Moore v. Kriebel, 97-CA-00098-COA.

• Decision Date: 20 April 1999
• Docket Number: No. 97-CA-00098-COA.,97-CA-00098-COA.
• Citation: 742 So.2d 139
• Parties: James R. MOORE and Jeanine Mah, Appellants, v. Patricia Gaines KRIEBEL, Ben M. Gaines, Jr. and Jodie Gaines Johnson, Appellees.
• Court: Mississippi Court of Appeals

742 So.2d 139

James R. MOORE and Jeanine Mah, Appellants, v. Patricia Gaines KRIEBEL, Ben M. Gaines, Jr. and Jodie Gaines Johnson, Appellees.

No. 97-CA-00098-COA.

Court of Appeals of Mississippi.

April 20, 1999.

James R. Moore, Jr., Ridgeland, Barry Joe Walker, Tupelo, Glenn Gates Taylor, Ridgeland, Attorneys for Appellants.

C. Michael Malski, Amory, Attorney for Appellees.

BEFORE THOMAS, P.J., LEE, AND SOUTHWICK, JJ.

SOUTHWICK, J., for the Court:

¶ 1. This is an appeal from a judgment of the Lee County Chancery Court granting relief from forfeiture of a commercial lease for nonpayment of taxes. There are five issues: 1) was notice demanding payment of taxes actually intended as notice; 2) was notice technically sufficient; 3) were lessees entitled to equitable relief from forfeiture; 4) was reliance on the advice of counsel a good faith mistake; and 5) are other equitable doctrines applicable? We find no error and affirm.

FACTS

¶ 2. The lessors sought termination of a lease for nonpayment of property taxes. The lease in issue was executed in 1972 for a 35-year term by Joseph Henry Moore and his wife Ophelia, both of whom are deceased. The plaintiffs Jeanine Mah and James Moore, Sr., are the successors to the original lessors. The defendants' interest was acquired in 1979 and 1981 by Ben Gaines, Sr., who in 1992 assigned his interest as lessee to his three adult children. Those children are the defendants Patricia Gaines Kreibel, Ben M. Gaines, Jr., and Jodie Gaines Johnson. The lessees for convenience are called the Gaineses. The property is a shopping center named Food World Plaza. Sublessees include a bank, grocery store, drug store, a nightclub, and other businesses.

¶ 3. The reason for nonpayment of taxes was that the Gaineses were attempting to pressure sublessees who operated a nightclub to vacate the property. Those sublessees were Walter E. Catledge and Terry D. Catledge. Noise and other disturbances from the Catledge's nightclub caused the Gaineses to receive complaints from other tenants. A suit was filed by the Gaineses against the nightclub in 1993 for constituting a nuisance, and also alleging nonpayment of rent and taxes.

¶ 4. There were four separate parcels for tax purposes. Taxes on three parcels were paid but were withheld on the nightclub parcel. When the taxes became delinquent, the lessor's CPA, Christopher Hutchinson, sent a written request for the payment to Ms. Kreibel on December 15, 1993. A second request was made to Ms. Kreibel in a letter dated July, 26, 1994. Hutchinson stated Kreibel called him on August 18, 1994, and explained why the taxes had not been paid. Hutchinson stated that, although he sympathized, the taxes needed to be paid. He further testified that Kreibel requested a strongly worded letter about this situation in order to help put pressure on the Catledges. Hutchinson said he could not do this and referred Ms. Kreibel to attorney David Butts. There was no definite commitment by Butts to comply, but by letter sent to Kreibel and dated September 1, 1994, Butts demanded payment and threatened default should payment not occur. This letter is a major issue in this litigation as it was evidence that the landlord had in fact demanded payment of the taxes. To the Gaineses it is only evidence that Butts, on behalf of the lessors, was assisting in pressuring the nightclub to depart.

¶ 5. The Gaineses' attorney, T.R. Trout, called Butts after Kreibel sent him a copy of this letter. He informed Butts that the Gaineses wished to put off paying the taxes in order to exert pressure on the Catledges. Trout testified that Butts told him the taxes had to be paid. Trout also said that Butts left him with the impression that payment was not urgent. Trout believed that he later called Kreibel and discussed the situation but did not believe he had told her the matter was urgent. Kreibel could not recall the conversation one way or the other. By letter of September 6, 1994, Hutchinson again gave notice to Kreibel that the back taxes needed to be paid.

¶ 6. The taxes still were not paid and the land was sold at a tax sale on August 29, 1994. The plaintiffs-lessors redeemed the land on September 20, 1994, paying the back taxes, interest and penalties totaling $7,692.89. They then instituted an action to have the lease canceled for nonpayment of taxes. A settlement was reached with James Moore, Sr., and he is not a party to this appeal. The chancellor ultimately held that for equitable reasons, the Gaineses had not forfeited their interests under the lease.

