Old City Hall v. Pierce County Aids Foundation

• Court: Court of Appeals of Washington
• Decided: February 25, 2014
• Docket: 43810-1
• Status: Unpublished

Opinion

ILED COrJj',?T 0C APPEALS 2011 4 FEB 25 AM; 9 4., 7 IN THE COURT OF APPEALS OF THE STATE OF WASHIN

DIVISION II

OLD CITY HALL LLC, a Washington No. 43810 -1 - II corporation,

Appellant, li I4i: aP%IWIXG) 1M

V.

PIERCE COUNTY AIDS FOUNDATION, a Washington non - profit corporation,

PEGGY FRAYCHINEAUD GROSS, Attorney at Law, a Washington sole proprietorship,

BJORGEN, J. — After years of complaints to their landlord, Old City Hall LLC, about

declining conditions in their building, the Pierce County AIDS' 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.

Acquired Immune Deficiency Syndrome. No. 43810- 1- 11

FACTS

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.

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 -ns. Old City Hall eventually decided to remedy these problems by i

locking the 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 build'ing' 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

building' s utility bills, leaving the tenants facing service shutoffs. The Foundation and pay the

Gross complained to Old City Hall' s property management company, Stratford Management

Company LLC, about these issues, but little, if anything changed.

2 No. 43 810 -1 - II

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.

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 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.

3 No. 43810 -1 - II

In 2010, after both Gross and the Foundation vacated the building, the city of Tacoma

declared it derelict. This declaration, by law, forbade any occupation of the building until Old

City Hall remedied defects cited by the City.

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.

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 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.

The trial court denied the motion for a continuance and granted partial summary

judgment to Gross and the Foundation. The trial court denied the request for a continuance

because the Foundation' s former head did not have materially relevant information to the

constructive eviction and waiver issues. Recognizing that Gross and the Foundation offered

unrebutted evidence about the conditions inside the building, the trial court concluded that

4 No. 43810 -1 - II

reasonable minds could only conclude that Old City Hall' s refusal to remedy declining

conditions in the building made it untenantable. Applying our decision in Aro Glass &

Upholstery Co. v. Smith Motors, Inc., ` Wn. Munson - l2 App. 6, 528 P. 3d 502 ( 1974), the trial

court determined that Gross and the Foundation had not waived their claims, because they had

continued to protest the building' s deficient conditions. The trial court therefore granted Gross

and the Foundation summary judgment on liability for any rent owed after they vacated their

leaseholds on September 23, 2008, and December 30, 2009, respectively. However, recognizing

that constructive eviction cannot eliminate liability for rent accrued before the tenant vacates the

leasehold, the trial court declined to grant summary judgment for liability on any rent owed by

Gross or the Foundation before they vacated the building. The parties later entered stipulated

agreements on damages on the remaining claims, contingent upon our disposition of any appeal.

Old City Hall now appeals the trial court' s order granting summary judgment to Gross

and the Foundation and the trial court' s denial of its motion for continuance.

ANALYSIS

I. SUMMARY JUDGMENT

Old City Hall appeals the trial court' s decision to grant Gross and the Foundation partial

summary judgment on the issue of liability for rent accruing after they vacated the property.

Old City Hall argues that summary judgment was inappropriate because two questions of

material fact remained: ( 1) whether it constructively evicted Gross and the Foundation and (2)

whether Gross and the Foundation waived their constructive eviction defense by failing to vacate

the building within a reasonable period of time after the objectionable conditions arose.

5 No. 43810 -1 - II

We review de novo a trial court' s decision to grant summary judgment, engaging in the

same inquiry as the trial court. Staples v. Allstate Ins. Co., 176 Wn.2d 404, 410, 295 P. 3d 201

2013). For purposes of summary judgment, we view all facts and any reasonable inferences

drawn from those facts in the light most favorable to the nonmoving party. Staples, 176 Wn.2d

at 410. We affirm a grant of summary judgment where no material issue of fact exists and the

moving party is entitled to judgment as a matter of law. Staples, 176 Wn.2d at 410; see CR 56.

