Kaydon Acquisition v. America Central Industries
| Decision Date | 12 December 2001 |
| Docket Number | No. C01-3063-MWB.,C01-3063-MWB. |
| Citation | 179 F.Supp.2d 1022 |
| Parties | KAYDON ACQUISITION CORPORATION V, a Delaware Corporation, Plaintiff, v. AMERICA CENTRAL INDUSTRIES, INC., a/k/a ACI, Inc., an Iowa Corporation, Defendant, and America Central Industries, Inc., a/k/a ACI, Inc., an Iowa Corporation, Defendant/Counterclaimant, v. Kaydon Acquisition Corporation V, a Delaware Corporation, Defendant to Counterclaim. |
| Court | U.S. District Court — Northern District of Iowa |
Richard H. Moeller, Berenstein, Moore, Berenstein, Heffernan & Moeller, L.L.P., Sioux City, IA, for Kaydon Acquisition Corp. V.
Paul D. Lundberg, Hellige, Lundberg, Meis, Erickson & Frey, Sioux City, IA, Redge O. Berg, Berg and Howe, Spencer, IA, for American Central Indus., Inc.
TABLE OF CONTENTS
I. INTRODUCTION AND BACKGROUND ..........................................1026
II. FINDINGS OF FACT .....................................................1027
III. LEGAL ANALYSIS .......................................................1032
A. Forcible Entry and Detainer .......................................1032
B. Analysis Of Kaydon's Alleged Defaults .............................1033
1. Items no longer claimed to constitute a default ................1033
2. Certificate of insurance requirement ...........................1033
3. Acts causing increase in insurance rates .......................1034
4. Environmental hazzards .........................................1035
5. Damages to wall ................................................1036
6. Unauthorized alterations or modifications ......................1037
a. The concrete pad ............................................1038
b. The storage shed ............................................1039
c. The door openings ...........................................1039
d. The removal of a section of wall ............................1039
e. Modifications to the facility for new paint line ............1040
C. Analysis Of Whether Forfeiture Required ...........................1040
IV. CONCLUSION ...........................................................1042
On August 6, 2001, plaintiff Kaydon Acquisition Corporation V ("Kaydon") filed a complaint for declaratory judgment against defendant American Central Industries, Inc. ("ACI"). Plaintiff Kaydon is the lessee of an industrial premises owned by defendant ACI. Plaintiff Kaydon seeks a declaratory judgment that it is not in default under the terms of the lease between it and ACI. Plaintiff Kaydon also seeks a declaratory judgment that ACI is not entitled to evict it from the premises. Defendant ACI filed its answer in this matter on September 4, 2001. In its answer, defendant ACI denied plaintiff Kaydon's claims, and asserted a single counterclaim for forcible entry and detainer against Kaydon. ACI asserts in its counterclaim that Kaydon is in default under the terms of the lease because of the existence of nineteen uncorrected violations of the lease. On November 14, 2001, defendant ACI filed an amended answer and counterclaim. In its amended counterclaim for forcible entry and detainer, ACI again requests that the court remove Kaydon from the premises. ACI also requests that the court award it money damages for damages to the premises and for any consequential damages resulting from Kaydon's alleged breach of the terms of the lease. ACI also requests money damages from Kaydon for breach of a separate Sales Representation Agreement. Finally, ACI seeks a declaratory judgment that a covenant not to compete in a sales agreement between ACI and Kaydon is unenforceable.
With respect to defendant ACI's counterclaim for forcible entry and detainer, trial was held on November 27, 2001, in Sioux City, Iowa. Plaintiff Kaydon was represented by Richard H. Moeller of Berenstein, Moore, Berenstein, Heffernan & Moeller, L.L.P., Sioux City, Iowa. Defendant ACI was represented by Paul D. Lundberg of Hellige, Lundberg, Meis, Erickson & Frey, Sioux City, Iowa, and Redge O. Berg of Berg and Howe, Spencer, Iowa.
The court will begin with its findings of fact and then turn to its legal analysis and conclusions of law regarding defendant ACI's counterclaim for forcible entry and detainer.
Plaintiff Kaydon is a corporation organized under the laws of the State of Delaware with its principal place of business in Ann Arbor, Michigan. Defendant ACI is an Iowa Corporation doing business in Pocahontas County, Iowa. ACI is owned by Lloyd Mefferd and Floyd Mefferd (collectively "the Mefferds" unless otherwise indicated).
