Southern Motors, Inc. v. Virginia Nat. Bank, Civ. A. No. 85-0326-A
| Decision Date | 10 February 1987 |
| Docket Number | Civ. A. No. 85-0326-A,85-0327-A. |
| Citation | 73 BR 261 |
| Parties | SOUTHERN MOTORS, INC., Plaintiff, v. VIRGINIA NATIONAL BANK, et al., Defendants. BANK OF VIRGINIA, Plaintiff, v. SOUTHERN MOTORS, INC., et al., Defendants. |
| Court | U.S. District Court — Western District of Virginia |
Robert T. Copeland, Abingdon, Va., for plaintiff in No. 85-0326A.
George M. Warren, Jr., Bristol, Va., Stuart B. Campbell, Jr., Wytheville, Va., for defendants in No. 85-0326A.
Fred M. Leonard, Bristol, Tenn., and Robert E. Wick, Jr., Bristol, Va., for plaintiff in No. 85-0327A.
Robert T. Copeland, Abingdon, Va., George M. Warren, Jr., Bristol, Va., Stuart B. Campbell, Jr., Wytheville, Va., for defendants in No. 85-0327A.
On March 5, 1981, Perry C. Cartwright, Sr., Frances M. Cartwright, and Southern Motors, Inc. leased an automobile dealership facility located near Bristol, Virginia, to Mullins Motors, Inc. The 10-year lease provided that repairs to the septic system were the responsibility of the landlord. The tenant vacated the facility on July 9, 1982, because of recurring problems with the septic system. The landlord claims that the tenant breached the lease agreement by leaving the premises and seeks, among other things, rental payments of approximately $8,000 a month from the date of the alleged breach to September, 1983, when the Bank of Virginia foreclosed its deeds of trust on the property. The tenant defends by claiming it was constructively evicted as a result of difficulties with the septic system.
The Cartwrights and Southern Motors, Inc. filed for bankruptcy under Chapter 11 of the Bankruptcy Code on January 15, 1982. The Bankruptcy Court heard their claim for rent and found that the tenant was constructively evicted from the property and owed no rental payments after July 9, 1982. This case is being reviewed under the standing order in effect prior to the adoption of the 1984 amendments to the Bankruptcy Code, so the record will be reviewed de novo.
The Bankruptcy Court found, and the record shows, that problems with the septic system caused sewage to back up and overflow in the restrooms, at times running into the public area of the service department, the customers' lounge, and the showroom. The restrooms sometimes were out of service for two or three days at a time. Customers and employees were forced to use restroom facilities at a nearby restaurant. Two of the tenant's maintenance employees were required to clean the premises, which included scrubbing with deodorant soap and vacuuming carpets.
Mullins Motors began to experience problems with the septic system shortly after it moved into the premises on March 14, 1981.1 In April of that year, Mullins Motors employed a septic company to pump several truckloads of sewage from the system. In May, Cartwright hired a contractor to install an extension to the system and new field lines, but problems resumed that summer. Cartwright said he was notified that the problems continued. In January of 1982, the manager of Mullins Motors notified Cartwright by telephone and letter that septic-system problems were recurring. Again in April, Cartwright was notified of the continuing problems by letter from the president of Mullins Motors. The tenant had the system pumped several times during this period. On July 9, Mullins Motors vacated the premises and notified Cartwright by letter. There was testimony that problems with the septic system became worse toward the latter part of tenant's occupancy.
The Virginia Supreme Court, in the only opinion it has issued on the subject of constructive eviction in this context,2 found that where the landlord failed to provide adequate heat and light as required by the lease, the tenant was constructively evicted and excused from paying rent. Buchanan v. Orange, 118 Va. 511, 88 S.E. 52 (1916). Eviction can include any wrongful act of the landlord, either commission or omission, which may result in substantial interference with the tenant's possession or enjoyment. Id. at 53, citing Taylor on Landlord and Tenant (9th Ed.) § 309A.
