60 N.E.3d 274
Ind. Ct. App.2016Background
- In 2009 Restoration Church leased Polk Place from Randy Faulkner & Associates (RFA) for $100/month with six one-year renewal options; lease required written notice of intent to renew at least 30 days before term expiration and certain donation receipts to document below-market rent.
- Church members invested substantial labor and $435,906.79 restoring the premises; Faulkner later had a falling-out with the Church and its pastor.
- The Church repeatedly failed to give timely written notice to exercise renewal options; RFA notified the Church of nonperformance on Sept. 24, 2010; the Church’s written renewal and $1,200 payment arrived after the original term expired.
- Church never provided the donation receipts required by the lease and continued occupying the premises as a holdover tenant paying the same $100/month rent; RFA sent a 60-day notice to vacate on July 27, 2012 and the Church vacated Sept. 6, 2012.
- The Church sued RFA and Faulkner for breach of contract; RFA and Faulkner counterclaimed for breach and torts (including tortious interference). After a bench trial the court awarded the Church over $322,000 on breach of contract, found for RFA/Faulkner on tortious interference but awarded them no damages (speculative), and sanctioned the Church $2,500 for fabricated documents.
- On appeal, the court consolidated the issues to whether RFA waived the 30-day written notice requirement and whether RFA/Faulkner’s tort damages evidence was speculative.
Issues
| Issue | Plaintiff's Argument (Church) | Defendant's Argument (RFA/Faulkner) | Held |
|---|---|---|---|
| Whether lessor waived the lease’s 30‑day written notice condition precedent to exercise renewal options | RFA accepted late rent payments and thereby waived strict notice; acceptance of rent signaled consent to renew | The lease required timely written notice; mere holding over and acceptance of rent (and even acceptance of lower holdover rent) does not waive the notice condition; non‑waiver provisions preserve lessor’s rights | Reversed trial court: no waiver. Church defaulted on renewal; RFA entitled to evict after proper notice and did not breach. |
| Whether RFA/Faulkner proved damages for tortious interference with business relationships | (implicitly) Faulkner’s testimony showed he sold The Christian Phonebook at a discounted price because Wood left due to Church statements, supporting damages | Evidence of lost value and causation was speculative and not sufficiently probative | Affirmed trial court: damages finding of speculative is not clearly erroneous; RFA/Faulkner recover no tort damages. |
Key Cases Cited
- Int’l Bus. Machs. Corp. v. State, 51 N.E.3d 150 (Ind. 2016) (appellate standard for reviewing bench trial findings and conclusions)
- Harrison v. Thomas, 761 N.E.2d 816 (Ind. 2002) (waiver of conditions precedent may be shown by conduct; waiver is ordinarily a factual question)
- Carsten v. Eickhoff, 323 N.E.2d 664 (Ind. App. 1975) (where lease stipulates notice as condition precedent, holding over and payment of rent does not constitute sufficient notice or waiver)
- Norris Ave. Prof’l Bldg. P’ship v. Coordinated Health, LLC, 28 N.E.3d 296 (Ind. Ct. App. 2015) (acceptance of payments consistent with option terms can support waiver in some circumstances)
- HK New Plan Marwood Sunshine Cheyenne, LLC v. Onofrey Food Servs., Inc., 846 N.E.2d 318 (Ind. Ct. App. 2006) (contract interpretation requires giving effect to parties’ intent as expressed in the lease)