Echo Consulting Services, Inc. v. North Conway Bank

• Decision Date: 28 December 1995
• Docket Number: No. 94-055,94-055
• Citation: 140 N.H. 566,669 A.2d 227
• Parties: ECHO CONSULTING SERVICES, INC. v. NORTH CONWAY BANK.
• Court: New Hampshire Supreme Court

Page 227

669 A.2d 227

140 N.H. 566

ECHO CONSULTING SERVICES, INC. v. NORTH CONWAY BANK.

No. 94-055.

Supreme Court of New Hampshire.

Dec. 28, 1995.

Burns, Bryant, Hinchey, Cox & Schulte, P.A., Dover (James H. Schulte, on the brief and orally), for plaintiff.

McLane, Graf, Raulerson & Middleton, P.A., Manchester (Arthur G. Greene and Michael J. Quinn, on the brief, and Mr. Quinn, orally), for defendant.

BROCK, Chief Justice.

The plaintiff, Echo Consulting Services, Inc. (Echo), sued its landlord, North Conway Bank (the bank), claiming constructive eviction, partial actual eviction, breach of an implied covenant of quiet enjoyment, and breach of the lease. Echo appeals the decision of the Superior Court (Fitzgerald, J.) denying all of Echo's claims after a bench trial. We affirm in part, reverse in part, and remand.

Pursuant to a written lease dated March 15, 1986, Echo leased premises on the downstairs floor of a building in Conway, together with "common right of access" thereto. When the bank purchased the building from Echo's prior landlord, it assumed the lease and became Echo's landlord.

The bank undertook a series of renovations to make the building suitable for a branch banking business on the main, street-level floor. These renovations, occurring on and off through 1987, created noise, dirt, and occasional interruptions of electric service. The construction work also made the rear parking lot inaccessible. During most of 1987, therefore, many of Echo's employees used the street-level parking lot in front of the building; they gained access to Echo's downstairs office by first using the main, street-level access to the building and then walking downstairs. On October 13, the bank changed the locks on the main floor access door for security reasons, and Echo's employees were no longer able to get in or out of the building through that door after regular business hours. At that point, Echo's only means of access after hours was through the rear door, and Echo presented testimony that even that access was obstructed and difficult at times. The parties disagree as to the extent of these interferences, and as to the damage that they caused to Echo's permissible uses of its leasehold.

On appeal, Echo argues that the trial court erred by: (1) confusing the legal standards for constructive eviction and partial actual eviction; (2) finding that locking the street-level access doors did not constitute a partial actual eviction; (3) ruling that there was no constructive eviction; and (4) applying the wrong legal standard to determine the quiet enjoyment issue.

This case involves a commercial, as distinguished from a residential, lease. Since we have not addressed in the commercial context all of the issues raised here, we will draw some insight from residential lease cases, even though the applicable law may be more protective in the residential context. Compare Golub v. Colby, 120 N.H. 535, 536, 419 A.2d 397, 398 (1980) with Kline v. Burns, 111 N.H. 87, 92, 276 A.2d 248, 251 (1971).

In any lease, along with the tenant's possessory interest, the law implies a covenant of quiet enjoyment, which obligates the landlord to refrain from interferences with the tenant's possession during the tenancy. See generally 2 R. Powell, Powell on Real Property pp 231, 232 (1994). There are several ways in which a landlord might breach that covenant, each giving rise to a different claim by the tenant. The landlord's actual physical dispossession of the tenant from the leased premises constitutes an actual eviction, either total or partial, as well as a breach of the covenant. Id. p 231. "Interferences by the landlord that fall short of a physical exclusion but that nevertheless substantially interfere with the tenant's enjoyment of the premises, causing the tenant to vacate, are actionable by the tenant as 'constructive' evictions." Id. p 232, at 16B-27. The landlord's general breach of the covenant of quiet enjoyment, even if not "substantial" enough to constitute a constructive eviction, nevertheless entitles the tenant to damages. Id. p 232, at 16B-32 to 16B-33. We turn now to addressing each of Echo's claims separately.

I. Partial Actual Eviction

A partial actual eviction occurs when the landlord deprives the tenant of physical possession of some portion of the leased property, including denial of access to the leased premises. See Barash v. Pennsylvania Terminal Real Estate Corp., 26 N.Y.2d 77, 308 N.Y.S.2d 649, 256 N.E.2d 707, 709 (N.Y.1970); Restatement (Second) of Property § 6.1 reporter's note 2, at 236 (1976); 2 Powell, supra p 231[b], at 16B-24. A landlord cannot apportion a tenant's rights under a lease. See Barash, 26 N.Y.2d 77, 308 N.Y.S.2d 649, 256 N.E.2d at 710; Smith v. McEnany, 170 Mass. 26, 48 N.E. 781 (1897). Thus, the bank cannot apportion Echo's rights to choose which door to enter if the lease gives Echo a right to two different doors for access.

