This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
Bradley Operating Limited
Nathan Wattenhofer d/b/a Heart Alive,
Hennepin County District Court
File No. 04-10687
Douglas B. Altman, Altman & Izek,
Considered and decided by Minge, Presiding Judge; Randall, Judge; and Collins, Judge.*
Appellant challenges summary judgment holding him liable for rental payments and dismissing his counterclaim for unjust enrichment. We affirm.
Appellant Nathan Wattenhofer entered into a lease agreement with respondent Bradley Operating Limited Partnership on January 8, 2002, which provided that Wattenhofer would rent a 19,300 square-foot building at Brookdale Square from Bradley for a period of ten years, with the option to renew for an additional five years. Once various repairs and leasehold improvements were completed, Wattenhofer intended to use the space for an entertainment center. The lease commenced on January 15, 2003. In August 2003, Bradley commenced an eviction action for nonpayment of rent. The parties entered into a settlement agreement to terminate Wattenhofer’s occupation of the premises. In December 2003, Wattenhofer moved out and the eviction action was dimissed.
In November 2004, Bradley started this action for rent, and Wattenhofer counterclaimed for unjust enrichment. Bradley moved for summary judgment. The district court granted Bradley’s motion, dismissed Wattenhofer’s counterclaim, and ultimately judgment was entered for Bradley in the amount of $254,725.15. Wattenhofer appeals.
appeal from summary judgment, this court asks two questions: (1) whether there
are any genuine issues of material fact; and (2) whether the district court
erred in its application of the law. Schafer v. JLC Food Sys., Inc., 695
N.W.2d 570, 573 (
first issue is whether the district court erred in granting summary judgment
for the rent obligation. Wattenhofer claims
the district court improperly interpreted the language of the lease. A lease is a contract which the court will
construe according to the rules of interpretation to ascertain the parties’
intent. Amoco Oil Co. v. Jones, 467 N.W.2d 357, 360 (
we consider whether Bradley, as the landlord, was responsible for structural
repairs. Wattenhofer argues that the
district court interpreted the “as-is” clause too expansively when it found
that Wattenhofer assumed the burden of making structural repairs. Wattenhofer asserts that he spent $100,121
for structural repairs and requests reimbursement or a rental offset.
in the absence of an agreement, “there is no implied covenant on the part of
the landlord to make repairs, [nor any warranty] that the premises are or will
prove to be suitable for the tenant’s use or business.” Dyrdal
v. Golden Nuggets, Inc., 672 N.W.2d 578, 587 (Minn. App. 2003) (alteration
in original) (citation omitted), aff’d,
689 N.W.2d 779 (
Here, the parties recognized that significant repairs and modifications were necessary to prepare the premises for Wattenhofer’s occupancy. Wattenhofer planned to establish an entertainment center in a building that had been used as a movie theater. Remodeling was obviously necessary. The lease divided the duties of each party to prepare the premises for occupancy. For example, Bradley was to replace the roof and repair certain mechanical systems, such as the heating, ventilation and air conditioning (HVAC) and sprinkler systems. The lease provided that after such repairs, Wattenhofer would receive possession “as-is.” In his affidavit opposing summary judgment, Wattenhofer contends that the HVAC and electrical system repairs were not properly completed by Bradley, and as a result the as-is clause was never triggered. But, Wattenhofer’s affidavit shows that the repairs were completed before both the commencement date of the lease and his receipt of the certificate of occupancy. Thus, by the plain terms of the lease, the as-is clause was triggered.
clause outlined Wattenhofer’s extensive responsibilities: “[a]ll work not provided
herein to be done by Landlord shall be performed by Tenant, at Tenant’s
expense, and deemed to be ‘Tenant’s Work.’”
The parties further agreed that, “[A]ll construction work to be
performed by Tenant hereunder shall be performed in a good and workmanlike
manner in full compliance with all applicable laws, codes and building
requirements of the local authorities.” Because
further claims that summary judgment was inappropriate because the local
governmental authorities required him to make substantial repairs to bring the
premises into code compliance. He points
out that the case of Dennison v. Marlowe,
106 N.M. 433, 744 P.2d 906 (1987) recognized that landlords are liable for such
repairs, and urges that we adopt that position.
