Bechtle v. Tandy Corp.

Decision Date18 June 2002
Docket NumberNo. ED 78702.,No. ED 78643.,ED 78643.,ED 78702.
Citation77 S.W.3d 689
PartiesEsther BECHTLE and John D. Schaperkotter, Personal Representatives of the Estate of Dr. Richard Bechtle, Deceased, Respondent/Cross-Appellant, v. TANDY CORPORATION, d/b/a Radio Shack, Appellant/Cross-Respondent.
CourtMissouri Court of Appeals

Matthew S. Hendricks, St. Louis, MO, for appellant.

James H. Ferrick, III, St. Louis, MO, for respondent.

ROBERT G. DOWD, JR., Judge.

Plaintiff Dr. Richard Bechtle1 (Dr. Bechtle) brought an action against Tandy Corporation, d/b/a Radio Shack, (Tandy) and Tandycrafts, Inc. (Tandycrafts), for amounts due under a lease as guarantor.2 After a bench trial, the trial court concluded there was no material alteration of or departure from the lease and entered judgment in favor of Dr. Bechtle. The trial court awarded Dr. Bechtle $538,042.82 in damages, including attorney's fees, but denied his motion for post-trial attorney's fees. Tandy and Dr. Bechtle appealed and their appeals were consolidated. We affirm the judgment and award of attorney's fees, but reverse the denial of post-trial attorney's fees and remand.

In January 1974, Color Tile of Missouri, Inc. (Color Tile), entered into a lease agreement (Lease) with DuBose Corporation for property located at 6000 South Lindbergh Boulevard, St. Louis, Missouri (Premises). The initial term of the Lease was to begin on September 15, 1974. Tandy executed a guaranty in favor of DuBose Corporation, its successors and assigns, concurrently with the execution of the Lease by Color Tile. Dr. Bechtle purchased the property in January 1981 and became the lessor under the Lease pursuant to a Lease Assignment and Assumption Agreement.

The Lease provided for periodic rent escalations at five-year intervals during an initial twenty-year term, and specified the formula by which each rent escalation was to be calculated. The Lease provided for rent escalations at the end of years five, ten, and fifteen. The Lease provided for additional rent escalations if Color Tile chose to extend the term of the Lease beyond the initial twenty-year term. All of the escalation formulas were driven by the Consumer Price Index (CPI).

Color Tile rented the Premises during the full extent of the twenty-year term. During this period, Color Tile and Dr. Bechtle did not follow the formula set forth in the Lease for calculating any of the rental escalations in that they did not use the proper CPI's. Neither Color Tile nor Dr. Bechtle notified Tandy of the failure to follow the formula. In January of 1994 in anticipation of the expiration of the initial twenty-year term on September 14, 1994, Color Tile exercised its option to extend the Lease through September 14, 1999. Dr. Bechtle accepted. Color Tile and Dr. Bechtle again failed to use the correct CPI's in calculating the rent for the extension period. Again, no notice was given to Tandy.

In December 1995, Color Tile defaulted on the Lease and went into bankruptcy. Color Tile failed to make any payments due on the Premises for the period of December 15, 1995 through January 24, 1996. Color Tile continued to occupy the Premises and resumed making rental payment on January 24, 1996, and paid until August 1997, at which time Color Tile abandoned the Premises. On January 20, 1998, Dr. Bechtle entered into a lease of the Premises with Missouri Goodwill Industries, with rental payments to begin on May 1, 1998.

Thereafter, Dr. Bechtle filed this action. After Tandycrafts was dismissed, Dr. Bechtle proceeded with his action against Tandy, as guarantor of rent under the Lease, for amounts due under the Lease. The parties waived a jury trial. The trial court found there was no material alteration of or departure from the Lease and that Tandy was bound by its obligations under the guaranty. The trial court awarded Dr. Bechtle damages, which included a 10 per cent late charge, as follows: (1) Rent $101,908.12; (2) Taxes $54,294.71; (3) Repairs and Maintenance $146,523.71; (4) Real Estate Commissions and Fees $39,798.00; (5) Other Accounting Fees $1,420.00; (6) Travel Expenses $7,500.00; and (7) Legal Fees, Expenses and Costs $186,598.28. Neither party requested findings of fact or conclusions of law. Tandy filed a Motion for Judgment Notwithstanding the Verdict or in the Alternative for a New Trial. Dr. Bechtle filed a Motion to Supplement Award of Costs and Attorney's Fees. The court denied Tandy's and Dr. Bechtle's motions. Tandy now appeals from the judgment, awarding Dr. Bechtle $538,042.82 in damages, and Dr. Bechtle in a cross-appeal challenges the denial of supplementary attorney's fees.

