Opinion
No. 37379-3-II.
April 14, 2009.
Appeal from a judgment of the Superior Court for Pierce County, No. 07-2-10979-5, Linda CJ Lee, J., entered February 1, 2008.
Affirmed by unpublished opinion per Houghton, J., concurred in by Penoyar, A.C.J., and Quinn-Brintnall, J.
UNPUBLISHED OPINION
In this unlawful detainer action, commercial tenants Bret Drager, Randy Gould, Greg Johnson (tenants), and Drager Gould Architects, Inc. (DGA) appeal the trial court's judgment in favor of landlord Ledaura, LLC. We affirm.
FACTS
On January 24, 2006, Leah Caruthers, in her capacity as co-trustee of the revocable living trust of David W. Smith (the trust), entered into a commercial lease agreement with the tenants.
Caruthers is Smith's daughter, and she created the living trust to provide for him and his future income after he suffered a stroke in 2004, that rendered him unable to speak and impaired his movement.
The parties completed a pre-printed commercial lease form by filling in blanks and annotating other portions by hand. The lease contained a provision that "[t]his Lease shall not be assignable by Landlord without the consent of Tenant" with the word "not" written by hand between "shall" and "be." Clerk's Papers (CP) at 16. Section 3a of the lease contains a provision that "[i]f Tenant occupies the Premises before the Commencement Date [defined elsewhere in the lease], then the Commencement Date shall be the date of occupancy." CP at 7. The tenants agreed to pay the first and last months' rent, followed by rent of $4,500 per month, beginning 12 months after the commencement date.
The parties had already entered into a previous lease on December 2, 2005, that they extinguished before entering into the lease at issue in this case.
The parties executed a lease addendum the following day providing Smith live in the basement rent free; the tenants pay no additional rent for the first year; and a three-year lease term commencing on "the date the building shall be free of debris and broom swept clean, approximately (60) days from date of agreement." CP at 22. The parties added the provision defining the commencement date because debris covered the inside of the property at the time of the lease's execution.
After the tenants entered into the lease with the trust, they told Caruthers that they and their corporate entity, DGA, would like to occupy a portion of the property formerly used as an apartment while they renovated the remainder of the property. Caruthers agreed and the tenants later obtained a key from Smith. In February, soon after the tenants signed the lease, they began remodeling a 760 square foot portion of the property for use as their office. The tenants moved into the office in April 2006, after three months of remodeling. On February 16, 2006, the trust transferred its interest in the property to the newly formed Ledaura LLC. The entire property, including the ground floor, comprises about 20,000 square feet.
In March 2006, Caruthers hired Robert Munroe to clear debris out of the property. During his employment with Caruthers, the tenants hired Munroe to perform demolition work on the same space. Instead of finishing the debris clearing, Munroe began demolishing the property and, in the process, removed asbestos. When the tenants learned of this and other problems, they terminated him. He later vandalized the property by damaging electrical systems and moving debris around the building. After the vandalism, the parties attempted to clear the debris out of the property and draft a new lease addendum, but they ultimately they did not reach an agreement.
Munroe is also spelled "Monroe" throughout the record.
Caruthers testified that Munroe hired street people, slept in the property on an old mattress, removed asbestos without a permit, and caused the Department of Labor and Industries to shut the site down.
On July 30, 2007, Ledaura served Gould a copy of the notice to pay rent or vacate. Ledaura addressed the notice to Gould, Drager, and Johnson. On August 10, Ledaura filed a complaint for an unlawful detainer action against the tenants, alleging failure to pay rent. The tenants included a counterclaim in their answer, and the trial court dismissed it without prejudice.
At trial, the court focused on the lease's commencement date. Ledaura argued that the lease commenced in February 2006, when the remodeling began that led to the tenant's occupancy beginning in April 2006. Ledaura relies on the portion of the lease providing that early occupancy triggers the beginning of the commencement date. The tenants argued that the lease commenced in September 2007, when the building contained a 55-gallon drum, some desks, an air canister, and some paint cans. The tenants rely on the lease provision that the commencement date would begin when the building was free of debris and swept clean "approximately (60) days from the date of agreement." CP at 166.
