Lovell v. Kevin J. Thornton Enterprises, Inc. (In re Branchaud)

186 B.R. 337, 1995 Bankr. LEXIS 1401
CourtUnited States Bankruptcy Court, D. Rhode Island
DecidedSeptember 18, 1995
DocketBankruptcy No. 89-10605; Adv. No. 94-1227
StatusPublished
Cited by1 cases

This text of 186 B.R. 337 (Lovell v. Kevin J. Thornton Enterprises, Inc. (In re Branchaud)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Rhode Island primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lovell v. Kevin J. Thornton Enterprises, Inc. (In re Branchaud), 186 B.R. 337, 1995 Bankr. LEXIS 1401 (R.I. 1995).

Opinion

[338]*338 DECISION AND ORDER ON PLAINTIFF-DISBURSING AGENT’S COMPLAINT SEEKING RECOVERY OF UNPAID RENT, ETC.

ARTHUR N. YOTOLATO, Bankruptcy Judge.

Heard on the Complaint of Charles Lovell, Esq., the disbursing agent appointed under the Debtor’s confirmed plan of reorganization, seeking recovery of unpaid rent, oil consumption charges, and taxes from the Defendant, Kevin J. Thornton Enterprises, Inc., d/b/a Rick’s Warehouse Liquors, Ltd. (“Thornton”). The Disbursing Agent also requests attorney’s fees, costs, and interest.

Based on the record and the arguments, for the reasons stated below we rule that the Disbursing Agent is entitled to relief in accordance with the following discussion, findings and conclusions.

BACKGROUND

On August 15, 1982, Robert Branchaud, d/b/a/ B & G Associates, entered into an eight year lease with Rick’s Warehouse Liquors, Ltd., of property located at 202-204 South Main Street, Woonsocket, Rhode Island. Under the terms of the agreement, the lessee was required to pay a minimum monthly rent of $1,666, with annual increases tied to the Boston Consumer Price Index. (Plaintiffs Ex. # 1, at 1-2). Additionally, the lessee was required to pay its pro-rata share (five-sevenths) of any increase in real estate taxes from the base year, and oil consumption charges. The lease contained options to renew for three additional periods of five years each. (Id. at 2-3, 6). On September 22,1988, the lease was assigned to Thornton, the Defendant herein. (Plaintiffs Ex. #2). On January 5, 1989, Thornton exercised its option to extend the lease for an additional five years, through August 15, 1995. (Plaintiffs Ex. #3).

On July 10, 1989, Robert Branchaud and five of his related entities filed petitions for relief under Chapter 11, and on July 24, 1989, these cases were consolidated administratively. On February 21, 1991, the Debtors’ Seconded Amended Plan of Reorganization was confirmed and Lovell was appointed disbursing agent. As such, he received title to the subject real estate, to administer for the benefit of creditors. In May 1991 Mr. Lovell informed the tenants of his appointment as disbursing agent, and began collecting rent.1

On August 20, 1993, Mr. Lovell sent Thornton a letter formally notifying him that rental increases since September 1990 were due in the amount of $3,936. (Plaintiffs Ex. #7). Thornton had not received a formal notice of rent increase since October 17, 1989, when Robert Branchaud increased the rent to $2,523.05 per month for the period September 1989 to September 1990. (Plaintiffs Ex. # 5). On September 8, 1993, Thornton responded to Lovell’s demand, by advising that he recalculated all rent increases and payments since September 1983, and discovered errors that resulted in overpay-ments totaling $6,287. (Plaintiffs Ex. #8).

THE ISSUES

Lovell alleges that: (1) Thornton has failed to pay rent increases called for under the lease since September 1990, amounting to $13,560; (2) Thornton owes $29,539, because it has failed to pay any rent since October 1994; (3) Thornton owes rent through August 1995, notwithstanding its abandonment of the premises; and (4) Thornton has failed to pay its pro-rata share of increased taxes and oil charges, in the amount of $2,725.

Thornton does not dispute that it owes the taxes and oil charges claimed, but argues that it (1) was constructively evicted by Lo-vell’s failure/refusal to provide lessor services, and (2) asserts a $5,700 offset resulting from the lessor’s miscalculation of the annual rent increase since the inception of the lease in 1982. We ruled at the May 9, 1995 hearing that Thornton could not go back to 1982 [339]*339to recalculate past due rent.2 Thornton also argues that the Disbursing Agent’s acceptance of reduced rent payments since September 1990 constitutes payment in full, and that he is now equitably estopped from seeking past due rent.

DISCUSSION

This dispute centers around Lovell’s three year delay in formally notifying Thornton of annual rent increases allegedly due under the lease. Lovell denies that the delay was a result of neglect, but argues that even in the exercise of due diligence it took him until now to reach this matter, after tending to all of his other priority duties as disbursing agent. He submits that the five consolidated bankruptcies were very complex, involving over 200 creditors, that the rent increase provisions were clear, and that Thornton was on actual and constructive notice of the increases. Kevin Thornton, the president of the Defendant corporation, acknowledged that he was aware of the rent increase provisions, but in light of conversations with Lo-vell regarding the downturn in his business, he assumed that Lovell was accepting the reduced payments of $2,523 in lieu of the increased rent.

Both factually and legally this argument is without merit, and Thornton is bound by the terms of the lease as written. There is no evidence or writing to alter the terms of the original lease, Thornton’s unilateral “assumptions” do not equate to an agreement between the parties, and they certainly are not binding on the Disbursing Agent. See North Smithfield Volunteer Fire Dept. v. Kollet, 70 R.I.182, 38 A.2d 141 (1944) (Court found that an oral agreement did not alter terms of written lease). The lease provides that the “Lessee shall pay to the Lessor as a Minimum Annual Rent for each Lease year after the initial lease year (it being the intention of the Parties to calculate the Minimum Annual Rent for each such year separately), a sum calculated by_” (Plaintiff’s Ex. # 1, at 2). Under the terms of the lease, rent increases are self-executing, and there is no requirement that the lessor provide notice of such new amount to the lessee. Accordingly, we find that the Disbursing Agent did not waive the annual increases, nor has he engaged in any conduct that would cause him to be equitably estopped from enforcing the lease in any respect. Accordingly, we conclude that Thornton is liable under the lease for all past due rent increases, as calculated by the Disbursing Agent.

In support of his constructive eviction argument, Thornton complains that he encountered numerous maintenance problems with the subject property, that were not corrected by Lovell. For example: (1) the air conditioners did not work; (2) Lovell did not provide snow removal services for 1994 as required under the lease; (3) Lovell failed to replace light bulbs; (4) a garage door was left with inadequate temporary repairs after an attempted burglary; (5) the exterior was in need of painting; and (6) the roof and foundation leaked in 1994. Thornton admitted that he never alerted Lovell to some of these present complaints, because he “thought it would be fruitless” and that “communications had broken down.” He also states that he only telephoned Lovell once in January 1994 about the leaking roof and foundation.

The evidence does not support Thornton’s claim of constructive eviction. Paragraph 6(b) of the lease provides that the Lessor will:

[mjaintain the interior of the building of which the demised premises are a part up to the point of the demised premises, and keep the exterior and structural portion of the demised premises, in good repair during the continuance of this lease.

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Bluebook (online)
186 B.R. 337, 1995 Bankr. LEXIS 1401, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lovell-v-kevin-j-thornton-enterprises-inc-in-re-branchaud-rib-1995.