TCN Invs., LLC v. Superior Detail

• Decision Date: 10 December 2019
• Docket Number: WD 82342
• Citation: 588 S.W.3d 245
• Parties: TCN INVESTMENTS, LLC, Respondent, v. SUPERIOR DETAIL, Lonnie Vaught and Julie Vaught, Appellants, v. Todd C. Neimeyer, Respondent.
• Court: Missouri Court of Appeals

588 S.W.3d 245

TCN INVESTMENTS, LLC, Respondent,

v.SUPERIOR DETAIL, Lonnie Vaught and Julie Vaught, Appellants,

v.Todd C. Neimeyer, Respondent.

WD 82342

Missouri Court of Appeals, Western District.

OPINION FILED: December 10, 2019

Daniel G. Beckett and Matthew R. Quetsch, Columbia, MO, Attorneys for Respondents.

Thomas M. Schneider, Columbia, MO, Attorney for Appellants.

Before Special Division: Mark D. Pfeiffer, Presiding Judge, and Edward R. Ardini, Jr., and Thomas N. Chapman, Judges

Mark D. Pfeiffer, Presiding Judge

Superior Detail, LLC ("Superior Detail"), the lessee under a lease agreement with TCN Investments, LLC ("TCN"), and Mr. Lonnie and Ms. Julie Vaught ("the Vaughts"), personal guarantors of Superior Detail’s obligations under the lease agreement (jointly "Superior"), appeal the judgment of the Circuit Court of Boone County, Missouri, ruling in favor of TCN on its breach of lease and guaranty claims against Superior Detail and the Vaughts respectively. We affirm.

Background¹

TCN entered into a commercial lease and guaranty agreement ("the Superior Lease") with Superior Detail and the Vaughts on August 23, 2014, for the rental of a portion of TCN’s commercial building and surrounding premises located in Columbia, Missouri ("the leased premises"). The Superior Lease was a term lease for an express lease term described in paragraph 2 of the Superior Lease as "beginning on August 1, 2014, and ending on July 31, 2017." The Superior Lease provided for escalating rent amounts triggered on each one-year anniversary through the term of the lease.

Provisions of the Superior Lease relevant to Superior’s appeal are as follows:

Paragraph 12 of the lease governed the alteration and improvement of the leased premises by Superior Detail, and provided, in relevant part:

Tenant shall not make any alterations or improvements to the Premises without Landlord’s prior written consent , which consent shall not be unreasonably withheld so long as any such proposed alterations or improvements do not affect the structural integrity of the building and provided that any such alterations or improvements shall, at Landlord’s option, at the end of the Lease term, become Landlord’s property or, alternatively, be removed by Tenant prior to the end of the Lease term at Tenant’s sole cost and expense.

Should any such alterations or improvements be removed by Tenant, Tenant shall repair all damage to the Premises occasioned by such removal.

(Emphasis added.)

Paragraph 16 of the lease governed default, and provided, in relevant part:

It is agreed that (i) if Tenant fails to pay the rent or any part thereof or any other sum due Landlord hereunder when due and such failure continues for five (5) days after written notice thereof from Landlord; or (ii) if Tenant fails to perform in accordance with any other covenant, condition, term, or provision of this Lease to be kept and performed by Tenant and such failure continues for thirty (30) days after written notice thereof is given by Landlord to Tenant; ... then and in any of such events, Tenant shall be in default hereunder.... Should Tenant be in default hereunder, Landlord may: (a) terminate this Lease; or (b) it may from time to time without terminating this Lease, make such alterations and repairs as may be necessary in order to relet the Demised Premises and relet said Demised Premises or any part thereof for such term or terms (which may be for a term extending beyond the term of this Lease) and at such rental or rentals and upon such other terms and conditions as Landlord in its sole discretion may deem advisable. Upon such reletting without termination, all rentals received by Landlord from such reletting shall be applied, first to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord; second, to the payment of any costs and expenses of such reletting, including brokerage fees and attorneys’ fees and costs of such alterations and repairs; third, to the payment of rent due and payable hereunder and the residue, if any, shall be held by Landlord and applied to the payment of future rents as the same may become due and payable hereunder.^{[2 ]}

(Emphasis added.) In August 2014, Superior Detail opened its car detailing business at the leased premises.

In 2015, Superior Detail removed landscaping from the leased premises and replaced the landscaping with a concrete pad measuring approximately forty feet by sixty feet in front of the building so that Superior Detail could park cars in that space. Superior Detail did not obtain prior written consent from TCN for this project and, in fact, TCN never consented to this project.

