Normandy Pointe Associates v. Dwight D. Brannon

• Decision Date: 30 January 1998
• Docket Number: 98-LW-0135,C.A. 16641
• Parties: NORMANDY POINTE ASSOCIATES, Plaintiff-Appellee v. DWIGHT D. BRANNON, et al., Defendants-Appellants C.A. CASE NO. 16641
• Court: Ohio Court of Appeals

NORMANDY POINTE ASSOCIATES Plaintiff-Appellee v. DWIGHT D. BRANNON, et al Defendants-Appellants T.C. CASE NO. 96-2924 Court of Appeals of Ohio, Second District Montgomery

No. C.A. 16641

98-LW-0135 (2nd)

January 30, 1998

JOHN T DUCKER, Atty. Reg. No. 0002615, 34 N. Main Street, 1400 Key Bank Building, Dayton, Ohio 45402, Attorney for Plaintiff-Appellee

DWIGHT D. BRANNON, Atty. Reg. No. 0021657, P. O. Box 750425, Dayton, Ohio 45475-04255, Attorney for Defendants-Appellants

OPINION

WOLFF J.

Dwight D. Brannon and William G. Knapp, III appeal from a judgment of the Montgomery County Court of Common Pleas, which ordered them to pay $16,093.02 to Normandy Pointe Associates ("Normandy") for breaching a written lease agreement.

Normandy, a general partnership, owns units of an office condominium located at 318-322 Regency Ridge, Centerville, Ohio. Brannon and Knapp practiced law together as Dwight D. Brannon and Associates. In October 1993, Normandy agreed to lease a 3,341 square foot unit, located at 320-322 Regency Ridge, to Brannon and Knapp. The two-year lease commenced on December 1, 1993 and terminated on November 30, 1995. On July 15, 1996, Normandy filed a complaint against Brannon and Knapp alleging that they had breached the lease by failing to pay maintenance and pass-thru expenses, DP&L charges, janitorial service fees, rent, and fees for late rent payments. Brannon and Knapp filed separate answers in response to Normandy's complaint.

The lease agreement included the following provisions relevant to this appeal.

Rent was set forth in Article IV of the lease:

4.01 General. For the Lease Years during the term hereof, Lessee shall pay to Lessor annual rental payments in monthly installments as follows:

Lease Year Yearly Rental Monthly Installment

1 $45,103.50 $3,758.63

2 $47,709.48 $3,975.79

4.02 Monthly Installments. All monthly payments shall be in advance, payable on the first business day of each month, at such place that the Lessor may direct in writing.

4.03 Late Charge. In the event any rental payment hereunder is not paid within five (5) days after its due date, Lessee agrees to pay an additional amount to Lessor equal to ten percent (10%) of such payment as a late charge. * * *

4.04 Pass thrus. Lessee agrees to pay for any increases in the below listed expenses on an annual basis over the following base expenses:

Condominium fees $1.08 sq. ft.

Real estate taxes 1.62 sq. ft.

Utilities 1.48 sq. ft.

Janitorial expenses .89 sq. ft.

Brannon and Knapp agreed to change light bulbs as needed, and Normandy agreed to provide janitorial services twice a week. Article VII. The lease specified that Normandy was to pay all gas, electricity, light, heat, and power charges, Article XIV, and to pay and discharge all real estate taxes and assessments imposed upon the leased property during the term of the lease. Article XVI. The terms for holding over were discussed Article XXV:

Any holding over by the Lessee or retention of said Leased Property after the expiration of this Lease Agreement beyond the term hereof shall operate and be construed as creating a tenancy from month to month and not be construed as creating an [sic] renewing this Lease Agreement in any manner whatsoever, * * *. The rental rate during any such hold-over period shall be the current rental rate as provided herein plus fifty percent (50%) of such rental rate.

A merger clause stated:

35.04 Complete Document. This Lease Agreement, together with the plans and Specifications, contain all the oral and written agreements, representations and arrangements between the parties hereto and any rights which the respective parties hereto may have had under any previous contracts or oral agreements are hereby cancelled and terminated and no representations or warranties are made or implied other than those set forth herein. [Sic] No oral agreement other than this Lease Agreement, and not until and unless this Lease Agreement shall have been properly executed by the Lessee and delivered to the Lessor.

On April 28 and 29, 1996, a magistrate conducted a hearing on Normandy's breach-of-lease claim. The evidence, presented at this hearing, established the following.