The serious problems with the septic system in this case certainly rise to the level of substantial interference with the tenant's use of the premises. The landlord was required by the lease to repair the system. Except for the extension added to the system in May of 1981, the landlord wholly failed to perform its obligation under the lease. An automobile dealership cannot properly carry on its business with closed restrooms and the odor and filth that accompanied each backup of the septic system. As indicated by one of the tenant's witnesses at trial, this recurring problem was an embarrassment both to Mullins Motors and its customers.
The two principal arguments made by the landlord are that Mullins Motors waived its right to claim constructive eviction by remaining at the premises for more than a year, and that the landlord was not given adequate notice of the septic-system problems.
It generally is held that to claim constructive eviction, a tenant must vacate the premises within a reasonable time. See, e.g., Jaffe-Spindler Co. v. Genesco, Inc., 747 F.2d 253, 256 n. 2 (4th Cir.1984).3
In Jaffe-Spindler, the Fourth Circuit affirmed a finding by the District Court in Genesco, Inc. v. Monumental Life Ins. Co., 577 F.Supp. 72 (D.S.C.1983), that the tenant was constructively evicted more than four years after it began to experience severe problems caused by major leaks in the roof of a department store.4
Even if a tenant waived its right to claim constructive eviction by failing to vacate the premises promptly, some courts have held that the right arises again once the problem recurs.
In the case of In Re Consumers World, 160 F.Supp. 238 (D.Mass.1958), the court found that the tenant was constructively evicted because the landlord violated a lease provision preventing it from engaging in a competing business. The violations continued for almost a year and a half before the tenant took steps to vacate the premises. The court held that even if the tenant had waived the right to claim constructive eviction based on earlier violations, the increase in competing business toward the latter part of the tenancy amounted to a new violation that provided a new basis for abandonment. Id. at 241.
In Automobile Supply Co. v. Scene-in-Action Corp., 340 Ill. 196, 172 N.E. 35 (Ill.1930), the tenant continued to occupy the premises after the landlord failed to provide sufficient heat. The court said this waived the tenant's right to terminate the lease, but this waiver would not have prevented the tenant from vacating the property based on subsequent breaches of the landlord's duty to provide adequate heat. Id., 172 N.E. at 38.
In Batterman v. Levenson, 102 Misc. 92, 168 N.Y.S. 197 (1917), the tenant abandoned his dental offices one year and two months after entering into the lease because the offices were infested with rats. Even though the tenant knew of the condition prior to signing the lease, the tenant can claim constructive eviction because the infestation became worse during the latter months of the tenancy. Id., 168 N.Y.S. at 198.
Other cases hold that when the landlord's breach is of a recurring nature, a jury question is presented as to whether the tenant acted reasonably by remaining on the premises after the first breach occurred. See, e.g., Minneapolis Co-operative Co. v. Williamson, 51 Minn. 53, 52 N.W. 986, 987 (Minn.1892), and Kennedy v. Nelson, 76 N.M. 299, 414 P.2d 518, 521 (1966).
I find that it was reasonable for Mullins Motors to remain on the leased premises for slightly more than a year before exercising its right to claim constructive eviction. Certainly this is a far shorter period than the 4½ years held to be reasonable in Genesco and affirmed by the Fourth Circuit on facts similar to those here. Even if the tenant's delay in vacating the premises could be deemed unreasonable, I believe that the recurring nature of the problem allowed Mullins Motors to claim that it was constructively evicted because of septic-system backups that occurred during the latter part of the tenancy.
In Rome v. Johnson, 274 Mass. 444, 174 N.E. 716 (1931), the court discusses factors that may be considered in determining whether a tenant unreasonably delayed its decision to vacate the premises:
What is a reasonable time depends upon the circumstances of each case including the size of the leased premises, the purposes for which they are occupied by the tenant, the personal property and fixtures owned by the tenant, the place where they are located, and the time reasonably required to remove them, with known weather conditions in New England and the difficulty of securing another location suitable for the conduct of the defendant\'s business.
It should be apparent that relocating a fairly large automobile dealership facility and service department would...
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