Ed Miller & Sons, Inc. v. Earl, S-91-222

Citation243 Neb. 708,502 N.W.2d 444
Decision Date09 July 1993
Docket NumberNo. S-91-222,S-91-222
Parties, 45 A.L.R.5th 855 ED MILLER & SONS, INC., a Nebraska Corporation, Appellee, v. George F. EARL, Appellant.
CourtSupreme Court of Nebraska

Syllabus by the Court

1. Limitations of Actions. Traditionally and generally in Nebraska, a cause of action accrues when an injury occurs and the aggrieved party, therefore, has a right to institute and maintain a suit for redress.

2. Limitations of Actions: Breach of Contract. A cause of action for breach of contract accrues as soon as the breach occurs.

3. Leases. A covenant to repair imposes on a lessee the affirmative duty to maintain and repair the premises.

4. Limitations of Actions: Breach of Contract: Leases. A cause of action based on breach of a covenant to repair in a lease accrues when the party obligated to repair anticipatorily repudiates the covenant; fails to undertake the repairs within a reasonable time; or, after undertaking to repair, abandons the repairs before completion.

5. Limitations of Actions: Breach of Lease. When a lessee during the term of a lease breaches a covenant to repair the leased premises, the lessor may bring an action as soon as the breach occurs.

6. Breach of Contract: Damages. In a breach of contract case, the ultimate objective of a damages award is to put the injured party in the same position he or she would have occupied if the contract had been performed, that is, to make the injured party whole.

7. Breach of Contract: Damages. As a general rule, a party injured by a breach of contract is entitled to recover all damages which are reasonably certain and which are naturally expected to follow the breach.

8. Breach of Lease: Damages. Generally, in a lessor's suit brought before expiration of a lease's term, the measure of damages for a lessee's breach of a covenant to repair the leased premises is the reduction in value of the lessor's reversion, that is, the difference in the value of the premises with and without repairs.

9. Breach of Lease: Damages. In a lessor's suit before expiration of a lease's term, when repair costs provide a reasonably 10. Claims: Recoupment: Words and Phrases. A counterclaim seeks an affirmative judgment and need not arise out of the same transaction or occurrence which is the basis of a plaintiff's action. Recoupment, on the other hand, must arise out of the same transaction or occurrence which is the basis of a plaintiff's action and is merely defensive, that is, does not seek an affirmative judgment in the action.

accurate measure of damages to a lessor as a result of a lessee's breach of a covenant to repair and do not result in a windfall to the lessor, repair costs may be used as the proper measure of damages.

11. Limitations of Actions: Claims: Recoupment. A counterclaim, seeking an affirmative judgment or relief, is barred by a statute of limitations unless the counterclaim is filed within the applicable statutory period for commencement of an action. Unlike a counterclaim that seeks an affirmative judgment, the defense of recoupment is not barred by a statute of limitations.

12. Fraud: Words and Phrases. Misrepresentation is a manifestation, by word or conduct, which constitutes an assertion not in accordance with fact.

13. Fraud: Proof. To recover in an action for fraud based on misrepresentation of a material fact, a plaintiff must prove that (1) the defendant represented a material fact; (2) the represented fact was untrue; (3) the defendant knew that the represented fact was untrue, recklessly made the representation as a positive assertion without knowledge concerning the truth of the representation, or made the representation negligently as the result of a lack of reasonable care in ascertaining the fact represented or in the absence of skill and competence required by a particular business or profession; (4) the misrepresentation was made with the intention that the plaintiff would rely on it; (5) the plaintiff reasonably relied on the misrepresentation; and (6) as the result of such reliance, the plaintiff was damaged.

14. Fraud. To constitute fraud, a misrepresentation must be an assertion of fact, not merely an expression of opinion.

15. Fraud. Fraud cannot be predicated on mere "sales talk" or "puffing."

Robert G. Dailey, of McGrath, North, Mullin & Kratz, P.C., Omaha, for appellant.

Kevin R. Hopp, of Richards, Riekes, Brown & Zabin, P.C., Omaha, for appellee.

HASTINGS, C.J., and BOSLAUGH, WHITE, CAPORALE, SHANAHAN, FAHRNBRUCH, and LANPHIER, JJ.

SHANAHAN, Justice.

George F. Earl appeals from judgments of the district court for Douglas County which awarded damages to Ed Miller & Sons, Inc. (Miller), in an action for breach of a lease.

STANDARD OF REVIEW

"An action for damages resulting from a breach of contract is a law action." Ballard v. Giltner Pub. Sch., 241 Neb. 970, 973, 492 N.W.2d 855, 857 (1992). Accord Buckingham v. Wray, 219 Neb. 807, 366 N.W.2d 753 (1985).

