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Appellate court upholds ruling in restaurant lease dispute
KEITH ARNOLD
Special to the Legal News
Published: August 25, 2023
A 5th District Court of Appeals panel recently upheld a trial court’s ruling in a lease dispute between the owners of the Sunbury Grill and the restaurant’s former landlord.
The 3-0 decision affirmed the Delaware County Common Pleas Court’s finding that the restaurant operator, Sunbury Diner LLC, was due damages in the amount of $18,417.32, from the estate of Joy Henson and $16,474.83 from Brenda Young, sole beneficiary of the former property owner.
Additionally, the lower court ruling ordered Young, acting individually and as executor of the Henson estate, to sell the real estate to the restaurant owners for a purchase price of $150,000, plus closing costs, according to a provision in the lease agreement.
Sunbury resident Richard Arrowsmith Jr. entered into a lease agreement with John and Joy Henson on Aug. 29, 2007, for the ground floor of a commercial building located at 40 E. Cherry St. in Sunbury, case summary provided.
The lease was to end at midnight on July 31, 2008.
The property was used for commercial purposes as a restaurant known as The Sunbury Grill, per the lease agreement. Arrowsmith continued to rent the property and operate the restaurant until the Sunbury Diner and the Hensons entered into a new lease agreement in May 2013.
The new commercial lease specifically referenced the previous lease and incorporated certain sections of it by specific reference, summary continued.
The provisions relevant to the dispute include those in which the lessee had the automatic right of renewal for five additional years through March 2023, the monthly rental amount and the first option to purchase the real estate by the lessee at an agreed upon price in the range of $100,000 to $150,000.
Allen Wandle, president of the restaurant company, advised Joy Henson he would be paying the agreed-upon increased rental amount of $1,050, commencing on April 1, 2018, and tendered a check for that amount to Joy Henson on that day, summary detailed.
Wandle also informed the landlord that the payment was for the purpose of renewing the commercial lease for another five years.
RULING
On Sept. 17, 2020, and again on Oct. 9, 2020, Wandle provided notice to the restaurant’s landlord that the company intended to exercise its option to purchase the property for the highest purchase price contemplated in the lease.
After receiving no response from the woman, Wandle again notified her Jan. 13, 2021, of the company’s intent to purchase the property and scheduled a closing date of Feb. 9, 2021, for the purchase transaction.
Wandle attended the closing on behalf of the company, but Joy Henson did not attend the closing, refusing to transfer the property. The company subsequently paid $151,967.50, the purchase price plus all closing costs, into an escrow account, summary noted.
The company filed a complaint against Joy Henson on April 15, 2021, for breach of contract and specific performance, and sought damages for the failure to close the sale of the property.
Prior to Joy Henson’s death on Feb. 20, 2022, the woman executed and filed for the record an affidavit for a transfer of death designation, which listed Brenda Young as sole beneficiary.
Young also was appointed executor of the estate by the Licking County Probate Court.
The trial court subsequently substituted Young as owner and executor of the estate, summary provided.
On Sept. 14, 2022, Young filed a motion to dismiss the company’s complaint pursuant to Civ. R. 12(B)(6) and a motion for summary judgment, while Sunbury Diner filed a motion for summary judgment the next day.
The company filed a response to the motion to dismiss as well as a memorandum against Young’s motion for summary judgment Sept. 27, 2022. Young filed a reply on Oct. 5, 2022.
On Oct. 7, 2022, Sunbury Diner filed a motion to strike, in part or in full, an affidavit attached in support of Young’s motion for summary judgment.
Young filed a memorandum in opposition to the motion to strike on Oct. 21, 2022.
The trial court granted, in part, and denied, in part, the company’s motion to strike, on the basis that the affidavit filed by Young included details based on the previous owner’s personal knowledge.
The trial court granted the company’s motion for summary judgment on the basis that Henson breached the purchase option clause of the lease when she refused to sell the property to Sunbury Diner.
Additionally, the trial court found Sunbury Diner had leased the property under the five-year renewal term and had a right to purchase the property in February 2021.
The trial court further determined that money damages were an inadequate remedy for the unique parcel of real estate, ruling Sunbury Diner was entitled to specific performance and ordered appellant to sell the property to the company.
The trial court denied Young’s motion for summary judgment and scheduled a damages hearing for Dec. 15, 2022.
Despite Young filing a motion for relief from judgment and dismissal, the trial court ruled in favor of the restaurant company, awarding damages and sale of the property.
On appeal, Young argued the trial court erred for failing to dismiss the complaint for the company’s failure to state a claim for which relief could be granted and for sustaining the company’s motion for summary judgment.
Young argued in the appellate proceedings that the company did not provide proper notice of its intent to renew the lease and subsequent purchase of the property.
The appellate panel found that the company’s payment of lease payments in the increased renewal amount of $1,050 per month, its continued possession of the property and Henson’s acceptance and depositing of the payments were sufficient to serve as a waiver of any notice requirement.
Presiding Judge Scott Gwin and Judge Andrew King concurred with the court decision authored by Judge William Hoffman.
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