Sundown, Inc v. Canel Square Associates
| Decision Date | 12 June 1978 |
| Docket Number | No. 9324.,No. 9501.,No. 9325.,9324.,9325.,9501. |
| Citation | 390 A.2d 421 |
| Parties | SUNDOWN, INCORPORATED, Appellant, v. CANAL SQUARE ASSOCIATES, Appellee. SUNDOWN, INCORPORATED, et al., Appellants, v. CANAL SQUARE ASSOCIATES et al., Appellees. CANAL SQUARE ASSOCIATES, a partnership, Appellant, v. CERBERUS THEATERS, INC., Appellee. |
| Court | D.C. Court of Appeals |
John Lodge Euler and John Lewis Smith, III, Washington, D. C., for appellants, Sundown, Incorporated, et al., in Nos. 9324 and 9325.
Rodney F. Page, Washington, D. C., for Canal Square Associates, et al., appellees in Nos. 9324 and 9325, appellant in No. 9501. Carol W. Kinsbourne, Washington, D. C., with whom Donald H. Green, Washington, D. C., was on the brief, for Cerberus Theaters, Inc., appellee in No. 9501.
Before YEAGLEY and MACK, Associate Judges, and REILLY, Chief Judge, Retired.
These consolidated appeals involve three complaints, one cross-complaint, two counterclaims, and two setoffs concerning two leases on parts of Canal Square's building located at 3040 M Street, N.W.; one lease to Cerberus Theaters was for space for three theaters on the upper floor and the other to Sundown, Inc., was for a restaurant on the lower floor. There also is raised a question regarding the proper measure of damages to Cerberus for breach of those leases by Sundown and Canal Square.
We are called upon to determine whether Canal Square, the landlord, breached its lease with Cerberus, a theater, by failing to prevent interference with the latter's operations caused by amplified music coming from the other tenant, a restaurant operated by Sundown. We are required also to decide whether the loud music constituted a breach by Sundown of its lease with Canal Square. The trial court, sitting without a jury, answered both questions affirmatively. It awarded Cerberus a judgment of $60,000 against Canal Square, and awarded Canal Square a judgment of $36,564.80 against Sundown, as well as possession of the premises which Sundown had occupied. We conclude that the trial court was correct and accordingly affirm.
The facts of this case are relatively clear. Canal Square Associates, a limited partnership, hereafter Canal Square or landlord, has a long term lease on commercial property at 3040 M Street, N.W., in Georgetown. Charles Coyer and William Guy are general partners. The property was subleased to two tenants: Cerberus, Inc., since 1970, has operated three theaters on the upper floor; Sundown, Inc., beginning in 1971, operated a restaurant on the lower floor. James Haight, a party to the appeal in Nos. 9324 and 9325 is the general manager of Sundown. The focal points of this litigation are provisions in the leases Canal Square Negotiated with Cerberus and Sundown. We turn first to the Cerberus lease.
On May 22, 1969, Cerberus and Canal Square signed a 10-year lease for the upper floor which was drafted especially for this property. Canal Square was contemporaneously negotiating with a Sophia's restaurant to occupy the building's lower floor. There is no dispute that a major concern of Cerberus during its negotiations was the possibility that noise and odors from the future restaurant would interfere with its theater operations. Thus, various provisions were included in the Cerberus-Canal Square lease to accommodate these concerns. The relevant articles provide:
NINTH: CONSTRUCTION OF DEMISED PREMISES
A. Landlord agrees to and shall perform such modifications, alterations, additions and constructions, at its sole cost, as are necessary and appropriate to convert the existing premises into three movie auditoriums, completed toilet rooms and plumbing fixtures, and a lobby area, completed except for painting, decoration and items of decor. Such work shall include all mechanical, electrical, plumbing and general contracting work, sloping of the floors, acoustical treatment as required in the partitions and elsewhere, construction of exits and entrances. It is understood and agreed that all of the work to be done by the Landlord shall be pursuant to the preliminary plans and outline specifications initialled by the parties and made a part of this Agreement. The final plans and specifications shall conform to such approved preliminary plans and outline specifications. It is further understood and agreed that such work will affect the first story of the existing structure as well as small portions of the basement and second story.
