J.M. Gebauer, Inc. v. American Samoa Power Authority

5 Am. Samoa 3d 204
CourtHigh Court of American Samoa
DecidedDecember 7, 2001
DocketCA No. 139-00
StatusPublished

This text of 5 Am. Samoa 3d 204 (J.M. Gebauer, Inc. v. American Samoa Power Authority) is published on Counsel Stack Legal Research, covering High Court of American Samoa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
J.M. Gebauer, Inc. v. American Samoa Power Authority, 5 Am. Samoa 3d 204 (amsamoa 2001).

Opinion

OPINION AND ORDER

On November 21, 2000, plaintiffs J.M. Gebauer, Inc., (“JMG”) and Kepaoa Development Corporation (“Kepaoa”) filed this action against defendant American Samoa Power Authority (“ASPA”) to recover damages for breach of a lease agreement between JMG and ASPA, unauthorized use of unleased adjacent area, and injuries to the leased premises. On December 27, 2000, ASPA filed its answer and counterclaim against JMG and Kepaoa to recover unpaid utility charges and the value of improvements made to the leased premises. Trial took place on July 12, 2001. Both counsel were present.

Facts

By the written instrument dated November 5, 1997, JMG leased to ASPA the building in Nu'uuli, American Samoa, commonly referred to as the “Aiga Basket” (“the premises”), for a term of 20 years commencing on November 1, 1997, with a renewal provision of another 20 years. On or about January 27, 2000, Kepaoa assumed from JMG the lessor’s rights and obligations under the lease. ASPA issued checks to either JMG or both JMG and Kepaoa to pay the rent until September 2000 when it completely stopped paying rent.

In a letter dated October 18, 2000, Kepaoa notified ASPA of the default in rent payments and demanded the problem be remedied within 30 days. ASPA, from the beginning of the lease, also used approximately 272 square feet beyond the leased premises, without paying rent for this extra space. In the October 18 letter, Kepaoa also notified ASPA that it had 30 days to remedy the lost rent for this extra space.

[207]*207Without responding to the letter and without written notice, ASPA quit the premises around November 14, 2000. In the course of moving, ASPA caused substantial structural damage to the premises, which JMG and Kepaoa repaired at their own expense. ASPA acted deliberately and maliciously in causing this damage.

Discussion

A. Abandonment

The default clause in the lease of the premises provides JMG and Kepaoa with two options upon ASPA’s default: (1) retake possession of the premises after a 10- or 30-day notice of default or (2) require that ASPA cure the lease default. Under either option, JMG and Kepaoa retain the right to charge ASPA for associated costs or damages.

The lease uses language of reentry rather than termination to effect cancellation of the lease. The only condition to reentry is that the lessee be given 10 days’ notice in the case of financial default or 30 days’ notice in the case of other default. Where a lessor’s conditional notice is unambiguously conveyed, providing a definitive date of termination, it can function as a termination of the lease if its terms are not met. Hodel Co. v. Sutherland, 415 N.E.2d 517, 521 (Ill. 1981). A notice merely expressing a conditional retaking of leased premises upon failure to cure a default can be too indeterminative to convey intent to terminate a lease. See Kaplan v. McCabe, 532 So. 2d 1354, 1357 (Fla. 1988) (conditional notice to pay rent or quit premises raises presumption landlord intends for tenant to remain under terms of lease); Ostlund v. Hendricks, 615 P.2d 327, 330 (Or. 1980).

The question, then, is whether file October 18th letter, of itself or in conjunction with later actions, conveyed an intent to exercise the right to reenter. The determination relies in part on the specific language of the letter. The letter establishes a condition precedent — eviction proceedings will not be instituted until default continues for another 30 days. While a specific date is set for the beginning of proceedings, no specific date for termination is set — there is no unambiguous date by which ASPA must quit the premises. If JMG and Kepaoa intended the October 18th letter to terminate the lease, the letter would have provided a definitive date for termination, rather than the ambiguous threat of beginning proceedings. The letter conveys an intent to continue with the terms of the lease and a demand for ASPA to cure payment according to those terms, rather than an intent to terminate the lease. See Kaplan, 532 So. 2d at 1357.

As the letter alone did not terminate the lease, ASPA’s relinquishment of the premises constitutes an abandonment of the lease. See 49 Am. Jur. [208]*2082d Landlord and Tenant § 250 (1995) (“Abandonment generally occurs when the lessee leaves the rented premises vacant with the clear intention not to pay rent or to be bound by the lease.”). ASPA’s conduct and letter of October 18, 2000, clearly indicate that it was voluntarily vacating the premises with no intent to pay rent.

B. Acceptance.

Except to the extent the parties agree otherwise, a lessor may, upon a lessee’s abandonment, (1) accept the lessee’s offer of surrender and terminate the lease, leaving lessee liable only for rent accrued before the acceptance and damage caused by the abandonment or (2) attempt to lease the premises to another lessee as a means of mitigating the loss of rents, in which case the original lessee is liable for the difference between promised rent and rents obtained. Restatement (Second) of Property § 12.1 (1977); Noce v. Stemen, 419 P.2d 450, 451 (N.M. 1966) (a lessor may enter premises which have been abandoned for the purpose of making ordinary and necessary repairs without affecting the lessee’s liability for future rent); Pague v. Petroleum Prod., Inc., 461 P.2d 317, 320 (Wash. 1969) (a lessor may re-enter abandoned premises to prepare them for a prospective lessee without accepting the abandonment; the abandoning lessee remains responsible for rent).

Whether a lessor’s reentry onto the premises constitutes acceptance of surrender is a question of fact. See Riggs v. Murdock, 458 P.2d 115, 118 (Ariz. Ct. App. 1969) (the trier of fact must “determine whether the dominion and control exercised by the landlord was for the landlord’s own benefit or for the benefit of and on behalf of the original tenant”).

Here, JMG and Kepaoa argue that when they reentered the premises, they did so to prevent further damage to the building caused by ASPA’s removal of fixtures, not with an intent to release ASPA from its lease obligations. However, clearly the efforts of JMG and Kepaoa were directed toward profits to be gained from new lessees — not in protecting the relationship with ASPA.

While preventing further damage to the premises was certainly one motivating factor for the reentry by JMG and Kepaoa, clearly they were acting for their own benefit as well. Taken in conjunction with the October 18th letter, the reentry constituted a legal reentry and retaking of the premises. Accordingly, once JMG and Kepaoa reentered for their own purposes, they in effect accepted ASPA’s unambiguous surrender of the premises.

[209]*209C. The 272 Square Feet

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Kaplan v. McCabe
532 So. 2d 1354 (District Court of Appeal of Florida, 1988)
Noce v. Stemen
419 P.2d 450 (New Mexico Supreme Court, 1966)
Pague v. Petroleum Products, Inc.
461 P.2d 317 (Washington Supreme Court, 1969)
Riggs v. Murdock
458 P.2d 115 (Court of Appeals of Arizona, 1969)
Bismarck Hotel Co. v. Sutherland
415 N.E.2d 517 (Appellate Court of Illinois, 1980)
Johnson v. Northwest Acceptance Corporation
485 P.2d 12 (Oregon Supreme Court, 1971)
Ostlund v. Hendricks
615 P.2d 327 (Oregon Supreme Court, 1980)

Cite This Page — Counsel Stack

Bluebook (online)
5 Am. Samoa 3d 204, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jm-gebauer-inc-v-american-samoa-power-authority-amsamoa-2001.