Zalud v. Ethan Associates

• Decision Date: 30 March 1981
• Docket Number: No. 3-1180A342,3-1180A342
• Citation: 418 N.E.2d 309
• Parties: John A. ZALUD, Jr. and Elliott H. Singer, Appellants (Defendants Below), v. ETHAN ASSOCIATES, Appellee (Plaintiff Below).
• Court: Indiana Appellate Court

Page 309

418 N.E.2d 309

John A. ZALUD, Jr. and Elliott H. Singer, Appellants (Defendants Below), v. ETHAN ASSOCIATES, Appellee (Plaintiff Below).

No. 3-1180A342.

Court of Appeals of Indiana, Third District.

March 30, 1981.

Charles A. Asher, South Bend, for appellant Elliott H. Singer.

Donald E. Wertheimer, South Bend, for appellant John A. Zalud, Jr.

Robert D. Lee, Patricia O'Brien Cotter, South Bend, for appellee.

STATON, Judge.

Ethan Associates (Associates) filed an action as the lessor for the breach of a leasing agreement against the lessees, John A. Zalud, Jr. and Elliott H. Singer (Zalud). ¹ The court granted Associates a summary judgment ² as to the issue of liability. Later, a trial was held on the issue of damages in which the court found in favor of Associates. A judgment of $68,815.41 plus prejudgment interest was entered for Associates.

On appeal, Zalud raises nine issues for our consideration:

(1) Did the court err in its granting of the summary judgment as to liability?

(2) Did it err in ruling that the lease was enforceable?

(3) Was it error for the court to have concluded that Zalud could not have repudiated the lease at will?

(4) Did the court err in its calculation of damages?

(5) Was there error in the inclusion of an "unreduced" realtor's commission in the damage award?

(6) Was prejudgment interest properly awarded?

(7) Did the court err in concluding that Associates' efforts to mitigate damages were reasonable?

(8) Was it error for the court to have refused to award a set-off for the subsequent lease?

(9) Did it err in failing to make specific findings on all issues of fact?

We affirm.

I. Summary Judgment

On appeal, Zalud urges that the granting of the partial summary judgment was improper because there were "several questions of material fact necessary for the resolution of the issues of liability." In essence, the "several questions" set forth by Zalud deal with the materiality of the breach of the lease as related to an anticipatory repudiation argument.

The record indicates that, on June 16, 1976, Associates leased a parcel of land to Zalud for the construction and operation of a fast-food restaurant. Prior to June 16th, Associates had leased an adjoining parcel of land to Clancy Hill, owner and operator of a hardware store. In December of 1977, Zalud became aware that a portion of the land leased to him was also included in Hill's lease. The area affected by this 38-foot "overlap" contained ten of the restaurant's forty-one parking spaces and a small landscaped area. In an attempt to resolve the problem, Associates negotiated with Hill and the legal counsel for Zalud. The negotiations were, unfortunately, unsuccessful. On March 8, 1978, Zalud failed to pay the premium for the property insurance, pursuant to the lease agreement. On April 1, 1978, he ceased paying rent. Zalud continued to occupy the premises until September 2, 1978 when he, without giving notice to Associates, vacated the property.

When reviewing the granting of a summary judgment, we may only look to see whether the court correctly applied the law and whether there is any genuine issue of material fact. Ind. Rules of Procedure, Trial Rule 56(C); Krueger v. Bailey (1980), Ind.App., 406 N.E.2d 665. To determine whether there are any material facts in controversy the evidentiary matters before the court are to be construed in a light most favorable to the non-moving party. Tekulve v. Turner (1979), Ind.App., 391 N.E.2d 673, and any doubt is to be resolved against the movant. Kendrick Memorial Hospital, Inc. v. Totten (1980), Ind.App., 408 N.E.2d 130; Krueger, supra.

Contending that Associates had materially breached the lease by failing to demise the "overlap" area, Zalud claims that issues of fact exist in this regard. He also argues that this same failure bars Associates from suing on the lease and allows it only to recover for goods and services rendered. We cannot agree. His attempts to develop a variety of "fact questions" cannot change either the evidence or the findings. In its findings of fact and conclusions of law, the court stated:

"9. That as of the 8th day of March, 1978, defendant was in breach of his lease agreement for non-payment of insurance and was duly notified thereof by plaintiff;

"10. That as of the 1st day of April, 1978, defendants ceased paying rent in further violation of their lease;

"11. That the defendant has failed to render any annual accounting as called for in the lease in further breach of the lease;

"12. That until the first part of April, 1978, defendants were not in any manner interfered with in the peaceable enjoyment of the leased premises and at the time the only interference first occurred when Clancy Hill placed certain items for display on the landscaped portion of the overlap area.

