Wayland-Goodman Properties, LP. v. Southside Package Store, Inc.

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
March 11, 2010 Session
WAYLAND-GOODMAN PROPERTIES, LP., v. SOUTHSIDE PACKAGE
STORE, INC.
Appeal from the Circuit Court for Knox County
No. C-027609 Hon. Harold Wimberly, Jr., Judge
No. E2009-01550-COA-R3-CV - FILED APRIL 8, 2010
Plaintiff landlord brought a detainer action against defendant in Sessions Court. On appeal
to the Circuit Court, the Trial Court in its Judgment, awarded possession to plaintiff and
awarded plaintiff a Judgment of $17,800.00 for the rent due and one-half of the 2009 ad
valorem property taxes. Defendant has appealed. We affirm the Judgment of the Circuit
Court.
Tenn. R. App. P.3 Appeal as of Right; Judgment of the Circuit Court Affirmed.
H ERSCHEL P ICKENS F RANKS, P.J., delivered the opinion of the Court, in which D. M ICHAEL
S WINEY, J., and J OHN W. M CC LARTY, J., joined.
Joseph J. Levitt, Jr., Knoxville, Tennessee, for the appellant, Southside Package Store, Inc.
Stephen R. Wise and Robin M. Cleavenger, Knoxville, Tennessee, for the appellee,
Wayland-Goodman Properties, LP.
OPINION
Plaintiff, Wayland-Goodman Properties (“Wayland”) filed a detainer action in General
Sessions Court against Southside Package Store, Inc., stating the defendant was unlawfully
detaining property belonging to plaintiff located at 3223 and 3225 Chapman Highway in
Knoxville. Plaintiff was awarded possession of the property and a default judgment for
$4,600.00. Defendant appealed to the Circuit Court.
In the Trial Court, Albert Ritchie was the first witness, and testified that he was the
secretary and treasurer for plaintiff, and also served as counsel. Ritchie testified that he was
familiar with the records and property of plaintiff, and knew that plaintiff entered into a lease
with defendant for the property, which began on October 1, 2007. Ritchie testified the
termination date of the lease was September 30, 2008, and the rent was $2,150.00 per month.
A copy of the lease was entered into evidence.
Ritchie testified the lease was extended before the termination date, and that the term
was extended to November 30, 2008, with a rent of $2,300.00 per month, and the lease was
not extended past November 30, 2008. Further, plaintiff had not received any rent from
defendant since that time and that plaintiff was seeking possession of the property, and rental
payments of $2,300.00 per month, from December 2008 to the present.
Ritchie further testified that plaintiff was also obligated to pay the real estate taxes,
and that the taxes were $3,332.76 per year. Ritchie testified that the 2008 taxes were paid,
but the 2009 taxes were not.
He admitted that plaintiff offered to extend the lease for another two months if the
defendant would agree to a detainer warrant action at the end of that term, but defendant
refused. Ritchie admitted that defendant tried to pay rent for December 2008, but the check
was returned uncashed by plaintiff because the lease was over. Correspondence from Ritchie
to defendant was entered into evidence, and Ritchie admitted he never sent defendant a letter
asking them to move after September 2008.
James Slyman was the next witness, and he testified that he was a realtor and
auctioneer, and had been since 1971. He testified that he had dealt with real estate on
Chapman Highway and was familiar with the property values and rental values. Slyman
testified that he had looked at the subject building and property where the liquor store was,
and opined that the fair market rental value of it was $750.00-850.00 per month. He also
opined that the other building had no rental value because it was not usable as a retail or
service business, and had been condemned by the city.
No other proof was offered, and at the end of the hearing, the Court awarded
possession to plaintiff, and awarded plaintiff a judgment for $17,800.00 for rental payments
and one-half of the 2009 ad valorem property taxes.
On appeal, defendant argues whether it is liable for the fair market rental value of the
property, or for the last agreed upon rent, after the rental agreement had expired? Also,
whether the case should have been dismissed as premature because no notice of termination
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of a periodic tenancy created by holding over was given by plaintiff to defendant, or no
rejection of a holding over?
Defendant argues that plaintiff’s detainer action was filed prematurely because
plaintiff was required to give defendant notice of termination of a periodic tenancy created
by holding over, or to send defendant notice of a rejection of its holding over. Plaintiff
argues that no periodic tenancy was created because plaintiff did not acquiesce in defendant’s
holding over and refused to accept the rent tendered after expiration of the lease.
Plaintiff is correct that defendant’s reliance upon Smith v. Holt, 193 S.W.2d 100(Tenn. Ct. App. 1945), is misplaced. In Smith, this Court stated that a periodic tenancy was
created when the tenant held over with the consent of the landlord, and that it could not be
terminated without sufficient notice from one to the other. Id. In this case there was no
consent by the landlord to defendant’s holding over. Thus, no periodic tenancy was created
that would require notice to terminate. Plaintiff refused to accept rent from defendant after
the lease expired, and would not renew the lease after November 30, 2008.
The lease and extension clearly state that the lease would terminate on November 30,
2008, and that the property was to be returned to the landlord in good condition at that time.
The lease does not require any notice to be given to defendant before defendant is required
to vacate. Thus, the Trial Court properly found that plaintiff was entitled to possession of
the property.
Defendant argues that the amount of rent awarded for the holdover period should be
the fair market rental value of the property, rather than the last agreed upon rent amount.
Defendant relies upon the cases of AHCI, Inc. v. Lamar Advertising of Tennessee, Inc., 898
S.W.2d 191 (Tenn. 1995), and Kokomo Grain Co., Inc. v. Randy Collins, et al., 2004 WL
626722 (Tenn. Ct. App. Mar. 26, 2004).
These cases deal with the situation of a landlord allowing a tenant to hold over but
attempting to raise the rent, and what type of notice was required. The Court stated that an
unequivocal demand, rather than a negotiable offer, was necessary, and that if an agreement
was not reached the tenant would be liable for the fair market rental value. Id. While these
cases are not exactly on point factually, there is still language to suggest that a holdover
tenant can be held liable for either the previously agreed upon rent or the proven fair market
value, if different. Id.While defendant argues that the only evidence of the fair market rental value of the
property was the testimony of Slyman, this argument ignores the fact that fair market value
is typically shown by what a reasonable tenant would pay and what a reasonable landlord
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would charge if neither was compelled to enter into the transaction. See, e.g., Nashville
Housing Authority v. Cohen, 541 S.W.2d 947 (Tenn. 1976). The evidence is undisputed
what defendant had previously agreed to pay plaintiff in rent and there was also evidence
of what defendant considered to be a fair market rental value. We hold the Trial Court did
not err in basing its judgment for unpaid rent on that amount.
We affirm the Judgment of the Trial Court and remand, with the cost of the appeal
assessed to Southside Package Store, Inc.
_________________________________
HERSCHEL PICKENS FRANKS, P.J.
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