Working Capital 1, LLC v. Quality Auto Body, Inc.
817 N.W.2d 346
| N.D. | 2012Background
- Quality Auto Body leased commercial space from Working Capital for 2010–2011 with a renewal option for up to five one-year terms contingent on no default, 30-day notice, and a security deposit.
- Quality indicated in February 2011 it wished to renew; Working Capital conditioned renewal on curing defaults and timely payment of the security deposit.
- April 2011 payments: April rent paid (accepted for April 2011); April security deposit initially failed but was later paid; Working Capital served a default/termination notice on April 15, 2011.
- May 2011 rent was paid but later not accepted as rent; Working Capital planned to deposit the May check with the court in anticipation of eviction.
- June 2011 Working Capital sued for eviction, claiming holdover status and lease breaches; trial court granted immediate possession, past-due rent and late fees, and attorney’s fees; amended judgment entered September 2011; appeal proceeds as to September 6, 2011 judgment.
- Court held that the presumption of renewal under N.D.C.C. § 47-16-06 was rebutted and that Quality Auto Body was a holdover tenant, supporting eviction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was Quality a holdover tenant entitling eviction? | Working Capital argued holdover eviction authorized. | Quality contended lease renewal occurred and eviction not proper. | Holdover eviction sustained; presumption rebutted. |
| Does 47-16-06 create an automatic renewal in holdover situations? | Working Capital relied on holdover mechanics; renewal not automatic. | Quality urged automatic renewal under the statute. | Presumption rebutted; no automatic renewal. |
| Was renewal conditioned on timely security deposit payment? | Quality failed to cure defaults and timely deposit; renewal not achieved. | Quality argues renewal on terms; security deposit due at renewal. | Evidence supports failure to timely pay deposit; no renewal. |
| May the trial court’s attorney’s fees be reviewed on appeal? | Fees were proper under lease; trial court’s findings upheld. | Quality argued against attorney’s fees on various grounds but did not raise the issue properly. | Issue not preserved; not reviewed on appeal. |
Key Cases Cited
- Willman v. Harty Co., 305 N.W.2d 909 (N.D. 1981) (47-16-06 presumption is disputable, not automatic renewal)
- Foster v. Nat’l Tea Co., 19 N.W.2d 760 (N.D. 1945) (section 47-16-06 creates a disputable presumption)
- Nelson v. Johnson, 778 N.W.2d 773 (N.D. 2010) (evictions are summary proceedings; recodification context)
- Riverwood Commercial Park, LLC v. Standard Oil Co., 698 N.W.2d 478 (N.D. 2005) (eviction designed as a summary proceeding)
- Paulson v. Paulson, 801 N.W.2d 746 (N.D. 2011) (parties may not raise new issues for first time on appeal)