Truetried Service Co. v. Hager

• Decision Date: 03 February 1997
• Docket Number: No. 70163,70163
• Parties: TRUETRIED SERVICE COMPANY, Appellant, v. HAGER et al., Appellees. Eighth District, Cuyahoga County
• Court: Ohio Court of Appeals

Page 78

118 Ohio App.3d 78

691 N.E.2d 1112

TRUETRIED SERVICE COMPANY, Appellant, v. HAGER et al., Appellees.

No. 70163.

Court of Appeals of Ohio,

Eighth District, Cuyahoga County.

Decided Feb. 3, 1997.

Daniel S. White, Beachwood, for appellant.

Richard G. Lillie and Gretchen A. Holderman, Cleveland, for appellees.

PORTER, Judge.

Plaintiff-appellant Truetried Service Company appeals from a judgment following a bench trial in favor of defendants-appellees Gene Hager and Brad Bush arising out of plaintiff's claim for rent under a five-year lease of commercial premises to defendants. Plaintiff contends that the trial court erred in holding that defendants' performance under the lease was excused by commercial impracticality. We agree and reverse for the reasons hereinafter stated.

The case arose out of plaintiff's lease of commercial property on E. 185th Street in Cleveland to defendants for use as a tavern and restaurant in December 1992. The written lease agreement provided for a five-year term from January 1, 1993 through December 31, 1997 at fixed rent for the first two years ($975 payable monthly) and thereafter at a variable rent indexed to the Consumer Price Index. The leased premises were part of a commercial strip of which plaintiff was the lessor. Although the lease provided that the premises were let "together with the right to use the area behind the said premises for parking purposes of LESSEE and LESSEE'S employees," the lease was silent on arrangements for where the lessees' patrons of the tavern and restaurant would park. The lease was also silent on what zoning conditions may have inhibited the operation or use of the facility for tavern and restaurant purposes. The premises had previously been occupied by a shoe store. The form lease was apparently drafted and prepared by lessor's agent, attorney Michael A. Shore, but was negotiated with various attorneys for defendants.

According to testimony at the bench trial, defendants began renovating the property as soon as they took possession in January 1993. They tore down a wall that divided the interior and walls around two lavatories. They tore down a set of fluorescent lights, took out basement wiring, and dug a three-foot-deep hole that was two feet wide and six feet long in the cement floor in order to put in pipes for a larger bathroom. After about two months, the defendants discovered that the roof leaked and that the basement joists had been ruined by a previous fire. The defendants told Shore about these problems, but according to them, the problems were never fixed. According to Shore, the leaky roof was fixed as soon as the weather permitted, and there was nothing wrong with the basement joists.

The defendants submitted their floor plans to the Cleveland building inspector in January or February 1993. When the inspector saw the plans and discovered that the defendants' tavern was to seat between eighty and one hundred people, the inspector informed them that they were going to have parking problems, as the city zoning ordinances required one parking space for every four people, and one parking space for each employee. The whole shopping strip had only eight parking spaces allotted to the common parking area behind the strip. The defendants informed Shore about the parking problem and were informed that they could have five of the eight spaces in the back of the building and that they should talk to the owner of the parking lot across the street to obtain more parking space. The defendants contacted the parking lot owner to see if they could lease thirty spaces. The owner refused to lease them the additional space. They also tried to rent spaces from other private parking lot owners near the property without success.

Defendants also had several conversations with Cleveland Councilman Polensek, who told them that the Town Association, an organization of local merchants, did not want another tavern on East 185th and that he would do everything he could to make sure their tavern did not go in there. Defendants admitted that although they considered making the tavern a topless bar, they considered doing that only if the tavern was not making enough money. Since Polensek was strongly opposed to such a bar, they agreed they would not run that type of establishment.

Defendants admitted that they never filed for a variance from the parking requirements, because their discussions with Polensek and the building inspector led them to believe such an act would be hopeless.

Defendants also admitted that they have not returned the premises to their original condition as required by the lease. They did, however, offer to have it fixed up, but Shore never responded to their offer.

In the fall of 1993, defendants informed Shore that due to problems they were having, they would not be able to use the property as a tavern and no longer wanted the premises. Shore informed them he needed a letter from them stating their desire to get out of the lease, so that he would have authority to try to find another lessee for the premises.