The trial court found that Johnson did not object to the transfer from the trust to Ledaura and that because the lease commenced in June 2006, the tenants owed rent beginning in June 2007. The trial court also found that the tenants had not paid any rent other than the initial first and last months' installments and that Ledaura served a five-day notice on Gould and Drager to pay rent or vacate on July 30, 2007. As five days had passed by the time of trial, the trial court awarded Ledaura the following damages for June 2007 to February 2008: (1) a $56,093.22 principal judgment, (2) $943.08 in prejudgment interest, (3) $19,605.00 in attorney fees, and (4) $987.83 in costs. The award totaled $77,629.13.
The trial court ordered a forfeiture of the lease and the return of the property to Ledaura within 20 days. The trial court ruled that with the exception of DGA, the tenants were jointly and severally liable on all the judgments. The tenants appeal.
ANALYSIS
The tenants raise various arguments as to why the trial court erred in entering judgment against them. They argue that the trial court lacked subject matter jurisdiction due to faulty service of process, that they did not consent to the lease assignment, and that the building was not free of debris and swept clean by June 2006. They also assert that a leaking roof should have decreased the amount of rent due and that the trial court should not have awarded attorney fees to Ledaura.
Subject Matter Jurisdiction
The tenants first contend that the trial court lacks subject matter jurisdiction over both Johnson and DGA because Ledaura did not serve notice on either. The tenants assert that Ledaura cannot avoid this lack of jurisdiction by showing that Johnson and DGA shared debts and were co-tenants, as RCW 59.12.030 and .040 require strict compliance. Ledaura countered at argument that the tenants waived their jurisdiction defenses and that, had they raised them at trial, Ledaura could have shown compliance with RCW 59.12.040.
In an unlawful detainer action, failure to strictly comply with the notice requirements of RCW 59.12.030 deprives the trial court of subject matter jurisdiction. Christensen v. Ellsworth, 162 Wn.2d 365, 372, 173 P.3d 228 (2007). RCW 59.12.030 and .040 describe the commencement of an unlawful detainer action and list the appropriate methods of service of notice. Under RCW 59.12.040,
[a]ny notice provided for in this chapter shall be served either (1) by delivering a copy personally to the person entitled thereto; or (2) if he be absent from the premises unlawfully held, by leaving there a copy, with some person of suitable age and discretion, and sending a copy through the mail addressed to the person entitled thereto at his place of residence.
Although a party cannot waive a lack of subject matter jurisdiction, it may waive a lack of personal jurisdiction either expressly or impliedly by consenting to the trial court's jurisdiction. Skagit Surveyors Eng'rs LLC v. Friends of Skagit County, 135 Wn.2d 542, 556, 958 P.2d 962 (1998); In re Marriage of Steele, 90 Wn. App. 992, 997-98, 957 P.2d 247 (1998). Here, the tenants included a counterclaim in their answer, seeking affirmative relief and submitting themselves to the trial court's jurisdiction. Grange Ins. Ass'n v. State, 110 Wn.2d 752, 765, 757 P.2d 933 (1988); Kuhlman Equip. Co. v. Tammermatic, Inc., 29 Wn. App. 419, 425, 628 P.2d 851 (1981). The tenants therefore waived any lack of personal jurisdiction.
On appeal, the tenants cite Christensen to support their argument that because Ledaura did not strictly comply with RCW 59.12.040 by serving process on each tenant individually, the trial court lacked subject matter jurisdiction. See 162 Wn.2d at 372. But the record adequately supports the parties' agreement that Ledaura properly served notice on Gould. By properly serving Gould, Ledaura satisfied the strict subject matter jurisdiction requirements of Christensen and complied with RCW 59.12.040. See 162 Wn.2d at 372. The trial court therefore did not lack subject matter jurisdiction in this case and the tenants' argument fails.
As Ledaura satisfied the service requirements of RCW 59.12.040, we need not analyze other provisions of the statute.
Consent to Lease Assignment
The tenants next contend that the trust did not have authority to assign its interest in the property without the tenants' consent. As a result, they assert that Ledaura is not the proper party to enforce the lease.
The tenants rely on two portions of the lease to support their position. First, they cite the portion that reads, "[t]his Lease shall not be assignable by Landlord without the consent of the Tenant." CP at 16. Next, they rely on the portion of the lease that reads "the covenants and agreements of this Lease shall not be altered, modified or added to except in writing signed by Landlord and Tenant." CP at 18.