A constructive eviction involves "` an intentional or injurious interference by the landlord

or those acting under his authority "' that "` deprives the tenant of the means or the power of

beneficial enjoyment of the demised premises or any part thereof, or materially impairs such

beneficial enjoyment. "' Aro Glass, 12 Wn. App. at 8 ( quoting Myers v. W. Farmers Ass' n, 75

Wn.2d 133, 134 -35, 449 P. 2d 104 ( 1969)). A constructive eviction prospectively releases the

tenant from the obligation to pay rent, so long as the tenant abandons the leasehold in response to

the constructive eviction. Buerkli v. Alderwood Farms, 168 Wash. 330, 334 -35, 11 P. 2d 958

2 1932). Where the suit concerns a commercial lease, " Washington[' s] courts have been quite

ready to find constructive evictions in cases in which the landlord seriously interfered with the

tenant' s conduct of business on the premises." 17 STOEBUCx & WEAVER, WASHINGTON

PRACTICE: REAL ESTATE: PROPERTY LAW § 6. 32, at 352 ( 2d ed. 2004) ( collecting cases where

constructive eviction occurred because of reasons as diverse as the landlord' s allowing puddles

2 Old City Hall' s citation to Draper Machine Works, Inc. v. Hagberg, 34 Wn. App. 483, 486, 663 P. 2d 141 ( 1983) is inapposite for this reason. The tenant in that case sought to escape liability for rent accrued while retaining possession of the property. 'Draper Mach. Works, 34 Wn. App. at 486. Here, the trial court granted summary judgment to Gross and the Foundation as to their liability only for rents accrued after they were constructively evicted, meaning after they abandoned the leased premises. No. 43810 -141

to form and remain on the commercial premises and a landlord' s insulting his tenant in front of

clients).

A. Reasonable minds could only conclude that Old City Hall constructively evicted Gross and the Foundation; summaryjudgment was appropriate in this case.

Old City Hall first claims that the trial court erred in granting summary judgment because

material issues of fact exist. We disagree.

At the outset, we note that no material issue of fact exists regarding the neglected state of

the building or its effect on tenants. Gross and the Foundation offered numerous declarations

and documentary evidence about the problems occurring during their leases. Old City Hall

makes no effort to contest these descriptions of conditions inside the building. See Clerk' s

Papers ( CP) at 673 -701 ( Old City Hall' s first declaration in opposition to summary judgment,

which contains a transcript of Gross' s deposition concerning waiver and also contains an e -mail

chain related to the issue of deposing the former head of the Foundation; none of the evidence

submitted discussed the conditions in the building), CP 714 -36 ( Old City Hall' s second

declaration in opposition to summary judgment which offered_evidence concerning only the_

issue of waiver).

Nonetheless, Old City Hall claims that material issues of fact remain because a fact finder

must determine whether these conditions amounted to a constructive eviction. We have indeed

noted that whether a constructive eviction has occurred is "` generally a question of fact to be

determined by the trier of facts. "' Aro Glass, 12 Wn. App. at 8 ( quoting Myers, 75 Wn.2d at

134 -35). But where reasonable minds can reach only one conclusion, resolution of a question by

a fact finder is unnecessary and courts may decide the question as one of law. Lakey v. Puget

Sound Energy, Inc., 176 Wn.2d 909, 924, 296 P. 3d 860 ( 2013). Thus, where reasonable minds

7 No. 43810 -141

could reach only one conclusion, the court may grant summary judgment, even where the issue

normally requires resolution by a fact finder. Lakey, 176 Wn.2d at 924; Staples, 176 Wn.2d at

410.

In Lakey, our Supreme Court affirmed a grant of summary judgment in the related

context of nuisance law using the principle that courts may sometimes decide factual questions

as questions of law. 176 Wn.2d at 922 -25. Several property owners sued a utility company over

the expansion of one of its substations, claiming that the electromagnetic fields generated by the

expanded substation constituted a nuisance. This claim required them to prove that their fears of

the emissions_caused a! " substantial and unreasonable interference with the use and enjoyment

of" their property. Lakey, 176 Wn.2d at 914 -17, 922 -25 ( quoting Bodin v. City ofStanwood, 79

Wn. App. 313, 318 n.2, 901 P. 2d 1065 ( 1995)): While it noted that reasonableness is normally a

question of fact for the jury, the Supreme Court nevertheless affirmed the trial court' s summary

judgment order after holding that no reasonable juror could find the utility' s conduct

unreasonable. Lakey, 176 Wn.2d at 924 -25.