In a court-tried case, we sustain the judgment of the trial court unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously applies or declares the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). Where the trial court enters no findings of fact or conclusions of law, we assume that the trial court resolved all issues of fact in accordance with the result reached. Rule 73.01(c); Lewis v. Lawless Homes, Inc., 984 S.W.2d 583, 586 (Mo.App. E.D.1999).

TANDY'S APPEAL

Tandy contends the trial court erred in finding there was no material alteration of or departure from the Lease, and thus, Tandy was bound by its obligations under the guaranty. Specifically, Tandy argues the trial court erred in finding Tandy was bound by the guaranty because: (1) the rent Color Tile paid for the 1994 to 1999 extension period was more than it should have paid using the correct formula and CPI's; (2) Color Tile and Dr. Bechtle abandoned and defaulted on the original Lease and entered into a new lease; (3) Color Tile and Dr. Bechtle did not enter into an agreement to amend the Lease but rather made mistakes in calculating the rental escalations; and (4) Color Tile and DuBose Corporation amended the Lease without notice to Tandy. Additionally, Tandy maintains the trial court erred in awarding damages for repairs and maintenance and travel expenses.

Tandy, in its first point, maintains Color Tile and Dr. Bechtle's failure to adhere to the terms of the Lease when calculating rent was a material alteration to the Lease which resulted in Color Tile paying more rent than it should have in the 1994 to 1999 extension period, thereby triggering the guaranty's notice requirement. We disagree.

Generally, a material alteration of the obligation guaranteed without the guarantor's consent will discharge the guarantor. Wigley v. Capital Bank of Southwest Missouri, 887 S.W.2d 715, 724 (Mo.App.S.D.1994). If any change enlarges or lessens the liability, it is material and discharges the guarantor, and courts do not inquire whether the alteration was injurious or beneficial. Id.

The guaranty reads in pertinent part as follows:

The Guarantor hereunder further agrees that Lessee may, as determined in its sole discretion enter into any one or more agreements with Lessor amending said Lease, and any such amendment shall be binding upon the Guarantor hereunder without necessity of joining in the execution of or being notified of any such amendment, except any amendment which would increase the rent payable by the Lessee under said Lease or substantially increase any other liability or obligation of the Lessee under said Lease.

It is undisputed that Color Tile and Dr. Bechtle did not adhere to the formula as set forth in the Lease when computing any of the periodic rental escalations during the initial twenty-year term or for the extension period after the initial term. This resulted in Color Tile paying amounts of rent that were different from the amounts it should have paid had they followed the formula and used the correct CPI's as set for in the Lease. There is some dispute as to whether the rent Color Tile paid in this period was more or less than it should have paid had the proper formula and CPI's been used. However, their failure to adhere to the formulas as set forth in the Lease did not alter the contractual obligation guaranteed by Tandy even if Color Tile paid more during this period.

Color Tile and Dr. Bechtle did not change the terms of the Lease. They did not enter into any agreement to amend the terms of the Lease. Color Tile and Dr. Bechtle simply made errors in calculating the rent escalations. The terms of the Lease remained the same. Tandy's liability or obligation under the Lease never changed. Tandy's only obligation with respect to the rent was to pay the rent as set forth in the Lease if Color Tile did not. Color Tile's and Dr. Bechtle's errors never changed those terms. Further, there is no evidence that Tandy would be required to pay more than Color Tile was obligated to pay under the Lease had Color Tile continued as the lessee. Accordingly, we find their failure to strictly adhere to the formula set forth in the Lease to calculate the rent escalations was not a material alteration of the Lease of which Tandy was entitled to notice. Point denied.

In its second point, Tandy asserts that Color Tile and Dr. Bechtle abandoned and defaulted on the original Lease and entered into a new lease to which the guaranty did not apply, thus, releasing Tandy from liability. Specifically, Tandy maintains their failure to adhere to the specific formula set forth in the Lease with respect to the extension, resulted in the formation of a new and different contract. We disagree.

In support of its position, Tandy correctly notes that where the...

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