Mountain Restaurant Corp. v. ParkCenter Mall Associates

• Decision Date: 05 May 1992
• Docket Number: No. 18826,18826
• Citation: 833 P.2d 119,122 Idaho 261
• Parties: MOUNTAIN RESTAURANT CORPORATION, an Idaho corporation, and Michael R. Clune, an individual, Plaintiffs-Appellants-Cross Respondents, v. PARKCENTER MALL ASSOCIATES, an Idaho joint venture, Gary L. Drown, Patrick L. Cindrich, J. Richard Jordan, Richard P. Wilcomb and Timothy R. Wilcomb, individuals, Defendants-Respondents-Cross Appellants. PARKCENTER MALL ASSOCIATES, an Idaho joint venture, Counterclaimant-Cross Appellant, v. MOUNTAIN RESTAURANT CORPORATION, an Idaho corporation, formerly known as Vista Deli, Inc., Counterdefendant-Cross Respondent.
• Court: Idaho Court of Appeals

Page 119

833 P.2d 119

122 Idaho 261

MOUNTAIN RESTAURANT CORPORATION, an Idaho corporation, and Michael R. Clune, an individual, Plaintiffs-Appellants-Cross Respondents, v. PARKCENTER MALL ASSOCIATES, an Idaho joint venture, Gary L. Drown, Patrick L. Cindrich, J. Richard Jordan, Richard P. Wilcomb and Timothy R. Wilcomb, individuals, Defendants-Respondents-Cross Appellants.

PARKCENTER MALL ASSOCIATES, an Idaho joint venture, Counterclaimant-Cross Appellant, v. MOUNTAIN RESTAURANT CORPORATION, an Idaho corporation, formerly known as Vista Deli, Inc., Counterdefendant-Cross Respondent.

No. 18826.

Court of Appeals of Idaho.

May 5, 1992.

Wishney & Elgee, Boise, for appellant. David E. Wishney argued.

Cantrill, Skinner, Sullivan & King, Boise, for respondent. Robert D. Lewis argued.

SILAK, Judge.

This appeal involves the question whether a shopping mall landlord's failure to provide the number of parking spaces specified in a commercial lease constitutes a material breach of that lease. Following a court trial, the district court found that the landlord had breached the contract, but that the breach was not material and that the tenant was not entitled to a rescission of the lease. Both parties have appealed. For the reasons explained below, we affirm the district court's ruling that the landlord breached the lease but that the breach was not a material breach. We also affirm the district court's order regarding attorney fees and costs, but remand for entry of an award of damages to the landlord in connection with a separate wrongful detainer action.

FACTS AND PROCEDURAL BACKGROUND

Mountain Restaurant Corporation (Mountain Restaurant) leased commercial space in the ParkCenter Mall to operate a restaurant called Zac's Grill. The space was leased from ParkCenter Associates (ParkCenter), an Idaho joint venture. Michael Clune, then doing business as Vista Deli, Inc., signed the lease on December 8, 1987, as guarantor.

The lease was to run for a period of seven years. Article V(A) of the lease contract specified that there would be 500 parking spaces at the mall:

Parking: Lessor shall at all times during the term of this Lease including any extension or renewal thereof, maintain a general shopping center upon the property upon which the leased premises are located, which shopping center shall always have as a part thereof, or upon premises immediately contiguous or adjacent thereto, a parking area to furnish parking space without charge to all customers of the shopping center seeking parking, so that there shall be maintained at all times a minimum of 500 parking spaces to be used in the manner further described by this paragraph.

In the course of developing the mall, ParkCenter entered into two agreements which affected the amount of parking at the mall. The first agreement was a parking easement, dated May 16, 1985, which permitted customers of the ParkCenter Mall to park in the Lake Pointe Office Center parking lot which was located to the The second agreement was a Cross-Covenant and Easement Agreement, dated November 7, 1986. This agreement was between ParkCenter and the ParkCenter Pointe Owners Association. It prohibited ParkCenter Mall customers from parking in the spaces on the west side of the mall. Compliance with the terms of the cross-covenant agreement was a specific condition imposed by the City of Boise when it issued the conditional use permit and building permit for the construction of the mall. Though ParkCenter entered into both of these agreements before it signed the lease contract with Clune, it did not provide copies of either of these agreements to him at the time the lease was signed. There is conflicting testimony regarding the question whether Clune had seen a different site development plan, which showed the parking available at Lake Pointe Center, prior to signing the lease.

[122 Idaho 264] north of ParkCenter Mall across Mallard Drive. ParkCenter had to obtain this additional parking because there were only 373 on-site parking spaces, which is approximately 25% fewer than is required by the Boise City Building Code. The easement provided 181 additional parking spaces; however, these spaces were available only on weekday evenings after 5:00 p.m. and on weekends.

In preparing to open Zac's Grill, Clune obtained bank loans and invested a substantial amount of money in finishing the interior of the restaurant space and in installing equipment. Zac's Grill was to be a fast-service lunch restaurant with a moderately priced menu. Clune had been in the restaurant business for several years and successfully operated a fast-service lunch deli in a different area of Boise. The peak period for this type of fast service lunch restaurant is the noon hour. Clune anticipated "turning over" the tables twice during the noon lunch hour.