Similar to the Supreme Court' s disposition of the appeal in Lakey, we affirm the trial

court' s summary judgment order on the grounds that no reasonable fact finder could conclude

that Old City Hall had not constructively evicted Gross and the Foundation. Undisputed

evidence in the record demonstrates that conditions in the building had become unsanitary,

unbearable, unworkable, and unsafe. See, e.g., CP at 298 ( trash piling up and cleaning services

not performed because Old City Hall failed to pay the bill between October 2008 and April

2009); CP at 577 ( feces found in the common areas March 2008); CP at 570 -80 ( failure to

8 No. 43810 -1 - II

address concerns about the HVAC3 units in the building led to intolerable temperatures in the

summer and winter); CP at 367 ( same); CP at 370 ( same); CP at 580 ( Gross' s clients not

comfortable coming to her offices); CP at 298 -99 ( locking of the Commerce Street entrance

made it extremely difficult for the Foundation' s clients to come to its offices); CP at 366

Foundation employees felt unsafe in building because of the lack of security and the.

unauthorized residents); CP at 369 ( safety concerns due to multiple burglaries in the building);

CP at 365 ( Old City Hall' s failure to pay utility bills on time interfered with the Foundation' s

ability to carry on its business); CP at 410 ( same).

Given the undisputed evidence about the state of the building, a reasonable fact finder

could only conclude that Old City Hall deprived Gross and the Foundation "` of the means or the

power of beneficial enjoyment of the demised premises "' or that it materially impaired such 4 beneficial enjoyment. Aro Glass, 12 Wn. App. at 8 ( quoting Myers, 75 Wn.2d at 134 -35) . With

that, no material issues of fact remain and Gross and the Foundation are entitled to judgment as a

5 matter of law.

3 Heating Ventilation and Air Conditioning. 4 This case is unusual in that there is objective evidence of a constructive eviction. The City forbad occupation of the building after both tenants moved out. Evidence in the record indicates that the conditions leading the City to declare the building derelict were substantially similar to those present when Gross determined to move out.

5 We note that resolving this factual issue as a matter of law may be conceptually indistinguishable from holding that the undisputed evidence of the site conditions and their effect shows constructive eviction as a matter of law under CR 56. Whichever lens is used, summary judgment was appropriate.

E No. 43 810 -1 - II

B. Waiver

Alternatively, Old City Hall asks us to find summary judgment on liability inappropriate

because material issues of fact remain about whether the Foundation and Gross waived their

claims to constructive eviction. 6 Old City Hall rests it argument on cases interpreting the

common law of constructive eviction and waiver in other states. While Old City Hall faithfully

describes the holdings of those cases, they are irrelevant in the face of controlling Washington

precedent.

Under Washington law, a tenant may waive the right to raise the defense of constructive

eviction in two ways. First, because the tenant must provide the landlord an opportunity to

remedy any problems, a tenant waives the defense by terminating the lease before providing

notice of defective conditions. See, e. g., Pague v. Petroleum Prods., Inc., 77 Wn.2d 219, 221,

461 P. 2d 317 ( 1969); Erickson v. Elliot, 177 Wash. 229, 233, 31 P. 2d 506 ( 1934); Cal. Bldg. Co.

103 Wash. 577, 581- 82, 175P. 302 ( 1918); Aro Glass, 12 Wn. App. at 10 -11. Second, v. Drury,

a tenant who acquiesces to the defective conditions by remaining in the leasehold without

6 The Foundation and Gross both claim that under CR 8( c) Old City Hall' s failure to plead waiver in its reply precludes it from arguing the issue before us. Old City Hall' s response raised the issue as one of equitable estoppel instead of waiver, but the substance of one of the defenses in its reply, that the Foundation acquiesced by remaining in the building despite the conditions it claimed led to its constructive eviction, is the same as its waiver claim. See, e. g., CP at 91 The Foundation] is equitably estopped from asserting that the terms of its lease were breached by features of the building or by conduct that was substantially the same as such features and conduct that existed at the time [ the Foundation] declined to relocate. "). The Supreme Court has recently admonished that we should resolve issues on the merits instead of formalistically rejecting claims based on issue preservation claims. See Washburn v. City ofFederal Way, 178 Wn.2d 732, 746 -52, 310 P. 3d 1275 ( 2013). Old City Hall raised the issue in its reply, the tenants had notice of the issue, and we address it on the merits.

