Truschinger v. Pak

• Court: Louisiana Supreme Court
• Writing for the Court: DIXON
• Citation: Truschinger v. Pak, 513 So.2d 1151 (La. 1987)
• Decision Date: 19 October 1987
• Docket Number: No. 87-C-0860,87-C-0860
• Parties: Hanina TRUSCHINGER v. Helen PAK, Buddy Pak, Mary Tsai, Mark Tsai and Mitchell Serio.

Page 1151

513 So.2d 1151

Hanina TRUSCHINGER v. Helen PAK, Buddy Pak, Mary Tsai, Mark Tsai and Mitchell Serio.

No. 87-C-0860.

Supreme Court of Louisiana.

Oct. 19, 1987.

R. Louis Carruth, New Orleans, for applicant.

Gary West, New Orleans, for respondent.

DIXON, Chief Justice.

This is a suit for damages for failure to consent to a sublease. The trial court found that the lessor, Mitchell Serio, unreasonably withheld his consent to a sublease between plaintiff Hanina Truschinger and co-defendants, Helen Pak, Buddy Pak, Mary Tsai and Mark Tsai. The court of appeal affirmed. Truschinger v. Pak, 503 So.2d 208 (La.App. 4th Cir.1987). We reverse.

This case involves a piece of property leased and subsequently subleased several times. In September, 1976, defendant-lessor Mitchell Serio leased property at 140 St. Charles Avenue to lessee Kenneth Upton, individually and as president of Flame-N-Burger, for use as a fast food hamburger restaurant. The property was located two doors from Serio's delicatessen at 130 St. Charles Avenue. The lease was to run from October, 1976 to October, 1986, with an option to renew for a second ten year term. In addition to a monthly rent of $900, Upton paid Serio $15,000 "as consideration for obtaining the lease." The lease also contained two clauses of importance in this case: (1) if Serio sold the building, the lease would be canceled and the lessee obligated to vacate upon twelve months' notice; (2) the lessee Upton was not permitted to sublease without the written consent of the lessor, Serio.

In August, 1977, Upton sublet the property to Art Spiropoulous who ran the business as the "Coffee Cove," selling Greek and American food. In addition to being obligated to pay the monthly rent, Spiropoulous paid Upton $15,000 "as consideration for obtaining this sublease," and Spiropoulous agreed to abide by the terms in the primary lease. Serio consented in writing to that sublease.

Spiropoulous and his wife, Lynne Portlock, divorced in 1980. As part of the property settlement executed by them in 1979, Portlock assumed the obligations of the sublease.

Both sublessor Upton and lessor Serio signed an "Agreement to Add Additional Party [Portlock] to Sublease" on January 7, 1980. Lynne Portlock subsequently sublet the property to plaintiff Hanina Truschinger on July 1, 1980. Truschinger agreed to abide by the terms of the primary lease and paid Portlock $32,000 consideration "for obtaining the sublease and for the trade name 'Coffee Cove.' " Truschinger, Portlock and Upton signed this sublease; Serio did not.

Although the primary lease stated that Serio's consent was necessary for subleasing, Truschinger nevertheless ran the business for three years until, planning to move to another city to help care for her sick mother, she found two couples, the Paks and Tsais, who were willing to buy the business and sublet the property. The Paks and Tsais planned to add some Oriental food items to the menu. In September, 1983, Swan Realty, through its agent, Kenneth Upton, negotiated the offer to purchase and sublease. The Paks and Tsais agreed to abide by the terms of the primary lease and to pay $80,000 as consideration for obtaining the sublease and for the trade name "Coffee Cove." Truschinger, as part of the agreement, consented to pay the agent's commission of 6%; Upton was to receive 3% or $2400. The offer was conditioned upon the approval of both sublessor Upton and lessor Serio. Upton approved; Serio did not. As a result of Serio's failure to consent to the sublease, the sale and sublease were never consummated.

Truschinger filed suit against Serio, ¹ alleging that he arbitrarily and capriciously withheld his consent, resulting in $80,000 damages for the loss of the sale.

At trial on the merits, Truschinger and Serio offered contradictory evidence on the events that occurred when Truschinger attempted to secure Serio's consent to the sublease. Essentially, Truschinger's testimony was that in September, 1983, she and her sister met with Serio at his delicatessen where he told Truschinger that he would sign the sublease for half the purchase price of the business--$40,000. Truschinger also testified to a second meeting, attended by herself, her sister, Mitchell Serio, Jack Serio, a nephew, and Nick Noriea, an attorney for Serio. Truschinger stated that Noriea told her to give Serio $40,000 to obtain his consent.

Further, Truschinger attested to a phone conversation between herself and Jack Serio in which the latter stated that if Truschinger could convince the purchasers to pay $1200 instead of $900 per month rent that Mitchell Serio would leave her alone. Truschinger's sister corroborated the testimony regarding the meetings.

Mitchell Serio and witnesses for the defense, Jack Serio and attorney Nick Noriea, denied that any discussion about money in exchange for consent ever transpired. Serio also introduced evidence of three letters written on his behalf by Nick Noriea. The first, dated October 11, 1983 and sent to Truschinger's attorney and Kenneth Upton, stated that Serio objected to any further subleasing of the property and that Serio considered the lease violated in three respects: (1) the Portlock-Truschinger sublease was entered into without Serio's written consent; (2) the purpose of the original lease had been greatly expanded; (3) the property had been poorly maintained.

The second letter, dated November 1, 1983, and sent to the attorney for the Paks and Tsais, requested a menu and description of the food to be sold at the "Coffee Cove." Noriea stated in the letter that Serio was negotiating with a prospective tenant for his own delicatessen and that that potential lessee planned to run an Oriental food business there.

The third letter, dated December 12, 1983, and sent to Kenneth Upton, informed him that he was in violation of his lease in two regards: (1) the use of the property in 1983 was not in accord with the "fast food hamburger restaurant" use stated in the primary lease; (2) Upton had not obtained Serio's written consent before subletting to Truschinger. Additionally, Serio testified that he also withheld consent from the sublease at issue here because he was negotiating at that time for the sale of the building in which the "Coffee Cove" was located.

The trial court held that Serio unreasonably withheld his consent and awarded Truschinger $80,000 in damages. The court noted that the only "real and valid objection that Mr. Serio could have to the sublease would be the operation of a competing Chinese restaurant" but concluded that "this excuse...