265 P.3d 320 (Alaska 2011)
On or about April 30, 2006, Samuel Sengul entered into a five-year lease with Robert Manus, president of CMS Franklin, Inc., for a commercial storefront in downtown Juneau that was still under construction.1 The lease required Sengul to deliver the space in vanilla-box finished condition with a certificate of occupancy by June 1, 2006, set monthly rent at $10,000 plus $500 in sales tax, and contained a rent-abatement clause granting additional days of free rent for each day of delay past May 15 or June 1.234
Sengul did not obtain the certificate of occupancy until June 8 because of sprinkler-system problems.5 CMS took possession in late April, opened its store in mid-June, and made no rent or security-deposit payments.6 Manus spoke with Sengul two or three times in June and July and stated that he knew he was late and would pay in full.7
On July 25 Manus sent a letter claiming abatement.8 Sengul's attorney replied in August that the right had been waived.9 Manus offered partial payment.10 On September 4 Sengul placed a cable lock on the store door and posted signs reading "Your Rent is Due."11 Manus had the lock cut off after a few hours, began moving inventory that day, and returned the keys on September 6 after notifying Sengul's attorney that CMS was vacating.12
Sengul filed suit on September 13, 2006, seeking unpaid rent for the full five-year term.13 After a bench trial on January 14, 2009, the superior court found waiver of abatement and constructive eviction, awarded Sengul $33,570 in unpaid rent, and awarded CMS a net judgment of $26,795.09 after offsetting the value of its improvements.14 Sengul appealed, and CMS cross-appealed.15
Whether the landlord's actions of placing a cable lock on the store door and posting signs demanding rent constituted constructive eviction of the tenant?16
Constructive eviction is a defense to a landlord's action for rent when the landlord substantially interferes with the tenant's use and enjoyment of the leased premises.17 To establish constructive eviction the tenant must notify the landlord of the interference, afford the landlord an opportunity to remedy the problem, and vacate within a reasonable time.18 A physical lockout constitutes an actual eviction and therefore supports a finding of constructive eviction.19 Under Alaska Statute 09.45.690 and the lease terms, a landlord may reenter only after legal process on notice unless the lease provides otherwise.20
Yes. On September 4, 2006 Sengul placed a cable lock on CMS's store door and posted signs reading 'Your Rent is Due,' physically excluding Manus and his staff from the premises for several hours until a contractor cut the lock.21 Manus had the lock removed, notified Sengul's attorney that CMS was vacating, and returned the keys on September 6 after moving the inventory.22 The lease required reentry only after legal process on notice, which Sengul did not pursue.23
These actions substantially interfered with CMS's use of the storefront, satisfying the elements of constructive eviction as the superior court found.24
Sengul's actions constituted constructive eviction of CMS.25
Whether the tenant waived its right to rent abatement under the lease by failing to mention the provision until late July and by making statements that it would pay rent in full?26
Waiver of a contractual right may be express or implied.27 Implied waiver arises where conduct evidences an intention to waive, is inconsistent with any other intention, or results in prejudice to another party through estoppel.28 Estoppel requires assertion of a position by word or conduct, reasonable reliance, and resulting prejudice.29 A non-waiver clause does not always bar implied waiver.30 The mandatory language in the abatement provision stating that the lessor 'shall abate the rent' and that 'a rent abatement of 4 days will apply' supports the conclusion that notice was not required to invoke the right.31
No. Manus's statements in June and July that he knew he was late and would pay in full were ambiguous because he also owed an unpaid security deposit.32 The period of less than three months between the lease signing and Manus's first mention of abatement did not lull Sengul into inaction.33 Sengul had independent motivation to obtain the certificate of occupancy to open his own store on June 8.34 The superior court's finding of prejudice was inconsistent with its other findings that the delay resulted from sprinkler-system problems beyond CMS's control.35
The non-waiver clause and the mandatory abatement language further confirm that CMS did not waive its entitlement to rent abatement.36
CMS did not waive its right to rent abatement.37
Related opinions on this issue
Justice Christen dissents from the majority's conclusion that CMS did not waive abatement.38 She maintains that the superior court's factual findings establish direct, unequivocal conduct showing waiver through Manus's repeated promises to pay rent in full, his failure to mention abatement until late July, and the context of Juneau's short summer tourist season.39 Given the context of this lease, she views the reference to long acquiescence as reinforcing the superior court's finding that Manus waived the right to claim rent abatement.
The combination of Manus's statements that he had failed to pay rent, his acknowledgment that he owed rent, his repeated promises to pay the rent, and his failure to mention rent abatement until two-thirds of the tourist season had passed, support the superior court's finding that Manus waived the right to claim abatement.40
Whether the superior court correctly calculated damages after finding both waiver of rent abatement and constructive eviction?41
When a finding of waiver is reversed, damages must be recalculated to apply the rent abatement required by the lease terms.42 Unpaid rent is properly valued using the monthly rental amount stated in the lease rather than a yearly rental value, because the lease requires payments of ten thousand dollars per month through May 31, 2007, regardless of seasonal operation of the tenant's business.43
No. Because CMS did not waive its right to abatement, the superior court's award of unpaid rent to Sengul and its offset for CMS's improvements must be recalculated to reflect the eighty-three days of abatement provided by the lease.44 The court correctly determined that monthly rental value applies, as the lease specifies per-month payments and CMS remains obligated to pay rent during non-summer months even if the store is closed.45
The superior court's damages calculation must be remanded for recalculation consistent with the absence of waiver and using monthly rental values.46