10 No. 43810 -1 - II

complaint also waives the defense. Cal. Bldg. Co., 103 Wash. at 582; Aro Glass, 12 Wn. App. at

10 -11.

In Aro Glass the tenant leased premises for a used car lot. 12 Wn. App. at 7. The lease

required the landlord to remedy the lot' s propensity to allow large puddles of water to form. Aro

Glass, 12 Wn. App. at 7. The landlord made several attempts to fix the problem, including

repaving the lot and creating trenches to channel the water off of the lot. Aro Glass, 12 Wn.

App. at 7 -8. These fixes failed, and the tenant continually demanded that the landlord make

good its obligations to eliminate the puddles. Aro Glass, 12 Wn. App. at 7. Eventually, the

tenant informed the landlord,that it would begin withholding rent and, if the landlord did not fix

the puddle problem within a month, it would terminate the lease and vacate the premises. Aro

Glass, 12 Wn. App. at 7 -8. The landlord took no action, and the tenant terminated the lease. Aro

Glass, 12 Wn. App. at 7 -8.

The landlord sued for rent, and the tenant defended on the grounds that the landlord had

constructively evicted it. Aro Glass, 12 Wn. App. at 8. In response, the landlord argued that the

tenant had waived constructive eviction as a defense. Aro Glass, 12 Wn. App. at 10 -11. We

rejected this claim after finding that the tenant had not engaged in either type of behavior that

waived a constructive eviction claim. The tenant had alerted the landlord to the deficient

conditions with its complaints, and its complaints showed that it had not acquiesced in the

deficient conditions. Aro Glass, 12 Wn. App. at 10 -11.

Just as the tenant did in Aro Glass, the Foundation and Gross " continually pursued [ their]

requests and demands that corrective action be taken" regarding the neglect of the building. See,

e. g., CP at 122 ( complaints about lack of sanitation, including blood and feces stains in the

11 No. 43 810 -1 - II

common bathrooms), CP at 124 ( complaints about failure to properly heat the building), CP at

130 -32 ( complaints about sanitation, lack of security, and criminal activity in the building), CP at

148 -49 ( complaints about failure to heat the building and thefts), CP at 151 - 52 ( complaints about

failure to heat the building), CP at 154 -55 ( same), CP at 160 ( same), CP at 162 -69 ( complaints

about failure to heat the building, poor security, and sanitary conditions in the bathroom), CP at

176 ( complaints about water leaks and failure to properly cool building), CP at 200 -02

complaints about security and sanitation conditions), CP at 204 ( complaints about security), CP

at 294 -303 ( repeated complaints about heating and cooling the building, difficulties arising from

Old City Hall' s failure to pay the utilities, sanitation,, and security conditions), CP at 315 -21

same), and CP at 364 -73 ( complaints about heating and cooling, security, and difficulty for the

Foundation' s clients due to. the locking of the Commerce Street door). With these complaints,

neither Gross nor the Foundation waived their constructive eviction claim under either waiver

theory Washington law recognizes. The complaints certainly alerted Old City Hall, or its agent

Stratford, to the deficient conditions so that Old City Hall could remedy.them. The complaints

also demonstrated that neither Gross nor the Foundation acquiesced in the deficient conditions

by accepting them without complaint.

Public policy considerations also require us to reject Old City Hall' s theory of waiver.

Our Supreme Court has recognized that landlords may have incentives to engage in wrongful

behavior in order to force tenants to vacate so that the landlord can put the leasehold to another

7 use more beneficial to it. See, e. g., Cherberg v. Peoples Nat' l Bank of Wash., 88 Wn.2d 595,

7 The Foundation claims this is just such a case. Because we review a summary judgment decision here, we must view the facts and the inferences arising from those facts in the light most favorable to the nonmoving party, Old City Hall. Viewed in that light, we cannot say that this 12 No. 43810 -1 - II

564 P. 2d 1137 ( 1977). In these cases, the neglect of the premises is an obvious tool the landlord

might use to force the tenant to break the lease. It would contradict public policy to allow the

landlord to make the leasehold untenantable and gamble on the possibility that it would suffer no

consequences for its actions if the tenant fails to quickly give up, break the lease, and move out.

