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Landlord/Tenant – Commercial Lease – Constructive Eviction – Mold & Sewage Smells

The plaintiff-landlord asserts that the cause of the mold and the foul smell in the defendant-tenant’s jewelry story was a water leak from the adjacent restaurant between two interior walls of the building and was thus beyond the landlord’s obligation under the lease. However, the tenant presented other evidence and theories of potential sources and causes of the foul odors and mold damage, including an exterior wall, demising wall between two tenants, a faulty grease trap, and a leaking roof; therefore, the landlord was not entitled to judgment notwithstanding the verdict.

The trial court erred in granting the landlord’s motion for judgment notwithstanding the verdict (JNOV) as to the tenant’s claims for constructive eviction; the trial court also erred in instructing the jury that it could only award damages for lost profits through the date the tenant vacated the leased premises. We affirm the trial court’s denial of the landlord’s motions for directed verdict or JNOV as to its own breach of contract claim.

It was for the jury to decide whether or not the shared wall between the jewelry store and the restaurant was a structural or demising wall or an interior wall and fell under the tenant’s or the landlord’s responsibility under the lease. Further, under the lease, the tenant was not responsible for maintaining the exterior grease trap or for the integrity of the roof.

Through its management company, the landlord pumped the grease trap after the tenant began complaining of the odor in its jewelry store. After the grease trap was pumped, the tenant still complained of odor.

The landlord sent a roofing company to look for possible damage in the roof, and the company repaired three holes in the roof.

Viewed in the light most favorable to the tenant, this evidence was sufficient to support the jury’s verdict in favor of the tenant. The trial court erred in granting JNOV to overturn the jury’s verdict and award on the tenant’s claims for constructive eviction. We reverse and reinstate the jury’s verdict and $60,000 in damages.

The trial court’s order left open the issue of attorney’s fees and costs for the tenant. We remand for a determination of the costs and fees, if any, the tenant is entitled to recover.

Although the landlord asserts that the tenant’s post-vacating profits were affected by the relocation of the jewelry business to a smaller market in Graham and that the tenant made little effort to find a new Raleigh location, the tenant presented sufficient evidence of lost profits stemming from the landlord’s breach of the lease. The tenant had an established history of profits and used historical tax records to establish profits before and after the landlord’s breach. Because the tenant could prove its lost profits with reasonable certainty, the issue should have been before the jury. We remand for a new trial on the issue of potential lost profits damages.

While elements of the landlord’s breach of contract claim were admitted in pretrial stipulations, there was at least a scintilla of evidence to support the tenant’s claim for constructive eviction. Therefore, the trial court did not err in denying the landlord’s motions for directed verdict or JNOV.

There are no pattern jury instructions for constructive eviction. Although the landlord wanted the trial court to require the jury to first find a breach of a specific lease agreement provision before finding the landlord’s breach forced the tenant to vacate, the landlord has failed to show the trial court abused its discretion in giving jury instructions which tracked the language of the lease and which reflect the law of constructive eviction.

Affirmed in part, reversed in part, and remanded.

Brennan Station 1671, LP v. Borovsky (Lawyers Weekly No. 011-314-18, 23 pp.) (John Tyson, J.) Appealed from Wake County Superior Court (Anderson Cromer, J.) John Benjamin and Aleksandra Anderson for plaintiff; Adam Gottsegen for defendant. N.C. App.


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