Roseburg Investments, LLC v. House of Fabrics, Inc.

995 P.2d 1228, 166 Or. App. 158, 2000 Ore. App. LEXIS 352
CourtCourt of Appeals of Oregon
DecidedMarch 8, 2000
Docket98CV1916ET; CA A103849
StatusPublished
Cited by2 cases

This text of 995 P.2d 1228 (Roseburg Investments, LLC v. House of Fabrics, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Roseburg Investments, LLC v. House of Fabrics, Inc., 995 P.2d 1228, 166 Or. App. 158, 2000 Ore. App. LEXIS 352 (Or. Ct. App. 2000).

Opinion

*160 BREWER, J.

This appeal arises from a commercial forcible entry and detainer (FED) action in which plaintiff sought to recover possession of premises leased to defendants for use as a fabric store. ORS 105.110. 1 The trial court entered judgment in favor of defendants, and plaintiff appeals. We affirm.

The following facts are not in dispute. In 1989, plaintiffs predecessor leased to defendants premises located in the Garden Valley Shopping Center in Roseburg. The written lease required defendants to make monthly rent and monthly common area maintenance (CAM) expense payments. According to the lease, CAM charges reflected “on a pro rata basis the reasonable costs of operating and maintaining the common areas” of the shopping center. The lease required defendants to pay estimated CAM charges each month in advance and, at the end of each year, plaintiff was required to furnish defendants with a written statement itemizing the actual CAM costs for the shopping center and defendants’ pro rata share of those costs. If defendants overpaid their pro rata share on an annual basis, then the lease obligated plaintiff to refund the difference; alternatively, if defendants underpaid, then they were obligated to make up the difference. The lease afforded defendants the “right to audit [plaintiffs] books and records regarding common area charges.”

In October 1996, defendants advised plaintiff in a letter that their auditors had determined that defendants were overcharged $6,161 in CAM expenses. Defendants requested a refund or credit for the alleged overpayment. Plaintiff apparently did not respond to defendants’ request at that time. In August 1997, defendants renewed the request in a further letter. Plaintiff responded that the “$6,161 obligation * * * was settled and paid to [defendants] * * *. The sum is not owed.” Plaintiff also warned defendants not to *161 “withhold rent as an offset. * * * Any [nonpayment] or setoff * * * will be treated as a breach, and eviction proceedings will be commenced.”

Defendants took the position that they had not been reimbursed for the alleged CAM overpayment and, despite plaintiffs warning, withheld an equal amount from their total payment each month from October 1997 through January 1998, for a total of $6,161. During those months, defendants’ payment was in an amount not less than the “minimum rent” required by the lease. Pursuant to its own accounting practices, plaintiff first applied defendants’ payments to CAM charges and then applied the remaining amount to rent. That allocation resulted in an alleged underpayment of rent in the amount of $6,161.

After January 1998, defendants resumed making the full monthly payments to plaintiff. Plaintiff notified defendants, in a letter dated May 4, 1998, that defendants were “in default due to [their] failure to pay [their] rent when due * * The notice also stated that if the claimed default was not remedied within 20 days, then plaintiff would seek to recover possession of the premises. Defendants did not pay the disputed amount and, on June 4, 1998, plaintiff served defendants with a notice to vacate the premises. When defendants did not comply, plaintiff initiated this FED proceeding.

At trial, plaintiff filed a memorandum that explained its theory of the case as follows:

“A. Lease Terminated for Non-Payment of Rent
“Under Oregon law failure of the tenant to pay the rent in a timely manner, within the terms of the lease, ‘operates to terminate the tenancy.’ ORS 91.090. The rule is strictly enforced pursuant to FED proceedings. * * * A late tender of the rent is insufficient to reinstate the lease. * * *
“The evidence in this case will show that Defendants failed to pay the rent due under the lease. Plaintiff gave Defendants the 20 day notice called for under the terms of the lease. When Defendants failed to pay the sum due * * *, ‘the tenancy is terminated’ and Defendants therefore hold the premises ‘with force.’ ORS 105.115. Plaintiff is therefore entitled to bring this FED proceeding. ORS 105.110.
*162 “B. Application of Payments
“The evidence will show that Defendants are obligated to pay * * * to Plaintiff: Minimum Rent * * *; [and] common area maintenance (‘CAM’) charges * * *. The evidence will show that on at least two occasions Defendants have paid an amount which is less than the total agreed upon amount. In those instances Plaintiff has credited Defendants’ payment first to CAM charges * * * with the remainder applied to rent. A creditor which is owed several debts is entitled to apply payments as the creditor sees fit. Fowler v. Courtemanche, 202 Or 413 (1954). As a result, the rent is unpaid.” (Boldface in original; emphasis added.)

That memorandum plainly articulated a single legal theory: Defendants failed to pay rent, which terminated their tenancy pursuant to ORS 91.090, 2 which, in turn, caused defendants to hold the premises “with force” under ORS 105.115. Therefore, plaintiff asserted, it was entitled to recover possession of the premises pursuant to ORS 105.110.

In its opinion letter, the trial court stated that the “central issue” in the case was the determination whether the alleged deficit in payments constituted unpaid “rent.” The court found that each of the monthly payments from October 1997 through January 1998 exceeded the amount of “minimum rent required by the lease”; it also concluded that plaintiff was required to apply those payments to reñí — rather than CAM — because defendants’ conduct made clear that they intended to apply their “short” payments to rent. The trial court therefore concluded that defendants were not in default due to nonpayment of rent and entered judgment in favor of defendants.

After receiving the court’s decision, plaintiff filed a motion for a new trial. Plaintiff argued that, in order to prevail, it was only required to prove that defendants were in *163 default based upon a breach of any condition or covenant of the lease. Plaintiff contended that the basis of defendants’ alleged default — whether in failing to pay CAM or, alternatively, nonpayment of rent — was immaterial to plaintiffs right of recovery. The trial court denied plaintiffs motion, reasoning that:

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Cite This Page — Counsel Stack

Bluebook (online)
995 P.2d 1228, 166 Or. App. 158, 2000 Ore. App. LEXIS 352, Counsel Stack Legal Research, https://law.counselstack.com/opinion/roseburg-investments-llc-v-house-of-fabrics-inc-orctapp-2000.