Court Opinion

ID: 2739476
Source: CourtListenerOpinion
Date Created: 2014-10-02 19:06:14.750459+00
Date Added: 2024-06-11T09:50:48.594143
License: Public Domain

130 Nev., Advance Opinion 63
                         IN THE SUPREME COURT OF THE STATE OF NEVADA

                 MASON-MCDUFFIE REAL ESTATE,                            No. 61233
                 INC., A NEVADA CORPORATION
                 D/B/A PRUDENTIAL NEVADA
                 REALTY,
                 Appellant,
                                                                              FILL
                 vs.                                                          OCT 02 21M/1
                 VILLA FIORE DEVELOPMENT, LLC, A
                 NEVADA LIMITED LIABILITY                                CL

                                                                        BY
                 COMPANY,
                 Respondent.

                             Appeal from a district court judgment in a contract action.
                 Second Judicial District Court, Washoe County; Brent T Adams, Judge.
                             Affirmed.

                 Olson, Cannon, Gormley, Angulo & Stoberski and Michael E. Stoberski
                 and Matthew A. Cavanaugh, Las Vegas,
                 for Appellant.

                 Fahrendorf, Viloria, Oliphant & Oster, LLP, and Patrick R. Millsap, Reno,
                 for Respondent.

                 BEFORE PICKERING, PARRAGUIRRE and SAITTA, JJ.

