Mittleman Properties v. Bank of California, Nat. Ass'n

• Citation: 131 Or.App. 666,886 P.2d 1061
• Parties: MITTLEMAN PROPERTIES, a general partnership, Appellant, v. The BANK OF CALIFORNIA, NATIONAL ASSOCIATION, a national banking association, Respondent, and BCT Partnership, a general partnership, Defendant. 9211-07802; CA A81598.
• Decision Date: 14 December 1994
• Court: Court of Appeals of Oregon

Page 1061

886 P.2d 1061

131 Or.App. 666

MITTLEMAN PROPERTIES, a general partnership, Appellant, v. The BANK OF CALIFORNIA, NATIONAL ASSOCIATION, a national banking association, Respondent and BCT Partnership, a general partnership, Defendant.

9211-07802; CA A81598.

Court of Appeals of Oregon.

Argued and Submitted Oct. 3, 1994.

Decided Dec. 14, 1994.

Robert D. Bulkley, Jr., Portland, argued the cause for appellant. With him on the briefs were David B. Markowitz, Lisa A. Kaner and Markowitz, Herbold, Glade & Mehlhaf, P.C.

Lori Irish Bauman, Portland, argued the cause for respondent. With her on the brief were Steven K. Blackhurst and Ater Wynne Hewitt Dodson & Skerritt.

Before WARREN, P.J., and EDMONDS and LANDAU, JJ.

EDMONDS, Judge.

Plaintiff brought this action to require defendant The Bank of California National Association to remove asbestos from the building that defendant leases from plaintiff. Plaintiff appeals from a summary judgment. ¹ ORCP 47. We reverse.

Summary judgment is proper when there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. Seeborg v. General Motors Corp., 284 Or. 695, 699, 588 P.2d 1100 (1978). On review of the summary judgment, we review the record in the light most favorable to the nonmoving party and draw all reasonable inferences in its favor. Uihlein v. Albertson's, Inc., 282 Or. 631, 634, 580 P.2d 1014 (1978).

The following facts are uncontroverted. In 1971, defendant built what is commonly known as The Bank of California Building in downtown Portland. At the time of construction, the steel structure of the building, including the frame, ceiling and walls, was coated with asbestos, which was a conventional practice in constructing office buildings at that time. Defendant sold the building to plaintiff in 1972 and leased it back. As a part of that transaction, plaintiff and defendant entered into a lease for a term of 29 years with options to renew. The lease requires defendant to pay all expenses, including taxes, utilities, insurance, maintenance and repairs. Defendant occupies several floors of the building and sublets the remainder of the building.

Beginning in 1987 and through early 1989, defendant removed asbestos from slightly less than half of the building. Thereafter, it notified plaintiff that it was suspending the removal of the asbestos indefinitely. In this action, plaintiff seeks to compel defendant to remove the remainder of the asbestos, and it requests other related relief.

Plaintiff's first claim for relief is based on allegations that defendant breached its obligation under the lease to remove the asbestos. In its complaint, plaintiff alleges that the asbestos that has not yet deteriorated will probably do so in the future and that defendant has a duty under the lease to remove the asbestos before it deteriorates. Plaintiff contends that even if the asbestos does not constitute an existing hazard, defendant is obligated to remove it before it becomes a hazard. Plaintiff also alleges that the lease obligates defendant to protect plaintiff from the financial impact of the asbestos on the value of the building.

Defendant maintains that the lease obligates it to remove the asbestos only in the event that the asbestos becomes dangerous or in a state of disrepair, and that because the asbestos is not dangerous, it has no obligation to take further action. Defendant further contends that the lease does not obligate it to address the financial impact of the asbestos on the value of the building. Plaintiff counters that the lease is ambiguous as to both issues and, when properly construed in accordance with the parties' intentions, it requires defendant to complete the removal of the asbestos at this time.

The lease says, in part:

"Subject to the provisions of paragraph 11 [concerning insurable harm to the building], [defendant] covenants, at [defendant's] sole cost and expense, to take good care of the demised premises and to keep the same in good order and condition and to make promptly all necessary repairs.

"[Defendant] covenants not to do or suffer any waste or damage to the demised premises * * *.

"[Defendant] covenants that upon termination of this Lease for any reason whatsoever [defendant] will surrender to [plaintiff] the entire demised premises, together with all improvements, changes, alterations and replacements thereto, in good order and condition except for reasonable wear, use and tear, and loss or damage caused by casualty not covered by insurance."

