Opinion ID: 1374499
Heading Depth: 1
Heading Rank: 3

Heading: the lessee's obligations under the compliance with codes covenant

Text: We next consider if the trial court erred by concluding that Arden breached the lease by failing to pay the expenses of bringing the premises into compliance with certain codes. Paragraph 8 of the lease contains a covenant providing: The Lessee covenants that it will ... observe and be responsible for and bear all expenses of complying with all orders, ordinances, rules, regulations, requirements and inspections of all municipal, state and federal authorities relative to the demised premises ... The trial court found that Arden violated code provisions in two respects: First, Arden violated applicable code provisions with respect to service drops by having more than one service drop. Second, Arden did not comply with code provisions with respect to exit lights and unit equipment for emergency illumination. The trial court concluded that Arden's failure to pay for repairs necessary to comply with these codes constituted a breach of the covenant quoted above. It awarded Fisher damages for the cost of revising the service entrance and installing lights and equipment for emergency illumination to comply with codes. Initially, Arden argues that the trial court erred by finding that it violated any applicable code provisions. First, with respect to service drops, Fisher alleged Arden violated the National Electrical Code, section 230-2, which provides that generally a building shall be supplied by only one electrical service entrance. National Electrical Code § 230-2 (National Fire Protection Association 1978). There is evidence in the record that the City of Seattle implemented the National Electrical Code. Moreover, the evidence shows that Arden did indeed have more than one service drop. Thus, the evidence supports the trial court's finding that Arden did violate this code provision. Second, concerning exit lights, Fisher argued Arden violated WAC 296-24-56531 because the building lacked illuminated exit signs. Arden contends that this provision does not require any such illumination system. However, WAC 296-24-56531(6) does state that [e]very exit sign shall be suitably illuminated by a reliable light source ... Therefore, it appears that Arden did not comply with applicable codes with respect to exit lights. [4] Arden further contends, however, that even if it did not comply with applicable codes, the lease did not obligate it to pay for repairs to bring the premises into compliance with codes unless it was required by inspectors to make such repairs. Arden relies on Puget Inv. Co. v. Wenck, 36 Wn.2d 817, 221 P.2d 459, 20 A.L.R.2d 1320 (1950), where this court construed a covenant similar to the one at issue here. In Wenck, city officials had notified the lessee that certain conditions on the premises violated city ordinances. We reasoned, however, that the lease did not obligate the lessee to pay the lessor for the cost of repairs necessary to comply with the ordinances, where the lessee had been able to use the premises without strict compliance with the laws and the city had not ordered the lessee to cease operations until it complied. Wenck, at 830. We held that a lease covenant of this kind should not be construed as an affirmative obligation to repair, alter or improve; rather, it was intended only to make the lessee responsible for any repairs which the lessee found necessary to use the premises, to indemnify the lessor for expenses resulting directly from unlawful use, and to provide a basis for the lessor to require the lessee to cease any unlawful activity. Wenck, at 831. Under the rule established in Wenck, even if Arden violated code provisions, the lease covenant did not require Arden to pay Fisher for the costs of repairs to comply with the codes if government authorities never ordered Arden to make such repairs or shut down the premises for noncompliance. There is no evidence in the record that any government authority ever required Arden to make repairs to bring the premises into compliance with codes. Therefore, the trial court erred in concluding Arden breached the lease by failing to pay the expenses of keeping the premises in compliance with codes. We reverse the trial court's award of damages for the costs of such compliance.