Nate v. Galloway, 3-479A91

• Decision Date: 27 August 1980
• Docket Number: No. 3-479A91,3-479A91
• Citation: 408 N.E.2d 1317
• Parties: George J. NATE, Jr., Plaintiff-Appellant, v. Fred GALLOWAY and Gail Galloway, Defendants-Appellees.
• Court: Indiana Appellate Court

Page 1317

408 N.E.2d 1317

George J. NATE, Jr., Plaintiff-Appellant, v. Fred GALLOWAY and Gail Galloway, Defendants-Appellees.

No. 3-479A91.

Court of Appeals of Indiana, Third District.

Aug. 27, 1980.

Rehearing Denied Oct. 3, 1980.

William L. LaBre, Edwardsburg, Mich., for plaintiff-appellant.

Marcia K. Sowles, South Bend, for defendants-appellees.

HOFFMAN, Judge.

This appeal concerns a landlord-tenant dispute in which the trial court found the landlord had breached the covenant of quiet enjoyment and awarded the defendants-tenants $234.67 in compensatory damages, $3,500 in punitive damages and cost of the action. The following statement of facts is taken primarily from the memorandum accompanying the order of the trial court.

On June 27, 1977, defendants Fred and Gail Galloway entered into a written lease with Oxford Development Corporation (Oxford) for an apartment located at 406 South 27th Street, South Bend, Indiana. That lease provided for a monthly rental of $110, possession by the Galloways for one year, and also contained several other provisions. At or near the time of taking possession of the apartment in July 1977, the Galloways provided Oxford with a list of necessary repairs to the apartment, pursuant to the landlord's request.

The incidents giving rise to this action began on August 4, 1977, the day that plaintiff George Nate purchased the Galloways' apartment and the adjoining apartment. On that date, Nate came to the Galloways' apartment, introduced himself, informed them that he was their new landlord and that their lease with Oxford was void. He also stated that their rent would be increased to $150 per month on September 1, and a new lease would be signed by Nate and the Galloways. The rental increase announced by Nate would have exceeded thirty-six per cent of the monthly rental obligation; the lease between the Galloways and Oxford allowed for an increase of fifteen per cent with thirty days' notice.

Nate conducted no inspection of the apartment on August 4, but returned a week or two later for an inspection. He found some problems with the apartment. Sometime toward the end of August, the Galloways informed Nate that their stove would not close properly.

On August 29, 1977 Nate appeared at the Galloway apartment and demanded that they sign a new lease. The Galloways demurred and requested time to consult their attorney. Nate gave them twenty-four hours. Upon Nate's return the next night, the Galloways informed Nate that they had contacted their attorney and had been advised that the lease with Oxford was valid. Nate then presented the Galloways with a document entitled "Legal Notice to Quit." That document read in part:

"You are Hereby Notified, To deliver to me, at the expiration of 4 days days (sic) from the time of receiving this notice, the possession of the following premises . . . now held of me by you as tenant, original notice was served to you on August 4, 1977 by me and you have 4 days remaining to vacate."

In response to Galloways' statement that the lease was valid, Nate replied that a landlord "can always find some small thing" to justify eviction of a tenant.

In a telephone conversation on August 31, 1977 Nate was informed by the Galloways' attorney that the lease between the Galloways and Oxford was valid. On the same date Nate informed the Galloways by telephone that he would accept no further rent from them. On September 1, 1977 Nate caused to be filed Small Claims Cause No. 77-SC-3766 in the Small Claims Division of the St. Joseph Superior Court. That Notice of Claim form, which constitutes the complaint in this cause, was styled by Nate in the section provided litigants for a brief statement of the claim: "Complaint for immediate possession for breach of written lease." No description of the breach was offered. Subsequent to the filing of the action, Nate informed the Galloways that the asserted breach was nonpayment of rent. Service of process was made by the sheriff upon the Galloways on September 2, 1977.

On September 7, 1977 Nate entered the Galloways' apartment and removed the stove, ostensibly to perform repairs. Nate left the Galloways with no alternative means to heat their food. He took a part of the stove to an appliance store and requested that it order the necessary parts.

