Freanel & Son Gilbert LLC v. Fashionable Expectations LLC
| Decision Date | 20 May 2010 |
| Docket Number | 1 CA-CV 08-0853 |
| Parties | FREANEL & SON GILBERT, LLC, dba GILBERT TOWNE CENTER, Plaintiff/Appellee/ Cross-Appellant, v. FASHIONABLE EXPECTATIONS, LLC, an Arizona limited liability company; MICHAEL GOODMAN and ANGELA WILSON-GOODMAN, husband and wife, Defendants/Appellants/ Cross-Appellees. |
| Court | Arizona Court of Appeals |
EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
See Ariz. R. Supreme Court 111(c); ARCAP 28(c);
MEMORANDUM DECISION(Not for Publication-Rule 28, Arizona Rules of Civil Appellate Procedure
The Honorable Bethany G. Hicks, Judge
Tiffany & Bosco, P.A. By Christopher R. Kaup May Lu
Wilson-Goodman & Fong, P.C.
By Terry J. Fong Attorneys for Defendants/Appellants/Cross-Appellees
¶1Fashionable Expectations, LLC, Michael Goodman, and Angela Wilson-Goodman (collectively "Tenant") appeal from the trial court's judgment after a bench trial finding that Tenant unjustifiably vacated the premises it leased from Freanel & Son Gilbert, LLC ("Landlord"), and was not constructively evicted. Landlord cross-appeals from the court's damages award, asserting that the court improperly reduced its claimed damages for renovation expenses and commissions incurred for re-leasing the premises, when such costs were included in the lease. For the following reasons, we find that the trial court set an incorrect accrual date for the interest on renovation costs, lease commissions, and the attorneys' fee award and should have credited Tenant with its security deposit. We otherwise affirm the judgment.
¶2 Landlord is the owner and lessor of a shopping center known as Gilbert Towne Center. In June 2004, Tenant signed a three-year lease with Landlord to lease Suite 142 for use as a retail store selling maternity, infant, and children's clothing and accessories. Angela Wilson-Goodman and her husband Michael Goodman executed a personal guarantee of the lease.
¶3 By letter dated July 18, 2005, Lisa Baranowski, the managing agent of the Gilbert Towne Center, advised Tenant thatTenant had violated the lease by installing a new air conditioning unit. She also stated:
Secondly, in regards to the roof leaks, we have had our contractor out to access [sic] the roof repairs and are currently waiting for a proposal. Once we have reviewed and receive approval from the owner, we will schedule the repairs. However, please be advised, that your A/C contractor will be responsible for any penetrations or leaks as a result of the installation of the A/C unit and will be responsible for any and all such repairs as caused by such.
Standard Roofing subsequently submitted an invoice for work performed for several rental units. With regard to Suite 142, the invoice stated: An earlier invoice from Standard Roofing, dated February 28, 2005, stated: "Not a roof leak, A/C problem." On or about October 15, 2005, Tenant vacated the premises.
¶4 The tenant adjoining Suite 142, Bed Depot, took over Suite 142 as an expansion of its existing space pursuant to a lease dated March 29, 2006. Bed Depot received three months' free rent, and Landlord made $26,497.99 worth of modifications to the suite to accommodate Bed Depot's expansion. Bed Depot agreed to lease the new space for five years and then extended its existing lease to correspond to the new lease on Suite 142. The lease commenced on September 19, 2006, with the payment of prorated rent for September.
¶5 In May 2006, Landlord filed a complaint against Tenant for breach of contract. The complaint alleged that Tenant vacated and abandoned the premises without Landlord's consent. Tenant denied it abandoned the premises and filed a counterclaim for the return of its $2,750 security deposit. Tenant alleged that Landlord breached the contract because Landlord failed to repair the roof after Tenant gave notice that the roof leaked during rainy weather. Tenant asserted that Landlord had knowledge of the leaking roof for at least a year prior to Tenant's vacating the premises. Tenant claimed that flooding caused by the leaking roof made the suite "untenable as a place of business."
¶6 Prior to trial, the superior court granted Landlord's motion in limine and request for sanctions based on Tenant's discovery violations and failure to comply with preparing the joint pretrial statement. The court precluded Tenant from presenting any exhibits or witnesses, except for the testimony of Angela Goodman-Wilson.
