Adbar, L.C. v. New Beginnings C-Star

103 S.W.3d 799, 2003 Mo. App. LEXIS 239, 2003 WL 431910
CourtMissouri Court of Appeals
DecidedFebruary 25, 2003
DocketNo. ED 81159
StatusPublished
Cited by3 cases

This text of 103 S.W.3d 799 (Adbar, L.C. v. New Beginnings C-Star) is published on Counsel Stack Legal Research, covering Missouri Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Adbar, L.C. v. New Beginnings C-Star, 103 S.W.3d 799, 2003 Mo. App. LEXIS 239, 2003 WL 431910 (Mo. Ct. App. 2003).

Opinion

GLENN A. NORTON, Judge.

Adbar, L.C. appeals the judgment in favor of New Beginnings C Star on Ad-bar’s claim for breach of lease. We reverse in part and affirm in part.

I. BACKGROUND

New Beginnings provides rehabilitation services for alcohol and drug abuse to both adults and adolescents. In the fall of 1999, New Beginnings was searching for a new location and entered into negotiations with Adbar for lease of a budding in the City of St. Louis. New Beginnings received a preliminary indication from the City’s zoning administrator that its use of the property constituted a permitted use under the zoning regulations. New Beginnings and Adbar subsequently entered into a three-year lease. The total rent due for the three-year term was $273,000.

After the lease was executed, the City denied New Beginnings’ application for an occupancy permit on the grounds that the operation constituted a nuisance use under the zoning regulations. At trial, Alderman Freeman Bosley, Sr. testified that due to his opposition to New Beginnings moving into his Ward, he had caded the zoning administrator and asked him to reverse his preliminary indication that New Beginnings’ operation constituted a permitted use.

New Beginnings appealed the denial of the occupancy permit to the board of adjustment. Alderman Bosley and other neighborhood residents testified in opposition to New Beginnings at the board’s hearing. The board affirmed the denial of the permit. New Beginnings then sought a writ, which was granted by the circuit court, and New Beginnings was issued an occupancy permit. Alderman Bosley contacted the judge who issued the writ and asked him to reverse his decision. The judge declined. A few weeks later, at the City counselor’s request, the City revoked New Beginnings’ occupancy permit. New Beginnings filed a motion for contempt with the circuit court. The motion was granted, and the City re-issued the occupancy permit.-

[801]*801After the permit was reissued, New Beginnings began preparing to move in, including having some construction done on the building. At this same time, Alderman Bosley contacted then State Representative Paula Carter, chairwoman of the appropriations committee responsible for New Beginnings’ state funding. Alderman Bosley asked Representative Carter to “pull the funding” for New Beginnings. Alderman Bosley did not get a commitment from Representative Carter, but told her that “if you don’t get their funding, you are going to have trouble running” for re-election.

New Beginnings alleges that it was then contacted by Michael Couty, director of the Missouri Division of Alcohol and Drug Abuse, who threatened to rescind all state contracts with New Beginnings if it moved into the new location. New Beginnings convened a meeting of its board of directors to conduct a conference call with Director Couty. New Beginnings alleges that during that conference call Director Couty repeated his threat to rescind funding if it moved into the new location. At the end of the meeting, New Beginnings’ board decided not to occupy the building they had leased from Adbar. At trial Director Couty denied making any such threats to New Beginnings.

Adbar filed a petition for breach of the lease. New Beginnings asserted a defense of legal impossibility. On the first day of the trial, New Beginnings was granted leave to amend its answer to add the defense of commercial frustration. Following a bench trial, the trial court ruled that New Beginnings was excused from its performance under the lease because of commercial frustration. This appeal follows.

II. DISCUSSION

On review of this court-tried case, we will sustain the judgment of the trial court unless there is no substantial evidence to support it, it is against the weight of the evidence, it erroneously declares the law, or it erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). We accept the evidence and inferences favorable to the prevailing party and disregard all contrary evidence. Kassebaum v. Kassebaum, 42 S.W.3d 685, 692 (Mo.App. E.D.2001). We will defer to the factual findings of the trial judge, who is in a superior position to assess credibility; however, we independently evaluate the court’s conclusions of law. Id.

A. Commercial Frustration

In its first point on appeal, Adbar asserts that the trial court erroneously applied the law when it excused New Beginnings’ performance under the lease due to the doctrine of commercial frustration. We agree.

The doctrine of commercial frustration grew out of demands of the commercial world to excuse performance under contracts in cases of extreme hardship. Kassebaum, 42 S.W.3d at 699. Under the doctrine of commercial frustration, if the occurrence of an event, not foreseen by the parties and not caused by or under the control of either party, destroys or nearly destroys the value of the performance or the object or purpose of the contract, then the parties are excused from further performance. Id. If, on the other hand, the event was reasonably foreseeable, then the parties should have provided for its occurrence in the contract. Werner v. Ashcraft Bloomquist, Inc., 10 S.W.3d 575, 577 (Mo.App. E.D.2000). The absence of a provision in the contract providing for such an occurrence indicates an assumption of the risk by the promisor. Id. In determining foreseeability, courts consider the terms of the contract and the circumstances surrounding the formation of the contract. [802]*802Id at 577-578. The doctrine of commercial frustration should be limited in its application so as to preserve the certainty of contracts. Id. at 578.

New Beginnings alleged that the troubles it faced obtaining its occupancy permit, along with the actions of Alderman Bosley and Director Couty, combined to rise to commercially frustrate the lease agreement with Adbar. Ultimately, New Beginnings’ funding was never rescinded. In this case the intervening event was merely the possibility that the funding may be rescinded. For an organization that receives funding from the State, the possibility that their funding may be reduced or even completely rescinded is foreseeable. Furthermore, while the zeal with which Alderman Bosley attempted to keep New Beginnings out of his ward may have been surprising to the parties, it is certainly foreseeable that a drug and alcohol abuse treatment facility might encounter neighborhood resistance when attempting to move into a new location. At trial, the CEO of New Beginnings admitted that both the elimination of New Beginnings’ funding and opposition from neighborhood groups were foreseeable.

This court has addressed similar intervening events before. In Conlon Group, Inc. v. City of St. Louis, this Court found that structural defects in a 100 year-old building were foreseeable and, despite increased development costs, the agreement with the City’s redevelopment authority remained intact. 980 S.W.2d 37, 40-41 (Mo.App. E.D.1998). In Shop’N Save Warehouse Foods, Inc. v. Soffer,

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Bluebook (online)
103 S.W.3d 799, 2003 Mo. App. LEXIS 239, 2003 WL 431910, Counsel Stack Legal Research, https://law.counselstack.com/opinion/adbar-lc-v-new-beginnings-c-star-moctapp-2003.