Moreno v. Jazzabi
| Decision Date | 29 July 2022 |
| Docket Number | M2021-00024-COA-R3-CV |
| Parties | KENIA MORENO v. MEHREBAN JAZZABI, EXECUTRIX OF ESTATE OF BEN JAZZABI |
| Court | Tennessee Court of Appeals |
Session July 6, 2022
Appeal from the Circuit Court for Davidson County No. 14C2126 Amanda Jane McClendon, Judge
A landlord and tenant entered into a lease-purchase agreement. Near the end of the lease term, the tenant sought to exercise the purchase option. The landlord claimed that the tenant could not do so because she defaulted on rent payments. The landlord also argued that he terminated the agreement before the tenant exercised the option. The trial court rejected both arguments and granted the tenant specific performance of the purchase option. We affirm.
Tenn R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed
Daniel Turklay, Mt. Juliet, Tennessee, for the appellant, Mehreban Jazzabi, executrix of the Estate of Ben Jazzabi.
Dan R Alexander, Old Hickory, Tennessee, for the appellee, Kenia Moreno.
W NEAL MCBRAYER, J., delivered the opinion of the court, in which D. MICHAEL SWINEY, C.J., and FRANK G. CLEMENT, JR., P.J., M.S., joined.
Sometime in 2009 or 2010, Ben Jazzabi met Mateo Lux Bach at a Home Depot. Mr. Jazzabi was looking for someone to fix up improved property he owned in Antioch, Tennessee. Mr. Bach agreed to do so in exchange for living there without paying rent.
After Mr. Bach worked on the property for some time, Mr. Jazzabi wanted to sell it. Mr. Bach told him that his sister-in-law, Kenia Moreno, was interested. Later, Ms. Moreno and Mr. Jazzabi signed a "Residential Lease Agreement for Single-Family Dwelling."
The lease agreement ran from June 1, 2011, to May 31, 2014, and required rent of $500 per month. If rent was not paid when due, Mr. Jazzabi had the right to terminate the agreement. Under a "special stipulation" in the agreement, Ms. Moreno could purchase the property. The stipulation required a $10,000 non-refundable deposit to be used as earnest money. And it provided that the $500 per month rent would go toward the purchase price. By its terms, the special stipulation controlled if it conflicted with any other provision of the lease agreement.
In October 2011, Mr. Jazzabi sent Ms. Moreno a letter complaining that she never made the full earnest money deposit. And he claimed that she was behind on rent. In May 2012, he sent her another letter with the same complaints and threatened eviction. Mr. Jazzabi sent Ms. Moreno yet another letter in June 2013. The letter provided that she had "fallen further behind" in her payments. He also wrote that "the contract is considered void." But Ms. Moreno remained on the property. And Mr. Jazzabi continued accepting payments.
Near the end of the lease term, Ms. Moreno wanted to exercise her option to purchase the property. She told Mr. Jazzabi, asked for a payoff amount, and requested a closing. Mr. Jazzabi refused. Ms. Moreno then sought legal counsel, who wrote a letter to Mr. Jazzabi. The letter, dated May 14, 2014, demanded that Mr. Jazzabi "close on the property and execute a deed to Ms. Moreno." When Mr. Jazzabi still refused, Ms. Moreno sued him in circuit court for specific performance. Soon after, Mr. Jazzabi filed a detainer warrant against Ms. Moreno in general sessions court for possession of the property.[2]
The trial of the circuit court action focused on whether Ms. Moreno had the right to exercise the option. How much money Ms. Moreno paid under the contract was hotly contested. A ledger that purported to reflect each payment was admitted into evidence.
Ms. Moreno claimed that she was never behind on payments. She testified that she made some payments in cash, but Mr. Jazzabi did not provide receipts for all the cash payments. So, she explained, the ledger did not reflect all her payments. And she argued that, even if she were in default on the payment of rent, the default did not prevent her from exercising the purchase option.
Mr. Jazzabi claimed that Ms. Moreno was in default on payments. He agreed that she made some payments in cash. But he testified that he provided receipts for all cash payments. So the ledger did, in fact, reflect all of Ms. Moreno's payments. And those payments did not add up to the amount owed under the lease agreement. Because of the default, Mr. Jazzabi argued that Ms. Moreno could not exercise the purchase option. He also argued that she could not exercise the option because he terminated the lease agreement with the letters he sent her.
The trial court found that the full earnest money deposit was made, but not all at once. And further payments under the agreement were "sporadic." Payments would become delinquent, and Ms. Moreno would only make partial payments to make up for it. But Mr. Jazzabi accepted them anyway, even after his letters threatening eviction and seeking to "void" the contract. The court also reasoned that the purchase option was separate from the lease terms. So a breach of the lease would not prevent Ms. Moreno from exercising the option. Instead, Mr. Jazzabi "had an absolute duty to come to a closing." If Ms. Moreno was delinquent, it was "a question of amount," not "an excuse for non-compliance" with the purchase option. Ms. Moreno was thus entitled to specific performance.
Because this was a bench trial, our review is de novo on the record with a presumption that the trial court's factual findings are correct, unless the evidence preponderates otherwise. TENN. R. APP. P. 13(d). Evidence preponderates against a finding of fact if the evidence "support[s] another finding of fact with greater convincing effect." Rawlings v. John Hancock Mut. Life Ins. Co., 78 S.W.3d 291, 296 (Tenn. Ct. App. 2001). We review the trial court's conclusions of law de novo with no presumption of correctness. Kaplan v. Bugalla, 188 S.W.3d 632, 635 (Tenn. 2006).
On appeal, Mr. Jazzabi's estate[3] argues that he terminated the lease agreement before Ms. Moreno exercised the purchase option. The estate claims that he did so when he declared the contract "void" in his June 2013 letter. Even if there was no termination, the estate contends that Ms. Moreno committed a material breach that extinguished the option. Specifically, Ms. Moreno failed to satisfy her "financial obligations to Mr. Jazzabi."
As the estate recognizes in its brief, the trial court impliedly found that there was no termination. Whether a party has terminated a contract is a question of fact. 17A AM. JUR. 2D Contracts § 514, Westlaw (database updated May 2022); see Ballard v. N. Am. Life &Cas. Co., 667 S.W.2d 79, 84 (Tenn. Ct. App. 1983); Cameron v. J. C. Lawrence Leather Co., 342 S.W.2d 65, 66 (Tenn. Ct. App. 1960) ().
Here, the evidence does not preponderate against the court's implicit finding that the lease agreement was not terminated. Despite declaring the lease agreement "void" in June 2013, Mr. Jazzabi continued accepting payments thereafter without reservation and allowed Ms. Moreno to remain in possession of the property. Under the Uniform Residential Landlord and Tenant Act, a landlord that "accepts rent without reservation and with knowledge of a tenant default . . . condones the default and thereby waives such landlord's right and is estopped from terminating the rental agreement as to that breach." Tenn. Code Ann. § 66-28-508 (2015). It was not until June 2014-after the expiration of the agreement's term and Ms. Moreno's exercise of the purchase option-that Mr. Jazzabi sought possession of the property through a detainer action.
As for the estate's claim that Ms. Moreno committed a material breach that extinguished the option, the estate concedes that "[t]he trial court . . . makes no explicit ruling as to whether [Ms. Moreno] was in breach of contract." Instead, the estate argues ...
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