WEISS JENKINS IV LLC v. UTRECHT MANUFACTURING CORPORATION (2018)

MEMORANDUM **

Utrecht Manufacturing Corp. (“Utrecht”) appeals an order granting summary judgment to its former landlord, Weiss-Jenkins IV LLC (“Weiss-Jenkins”), awarding Weiss-Jenkins damages upon Utrecht's breach of its commercial lease (the “Lease”) at the Pike & Minor Building (the “Building”) in Seattle. We affirm.

1. The district court correctly concluded that Utrecht's breach and Weiss-Jenkins’ subsequent termination of the Lease resulted in a qualified forfeiture. See Hargis v. Mel-Mad Corp., 46 Wash.App. 146, 730 P.2d 76, 79-80 (1986) (citing Heuss v. Olson, 43 Wash.2d 901, 264 P.2d 875, 878 (1953); Metro. Nat'l Bank of Seattle v. Hutchinson Realty Co., 157 Wash. 522, 289 P. 56, 58-59 (1930)). A forfeiture is qualified when the lease “expressly saves the lessor's right to [ ] recover damages based on unaccrued rent,” or when “the notice of forfeiture communicates to the lessee the lessor's intention to hold the lessee for such damages, notwithstanding the forfeiture.” Hargis, 730 P.2d at 80 (internal quotation marks and citations omitted). Here, both the requisite lease language and notice language are present.

2. For the same reasons, the district court also properly determined that the appropriate measure of damages was the rent deficiency that accrued through the end of the Lease term. See Metro. Nat'l Bank of Seattle, 289 P. at 58-59; Pollock v. Ives Theatres, Inc., 174 Wash. 65, 24 P.2d 396, 398-99 (1933). Weiss-Jenkins was entitled to recover lost rents between July 2013 (when the breach occurred) and the time the premises were relet, plus any shortfall in the amount of rent received from the date of the reletting to the end of the Lease term. The property value-based measure of damages advanced by Utrecht was properly rejected by the district court. Cf. Family Med. Bldg., Inc. v. State, Dep't of Soc. & Health Servs., 104 Wash.2d 105, 702 P.2d 459, 464 (1985) (en banc).

The district court also appropriately rejected Utrecht's claim that speculative, post-breach improvements made to the property by the new tenant effect a windfall to Weiss-Jenkins, and that Utrecht is therefore entitled to an offset against the damages it owes under the Lease. See Lacey Mktplace Assocs. II, LLC v. United Farmers of Alb. Coop. Ltd., No. C13-0383JLR, 2015 WL 403165, at * 17-18 (W.D. Wash. Jan. 28, 2015), aff'd in part, 720 F. App'x 828 (9th Cir. Dec. 21, 2017); Hargis, 730 P.2d at 81. The base rent comparison formula employed by the district court to calculate the rent deficiency was set forth in the Lease. In any event, as the nonbreaching party, Weiss-Jenkins should receive any benefit stemming from Utrecht's breach. See Hargis, 730 P.2d at 81.

3. Finally, the district court's award of attorney's fees to Weiss-Jenkins was proper, as the Lease provided that attorney's fees would be awarded to the prevailing party. See Lacey, 2015 WL 403165, at *18 (quoting Wash. Rev. Code § 4.84.330); King Cty. v. Vinci Constr. Grands Projets/Parsons RCI/Frontier-Kemper, JV, 188 Wash.2d 618, 398 P.3d 1093, 1098 (2017).

AFFIRMED.