Sengul v. CMS Franklin, Inc.

265 P.3d 320, 2011 Alas. LEXIS 135, 2011 WL 6116695
CourtAlaska Supreme Court
DecidedDecember 9, 2011
DocketNos. S-13552, S-13582
StatusPublished
Cited by15 cases

This text of 265 P.3d 320 (Sengul v. CMS Franklin, Inc.) is published on Counsel Stack Legal Research, covering Alaska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sengul v. CMS Franklin, Inc., 265 P.3d 320, 2011 Alas. LEXIS 135, 2011 WL 6116695 (Ala. 2011).

Opinions

OPINION

FABE, Justice.

I. INTRODUCTION

In late April 2006 Samuel Sengul leased a commercial storefront in downtown Juneau to Robert Manus, who was acting on behalf of CMS Franklin, Inc. The building was under construction when Sengul and CMS entered into the lease agreement, but the lease provided that Sengul would deliver the property to CMS in a specified improved condition by the time the lease commenced on June 1, 2006. The lease also included a rent abatement provision, which is at issue in this case because the building was not in the promised improved condition until approximately June 8, 2006. Manus did not pay any rent, nor did he mention the rent abatement provision when he took possession of the building, when the lease commenced, or when he opened CMS's store in mid-June. Sengul finally demanded rent in late July, but Manus refused to pay, claiming abatement. In September, Manus had still not paid any rent, and Sengul put a lock on CMS's store door and placed signs demanding rent in the store windows. Manus had the lock cut off, but began to move the inventory out of CMS's store, vacating it and returning the keys to Sengul two days after the lockout. Sengul then sued CMS and Manus for unpaid rent.

The superior court determined that CMS had waived its right to rent abatement and owed Sengul unpaid rental amounts for the time that Manus had occupied the building. But the superior court also concluded that Sengul's lockout amounted to constructive eviction and awarded CMS damages as a refund for work performed on the premises that CMS was unable to benefit from after the constructive eviction.

We agree with the superior court that Sengul's actions constituted constructive eviction, but we disagree that CMS waived its entitlement to have the rent abated. We [322]*322remand for the superior court to recalculate the damages owed to CMS.

II. FACTS AND PROCEEDINGS

A. Facts

On or about April 30, 2006, Samuel Sengul and the president of CMS Franklin, Inc. (CMS), Robert Manus, entered into a five-year lease for part of a commercial storefront building in downtown Juneau. The building was still under construction when Sengul and CMS entered into the lease agreement. The parties apparently hoped that the storefront would be completed by mid-May 2006 in time for the beginning of the 2006 summer tourist season, but the lease contained certain provisions outlining how the lease terms would change if the storefront was not in a specified improved condition by the time the lease was set to begin on June 1, 2006. Several provisions of the lease are relevant to this appeal.

First, the lease provided: "Subject to completion of Landlord Work and vacant, 'broom-clean' delivery of Store Space 2 to Lessee, with a certificate of occupancy in place for the Building, this Lease commences on June 1, 2006." The term "Landlord Work" was defined in section 8.01(E) of the lease, which required Sengul to deliver the building to CMS in "[vlanilla box, finished condition." This included: four walls painted to CMS's color specification, the floor ready for carpet or wood tiling, a fully finished bathroom, and "[aln official certificate for oceupaney of the Building ... permitting [CMS's] use and occupancy."

The lease set the rent at $10,000 per month through May 81, 2007, with increases each year thereafter. CMS was to pay rent "commencing on the first day of the term of the lease." CMS also had to pay Juneau sales tax on the monthly rent, which amounted to an additional $500 per month. But the lease included a rent abatement provision:

If Lessor's Work [defined in Section 3.01(E)] is not completed by May 15th, 2006, and the Leased Property is not delivered to Lessee in vacant, finished condition for Lessee's sole possession and improvements, then Lessor shall abate the rent per month for the first year of the lease by an additional 3 days for every day of delay. If the Leased Property is not delivered in vacant, finished condition with Lessor's Work completed by June 1, 2006, a rent abatement of 4 days will apply for each day the Leased Property is not finished to the standard set forth in Landlord's Work, E., below. If the Leased Property is still not delivered in finished condition with Landlord's Work completed by June 15, 2006, Lessee at its option, may cancel this Lease or continue to receive a 4 day abatement for each day of non-delivery.

In addition, the lease included terms and conditions related to default. It defined default as including failure to pay rent within ten days of Sengul providing notice that rent was due. And it provided that upon default, Sengul, "in addition to any rights and remedies that may be given ... by statute," could "choose to do the following, singly or in combination: (a) After legal process on notice, reenter the Leased Property and take possession thereof and remove all property from the same, except inventory." Finally, the lease contained a provision regarding waiver, which stated:

No failure by either Lessor or Lessee to insist upon the strict performance by the other of any covenant, agreement, term, or condition or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or of such covenant, agreement, term, or condition.

CMS took possession of the building on or about April 30, 2006. At that time, contractors were still working on the building and, among other things, there was no certificate of occupancy. Over the next few weeks, a contractor made repairs and adjustments to both Sengul's and CMS's retail spaces in the building. Due to issues with the sprinkler system, Sengul was unable to obtain a certificate of occupaney for the storefront until June 8. Sengul opened his store that same day, but CMS did not open its store until about a week later, apparently because it was waiting for the contractor to finish certain improvements to the space.

Though CMS occupied the storefront for the next month and a half, it did not make [323]*323any rent or security deposit payments to Sengul. According to Sengul, he and Manus spoke two or three times in June and July, and Manus stated: "I know I'm late. I'm going to pay you in full, and I'm going to make it up to you." Manus, however, claims that Sengul did not ask for rent until late July and alleges that he responded that CMS did not owe any rent because the building was not ready until mid-June, and thus the rent was abated.

On July 25 Manus sent a letter to Sengul's attorney, contending that rent should have been abated due to the delay in having the building ready; he conceded that CMS owed Sengul the security deposit. Sengul's attorney responded to Manus in August, explaining that Manus was not entitled to rent abatement because, "(bly accepting possession of the property and failing to provide any sort of notice to Mr. Sengul[,I[CMS] ... waived any right it may have had to a penalty under section 3(D) of the lease." The letter also warned that if CMS did not pay the full amount of rent and security deposit within ten days, Sengul would consider the lease in default and would seek all legal remedies, including eviction. Manus replied to Sengul's attorney on August 16, again claiming that the rent should have been abated and offering to pay $8,000 to remain in the storefront through the end of September.

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Cite This Page — Counsel Stack

Bluebook (online)
265 P.3d 320, 2011 Alas. LEXIS 135, 2011 WL 6116695, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sengul-v-cms-franklin-inc-alaska-2011.