Summary
observing that even if a lessor could “contract away” a statutory right, “the lessor's statutorily created right ... would have to be expressly waived”
Summary of this case from Elderberry of Weber City, LLC v. Living Centers-Southeast, Inc.Opinion
48034 Record No. 911089
September 18, 1992
Present: All the Justices
Code Sec. 8.01-128 expressly authorizes a lessor to split its cause of action for unpaid rent and that portion of the trial court's decision sustaining a lessee's plea of res judicata and estoppel by judgment for rent not already claimed by a lessor in an earlier action is reversed. The portion of the decision sustaining the plea relating to the rent already claimed in an earlier action is affirmed.
Real Property — Leases — Landlord and Tenant — Statutory Construction (Code Sec. 8.01-128) — Unlawful Entry and Detainer — Acceleration Clauses — Practice and Procedure — Res Judicata — Splitting Causes of Action — Contracts
The lessor leased premises to the lessee. An acceleration clause in the lease provided that if the monthly installment of rent was late more than 15 days, the balance for the whole term of the lease would be due immediately and that the lessor would have the option of taking possession of the premises. The lessee failed to pay the rent for three months and the lessor filed an unlawful detainer warrant in the general district court of the county. The lessor recovered a judgment for possession of the premises and for the total amount of the rent due and other charges. The lessor regained possession of the premises, but did not collect the rent due. The lessor then sued the lessee in the circuit court for the entire amount allegedly due for rent and other charges for the entire term of the lease. The court dismissed the action as to all defendants on the ground that the previous general district court judgment was res judicata and constituted a bar and merger. The lessor appeals.
1. In another case it was held that a lease containing a mandatory acceleration clause required the lessor to include the demand for future rent in the initial action for past due rent in order to avoid a defense of claim-splitting, but the initial action in that case was not an unlawful detainer action, as it was in the present case.
2. Code Sec. 8.01-128 provides that a verdict for possession of premises shall also be for such rent as the plaintiff may prove to have been owing to him, but no such verdict or judgment shall bar any separate concurrent or future action for any such damages or rent as may not be so claimed.
3. The statutory language "may not be so claimed" is an unambiguous statement that gives the lessor an option to defer its claim for all the rent in its unlawful detainer action, despite the allegedly mandatory acceleration clause.
4. Code Sec. 8.01-128 creates an exception to the rules of claim-splitting and provides the lessor with an opportunity to evict the lessee without losing its right to recover any later deficiency in rent after making an effort to minimize the lessee's damages by renting to another tenant.
5. Assuming, without deciding, that such a statutorily created right to split a cause of action for rent could be contracted away, the lessor would have to expressly waive its right to file a subsequent action for rent because it is presumed that one will not preclude himself from exercising a right granted by statute.
Appeal from a judgment of the Circuit Court of Stafford County, Hon. James W. Haley, Jr., judge presiding.
Affirmed in part, reversed in part, and remanded.
R. Scott Pugh (Leland L. Baker, Jr.; Hicks, Baker Peterson, on brief), for appellant.
No brief or argument for Thomas E. Payne.
In this case, we decide whether a provision of the unlawful entry and detainer statute, Code Sec. 8.01-128, authorizes a lessor to split its cause of action for unpaid rent.
For a period scheduled to begin October 15, 1987, and to end October 31, 1992, Virginia Dynamics Company (the lessor) leased premises in Stafford County to Steve Turco, Doreen Turco, Thomas E. Payne, and Roy E. Wilfong, a partnership trading as Master Electrical Contractors (the lessee). The lessee took possession of the premises. An acceleration clause in the lease provided that
None of the parties has appealed the trial court's ruling that the lessee was a partnership comprised of the Turcos, Wilfong, and Payne.
[if the monthly installment of] rent is late in excess of 15 days . . . the rent for the balance of the Lease term shall be immediately due and at the option of the Lessor the Lessee's right of possession shall end, and Lessor shall be entitled to the possession of the leased premises. Lessee nevertheless is to remain liable for any damages of loss of rent Lessor may sustain, and Lessee gives Lessor full power to re-let premises for the benefit of the Lessee.
(Emphasis added.)
The lessee failed to pay the rent for April, May, and June 1989, and the lessor filed an unlawful detainer warrant on June 13, 1989, in the General District Court of Stafford County against Steve Turco and Wilfong, trading as Master Electrical Contractors. On July 10, 1989, the lessor recovered a judgment, now final, for possession of the premises and for $7,000, the total amount of the three monthly installments of rent and other charges. Shortly thereafter, the lessor regained possession of the premises, but collected none of the $7,000.
