D.L. Development, Inc. v. Nance

894 S.W.2d 258, 1995 WL 103825
CourtMissouri Court of Appeals
DecidedMarch 9, 1995
DocketNo. WD 49136
StatusPublished
Cited by6 cases

This text of 894 S.W.2d 258 (D.L. Development, Inc. v. Nance) 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
D.L. Development, Inc. v. Nance, 894 S.W.2d 258, 1995 WL 103825 (Mo. Ct. App. 1995).

Opinion

LOWENSTEIN, Judge.

This appeal arises from a landlord-tenant relationship gone sour. In a nutshell, the appeal arises from the following: 1) landlord rented a building to tenant for commercial use; 2) tenant wanted permission to sublease the building and asked for landlord’s consent; 3) lease provided that landlord’s consent to a sublease could not be unreasonably withheld; 4) landlord withheld consent; 5) tenant successfully sued landlord for breach of contract in Circuit Court.

D.L. Development, Inc. (tenant) had 68 years remaining on a 99 year commercial lease, dated June 1, 1962, with Nance (landlord) for a five to seven acre tract. In February, 1991, tenant negotiated with McCaw Cellular Communications to potentially sublease 4,900 square feet of the tract. The proposed use was the location of a cellular telephone antenna on a portion of the leased premises.

On March 4, 1991, tenant’s attorney, Mr. Meise, mailed a letter to landlord requesting that she consent to the sublease, which she forwarded to her agent, her son, in Texas. On March 11, 1991, landlord’s agent wrote a letter to Mr. Meise stating, “Because it would not be in our best interest, we ... are declining this proposal.” The son wrote and sent this letter before requesting or obtaining a copy of the proposed sublease. Because the sublease consent was declined without a stated reason, Meise called landlord’s agent for an explanation, and agent told him that there would be no consent to sublet unless the original lease between landlord and tenant was renegotiated.

On January 21,1992, tenant filed a petition for breach of contract. The petition prayed for damages in the form of the loss of the subrent which tenant would have received from the proposed subtenant. The trial court concluded that the refusal of landlord to consent to the sublease was arbitrary and awarded tenant $8,400 in damages and costs.

Landlord claims the trial court erred: 1) by ruling her refusal to consent as arbitrary; and 2) by awarding $8,400 in damages to tenant because such damages were contingent and speculative.

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Landlord first claims the trial court erred by finding her refusal to consent was arbitrary.

In this court tried matter, this court must affirm the judgement of the trial court unless it is not supported by substantial evidence, is against the weight of the evidence, or incorrectly declares or misapplies the law. See Rule 73.01; Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976); Hansen v. Gary Naugle Constr. Co., 801 S.W.2d 71 (Mo.1990).

The main crux of landlord’s appeal is that there was a crucial, important reason justifying the nonconsent of the sublease, which the trial court failed to properly consider in deciding her refusal to consent was arbitrary.

Landlord is, in essence, claiming she had all the justification in the world for withholding consent, because the proposed sublease contained provisions which were different and somewhat contradictory from those in the original lease, even though those reasons were not communicated to the tenant.

On the other hand, the trial court found she acted “arbitrarily.” Arbitrary means “without rational basis” and “without cause based upon law,” because she failed to even [260]*260consider, or obtain the sublease before withholding consent, and failed to state reasons for doing so in the letter to the tenant. Canal Nat’l Bank v. United States, 258 F.Supp. 626 (D.C.Me.1966).

The main case in this area is Haack v. Great Atlantic and Pacific Tea Co., 603 S.W.2d 645 (Mo.App.1980). Landlord cites this case at length in support of her proposition that a decision not to sublet is subject to a presumption of “good business judgment”. Id. at 650. Therefore, when a sublease affects the landlord’s business, the tenant wishing to sublease must prove that the landlord’s noneonsent is not based on good business judgment in order to recover under a breach of contract theory. Id.

The facts of Haack are as follows: The landlord (Haack) had a commercial lease with tenant A & P (a grocery company). A & P said it needed to sublease to a non-food operator (furniture store), because it could not find a lucrative enough food-related sub-lessee. Id. at 648. Before asking Haack for permission to sublet, A & P sublet the property to the furniture store. Id. After the fact, A & P wrote Haack, asking his permission. Id. Haack returned with a letter asking for information on who the subtenant was and for some information relating to the anticipated sales and financial condition of the subtenant; making his consent conditional on the release of such information. Id. at 648. After the information reached Haack, he declined consent, stating that because the proposed sublessee would not make sales in excess of $1,400,000 the sublease would not be lucrative enough, specifically that there was “no reasonable likelihood” that the sales of the furniture store would “approach” the amount provided for in the lease to general percentage rentals. Id. at 649.

In finding for Haack, the Court of Appeals ruled, “to not be arbitrary the decision had to be a reasonable exercise of business judgment on the part of the lessor.” Id. at 650. In addition, it held each case must be reviewed on its own specific facts. Id.

Landlord claims Haack helps her because her decision, too, was based on sound business judgment. This claim is rejected. Nowhere in the letter declining consent is there a reason given for the rejection. There is no evidence that the landlord ever even read the proposed sublease, nor are the claimed “inconsistencies” between the main lease and the proposed sublease set forth for the tenant to have any sort of idea whatsoever why consent was being withheld. To reiterate, the letter of rejection sent by landlord’s agent read,

... I have talked to our attorneys here and in Kansas City today, and do not feel that this sublease would be in our best interest. We, therefore, are declining this proposal.

As evidenced above, landlord’s agent never mentioned if or when he looked at, or even if had a copy of the sublease; or what, if any, provisions were inconsistent; or why he felt such nonconsent was in the landlord’s best interests. Such a blanket denial is not sufficient to create a presumption that the decision was based on good business judgment.

Landlord then claims that the agent took back the blanket denial when tenant phoned him after receiving the March 11 letter. When the tenant called him and asked him why he was declining the request to sublease, agent told him that “it has so many inconsistencies in the lease itself that I just don’t feel comfortable with it, and I just feel that if we did, if we would renegotiate the (original) lease, then certainly we ought to go back to the original lease and talk about re-working the whole thing.” Tenant found this rather confusing, but after further discussion, it became apparent that the sublease was contingent on a re-working of the main lease. Tenant did not agree to such renegotiation.

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Cite This Page — Counsel Stack

Bluebook (online)
894 S.W.2d 258, 1995 WL 103825, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dl-development-inc-v-nance-moctapp-1995.