We review whether substantial evidence supports the trial court's findings and whether they, in turn, support its conclusions of law. Ruse v. Dep't of Labor Indus., 138 Wn.2d 1, 5, 977 P.2d 570 (1999). Here, the trial court found that "[w]ithout objection, all of the interest of [the trust] in the Property was transferred to Ledaura LLC on February 16, 2006, by quitclaim deed" and found that the tenants consented to the transfer. CP at 164-65.
Gould testified that the assignment of the lease did not impact his occupancy or harm him in any way. Caruthers testified that she and Johnson discussed the formation of the LLC and the transfer of the property and he did not object. Substantial evidence supports the trial court's consent finding. The tenants' argument fails.
Lease Commencement Date
The tenants next contend that the lease commenced on September 2007 because the property was not free of debris and swept clean until that time, thus tolling their obligation to pay rent. They argue that the trial court reached the wrong conclusion because it ignored certain pieces of evidence and gave too much weight to others. We disagree.
In a letter dated August 23, 2006, the tenants told Caruthers:
As set forth in the lease addendum, the commencement date begins as soon as the building is "free of debris and broom swept clean." Obviously, we all had hoped that those conditions would be quickly met. Unfortunately, as noted above, the leased premises are still not free of debris. On the other hand, we acknowledge that we have been able to make limited use of the rented areas even though not all of the debris has been removed. Therefore, we think it is reasonable and fair to designate the commencement date as July 1, 2006.
Ex. 34. When the tenants hired Munroe to do the demolition work, he had nearly completed the removal of the debris from the property and would have completed that work had the tenants not interfered. Furthermore, the tenants exercised control over the property when they began the demolition and invested approximately $200,000 to make the property conform to their needs.
Substantial evidence therefore supports the trial court's finding and the tenants' argument fails. Ruse, 138 Wn.2d at 5.
Implied Warranty of Habitability
The tenants next contend that they should not have to pay the entire amount of the rent owed under the lease. They make this claim asserting that Ledaura violated its responsibility to repair roof leaks in violation of the implied warranty of habitability.
In Washington, the implied warranty of habitability does not generally extend to commercial leases. Olson v. Scholes, 17 Wn. App. 383, 392, 563 P.2d 1275 (1977). In Olson, Division One rejected a claim of breach of an implied warranty of habitability in a commercial lease because the lessee accepted the premises in "as is" condition and operated a business there for two years before bringing the claim. 17 Wn. App. at 392-93. The facts are similar to those here, where the tenants acquired the property in "as is" condition in a commercial setting. We agree with Division One and also decline to extend the implied warranty of habitability to commercial leases.
The trial court entered no findings of fact with respect to the leaking roof. As a result, in support of their claim regarding the roof, the tenants assigned error to the trial court's finding of fact establishing the amount owed for past rent due and conclusions of law related to the $77,629.13 judgment. But as we discussed above, substantial evidence supports the trial court's decision that the commencement date was June 2006. The findings therefore also support the damages for past due rent. Ruse, 138 Wn.2d at 5. The tenants' argument fails.
Furthermore, the record shows that Caruthers or Smith's attorney paid to fix the roof three times: once before the parties executed the lease, once in March 2006, and again after that hiring a different roofer.
ATTORNEY FEES
Both parties request attorney fees on appeal under RAP 18.1, citing a lease provision allowing the prevailing party in any litigation to recover attorney fees. Awarding attorney fees under a contract is a matter of discretion with the trial court that we will not disturb absent a clear showing of an abuse of that discretion. Boeing Co. v. Sierracin Corp., 108 Wn.2d 38, 65, 738 P.2d 665 (1987); Fluke Capital Mgmt. Servs. Co. v. Richmond, 106 Wn.2d 614, 625, 724 P.2d 356 (1986). The trial court abuses its discretion when it bases its decision on manifestly unreasonable grounds. Rettkowski v. Dep't of Ecology, 128 Wn.2d 508, 519, 910 P.2d 462 (1996).
Here, Ledaura prevailed below and presented a detailed accounting of its fees. The trial court did not abuse its discretion in granting them. Because Ledaura substantially prevails on appeal, it is entitled to reasonable attorney fees under section 25 of the lease and RAP 18.1.
Affirmed.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
QUINN-BRINTNALL, J. and PENOYAR, A.C.J., concur.