In December 2015, Superior Detail stopped paying rent, with nineteen months remaining on the term of the Superior Lease. In February 2016, Superior Detail vacated the leased premises.

Without terminating the Superior Lease, TCN relet the leased premises by entering into a new lease with Unifirst Corporation for a term from May 1, 2016, through April 30, 2019, with an option to extend the lease for an additional three years ("the Unifirst Lease"). Unifirst entered the Unifirst Lease on the condition that TCN alter the height of the loading dock area and truck area adjacent to the loading dock area of the leased premises to accommodate Unifirst’s business needs of loading and unloading large trucks for its uniform cleaning business. TCN incurred the expense of engineering fees of $1,187.50 to design the required alteration and paid an excavating and concrete business $19,950 to implement the necessary alteration by excavating near the existing door and pouring additional concrete to allow Unifirst’s trucks to access the loading dock. Thus, the total cost related to altering the loading dock height and surrounding loading area on the leased premises was $21,137.50. TCN received $41,250.00 in rent from Unifirst from May 1, 2016, through July 31, 2017, the date upon which the lease term expired on the Superior Lease.

TCN eventually filed a first amended petition for breach of the Superior Lease (including the lease guaranty terms) on August 18, 2017, which sought unpaid rent and other lease-related damages from Superior Detail as the lessee and the Vaughts as the guarantors. Superior filed their answer and asserted both a counterclaim and a cross-claim.

The case proceeded to a bench trial before the trial court and, after hearing the evidence and arguments of the parties, the trial court issued its judgment in favor of TCN and against Superior Detail and the Vaughts, jointly and severally, on all claims, counterclaims, and cross-claims.

After offsetting the total damages under the Superior Lease by the rent received by TCN from the Unifirst Lease ($41,250) up to the expiration of the term of the Superior Lease on July 31, 2017, the trial court awarded remaining unpaid damages to TCN in the amount of $44,400.12.³ After awarding attorney’s fees of $27,637.00 to TCN as the prevailing party (and as authorized by the terms of the Superior Lease),⁴ the trial court entered total judgment in favor of TCN in the amount of $72,037.12. As relevant to this appeal, the trial court awarded damages related to altering the loading dock area of the leased premises in the amount of $21,137.50 and damages related to the cost of restoring the landscaping that had been altered by Superior Detail without the consent of TCN in the amount of $9,800.

This appeal timely follows.

Standard of Review

Because this case was bench-tried to the court below, the trial court’s judgment will be affirmed unless it is not supported by substantial evidence, against the weight of the evidence, or erroneously declares or applies the law. R & J Rhodes, LLC v. Finney , 231 S.W.3d 183, 187 (Mo. App. W.D. 2007) ; Murphy v. Carron , 536 S.W.2d 30, 32 (Mo. banc 1976). The interpretation of a contract, including a lease agreement, is a question of law, which we review de novo. R & J Rhodes, LLC , 231 S.W.3d at 187.

Analysis

On appeal, Superior does not dispute the validity of the Superior Lease or contend that it is ambiguous in any respect. Superior Detail does not dispute that it breached the lease, and the Vaughts do not dispute that they have guarantor liability for any sums due as a result of Superior Detail’s breach of the Superior Lease.

In four points on appeal, Superior complains that (I) the trial court erroneously applied the law by misinterpreting the Superior Lease when it only offset the damages Superior owed under the Superior Lease by the amount of rent paid by Unifirst up to the end of the express term of the Superior Lease, rather than all rent paid by Unifirst including beyond the express term of the Superior Lease; (II) the trial court erroneously applied the law by awarding the $21,137.50 TCN spent to alter the leased premises to induce Unifirst to enter into the Unifirst Lease as a cost of reletting; and (III & IV) the trial court’s award of $9,800 for removing the concrete pad and replacing it with the landscaping that existed on the leased premises prior to Superior Detail’s unauthorized removal of the landscaping during the time it maintained possession of the leased premises because such award of damages was against the weight of the evidence and constituted an abuse of discretion.

I. Damages Offset

"The cardinal principle of contract interpretation is to ascertain the intention of the parties and to give effect to that intent." Dunn Indus. Grp., Inc. v. City of Sugar Creek , 112 S.W.3d 421, 428 (Mo. banc 2003) (citation omitted). It is elementary that "[t]he designation of a lease term is an essential element of a lease. The lease term is required to be for a definite and agreed-upon period, and it is essential to the validity of the lease that it prescribes with reasonable certainty the date of commencement and the duration of the term of the lease." 52 C.J.S. Landlord & Tenant § 358 (2019) (footnotes omitted).

Here, there is nothing unclear or indefinite in the parties’...