Pingree v. Continental Group of Utah, Inc., 14484

• Decision Date: 22 December 1976
• Docket Number: No. 14484,14484
• Citation: 558 P.2d 1317
• Parties: Carl L. PINGREE et al., Plaintiffs, Respondents, and Cross-Appellants, v. The CONTINENTAL GROUP OF UTAH, INC., a Utah Corporation, and Leslie W. Van Antwerp, Jr., Aka L. A. Antwerp dba Van's Blue Ox, Defendants and Appellants.
• Court: Utah Supreme Court

Page 1317

558 P.2d 1317

Carl L. PINGREE et al., Plaintiffs, Respondents, and Cross-Appellants, v.The CONTINENTAL GROUP OF UTAH, INC., a Utah Corporation, and Leslie W. Van Antwerp, Jr., Aka L. A. Antwerp dba Van's Blue Ox, Defendants and Appellants.

No. 14484.

Supreme Court of Utah.

Dec. 22, 1976.

Brian R. Florence, of Florence & Hutchison, Ogden, for defendants and appellants.

Edward P. Powell, of Christensen, Gardiner, Jensen & Evans, Salt Lake City, for respondents.

MAUGHAN, Justice:

On appeal is a judgment of the District Court in an action for a Declaratory Judgment involving a lease, together with a cross-appeal seeking treble damages for unlawful detainer.

We affirm, in part, reverse, in part; and remand for elimination from the judgment all sums included because of failure to construct the fire escape.No costs awarded.Statutory references are to U.C.A.1953.

Plaintiffs, lessors of premises suitable for use as a restaurant initially leased to The Continental Group of Utah, Inc., hereafter Continental.Continental's interest was assigned, with the lessor's consent, to Leslie Van Antwerp, Jr., hereafter, defendant or lessee.In their complaint, plaintiffs sought an order declaring a provision granting lessee an option to renew, invalid for uncertainty.In the alternative, a decree declaring the rental under the renewal option to be $900 per month, and a determination as to the one responsible under the lease for the installation of a fire escape.

Upon trial to the court, plaintiffs were awarded judgment as follows: $4,000 damages for breach of the covenant to repair and maintain the premises and for lessee's failure to install a fire escape; $400 per month additional rent commencing October 1, 1974, through February 1975; damages for holdover of the premises from March 4, 1975, to January 15, 1976, in the sum of $9,450, with offset of $5,000 paid during this period ($90 per month reasonable rental value); $5,000 attorney's fees; and a decree terminating the lease and restoring possession.

Lessors and Continental, the initial lessees, executed a lease for a term of five years, commencing October 1, 1969.The lease provided the premises were rented in an 'as is' condition.The lessee covenanted, at his sole expense, to maintain the exterior and interior of the building and improvements on the premises, including the roof, plumbing and electrical wiring, air-conditioning, and heating equipment, subject to reasonable wear and tear.Reserved rent was $500 per month, plus three percent of the gross receipts, in excess of $10,000.Beginning in 1970, Continental utilized the second floor of the premises for banquets and parties.In January 1972, the Fire Department of Roy City informed Continental this new use of the premises required the installation of a fire escape.

In May 1972, Continental, with lessor's consent, assigned its leasehold interest to defendant.A representative of Continental testified defendant was informed it was his responsibility to install the fire escape, and to repair the floor.The trial court found defendant assumed all the rights and obligations under the lease, and defendant understood, at the time of the assignment, the lease required him to do all maintenance; including changes made necessary by the public authorities.Further, defendant assumed the obligation to repair and maintain any condition which occurred during the occupancy of Continental.

By a letter of September 24, 1974, lessors informed defendant of specific deficiencies in his maintenance, and in their amended complaint, they sought damages for breach of the covenant.The trial court found defendant had failed to make extensive repairs within the covenant.Plaintiffs were awarded damages of $4,000 for defendant's failure to repair and maintain the premises, and to install the fire escape.

On appeal, defendant contends there was insufficient evidence to sustain the finding he was responsible for the damages awarded.However, with the exception of the fire escape, the record does not sustain defendant's contentions.

A representative of defendant's predecessor, Continental, testified the building was in good condition at the time defendant took possession.The records of the Health Department during 1974, indicated the need for repair of the premises.Significantly, defendant did not contradict the testimony of Continental, to wit, he agreed he would be responsible for the repairs and installation of the fire escape.

Estimates of the cost of repairs were adduced, and the court was of the view, if the repairs were made, betterment would be the result.There is no evidence in the record to show the cost of the fire escape, which was not included in the estimate of repair of structural damage.The total estimate for repairs without the fire escape was $4,564.The trial court did not allocate the $4,000 for delayed maintenance and the fire escape among the various cited deficiencies.However, since there is evidence in the record to sustain the amount of the award, (excepting the fire escape), the finding of the trial court is sustained.

It was found the City of Roy directed the fire escape be installed, because of the use being made of the premises by the lessee; and defendant understood at the time of the assignment, it was his duty to do all maintenance; including changes made necessary by public authorities.Defendant testified he used the upstairs for banquets and parties, which accounted for 10 to 20 percent of his business.

Gaddis v. Consolidated Freightways, ¹ illuminates the several factors to be considered in determining who should bear the cost of compliance required by governmental authority, in order to conform the premises to health and safety laws.

The court quoted the following from 1 American Law of Property 353:

Where the lessee covenants to repair, the question of who should bear the cost of compliance depends upon the nature of the alteration or improvement and the reason for requiring it.If the order involves mere repairs which the lessee would normally be required to make under his covenant, he should bear the cost.Likewise, the burden is on the lessee where the alteration is required only because of the particular use which he is making of the premises, although it may be questioned whether even in this case, the court would place the burden of extensive and lasting improvements on the lessee, except perhaps where the lease is for a long term.At any rate, if the order requires the making of such improvements, so-called 'structural' changes, and they are not required because of the particular use made of the premises by the lessee, the lessor must bear the burden of compliance.

In our matter, defendant had the responsibility to install the fire escape, had he continued to engage in activities which required it.Defendant's particular use of the premises was the reason the authorities required the installation.²He was notified no business license would be issued were he to continue the prohibited use.Faced with this ultimatum defendant chose to stop the proscribed activities, thus rendering the fire escape responsibility moot.

Defendant asserts error in the court's determination that, under the option to renew, $900 per month was a reasonable rental rate.The lease contained the following renewal provisions, which were drafted by defendant's predecessor Continental:

The Lessee shall have and is hereby granted the option to renew this lease for two separate additional five-year terms, commencing on the first month following the expiration of the term of this lease upon the same terms and conditions contained herein except that the rental amount will be renegotiated; however, maximum total monthly rental shall not exceed $900.00 per month.

Factors of tax increase, costs of business increases or decreases, business volume and success, insurance costs and other reasonable allowances, will be the basis for terms of negotiation.

Defendant gave lessors timely notice of his exercise of the option to renew.Lessors responded the new rental would be $900 per month.Defendant replied citing the factors of the lease and explaining his costs of doing business had increased 81 per cent, and his volume had decreased 24 per cent.Defendant was willing to pay $500 per month. ...