                                                  OPINION

                 By the Court, PARRAGUIRRE, J.:
                             In this appeal, we are asked whether a commercial tenant may
                 be constructively evicted without first providing the landlord notice of and
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                      a reasonable opportunity to cure the defect. We conclude that constructive
                      eviction requires that a landlord be given notice of and a reasonable
                      opportunity to cure a defect, and substantial evidence supports the district
                      court's finding that the landlord in this case did not receive notice that the
                      defect continued after repairs were attempted. Therefore, we affirm.
                                        FACTS AND PROCEDURAL HISTORY
                                  Appellant Mason-McDuffie Real Estate, Inc., leased
                      commercial real property in Reno from respondent Villa Fiore
                      Development, LLC. Following a significant water intrusion event in
                      December 2007, Mason-McDuffie vacated the property and ceased paying
                      rent. Thereafter, Villa Fiore filed a complaint in the district court against
                      Mason-McDuffie, alleging that Mason-McDuffie breached the lease.
                      Mason-McDuffie filed an answer and counterclaims, alleging that Villa
                      Fiore constructively evicted Mason-McDuffie by failing to maintain the
                      roof. At a bench trial, the following evidence was presented.
                                  Before Villa Fiore owned the property, Mason-McDuffie leased
                      the property from nonparty Joe Hitch. In 2006, Valerie Mapes, Mason-
                      McDuffle's manager at the time, repeatedly complained to Hitch about
                      water intrusion. In March 2006, Mason-McDuffie sent Hitch a letter
                      describing Hitch's failure to maintain the roof as a material breach of the
                      lease, and Hitch arranged extensive roof repairs in the summer of 2006.
                      After these repairs were made, Mason-McDuffie reported one new leak in a
                      different area, and additional repairs were made in February or March
                      2007. Hitch received no further complaints about the roof.
                                  Villa Fiore bought the property from Hitch in June 2007.
                      Hitch told Gary Arthur, Villa Fiore's managing member, about the roofs
                      past problems and that the problems had been fixed. Mapes told Arthur
                      that the roof had leaked in the past but not recently. Villa Fiore assumed
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                the landlord's duties under the lease, including the duty to maintain the
                roof and protect the interior from water intrusion. In the event that Villa
                Fiore breached the lease, the lease entitled Mason-McDuffie to pay third
                parties to cure any defects caused by Villa Fiore's breach and withhold rent
                in the amount of these payments if Villa Fiore failed to cure the defects
                within 30 days after receiving written notice of the defects. The lease was
                to expire in July 2009.
                            Arthur testified that Mapes called him in October 2007 and
                told him that the roof was leaking Arthur went to the property that day,
                and Mapes showed him two or three areas where water was coming into
                the building through the roof. A roofing contractor made repairs that day.
                A few weeks later, Mapes reported roof leaks in different locations. Arthur
                saw leaks inside the property, but no one could identify their sources
                outside. Nevertheless, a roofing contractor performed repairs and
                expressed confidence that the repairs would be effective.
                            Arthur testified that he was never informed of other water
                intrusion or mold at the property before Mason-McDuffie vacated the
                property in December 2007. Arthur testified that he gave Mapes an
                emergency maintenance phone number. He also asserted that Villa Fiore's
                maintenance employees told him whenever they performed work at the
                property, but they never reported additional water intrusion problems.
                Arthur never received any reports from roofers or mold inspectors hired by
                Mason-McDuffie
                            In contrast, David Hansen, Mason-McDuffie's sales manager in
                2007, testified that water intrusion occurred every time it rained,
                beginning in August 2007. Hansen testified that Mapes called Arthur
                repeatedly and a maintenance person typically responded. Mason-
                McDuffle arranged two mold inspections in November 2007, and one
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                     indicated that mold was present in the building while the other indicated
                     that mold was not present. Hansen did not know whether the mold reports
                     were ever given to Arthur or Villa Fiore.
                                 In December 2007, a severe water intrusion event occurred at
                     the property. Hansen testified that Villa Fiore maintenance workers
                     brought buckets to catch water. Hansen testified that Mapes and Mason-
                     McDuffie's attorney tried to call Arthur, but he did not believe that Arthur
                     ever came to the property in response. Mason-McDuffie never sent a letter
                     to Arthur or Villa Fiore like the letter that Mason-McDuffie sent to Hitch
                 •   in March 2006. Hansen never personally tried to contact Arthur. Mason-
                     McDuffie hired engineers to examine the roof, and the engineers reported
                     that portions of the roof needed to be replaced as soon as possible. This
                     report was not provided to Arthur or Villa Fiore, but Hansen did not know
                     why. In mid-December 2007, Mason-McDuffie vacated the property.
                                 On January 3, 2008, Arthur passed by the property and saw a
                     note on the door stating that Mason-McDuffie had moved. A few days
                     later, Arthur received a letter from Mason-McDuffie stating that Mason-
                     McDuffie considered itself constructively evicted due to the water
                     intrusion. Upon receiving the letter, Arthur called Mapes, and the two
                     exchanged voicemail messages, but they had no further contact. Arthur
                     subsequently sought a new tenant for the property. The new tenant also
                     experienced water intrusion problems, and Villa Fiore eventually replaced
                     the roof in 2009.
                                 The district court did not expressly decide whether Mason-
                     McDuffie was constructively evicted, but found that severe water intrusion
                 justified Mason-McDuffie's vacating the property. The district court also
                     found that Mason-McDuffie did not provide the information that it had in
                     November 2007 regarding the ongoing water intrusion and related mold
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                problems to Villa Fiore before vacating the property. Finally, the district
                court found that Mason-McDuffie did not provide Villa Fiore written notice
                of the ongoing water intrusion. The district court concluded that the lease
                obligated Mason-McDuffie to provide Villa Fiore written notice of and 30
                days to cure the water intrusion before exercising any other potential
                remedies. Because Mason-McDuffie did not comply with the notice and
                cure provision, the district court entered judgment in favor of Villa Fiore.
                Mason-McDuffie now appeals
                                                DISCUSSION
                            The district court based its judgment in Villa Fiore's favor on
                its finding that Mason-McDuffie failed to comply with the notice and cure
                provision of the lease and its conclusion that the lease required Mason-
                McDuffie to comply with this provision before seeking other remedies,
                including constructive eviction. Mason-McDuffie first argues that the
                district court misconstrued the lease. Next, Mason-McDuffie argues that
                under a theory of constructive eviction, a tenant is not required to provide
                its landlord with notice of and a reasonable opportunity to cure a defect
                before vacating the premises. Finally, Mason-McDuffie contends that the
                district court's findings support an implicit finding of constructive eviction.
                            We assume without deciding that the lease did not require
                Mason-McDuffie to comply with the notice and cure provision before
                asserting constructive eviction. We conclude, however, that constructive
                eviction requires that a commercial tenant provide a landlord with notice
                of and a reasonable opportunity to cure a defect. Because the district
                court's finding that Mason-McDuffie did not provide Villa Fiore notice of
                the ongoing nature of the water intrusion is supported by substantial
                evidence, we conclude that the district court's factual findings do not
                support a finding of constructive eviction. Accordingly, we affirm.
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                 Standard of review
                               Whether constructive eviction requires notice of and an
                 opportunity to cure a defect is a question of law that we review de novo.
                 See Brady, Vorwerck, Ryder & Caspino v. New Albertson's, Inc.,      130 Nev.
                                P.3d     ,    (Adv. Op. No. 68, August 7, 2014) (recognizing
                 that the interpretation of caselaw is a question of law that this court
                 reviews de novo). "Whether constructive eviction has occurred is a factual
                 determination to be made by the trier of fact." Krieger v. Elkins, 96 Nev.
                 839, 841, 620 P.2d 370, 372 (1980). We will not disturb such a finding if it
                 is supported by substantial evidence.     Id.; see also Weddell v. H20, Inc.,
                 128 Nev. „ 271 P.3d 743, 748 (2012) (stating that this court will not
                 overturn factual findings that are supported by substantial evidence).
                 Substantial evidence is "that which a reasonable mind might accept as
                 adequate to support a conclusion.'     Otak Nev., L.L.C. v. Eighth Judicial
                 Dist. Court, 129 Nev. „ 312 P.3d 491, 496 (2013) (quoting Finkel v.
                 Cashman Profl, Inc., 128 Nev.       „ 270 P.3d 1259, 1262 (2012)).
                 Constructive eviction requires that the landlord have notice of and a
                 reasonable opportunity to cure the defect
                               We have required a party alleging constructive eviction to
                 prove three elements. First, the landlord must either act or fail to act. Yee
                 v. Weiss, 110 Nev. 657, 660, 877 P.2d 510, 512 (1994). Second, the
                 landlord's action or inaction must render "the whole or a substantial part
                 of the premises unfit for occupancy for the purpose for which it was
                 leased." Id. Third, the tenant must actually vacate the premises within a
                 reasonable time. Schultz v. Provenzano, 69 Nev. 324, 328, 251 P.2d 294,
                 296 (1952).
                               Villa Fiore argues that there is a fourth essential element of
                 constructive eviction, that the tenant provide the landlord notice of and a
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                reasonable opportunity to cure the defect. We have not previously
                discussed this proposed element, but it is not foreclosed by our decisions
                Accordingly, we look to other jurisdictions for guidance.     See City of Las
                Vegas v. Cliff Shadows Prof? Plaza, L.L.C., 129 Nev. , n.4, 293 P.3d
                860, 865 n.4 (2013) ("This court has often relied on the decisions of other
                jurisdictions when, as here, it is faced with issues of first impression.").
                Other jurisdictions have stated that constructive eviction cannot occur
                unless the landlord has notice of and a reasonable opportunity to cure the
                defect. E.g., Home Rentals Corp. v. Curtis, 602 N.E.2d 859, 863 (Ill. App.
                Ct. 1992) ("UV tenant may not abandon premises under the theory of
                constructive eviction without first affording the lessor a reasonable
                opportunity to correct the defects in the property."); Pague v. Petroleum
                Prods., Inc., 461 P.2d 317, 319 (Wash. 1969) ("In order for a vacating
                tenant to claim constructive eviction, it is essential that he give the
                landlord notice of the act or condition complained of and an opportunity to
                remove or correct the condition."); see also Restatement (Second) of Prop.:
                Landlord & Tenant § 5.4 (1977) (stating that a tenant may seek remedies
                for a landlord's failure to make repairs if "the landlord does not correct the
                situation within a reasonable time after being requested by the tenant to
                do so").
                            A landlord cannot be expected to cure a defect if the landlord is
                unaware that the defect exists.    See Krieger, 96 Nev. at 841, 620 P.2d at
                372 (stating that substantial evidence supported the district court's finding
                of constructive eviction where the landlord was "notified of the
                problems . . . but failed to make any repairs"). Requiring a commercial
                tenant to provide a landlord notice of and a reasonable opportunity to cure
                a defect in the leased premises as an element of constructive eviction
                encourages the parties to discuss and potentially resolve• deficient
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                  conditions in leased premises outside of the courts.      See Conference Ctr.
                  Ltd. v. TRC—The Research Corp. of New England,          455 A.2d 857, 863-64
                  (Conn. 1983) (recognizing that requiring notice and an opportunity to cure
                  under a theory of constructive eviction is desirable because it provides "an
                  opportunity for dialogue to establish whether the parties intend to
                  repudiate or to fulfill their contractual obligations"). In contrast, declining
                  to impose such an element would require landlords to intrude upon
                  tenants' right to possess leased premises in order to guard against claims
                  of constructive eviction by conducting frequent inspections.      See State v.
                  White, 130 Nev. , n.3 ,330 P.3d 482, 486 n.3 (2014) (stating that "a
                  landlord does not have an absolute right to enter a property he or she owns
                  because the landlord conveys the right of possession to the tenant")
                  Requiring a tenant to provide notice of and a reasonable opportunity to
                  cure a defect as an element of constructive eviction thus protects both
                  landlords' expectations in rental income and tenants' rights to possess the
                  leased premises free from excessive intrusions by the landlord.
                              Therefore, we hold that a commercial tenant alleging that it
                  was constructively evicted must show, in addition to the three elements
                  stated in Yee and Schultz, that it provided the landlord notice of and a
                  reasonable opportunity to cure the defect.     See, e.g., Home Rentals Corp.,
                  602 N.E.2d at 863. 1

