Tenn-Tex Properties v. Brownell-Electro, Inc.

PROPERTIES, TENN-TEX A Joint Ven

ture of James P. Atkinson and Robert Mathews, Jr., Plaintiff/Appellee,

C.H.

BROWNELL-ELECTRO, INC., and Av

net, Inc., Defendants/Appellants. Tennessee,

Supreme Miller, Court of Collins, Jr., Gregory W. W. Ovid Collins, Nashville, Nashville. Cornelius for defen- & dants/appellants. 18, Sept. Patterson, Bulso, Eugene N. Robert S.

Jr., Boult, Cummings, Berry, Conners & Nashville, plaintiff/appellee.

OPINION O’BRIEN, Justice. originated Chancery

This suit in the County complaint on a Davidson Properties filed and involves dispute obligations par- as to the agreement. Tenn-Tex, ties under a lease landlord, sought damages against Electro, Inc., and Av- net, guarantor, damages, including rent, taxes, insurance, repairs, interest and attorney’s fees, alleging breach of the lease agreement. The defendants counter- against plaintiff wrongful claimed agreement termination of the lease and re- bargain good fusal to faith. The trial court rendered in favor of the plaintiff against both defendants amount of assessed costs accordance with Civ.Proc.Rule based judgment by offer of defendants amount In a memorandum following pertinent findings made the fact: May plaintiff 21On entered into (10) year

a ten defendants, beginning August 1973 and expiring original on 31 1983. The 7,135 demised consisted feet, square approximately which was one-fourth of the in a by plaintiff. The remainder occupied by other ten- ants. 1980 and 1981 amend- increas- ments to the lease were executed 424

