Opinion ID: 884898
Heading Depth: 1
Heading Rank: 8

Heading: Did the District Court err in calculating damages resulting from Anderson's failure to cure his defaults?

Text: ¶ 47 The District Court concluded that Anderson did not cure his defaults. The court does not, however, reference to which 10-day period this conclusion applies, the one following the October 17, 1991 notice  which the District Court concluded was sufficient  or the October 30, 1991 notice, which the parties discuss at length in their briefs on appeal. Regardless, the District Court concluded that Grenfell was entitled to damages for unpaid rent and utilities for the full term of the lease, and for rents received by Anderson from his subtenant. We agree with Anderson that this assessment, totaling $4,148.78, was incorrectly calculated. ¶ 48 As a preliminary matter to this issue, several key points of law need to be addressed. ¶ 49 First, and foremost, the October 30, 1991 default notice to Anderson, and all those subsequent, are irrelevant as a matter of law, because by that date Grenfell had terminated the lease and Anderson was no longer in possession of the premises. Likewise, this conclusion nullifies Anderson's argument that Grenfell's October 30, 1991 notice waived or revoked the October 17, 1991 notice. ¶ 50 Grenfell's changing the locks on the premises on October 28, 1991, pursuant to the express terms of the lease, effectively terminated the lease between Grenfell and Anderson. In LIC, Inc. v. Baltrusch (1985), 215 Mont. 44, 48, 692 P.2d 1264, 1266, we concluded that by changing the locks a party had as a matter of law repossessed the premises. See also Deeb v. Canniff (1971), 29 Colo.App. 510, 488 P.2d 93, 95 (holding that changing the locks by sublessor terminated sublease agreement, and trial court properly withdrew sublessor's counterclaim for rent from the jury); Towers Co. v. Trinidad and Tobago (S.D.N.Y.1995), 903 F.Supp. 515, 527 (stating that changing the locks to rented premises constitutes an eviction so long as evidence sufficiently demonstrates intent of the landlord to keep the tenant out by reason of this action). That this act conclusively terminated the lease is enhanced by the fact that on October 29, 1991, Grenfell sent a letter to Bice, Anderson's sublessee, instructing him to remit rent and utility payments directly to Grenfell, under the theory that his repossession entitled him to take over Anderson's subleases. In all respects, the evidence demonstrates that the these acts were intended by Grenfell to terminate the lease in accordance with the lease's terms. ¶ 51 Second, once Grenfell changed the locks, took possession, and thereby terminated the lease, Anderson's obligations, including payment of rent, ended as a matter of law. In determining damages in LIC, the lease, unlike the one in question here, provided that the landlord could retake possession without terminating the lease. LIC, 215 Mont. at 47, 692 P.2d at 1266. Therefore, the tenant could still be held accountable for rent under the remaining lease term. See also Gallatin Valley Medical Dental Center, Inc. v. Lemley (1983), 206 Mont. 241, 245-46, 670 P.2d 83, 85 (holding that the lessee was liable for future rent following termination where the lease provided for this right). ¶ 52 We thoroughly addressed the consequences of a lease that does not expressly provide for the continuing right to receive rent following termination in Knight v. OMI Corp. (1977), 174 Mont. 72, 568 P.2d 552. In Knight, OMI, the lessee, was delinquent in its rent payments under a commercial lease. The Knights, following their termination of the lease, reentry, and repossession, sought damages for being deprived of future rent throughout the entire term of the lease, less any sums recoverable in mitigation. In affirming summary judgment for OMI, we stated the rule that [i]n the absence of clear language expressly preserving such right, courts generally will not construe a lease as providing that, upon reentry or forfeiture, the tenant shall remain liable for unaccrued rent. Knight, 174 Mont. at 75, 568 P.2d at 554. We held that a lease must contain clear language to the effect that a tenant is to remain liable for rent accruing subsequent to the landlord's cancellation, if such liability is to be imposed. Knight, 174 Mont. at 77, 568 P.2d at 555. ¶ 53 Here, the lease expressly provides that upon taking repossession, the landlord was entitled to enjoy the premises as if the lease had not been made, reserving the right to recover from Lessee all rent due up to the time of such entry  (emphasis added). Consequently, we conclude that the award for unpaid rent and utilities to Grenfell cannot be sustained beyond the date he took repossession. Likewise, we conclude that Grenfell's claim for unlawful detainer is void as well, under the logical conclusion that once locked out, Anderson could in no sense unlawfully detain the premises absent a showing of his reentry. What remains to be determined, therefore, is what damages Grenfell may still be entitled to. ¶ 54 The District Court stated in its findings of fact that as of November 9, 1991, within the 10-day period afforded by the effective notice given to Anderson on October 30, 1991, Anderson owed $256.91 for July and September utilities. Grenfell agrees that this is the amount Anderson owed at the time. Anderson, upon tendering payment for the past-due sums, asserted that he was never billed for July, and that pursuant to the ordinary billing cycle, he could not have been in default as of October 17th or 30th, for September utilities. ¶ 55 We conclude that the District Court was correct in assessing that the amount Anderson owed to Grenfell as of November 9, 1991, was $256.91. Whether Anderson was in default as to those amounts is irrelevant. Grenfell had a right, following the October 28, 1991 reentry  whether or not his default notice to Anderson was sufficient  to recover all rent due, including the utility payments. We are left, however, with a definite and firm conviction that a mistake has been committed as to the District Court's determination that Anderson owed Grenfell future rent, including utilities, interest and penalties  for November, December and January. Based on the foregoing, this conclusion was incorrect and, consequently, any additional amount of damages based in these findings was incorrect. ¶ 56 We therefore affirm the portion of the District Court's findings that the sum, $256.91, represents the amount recoverable in damages by Grenfell resulting from the October 28, 1991 termination of the lease agreement.