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GM597 Course Project T&W Building Co. vs. Merrillville Sport & Fitness, Inc
4/6/2012 Lieka M. Crump

Lieka M. Crump GM597 Business Law 03/28/2012

Course Project
T&W Building Co. vs. Merrillville Sport & Fitness, Inc Parties: T&W Building Company, the landlord, is the defendant in the case. Merrillville Sport & Fitness, Inc., the tenant, is the plaintiff in the case. Facts: T&W Building Company entered into a five-year lease agreement as the landlord with Merrillville Sport & Fitness, Inc., to lease space in a building to be used as a sports and fitness center. The lease provided that Landlord was to keep the heating and cooling plant in good order, repair, and condition and was to commence required repairs as soon as reasonably practicable after receiving written notice of problems. Tenant complained of several problems throughout the first year of its tenancy (in.findacase.com. 2011). First, the heating system did not work properly, causing the premises to be extremely cold, particularly in the winter months. Second, there was no water on many occasions. Third, there was only one electrical outlet installed on the premises. Landlord failed to rectify the problems. As a result, Tenant lost members. It gave notice and vacated the premises within one year of signing the lease. Procedure: Finding that constructive eviction occurred, the jury awarded the Tenant $36,615.56 in damages . The Landlord brought the appeal contesting the courts award. He presented the following issues for the court review: I. Whether the jury's finding of constructive eviction, based upon its determination that abandonment occurred within a reasonable time, was contrary to law? II. Whether there is sufficient evidence supporting the damage award of $36,615.56? III. Whether the amount of damages awarded is excessive? IV. Whether the Tenant is allowed a refund of rents due during its occupation as an element of damages? V. Whether the court erred in admitting the Plaintiff . Issue: The central question in the case is whether or not constructive eviction was in a reasonable amount of time and if the awarded amount is excessive. Holding: The courts resolved the issue by reviewing the evidence of the lower court based on the defendants claim. The courts did uphold the lower courts and awarded judgment to the Plaintiff.

Reasoning/ Case Questions: The Landlord focuses his argument against constructive eviction upon whether the Tenant's abandonment occurred within a reasonable time. Constructive eviction occurs when residential rental property is an uninhabitable condition. The uninhabitable condition makes the property unsuitable to live in, forcing the tenant to leave the property . When residential real property is uninhabitable, it creates a condition under which the tenant has been "constructively evicted"; the facts and circumstances are such that the tenant is unable to have full use and possession of the rental property and thus, in reality, has been evicted. To claim constructive eviction, the tenant must serve the landlord with written notice of the constructive eviction and provide the landlord with a reasonable amount of time to clear up the problem. While, it is necessary to give the landlord a chance to remedy the problem. In this particular case, the Plaintiff did not leave until after a year of renting property, although claims were submitted within the first month. According to the lease, the Landlord had the duty to maintain the physical structure of the leased premises, as well as the electrical, mechanical, and plumbing equipment. The Landlord was also to keep the heating and cooling plant "in good order, repair and condition," and was to commence the required repairs as soon as reasonably practicable after receiving written notice. The Landlord argues that because the heat problem was "remedied" a month prior to the Tenant's abandonment, it did not abandon within a reasonable time. There is evidence that this problem was also left not remedied. The Defendant provided two photos depicting the leased premises after the Tenant had left. The photos show at least one-third of the ceiling tiles were missing, which would allow the heat to escape to the roof and contradict any assertions that the area was contained. Therefore, this is evidence indicating that the space was not contained as of the time the Tenant abandoned it and that the lack of heat was not alleviated. Since the facts were not undisputed and reasonable minds could differ as to whether abandoning occurred within a reasonable time, constructive eviction is a present fact. The plaintiff also brought up the issue of excessive damages awarded. A judgment is not excessive unless the amount is so large it cannot be explained upon any reasonable hypothesis other than prejudice, passion, partiality, corruption, or some other improper element. Numerical evidence relating to the amount of damages suffered by the plaintiff was found in the testimony. This included lost profits calculated in a variety of ways, one of which was based on membership fees. The method of calculating lost profits based on 247 lost members, using the $125.00 average membership fee, a "conservative figure." However, the fee could have been as large as $225.00. The jury also had before it list profits calculated on the basis of previous profit margins. On the one hand, evidence in the form of tax returns was presented which indicated that the plaintiffs made little or no net profits prior to their stay at the landlord's premises. However, the Tenant testified that the rent under its prior lease was half of its net profit figure, with a ceiling set at $1,500.00. The Tenant testified that it paid the $1,500.00 ceiling figure for the 18 months prior to its move into the Landlord's premises. If such was the case, this would leave the Tenant with $1,500.00 profit per month, which, when computed for a year's time is equivalent to $18,000.00. Multiplied by three years results in a figure of $54,000.00 in profits, however the awarded amount was much less. Therefore, excessive damages will not stand in case.

Conclusion: Based on the courts upholding the finding that constructive eviction occurred, the jury awarded the Tenant $36,615.56 in damages still stands. No judgment was overturned and all the defendants claims were dismissed. After fully reviewing the case, I agree with the court to its entirety. Based on the information given, the landlord did not perform its duties in keeping the premises in a livable condition by making all necessary repairs, keeping all common or public areas in the building and grounds safe and sanitary and maintain in good working condition all electrical, plumbing, heating and air conditioning systems, fixtures and appliances which the landlord has supplied or is required to supply. Therefore, the tenant had every right to leave the premises. I would recommend that the courts order the Landlord to fix the issues and have a property inspection before allowing another rental of this property. It is obvious that the Landlord is acting unethically by gaining income without fulfilling the duties by law and I believe that the actions the court decides to take will prevent this from happening with future tenants. I would also recommend that the court mandate an inspection on this property every three years to ensure it is staying well kept. Overall, I am please with the outcome of the case and I believe justice was served. In this case the tenant wins. Since the landlord causes the leased premises to become unfit for intended use, the tenant has been constructively evicted and thus has no more obligations under the lease.

Work Cited

"Constructive eviction." Real Estate Law - Real Estate Lawyers & Attorneys - Free Legal Information. N.p., n.d. Web. 31 Mar. 2012. <http://real-estate-law.freeadvice.com/real-estatelaw/landlord_tenant/constructive_eviction.htm>. "FindACase | 10/26/88 T & W BUILDING COMPANY v. MERRILLVILLE." FindACase. N.p., n.d. Web. 30 Mar. 2012. <http://in.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19881026_0031146.IN.htm/qx.%20201 1>. "T&W building CO V Merrillville - Google Scholar." Google Scholar. N.p., n.d. Web. 2 Apr. 2012. <http://scholar.google.com/scholar_case?case=1898564325813946620&q=T%26W+building++CO+V+M errillville&hl=en&as_sdt=2,44&as_vis=1>.

Cheeseman, H. (2010). Chapter 49 LANDLORDTENANT LAW AND LAND USE REGULATION. Business Law (pp. 768-782). Upper Saddle River: Pearson Prentice Hall.