Iron Steamer, Ltd. v. Trinity Restaurant, Inc.

• Decision Date: 06 July 1993
• Docket Number: No. 923SC800,923SC800
• Citation: 431 S.E.2d 767,110 N.C.App. 843
• Court: North Carolina Court of Appeals
• Parties: IRON STEAMER, LTD., Plaintiff, v. TRINITY RESTAURANT, INC. and Joel D. Cantor, Defendants.

Page 767

431 S.E.2d 767

110 N.C.App. 843

IRON STEAMER, LTD., Plaintiff, v. TRINITY RESTAURANT, INC. and Joel D. Cantor, Defendants.

No. 923SC800.

Court of Appeals of North Carolina.

July 6, 1993.

Bennett, McConkey, Thompson and Marquardt, P.A. by Samuel A. McConkey, Jr., Morehead City, for plaintiff-appellant-appellee.

Darden, Coyne, Simpson & Harris, P.A. by H. Buckmaster Coyne, Jr., Morehead City, for defendants-appellees-appellants.

WELLS, Judge.

Plaintiff sets forth three arguments in support of six assignments of error for our review. First, plaintiff contends the trial court erred in finding that plaintiff breached the lease agreement, where plaintiff failed to render the premises tenantable for the intended purpose (1) by failing to replace the water heater, (2) by failing to replace or otherwise repair the exterior door, and (3) by failing to replace the inadequate heating and air conditioning system.

In general, where a court sits without a jury, its findings of fact are "conclusive on appeal if there is evidence to support them, even though the evidence might sustain findings to the contrary." Williams v. Insurance Co., 288 N.C. 338, 218 S.E.2d 368 (1975). In the instant case, there is ample evidence to support the court's findings as to each of the three items of breach.

Defendants presented evidence that the hot water heaters ran out of hot water too quickly in violation of health department requirements and that defendant lessee asked plaintiff to install a new heater. After plaintiff refused defendant lessee's request, defendant lessee paid $1,200.00 to purchase and install a new water heater. The pertinent portion of the lease provides, "facilities disrepair that solely causes a loss of the required [sanitation] rating shall be LANDLORD'S responsibility." (paragraph 8.a. of the Lease Agreement). The lease also limits defendant lessee's responsibility to minor repairs and maintenance of equipment and fixtures. In light of these provisions and the evidence presented, the trial court's finding that such inaction by the plaintiff constituted a breach of the lease agreement was proper.

Defendants also introduced evidence that an exterior door, facing the ocean, routinely blew open allowing air into the restaurant. Upon plaintiff's refusal to replace the door, defendant lessee purchased a new storm door. Both parties agree that the portion of the lease governing the storm door is paragraph 8.d. which requires a landlord to "... maintain all the exterior of the subject premises specifically including a leakproof roof and walls...." The trial court reasonably interpreted this provision as requiring action by plaintiff to replace the exterior door and therefore its findings are binding upon us.

Defendants also presented evidence that the heating and air conditioning unit was not functioning properly. There is no question that plaintiff never replaced the heating and air conditioning system in the restaurant facility. The lease contains a specific provision regarding air conditioners to the following effect: "LANDLORD agrees to put all air conditioners in proper working order, and TENANT agrees to maintain and make minor repairs thereafter, excepting motors and compressors which may need replacement without cause of TENANT." (paragraph 8.e. of the Lease Agreement). Clearly, there is sufficient evidence to find that failure to repair or replace the heating and air conditioning unit by the plaintiff lessor was a breach of the lease. This assignment of error is overruled.

Plaintiff next challenges the trial court's findings of fact with respect to lost profits and the award of damages based on those findings. We agree.

In order to recover damages for lost profits, the complainant must prove that except for the breach of contract, profits would have been realized, and he must ascertain such losses with "reasonable certainty." Olivetti Corp. v. Ames Business Systems, Inc., 319 N.C. 534, 356 S.E.2d 578, petition denied, 320 N.C. 639, 360 S.E.2d 92 (1987). North Carolina courts have long held that damages for lost profits will not be awarded based upon hypothetical or speculative forecasts of losses. Our courts, however, have not gone so far as to apply the "New Business Rule" which categorically precludes an award of damages for lost profits where the party seeking damages is a new business with no record of profitability. See, Olivetti, supra. Instead, we have chosen to evaluate the quality of evidence of lost profits on an individual case-by-case basis in light of certain criteria to determine whether damages have been proven with "reasonable certainty."

Plaintiff argues that defendants have failed to prove with the requisite degree of certainty, the amount of lost profits defendants should recover due to the alleged breach of contract by plaintiff. The burden of proving damages is always on the party claiming injury. See Olivetti, supra. Defendants have failed to meet this burden of proof in that they have presented insufficient evidence at trial to ascertain or measure lost profits with "reasonable certainty."

Defendant lessee began...