KMT Enterprises, Inc. v. Nyssen

959 P.2d 640, 154 Or. App. 477, 1998 Ore. App. LEXIS 970
CourtCourt of Appeals of Oregon
DecidedJune 17, 1998
DocketC95 0708 CV; CA A94419
StatusPublished
Cited by2 cases

This text of 959 P.2d 640 (KMT Enterprises, Inc. v. Nyssen) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
KMT Enterprises, Inc. v. Nyssen, 959 P.2d 640, 154 Or. App. 477, 1998 Ore. App. LEXIS 970 (Or. Ct. App. 1998).

Opinion

LANDAU, P. J.

Defendants Donald and Marsha Nyssen own a commercial building that is specially stated for a child care facility. In 1989, the Nyssens leased the building to plaintiff KMT Enterprises, Inc. (KMT) for a five-year term. In early 1993, KMT began negotiating a sublease and sale of business assets to the Migrant and Indian Coalition for Coordinated Childcare (MIC). MIC required a ten-year sublease, which was longer than the term left on KMT’s lease with the Nyssens.

KMT renegotiated its lease with the Nyssens. The new lease was for an additional eight years, with payments of $4,000 per month to be credited against a purchase option that could be exercised at the end of the term. The new lease authorized the Nyssens to terminate upon ten days’ written notice in the event of any default by KMT.

Armed with a longer lease, KMT then subleased the building to MIC for ten years at $5,500 per month for the first 20 months and $4,500 per month thereafter. The sublease obligated KMT to maintain the roof of the building in good order and repair. It also required MIC to clean leaves and debris from the roof, gutters and downspouts, so that water would not accumulate.

In January 1995, MIC complained to KMT that the building’s roof leaked. KMT’s president, M. Duane Taylor, inspected the roof and discovered that the drains were plugged with debris. He cleaned out the drains, made some minor repairs and eventually hired a roofer to complete repairs. MIC, however, was unsatisfied with the roof repairs and contacted the Nyssens directly to complain. The Nyssens responded by sending a notice of default to KMT on May 5, 1995. The notice gave KMT ten days to repair the roof or face termination of the lease. Meanwhile, the Nyssens began negotiating with MIC to repair the roof themselves and collect lease payments directly from MIC.

KMT sent a letter to the Nyssens claiming that it would repair the roof but required some additional time. On May 23,1995, the Nyssens declared the lease in default and [480]*480demanded that KMT quit the premises. On June 1, 1995, however, KMT sent the Nyssens the regular $4,000 payment for that month, and the Nyssens cashed the check.

On June 15,1995, the Nyssens sent a letter to KMT declaring the lease and the sublease terminated effective June 16. The Nyssens then entered into a separate agreement with MIC, requiring monthly payments of $4,000 paid directly to the Nyssens. The Nyssens repaired the roof, at a cost of $21,360. On June 26, 1995, the Nyssens again informed KMT that the lease had been terminated, that the locks had been changed and that further entry by KMT would be treated as a trespass.

On July 7, 1995, KMT initiated this action against the Nyssens for interference with contract and for an injunction preventing the Nyssens from forfeiting KMT’s interest in the lease and option to purchase. KMT moved for summary judgment on the claim for injunctive relief, on the ground that the Nyssens waived any right to terminate for breach of the lease in June 1995, because the Nyssens already had accepted rent for that period after notice of KMT’s alleged breach. The trial court granted the motion. At that point, MIC began making its $5,500 payments on the sublease; $1,500 was paid to KMT, and the balance was paid to the corut for the benefit of the Nyssens.

The Nyssens then sent a letter to KMT terminating the lease for failure to repair the roof, this time reciting that the ten-day notice of default was given in May 1995, not June. That same day, the Nyssens sent another notice of default, declaring that KMT was in breach of the lease for failing to reimburse them for the cost of repairing the roof. KMT responded by filing an amended complaint seeking an order enjoining the Nyssens from forfeiting the lease or instituting forcible entry and detainer proceedings. The Nyssens counterclaimed, seeking an injunction terminating the lease and a judgment for the costs of repairing the roof.

After a bench trial, the court ruled that the Nyssens could not terminate the lease for KMT’s failure to repair the roof and that KMT had not breached the lease by failing to make lease payments from July 1995 through February 1996 and by failing to reimburse defendants for repairing the roof. [481]*481The court held that KMT was not obligated to make payments, because the Nyssens had repudiated the lease. It held that KMT was not obligated under the lease to reimburse the Nyssens for repairing the roof, because no provision in the lease imposed that obligation on KMT. The court also ruled, however, that the Nyssens were entitled to reimbursement for the $21,360 in repair costs on a theory of unjust enrichment. The court also awarded costs and attorney fees to KMT.

On appeal, the Nyssens assert four assignments of error: (1) The trial court erred in granting KMT’s motion for summary judgment; (2) the court erred in ruling that KMT did not breach the lease by failing to make payments from July 1995 through February 1996; (3) the trial court erred in ruling at trial that KMT did not breach the lease by failing to reimburse them for the costs of repairing the roof; and (4) the trial court erred in awarding attorney fees to KMT.

We begin with the trial court’s summary judgment ruling. According to the Nyssens, the trial court incorrectly ruled that, by accepting the June 1995 monthly payment after notice of the alleged breach, they waived the right to terminate the lease during that month. KMT responds that the trial court’s decision is correct under our decision in Smith v. Hickey, 45 Or App 139, 607 P2d 787 (1980). We agree with KMT.

Summary judgment is proper when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. ORCP 47 C. In this case, there is no dispute as to the relevant facts. The only question is whether, as a matter of law, the Nyssens waived the right to terminate by accepting KMT’s June 1995 payment with knowledge of the alleged breach.

In Smith, the plaintiff leased property from the defendant with an option to purchase. The lease agreement obligated the plaintiff to pay real property taxes on the property. When the plaintiff failed to do that, the defendant declared the plaintiff in default. The plaintiff continued making monthly payments on the lease, however, and the defendant continued to accept the payments. When the plaintiff attempted to exercise the option to purchase, the defendant [482]*482resisted, and the plaintiff initiated a suit for specific performance. The trial court held in favor of the defendant, finding that the lease had been breached by the plaintiffs failure to pay real property taxes. We reversed:

“Nonpayment of taxes was grounds for termination of the lease agreement by defendant. When defendant learned of the nonpayment of taxes, he had an election either to terminate the lease on account of the breach or to waive his right to terminate and continue the agreement in full force. This principle is stated in 5 Williston, Contracts, § 687, 292 (3d Ed 1961):
“ ‘The commonest case of election in the law of contracts arises where, with knowledge of a breach of condition or a defense excusing performance, a promisor either refuses or continues to accept performance from the other party. As the only theory upon which the benefit of such performance can be rightly received is on the assumption of an election to continue the contract, that assumption is made if the injured party accepts further performance.

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Cite This Page — Counsel Stack

Bluebook (online)
959 P.2d 640, 154 Or. App. 477, 1998 Ore. App. LEXIS 970, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kmt-enterprises-inc-v-nyssen-orctapp-1998.