Stevens v. Mobil Oil Corp., Civ. A. No. 75-70857.

• Decision Date: 19 March 1976
• Docket Number: Civ. A. No. 75-70857.
• Citation: 412 F. Supp. 809
• Parties: Bernard O. STEVENS and Estelle E. Stevens, Plaintiffs, v. MOBIL OIL CORPORATION, Defendant.
• Court: U.S. District Court — Western District of Michigan

412 F. Supp. 809

Bernard O. STEVENS and Estelle E. Stevens, Plaintiffs, v. MOBIL OIL CORPORATION, Defendant.

Civ. A. No. 75-70857.

United States District Court, E. D. Michigan, S. D.

March 19, 1976.

James D. Wines, Brighton, Mich., for plaintiffs.

Donald B. Miller, Delmer C. Gowing, III, Butzel, Long, Gust, Klein & Van Zile, Detroit, Mich., for defendant.

OPINION AND ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

CORNELIA G. KENNEDY, District Judge.

This action was instituted by plaintiffs to recover for alleged waste committed by defendant, which is the lessee of property owned by plaintiffs in the City of Detroit. Defendant has filed a motion for summary judgment. A hearing was held on January 12, 1976, and the parties have supplied supplemental memoranda to the Court.

Plaintiffs leased the property involved, on which was located a service station, to defendant on November 29, 1956. The lease was extended twice. The last extension, dated March 25, 1971, extended the lease until November 30, 1976.

On September 5, 1972, the City of Detroit passed an ordinance, No. 726-G (effective October 12, 1972), which provided that any service station not open for business for 120 consecutive days would be deemed abandoned, and further provided for demolition unless within specified periods the station was reopened or converted to an approved alternate business. The affidavit of defendant's real estate manager for this area, Thomas Pence, states that defendant first became aware of the ordinance in June 1974.

Defendant decided to discontinue operation of the station on March 18, 1974, and so informed plaintiffs by letter on April 2, 1974. Apparently, actual operation had stopped when the sublessee who had operated the station for many years left the premises on December 31, 1973.

The City of Detroit issued orders regarding the property pursuant to the ordinance on August 16, 1974. After a period of time, defendant secured permission of the Detroit Board of Zoning Appeals to use the station as an auto reconditioning center. Defendant sought plaintiffs' approval of a proposed sublease for that purpose, but plaintiffs refused to consent. Defendant then declared that it considered the refusal to consent to the sublease a breach of the lease, and ceased to pay rent on March 31, 1975.

By its terms, the Zoning Board's approval of the alternative use as an auto reconditioning center expired on March 31, 1975, and, presumably, the original demolition order was thereby reinstated.

Plaintiffs commenced this action on May 9, 1975, claiming that the conduct of the defendant constituted waste under M.S.A. § 27A.2919. That section states:

(2)(a) Any guardian, tenant in dower, life tenant, or tenant for years who commits or suffers any waste during his term or estate, to the lands, tenements, or hereditaments, without having a lawful license to do so, is liable for double the amount of actual damages.

The complaint makes allegations of two sorts regarding the conduct of the defendant that plaintiffs believe constitute waste:

(1) That defendant removed equipment, boarded up the building and painted the building gray; and

(2) That defendant's conduct has led to the loss of the right to use the property as a service station, thus reducing its value.

The parties have indicated that the building involved does not comply with applicable set-back and lot size requirements under the City of Detroit's zoning ordinance. The present rules regarding set-back and minimum lot size were adopted prior to the last extension of the lease¹ as part of the general zoning ordinance, No. 390-G, which became effective on December 12, 1968. The set-back and minimum size rules were contained in section 94.0100 of ordinance No. 390-G.²

The operation of this station after 1968, therefore, constituted a nonconforming use of the property. The zoning ordinance provides that the right to continue the noncomforming use is lost if the property is vacant for two years. Ordinance No. 390-G, § 52.0300.

Plaintiff's first claim is that the actions of the defendant that had impact on the physical structure of the station constitute waste. The leading Michigan case regarding waste in connection with modifications of buildings is Pearson v. Sullivan, 209 Mich. 306, 176 N.W. 597 (1920). The Michigan Supreme Court stated:

The doctrine seems to be well established that a tenant cannot, without the consent of the landlord, make material changes or alterations in a building to suit his taste or convenience, and, if he does so, it is waste. And any material change in the nature and character of the buildings made by the tenant is waste although the value of the property should be enhanced by the alterations.

