Pfeifle v. Tanabe, 20000134.

• Decision Date: 21 December 2000
• Docket Number: No. 20000134.,20000134.
• Citation: 620 N.W.2d 167,2000 ND 219
• Parties: Leslie PFEIFLE, f/k/a Leslie Miller, Plaintiff and Appellant, v. Curtis TANABE, Defendant and Appellee.
• Court: North Dakota Supreme Court

620 N.W.2d 167

2000 ND 219

Leslie PFEIFLE, f/k/a Leslie Miller, Plaintiff and Appellant, v. Curtis TANABE, Defendant and Appellee.

No. 20000134.

Supreme Court of North Dakota.

December 21, 2000.

Jon J. Jensen (argued) and Jeffrey L. Skaare, Pearson Christensen, Grand Forks, ND, for plaintiff and appellant.

Grant H. Shaft, Shaft, Reis and Shaft, Grand Forks, ND, for defendant and appellee.

KAPSNER, Justice.

[¶ 1] Leslie Pfeifle appeals from the judgment of the district court determining Dr. Curtis Tanabe did not breach a five-year lease but justifiably terminated the lease and vacated the premises, based on Pfeifle's failure to secure quiet possession of the premises within a reasonable time, and determining dental cabinets were trade fixtures lawfully removed. We affirm.

I

[¶ 2] In January 1993, Leslie Pfeifle entered a five-year lease agreement with Dr. Curtis Tanabe for rental of premises in connection with Tanabe's purchase of the dental practice of Pfeifle's late husband. Tanabe also leased part of the basement of the premises for equipment and record storage, with Pfeifle remaining in possession of an adjacent part of the basement. The specified purpose of the lease was for "operating a dental practice, and for no other purpose." The lease required both parties to utilize the premises in accordance with existing zoning ordinances and condominium covenants, conditions, and restrictions. The lease further required Pfeifle not to unreasonably withhold consent to an assignment or sublease of the premises. The stock purchase agreement between Pfeifle and Tanabe was based on an appraisal of the dental practice at $274,300, including a valuation of $51,700 for "Dental Equipment, Sundries, Hand Instruments, and Cabinets."

[¶ 3] During the summer of 1994, Pfeifle's husband and their sons began to occupy the adjacent basement premises, utilizing the property as an office, workshop, and living quarters. The sons and their friends also entered the dental office during non-office hours and used the bathroom, office furniture, and equipment, causing Tanabe concern about sterilization problems and the confidentiality of dental files. These unauthorized entries to the leased dental premises continued until the end of 1995, when Tanabe changed the locks. Construction noises from the basement at times required Tanabe or his staff to stop conversing with patients over the hammering, drilling, or sawing. Pfeifle also began a construction project, leaving piles of dirt outside the building in the parking area in excess of six months. Tanabe at times had to leave patients in the middle of a procedure to tell children to get off the dirt piles. During January 1996, Tanabe's office manager found a smoldering plug on an electrical cord used by the Pfeifles in the basement. Fumes from the Pfeifles' propane heater in the basement came up through the dental office vents, sickening patients and staff. Pfeifle also used electricity in the basement; the electricity was billed to Tanabe's meter. Following inspections by the city fire marshal and building code enforcement officers, Pfeifle was cited for illegal use of electrical wiring, failing to obtain a building permit, unlawful use of the premises, and failing to maintain a sprinkler system in the basement as required by city fire code.

[¶ 4] Tanabe and his office manager personally reported these various complaints to Pfeifle and her family, primarily during 1995 and 1996, at times also leaving messages on Pfeifle's answering machine. Pfeifle acknowledged receiving the majority of these complaints. After discussing these "landlord problems" with a real estate developer, in August 1995 Tanabe signed a purchase agreement for a new office building. On April 15, 1996, Tanabe vacated the leased premises, after his attorney wrote a letter two months earlier officially informing Pfeifle of Tanabe's intention to terminate the lease and vacate. Tanabe had workmen remove dental cabinets which were screwed into the wall and electrically wired and plumbed. Tanabe attempted to provide Pfeifle with a suitable tenant willing to sublet the premises in order to mitigate the loss of rent payments from the terminated lease; however, Pfeifle refused to consent to assigning or subletting the lease. Tanabe continued to pay rent to Pfeifle for two months after vacating, but then failed to make the remaining 15 payments.

