Prologis Trust v. DuPont Commercial Flooring Systems, Inc.

63 Va. Cir. 347, 2003 Va. Cir. LEXIS 337
CourtLoudoun County Circuit Court
DecidedNovember 4, 2003
DocketCase No. (Law) 27325
StatusPublished
Cited by1 cases

This text of 63 Va. Cir. 347 (Prologis Trust v. DuPont Commercial Flooring Systems, Inc.) is published on Counsel Stack Legal Research, covering Loudoun County Circuit Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Prologis Trust v. DuPont Commercial Flooring Systems, Inc., 63 Va. Cir. 347, 2003 Va. Cir. LEXIS 337 (Va. Super. Ct. 2003).

Opinion

By Judge James H. Chamblin

This case came before the Court on September 16,2003, for trial without a jury on claims for breach of a lease. Upon consideration of the evidence presented, the argument of counsel, and the post-trial memoranda, I find in favor of the Plaintiff, Prologis Trust, and it is granted a judgment against the Defendant, DuPont Commercial Flooring Systems, Inc., in favor of Prologis Trust in the amount of $31,548.55 on its claim for damages for breach ofthe lease.

Facts

On March 7, 1997, the Plaintiff, Prologis Trust (“Prologis”), and the Defendant, DuPont Commercial Flooring Systems, Inc. (“DuPont”), through their predecessors in interest, Security Capital Industrial Trust and MSA Industries, Inc., entered into a Lease Agreement (the “Lease”) for property located at 113 Executive Drive, Suite # 125, Sterling, Virginia, in Loudoun County. The Lease expired on March 31, 2002.

DuPont used the Property for a commercial carpet business under the trade name of Kemper Carpet. On January 18, 2000, DuPont assigned its interest in the Lease to Nations Flooring, Inc. (“Nations Flooring”) effective as of July 1, 1999. Nations Flooring operated a carpet business at the Property under the trade name of Kemper Carpet Bam. The assignment was made by the Lease Assignment and Assumption Agreement dated January 18, 2000, between DuPont, as assignor, and Nations Flooring, as assignee. Prologis was [348]*348not a party to the Assignment Agreement. However, Prologis never objected to the Assignment Agreement and accepted rent from Nations Flooring after the assignment. At trial, the parties stipulated that Prologis impliedly consented to the assignment of the Lease by DuPont to Nations Flooring.

In October 2001, Nations Flooring ceased paying rent. Prologis filed an unlawful detainer action against DuPont in October 2001, but it was dismissed because DuPont asserted that it did not have possession of the Property. Thereafter, Prologis filed an unlawful detainer action against Nations Flooring.

Because the rent was not paid for October 2001, Prologis on October 20, 2001, gave notice that, if the default was not cured within five days it would elect to terminate the tenant’s right to possession under the Lease without terminating the tenant’s obligations under the lease.

While the unlawful detainer action was pending, Nations Flooring, on December 20, 2001, filed a petition in bankruptcy in the United States Bankruptcy Court for the Southern District of New York.

On February 12,2002, counsel for Prologis and Nations Flooring agreed in writing that Prologis would not object to a motion to be filed by Nations Flooring in the bankruptcy proceeding for an order rejecting the Lease as of December 20,2001, surrendering the Property, and allowing Nations Flooring to abandon all the personal property remaining on the Property. On February 13,2002, Nations Flooring filed the motion, and on March 1,2002, an order was entered in the bankruptcy court authorizing Nations Flooring to reject the Lease as of December 20, 2001, approving the letter agreement dated February 12,2002, and deeming the personal property located on the Property to be abandoned under the Bankruptcy Code.

After entry of the order by the bankruptcy court, Prologis personnel were finally able to re-enter the Property. It proceeded to clean up the property. In doing so, it incurred certain expenses and it bartered with other companies to clean up and remove the personal property left on the Property.

The personal property abandoned at the Property included a carpet cutting machine, carpet racks, and five delivery vans. In exchange for the carpet racks, Sully Carpet extensively cleaned up the Property. Prologis had Henry’s Wrecker Service tow away the vans at no cost to Prologis. Finally, the carpet cutting machine was removed by Sully Carpet at no cost. Prologis gave away the carpet racks, delivery vans, and carpet cutting machine.

On August 29,2002, Prologis filed this suit against DuPont for damages resulting from breach of the Lease. Prologis seeks to recover over $90,000.00 for unpaid rent and rent-related charges under the Lease, attorney’s fees, and repair costs.

[349]*349 Legal Analysis

DuPont’s defenses may be summarized as follows:

1. By virtue of the Assignment DuPont became a surety and has been discharged from liability under the Lease.

2. Prologis failed to mitigate its damages.

3. DuPont’s liability as surety has been discharged in an amount equal to the value of the personal property abandoned at the Property.

4. Prologis is not entitled under the Lease to recover any attorney’s fees.

The defenses are addressed below.

A. Suretyship Issue .

Relying on The Corner Associates v. W. R. Grace & Co., 988 F. Supp. 970 (E.D. Va. 1997), aff’d, 173 F.3d 424 (4th Cir. 1999), DuPont asserts that it is a “well-established” legal principle that “the effect of [an] assignment is to make the lessee a surety to the lessor for the assignee.” 988 F. Supp. at 974. It is recognized in Corner Associates that the issue is one of first impression in Virginia. There are no reported Virginia cases supporting the principle. There is merely one case, decided similarly by the United States District Court for the Eastern District of Virginia and the Fourth Circuit Court of Appeals, saying this is the law in Virginia. That is not a “well-established” legal principle. The opinion in Corner Associates recognizes that there is a conflict of authority throughout the United States on the issue.

There being no authority from a Virginia state court, the federal court decision in Corner Associates is no more persuasive than a decision from another state. The similarity between the lease assignment in this case and the deeds of trust assumed in Hofheimer v. Booker, 164 Va. 358 (1935), and Waddell v. Roanoke Mut. B. & L. Ass’n, 165 Va. 229 (1935) (upon the sale of real estate whereby the purchaser assumes a deed of trust the seller became a surety), is somewhat persuasive, but is not dispositive under the facts of this case.

A surety arrangement is a three party agreement among a principal obligor, his obligee, and a surety. The surety makes a direct promise to perform the obligation in the event the principal obligor fails to perform. As between the principal obligor and the surety, the ultimate liability rests upon the former, but the obligee has a remedy against both. First Va. Bank-Colonial v. Baker, 225 Va. 72, 77 (1983).

A surety arrangement is made where the surety agrees, either as an accommodation or for compensation, to perform the obligations of the principal obligor. An obvious example is a surety bond situation. The surety [350]*350relationship comes about by express agreement. It cannot be implied. The relationship among Prologis, Nations Flooring, and DuPont was created by a business transaction between DuPont and Nations Flooring. It is not a situation whereby DuPont merely agreed to be surety for the performance of Nations Flooring’s obligation under the Lease. DuPont was obligated under the Lease before Nation’s Flooring agreed to be obligated under the Lease.

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Bluebook (online)
63 Va. Cir. 347, 2003 Va. Cir. LEXIS 337, Counsel Stack Legal Research, https://law.counselstack.com/opinion/prologis-trust-v-dupont-commercial-flooring-systems-inc-vaccloudoun-2003.