209 Mich. at 314, 176 N.W. at 600. In Pearson, the tenant proposed to make very extensive changes, including remodeling the storefront, removing and rearranging stairways and partitions, and bricking in a porch area to expand the size of the store.

The actions alleged to constitute improper physical alterations of the property in the instant case are described in paragraph 19 of the complaint:

. . . the defendant . . . did in fact paint the premises dark gray, boarded up the premises, removed the underground tanks, pumps, signs and all other necessary equipment to operate the premises as a service station, which in itself was for the convenience and use of the defendant, thereby creating waste by the material change in the nature and character of the building made by the defendant.

Painting the premises and boarding up the premises would not constitute a material change since those acts would not reduce the value of the lessors' interest. Unauthorized removal of equipment, including the items mentioned, might well constitute waste. However, such actions were expressly permitted here by the terms of the lease.

Paragraph III of the lease states, in part: Tenant may erect and install on the said premises such buildings, improvements and equipment as it may require for the conduct of its business thereon; may remove trees and shrubbery, may cut curbs, and construct and maintain and use driveways over, upon and across said premises, for ingress and egress of vehicles and persons. All buildings, improvements and equipment erected, installed or owned by tenant shall not become a part of the real estate but shall be and remain the property of Tenant, and Landlord grants unto Tenant full right to remove same at any time while this lease is in effect or any renewal or extension thereof . . ..

The affidavit in support of the motion for summary judgment states that defendant removed "its property from the station, including underground storage tanks, gasoline pumps, identifying signs, and related equipment." ¶ 10 (emphasis added). Plaintiff's affidavit in response indicates that substantial amounts of equipment that were on the premises in 1956 were sold to defendant at the time the parties entered into the lease. Affidavit of plaintiff BERNARD STEVENS, ¶ 10. The deposition of BERNARD STEVENS also contains statements admitting that defendant had installed the equipment that it later removed. See deposition of BERNARD STEVENS, pages 26-28.

Thus, the physical changes made in the property do not constitute waste.

The more novel claim of plaintiffs' is that the actions of the defendant have resulted in the loss of the right to use the premises as a service station, and that the loss of the right to use premises for a particular commercial purpose can constitute waste.

It is difficult to tell whether the claim is really for waste or whether it is a claim that the terms of the lease have been breached. Both theories should be discussed, however, since even though plaintiffs have not pleaded that they claim breach of lease (plaintiffs' affidavit in opposition to the motion asserts that defendant has breached the lease) if the Court concludes that the facts alleged in the complaint, together with the depositions and affidavits and accompanying exhibits reveal that such a claim is available, it could exercise its discretion to permit an amendment to allege such a cause of action.

Essentially, plaintiffs' argument is that the actions of the defendant in ceasing to operate a service station lead to the issuance of the demolition order issued by the City of Detroit, and that defendant's subsequent conduct has resulted in the loss of the right to conduct a service station business on the property or at least the right to do so in the manner that the business was conducted in the past (because of the presumed loss of the right to continue the nonconforming use).

There are a number of disputes regarding who is at fault for permitting the institution of the demolition order, who was responsible for its remaining in effect, and whose duty it was to take steps to comply with the order. Indeed, the factual record at this point would not permit a finding as to whether the right to use the premises as a service station has in fact been lost. In consideration of this motion, the Court must resolve disputed matters in favor of the plaintiffs and against the moving party. Thus, for the purpose of ruling on this motion for summary judgment, the Court must assume that the defendant's ceasing to operate a service station on the premises has resulted in the loss of the right of plaintiffs to use the premises for a service station. The determination of the motion depends upon whether either the duty to avoid committing waste to the premises or the lease imposes an obligation on defendant to preserve the plaintiff's ability to operate a service station on the premises at the end of the lease.

Defendant strenuously maintains that liability for waste can be imposed only for physical damage to the leased premises.

The basic structure and history of the M.S.A. § 27A.2919 supports that view. The prior version of the statute, C.L.1948 § 692.401, described waste more specifically:

If any

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