Zac's Grill opened on September 1, 1988. There were immediate problems with parking due to construction vehicles and mall employees parking in the areas other than the designated employee parking area. Nevertheless, Zac's Grill operated successfully until the Lake Pointe Center Office Building opened and the parking in that lot was restricted. Two other restaurants opened in the north end of ParkCenter Mall in the fall of 1988. TCBY opened two weeks after Zac's grill and Ducks' Bar and Grill opened in early December. All three restaurants were then competing for a limited number of parking spaces. The parking closest to Zac's would become full between noon and 12:30 p.m. each weekday. After that, the lunch traffic would decline precipitously. The evidence also showed, however, that parking was always available at other areas of the mall parking lot.

During the trial, Clune presented testimony from several former customers that they had had difficulty finding a parking place during the lunch hour and had, at times, driven through the parking lot and gone on to someplace else for lunch. Clune himself kept notes in his desk diary on the status of the parking situation. A summary of these notes was admitted as Plaintiff's Exhibit 7; Clune testified that the summary reflected an every day situation and that the lack of available parking was not limited to the specific instances listed on the summary.

Clune informed ParkCenter on several occasions that there were problems due to the lack of adequate parking. The lack of customers caused cash flow problems. Clune stopped making rental payments to ParkCenter. In an attempt to make up for the loss of lunch-time business, Clune bought a delivery truck and started delivering lunch orders outside of the restaurant. Finally, he closed the restaurant and vacated the leased premises on December 20, 1989. At that time, Clune owed ParkCenter approximately $12,000 in unpaid rent.

Mountain Restaurant filed an action for rescission of the lease contract and ParkCenter filed a counterclaim for rent that had accrued before and after Mountain Restaurant vacated the premises. Following a court trial, the district court found that ParkCenter had breached the lease, but that the breach was not a material breach. Consequently, the district court declined to grant a rescission of the contract.

[122 Idaho 265] The district court concluded that ParkCenter was entitled to collect rent for the time that Mountain Restaurant occupied the premises, but that no rent could be recovered for the period after Mountain Restaurant vacated the premises because of ParkCenter's failure to mitigate damages. The district court found that neither party had totally prevailed, and declined to award attorney fees. ParkCenter's claim for costs pursuant to I.R.C.P. 68 was also denied. These appeals followed.

ANALYSIS

1. Material Breach.

A material breach of contract is a breach so substantial and fundamental that it defeats the object of the parties in entering into the contract. Huggins v. Green Top Dairy Farms, 75 Idaho 436, 447, 273 P.2d 399, 405 (1954); Enterprise, Inc. v. Nampa, 96 Idaho 734, 740, 536 P.2d 729, 735; Crowley v. LaFayette Life Ins. Co., 106 Idaho 818, 821, 683 P.2d 854, 857 (1984); Aldape v. Lubcke, 107 Idaho 316, 317-18, 688 P.2d 1221, 1222-23 (Ct.App.1984). A material breach affects the substantive rights of the parties and a rescission of the contract may be ordered. Crowley, supra; Aldape, supra. Rescission is not warranted where the breach is incidental and subordinate to the main purpose of the contract. Huggins, supra. There is no material breach of contract where substantial performance has been rendered. See J. CALAMARI & J. PERILLO, THE LAW OF CONTRACTS § 11-22 (2d ed. 1977). "Substantial performance is performance which despite deviation or omission provides the important and essential benefits of the contract to the promisee." Gilbert v. City of Caldwell, 112 Idaho 386, 394, 732 P.2d 355, 363 (Ct.App.1987).

Whether a breach of contract is material is a question of fact. See Pugmire v. Sandy, 102 Idaho 346, 347, 630 P.2d 138 (1981); Enterprise, supra; Commerce Mortgage Co. v. Industrial Park, 101 Or.App. 345, 791 P.2d 132, 136 (1990) (opinion adhered to as modified, reconsideration allowed (on other grounds)), In re Industrial Park Col., 102 Or.App. 284, 793 P.2d 894 (1990). Our role in reviewing a factual finding of material breach is limited. We do not weigh the evidence, nor do we substitute our view of the facts for the view of the trial judge. E.g., Angleton v. Angleton, 84 Idaho 184, 370 P.2d 788 (1962). We merely determine whether the finding is supported by substantial, albeit conflicting, evidence in the record. If so, the finding cannot be deemed clearly erroneous. Rasmussen v. Martin, 104 Idaho 401, 404, 659 P.2d 155, 158 (Ct.App.1983). We regard evidence as "substantial" if a reasonable trier of fact would accept it and rely upon it in determining whether a disputed point of fact has been proven. IDAHO APPELLATE HANDBOOK §§ 3.3.1 and 3.3.2.2 (Idaho Law Foundation, Inc. 1985).

In its memorandum decision, the...