ing square footage (6) defen- made Atkinson had demands dants as other tenants the prem- vacated 'Brownell for ises. The 1981 amendment in delinquent; resulted not which were occupying defendant’s the entire year build- made demand for of a full ing. building already had been insured defendants. (2) The 1979 and 1980 amendments to (7) On 15 November agreement provided the lease that opera- Brownell moved most of its space accepted additional “as was is” tions its new On 19 condition, location. Novem- existing its subject to reason- ber Mr. Atkinson addressed corre- tear, prior able wear and to the effective agents spondence to two real estate indi- date of the lease agreement. amendment cating plan property. relet When possession, preexist- Brownell took court considered these communications ing damage to expansion space Atkinson’s additional indications of by prior caused tenants consisted of knowledge that Brownell intended carpeting covering, worn and floor stains floor, property. move from Tenn-Tex Brow- panelling, holes office nell did nor it desert or missing doors, not intend to did holes, damaged closet nail Although building. vacate the Tenn-Tex tiles, and sagging ceiling a defective parts building unoccu- bathroom vent damaged and a concrete pied, Brownell left office furniture and obligated sidewalk. Brownell was not building, kept the inventory in the tele- repair preexisting damage by pri- caused electric, phone, security gas, water and obligated or tenants. Plaintiff was system alarm service and make repairs certain included in ex- an kept was employees locked. Brownell’s hibit to the lease amendments but failed daily checked on the on a basis. comply agreement. with this ad- given Brownell had notice to Atkinson space occupied ditional by Brownell in vacating it accordance with the 27 October 1981 paid It later the November rent. agreement subject was taken to the same month rent for the of December. terms and conditions contained in the previous (8) lease amendments. 1982 counsel for 29 November Atkinson advised Avnet letter that (3) negotiations There were for renewal Brownell had vacated the of the lease. The unable paragraph defaulted under 18 of its agree on a rental rate. There no lease. Demand for remittance agreement for a renewal or extension of remaining unpaid of all lease beyond expiration the lease its date of 31 July term July 1983. (9) According to prepared an estimate (4) On 1 October 1982 Brownell advised January for James Tenn-Tex that had obtained else- expected for which Atkinson where and occupy lease Brownell to totalled premises beyond In his law trial court conclusions of (5) On 12 October 1982 James P. Atkin- held: son, Tenn-Tex, joint one owners of (1) Brownell was not default under the submitted a letter to counsel for agreement on 29 November 1982 Avnet, itemizing per- twelve paragraph subpara- the terms formed Subsequently, Brownell. graph agreement. 5 of the lease Brownell, on behalf of assured Atkinson that Brownell would take care Under the facts found herein there repair of nine twelve items. no Brownell to abandon Coun- intention sel was of the the three the lease. Brownell was not default items excluded were the result of reason- of the lease on 29 November preexisting attorney able wear and tear or dam- declared Brow- date Atkinson’s ages. nell default and demanded remittance Electro, unpaid remaining Inc. breached rent for the premises of vacating the by substantially wrongfully term. Tenn-Tex’s actions by Tenn-Tex declaring demanding the office warehouse default and agreement be- Properties; remaining payments the acceleration of the and Brownell Electro of the lease tween Tenn-Tex amounted to termination terminated; enti- that Tenn-Tex was reentry. never and constructive the through the term of tled to recover (3) Tenn-Tex was not entitled taxes, charges, insurance plus late rent, of interest penalty award and attorney’s fees. and sought complaint wrong- the since Further, fully the terminated lease. plaintiff of found that Court damages its failed the the Court that demonstrated to concerning by attempting to the rent re- disposition appeal would be effected per square the for foot let $3.00 preter- issue by a of the first and resolution recouping per rather than the $2.16 being mitted it as moot. square foot which would have been re- agree- As that the lease to the insistence ceived the lease. under ment the was never termi- (4) The Brownell evidence showed that evidence, nated, the dis- the court reviewed provisions complied and Avnet with the cussed authorities and concluded various insuring of the lease reference to prior to that the lease was not terminated relevant under at all times Av- expiration by its terms on 31 its own A claim net’s blanket all-risk for premiums in the amount of They liable that the defendants were held $1,780.57 was denied. plaintiff monthly to the rental install- (5) judgment Tenn-Tex was entitled to lease, plus ments term of $5,160 in the sum of ac- (5%) inter- percent penalty” “late and five cordance with CollectiveExhibit (10%)from percent est at rate of ten remaining repair cost claimed Tenn- the due date of rent installment damages, preexisting Tex related to dam- entry judgment. date of of held that ages occurring after removed plaintiff entitled to recover the taxes from as the result of due for 1982 and seven-twelfths of the reasonable and wear tear. taxes, $8,807.93, plus in the total sum of (6) Plaintiffs were not entitled to recover plaintiff to