                        'Mason-McDuffie argues that notice and a reasonable opportunity to
                  cure are not required for constructive eviction, relying on Milheim v.
                  Baxter, 103 P. 376, 377 (Colo. 1909). The court in Milheim concluded that,
                  under the circumstances of that case, notice was not required because the
                  landlord already "had full knowledge" of and no intent to cure the defect.
                  Id. Milheim thus stands only for the proposition that a tenant need not
                  provide the landlord with notice of a defect if the landlord already knows of
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                   The district court's findings are supported by substantial evidence, but they
                   do not support a finding of constructive eviction
                               Applying this rule to the circumstances presented here, we
                   conclude that the district court's factual findings are supported by
                   substantial evidence, but these findings do not support Mason-McDuffie's
                   argument that it was constructively evicted.
                               The district court found, based on substantial evidence, that
                   severe water intrusion rendered the property unfit for occupancy in
                   December 2007, and it is undisputed that Mason-McDuffie vacated the
                   property in a reasonable time. Given that the lease expressly imposed
                   upon Villa Fiore the duty to maintain the roof, we also assume for the
                   purpose of argument that the district court implicitly found that Villa Fiore
                   failed to maintain the roof, thus causing the severe water intrusion.      See
                   Luciano v. Diercks, 97 Nev. 637, 639, 637 P.2d 1219, 1220 (1981) ("[T]his
                   court will imply findings of fact and conclusions of law so long as the record
                   is clear and will support the judgment."). Thus, the three elements of
                   constructive eviction set forth in Yee and Schultz were satisfied. See Otak
                   Nev., 129 Nev. at , 312 P.3d at 496; Krieger, 96 Nev. at 841, 620 P.2d at
                   372.
                               But the district court also found that Mason-McDuffie knew
                   that the water intrusion and related mold problems were ongoing in
                   November 2007 but never provided this information to Villa Fiore before
                   vacating the premises. Although Hansen testified that Villa Fiore
                   maintenance employees were at the property in December 2007, Arthur