¶7 The court conducted a two-day bench trial. Michael Crook, President of Nobeus Property Management, Inc. ("Nobeus"), the property management company for Landlord, testified that on October 15, 2005, during a periodic inspection of the Gilbert Towne Center, he noticed a "Going Out of Business" sign taped to Tenant's front windows, and instructed Baranowski to contactTenant about the sign. He further testified that after Tenant vacated the premises, Nobeus negotiated with four potential tenants for the vacated premises. He explained that his company was entitled to a commission of $10,856.60 for obtaining the replacement tenant. He testified that the renovations were necessary to secure Bed Depot's occupancy. He also testified that any leaking because of the air conditioner was Tenant's responsibility under the lease. He stated that he inspected the property after Tenant vacated the premises but before the renovations were made and saw no evidence of any water damage on the property.
18 Baranowski testified that she also visited the property after Tenant moved out and saw no signs of water damage. She had several conversations with Angela Wilson-Goodman about roof leaks and hired contractors on several occasions to address the complaints. She noted that the roofer indicated that the condensate line for the air conditioning unit needed to be checked and stated that she told Wilson-Goodman, but she did not know whether Tenant ever checked or fixed the air conditioning unit. Baranowski also explained that repairs were made to the roofs over other suites, but that those other suites were not in the same building as Suite 142 and did not share the same roof. She further testified that in January 2006, the entire roof was sealed with an elastomeric coating, but that the project was not precipitated by any complaints or any leaks related to Suite 142. She could not remember receiving any letter from Tenant regarding problems with the roof or any letter in October 2005 informing her that Tenant was going to terminate the lease and vacate the premises because of flooding issues.
¶9 Angela Wilson-Goodman testified that the roof of Suite 142 leaked for the first time in July 2004, soon after Tenant took possession of the property. She notified the property management company, which was someone other than Nobeus at the time, but did not know if that company took any action because in July the following year the roof leaked again. She said that she sent a letter to Baranowski on July 23, 2005, because the roof was still leaking and nothing was being done. According to Wilson-Goodman, the letter noted that the bathroom was under water and a carpeted children's play area was drenched. She described the bathroom as having water running down the walls and bubbling paint on the ceiling and described the ceiling in the center of the store as also having a major leak. Wilson-Goodman testified that Nobeus sent someone to pull up the carpet to dry it, to vacuum up the water, and to replace a ceiling tile that had crumbled. She stated that, after the July 23 letter, the store flooded every time it rained. Wilson-Goodman testified that, on October 18, 2005, the store flooded again, and she faxed and mailed a letter to Baranowski, saying that because Nobeus failed to repair the roof, she considered Landlord to be in breach of its obligations and so she was vacating the premises. She denied that she was ever told that the leak was caused by the air conditioning unit. She testified that the store did not have a "going out of business" sign on the window, but had a sign indicating fifty percent off and that the sign, advertising varying discounts, had been placed on the window in early 2005.
¶10 In rebuttal, Baranowski testified that Nobeus maintains a log of telephone calls it receives regarding maintenance issues and that, except for a call in June 2005 about the air conditioning, the log reflected no calls from Wilson-Goodman. She testified she received an e-mail regarding leaks some time prior to July 18, 2005, and that in response Nobeus sent Standard Roofing to check the problem.
¶11 Randy England, general manager of Standard Roofing, testified regarding two invoices from his company dated February 28, 2005, and July 29, 2005. Tenant objected to his testimony on the grounds that England had no personal knowledge of the service listed in the invoices because he had not performed the work. Overruling the objection, the trial court indicated that it would accept the evidence as an interpretation of business records. England testified that the "three-course split" thatappeared in the July invoice was a minor repair needed when a roof penetration, as with a pipe, vent, or duct, caused a small split requiring new plastic cement. He further explained that an air conditioning condensate line drains the condensation from an air conditioning unit, but that if the condensate line becomes blocked, the water builds up inside the unit, overflows, and can come through the roof, appearing to be a roof leak. He also noted that an air conditioning unit produces more condensation when it rains, resulting in overflows and leaks, giving the impression that the...
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