re- That was entitled interest. attorneys paragraph fees under 19 of the premi- of insurance cover a share lease because there was no breach or interest, paid, plus ums and remanded default defendants. proof further on an award reasonable judg- The court found that an offer of attorney fees. ment had been defendants on scope governed is review Our $40,000 1983 in the amount Appellate by Tennessee Rule of Procedure and assessed costs accordance with 13(d) required by stat and unless otherwise Tennessee Rule of Civil Procedure 68. ute, findings fact the trial review incorpo- The memorandum upon de novo court in civil actions shall be judgment into court’s final rated court, accompanied the record of trial awarding plaintiffs against defen- recovery by presumption of the correctness of $5,099.32 for in the sum of dants findings, preponderance unless the during first months of eleven accrued Knighton, Hass v. evidence is otherwise. 1982; repairs to the sum of (Tenn.1984); Foster 676 S.W.2d making premises; a total (Tenn.1988). Bue, $11,093.32. par- of both All other claims judge has seen and heard trial Where the respective pleadings ties their witnesses, issues of credi especially where denied. testimony in bility weight of are oral volved, deference review considerable The issues raised to those circumstanc- Brownell must still be accorded plaintiff by the asserted Brownell, es. Humphrey Witherspoon, v. David dent of Atkinson called to his Inc., (Tenn.1987). obligated 734 S.W.2d 315 Where attention that Brownell was depends if issue decision deter- make certain were not witnesses, credibility promptly consequence done mination legal judge trial is action. The tenor of this conversa- the best of the credibili- reported ty findings tion Avnet’s credibility are entitled Birk, David who letter great weight. communicated This is true because him that Brow- opportunity court alone has the nell intended to abide the terms of the appearance observe the and the demeanor expected to do same. Royal the witnesses. Insurance Co. v. requested pro- The letter an itemization Co., Alliance Insurance posed repairs in accordance with the lease (Tenn.App.1985). suggestion and concluded the that it with presented The first issue to this Court advantage would be to the mutual and urges the of that erred in profit parties of the to an reach amicable Tenn-Tex, ruling plaintiff/land- that the replied resolution. Atkinson short lord, mitigate damages duty had no to order, advising inspected he the unpaid rent. April and September on 20 ruling of the trial court on this issue and found a series of items twelve which has been noted heretofore. believed the he were tenant’s to expressly The Court of did not repair under lease He the terms. further hold duty that Tenn-Tex had no stated as an alternative he have esti- would find, damages. They interpre- did on their prepared mates for the work which above evidence, tation that there was no possible completed should be as soon as evidence the record that Tenn-Tex ever further avoid deterioration build- [to demanded from the turn, ing]. responded Mr. Birk attempted evicted or by evict the tenant they reviewing were set forth in items force or law. held was there no Atkinson, list submitted and re- any constructive eviction or surrender questing pursuant to the estimates the of- defendants, premises by therefore the made in of 12 fer the Atkinson letter Octo- duty issue re-rent moot because ber. The letter concluded the assur- with there no of an evidence unconditional every that and Avnet ance Brownell surrender the tenant. by the of the intention to abide terms respect repairs maintenance and with Apparently parties this responsibility. tenant’s which were the agreement operated amicably years opera- nearly terms for nine of its next Apparently the communication was During tion. that time there were three telephone to Birk in from Atkinson expanding amendments explained he that he not com- would the area within occu- ply with his offer to furnish estimates un- pied by early the defendant Brownell. agreed less Brownell beforehand negoti- began 1982 Brownell and Tenn-Tex repair the items of and maintenance ations renewal of lease. These prior correspondence in his at its cost listed negotiations period went on for a of several expense. It should be noted Av- months without effective net’s house counsel was officed New parties. Finally, between on 1 October City. responded once more York Counsel officer of James letter, seeking Brownell advised saying they advice company not Atkinson that the professional determine if contractor to renewing necessary its lease and that it had leased repairs were in fact the listed moving. it other to which would be the nature extent of the Immediately growing after notice this should be undertaken as maintenance that began parties, friction initiated letter indi- responsibility. Brownell’s over which emerging Atkinson. In a be- a conflict James conversation cated communicate with the Spiegel, tween him and should Frank Vice-Presi- place equipment obtaining profession- a lien on necessary other Brownell, bring his own contractor on repairs. al advice and estimates for the the work charge double for suggestion There was also a Rob- that Mr. damages. Tenn-Tex, joint ert and Avnet Mathews owner and sue dated previously engaged who had not another followed letter was This controversy, insisting November, that all of the advising Mr. Atkinson repair completed twenty- work be conjunction within commenced