Court Opinion

ID: 9926384
Source: CourtListenerOpinion
Date Created: 2024-01-24 17:05:41.90613+00
Date Added: 2024-06-11T09:22:44.559985
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                  No. 22-1822
                            Filed January 24, 2024

BURKLE CO. LLC,
    Plaintiff-Appellee/Cross-Appellant,

vs.

COPPER KITCHEN, LLC; BESIM MAKSUTOSKI; and ANGELA MAKSUTOSKI,
     Defendants-Appellants/Cross-Appellees.
________________________________________________________________

      Appeal from the Iowa District Court for Polk County, Joseph W. Seidlin,

Judge.

      Civil defendants appeal the judgment in a breach-of-contract action, and the

plaintiff cross-appeals the damages awarded. AFFIRMED ON APPEAL AND

CROSS-APPEAL.

      Christopher Stewart, Konnor Hodges, and Michael Altes, of Gribble Boles

Stewart & Witosky Law, Des Moines, for appellants/cross-appellees.

      Brett T. Osborn and Emily X. Douglas of Abbott Osborn Jacobs PLC, West

Des Moines, for appellees/cross-appellants.

      Heard by Greer, P.J., and Ahlers and Buller, JJ.
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BULLER, Judge.

       Copper Kitchen, LLC, and its guarantors Besim (“Ben”) Maksutoski and

Angela Maksutoski (collectively “Copper Kitchen”) appeal the judgment entered in

favor of Burkle Co. LLC (“Burkle”) in Burkle’s breach-of-contract claim and the

dismissal of Copper Kitchen’s counterclaims for conversion and trespass to

chattel.   Burkle cross-appeals, claiming the district court erred in limiting its

damages. We reject both parties’ attempt to re-try the case in our appellate courts

and affirm the appeal and cross-appeal.

       I. Background Facts and Proceedings

       Burkle owns Copper Creek Plaza, a building in Polk County containing a

number of rental spaces or “suites.” In June 2017, Copper Kitchen signed a ten-

year lease for a suite in the plaza to establish a restaurant and sports bar, with a

qualified early-out clause after forty months. Copper Kitchen opened for business

in April 2018.

       On August 31, 2020, Angela emailed Ron Burkle, Burkle’s sole owner and

operator, and indicated they were closing the restaurant and “had spoken to

someone about subleasing if you are ok with this.” Ron responded about ten

minutes later: “Please have Ben call me first thing in the morning concerning this

situation.”

       When Ron didn’t hear back from Copper Kitchen, he visited the restaurant

on September 2 with the property manager. They noted a placard on a window

and found Copper Kitchen had removed kitchen equipment and some restaurant

and bar furnishings. But a number of items remained, including booths affixed to

the walls, tables, chairs, a salad bar, and beer kegs in a cooler.
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       That same day, Ron sent a message to Copper Kitchen reminding it the

lease remained in effect. Ron also sought past-due rent for eight months and

additional rent for the remaining fifteen months before the early-out clause would

apply, and he reminded Copper Kitchen it would be responsible for utilities and

clean-up costs. He also informed them by letter, “I had the locks changed because

I didn’t know who in your employment may have had keys” and requested “please

contact me as soon as possible to make arrangements to get your items out and

to get your former restaurant cleaned up.” Contrary to Ron’s September 2 letter,

the locks were changed about two weeks later, after Ron learned items belonging

to vendors were missing from the restaurant. Regardless of the lock situation, Ron

did not receive any further communication from Copper Kitchen.

       Following an unsuccessful demand letter, Burkle filed a lawsuit against

Copper Kitchen for breach of written contract, seeking damages for past and future

unpaid rent, late fees, utilities, restoration costs, court costs, and attorney fees.

Copper Kitchen answered, denying Burkle’s claim and the amount of damages.

Copper Kitchen also counterclaimed for breach of written contract, conversion, and

trespass to chattel.

       Following motion practice, the court granted Burkle summary judgment on

its breach-of-contract claim because Copper Kitchen conceded Burkle had

established all elements of its claim except damages. As the district court put it,

“The dispute as to Burkle’s breach of contract claim is over damages,” noting

“[t]here are fact issues raised regarding whether and when mitigation efforts began

and ended, and Burkle’s relationship to a potential tenant.”        The court also
                                         4

dismissed Copper Kitchen’s breach-of-contract counterclaim and reserved for trial

its counterclaims for conversion and trespass to chattel.