[¶ 5] Pfeifle filed an action claiming Tanabe breached the lease and converted the dental cabinets which were fixtures on the property. Tanabe responded with an affirmative defense of constructive eviction, arguing he was justified in terminating the lease because Pfeifle interfered with Tanabe's quiet possession of the property and made the premises unfit for a dental office. Tanabe claimed he rightfully removed the cabinets because they were trade fixtures included in his purchase of the dental practice. Tanabe asserted a counterclaim that he had paid electricity bills for a part of the basement which he had not leased.

[¶ 6] The trial court concluded Tanabe was justified in terminating the lease before the end of the contractual term, based on Pfeifle's failure to fulfill her obligation to secure to Tanabe quiet possession of the property. The trial court found the "accumulative effect" of Pfeifle's actions constituted constructive eviction of Tanabe, whose dental practice required quiet use and enjoyment of the premises. Despite no written complaints from Tanabe, the trial court found sufficient evidence complaints were made about various problems. Finally, the trial court found Tanabe was entitled to take the dental cabinets because (1) the cabinets were part of the purchase price, based on the appraisal and income tax records, and (2) the premises were in a commercially reasonable state after Tanabe removed the cabinets. The trial court dismissed Pfeifle's claims, as well as Tanabe's counterclaim relating to the electrical billing because the amount was nominal. Pfeifle appeals.

II

[¶ 7] Whether a party has breached a contract is a finding of fact that will not be reversed on appeal unless it is clearly erroneous. Wachter v. Gratech Co., Ltd., 2000 ND 62, ¶ 17, 608 N.W.2d 279. A finding of fact is clearly erroneous if it is not supported by any evidence, if, although there is some evidence to support the finding, a reviewing court is left with a definite and firm conviction a mistake has been made, or if the finding is induced by an erroneous conception of the law. Id. A trial court's conclusions of law are fully reviewable. CAP Partners v. Cameron, 1999 ND 178, ¶ 11, 599 N.W.2d 309.

III

[¶ 8] Pfeifle argues the trial court erred as a matter of law in deciding Tanabe had not breached the lease and was not liable for the remaining payments, because Tanabe failed to comply with statutory requirements and express lease terms for terminating the lease. Pfeifle further contends Tanabe waived his right to terminate the lease by remaining on the property for a substantial time following his complaints. We disagree.

A

[¶ 9] Pfeifle asserts she had a right to timely written notice of intent to terminate the lease, required by law and by the express terms of the lease agreement, because a lessor is allowed a reasonable time to restore quiet possession or make repairs after a lessee's request. We are not persuaded.

[¶ 10] "An agreement to lease real property binds the lessor to secure to the lessee the quiet possession of such property during the term of the lease against all persons lawfully claiming the same." N.D.C.C. § 47-16-08. "If within a reasonable time after notice from the lessee of dilapidations which the lessor ought to repair the lessor neglects to do so, the lessee may ... [v]acate the premises, in which case the lessee shall be discharged from further payment of rent or performance of other conditions." N.D.C.C. § 47-16-13. A lessee who vacates the premises under § 47-16-13 must give the lessor notice of intent to vacate the premises prior to vacating. Hofmann v. Stoller, 320 N.W.2d 786, 794 (N.D.1982). A lessee of real property may terminate a lease before the end of an agreed term "[w]hen the lessor does not fulfill the lessor's obligations, if any, within a reasonable time after request, as to placing and securing the lessee in the quiet possession of the property leased, or putting it into a good condition, or repairing it...." N.D.C.C. § 47-16-17.

[¶ 11] By the plain language of §§ 47-16-13 and 47-16-17, notice must be given to a lessor by requests to repair dilapidations or to secure quiet possession of leased property; however, neither statute requires notice to be written.

[¶ 12] Pfeifle relies on the lease agreement, as requiring written notice before termination. The lease language on which Pfeifle relies provides: "All notices... in this Lease Agreement provided to be given or made or sent, ... by either party to the other, shall be deemed to have been fully given or made or sent when made in writing and deposited in the United States mail...." Pfeifle refers to no language of the lease which requires the tenant to give notice of the landlord's failure to secure quiet possession of the premises. However, even if the lease specifically required such notice, two months before Tanabe vacated the premises, his attorney did send Pfeifle a written notice of Tanabe's intent to terminate the lease and vacate. Tanabe also made numerous verbal complaints, in person and by telephone messages, which Pfeifle acknowledged receiving. Therefore, we find sufficient evidence in the record to support the trial court's findings that Pfeifle received notice of the complaints and also notice of Tanabe's intention to terminate the lease and vacate.

B

[¶ 13] Pfeifle argues the district court clearly erred because none of the alleged problems justify termination of the lease because she took immediate steps to resolve problems after Tanabe's complaints and all the...