B. Tenant agrees to install, at its own cost, all theatre equipment, such as carpeting, theatre seats, projectors, screens sound system, signs, vacuuming system, turnstiles, ticket booth, showcases for food, beverages and other items for sale in the lobby area; painting, decoration and items of decor in the demised premises.
C. Landlord shall exercise its best efforts to complete all of the work as approved by the parties hereto no later than October 1, 1969.
Landlord agrees that in the event of Landlord's failure to pay any sum or sums which Landlord is obligated to pay, the non-payment of which may result in a charge or encumbrance upon the demised premises, or in the event of Landlord's failure to perform any of Landlord's obligations hereunder, Tenant, in addition to any other rights it may have in law or in equity, shall have the right after thirty (30) days' prior written notice from Tenant to Landlord, to make payment of such sums or to perform such obligations, and thereupon Landlord agrees to reimburse Tenant for such sums, together with legal interest thereon until the same are repaid to Tenant, and Tenant shall have the right to receive an assignment of the claim of any payee against Landlord and shall have the future right to set-off against accruing rents or other sums payable to Landlord for such payment or expenditures made by Tenant, holding Landlord liable for any excess of such payments or expenditures over any amounts set-off against accruing rents and other sums, provided, however, the foregoing right of Tenant to setoff against accruing rents or other sums payable to Landlord shall be enforceable only against Landlord and its successors and assigns, but shall not apply to the holder of any mortgage or deed of trust on Landlord's interest or any of its successors or assigns which may acquire the Landlord's interest by virtue of a foreclosure of a mortgage or deed of trust.
A. Landlord agrees that it will not lease to or for any theatre operation any premises which it owns or controls in the area having a radius of two city blocks from the demised premises, for the term of this Agreement or any extensions thereof.
B. Landlord agrees that adequate means of construction and insulation will be used in the building housing the demised premises to prevent noise or odors emanating from any other persons in the building from interfering with Tenant's use of the demised premises, including particularly but not limited to kitchen noises and odors from the restaurant planned for the basement under the demised premises, and live or amplified music. Landlord agrees that such construction and insulation are essential for the Tenant's use of the demised premises.
Because Sophia's restaurant was unable to secure a liquor license, it never became the lower floor tenant.1 In its place, Sundown became the restaurant tenant when it signed a 10-year lease with Canal Square on March 9, 1971, contingent on a liquor license being obtained. The license was granted on July 2, 1971, to Sundown, operating as the Chesapeake Inn-Georgetown, a "family style restaurant without live entertainment." Portions of the Sundown-Canal Square lease relevant to this litigation follow:
6. Use of Leased Premises
Tenant shall not use, or suffer the Leased Premises to be used, for any disorderly or unlawful purpose. The Leased Premises are to be used by Tenant for the purpose of operating a restaurant and food service business and any other related legitimate business. Tenant shall have the right to offer for sale, and to sell to the general public such food and beverages (including alcoholic beverages) as are usually sold in fine restaurants in the metropolitan area of Washington, D.C., and in addition thereto, but not by way of limitation, cigars, cigarettes, and other tobacco products. Tenant agrees to keep the Leased Premises open for the regular conduct of its business aforesaid, for the lunch meal and the dinner meal at least six (6) days (except legal holidays or declared vacation periods) per week during the continuance of this Lease and for such other additional period of operation as may, in Tenant's judgment, be determined by the requirements to Tenant's patronage therein, except when prevented by strikes, fire, or other casualty or other causes beyond Tenant's control. Tenant shall not conduct any carryout business on the Leased Premises, but the foregoing shall not prevent Tenant from providing catering services to facilities outside of the Leased Premises.
In conducting the business herein authorized, Tenant covenants to comply with all applicable laws, regulations, and licensing requirements.
Landlord represents that there are presently, and that there will be at the date upon which the Leased Premises are opened for the conduct of business, no laws, covenants or restrictions which would prohibit or limit Tenant from operating on the Leased Premises a restaurant business with liquor service and entertainment. Landlord agrees upon request by Tenant to sign promptly and without a charge therefor to Tenant, but at Tenant's sole expense, any application for licenses and permits as may be required by Tenant for the conduct and operation of the business herein authorized or for the proper use of the Leased...
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