Brannon and Knapp took possession of the leased property on December 1, 1993 and used it as their law offices. Although they occasionally were late in paying rent, Normandy never charged a late fee. In September 1995, the parties orally agreed that Brannon and Knapp would lease an additional 2,600 square feet in an adjacent office unit, located at 318 Regency Ridge, which would be leased on a month-to-month basis until the expiration of the original lease, and that rent would be $2,000 per month for the additional space. Brannon and Knapp paid $5,975.79 ($3,975.97 + $2,000) for the months of September, October, and November. Neither party produced evidence of the December payment. During the final months of the original lease, the parties attempted to reach an agreement on terms for a new lease; however, they could not agree on rent or the responsibility for pass-thru expenses.

In November 1995, Joan Childers, a Normandy property manager, sent an invoice to Brannon and Knapp indicating that they owed $4,176.25 in pass-thru expenses for 1994 and 1995 combined. This invoice stated the following:

Differences

Base Rates Base 1993 Actual 1994 Actual 1995 1994 1995 Condominium Fees $1.08 $1.08 $1.08 $0.00 $0.00

Real Estate Taxes $1.62 $1.81 $2.01 $0.19 $0.39

Utilities $1.48 $1.52 $1.68 $0.04 $0.20

Janitorial $0.89 $1.06 $1.15 $0.17 $0.26

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$5.07 $5.47 $5.92 $0.40 $0.85

(X 3,341) (X 3,341)

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Totals $16,938.87 $18,275.27 $19.778.72 $1,336.40 $2,839.85

Although the lease provided that Brannon and Knapp would pay any pass-thru expenses exceeding the base expenses on an annual basis, Childers testified that the late billing had resulted from an oversight on her part. Brannon and Knapp did not pay this invoice.

During negotiations for a new lease, Gary Thibo, a Normandy operating manager, proposed the following rates: $6,274.73 per month for a one-year lease and $6,766.48 for a month-to-month lease. On February 5, 1996, Thibo sent Brannon a letter stating:

We have had a verbal commitment from Sharon Konkler on your behalf for a month to month agreement on the 5,901 sq. ft. you are presently occupying. The lease rate on a month to month basis is $6,766.48., [sic] plus Lessee pays own utilities and janitorial services. These charges will be invoiced back to you monthly. * * * Unless herein specifically amended, all provisions of the Lease Agreement shall remain in full force and effect. Please sign below as to your agreement with the above provisions, and return to our office.

Brannon did not sign the letter. Thibo testified at trial that despite Brannon's refusal to sign the letter, he had understood from conversations with Brannon's real estate agent, Sharon Konkler, that Brannon and Knapp had intended to enter into a month-to-month lease. On March 26, 1996, Brannon sent a letter to Thibo informing him that he would be vacating the premises as of March 31, 1996. He also enclosed a check in the amount of $3,274.73 to pay March rent. Brannon's letter explained that this amount represented the rent that he believed to be owing ($6,274.73) minus the $3,000 security deposit that he believed to have been deposited with Normandy at the start of the original lease. (Actually, Brannon and Knapp had made a $2,000 security deposit.) On March 29, 1996, Thibo wrote a letter to Brannon explaining that Normandy was returning his check because the amount was insufficient to cover March rent. Thibo also sent Brannon a letter, dated May 2, 1996, that stated his intent to turn the matter over for collection if Brannon failed to contact him by May 7, 1996.

The magistrate's May 15, 1997 decision included findings of fact and conclusions of law regarding the original lease and the alleged extended lease. The magistrate concluded that Brannon and Knapp had breached the original lease by refusing to pay $4,176.25 for pass-thru expenses and $237.50 for maintenance charges. He stated that the express terms of the lease regarding pass-thru expenses could not be overridden by Brannon's testimony that Normandy had orally agreed to waive them. Regarding the period subsequent to the original lease, the magistrate concluded that Konkler's statements to Thibo indicating Brannon and Knapp's agreement to a month-to-month tenancy, based on the terms proposed by Thibo could be charged to Brannon and Knapp. Furthermore, the magistrate concluded that, despite Brannon's refusal to sign the letter, Brannon "did not effectively dissent to the terms of the agreement as memorialized in the February 5, 1996 letter." Accordingly, the magistrate ordered Brannon and Knapp to pay $7,749.50, representing the unpaid amount of rent for January through March 1996, and $3,929.68 for utility and janitorial services for the months of December 1995 through March 1996. In its May 30, 1997 Judgment Entry Adopting Magistrate's Decision, the trial court noted that neither party had filed any objections to the Magistrate's Decision and determined that the decision contained no errors of law nor facial defects.

Brannon and Knapp raise two assignments of error on appeal.

I. THE TRIAL COURT ERRED IN FINDING A VALID LEASE EXISTED BASED UPON THE LESSOR'S ALLEGED TERMS.

Brannon and Knapp contend that the trial court erred in finding that Brannon's failure to effectively dissent to Thibo's letter and Konkler's statements to Thibo had established an implied contract. They claim that their office manager mistakenly sent January and...