Mimi's Inc. and Harold R. Arbaugh v. BAI Riverwalk

CourtWest Virginia Supreme Court
DecidedMarch 23, 2020
Docket18-0775
StatusPublished

This text of Mimi's Inc. and Harold R. Arbaugh v. BAI Riverwalk (Mimi's Inc. and Harold R. Arbaugh v. BAI Riverwalk) is published on Counsel Stack Legal Research, covering West Virginia Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mimi's Inc. and Harold R. Arbaugh v. BAI Riverwalk, (W. Va. 2020).

Opinion

STATE OF WEST VIRGINIA SUPREME COURT OF APPEALS

Mimi’s Inc., and Harold R. Arbaugh, Defendants and Third-Party Plaintiffs Below, Petitioners FILED March 23, 2020 vs.) No. 18-0775 (Kanawha County 14-C-513) EDYTHE NASH GAISER, CLERK SUPREME COURT OF APPEALS OF WEST VIRGINIA BAI Riverwalk, L.P.; Zamias Services, Inc.; Kimco Riverwalk Corporation; Kimco Riverwalk 595, Inc.; and Kimco Riverwalk, L.P., Plaintiffs and Third-Party Defendants Below, Respondents

MEMORANDUM DECISION

Petitioners Mimi’s Inc., (“Mimi’s”) and Harold R. Arbaugh, by counsel Ancil G. Ramey, appeal multiple orders of the Circuit Court of Kanawha County, referenced specifically below, including orders awarding summary judgment to respondents on petitioners’ counterclaims against Respondent BAI Riverwalk, L.P. (“BAI”) and petitioners’ third-party claims against Respondent Zamias Services, Inc., (“Zamias”) and Respondents Kimco Realty Corporation; Kimco Riverwalk 595, Inc.; and Kimco Riverwalk, L.P. (collectively referred to as “Kimco”). Petitioners further appeal the circuit court’s award of a judgment to Respondent BAI for unpaid rent and associated damages, including attorney’s fees. Respondent Kimco, by counsel Joseph T. Cramer, filed a response in support of the circuit court’s order awarding summary judgment to Kimco. Respondents BAI and Zamias, by counsel Mychal S. Schulz, filed a response in support of the circuit court’s orders. Petitioners filed a reply.

This Court has considered the parties’ briefs and the record on appeal. The facts and legal arguments are adequately presented, and the decisional process would not be significantly aided by oral argument. Upon consideration of the standard of review, the briefs, and the record presented, the Court finds no substantial question of law and no prejudicial error. For these reasons, a memorandum decision affirming the order of the circuit court is appropriate under Rule 21 of the Rules of Appellate Procedure.

The underlying litigation arises from petitioners’ lease of a 2,620 square foot commercial space at Riverwalk Plaza Shopping Center (“Riverwalk”) in South Charleston, West Virginia. On January 18, 2011, Respondent Kimco and Petitioner Mimi’s executed a lease agreement for the premises at issue for a period of five years, with a base monthly rent of $4,148.33.1 In addition to the commercial lease agreement, Petitioner Arbaugh, president of Mimi’s, executed a “Guaranty” in which he personally “guarantee[d] all of the payments to be made by [Mimi’s] under the

1 The term of the lease commenced on March 17, 2011.

1 [l]ease.” In April of 2011, petitioners opened a restaurant and video gaming establishment in the leased space.

On March 30, 2012, Respondent Kimco sold its interest in Riverwalk to Respondent BAI, and, that same day, assigned its interest in all Riverwalk leases, including petitioners’ lease, to BAI. On January 8, 2014, petitioners ceased operation of their restaurant and video gaming establishment in the leased space. In March of 2014, BAI filed the underlying litigation against petitioners alleging breach of contract, breach of the covenant of good faith and fair dealing, and “collection on guaranty” executed by Petitioner Arbaugh. BAI sought unpaid rent totaling $10,242.42 and rent for the balance of the lease totaling $141,769.98.2

On April 30, 2014, petitioners served their answer and a counterclaim against BAI alleging BAI’s breach of contract, breach of lease, breach of quiet enjoyment, fraud in inducement, conversion, theft, trespassing, negligence, breach of the covenant of good faith and fair dealing, and gross negligence, reckless, willful, and wanton conduct. Specifically, petitioners alleged that BAI

(1) tore down and illegally removed a substantial part of the leased premises, causing [petitioners] substantial economic and business harm; (2) failed to repair and replace the HVAC unit as verbally represented in the lease negotiations and as thereafter represented in the lease; (3) failed to remove mold on the premises; (4) failed to properly repair multiple roof leaks, as well as leaks in the rear window of the premises; (5) improperly tore down the [petitioners’] fencing on its premises; (6) failed to properly lease back the adjoining leased structure as represented; (7) failed to properly credit [petitioners’] initial lease deposit; (8) allowed water leaks to cause damage to the rented premises as well as video lottery machines utilized by [petitioners] on the leased premises; (9) improperly destroyed and removed [petitioners’] deck and seating area; and (10) improperly and illegally billed [petitioners] for services, repairs[,] and clean up that was not the responsibility of [petitioners].

Petitioners then sought leave to file a third-party complaint against Respondents Kimco and Zamias3 setting forth factual allegations similar to those alleged against BAI, but also including claims for civil conspiracy and tortious interference with a contractual and business relationship. Petitioners were granted leave to file their third-party complaint on May 29, 2015.4

2 On August 6, 2014, four months after petitioners’ breach of the lease, BAI entered into a written lease with Ivy’s LLC for the property at issue. Ivy’s lease became effective on November 8, 2014, at a charge of $3,471.83 per month, and continued through April 30, 2016. 3 Zamias Services was the property manager hired by BAI for the Riverwalk properties. 4 Petitioners also sought leave to include third-party claims against Bon Aviv Investments, LLC (“Bon Aviv”), a company affiliated with BAI. Petitioners were granted leave to pursue third-

2 On October 19, 2016, Kimco filed a motion for summary judgment, to which petitioners responded. Kimco’s motion for summary judgment was granted by the circuit court on December 19, 2016. On May 4, 2017, BAI and Zamias filed a joint motion for summary judgment, to which petitioners replied. A hearing was held on the motion on June 1, 2017. By order entered June 21, 2017, the circuit court granted BAI and Zamias’ motion for summary judgment for reasons similar to the reasoning employed by the court when granting summary judgment to Respondent Kimco. Further, with no other claims pending against Zamias, the court dismissed it from the case, with prejudice.

On August 7, 2017, a bench trial commenced on BAI’s claims against petitioners.5 The only witness called to testify by BAI was a representative of Zamias who offered testimony as to the lease, Zamias’ work for BAI, petitioners’ abandonment of the property, and calculation of BAI’s damages. In the presentation of their case, petitioners called Tommy Clay, operator of a company that leased video poker machines to petitioners, as a witness. Mr. Clay testified that, on at least two occasions, one of his video poker machines at the leased premises sustained water damage, that he visited the location once or twice a week, and that the water problems at the premises were “constant.” Mr. Clay testified that he contacted petitioners’ property management regarding these issues but was advised there was nothing to be done to correct the problem. Next, petitioners called Petitioner Arbaugh to testify. Petitioner Arbaugh testified that he spent over $90,000 remodeling the leased space but the leaking roof and mold problems persisted and negatively impacted his business. Petitioners’ final trial witness was Ron McVey, who installed electronic security and other equipment at the leased premises. Mr. McVey testified about prolific water infiltration that caused electronic equipment to be damaged and that he did not believe the space was “fit to be occupied.”

On October 2, 2017, the circuit court entered a preliminary judgment order in favor of BAI.

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