      At a bench trial, the court heard testimony from Ron; James Krueger,

Burkle’s property manager and laborer; Kevin Koethe, a realtor; and Angela. The

court was faced with contradictory evidence and testimony. The court resolved

the discrepancies by making implicit and explicit credibility findings in a detailed

twenty-one-page ruling. Repeating those factual and credibility findings in full

serves no purpose here, but we note below some findings relevant to the issues

on appeal.

      Restoration damages. The court found Copper Kitchen “left a mess” when

they vacated the premises and failed to respond to invitations to clean up the space

and retrieve any items left behind. But the court also found that, for many of its

claims, Burkle did not provide sufficient evidence to warrant damages. Claimed

costs like repairs and painting were reduced because at least some portion was

attributable to Burkle’s new business venture. Others were reduced due to lack of

itemized billing or for other reasons. And the court denied moving and storage

expenses, finding the contract did not authorize them. In total, the court awarded

$15,939.11 in restoration damages.

      Rent damages and mitigation. The court found Burkle took no steps to

specifically re-lease the restaurant space and instead chose to open a new venture

with one of its business partners. The court found Ron’s testimony on mitigation

was “not credible,” in part because Burkle began renovations in anticipation of its

new venture no later than December 2020. Based on these and other findings,
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the court awarded Burkle rent damages through December 2020 for a total of

$62,112.00.

       Conversion and trespass-to-chattels. The court found that, while certain

property belonging to Copper Kitchen remained on the premises, no principal or

agent of Copper Kitchen ever attempted to reclaim that property despite repeated

invitations to do so. The court emphasized that, even as of trial, Copper Kitchen

could not provide an itemized list of property it sought or its value. And even if

Copper Kitchen had supplied an itemized list, there was no evidence Burkle had

exercised dominion or control over, or otherwise deprived Copper Kitchen of, any

property left behind.

       The district court entered judgment for Burkle in the amount of $79,341.46

and directed that Burkle could later file a supplemental application for attorney fees

and expenses. Before that supplemental application was filed, Copper Kitchen

appealed and Burkle cross-appealed.

       II. Standard of Review

       Resolution of this appeal is largely dependent on principles of appellate

review:

                We review the judgment of a district court following a bench
       trial in a law action for correction of errors at law. The district court’s
       findings of fact have the force of a special verdict and are binding on
       us if supported by substantial evidence. Evidence is substantial if a
       reasonable person would accept it as adequate to reach a
       conclusion. Evidence is not insubstantial merely because we may
       draw different conclusions from it; the ultimate question is whether it
       supports the finding actually made, not whether the evidence would
       support a different finding. In determining whether substantial
       evidence exists, we view the evidence in the light most favorable to
       the district court’s judgment. If the district court’s findings are
       ambiguous, they will be construed to uphold, not defeat, the
       judgment.
                                          6

Chrysler Fin. Co. v. Bergstrom, 703 N.W.2d 415, 418–19 (Iowa 2005) (internal

quotation marks and citations omitted).

       III. Discussion

       The issues on appeal and cross-appeal can be condensed into a few

buckets. Both parties assert the trial court erred in its findings on restoration

damages. Burkle claims error in the district court findings on mitigation. Copper

Kitchen requests we reverse dismissal of its conversion and trespass-to-chattels

claims. And both parties spar over whether attorney fees are properly considered

here or in a separate pending appeal.

       A. Restoration Damages

       Copper Kitchen “concedes and is willing to pay for work done to repair the

premises that occurred under their control but is not willing to pay for the

construction and operation” completed for the restaurant Burkle opened in the

space after Copper Kitchen left. In other words, the fight is over whether damages

awarded for some of Burkle’s claimed “necessary repair damages” is supported by

substantial evidence. Burkle, on the other hand, disputes certain reductions made

by the district court based on inadequacies in the evidence presented.

