Cherberg v. Peoples Nat. Bank of Washington

• Decision Date: 02 June 1977
• Docket Number: No. 44287,44287
• Citation: 88 Wn.2d 595,564 P.2d 1137
• Parties: James J. CHERBERG and Arlene M. Cherberg, his wife, Petitioners, v. PEOPLES NATIONAL BANK OF WASHINGTON, Defendant, Joshua Green Corporation, a corporation, Respondent.
• Court: Washington Supreme Court

Page 595

88 Wn.2d 595

564 P.2d 1137

James J. CHERBERG and Arlene M. Cherberg, his wife, Petitioners, v. PEOPLES NATIONAL BANK OF WASHINGTON, Defendant Joshua Green Corporation, a corporation, Respondent.

No. 44287.

Supreme Court of Washington, En Banc.

June 2, 1977.

Olwell, Boyle & Hattrup, Lee Olwell, Seattle, for petitioners.

MacBride, Sax & MacIver, D. Gordon Willhite, Seattle, for respondent.

UTTER, Associate Justice.

James Cherberg and his wife brought a claim based in part upon the tort of intentional interference with business expectancies arising from the willful refusal of the Joshua Green Corporation, as their landlord, to perform duties owed them under a commercial lease. A jury verdict for $42,000 was entered in favor of the Cherbergs. The Court of Appeals in Cherberg v. Peoples National Bank, 15 Wash.App. 336, 549 P.2d 46 (1976), determined that, while on the facts presented an implied duty to repair certain exterior walls did exist, the trial court erred in declining to grant the landlord's motion for a directed verdict. It held that an action for intentional interference did not lie because one cannot, as a matter of law, be guilty of an intentional tort for interfering with one's own contract. We reverse that decision.

In 1967 the petitioners, James and Arlene Cherberg, leased a portion of the Lewis Building on Fifth Avenue in downtown Seattle and invested some $80,000 in the establishment and operation of a restaurant business at that location. The respondent, Joshua Green Corporation, acquired the Lewis Building in February of 1972, subject to the lease of the petitioners. In April of 1972, Peoples National Bank of Washington, the owner of the property abutting the Lewis Building on the south, commenced demolition of the existing buildings on its property for the purpose of constructing a high -rise office tower. The demolition work resulted in the exposure of the south wall of the Lewis Building. It was found to be structurally unsafe and in need of substantial repairs to satisfy requirements of the City of Seattle Building Department. The demised premises here at issue were located within the Lewis Building but did not abut the south wall.

The lease between the parties required the lessee to make necessary repairs to maintain the demised premises, excepting the outside walls and other structural components of the building, and reserved to the lessor the use of the roof and outside walls of the building. The lease does not contain an express covenant concerning the responsibility to maintain the structural components of the building. ¹

Upon learning of the problems with the south wall, the lessor contacted the Cherbergs directly and through its attorneys, indicating the Green Corporation would probably elect not to repair the wall and that the City might order the building closed. The Cherbergs responded that the lessor was obligated under the lease to make repairs and that they would suffer substantial damage should their tenancy be disrupted.

Thereafter, the lessor terminated the lease and informed the Cherbergs of its intention to post the building as unsafe. The Cherbergs closed their business for approximately one week. An independent consultant then informed the Cherbergs that repair of the wall was in fact feasible. Petitioners reopened their business when the Green Corporation failed to actually post the building and at that time reiterated their demands to the lessor. The bank, not wishing to be delayed further in its construction plans, eventually repaired the wall at its own expense (estimated at $30,000 to $50,000).

This action was brought against the bank and the Green Corporation, alleging breach of the lessor's duty to repair, negligent demolition by the bank, and, that the defendants had engaged in a conspiracy to destroy petitioners' business. Undisputed evidence was presented demonstrating that there were close ties between Joshua Green, III, The Green Corporation, and Peoples National Bank of Washington. The evidence disclosed the Green Corporation viewed the Lewis Building as an adequately profitable investment under the circumstances existing at the time of purchase, but that it was the Corporation's desire to regain control of the premises as soon as possible in order to demolish the existing structure on the property and erect a new building which they felt might be more profitable. Demolition of the Lewis Building during the course of the new construction would have been of substantial economic benefit both to the Green Corporation and to the bank. In early 1972 both the bank and the Green Corporation had requested the same agent to engage in efforts to negotiate a sale of petitioners' leasehold, in order that the Green Corporation might regain control of the premises.