"Based upon the above the Court now finds as ultimate fact that the defendants were never so interfered with in their usage and possession of the demised premises as to constitute any anticipatory repudiation by plaintiff or give rise to any affirmative defense or give rise to right to cancellation of the lease and that accordingly plaintiff is, as a matter of law, entitled to some rejudgment (sic) on the issue of liability of the defendants by virtue of the defendants breached (sic) of lease set forth in findings of facts numbered 9, 10 and 11 above. The Court further finds that there remains a justiciable issue as to the proper measure and amount of damages, if any, to which plaintiff is reasonably entitled."

In Indiana, a lessee who is evicted from a material part of the leased premises may elect to abandon the whole premises and terminate his obligation to pay rent. Talbott v. English (1901), 156 Ind. 299, 305-308, 59 N.E. 857; Hoagland v. New York, Chicago and St. Louis Railway Co. (1887), 111 Ind. 443, 446, 156 Ind. 299, 305-308, 59 N.E. 857; Hoagland v. New York, Chicago and St. Louis Railway Co. (1887), 111 Ind. 443, 446, 12 N.E. 83. A transitory and fleeting interference by the lessor with the lessee's possession is not, however, such an eviction. Talbot v. Citizens National Bank of Evansville (1968 7th Cir.), 389 F.2d 207. To constitute an eviction, the act of the lessor must be an actual eviction or an interference with possession so serious that it deprives the lessee of the beneficial enjoyment of the leased premises, i. e., a constructive eviction. Talbot, supra; Talbott, supra.

It has been repeatedly stated that in reviewing an appeal from a decision in which a judge has rendered findings of fact and conclusions of law, we will not set aside a judgment unless that judgment is erroneous. Ind. Rules of Procedure, Trial Rule 52; Lawrence v. Ball State University Bd. (1980), Ind.App., 400 N.E.2d 179; Matter of Estate of Apple (1978), Ind.App., 376 N.E.2d 1172. The purpose of making special findings is to provide the parties and the reviewing courts with the theory upon which the judge decided the case so that the right of review for error might be effectively preserved. Malbin & Bullock, Inc. v. Hilton (1979), Ind.App., 387 N.E.2d 1332.

The court's conclusion that Associates was entitled to a judgment on the issue of liability was amply supported by its findings # 9, # 10, # 11, and # 12. Such findings were sufficient "to disclose a valid basis" for the judgment. Malbin, supra, at 1334. Without a doubt, the leasing agreements of both Hill and Zalud should have been adjusted in view of the overlapping problem. A compromise along these lines was, in fact, attempted by Associates and Hill. Zalud, however, chose to take the position that the "double-leasing" was a material breach, and apparently tried to avoid the obligations of his lease by asserting that he had been constructively evicted. The fact remains that the "double-leasing" had no effect upon the restaurant's operations. ³ Zalud was not harmed; he was never deprived of the "beneficial enjoyment" of the use of the ten parking spaces or the landscaped area. ⁴

A summary judgment is a procedure for applying the law to the facts, when no factual controversy exists. Krueger, supra, at 668. This is precisely what the court did. Associates presented evidence which established that Zalud was never deprived of the physical possession or "beneficial enjoyment" of any of the property under his lease. Despite the "overlap," his access to the parking spaces was unencumbered. Zalud's evidence in this regard amounted to a claim that if Hill had chosen to expand, he might have had franchise problems. Such was far too speculative in nature as to be given any weight. We are not persuaded that the summary judgment was erroneous, TR. 52; it will not be set aside.

II. Meeting of the Minds

Zalud next argues that the lease was unenforceable as there was no certainty of terms. He claims that the "described real estate was not made available to Defendants, Defendants as a consequence were placed in breach of their franchise agreement, and certainly were left in the precarious position caused by Plaintiff's own breach." Despite Zalud's contentions to the contrary, we again note that the thirty-eight feet of overlapping property was always made available to him. In addition, he was unable to produce any evidence at trial which was not highly speculative as to his potential franchise problems. We might agree that several terms in the lease were technically uncertain. In a practical sense, however, Zalud had full use of the land leased from Associates. His retrospective argument that there was a failure of a meeting of the minds as to the amount of land leased must fail.

III. Repudiation of Lease

Claiming that "there simply was no other adequate remedy," Zalud contends that the court erred in not allowing him to repudiate the lease. He argues that Associates' "breach of the purported leasing agreement placed Defendants directly in violation of their franchise agreement."

When asked if the double-leasing problem made a...