Court Opinion

ID: 9684083
Source: CourtListenerOpinion
Date Created: 2023-08-24 13:46:14.916884+00
Date Added: 2024-06-11T18:17:50.870775
License: Public Domain

Andree Layton Roaf, Judge, dissenting. While I agree with and also join Judge Robbins’ dissent, I would not reach the issue of whether the trial court could apply equitable considerations to the forfeiture of a sublease, because I would affirm the trial court’s finding that Adous was an assignee of the lease between the Abemathys and Griffen Petroleum, Inc. (GPI). The majority has found that the three factors indicating the arrangement is a sublease overrode the three factors which suggest that it is an assignment, placing great emphasis on the parties’ characterization of the instrument as a sublease. The other two factors favoring a sublease are the fact that Adous paid rent to GPI rather than directly to the Abernathys, and a clause in the agreement giving GPI the right of reentry and possession of the premises. However, this right of reentry was available only in the event of a default by Adous, and only pursuant to a judgment or writ issued in an appropriate legal proceeding. In Jaher v. Miller, 219 Ark. 59, 239 S.W.2d 760 (1951), the.supreme court expressly rejected the appellee’s argument that reserved rights of reentry rendered an agreement a sublease, in reversing the trial court’s ruling that the document in question was a sublease rather than an assignment. This court also reversed the trial court’s characterization of an instrument as a sublease despite the appellee’s retention of the right of reentry for nonpayment of rent and other rights, noting that “none of the rights retained by appellant rise to the dignity of a reversionary estate.” Gagne v. Hartmeier, 271 Ark. 845, 611 S.W.2d 194 (Ark. App. 1981). These two cases are relied upon by the majority to a great extent, however; they suggest that the nature of the rights transferred is key to the determination of the parties’ intent, and in both cases the instrument in question was found to be an assignment despite factors indicating the contrary. In this instance, the factors favoring assignment are equally as compelling or even stronger. First, the amount of Adous’s rent was exactly the amount of the rent to be paid under the original lease. Had the amounts been different, that would have indicated a sublease. 52 C.J.S. Landlord & Tenant § 43 (2003). Second, the Second Addendum to the Sublease contains the following provision: COMPLIANCE WITH ORIGINAL LEASE: New Lessees shall perform and observe the terms and conditions to be performed on the part of [GPI] in the original Lease Agreement pertaining to this property between [GPI] and...Abernathy. Additionally, New Lessees agree to indemnify [GPI] against any and all claims, damages, costs, and expenses in respect to New Lessees nonperformance or nonobservance of any terms or conditions contained in the original Lease Agreement. Incorporation of the original lease into the transferring instrument indicates an assignment. Gagne v. Hartmeier, supra. Thirdly, GPI transferred the lease to Adous for the entire remainder of the original lease term. The original primary term of the lease was ten years, to begin upon completion of construction. According to William Abernathy, construction was completed in August 1992. Thus, when the first subtenancy agreement was executed in November 1996, there was approximately five years and nine months remaining in the original term, plus options. The agreement between GPI and Adous was for five years and eight months plus options. In sum, GPI transferred all of its rights of any significance in the lease, including options to renew, to Adous. Adous faithfully performed in a timely manner for a number of years, until he was compelled to file suit for specific performance in May 2001 because the Abernathys refused to accept rent tendered directly by him. As in Gagne, supra, there was no reversionary estate remaining to GPI. I cannot say that the trial court’s characterization of this contractual arrangement as an assignment despite the parties’ labeling it as a sublease was clearly erroneous.