Omega Industries, Inc. v. Raffaele

894 F. Supp. 1425, 1995 U.S. Dist. LEXIS 10941, 1995 WL 457915
CourtDistrict Court, D. Nevada
DecidedJune 28, 1995
DocketCV-S-93-312-RJJ
StatusPublished
Cited by13 cases

This text of 894 F. Supp. 1425 (Omega Industries, Inc. v. Raffaele) is published on Counsel Stack Legal Research, covering District Court, D. Nevada primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Omega Industries, Inc. v. Raffaele, 894 F. Supp. 1425, 1995 U.S. Dist. LEXIS 10941, 1995 WL 457915 (D. Nev. 1995).

Opinion

OPINION

JOHNSTON, United States Magistrate Judge.

This matter came before the Court for a bench trial upon consent of the parties pursuant to 28 U.S.C. § 636(e).

FINDINGS OF FACT

Plaintiff, Omega Industries, Inc. (Omega), is a commercial development company which owns the Sahara Professional Center located at 2069 East Sahara Avenue in Las Vegas, Nevada. Omega is owned and operated by its president, Edward M. Nigro. Defendant, Dr. Thomas S. Raffaele (Dr. Raffaele), is a licensed optometrist who operated a private optometry business in Las Vegas from 1978 to 1992.

On September 25, 1985, Omega and Dr. Raffaele entered into a lease agreement for office space located at the Sahara Professional Center. Plaintiffs Exhibit 1. On August 21,1991, Omega and Dr. Raffaele terminated their 1985 lease agreement and entered into a second lease agreement with respect to a larger office which was also located at the Sahara Professional Center. Plaintiff’s Exhibit 2. This second agreement was for a period of five years commencing November 1, 1991. Because Dr. Raffaele agreed to a relatively long term of five years, Omega consented to make certain tenant improvements and to reduce its regular per square foot rental rate. Dr. Raffaele also signed a lease guaranty whereby he personally guaranteed the payment of all rent, together with all costs and attorneys’ fees incurred by Omega in enforcing the office lease. Plaintiff’s Exhibit 3.

*1428 In September 1992, Dr. Raffaele contacted the United States Public Health Service regarding potential public service opportunities as a optometrist. Dr. Raffaele became interested in moving from Las Vegas and utilizing his optometry skills through public service opportunities after his children had left home either to attend college or to enter military service. Plaintiffs Exhibit 22. 1 The Public Health Service subsequently provided Dr. Raffaele with application materials for the position of a Public Health Service Officer and indicated that, if selected, he could legally terminate his office lease under Section 304 of the Soldiers’ and Sailors’ Civil Relief Act of 1940 (50 U.S.C.Appx. § 534).

On October 30, 1992, after one year of satisfactory performance under the lease, Dr. Raffaele submitted an application to the United States Department of Health and Human Services (HHS) for an appointment as a commissioned officer in the Public Health Service. Plaintiffs Exhibit 22. In February 1993, HHS notified Dr. Raffaele that he had been selected for the position of optometrist at the Public Health Service’s Indian Health Center in Lame Deer, Montana. Plaintiff’s Exhibit 5. Dr. Raffaele was assigned the rank of Lieutenant Commander and ordered to report on “active duty” in Lame Deer on April 5, 1993. Plaintiffs Exhibit 23.

Dr. Raffaele subsequently notified Omega of his appointment and indicated that he would be terminating his office lease at the end of March 1993. On April 5, 1993, Dr. Raffaele reported to his assignment in Lame Deer and, on April 25,1993, provided written confirmation to Omega that he had terminated his lease pursuant to Section 304 of the Soldiers’ and Sailors’ Civil Relief Act. Plaintiffs Exhibit 8. On March 16, 1993, HHS also notified Omega that, as a commissioned officer in the Public Health Service, Dr. Raffaele was entitled to legally terminate his lease agreement under the Act. Plaintiffs Exhibit 7. Thereafter, Omega immediately commenced efforts to re-lease the office space previously occupied by Dr. Raffaele. Ten months later, Omega leased the office to a new tenant, Prime Health. Due to depressed market conditions, Omega was forced to offer Prime Health a reduced rental rate.

Omega has now filed the instant action against Dr. Raffaele for breach of the 1991 lease agreement. In doing so, Omega acknowledges that subsection 304(2) of the Soldiers’ and Sailors’ Civil Relief Act reheves military personnel from leasehold obligations which exist at the time they are called into service. However, Omega asserts that, under subsection 304(2), the court may modify or restrict this leasehold relief if equity so requires. Accordingly, Omega argues that equity bars Dr. Raffaele from obtaining any relief from his leasehold obligations because: (1) he acted deceptively and with bad faith in securing and terminating the 1991 lease agreement; and, (2) he was not called into military service at a time of national crisis, but, rather, he voluntarily applied for active duty during a time of peace. Omega therefore asserts that Dr. Raffaele’s utilization of subsection 304(2) is contrary to the intent and public policy of the Soldiers’ and Sailors’ Civil Relief Act. Consequently, Omega seeks damages for breach of the 1991 lease agreement in the form of lost rental income; reduced rental income, induced tenant improvements; realty commissions; and attorneys’ fees and costs. Plaintiffs Exhibit 18. 2

Dr. Raffaele opposes Omega’s action on several grounds. First, Dr. Raffaele argues that the court may only modify or restrict his leasehold relief, under subsection 304(2), to the extent of ordering him to fulfill his monthly rental obligations and/or to forfeit his lease security deposit. Dr. Raffaele therefore asserts that this court has no authority to grant damages to Omega in the form of induced tenant improvements, realty commissions and attorneys’ fees and costs. Second, Dr. Raffaele claims that Omega *1429 should be denied equitable damages because it has violated the equitable maxim that “he who comes into equity must come with clean hands.” Finally, Dr. Raffaele argues that there is no equitable justification to deny him the leasehold relief provided by subsection 304(2).

DISCUSSION AND CONCLUSIONS OF LAW

The court must determine: (1) the extent to which it may grant equitable remedies to a lessor under subsection 304(2) of the Soldiers’ and Sailors’ Civil Relief Act; (2) if the court may grant equitable remedies, whether Omega has come before the court with “unclean hands” and, therefore, is barred from obtaining equitable damages under subsection 304(2); and, (3) whether principles of equity and justice bar Dr. Raffaele from obtaining the leasehold relief provided in subsection 304(2). To properly address these issues, the court must first discuss the scope and applicability of the Soldiers’ and Sailors’ Civil Relief Act.

I. SOLDIERS’ AND SAILORS’ CIVIL RELIEF ACT

The Soldiers’ and Sailors’ Civil Relief Act of 1940 (50 U.S.C.Appx. §§ 501 et seq.) suspends or terminates various civil liabilities of persons in military service. Subsection 304(2) of the Act (50 U.S.C.Appx. § 534(2)) specifically allows military personnel, as a lessee, to terminate lease obligations which exist at the time they are called into service. 3 Subsection 304(2) also provides, however, that a court may modify or restrict this relief from a leasehold obligation where equity so requires. Subsection 304(2) provides:

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Bluebook (online)
894 F. Supp. 1425, 1995 U.S. Dist. LEXIS 10941, 1995 WL 457915, Counsel Stack Legal Research, https://law.counselstack.com/opinion/omega-industries-inc-v-raffaele-nvd-1995.