                   ...continued
                   the defect through other means and has failed to cure it. See id.; Krieger,
                   96 Nev. at 841, 620 P.2d at 372. Therefore, this argument is unpersuasive.

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                testified that Villa Fiore employees always told him when they performed
                work at the property and no one did so in December 2007. Hansen testified
                that Mapes tried to call Arthur in December 2007 to no avail. But Arthur
                testified that he responded to Mapes' calls promptly in the past and that he
                believed the problems were resolved because no one told him about water
                intrusion after October 2007. Mason-McDuffie also had documentation of
                the ongoing water intrusion that it, inexplicably, never provided to Arthur
                or Villa Fiore. Thus, the district court's finding that Mason-McDuffie did
                not provide the information regarding the failure of the roof that it had in
                November 2007 to Villa Fiore before vacating the property is supported by
                substantial, although conflicting, evidence.
                            Mason-McDuffie argues that it provided Villa Fiore notice of
                and an opportunity to cure the prior water intrusion and that this satisfied
                any notice and opportunity to cure obligation that Mason-McDuffie had
                under a theory of constructive eviction. Notice that the water intrusion
                continued despite Villa Fiore's attempted repairs was important because
                without further complaints from Mason-McDuffie, Villa Fiore would have
                no reason to believe that the repairs were ineffective.   See SGM P'ship v.
                Nelson, 705 P.2d 49, 52 (Haw. Ct. App. 1985) (requiring a tenant to give a
                landlord notice that attempted repairs were insufficient in order to assert
                constructive eviction based on the insufficiency of the repairs). Because
                Villa Fiore attempted repairs and the district court found on substantial
                evidence that Mason-McDuffie did not inform Villa Fiore that these repairs
                were ineffective, we conclude that Mason-McDuffie's notice of prior water
                intrusion was insufficient to satisfy its notice and cure obligation under a
                theory of constructive eviction. See id.
                            While the evidence in this case is conflicting, it nevertheless
                constitutes substantial evidence supporting the district court's finding that
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                   Mason-McDuffie did not inform Villa Fiore that the water intrusion and
                   related problems continued after the last repairs in October 2007 before
                   vacating the property in December 2007. Thus, Mason-McDuffie did not
                   satisfy the fourth element of constructive eviction, notice of and a
                   reasonable opportunity to cure the defect.
                                                   CONCLUSION
                                Because the district court found that Mason-McDuffie did not
                   provide Villa Fiore notice of and a reasonable opportunity to cure the
                   ongoing water intrusion, the district court's factual findings do not support
                   Mason-McDuffie's argument that it was constructively evicted. As a result,
                   we need not address whether Mason-McDuffie was required to comply with
                   the lease's notice and cure provision in order to successfully assert
                   constructive eviction, and we affirm the judgment. See Saavedra-Sandoval
                   v. Wal-Mart Stores, Inc., 126 Nev. , 245 P.3d 1198, 1202 (2010)
                   ("This court will affirm a district court's order if the district court reached
                   the correct result, even if for the wrong reason.").

                                                                                        J.
                                                         Parraguirre

                   We concur:

                               Adeutli,             J.
                   Pickering

                                                    J.
                   Saitta

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