Howe v. ALD Services, Inc.

• Decision Date: 11 February 1997
• Docket Number: No. 69235,69235
• Citation: 941 S.W.2d 645
• Parties: Jerome L. HOWE, Jr., Appellant, v. ALD SERVICES, INC., et al., Respondent.
• Court: Missouri Court of Appeals

Page 645

941 S.W.2d 645

Jerome L. HOWE, Jr., Appellant, v. ALD SERVICES, INC., et al., Respondent.

No. 69235.

Missouri Court of Appeals,

Eastern District,

Division Four.

Feb. 11, 1997.

Motion for Rehearing and/or Transfer to

Supreme Court Denied March 20, 1997.

J. Patrick Chassaing, St. Louis, for appellant.

Barry S. Ginsburg, Clayton, for respondent.

RHODES RUSSELL, Judge.

Jerome Howe ("landlord") filed suit against ALD Services, Inc. ("tenant") and tenant's president, Alan Deutschmann, seeking damages for breach of a commercial lease. Tenant counterclaimed alleging damages as a result of landlord's failure to repair the roof and replace an air conditioning unit. The jury returned a verdict for landlord on his claim, awarding $2,500 in damages. The jury found for tenant on its counterclaim, awarding $500 in damages. The trial court overruled landlord's post-trial motions, including his motion for judgment notwithstanding the verdict, and entered judgments in accordance with the verdicts.

Landlord contends that the trial court erred in: 1) denying his motion for directed verdict and j.n.o.v.; 2) denying his motion for a mistrial and motion for a new trial because tenant improperly injected landlord's relationship with his attorney into the trial; 3) refusing to admit certified weather records; 4) refusing to allow his attorney to state in closing argument the law of accord and satisfaction; 5) admitting Exhibit M because it was prejudicial hearsay; and 6) submitting tenant's Instruction Number 10 to the jury. We affirm in part and reverse in part.

On January 11, 1988, landlord and Deutschmann entered into a commercial lease agreement for a warehouse in Fenton, Missouri for five years. In October 1988, tenant and landlord entered into another lease for an adjoining building. Tenant took possession of the property conducting a coin operated equipment distribution, sales and service business at the site.

During tenant's occupancy of the premises, it experienced recurring problems with a warehouse roof. Deutschmann testified that when it rained, the roof would leak causing damage to tenant's inventory. The roof was eventually repaired by landlord, however, the roof continued to occasionally leak when it rained.

In the summer of 1989, tenant began experiencing problems with the air conditioning in one of the warehouses. Deutschmann complained to landlord stating that the air conditioning system was not working properly. Landlord, however, attributed tenant's cooling problems to boxes of stuffed animals which tenant had stacked to the ceiling of the warehouse. Landlord concluded that the boxes of stuffed animals trapped the heat inside the warehouse. Due to the air conditioning problems, tenant experienced a higher turnover of employees during the summer months. The cost to tenant was approximately $4,000 to hire and retrain new employees.

Near the end of the tenancy, tenant and landlord agreed to extend the lease to April 30, 1993. After that date, however, the parties are in disagreement as to the terms. According to tenant, landlord agreed that tenant could remain on the premises for the month of May. Tenant later sent landlord a rent check for May in the amount of $3,190.

Landlord denied that he agreed to extend tenant's occupancy into May, and in fact, considered tenant to be a holdover. Landlord testified that he did not negotiate the May rent check because it contained the following language: "Final $ due Howe" and "Final notice and payment. Rent paid in full through May 31, 1993. We will be out on or before May 31, 1993." Landlord did not deposit the check because he did not know whether or not tenant owed him other money.

After tenant vacated the premises at the end of May, landlord inspected the property and discovered that a portion of the suspended ceiling of one of the warehouses had collapsed. Landlord testified that there was also damage to the front of the building where tenant had removed its exterior sign, there were lights that did not work, and that the carpeting, floors, and tiles were extremely filthy. Landlord estimated that it would cost $5,000 to $6,000 to repair the damages. Tenant denied responsibility for the damages.

Landlord eventually rented the premises to a new tenant. He testified that he had to rent the property for approximately $5,500 less than market value because of the damages to the property.

In August 1993 landlord filed suit in St. Louis County Circuit Court against tenant for breach of contract. Landlord alleged that tenant was a holdover for the month of May, and therefore, owed double rent. Landlord also sought compensation for the property damage and for lost rent. In response, tenant counterclaimed alleging that landlord breached the lease by failing to provide adequate air conditioning and by failing to maintain the structural integrity of the roof. Tenant requested that it be awarded damages for the loss to its inventory and for the expenses it incurred for the business interruption caused by landlord's breach of the lease.