On July 25, 1990, the lessor sued the Turcos, Wilfong, and Payne in the circuit court for $97,408.14, the amount allegedly due for rent and other charges for the entire period of the lease beginning April 1, 1989, and ending October 31, 1992. The Turcos and Wilfong having filed an appropriate plea, the circuit court dismissed the action as to all defendants, including Payne, on the ground that the previous general district court judgment was "res judicata and constitute[d] a bar and merger."
The lessor claimed rent and other charges for April through June 1989 in both the earlier general district court and the later circuit court actions. Clearly, the circuit court could not have entered judgment for those three months' rent for which judgment had already been entered in the general district court.
In oral argument, the lessor suggested that Payne did not file a plea of res judicata or estoppel by judgment. However, the lessor did not assign error to the trial court's finding that the four defendants were partners who were in privity with one another, or to its holding that Payne could rely upon the plea of res judicata or estoppel by judgment filed by the other partners. Therefore, we will not review this ruling. Rule 5:17(c).
After we awarded the lessor's appeal, it nonsuited its claim against the Turcos and Wilfong, leaving Payne as the sole party defendant. We must decide whether the lessor can maintain its claim against Payne as the remaining partner in Master Electrical Contractors.
The lessee argues that the acceleration clause is a mandatory one. Without so deciding, we will agree with this contention. Because the clause is a mandatory acceleration clause, the lessee contends that lessor has thereby "contracted away its right, if any, to split its cause of action."
The lessee contends that Snyder v. Exum, 227 Va. 373, 315 S.E.2d 216 (1984), controls our decision in this case. The Snyder lease contained a mandatory acceleration of rent clause upon the lessee's default. We held that this clause required the lessor to include future rent in his initial action for past due rent in order to avoid a defense of claim-splitting.
However, the initial action in Snyder was not an unlawful detainer action, as in this case. Thus, Code Sec. 8.01-128 was not involved in Snyder.
Code Sec. 8.01-128 provides:
If it appear that the plaintiff was forcibly or unlawfully turned out of possession or that it was unlawfully detained from him, the verdict or judgment shall be for the plaintiff for the premises, or such part thereof as may be found to have been so held or detained. The verdict or judgment shall also be for such damages as the plaintiff may prove to have been sustained by him by reason of such forcible or unlawful entry, or unlawful detention, of such premises, and such rent as he may prove to have been owing to him, provided such damages and rent claimed shall not exceed the jurisdictional amount of the court in which the action is tried. No such verdict or judgment shall bar any separate concurrent or future action for any such damages or rent as may not be so claimed.
(Emphasis added.)
Obviously, the emphasized language gives lessors the right to file subsequent actions for rent not claimed in earlier unlawful detainer actions. And, in our opinion, the statutory language "may not be so claimed" is an unambiguous statement that gives the lessor an option to defer its claim for all the rent in its unlawful detainer action, despite the allegedly mandatory acceleration provision in the lease.
In creating an exemption to the rules of claim-splitting, Code Sec. 8.01-128 provides the lessor with an opportunity to evict the lessee without losing its right to recover any later deficiency in rent after making an effort to minimize the lessee's damages by renting to another tenant. Such an exemption serves the public policies of maximizing the lessor's use of land and minimizing the defaulting lessee's damages. See Snyder, 227 Va. at 376, 315 S.E.2d at 218 (If acceleration clause enforceable, lessor can still collect all the rent from the defaulting lessee even though he finds a new tenant for the balance of the term).
As in Snyder, we express no opinion of the validity of the acceleration clause as a possible penalty because that issue was not raised in Snyder, nor has it been raised in this case.
Even so, the lessee claims that the lessor "contracted away" its right to split its cause of action for rent. Assuming, but not deciding, that such a right could be "contracted away," we think that the lessor's statutorily created right to file a subsequent action for rent would have to be expressly waived. See McMerit Constr. Co. v. Knightsbridge Dev. Co., 235 Va. 368, 374, 367 S.E.2d 512, 515 (1988) ("In the absence of clear evidence to the contrary, it is presumed that one will not preclude himself from exercising a right granted by statute."); VNB Mortgage Corp. v. Lone Star Industries, Inc., 215 Va. 366, 371, 209 S.E.2d 909, 914 (1974). No such waiver appearing, we find no merit in this contention.
Accordingly, we will: (1) affirm the judgment of the trial court sustaining the lessee's plea of res judicata and estoppel by judgment relating to the monthly installments for April, May, and June 1989; (2) reverse that part of the judgment sustaining the plea as to the balance of the lessor's claim; and (3) remand the case for further proceedings consistent with this opinion.
Affirmed in part, reversed in part, and remanded.