work had day period. time This was in a confirmed and was communication the former with communication from to Brow- completed within the anticipated would be manager nell’s in Nashville on 29 October couple of weeks. next inquiring progress about 1982 Mr. Atkinson premises. to be done to the Electro, president of Brownell wrote manager proceed- informed him address, informing their New Inc. at York ing require with those items which did him that in accordance estimates. He said Birk had advised enclosing copy of a agreement he was ongoing there were discussions between property real from the tax statement him and Mr. Atkinson in to reference those. Nashville, Metropolitan cov- Government they allowing informed ering leased the amount twenty days under the terms of the lease requesting since payment, repairs. gave to make the He also payable. the taxes then due and manager Nashville con- names three any letter concluded that sums immediately tractors. Avnet’s counsel would be deemed to be additional rent advising to they wrote Atkinson would con- by bearing interest at tact those at contractors once and ask them percent (10%)per the rate of ten annum to review the items listed in the letter pay- to from date demand date As October 12. soon as this was accom- A ment. similar letter the same date plished they would advise Mr. Atkinson insurance, enclosed an invoice for dated 27 further. 1982, in the amount October appears next communication onbe coverage on the fire and extended telephone, November followed a premises ensuing year. for the next letter from David Birk to Mr. Atkinson. amount, requested payment of letter Birk had advised not been able share Brownell that its contact the contractors had whose names unearned would be reimbursed provided by been Atkinson. Two them expiration of lease. upon On No- responded placed had not to calls with their approached Mr. Atkinson had vember 1982 answering and the in- service third had agents reletting rental in reference to two spected respond- but had not premises. correspondence His to each ed with an estimate. He advised that had not received official notice indicated he would, practicable, soon as as moving that Brownell was but complete Mr. Atkinson’s upon resolving property would be available exception gravel list with the of some problems vacancy. The and its apparently guards did not need re- which price per in the $3.00 was stated be pair, some rust on the outside discoloration NET, range, square foot tenant by a prior of the which was caused taxes, insurance and mainte- all real estate painting tenant and exterior strength of Atkinson’s com- On the nance. ordinary they considered to be wear and began one of these brokers munication responsibility. not the tear and tenant’s searching prospects oc- immediate requested further discussion of the He proposed per rate at cupancy $3.00 parties. matter The letter re- foot, NET. square absolute Atkinson, telephone flected that Mr. plain- 1982 counsel conversation, in- highly had seemed to be New tiff with defendants’ expressed had an intent communicated censed. He come advising that three-day proceeding, York initiate a eviction his attention Brownell had vacated the tenants landlord virtue of Atkin- premises in agree- conduct, violation of their lease son’s which amounted to a breach ment with Tenn-Tex and that this action of quiet enjoyment. the covenant for constituted default under the terms of their Sprankle, Tenn.App. Moe v. lease. (1948), the court said: By things this time had reached the state practice “It is a modern to lease where employed local counsel had been purposes long for business terms and flurry both and a of communication there occurs to why us no reason a les- commenced between them. see, establishing after his business on premises, the leased should be forced to There is evidence that sometime await eviction the lessor or surrender 29 December 1982 defendant’s counsel en- loss, great often before keys prem- deavored to turn over the claiming a breach of the covenant for ises to counsel for plaintiffs. It was interference with his use and agreed keys accepted would be without premises falling of the short of total a waiver of might claims their clients true, course, eviction. It is that the have under response the lease. Their spe- trespass. lessee has his action at law for noted, cifically “obviously duty we have a presupposes But such an negli- action damages accepting our and our gence while an action on the covenant is keys ... would the nature of upon based a violation of the mitigation preservation prop- not to disturb the tenant in the use or erty.” There is also evidence in the record Since, occupancy premises. as early part that as as the first of December held in Weinstein v. Barrasso Tenn. [139 advised, Mr. Atkinson had been counsel (1918)], 202 S.W. 920 supra, time, representing him at the that he had tenant cannot payment avoid the of rent attempt to minimize his long possession, so as he retains to hold damages. conjunction with that advice otherwise would in effect force the ten- Mr. begun Atkinson had listing the property ant either to surrender his for occupancy. immediate lose the benefit of the covenant and be In summary the evidence is clear relegated trespass.” to an action of that for a number of months to 1 unequivocally This Court said in Couch negotiated October 1982 the Hall, 635, 637, 412 v. S.W.2d 219 Tenn. 616 unsuccessfully for renewal of the lease quiet enjoyment that a covenant of agreement for