On March 11, 1997, plaintiff Kaydon acquired Gold Star Manufacturing, Inc. ("Gold Star"), a wholly owned subsidiary of ACI for $4,781,896.27. The purchase price was based solely on the outstanding debt of Gold Star, which Kaydon assumed. Gold Star was engaged in the manufacture of hydraulic cylinders. Gold Star operated from a manufacturing facility in Laurens, Iowa, which had been constructed by the Laurens Industrial Foundation and leased to Gold Star pursuant to a lease agreement executed October of 1991.
Gold Star's manufacturing facility consisted of an 80×200 feet building which was constructed in 1986. An 80×200 feet addition to the building was constructed in 1990. A third addition, 50×200 feet, was made to the building in 1995. Each of the additions is an independent structure containing a manufacturing bay fastened to the other two structures. The Mefferds helped in the construction of Gold Star's manufacturing facility.
The building's construction was accomplished by means of bolting together a series of columns and beams that form the superstructure for the facility. The vertical columns are spaced twenty to twenty five feet apart. Girts then connect the columns on the side of the structure.1 Prefabricated outside metal panels are attached to the girts. The roof of the structure consists of beams connected by purlins.2 Prefabricated roof panels are attached to the purlins.
At the time of the sale of Gold Star to Kaydon, Kaydon assumed possession of Gold Star's Laurens production facility under a short-term lease with ACI that was terminable by Kaydon on thirty days written notice. In November of 1997, ACI exercised an option to purchase the Gold Star manufacturing facility for $450,000 from the Laurens Industrial Foundation.
In early 1998 Kaydon and ACI commenced negotiations to enter into a longer term lease. On June 2, 1998, Kaydon and ACI entered into a written lease for the rental of an industrial premises located in Laurens, Iowa ("the Lease"). Section 6(c) of the Lease provides, in part, as follows:
(c) TENANT'S DUTY OF CARE AND MAINTENANCE. Tenant shall, after taking possession of said premises and until the termination of this lease and the actual removal from the premises, at its own expense, care for and maintain said premises in a reasonably safe and serviceable condition, except for structural parts of the building. Tenant will furnish its own interior and exterior decorating. Tenant will not permit or allow said premises to be damaged or depreciated in value by any act or negligence of the Tenant, its agent or employees, ordinary wear and tear excepted. Without limiting the generality of the foregoing, Tenant will make necessary repairs to the sewer, the plumbing, the water pipes and electrical wiring, and all other component parts of the building and land, and Tenant agrees to keep faucets closed so as to prevent waste of water and flooding of premises; to promptly take care of any leakage or stoppage in any of the water, gas or water pipes. The Tenant agrees to maintain adequate heat to prevent freezing of pipes, if and only if the other terms of this lease fix responsibility for heating upon the Tenant. Tenant at its own expense may install floor covering and will maintain such floor covering in good condition. Tenant will be responsible for the plate glass in the windows of the leased premises and for maintaining the parking area, driveways and sidewalks on and abutting the leased premises, if the leased premises include the ground floor, and if the other terms of this lease include premised [sic] so described. Tenant shall make no structural alterations or improvements without the written approval of the Landlord first had and obtained, of the plans and specifications therefore.
The Lease also contains several provisions related to insurance. It provides, in relevant part that:
11. Insurance (a) Landlord and Tenant will each keep its respective property interests in the premises and its liability in regard thereto, and the personal property on the premises, reasonably insured against hazards and casualties; that is, fire and those items usually covered by extended coverage; and Tenant will procure and deliver to the Landlord a certification from the respective insurance companies to that effect. Such insurance shall be made payable to the parties hereto as their interests may appear. TENANT SHALL PAY FOR ALL PREMIUMS FOR THE INSURANCE COVERAGE REQUIRED BY THIS LEASE, WHETHER LANDLORD'S OR TENANT'S RESPONSIBILITY.
(b) Tenant will not do or omit the doing of any act which would vitiate any insurance, or increase the insurance rates in force upon the real estate improvements on the premises.
On June 2, 1998, Kaydon and ACI also entered into an addendum to the Lease ("The Addendum"). The Lease was to run from June 1, 1998, through May 31, 2000, and called for monthly rental payments of $9,885.00. The Addendum provided that the Lease would automatically renew for ten successive one-year terms. Thus, under the Addendum the Lease...
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