Old City Hall LLC v. Pierce County Aids Foundation

329 P.3d 83, 181 Wash. App. 1
Court of Appeals of Washington·Decided February 25, 2014·No. No. 43810-1-II·Published·Cited by 10 cases

Opinion

Bjorgen, J.

¶1 — After years of complaints to their landlord, Old City Hall LLC, about declining conditions in [4] their building, the Pierce County AIDS1 Foundation (Foundation) and Peggy Gross terminated their leases and moved out. When Old City Hall sued for rent, both Gross and the Foundation asserted constructive eviction as a defense and moved for summary judgment. The trial court granted Gross and the Foundation partial summary judgment, ruling that Old City Hall’s constructive eviction relieved them of any obligation to pay rent after the date they vacated the premises. Old City Hall appeals, claiming that the trial court improperly denied a continuance so that it could depose a witness and improperly granted the Foundation and Gross summary judgment on the constructive eviction issue. We affirm the trial court in all respects.

FACTS

¶2 Old City Hall bought Tacoma’s historic city hall building in 2005. It took the property subject to existing leases but planned to convert the building from commercial to residential use so that it could sell spaces in the building as luxury condominiums. To make this conversion, Old City Hall needed the building’s tenants to leave; it attempted to speed this process along by offering the tenants financial incentives to voluntarily terminate their leases and relocate. Many tenants accepted the offers. The Foundation and Gross were among those that did not.

¶3 The tenants who remained noticed that the building began falling into neglect and disrepair. Janitorial services, which the lease required Old City Hall to provide, declined. Trash piled up in the common areas, and human feces from unauthorized residents began appearing in areas of the building. The building’s security regime began to fail. Tenants and their visitors noticed an increase in criminal activity and came to feel unsafe in the building. The remaining tenants suffered break-ins. Old City Hall eventually decided to remedy these problems by locking the [5] building’s main door on Commerce Street. This required the Foundation’s clients to walk up and down a steep hillside to another entrance, despite the fact that this was physically very difficult for many of them. The building’s heating and cooling units also repeatedly failed, and the building became unbearably cold in the winter and intolerably hot in the summer. Finally, despite the lease’s contractual obligation that it do so, Old City Hall frequently failed to pay the building’s utility bills, leaving the tenants to face service shutoffs. The Foundation and Gross complained to Old City Hall’s property management company, Stratford Management Company LLC, about these issues, but little, if anything, changed.

¶4 Gross had come close to moving out when Old City Hall initially attempted to move its tenants out of the building, even spending $23,000 to hold space in another building. That plan, though, fell through when she and Old City Hall could not agree on a deal to terminate her lease. In 2007 her lease was ending, and she needed to provide six months’ notice if she planned to renew. Concluding she had no viable alternative to her current space, Gross gave the notice and renewed her lease in reliance on Stratford’s assurances that conditions would improve. After April 2008, a clerical error caused Gross to stop paying rent. When Old City Hall called this to her attention, Gross announced that she considered herself constructively evicted, planned on leaving the building by October 2008, and informed Old City Hall that she would use the back rent to relocate.

¶5 By 2009 the Foundation had also decided to leave the building because of the deteriorating conditions. In August 2009 the Foundation filed suit against Stratford, seeking a declaratory judgment that it owed no further rent because of constructive eviction. Stratford never appeared, and the Foundation received a default judgment in September. With this judgment in hand, the Foundation moved forward on plans to secure an alternate space and, in November 2009, announced that it was vacating the building. Old City Hall [6] responded by asking the trial court to vacate the declaratory judgment because the Foundation had improperly sued Stratford, the property manager, rather than it. The trial court agreed that the Foundation had failed to name a necessary party and vacated its earlier order. Nonetheless, the Foundation proceeded with its plans and vacated the building in order to occupy premises it had leased in reliance on the default judgment.

¶6 In 2010, after both Gross and the Foundation vacated the building, the city of Tacoma (City) declared it derelict. This declaration, by law, forbade any occupation of the building until Old City Hall remedied defects cited by the City.

¶7 In early 2010 Old City Hall filed suit against Gross and the Foundation for breach of the lease. Old City Hall asked the trial court to accelerate all rents due under the lease and award it nearly $500,000 in damages between the defendants. Gross and the Foundation both answered the rent action by claiming the affirmative defense of constructive eviction and counterclaimed for damages caused by Old City Hall’s breach of its duties under the lease.

¶8 Gross and the Foundation moved for summary judgment on the issue of liability for rent based on the constructive eviction defense. Old City Hall responded by asking the trial court to continue the matter until it could depose the state representative that had headed the Foundation in 2005, claiming that it needed the information from this witness to properly argue its theory of waiver. In the alternative, Old City Hall asked the trial court to deny Gross and the Foundation’s summary judgment motion because material issues of fact remained as to whether it had constructively evicted Gross and the Foundation and whether they had waived their right to the defense of constructive eviction by failing to vacate the building within a reasonable time from the appearance of the conditions they claimed drove them out.

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Old City Hall LLC v. Pierce County Aids Foundation, 329 P.3d 83, 181 Wash. App. 1 (Wash. Ct. App. 2014).

329 P.3d 83 (Old City Hall LLC v. Pierce County Aids Foundation) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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