The jury returned a verdict in favor of landlord's claim in the amount of $2,500 and in favor of tenant's counterclaim for $500. Landlord's motion for j.n.o.v. or, in the alternative, a new trial was denied. This appeal follows.

For his first point, landlord contends the trial court erred in denying his motion for directed verdict and j.n.o.v. on tenant's counterclaim because the verdict was against the weight of the evidence and because he had no liability to tenant under the terms of the lease.

In reviewing the denial of a motion for a directed verdict and j.n.o.v., we must review the evidence in the light most favorable to the non-moving party and give that party all reasonable inferences from the evidence. Resnik v. Blue Cross and Blue Shield, 912 S.W.2d 567, 570 (Mo.App.1995). We ignore all evidence and inferences which contradict the non-movant's claim. A jury verdict will not be overturned unless there is a complete absence of probative facts to support it. Id.

To make a submissible case, substantial evidence must support every fact essential to liability. Gateway Exteriors v. Suntide Homes, 882 S.W.2d 275, 279 (Mo.App.1994). The evidence must establish every element necessary to recovery. Id. In order to make a submissible case of breach of contract, the complaining party must establish: 1) the existence of a valid contract; 2) the rights and obligations of the respective parties; 3) a breach; and 4) damages. Rice v. West End Motors, Co., 905 S.W.2d 541 542, (Mo.App.1995).

Following these principles, we disregard the testimony of landlord, except to the extent it is favorable to tenant's claim. Under the terms of the lease, landlord was obligated to make and pay for structural repairs to the roof. Landlord was also obligated to replace the air conditioning mechanical units. Tenant testified that he notified landlord that the roof leaked shortly after taking possession of the property. Tenant testified that the roof continued to leak even after it was repaired, and his inventory was damaged as a result.

Tenant also experienced problems with the air conditioning units. The air conditioning units were barely able to keep the office ten degrees cooler than the outside temperature. Tenant testified that he had sent a letter to landlord explaining that the air conditioning unit needed to be replaced. Due to the insufficient cooling system, tenant experienced a higher employee turnover rate. Deutschmann stated that it cost ALD approximately $4,000 to hire and train new employees. From this evidence, we conclude that tenant presented sufficient evidence to submit the issue of breach of contract to the jury.

Landlord, however, contends he is not liable for damages because paragraph XIV of the written lease agreement provides that "Lessor shall not be liable or responsible for any personal property of Lessee, their employee, customers or other invitees of Lessee." It appears that landlord is contending that this paragraph is an exculpatory or exoneration clause which absolves him from any responsibility for the damages resulting from his failure to repair the roof or replace the air conditioning unit.

Under Missouri law, covenants in leases that relieve the landlord of liability for condition, maintenance, or repair of the leased premises are valid. Govero v. Standard Oil Company, 192 F.2d 962, 964 (8th Cir.1951). Exculpatory clauses, however, are strictly construed. Meyer Jewelry Co. v. Professional Bldg. Co., 307 S.W.2d 517, 521 (Mo.App.1957).

An agreement, express or implied, which undertakes to decrease a landlord's obligation in regard to the condition of the leased premises, will be construed strictly against the landlord. In other words, the extent of the decrease will be kept in as narrow a range as is consistent with the terms of the agreement entered into by the parties.

Mobil Oil Credit Corp. v. DST Realty, Inc., 689 S.W.2d 658 (Mo.App.1985) (quoting Restatement (Second) of Property § 5.6 cmt. d (1977)).

In construing the lease agreement, we follow the general rules of construction governing contracts. Kamada v. RX Group Ltd., 639 S.W.2d 146, 148 (Mo.App.1982). Two basic principles for construing contracts are: 1) all provisions of a contract must, if possible, be given effect ¹, and 2) a contract should be given a reasonable construction. ²

Here, the lease agreement specifically provided that landlord was to repair the roof and replace the air conditioning units. The lease, however, also provided that landlord was not responsible for tenant's personal property. The lease agreement can be construed to give effect to both the exculpatory clause and the covenants to repair by construing the exculpatory clause to exonerate landlord from liability for personal property, except for damages caused by his failure to repair the roof or replace the air conditioning unit. To hold otherwise, would render the...