The trial court, at the conclusion of testimony, dismissed the bank from the suit and also dismissed the negligence and conspiracy claims. Respondent's other motions pertinent to this appeal were denied. The jury was instructed that respondent was liable for damages caused by the failure to repair the outside wall. It further instructed the jury with regard to the elements of the tort of intentional interference with business expectations and that, if the jury concluded the defendant's actions were willful, damages for mental suffering, inconvenience, and discomfort would be compensable. The jury made a special finding of willful action and returned a verdict of $42,000. The only evidence of economic loss due to the temporary closure and attendant disruption of business was in the amount of $3,100.

The Court of Appeals held the lessor did have a duty to make repairs to the wall on the basis of a mandate so to do from competent government authority. However, it reversed and remanded, holding that the Green Corporation was entitled to a directed verdict on the claim of interference with business expectations and the assessment of damages for inconvenience, discomfort and mental distress.

The first issue is the rights and duties of the parties with regard to the unsafe condition of the south wall of the building. We agree with the holding of the Court of Appeals that an implied duty on the part of the lessor exists to make those repairs mandated by competent government authority where, as here, the appropriate authority determines that, in the interest of the public welfare, a defective condition of a building must be remedied. We also agree the evidence presented established that the refusal of the respondent to take action to fulfill this duty, within a reasonable time after notification from the City, breached an implied covenant of quiet enjoyment and resulted in an actionable constructive eviction. See Cherberg v. Peoples National Bank, supra at 343--45, 549 P.2d 46.

In addition, however, even absent a mandate from government authority, the lessor was under a duty to make the repairs here in question. The general rule is that a landlord has no duty to make repairs to the Demised premises absent an express covenant requiring such action. Feigenbaum v. Brink, 66 Wash.2d 125, 401 P.2d 642 (1965); Conradi v. Arnold, 34 Wash.2d 730, 209 P.2d 491 (1949); Cordes v. Guy Inv. Co., 146 Wash. 143, 262 P. 131 (1927). While it is true this lease did not contain an express covenant abrogating this common-law rule, the area requiring repair was not a part of the demised premises but was an area of the building over which the landlord had expressly retained control.

A landlord has a duty to maintain, control and preserve retained portions of the premises subject to a leasehold in a manner rendering the demised premises adequate for the tenant's use and safe for occupancy by both the tenant and his invitees. Geise v. Lee, 84 Wash.2d 866, 529 P.2d 1054 (1975); Feigenbaum v. Brink, supra; Washington Chocolate Co. v. Kent, 28 Wash.2d 448, 183 P.2d 514 (1947); Andrews v. McCutcheon, 17 Wash.2d 340, 135 P.2d 459 (1943); Le Vette v. Hardman Estate, 77 Wash. 320, 137 P. 454 (1914). Failure to fulfill this duty results in liability on the part of the lessor for injury caused thereby, Geise v. Lee, supra, and failure to fulfill this duty, by omission to repair, can in a proper case constitute an actionable constructive eviction. Washington Chocolate Co. v. Kent, supra. See generally Stoebuck, The Law Between Landlord and Tenant in Washington, 49 Wash.L.Rev. 291, 347--50 (1974).

The willful refusal to adequately maintain retained portions of a building so as to allow the tenant to enjoy the beneficial use of the demised portion of the building is a breach of an implied duty owed by the landlord to the tenant under Washington law. On these facts this breach of duty was sufficient to constitute an actionable constructive eviction, and provides a basis for the conclusion that the landlord was liable for any damages stemming from that breach, Washington Chocolate Co. v. Kent, supra, independent of any directive to repair issued by the City of Seattle.

The remaining question is whether a willful refusal on the part of a landlord to make repairs when under a duty so to do gives rise to an action in tort for intentional inteference with the tenant's business expectancies with third parties. The Court of Appeals held the trial court erred in declining to grant the lessor's motion for a directed verdict on the issue of intentional interference with the lessees' business. The basis of this ruling was that the lessee should not be able to recover in tort for breach of a duty arising by virtue of a lease. The Court of Appeals also held that it was error to inform the jury it could award additional damages for inconvenience, discomfort and mental anguish if it found the lessor's actions were willful, because to do so would be to allow punitive or exemplary damages for breach of a lease.

As a general rule a tenant may not recover such additional damages solely on the basis of breach of such a duty. Barnes...