On October 25, 1993, Shore drafted and sent a letter to defendants to sign. The letter was addressed to Shore and stated as follows:

"The purpose of this letter is to confirm our telephone conversation relating to the storeroom which we lease from Truetried Service Co. and which is located at 692-694 East 185 Street. As you know the lease on the premises expires on December 31, 1997.

"You are aware of the fact that we have not been able to transfer a liquor license to the premises as originally contemplated. For that reason we would appreciate it if you would attempt to lease the premises to another lessee. We understand that we are obligated for the obligations on the lease for the balance of the lease term and for any costs that might be incurred in re-leasing the premises to an acceptable tenant but we do expect you to mitigate our damages as much as possible. Obviously, any rent collected from another tenant would be utilized to reduce any obligations that we might have.

"We will make arrangements to restore the premises to the condition in which we found them at the time of our first occupancy and we will vacate the premises promptly upon notification of another tenant."

It was signed by both defendant lessees. After signing the letter, the defendants quit the premises and paid no further rent, and they did not restore the property to its original condition.

Plaintiff filed suit in Cleveland Municipal Court on January 24, 1994 for past due rent and the cost of restoring the premises. The defendants counterclaimed for the rental paid from the inception of lease and the cost of renovations. The case exceeded the monetary jurisdiction of municipal court and was transferred to common pleas court pursuant to Civ.R. 13(J) and R.C. 1901.17. Following extensive discovery and denial of dispositive motions, the case proceeded to a bench trial on June 7, 1995.

At trial, plaintiff's agent Shore testified to past due and future rent of $84,690.10 plus $7,600 for damages done by defendants' renovations. The evidence from Cleveland's zoning administrator also revealed that defendants never filed the required applications for permits or licenses to commence business at the location or to obtain zoning variances for the parking problems. The defendants admitted that Councilman Polensek had expressed opposition to their plans to open "another bar on East 185th Street" and particularly did not want "adult" entertainment. Defendant Hager acknowledged that no attempt had been made to transfer a liquor permit to the leased premises.

On June 9, 1995, the trial court found generally for defendants on plaintiff's amended complaint and for plaintiff on defendants' counterclaim. On January 10, 1996, the trial court entered findings of fact and conclusions of law. It found that "at the time the lease was entered into, certain ordinances were in effect which would render continued performance impractical." As a matter of law, "the lease in question [was] void from its inception." No restitution was available on the counterclaim "due to impracticality of performance under the lease."

From these rulings a timely appeal by plaintiff lessor ensued. Defendants did not cross-appeal the judgment against their counterclaim.

Plaintiff's sole assignment of error states:

"The trial court erred in finding for the defendants-appellees on the plaintiff-appellant's amended complaint."

Our review of the trial court's findings of fact and conclusions of law is limited to determining whether the lower court properly applied the law to the facts and determined the facts consistent with the evidence. Cleveland v. Assn. of Fire Fighters, Local 93 (1991), 73 Ohio App.3d 220, 226, 596 N.E.2d 1086. The trial court's findings will not be set aside unless the trial court manifestly disregarded the weight of the evidence or violated a principle of law in making its findings in arriving at its conclusions. Bowlin v. Black & White Cab Co. (1966), 7 Ohio App.2d 133, 141, 36 O.O.2d 288, 292-293, 219 N.E.2d 221, 226.

We find that the trial court erred as a matter of law in finding that commercial impracticality was a bar to enforcement of the lease pursuant to its terms. We have to look no further than the defendants-appellees' brief to find the general principles applicable to this case. Attached thereto is F & R Ent. v. Phillips (May 21, 1990), Montgomery App. No. 11711, unreported, 1990 WL 68968, which states as follows at 2:

"In Ohio a lease for real property is a contract as well as a conveyance of an interest in that property. Consequently, the principles of construction applicable to contracts also apply to lease agreements. See 65 Ohio Jurisprudence 3d (1986), Landlord and Tenant, Sec. 103. As with a contract, a lease is construed most strongly against the party who prepared it. See 65 Ohio Jurisprudence 3d (1986), Landlord and Tenant, Sec. 108.

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