In Dennison, after the lessee
had taken possession of the premises, municipal officials notified the lessee that
the premises needed significant structural changes to become code-compliant. 106 N.M. at 434, 744 P.2d at 908. The New Mexico Supreme Court held: “the
landlord instead of the tenant is liable for such alterations unless the terms of the covenant and the
surrounding circumstances indicate the tenant’s intention to assume such an
obligation.” Dennison, 106 N.M. at 434, 744 P.2d at 907 (emphasis added). “This rule is followed because the property
owner is initially under the duty to comply with all laws and orders unless it
is assumed by the lessee under the terms of the lease.”
Dennison does not apply. First, the plain language of the lease in our
case provides that, once Bradley completed its repairs and Wattenhofer took
possession of the property, Wattenhofer assumed the responsibility of meeting
code requirements. Given the change in
use that Wattenhofer planned for the premises, code issues were foreseeable. The court in Dennison expressly stated that the landlord would have the
responsibility to meet code requirements unless
the lease provided otherwise. Dennison, 106 N.M. at 434, 744 P.2d at
908. Second, in Dennison the building did not comply with code requirements for any
Finally, Wattenhofer challenges summary judgment by claiming that he no
longer has to make payments under the lease, either because the eviction
agreement or Bradley’s attempt to relet the premises implicitly terminated the lease. Where “the lease expressly permits re-entry
by the landlord, there must be unequivocal proof that the landlord
intended to forgive the tenant’s further obligations under the lease and
accepted the tenant’s surrender of the premises.” Provident Mut. Life Ins. Co. v. Tachtronic
Instruments, Inc., 394 N.W.2d 161, 164 (
Here, the lease provided that, in the event of Wattenhofer’s default, Bradley would have an immediate right to re-enter the premises and terminate Wattenhofer’s right of possession. In such a case, Bradley could elect to either terminate the lease, or “from time to time without terminating this Lease, make such alterations and repairs as may be necessary in order to relet the Premises.” The lease further gave Bradley the right to relet the premises upon Wattenhofer’s default, with proceeds applied first to Wattenhofer’s obligations, other than rent, then to the costs of reletting, and finally to the rent due under the lease. These lease provisions are directly contrary to Wattenhofer’s claim that Bradley intended to forgive Wattenhofer’s future rent obligation merely because Wattenhofer surrendered possession. See id.
parties entered into an agreement to settle Bradley’s eviction claim. The summary nature of an eviction proceeding
“is comparable to the summary nature of the former unlawful-detainer
proceeding[.]” Fraser v. Fraser, 642 N.W.2d 34, 40 (
second issue is whether the district court erred by dismissing Wattenhofer’s
unjust enrichment counterclaim. To
establish unjust enrichment, the claimant must show that the defendant
knowingly received or obtained something of value, for which fairness requires
the defendant to pay. ServiceMaster of
Wattenhofer argues that because some of the repairs were structural in nature, they inured to Bradley’s benefit, and that it would be unjust to allow Bradley to be so benefited without paying for the cost of such repairs. However, Wattenhofer’s repairs in preparing the premises for his business purpose do not necessarily benefit Bradley. The next use of the building may require different, possibly even conflicting, improvements. In any event, such repairs do not mean Bradley was unjustly enriched. See Armstrong v. Carr, 341 N.W.2d 582, 583 (Minn. App. 1984) (holding that where the lessee made certain improvements to the premises in order to expedite the sale of the business, the landlord was not liable to lessee under a theory of unjust enrichment). Bradley contracted to contribute up to $200,000 for the repairs and modifications needed by Wattenhofer to achieve the purpose of the lease. Bradley paid out all but $14,721.88 of that amount. Bradley has no assurance that it will recover rent payments adequate to recoup this advance. Wattenhofer does not allege that Bradley did anything illegal or untoward in arranging for the repairs or in negotiating the terms of the lease. There is no evidence that Bradley’s recovery of the building with the repairs that Wattenhofer made was illegal or unlawful.
In sum, the district court did not err by dismissing Wattenhofer’s counterclaim for unjust enrichment.
* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.
note that residential premises are covered by a different rule. See
 Again, we note that residential leases are treated differently with respect to code violations. See generally Minn. Stat. §§ 504B.001-.471 (2004).
 Wattenhofer also claims that Bradley breached the implied covenant of good faith and fair dealing by failing to adequately respond to his requests for an accurate accounting of how much rent he owed on the lease. However, the lease clearly outlined Wattenhofer’s payment obligations. Bradley did not materially breach the lease by failing to give Wattenhofer a timely accounting where Wattenhofer himself could have determined the remaining amount with little difficulty by referring to the relevant lease provision.