Davidow v. Inwood North Professional Group-Phase I

• Decision Date: 24 February 1988
• Docket Number: GROUP--PHASE,No. C-6618,C-6618
• Parties: Joseph F. DAVIDOW, M.D., Petitioner, v. INWOOD NORTH PROFESSIONALI, Respondent.
• Court: Texas Supreme Court

Page 373

747 S.W.2d 373

76 A.L.R.4th 919

Joseph F. DAVIDOW, M.D., Petitioner, v. INWOOD NORTH PROFESSIONAL GROUP--PHASE I, Respondent.

No. C-6618.

Supreme Court of Texas.

Feb. 24, 1988.

Rehearing Denied April 20, 1988.

Frank W. Mitchell and Brock Akers, Vinson & Elkins, Houston, for petitioner.

Richard C. Waites and Kimberlee Kovach, Richard C. Waites & Associates, Houston, for respondent.

SPEARS, Justice.

This case presents the question of whether there is an implied warranty by a commercial landlord that the leased premises are suitable for their intended commercial purpose. Respondent Inwood North Professional Group--Phase I sued petitioner Dr. Joseph Davidow for unpaid rent on medical office space leased by Dr. Davidow. The jury found that Inwood materially breached the lease agreement and that the defects rendered the office space unsuitable for use as a medical office. The trial court rendered judgment that Inwood take nothing and that Dr. Davidow recover damages for lost time and relocation expenses. The court of appeals reversed the trial court judgment and rendered judgment that Inwood recover unpaid rents for the remainder of the lease period and that Dr. Davidow take nothing. 731 S.W.2d 600. We affirm in part and reverse and render in part.

Dr. Davidow entered into a five-year lease agreement with Inwood for medical office space. The lease required Dr. Davidow to pay Inwood $793.26 per month as rent. The lease also required Inwood to provide air conditioning, electricity, hot water, janitor and maintenance services, light fixtures, and security services. Shortly after moving into the office space, Dr. Davidow began experiencing problems with the building. The air conditioning did not work properly, often causing temperatures inside the office to rise above eighty-five degrees. The roof leaked whenever it rained, resulting in stained tiles and rotting, mildewed carpet. Patients were directed away from certain areas during rain so that they would not be dripped upon in the waiting room. Pests and rodents often infested the office. The hallways remained dark because hallway lights were unreplaced for months. Cleaning and maintenance were not provided. The parking lot was constantly filled with trash. Hot water was not provided, and on one occasion Dr. Davidow went without electricity for several days because Inwood failed to pay the electric bill. Several burglaries and various acts of vandalism occurred. Dr. Davidow finally moved out of the premises and discontinued rent payments approximately fourteen months before the lease expired.

Inwood sued Dr. Davidow for the unpaid rent and costs of restoration. Dr. Davidow answered by general denial and the affirmative defenses of material breach of the lease agreement, a void lease, and breach of an implied warranty that the premises were suitable for use as a medical office. The jury found that Inwood materially breached the lease, that Inwood warranted to Dr. Davidow that the lease space was suitable for a medical office, and that the lease space was not suitable for a medical office. One month after the jury returned its verdict, but before entry of judgment, the trial court allowed Dr. Davidow to amend his pleadings to include the defense of constructive eviction. The trial court then rendered judgment that Inwood take nothing and that Dr. Davidow recover $9,300 in damages.

With one justice dissenting, the court of appeals reversed the trial court judgment and rendered judgment in favor of Inwood for unpaid rent. The court of appeals held that because Inwood's covenant to maintain and repair the premises was independent of Dr. Davidow's covenant to pay rent, Inwood's breach of its covenant did not justify Dr. Davidow's refusal to pay rent. The court of appeals also held that the implied warranty of habitability does not extend to commercial leaseholds and that Dr. Davidow's pleadings did not support an award of affirmative relief.

Inwood contends that the defense of material breach of the covenant to repair is insufficient as a matter of law to defeat a landlord's claim for unpaid rent. In Texas, the courts have held that the landlord's covenant to repair the premises and the tenant's covenant to pay rent are independent covenants. Cottrell v. Carrillon Associates, Ltd., 646 S.W.2d 491, 494 (Tex.App.--Houston [1st Dist.] 1982, no writ); Ravkind v. Jones Apothecary, Inc., 439 S.W.2d 470, 471 (Tex.Civ.App.--Houston [1st Dist.] 1969, writ ref'd n.r.e.); Edwards v. Ward Associates, Inc., 367 S.W.2d 390, 393 (Tex.Civ.App.--Dallas 1963, writ ref'd n.r.e.). Thus, a tenant is still under a duty to pay rent even though his landlord has breached his covenant to make repairs. Ammons v. Beaudry, 337 S.W.2d 323, 324 (Tex.Civ.App.--Fort Worth 1960, writ ref'd).

This theory of independent covenants in leases was established in early property law prior to the development of the concept of mutually dependent covenants in contract law. At common law, the lease was traditionally regarded as a conveyance of an interest in land, subject to the doctrine of caveat emptor. The landlord was required only to deliver the right of possession to the tenant; the tenant, in return, was required to pay rent to the landlord. Once the landlord delivered the right of possession, his part of the agreement was completed. The tenant's duty to pay rent continued as long as he retained possession, even if the buildings on the leasehold were destroyed or became uninhabitable. The landlord's breach of a lease covenant did not relieve the tenant of his duty to pay rent for the remainder of the term because the tenant still retained everything he was entitled to under the lease--the right of possession. All lease covenants were therefore considered independent. See 3 G. Thompson, Thompson on Real Estate §§ 1110, 1115 (1980); cf. Kamarath v. Bennett, 568 S.W.2d 658, 659-60 (Tex.1978).

In the past, this court has attempted to provide a more equitable and contemporary solution to landlord-tenant problems by easing the burden placed on tenants as a result of the independence of lease covenants and the doctrine of caveat emptor. See, e.g., Kamarath v. Bennett, 568 S.W.2d 658 (Tex.1978); Humber v. Morton, 426 S.W.2d 554 (Tex.1968). In Kamarath v. Bennett, we reexamined the realities of the landlord-tenant relationship in a modern context and concluded that the agrarian common-law concept is no longer indicative of the contemporary relationship between the tenant and landlord. The land is of minimal importance to the modern tenant; rather, the primary subject of most leases is the structure located on the land and the services which are to be provided to the tenant. The modern residential tenant seeks to lease a dwelling suitable for living purposes. The landlord usually has knowledge of any defects in the premises that may render it uninhabitable. In addition, the landlord, as permanent owner of the premises, should rightfully bear the cost of any necessary repairs. In most instances the landlord is in a much better bargaining position than the tenant. Accordingly, we held in Kamarath that the landlord impliedly warrants that the premises are habitable and fit for living. We further implicitly recognized that the residential tenant's obligation to pay rent is dependent upon the landlord's performance under his warranty of habitability. Kamarath, 568 S.W.2d at 660-61.

When a commercial tenant such as Dr. Davidow leases office space, many of the same considerations are involved. A significant number of commentators have recognized the similarities between residential and...