Approximately one week after he removed the stove, Nate was informed by the store that the part he had brought in was not adequate for identification, and that he would either have to provide more parts or bring in the entire stove. Although he concededly had the facilities to take the entire stove to the repair store, he claims he was too busy to do so. Accordingly, that stove has never been repaired. On October 17, 1977, forty days after Nate's initial displacement of the Galloways' stove, Nate installed another stove in the apartment.

In the meantime, Nate informed the Galloways that if they were not out of the apartment by the 15th of September, the eviction proceedings would continue. The Galloways attempted to pay their rent by mailing Nate a check for $110 for their September rent by certified mail; the return receipt indicates that Nate received the check on September 15, 1977. Under date of September 16, Nate responded thusly: "We are returning your rent check # 497 as we intend to proceed with our eviction proceedings. We will not accept any further rent payments whatsoever."

Several times after the initial contact on August 4, Nate contacted the Galloways about signing a new lease.

On September 19, 1977 Nate again came upon the premises to investigate loose tiles he had noticed in the apartment's bathroom. As part of that investigation, Nate removed all of the tiles from the wall in the tub area, as well as the shower attachment. He found no structural damage but did find that the plasterboard was crumbling, apparently from water damage. He also decided that new plywood would be necessary on the floor. He replaced neither the tile nor the shower attachment. Nate testified at trial that necessary major repairs would have required removal of the stool and would have taken a full month to accomplish. He did not testify as to when, if ever, he intended to perform those repairs.

The tiles he then removed have never been replaced. In early December 1977 (more than two months after the bathroom was dismantled), in response to Nate's suggestion that he could repair the bathroom if given a week to do so, the Galloways made arrangements to move into a relative's home for a week to permit those repairs to be made. Nate then responded that, because of the weather, he could not do the repairs. He suggested that he might be able to do the repairs in the spring. Nate did offer to "let" the Galloways out of their lease.

On September 23, 1977 the Galloways filed their answer and counterclaim in this cause, and removed the same to Division I of the Superior Court on the ground that they believed in good faith that their counterclaim for intentional infliction of mental and emotional distress and breach of the lease's covenant of quiet enjoyment exceeded the jurisdiction of the small claims division. ¹ Pursuant to Rule 5 of the local court rules, the cause was removed and redocketed. The counterclaim prayed for compensatory damages and punitive damages.

Nate subsequently retained counsel and learned how to increase the Galloways' rent pursuant to the provisions of the lease. On November 4, 1977 he increased the rent fifteen per cent to $126 per month.

In analyzing these facts, the trial court specifically ruled:

"In summary, George Nate took title to the Galloways' apartment on August 4, 1977, immediately advised the Galloways that their lease was void, and ordered them to sign a new lease at a higher rate of rent. When they refused, he ordered them to leave; he gave them four days' notice and claimed to have given them prior notice some twenty-six days earlier when he erroneously advised them that the lease was invalid. The following day, he advised them that he would not accept September's rent. The day following that, he filed a small claims action demanding possession on the basis of breach of the written lease which he had previously declared void; that declaration had apparently formed the basis of the 'notices' on August 4 and August 30. Because Nate did not discover the asserted damage to the bathroom until the tile was removed on September 19, 1977, the Court can only surmise that the 'breach' asserted in the September 1 filing was the non-payment of the rent Nate had announced he would not accept. Nate then proceeded to remove the stove, the bathroom tile and the shower attachment, which actions, whether or not by design, amounted to a partial dismantling of the apartment. He eventually raised the rent on the apartment to the fullest extent permitted by the lease. Throughout all of these actions, the bulk of which occurred over the span of less than fifty days, Nate believed that he was dealing with a pregnant tenant. Throughout all of these actions, Nate consistently 'offered' to let the Galloways move out or sign a new lease providing for greater rent.

"On the basis of the foregoing, the Court finds that plaintiff George Nate has engaged in a malicious and oppressive course of conduct designed to produce increased revenue to him from the apartment at 406 South 27th Street, and that he has done so with reckless disregard for the rights of the Galloways."

In bringing this appeal, Nate alleges five errors which have been consolidated as follows:

(1) whether the finding of a breach of the covenant of quiet enjoyment is not supported by sufficient evidence and is contrary to the law;

(2) whether the award of compensatory damages is contrary to the law; and

(3) whether the award of punitive damages is contrary to the law and not supported by sufficient evidence.

In challenging the finding of a breach of the covenant of quiet enjoyment, the landlord, Nate,...