Kleyle v. Deogracias

• Decision Date: 28 June 2016
• Docket Number: No. 2014–CA–01673–COA.,2014–CA–01673–COA.
• Citation: 195 So.3d 234
• Parties: Gordon KLEYLE, Appellant v. Myrna DEOGRACIAS and Philip Deogracias, Individually and/or d/b/a The Railroad Café, LLC, Appellees.
• Court: Mississippi Court of Appeals

195 So.3d 234

Gordon KLEYLE, Appellant
v.
Myrna DEOGRACIAS and Philip Deogracias, Individually and/or d/b/a The Railroad Café, LLC, Appellees.

No. 2014–CA–01673–COA.

Court of Appeals of Mississippi.

June 28, 2016.

195 So.3d 234

Brian Randolph Bledsoe, F. Douglas Montague III, Hattiesburg, attorneys for appellant.

Richard C. Fitzpatrick, Poplarville, T. Jackson Lyons, Jackson, attorneys for appellees.

EN BANC.

WILSON, J., for the Court:

¶ 1. Gordon Kleyle sued Myrna and Philip Deogracias and The Railroad Café LLC for unpaid rent under a lease. The Deograciases¹ eventually moved to dismiss, arguing that Kleyle's claim was barred because the lease was actually a sublease; Kleyle's prime lease with the Alabama Great Southern Railroad Company (“AGS”) prohibited subleasing without AGS's consent; and the sublease was void because Kleyle failed to obtain AGS's consent. The circuit court agreed with the Deograciases and granted their motion to dismiss. However, we conclude that the anti-assignment provision of the Kleyle–AGS lease was for the benefit of AGS alone. Therefore, the Deograciases lack standing to raise the provision as a defense to their obligation to pay rent under the sublease. Accordingly, we reverse and remand for further proceedings.

FACTS AND PROCEDURAL HISTORY

¶ 2. Kleyle alleges that on December 22, 2007, he entered into an oral agreement with the Deograciases to lease them a building in Poplarville. The Deograciases intended to use the building to operate a new restaurant, The Railroad Café. Kleyle contends that the oral lease was reduced to writing on February 9, 2008.

195 So.3d 235

Under the terms of the written lease, the Deograciases were to pay $1,850 per month in rent, the lease was to run from February 2008 through February 2010, and the Deograciases could cancel the lease at any time by providing Kleyle with ninety days' written notice. According to Kleyle, the Deograciases stopped paying rent as of August 1, 2008, and they gave oral notice on June 23, 2009, that they were vacating the building.

¶ 3. On May 18, 2011, Kleyle filed a complaint in the Pearl River County Circuit Court against the Deograciases and The Railroad Café, claiming that they had defaulted on the lease agreement. Kleyle sought $24,000 in past-due rent, damages for personal property that he claimed the Deograciases had removed from the premises, and the cost of repairs to equipment and appliances.

¶ 4. In June 2011, The Railroad Café answered Kleyle's complaint. The answer asserted that the written lease attached to Kleyle's complaint was forged, that there was only an oral month-to-month lease, and that oral notice of cancellation was provided to Kleyle when the restaurant ceased operations in October 2008. The answer also alleged that on November 17, 2008, the Deograciases had sold The Railroad Café to Rudy Packard, who had operated the restaurant since that time and had paid Kleyle rent of $200 per week through June 23, 2009. The Deograciases filed a separate motion to dismiss, arguing that they were not personally liable because the only parties to the lease agreement were Kleyle and The Railroad Café. The circuit court denied the Deograciases' motion to dismiss in August 2011.

¶ 5. In January 2013, the Deograciases filed a motion to add AGS as a party to the case on the ground that AGS owned the property at issue in this litigation, which it had subleased to Kleyle. In response, Kleyle argued that AGS was not a necessary party because the Deograciases' debt was to him, not AGS, and because AGS owned only the land, not the leased building. However, the circuit court granted the Deograciases' motion, stating, “[AGS] ... is a necessary party to those proceedings, and as such, shall be joined as a party.”

¶ 6. On June 11, 2013, the Deograciases filed an amended answer, raising as a defense, for the first time, that Kleyle had violated the anti-assignment/sublease provision contained in the lease between AGS and Kleyle. That provision states in relevant part:

12. Assignment. Tenant may not assign this Lease or any interest thereunder or sublet the Premises in whole or in part or allow all or a portion of the Premises to be used by a third party without the prior written consent of Landlord.... All requests for an assignment or sublease shall be accompanied by a copy of the proposed assignment or sublease agreement and an administrative fee in the amount of $750.00. Any assignee shall become liable directly to the Landlord for all obligations of Tenant hereunder. No such assignment or sublease nor any subsequent amendment of the Lease shall release Tenant or any guarantor of Tenant's obligations hereunder. If any such subtenant or assignee pays rental in excess of the rental due hereunder or if Tenant receives any other consideration on account of any such assignment or sublease, Tenant shall pay to Landlord, as additional rent, one-half of such excess rental or other consideration upon the receipt thereof. Any assignment or sublease made in violation of this Paragraph 12 shall be void and shall constitute a default hereunder.

195 So.3d 236

¶ 7. After being served with the Deograciases' amended answer, AGS filed a motion to be dismissed as a party, stating that it was ...