Davenport Chester, LLC v. Abrams Properties, Inc.
2017 U.S. App. LEXIS 17082
| 8th Cir. | 2017Background
- Abrams Properties (tenant) built and managed a K‑Mart store on premises and subleased to K‑Mart; Chester (landlord) bought the property and leased it back to Abrams in 1977 with renewals through 2012.
- Abrams collected K‑Mart rent, paid taxes/insurance/maintenance, and remitted most rent to Chester; lease allocated maintenance and repair responsibility to Abrams (Article 6) and allowed Chester to cure defaults at Abrams’ expense (Section 13.01).
- K‑Mart closed in early 2012; Abrams failed to pay June 2012 rent and Chester terminated the lease effective September 12, 2012 and retook possession.
- After repossession, Chester’s inspector estimated over $2 million in repairs; Chester also discovered an encroachment (store built ~5 feet over property line) and bought adjacent land to clear title.
- Chester sued Abrams for breach of the terminated lease and waste, seeking repair costs, loss of fair market value, and expenses to acquire adjacent land; the district court granted summary judgment for Abrams, holding Section 26.01 limited Chester’s remedies to lease termination.
- Chester appealed, arguing Section 26.01 is ambiguous, conflicts with other lease provisions (Articles 6 and 13), and should be disregarded as repugnant; the Eighth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument (Chester) | Defendant's Argument (Abrams) | Held |
|---|---|---|---|
| Whether "no personal liability" in §26.01 is ambiguous | Means only officers/shareholders protected; corp still liable | Plainly exculpates the tenant corporation; "person" includes corporations under Iowa law | Not ambiguous; exculpates Abrams (tenant corporation) |
| Whether §26.01 conflicts with maintenance/indemnity provisions (Art.6, §13.01) | §26.01 nullifies landlord remedies to recover repair costs and renders other provisions meaningless | §13.01 and Art.6 allow landlord to cure or terminate and collect rent; §26.01 sensibly limits remedies to termination | No conflict; provisions are complementary and operative as written |
| Whether §26.01 should be disregarded as repugnant to lease purpose | Clause is repugnant because it defeats landlord protections elsewhere | Parties bargained for remedy limitations; repugnancy doctrine is narrow; parties may define remedies | Clause not repugnant or unconscionable; enforceable as written |
| Whether landlord may recover contract damages and waste after termination | Chester seeks repair, diminution, and land acquisition costs | Abrams contends §26.01 makes termination the sole remedy and limits tenant liability for waste | Held: Chester’s sole remedy was lease termination; claims for contract damages and waste barred |
Key Cases Cited
- Walsh v. Nelson, 622 N.W.2d 499 (Iowa 2001) (ambiguity in lease terms generally resolved as a matter of law)
- C & J Vantage Lease Co. v. Wolfe, 795 N.W.2d 65 (Iowa 2011) (courts give effect to contractual remedial provisions and interpret indemnity language in its ordinary sense)
- Alta Vista Props., LLC v. Mauer Vision Ctr., PC, 855 N.W.2d 722 (Iowa 2014) (when no relevant extrinsic evidence exists, contract interpretation is for the court)
- Mealey v. Kanealy, 286 N.W. 500 (Iowa 1939) (narrow application of repugnancy principle; a clause modifying earlier provisions is enforceable)