DISCUSSION

Issue 1: Was clear and effective notice ever sent?

¶ 7. The chancellor found that, under the circumstances, it was reasonable for Kreibel to conclude that the letter of September 1, 1994, did not represent a genuine manifestation of intent by the landlord to demand payment of the back taxes. The effort to force the nightclub out is at the center of that conclusion:

(1) [Kreibel] had asked the Moore accountant for it, (2) she had spoken to the Moore estate attorney the day before the letter was sent, (3) no complaint had been made about the taxes not being paid until July 26, 1994, and (4) perhaps, most telling, the letter itself demanded that "these taxes be paid prior to September 15, 1994, in order to avoid sale of the leased property by the tax collector of Lee County."

¶ 8. Moreover, since the land had already been sold for delinquent taxes on August 29, 1994, the chancellor concluded that the only logical reason for the letter was to assist the Gaineses in their litigation against the Catledges.

¶ 9. Mah counters that the notice was not misleading. Kreibel testified that her only reason for not paying the taxes was the legal advice of Trout, not that she believed that the demand from the lessors was a pretense. Butts and Hutchinson testified they had not given Kreibel or Trout any reason to believe that the taxes need not be paid. By this Mah argues that neither Butts nor Hutchinson could be seen as acquiescing in the plan to pressure the Catledges.

¶ 10. The supreme court has held that in reviewing a chancellor's decision, "the Court will not disturb the factual findings of a chancellor when supported by substantial evidence unless the Court can say with reasonable certainty that the chancellor abused his discretion, was manifestly wrong, clearly erroneous or applied an erroneous legal standard." Cummings v. Benderman, 681 So.2d 97, 100 (Miss.1996). There is evidence from the communications between Kreibel, Hutchinson, and Butts, to support a conclusion that Kreibel reasonably assumed that the letter of September 1, 1994 was the strongly worded letter that she had requested. This finding is not against the overwhelming weight of the evidence.

¶ 11. The effect of that assumption being reasonable is addressed in the third issue.

Issue 2: Compliance of the notice with lease and legal requirements.

¶ 12. The chancellor found that in various ways the notice failed to satisfy the terms of the lease for declaring the lease in default. Lease section number 23 provides that if the lease is breached, "then the Landlord, at its election, may terminate this lease upon five (5) days written notice to the tenant to such effect, and unless Tenant shall have cured the default complained of within said five-day period, this lease shall be deemed terminated upon the expiration of said five-day period...." The chancellor found that the notice was defective because it was sent by the landlord's attorney and not the landlord, did not state the exact amount of taxes due, and despite that the letter said a forfeiture would be declared if the taxes were left unpaid, no formal forfeiture was ever declared.

¶ 13. However, because we find that it is irrelevant whether the notice satisfied the technical requirements for declaring the lease terminated, we do not discuss the arguments under this issue. Even if the notice were sufficient technically, a forfeiture still validly was denied.

Issue 3: Propriety of equitable relief in the absence of fault on the part of the lessor.

¶ 14. Relief from forfeiture is said both to be "favored" and to be permitted on only slight grounds. However, such language does not mean that relief is automatic. The parties disagree as to whether the person who is attempting to avoid forfeiture must prove that the other party contributed to the default. Both parties discuss at some length language regarding this and other issues from a supreme court decision addressing grounds for forfeiture of a lease. Koch v. H & S Development Co., 249 Miss. 590, 163 So.2d 710 (1964). We agree that Koch is central to the analysis. Phrases from that opinion can be found to support each viewpoint regarding the necessary role of the lessor before a forfeiture can be avoided. In it can be found this:

The rule is well recognized that equity will not relieve against a forfeiture in case of default of performance due to inadvertence, neglect or ignorance to which lessor in no way contributed.

Id., 163 So.2d at 727-28. The same paragraph refers to other rules, then concludes with this:

Equity will not relieve against mere forgetfulness and will not intervene where there is no fraud, accident or mistake on account of which the lessee neglected to avail himself of the option [to renew a lease].

Id. at 728. Though "fraud" would be that of the lessor (a lessee would not receive relief from his own fraud), should the reference to "accident or mistake" be limited to mistakes by the lessor, or does it more reasonably mean mistakes by the lessee?

¶ 15. Koch, in fact, may have too many statements of the guiding principles. Part of the reason for so many iterations of what is required to avoid forfeiture is that the principal authorities for the rules are legal encyclopedia and annotations. Id. at 724, 728. By their very nature, such sources collect concepts from a variety of jurisdictions and list them with supporting...