Peyton Building, LLC v. Nikos Gourmet Inc.

Procedural entryThis page is a short order in Peyton Building, LLC v. Nikos Gourmet Inc.. Read the opinion of the Court — 180 Wash. App. 674
Court of Appeals of Washington·Decided April 24, 2014·No. 30840-5·Published

Opinion

FILED

April 24, 2014

In the Office of the Clerk of Court

WA State Court of Appeals, Division III

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

DIVISION THREE

PEYTON BUILDING, LLC, a Washington ) No. 30840-5-111 Limited Liability Corporation, ) ) Respondent, ) ) v. ) ) PUBLISHED OPINION NIKO'S GOURMET, INC., a Washington ) corporation; LAITH and ABIR ELAIMY, a ) marital community, ) ) Appellants. )

BROWN, J.-Tenant Niko's Gourmet Inc., and its personal guarantors Abir and

Laith Elaimy, appeal the trial court's summary judgment granting breach of lease

damages to Peyton Building, LLC. Peyton is the successor in interest to the leased

property by a purchase agreement but is not an assignee of the lease or guarantee.

Even so, the court enforced Niko's relevant lease obligations and the Elaimys' personal

guarantee in Peyton's favor on summary judgment. Niko's and the Elaimys contend the

court erred in rejecting their challenges to Peyton's standing and real party in interest

status, and in deciding no genuine issue of material fact remains regarding the amount

of Niko's default, and the amount, if any, to credit or pay Niko's for the value of personal

property Peyton retained under its landlord's lien. No. 30840-5-111 Peyton Bldg. LLC v. Niko's Gourmet Inc.

Considering Peyton's reversionary estate in the leased property. we conclude the

trial court correctly acknowledged Peyton's status as de facto landlord. But because

Peyton did not receive a contractual assignment of rights for the lease or guarantee, it

may enforce solely those lease covenants running with the land. While Niko's relevant

lease obligations run with the land, the Elaimys' personal guarantee does not. For this

reason, we conclude the court erred by enforcing the guarantee in Peyton's favor on

summary judgment. We decide genuine issues of material fact remain regarding both

the amount of unpaid rent and the value of retained personal property. Therefore, the

trial court erred in granting Peyton summary judgment on the rent default and landlord's

lien amounts. Accordingly, we affirm in part, reverse in part, and remand for further

proceedings.

FACTS

On May 20,2002, Niko's signed a 10-year agreement leasing commercial

property from Pacific Security Financial Inc. and promising to continuously occLipy the

premises while operating it as a restaurant. Niko's promised to pay escalating rent

totaling, as relevant here, $7,933 monthly beginning in September 2010 and $8,171

monthly beginning in September 2011. Additionally, Niko's promised to pay a five

percent late charge for rent due but unpaid by the fifth day of each month. In the same

document, the Elaimys personally guaranteed to pay for Niko's default. Later, Peyton

bought the building from Pacific Security.

Niko's did not pay the full $7,933 monthly rent in February 2011 and vacated the

premises in March 2011. At the time, Niko's owed additional money to Washington

No. 30840-5-111

Peyton Bldg. LLC v. Niko's Gourmet Inc.

Trust Bank and the Internal Revenue Service (IRS). As a secured creditor, Washington

Trust held a security interest in Niko's "inventory, chattel paper, accounts, equipment,

general intangibles, and fixtures." Clerk's Papers (CP) at 60. As a priority lienholder,

the IRS held a tax lien on all Niko's property, including "[f]ixtures, furnishings, and

equipment." CP at 63.

On March 11,2011, Peyton sued Niko's for unlawful detainer. Ten days later,

Peyton and Niko's signed a stipulated eviction order stating,

[Niko's] agrees to surrender the Property to [Peyton] together with all non­ perishable inventory (specifically including all wine and other alcoholic beverages), restaurant equipment and trade fixtures. [Niko's] specifically recognizes [Peyton]'s claim to a lien on such inventory, equipment and fixtures pursuant to RCW 60.72.010. [Niko's] also acknowledges the security interest of Washington Trust ... in such property identified in this paragraph, and that [Peyton] and Washington Trust ... will be negotiating in the future over the disposition of such property. The IRS makes claim to this property as well.

CP at 54.

After negotiations, Peyton took some restaurant equipment and trade fixtures,

which Niko's and the Elaimys later valued at $110,235, while Washington Trust took

some inventory and the IRS relinquished its tax lien. Peyton relet the premises,

including the equipment and fixtures, for rent beginning at $10,000 monthly in

November 2011-a disputed start date for the replacement lease. Niko's and the

Elaimys unsuccessfully requested Peyton credit or pay the value of the equipment and

fixtures.

On May 20, 2011, Peyton sued Niko's and the Elaimys for breach of the lease

and foreclosure of a landlord's lien in the equipment and fixtures. Peyton moved

No. 30840-5-111 Peyton Bldg. LLC v. Niko's Gourmet Inc.

successfully for summary judgment totaling $104,558.08 plus costs. Niko's and the

Elaimys appealed after moving unsuccessfully for reconsideration.

STANDARD OF REVIEW

We review a summary judgment order de novo, engaging in the same inquiry as

the trial court. Highline Sch. Dist. No. 401 v. Port of Seattle, 87 Wn.2d 6, 15,548 P.2d

1085 (1976); Mahoney v. Shinpoch, 107 Wn.2d 679, 683,732 P.2d 510 (1987).

Summary judgment is proper if the records on file with the trial court show "there is no

genuine issue as to any material fact" and "the moving party is entitled to a judgment as

a matter of law." CR 56(c). A genuine issue is one upon which reasonable people may

disagree; a material fact is one controlling the litigation's outcome. Morris v. McNicol,

83 Wn.2d 491,494,519 P.2d 7 (1974); Ranger Ins. Co. v. Pierce County, 164 Wn.2d

545, 552, 192 P.3d 886 (2008). We construe all evidence and reasonable inferences in

the light most favorable to the nonmoving party. Barber v. Bankers Life & Cas. Co., 81

Wn.2d 140, 142,500 P.2d 88 (1972); Wilson v. Steinbach, 98 Wn.2d 434, 437,656

P.2d 1030 (1982). And, we consider solely evidence and issues the parties called to

the trial court's attention. RAP 9.12.

Initially, the moving party bears the burden of proving no genuine issue of

material fact exists. LaPlante v. State, 85 Wn.2d 154, 158,531 P.2d 299 (1975). Then,

the burden shifts and the nonmoving party must present admissible evidence showing a

genuine issue of material fact exists. Young v. Key Pharms., Inc., 112 Wn.2d 216, 225,

770 P.2d 182 (1989); see CR 56(e). The sections below address each contention

separately.

No. 30840-5-111 Peyton Bldg. LLC v. Niko's Gourmet Inc.

ANALYSIS

A. Standing and Real Party in Interest

The issue is whether the trial court erred in summarily deciding Peyton had

standing and was the real party in interest to enforce Niko's relevant lease obligations

and the Elaimys' personal guarantee. Niko's and the Elaimys contend this decision is

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