another term. On that date protects the lessee from act of the defendants notified Mr. Atkinson that destroys quiet lessor which and benefi- renewing Brownell would not be enjoyment cial property. the use of the that it had leased other and would be A may constructive eviction arise from moving in the near future. He was ad improper conduct of the landlord in vised that Brownell intended to abide interfering enjoyment with the beneficial the terms of the lease and there is no premises by expulsion, threats of at- evidence this record that ever did others, tempts to lease to or unreasonable receiving Upon otherwise. this informa demands, insults, or assaults. Such mat- began making tion Mr. Atkinson demands ters, however, in order to constitute a con- which became more and more strident and eviction, substantially structive must inter- assertive, culminating in the declaration of enjoyment fere with the tenant’s beneficial through 29 November and the interference must defendants were default under the terms C.J.S., permanent be of a Land- nature. 52 of the lease. made Demand was for all Tenant, 458, p. lord and Sec. unpaid the amount of as payments well as acceleration of other We are of the that there was attempt part which were not due under the lease terms. sincere of defendants plaintiff. This leads to the ineluctable conclusion that to surrender the building there was a constructive eviction of the The rent on in No- building to add the their carrier vember and for the month of December. would have Nonetheless, whether or not the actions 1981 and policy as of 1 November their plaintiff in this case constituted a mate- sent to provide Tenn-Tex with a certificate impairment rial or substantial or interfer- request was ever attention. No Atkinson’s ence with defendants’ beneficial use of delivery copy policy of a question for the fact with the accordance judge, as the matter of surrender. Atkin- terms. On November Hall, supra p. See Couch S.W.2d for the son made demand policy for a insurance annual mitigation, As to the matter of the con- property he had insurance taken structive eviction of the tenant land- extending until October 1983. We a term lord renders that issue moot. agree the chancellor that the evidence with complied provi- defendants with the shows Plaintiffs made demand on defendants having sions year premi- of a full insurance the.lease covering coverage in times under Avnet’s um fire and extended insured at relevant the amount of de- trial court policy. all-risk blanket premiums nied the claim The chancellor found that Tenn-Tex was complied the basis that defendants had judgment tax entitled to provisions insuring the lease by of the 1982 payments for eleven-twelfths at all relevant times under a $5,099.32. Based the amount of Ap- all-risk blanket determination that the lease did their peals reversed this and awarded expire July until 31 the Court portion premi- of the insurance $8,807.93in Appeals awarded taxes for the period um for the 2 October 1982 plus year entire seven-twelfths in the amount of taxes. added at ten the 1983 interest percent (10%) plus ten interest from Octo- percent (10%) on the 1982 taxes judgment. ber 1982 to date of $5,562.90. amount of agreement, The pertinent The trial court found there was no provided part, keep the tenant of defen- breach or default on behalf against damage secured loss or recovery attorney dant and denied the coverage fire with extended insurance. fees. directed policies provide payment were to attorneys fees under the terms landlord, others, loss to the and be of the lease. requested. delivered the landlord if occupancy Brownell took of the entire on our the trial Based conclusion building on 27 October 1981. Prior to that finding reached the correct result in procured pro time Tenn-Tex brought ter- plaintiffs’ actions about a premium proper rated the insurance of his mination of the each ty portion in accordance findings, judg- concur his resultant we building occupied by its various tenants. entirety. ment in its On 13 1981 defendants ad is of the Court noting dressed a letter to James Atkinson insofar as it directs reversed copy of they had received a the insurance those any amounts excess of set premium with a invoice judgment is The trial court’s trial court. $1,828.02. They advised that since directing recovery reinstated occupied premises they the entire elect $11,093.32in accord- in the total amount of insure own ed to under their case is that court’s decree. The ance with percent policy because the one hundred proceedings as for such further remanded (100%) replacement value appeal required. The costs of this may be could be insured for an annual equally to jointly and charge approximately are taxed under Av- $250 they parties. net’s blanket stated

FONES, HARBISON, COOPER and

JJ., concur.

DROWOTA, C.J., not participating.

ORDER ON PETITION TO REHEAR

Plaintiff has filed a Petition to Rehear

asserting that the Court overlooked certain

evidentiary matters relative to defendants’ occupancy

continued prem- the demised

ises after constructive eviction the land-

lord.

Upon re-examination the evidence and

the issue raised the Court adheres to the

conclusion Opinion. reached Tennessee, Appellee,

STATE of JACUMIN, Appellant.

Richard T.

Supreme Tennessee,

at Nashville.

Oct.

Case Details

Case Name: Tenn-Tex Properties v. Brownell-Electro, Inc.

Court Name: Tennessee Supreme Court

Date Published: Sep 18, 1989

Citation: 778 S.W.2d 423

Court Abbreviation: Tenn.