       Broadly speaking, both parties’ claims are little more than a plea to re-try

this case on appeal. This, of course, conflicts with our standard of review. E.g.,

id. We are not a super-jury, and we are neither permitted nor inclined to substitute

our view of the record for that of the factfinder. We opt not to recite the intricacies

relied on by the district court in its detailed ruling on restoration damages, but we

are convinced after review of the record that—while we might have ruled differently
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on some of the claimed damages were we the trial judge—there is enough

evidence supporting each finding that our standard of review compels us to affirm.

See id.

       To the extent any legal argument—rather than a factual argument more

appropriately made in the district court—is present in Copper Kitchen’s appellate

brief, we understand it to draw on one of our unpublished cases to argue the

damages claimed were too speculative and uncertain to support an award. See

Gannon v. Willow Creek Century Farms, L.L.C., No. 14-0293, 2015 WL 1849401,

at *3 (Iowa Ct. App. Apr. 22, 2015). But “[t]here is a distinction between proof of

the fact that damages have been sustained and proof of the amount of those

damages.” Id. (quoting St. Malachy Roman Cath. Congregation of Geneseo v.

Ingram, 841 N.W.2d 338, 352 (Iowa 2013)). And Copper Kitchen acknowledges

Burkle sustained some damage. Thus, “the uncertainty merely lies in the amount

of damages sustained [and] recovery may be had if there is proof of a reasonable

basis from which the amount can be inferred or approximated.” Pavone v. Kirke,

801 N.W.2d 477, 495 (Iowa 2011) (internal quotation marks and citation omitted).

We find this record contains a reasonable basis for approximated damages in the

evidence and testimony offered at trial, including bills, receipts, and invoices. We

therefore affirm, finding a detailed discussion of each dollar and cent serves no

useful purpose in this opinion.

       B. Rent Damages and Mitigation

       “When a tenant abandons leased premises prior to the termination of the

lease, the landlord has a duty to mitigate damages by using reasonable diligence

to relet the property at the best obtainable rent.”        J.M. Grimstad, Inc. v.
                                         8

ScanGraphics, Inc., 539 N.W.2d 732, 734 (Iowa Ct. App. 1995). There is no

preordained method of finding a new tenant that satisfies this duty; the lessor has

the burden of proof to show they exercised reasonable diligence to find a new

tenant for the property. Id.

       Burkle challenges the district court’s conclusion that it generally failed to

mitigate damages because Ron was instead developing the location for his own

new venture. But whether a party has exercised due diligence to find a new tenant

is a fact question within the purview of the factfinder. See id. at 735. So too for

credibility determinations, which we defer to on appeal. City of Cedar Rapids v.

Leaf, 923 N.W.2d 184, 196 (Iowa 2018). Here, the trial court made a specific

finding that Ron’s testimony on mitigation was not credible and found the more

compelling evidence was that Burkle failed to mitigate damages. This conclusion

is supported by substantial evidence, and Burkle offers us no legal ground to

disturb the ruling on this basis.    We affirm, approving of the district court’s

reasoning and finding a more-detailed recitation of the facts serves no useful

purpose.

       C. Conversion and Trespass-to-Chattels Counterclaims

       Both of Copper Kitchen’s counterclaims hinge on its assertion that Burkle

prohibited Ben and Angela from returning to the premises to retrieve property

allegedly left behind. Angela testified Burkle told her the locks were changed, so

she and Ben could not retrieve their property. But the district court found the more

credible—and largely undisputed—evidence was that no principal or agent of

Copper Kitchen accepted or otherwise responded to Burkle’s invitations to finish

cleaning and retrieve property. This finding is supported by substantial evidence
                                        9

and specific credibility findings, we see no error in dismissing the counterclaims,

and we affirm without further discussion.

      D. Attorney Fees

      Last, the parties dispute whether an issue relating to attorney fees is

properly appealable in this case number. We conclude we need not resolve that

question, as we address the merits in Burkle Co. LLC v. Copper Kitchen, LLC,

No. 23-0231, 2024 WL ______ (Iowa Ct. App. Jan. 24, 2024), also decided today.

      IV. Disposition

      Finding substantial evidence supports the district court’s ruling, and

discerning no legal error on which reversal is warranted, we affirm both the appeal

and cross-appeal.

      AFFIRMED ON APPEAL AND CROSS-APPEAL.