Finally, Old City.Hall claims that the trial court failed to make adequate findings of fact

to support its conclusion that a constructive eviction occurred or that it occurred on September

23, 2008 for Gross and on December 30, 2009 for the Foundation. Findings of fact are

superfluous on appeal from an order of summary judgment because of the de novo nature of our

review. Shoulberg v. Pub. Util. Dist. No. 1 ofJefferson County, 169 Wn. App. 173, 177 n.1, 280

P. 3d 491, review denied, 175 Wn.2d 1024, 291 P. 3d 253 ( 2012). Instead, we consider whether

material facts are " uncontroverted or conceded at summary judgment." Shoulberg, 169 Wn.

App. at 177 n. 1. Thus, the court' s failure to make specific findings does not imperil its order on

summary judgment.

To the extent Old City Hall is claiming that a material issue of fact remains, its position

also fails. Essentially, it argues that conditions in the building evicted Gross and the Foundation

at some point before they actually quit the building and that the trial court needed to determine

that date. However, in Buerkli, 168 Wash. at 334 -35, the court held, " In order to claim and assert

a constructive eviction as a defense to an action for rent, the tenant must in fact vacate the

premises." The trial court recognized this by terminating the duty to pay rent on the dates that

Gross and the Foundation moved out. No evidence in the record controverts the dates Gross and

the Foundation vacated the building. Summary judgment that Gross and the Foundation had no

was a campaign to drive the tenants out of the building, but may have just been a lessor ill - equipped way to deal with the challenges inherent in owning a historic building. 13 No. 43 810 -1 - II

liability to pay rent after September 23, 2008, and December 30, 2009, respectively, was

therefore appropriate.

II. THE MOTION TO CONTINUE

Old City Hall also appeals the trial court' s decision to deny it a continuance to depose the

Foundation' s former head. Old City Hall sought the deposition in order to establish the

Foundation had experienced the objectionable conditions underlying its constructive eviction

claim as far back as 2005 and had, therefore, waived the claim.

CR 56( f)allows a parry to move for a continuance so that it may gather evidence relevant

to a summary judgment proceeding. We review a trial court' s decision to deny a motion for a

continuance on these grounds for an abuse of discretion. Turner v. Kohler, 54 Wn. App. 688,

693, 775 P. 2d 474 ( 1989). A trial court does not abuse its discretion if it denies a motion for a

continuance because

1) the requesting parry does not offer a good reason for the delay in obtaining the desired evidence; ( 2) the requesting party does not state what evidence would be

established through the additional discovery; or ( 3) the desired evidence will not raise a genuine issue of material fact. --

Turner, 54 Wn. App. at 693. As shown above, Old City Hall' s waiver theory is incompatible

with Washington precedent. Thus, the evidence sought from the former head would not raise or

bear on a material issue of fact. The trial court therefore did not abuse its discretion in denying

the continuance.

III. GROSS AND FOUNDATION SHOULD RECEIVE ATTORNEY FEES

Both Gross and the Foundation request attorney fees for the appeal. We may award

attorney fees on appeal if "allowed by statute, rule, or contract and the request is made pursuant

to RAP 18. 1( a)." Malted Mousse, Inc. v. Steinmetz, 150 Wn.2d 518, 535, 79 P. 3d 1154 ( 2003).

14 No. 43810 -1 - II

Both Gross' s and the Foundation' s leases contain a provision permitting a prevailing party to

recover reasonable attorney fees in a suit arising out of the lease. These provisions cover fees

incurred during " trial and on appeal." CP at 19, 41.

Old City Hall' s lawsuit and this appeal arose out of the lease, since Old City Hall was

seeking the payment of back rent under it. Gross and the Foundation have prevailed in this

appeal. Therefore, we award them attorney fees for reasonable expenses incurred for this appeal.

CONCLUSION

We hold that reasonable minds could reach only the conclusion that Old City Hall

constructively evicted Gross and the Foundation, and we hold that Gross and the Foundation did

not waive the defense of constructive eviction. Accordingly, we affirm the trial court' s decision

to grant summary judgment to Gross and the Foundation, and we award them attorney fees on

appeal.

A majority of the panel having determined that this opinion will not be printed in the

Washington Appellate Reports, but will be filed for public record in accordance with RCW

2. 06. 040, it is so ordered.

b

BKRGENAK `»- We concur:

r a

JOHANSON, A.C. J.

MAxA, J.