In a bench trial of a law action, a trial court's factual findings have the effect of a verdict and will not be set aside unless clearly erroneous. In reviewing a judgment awarded in a bench trial of a law action, an appellate court does not reweigh evidence, but considers the evidence in the light most favorable to the successful party and resolves evidentiary conflicts in favor of the successful party, who is entitled to every reasonable inference deducible from the evidence.

Broekemeier Ford v. Clatanoff, 240 Neb. 265, 267, 481 N.W.2d 416, 418 (1992). Accord, In re Estate of Watkins, 243 Neb. 583, 501 N.W.2d 292 (1993); Young v. Dodge Cty. Bd. of Supervisors, 242 Neb. 1, 493 N.W.2d 160 (1992); Ballard v. Giltner Pub. Sch., supra.

"When neither the terms of a contract nor facts and circumstances demonstrating the intent of the parties are disputed, construction of a contract is a question of law." Boisen v. Petersen Flying Serv., 222 Neb. 239, 241, 383 N.W.2d 29, 31

(1986). "Regarding a question of law, an appellate court has an obligation to reach a conclusion independent from a trial court's conclusion in a judgment under review." Huffman v. Huffman, 232 Neb. 742, 748, 441 N.W.2d 899, 904 (1989). Accord, In re Estate of Watkins, supra; Sports Courts of Omaha v. Meginnis, 242 Neb. 768, 497 N.W.2d 38 (1993).

BACKGROUND

Miller's premises, leased to Earl, consisted of shop facilities on a 4 1/2-acre site and an asphalt parking lot composed of 2 to 3 inches of asphalt laid over a 6- to 8-inch bed of crushed rock. From 1974 to 1983, Miller used the premises in its construction business. During this time, Miller performed routine maintenance on the parking lot, including application of hot tar each spring and fall to fill cracks in the lot. In 1983, when the lot was in good repair, the premises were turned over to Earl under a 5-year lease which, at Earl's option, was extended for an additional 5 years. The lease contained the following:

In consideration of the foregoing demise and the rate of rental herein stipulated, the Lessee agrees during the term of this lease, at his own expense, to keep in good and substantial order and repair and to make all necessary repairs, renewals, replacements and decorations upon or in connection with said premises, including all ... heating equipment ... and all other equipment, fixtures and appurtenances....

....

... The Lessor ... shall have the right to enter said premises at all reasonable times, to examine or ... to make such repairs....

Additionally, paragraph 31 of the lease stated:

The Lessee shall have full and complete responsibility for maintenance, replacement and repair of all buildings and other improvements contained within the property including by way of example and not by way of limitation all parking areas, roadways, external building surfaces, roofs and other improvements on the property as well as all items specified in paragraph 6 of this lease during the term of this lease and any extensions thereof. In the event of failure of Lessee to so maintain, replace or repair any such items, the Lessor may cause such work to be done and the cost thereof with interest at sixteen percent (16%) shall be additional rental due and payable forthwith hereunder. It is mutually agreed that such maintenance, repairs and replacements required will be that which will reasonably maintain the property in its present condition, reasonable wear and tear excepted.

After 1983, the parking lot began to deteriorate. According to a paving contractor who inspected the lot for Miller in July 1990, the lot was "rough and deteriorating" and had large areas that required an overlay of new asphalt. One area had deteriorated so badly that it needed to be torn up and completely replaced. Deterioration was not caused by ordinary wear and tear; rather, the deterioration was caused by failure to fill cracks in the asphalt, thereby allowing water to seep beneath the asphalt, soften the subbase, and cause additional extensive cracking and large holes in the asphalt surface. Miller made, and Earl refused, several demands that Earl repair the lot.

From October 1988 to September 1991, rent on the premises was $5,000 per month. However, in addition to his refusal to repair the parking lot, in 1989 Earl began withholding rent to cover the cost of other repairs to the premises. In December 1989, Earl withheld $3,035 from rent for the cost of repairs to the shop's roof and replacement of two furnaces. Earl also withheld $1,320 in March 1990 for the cost of replacing a roof, $5,000 in October 1990 for part of the cost of painting a building, and $3,885 in November 1990 for the remaining cost of painting the building and for the cost of replacing another roof. Additionally, Earl refused to pay $1,164 in premiums for casualty insurance on the premises for the period from May 15, 1990, to May 15, 1991, as required by the lease.

PLEADINGS AND TRIAL

In December 1989, Miller sued Earl and, in an amended petition filed on ...

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