Opinion ID: 542860
Heading Depth: 2
Heading Rank: 2

Heading: The Mid-1970's Dispute and the Decision in Prime I

Text: 11 A certificate of occupancy for the motel was issued in July 1974, and Prime's rental obligations began on January 1, 1975. Soon thereafter, disputes arose with respect to, inter alia, the amount of rent due under the lease. Prime took the position that the 1973 amendment relieved it of any obligation to pay Steinegger any percentage of its income from room rentals. In May 1976, Prime ceased to pay any rent to Steinegger, though it did make certain payments directly to the mortgagee. In response, Steinegger sent Prime a notice to quit the premises, which is a prerequisite to summary eviction proceedings. 12 Prime promptly brought suit in the district court (Prime I ), seeking an adjudication of its obligations under the lease. It asked, inter alia, that the court reform the lease to provide (a) that Prime was not required to pay Steinegger any rent above the amount Steinegger needed to pay the mortgagee, and (b) that Prime was not required to make any payment of a percentage of its gross receipts from room rentals. Steinegger counterclaimed, charging, inter alia, that Prime had improperly refused to submit monthly statements as to room rental income and to pay to Steinegger the required percentage of that income. Steinegger asked for relief in the form of an accounting of the gross room rentals and payment of the percentage rental due, and an order from the court directing Prime to pay the rentals in arrears. 13 After a bench trial in 1981, the district court, T.F. Gilroy Daly, Judge, ruled that Prime was not entitled to reformation of the lease and was required to pay Steinegger the base amount of rent plus the percentage provided in the lease. The court stated as follows:1. The term of the Lease between the parties is twenty-five years. The rental due the lessor is that amount necessary to amortize the mortgage due [the mortgagee] over a period of twenty years payable each month at the rate of $17,701.96 per month during the first twenty years of the lease term. The rent due from the lessee during the last five years of the term is $15,916.66 per month. 14 2. The lessee shall also pay to the lessor during the original term of the Lease and any extensions thereof fifteen (15%) percent of gross receipts received from the rental of lodging facilities in excess of Five Hundred Eighty-Five Thousand ($585,000) Dollars per year (Sixty-Five Hundred ($6,500) Dollars per rental unit) less all applicable use and occupancy taxes. 15 Memorandum of Decision dated July 31, 1981 (1981 Decision), at 9-10. The court ordered Prime to pay Steinegger the base and percentage rents due pursuant to paragraphs 1 and 2 above plus an amount of interest to be determined by the Court in the event the parties cannot agree. Id. at 10. The Prime I court did not order an accounting. 16 Judgment was entered in August 1981. Though Prime filed a notice of appeal, the matter was then settled.