Echo, however, was not physically deprived of any portion of the property leased to it, nor of any appurtenant rights given to it under the lease. For its claim of partial actual eviction, Echo relies on the following language in the lease: "approximately 1,890 square feet of floor area, together with common right of access thereto, a common use of the parking lot." Echo argues that this language gives it a right of access through the main, street-level door, since that door is the only door that was actually used in common by both the bank and Echo. We disagree.

A lease is a form of contract that is construed in accordance with the standard rules of contract interpretation. LaPonsie v. Kumorek, 122 N.H. 1021, 1022, 453 A.2d 1294, 1294 (1982). When construing disputed provisions in a lease, we must analyze the entire document to determine the meaning intended by the parties. ELCA of New Hampshire, Inc. v. McIntyre, 129 N.H. 114, 116, 523 A.2d 90, 91 (1987). Language used by the parties to the agreement should be given its standard meaning as understood by reasonable people. Murphy v. Doll-Mar, Inc., 120 N.H. 610, 611-12, 419 A.2d 1106, 1108 (1980). In the absence of ambiguity, the intent of the parties to a lease is to be determined from the plain meaning of the language used. Mast Road Grain & Bldg. v. Ray Piet, Inc., 126 N.H. 194, 197, 489 A.2d 143, 145 (1985). "The meaning of a contract is ultimately a matter of law for this court to decide, including the determination whether a contract term is ambiguous." Walsh v. Young, 139 N.H. 693, 695, 660 A.2d 1139, 1141 (1995) (quotation omitted).

The word "common" in Echo's lease modifies the phrase "right of access." Thus it plainly means only that the tenant's right to access is not an exclusive right; it is in "common" with the landlord's. The lease is not ambiguous; it cannot reasonably be construed to afford Echo the right in "common" to use the street-level door simply because that is the door which the bank chose actually to use. We interpret the trial court's finding that "Echo employees had access to their offices through at least one door at all times" to be a determination that such access was reasonable. That is all that is required under the language of this lease.

The trial court apparently applied the standard for constructive eviction in ruling on the actual eviction claim. Even though this was error, we affirm its decision on this issue because it reached the correct result and there are valid alternative grounds to reach that result. See In re Trailer and Plumbing Supplies, 133 N.H. 432, 438, 578 A.2d 343, 346 (1990). Since Echo was not physically deprived of any portion of the premises to which it had a right under the lease, the partial actual eviction claim was properly denied.

II. Constructive Eviction

A constructive eviction is similar to a partial actual eviction except that no actual physical deprivation takes place. A constructive eviction occurs when the landlord so deprives the tenant of the beneficial use or enjoyment of the property that the action is tantamount to depriving the tenant of physical possession. Barash, 26 N.Y.2d 77, 308 N.Y.S.2d 649, 256 N.E.2d at 710; Restatement (Second) of Property, supra; 2 Powell, supra p 232, at 16B-27.

The bank argues that a constructive eviction claim will not lie unless the landlord intends that its actions (1) render the premises unfit for occupancy or (2) permanently interfere with the tenant's beneficial use or enjoyment of the premises. We disagree.

It is well established that "the landlord's conduct, and not his intentions, is controlling." Blackett v. Olanoff, 371 Mass. 714, 358 N.E.2d 817, 819 (1977); cf. Restatement (Second) of Property § 6.1 (1976 & Supp.1995) (not mentioning any requirement that the landlord intend to evict the tenant). The bank mistakenly relies on one prior case to support its view that intent is required for a constructive eviction. See Thompson v. Poirier, 120 N.H. 584, 420 A.2d 297 (1980). Although Thompson contains allegations of intentional conduct on the landlord's part, intent was not a necessary element of our decision, and the prevailing view is to the contrary. For example, even though no intent was or could have been found, courts have found a constructive eviction where a nuisance outside the leased premises--such as excessive noise from neighboring tenants--was attributable to, though not affirmatively undertaken by, the landlord. See, e.g., Blackett, 358 N.E.2d at 819; Gottdiener v. Mailhot, 179 N.J.Super. 286, 431 A.2d 851, 854 (1981).

The focus of the inquiry in a constructive eviction case is not on intent but on the extent of the interference, i.e., whether, in the factual circumstances of the case, the interference is substantial enough that it is tantamount to depriving the tenant of physical possession. See, e.g., Baley & Selover v. All Am. Van & Storage, 97 Nev. 370, 632 P.2d 723, 724 (1981); Reste Realty Corp. v. Cooper, 53 N.J. 444, 251 A.2d 268, 274-75 (1969); see also 2...