Whether the lease is ambiguous is a question of law, as is its interpretation. Timberline Equipment v. St. Paul Fire & Marine Ins., 281 Or. 639, 643, 576 P.2d 1244 (1978). An agreement is ambiguous "if it has no definite significance or it is capable of more than one sensible and reasonable interpretation." Deerfield Commodities v. Nerco, Inc., 72 Or.App. 305, 317, 696 P.2d 1096, rev.den. 299 Or. 314, 702 P.2d 1111 (1985). In the absence of any claim of a latent ambiguity, we look to the four corners of the document to determine whether it is ambiguous. See Edwards v. Times Mirror Company, 102 Or.App. 440, 445, 795 P.2d 564 (1990); see also Rodway v. Arrow Light Truck Parts, 96 Or.App. 232, 772 P.2d 1349 (1989).

The lease requires defendant to keep the premises in "good order and condition and to promptly make all necessary repairs." Moreover, the lease obligates defendant not to allow any "waste or damage" to the premises, and on the completion of the term of the lease, to surrender the premises "in good order and condition except for reasonable wear, use and tear * * *." On their face, those provisions require defendant to take action only when the premises are in a state of disrepair. We conclude that the lease is not ambiguous regarding when defendant has an obligation to make repairs. The lease unambiguously requires defendant to make repairs only when they are needed. Nothing in the lease requires defendant to remove asbestos that is not a current health hazard or in a state of disrepair, nor does it require defendant to act if there is a financial impact on the value of the building, but repair is not required.

Also, plaintiff argues that a factual dispute exists as to whether the condition of the asbestos constitutes a present health hazard, which the parties agree would obligate defendant to address the hazard under the terms of the lease. Defendant contends that plaintiff does not allege any current health hazard in its complaint, but rather alleges only a potential hazard and that plaintiff cannot avoid summary judgment by creating a factual dispute on an issue outside of the scope of the pleadings. In Federal Savings and Loan Ins. Corp. v. Johnson, 97 Or.App. 250, 254 n. 4, 776 P.2d 24 (1989), we said, "if there is evidence in the summary judgment record that would justify amending a pleading, we will treat the complaint as if it had been amended." See Hussey v. Huntsinger, 72 Or.App. 565, 569, 696 P.2d 580 (1985). In that light, we turn to the evidentiary record in the summary judgment proceeding.

Both parties presented evidence on the issue of whether the asbestos was in a state of disrepair. Plaintiff submitted a letter written by defendant's building manager in which he said, in part:

"Under no circumstances will any person disturb the asbestos containing fire-proofing monocoat during construction of The Bank of California tower.

"The sprayed fire-proofing is located on the structure's ceiling and perimeter walls. Since the asbestos containing material is friable, some material has fallen on top of the ceiling tile, so the suspended ceiling is to be considered contaminated and therefore cannot be disturbed.

"It is essential that all subcontractors' employees are told this information before entering the work site."

However, an affidavit from the executive director of a company that performs asbestos monitoring for commercial and industrial buildings asserts,

"in cooperation with [defendant] we developed an Operation and Maintenance Program for the Bank of California building * * *.

"3. Pursuant to this Operation and Maintenance Program, monitoring is conducted on a regular basis. Monitoring consists of conducting air quality tests for asbestos fibers throughout the building.

"4. Air quality sampling confirmed that these levels are comparable to asbestos fiber levels found outdoors in an urban area, such as downtown Portland. There is no evidence that such low levels present a measurable health hazard."

Also, based on deposition testimony, an attorney for defendant argued:

"The asbestos in the Bank of California building is not deteriorating, nor is it causing a health hazard."

In response to that argument, plaintiff's attorney filed an affidavit that said:

"Plaintiff has retained an expert who is available and willing to testify to admissible facts and opinions creating a question of fact [that] will be deemed sufficient to controvert the allegations of the Bank * * * and consequently form an adequate basis for the court to deny the Bank's motion to the extent it relies on those allegations." ²

We hold that the evidence, when considered as a whole, creates a genuine issue of material fact as to whether the asbestos presently is in a state of disrepair, and that issue of fact precludes summary judgment under ORCP 47. The trial court erred in granting summary judgment on the first claim.

The trial court also granted summary judgment as to plaintiff's third claim. In substance, plaintiff alleges that, after several years, it was discovered that the presence of asbestos in a building could constitute a health hazard to those persons who worked there, and that, thereafter, after it had appealed a property tax evaluation, defendant entered into an agreement with Multnomah County to remove the asbestos in exchange for reduced property taxes. Plaintiff asserts that as long as defendant...