Title: KPC Corp. v. Book Press, Inc.

State: vermont

Issuer: Vermont Supreme Court

Document:

KPC_CORP_V_BOOK_PRESS_INC.92-402; 161 Vt. 145; 636 A.2d 325

[Filed 05-Nov-1993]

 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
 40 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.


                                 No. 92-402


 KPC Corporation                              Supreme Court

                                              On Appeal from
      v.                                      Windham Superior Court

 The Book Press, Inc. et al.                  September Term, 1993



 Silvio T. Valente, J.

 John H. Carnahan of Fitts, Olson, Carnahan & Giddings, Brattleboro, and
    Lawrence J. Gebhardt of Gebhardt & Smith, Baltimore, Maryland, for
    plaintiff-appellee

 Charles N. Hurt, Jr. of Downs Rachlin & Martin, St. Johnsbury, for
    defendant-appellant



 PRESENT:  Allen C.J., Gibson, Dooley and Morse, JJ. and Grussing, D.J.,
           Specially Assigned



      GIBSON, J.   Book Press, Inc. appeals from a judgment in favor of KPC
 Corporation holding Book Press liable under the terms of its lease with KPC
 to pay 110% of the basic rent due until the lease expires in the year 2005,
 and to pay certain sublease net profits.  We affirm.
      Book Press is a printing company owned by Quebecor America, Inc.  In
 1980, Book Press contracted with Devon Group, Inc., to lease an industrial
 building in Brattleboro, Vermont.  Subsequently, Book Press sublet a portion
 of the premises to C & S Wholesalers, and KPC acquired the building subject
 to the lease and sublease.

 

      Article 22.01(a) of the lease between Book Press and KPC provides in
 relevant part that an "Event of Default" occurs when "[t]he Tenant shall
 default in making the payment of any instalment of the Basic Rent . . . and
 such default shall continue for a period of twenty (20) days."  The lease
 imposes a late charge of 3% on payments made more than ten days after the
 due date, provides for 12% interest on late payments, and states in Article
 22.01:
                   [I]f Tenant shall default (i) in the timely payment of
                   Basic Rent or Additional Rent, and any such default
                   shall continue or be repeated for two consecutive months
                   or for a total of four months in any period of twelve
                   months or (ii) more than three times in any period of
                   six months . . . then, notwithstanding that such de-
                   faults shall have each been cured within the applicable
                   period . . . any further similar default shall be deemed
                   to be deliberate and Landlord thereafter may either (i)
                   serve . . . 10 days' notice of termination upon Tenant .
                   . . or (ii) by written notice to Tenant, increase the
                   Basic Rent . . . to 110% of the Basic Rent reserved in
                   Article 5 hereof.
 Article 5 sets forth the schedule of basic rent due over the term of the
 lease, showing increases in basic rent due on September 1 of each year
 beginning in 1986.
      Article 17 of the lease requires the landlord's consent for any
 sublease and requires the tenant to pay "additional rent" to the landlord in
 the amount of any net profits, after costs and expenses, that the tenant
 realizes from its sublease.  The previous landlord, Devon Group, waived its
 right to collect net profits from the sublease between Book Press and C & S.
      In September 1988, Book Press submitted to KPC for its consent a
 proposed extension of the sublease to C & S.  In granting its consent, KPC
 expressly reserved its right to receive net profits from the sublease.  In
 December, C & S notified Book Press, but not KPC, that it would move out of

 

 the building in March 1989.  KPC did not learn of the move until June 1989,
 at which time it requested payment of net profits from Book Press, which
 responded that it would not pay net profits because the requirement had been
 waived.
      In September 1989, the rent payment from Book Press was late and for an
 incorrect amount according to the scheduled increase set forth in Article 5
 of the lease.  KPC sent a notice of default, and Book Press responded that
 it had paid the rent and owed nothing further.  The rent payment was late
 again in October and again for an incorrect amount.  Incorrect amounts were
 also paid in November and December.  KPC thereupon sent a notice of
 increase, stating that it was electing to increase the basic rent by 10% as
 it had a right to do under the lease.
      When the rent payment for January 1990 was again remitted for an
 incorrect amount, KPC commenced this lawsuit.  The February rent payment was
 also incorrect, but later in the month Book Press discovered its mistake and
 remitted to KPC the amount of increased basic rent it had failed to pay for
 the preceding months plus a 3% late charge and 12% interest.  This payment
 did not include the 10% increase.  KPC pressed its lawsuit on the grounds
 that Book Press owed it both the 10% increase in basic rent and the net
 profits from the sublease with C & S.
      The trial court found in favor of KPC on both the rent increase and the
 net profits issues, and Book Press appeals.  It contends (1) that KPC
 waived its right to collect the 10% increase in basic rent when it accepted
 rent checks for the basic amount, (2) that the 10% increase provision in the
 lease is unconscionable, and (3) that KPC waived its right to net profits
 from the sublease when it delayed its demand for payment until after C & S

 

 had vacated the premises.  We shall consider the waiver issues in turn, then
 proceed to the issue of unconscionability.  The trial court's findings of
 fact will be upheld unless there has been clear error.  V.R.C.P. 52(a)(2);
 Cab-Tek, Inc. v. E.B.M., Inc., 153 Vt. 432, 434, 571 A.2d 671, 672 (1990).
      Book Press first contends that the trial court erred in not holding
 that by accepting rent checks KPC waived its right to increase the rent by
 10%.  The court made no findings on this issue, but did find that KPC
 accepted rent checks without waiving its right to net profits.  This
 finding, in addition to the lease provisions, the notice of default of
 September 1989, and the notice of increase in basic rent of December 1989
 clearly support the court's conclusion that no waiver occurred when KPC
 accepted the rent checks.  See Wells v. Village of Orleans, Inc., 132 Vt.
 216, 222,