Select Management Resources v. The Runnymede Corp.

Present: Hassell, C.J., Lacy, Koontz, Lemons, and Agee, JJ., and
Carrico and Russell, S.JJ.
SELECT MANAGEMENT RESOURCES, LLC, ET AL.
OPINION BY
v. Record No. 061168 SENIOR JUSTICE HARRY L. CARRICO
April 20, 2007
THE RUNNYMEDE CORPORATION, ET AL.
FROM THE CIRCUIT COURT OF THE CITY OF CHESAPEAKE
Randall D. Smith, Judge
At issue in this case is a provision in a lease dated
November 8, 2004, between The Runnymede Corporation, as
landlord, and Select Management Resources, LLC, as tenant, for
the rental of a commercial building located in the City of
Chesapeake. The provision is found in Paragraph 18 of the lease
and reads in pertinent part as follows: “Tenant covenants not
to make (or suffer to be made) any alterations or improvements
therein or thereto . . . without prior written permission of
Landlord, which approval shall not unreasonably be withheld.”
The lease is for a term of five years commencing January 1,
2005, with the option of one three-year renewal.
Select Management Resources trades under the name of
“LoanMax” and operates a loan office providing loans on
automobile titles in the building leased from Runnymede. The
building is constructed of natural stone with off-white pebble
trim. On January 14, 2005, Select Management commenced to paint
the exterior of the building bright yellow with red trim.
On March 8, 2005, after the paint job was completed,
Runnymede sent a letter to Select Management stating that the
latter had painted the exterior of the building without asking
or receiving Runnymede’s prior permission and was therefore in
default under the terms of the lease. The letter further stated
that unless the building was restored to its original state
within 30 days, Runnymede would take necessary steps to correct
the situation at Select Management’s expense.
Select Management then asked that it “be allowed to leave
the building exterior as it is currently painted until the lease
expires, at which time [Select Management] would agree to
restore it to its original state.” Select Management did not
offer to establish an escrow or otherwise guarantee the
restoration of the premises. By letter dated March 31, 2005,
Runnymede denied this request, “as there was no prior permission
given by the Landlord for [Select Management] to paint the
exterior of the building” and that Select Management was still
in default and must restore the building to its original state
within 30 days.
Select Management did not restore the building within the
thirty-day period but on April 7, 2005, filed in the trial court
a bill of complaint for injunctive and declaratory relief
against Runnymede, requesting an injunction preventing Runnymede
from holding Select Management in default or taking any legal
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proceedings of default against Select Management. The bill also
sought a declaration that the painting of the building was “a
cosmetic change” and not “an alteration . . . pursuant to
paragraph 18 of the Lease,” or, if the painting was an
alteration, that consent by Runnymede was unreasonably withheld.
At trial, Select Management presented evidence that it has
some 200 loan offices across the country, including 24 in
Virginia. The exterior walls of all freestanding offices are
painted bright yellow with red trim. Select Management
considers this color pattern important because it distinguishes
LoanMax from its competitors and allows the public to easily
identify the LoanMax brand. The building is located in a
commercial district and stands between a McDonald’s Restaurant
on one side and a Dairy Queen Restaurant on the other. On the
same street are a Jiffy Lube, a Rally’s Hamburgers, and a
Popeye’s Chicken Restaurant. All these buildings have color
schemes similar to that of LoanMax. There are no city
restrictions that prohibit painting the building according to
the LoanMax color scheme.
Runnymede introduced into evidence an estimate it had
received from a contractor for the removal of the yellow paint
from the stone and mortar joints and the repainting of the red
trim with an off-white color. The yellow paint will have to be
removed from the stone and mortar joints with chemicals and
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water blasting, and the red paint on the trim will simply be
coated over. The work will consume thirty days at a cost of
$18,676.00. Runnymede also introduced into evidence color
photographs of the building in its before-paint and after-paint
state.
In a final order, the trial court found that Select
Management’s “painting of the building is an ‘alteration’ as
that word is used and meant in the lease” and that Runnymede’s
“permission for the alteration has not been unreasonably
withheld.” The court denied Select Management’s request for an
injunction. We awarded Select Management this appeal.
On appeal, Select Management argues that the trial court
erred in holding that the painting of the building constituted
an alteration within the meaning of Paragraph 18 of the lease.
Select Management says that painting the exterior of a building
is cosmetic in nature, that the paint was readily removable from
the building in question, and, hence, the painting of the
building did not constitute an alteration requiring Service
Management to seek the permission of Runnymede before doing the
painting. Select Management also argues that if the painting
was an alteration, Runnymede unreasonably withheld its consent.
Our cases provide only limited assistance in defining the
term “alteration.” We said in Bolin v. Laderberg, 207 Va. 795,
801, 153 S.E.2d 251, 256 (1967), that the word “alteration,”
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when given its usual meaning and viewed in the context in which
it is used in the lease, “can mean only something changed about
the premises.”
Black’s Law Dictionary 85 (8th ed. 2004) defines the term
as follows:
A substantial change to real estate, esp[ecially] to a
structure, usu[ally] not involving an addition to or
removal of the exterior dimensions of a building’s
structural parts. Although any addition to or improvement
of real estate is by its very nature an alteration, real-
estate lawyers habitually use alteration in reference to a
lesser change. Still, to constitute an alteration, the
change must be substantial – not simply a trifling
modification.
Other jurisdictions have considered the meaning of the
term. In Ten-Six Olive, Inc. v. Curby, 208 F.2d 117, 122 (8th
Cir. 1953), it is said that an “[a]lteration denotes a
substantial change.” See also Zelinger v. Plisek, 426 P.2d 957,
959-60 (1967); Rosenblum v. Neisner Bros., Inc., 231 F.2d 322,
326 (7th Cir. 1956). In Garland v. Titan West Associates, 543
N.Y.S.2d 56, 60 (N.Y.App.Div. 1989), the court stated that
“whether the improvements effectuated by plaintiffs constitute
alterations turns on whether they changed the nature and
character of the demised premises.” And in Leong Won v. Snyder,
94 N.Y.S.2d 247, 249 (1949), the court defined the term as
applied to a building to mean “a substantial change therein
varying or changing the form or nature of such building.”
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In short, for a change in a building to constitute an
alteration, the change must be substantial, not trifling. It
must be one that alters the nature and character of the
building.
We would agree with Select Management that, ordinarily, the
painting of the exterior of a building is merely cosmetic in
nature and not an alteration in the legal sense. But this is
not an ordinary situation. Here, the trial judge would have
needed to take only one look at the graphic before and after
photographs of the building to find that the change caused by
the painting was substantial, not trifling, resulting in a
change in the nature and character of the building. What once
had the appearance of a stately stone building has been given
the mark of crass commercialism, which can only be erased with
the expenditure of a significant sum of money.
That the effect of the alteration was substantial may be
demonstrated by reference to a rule applicable to landlord-
tenant cases. A tenant who performs work on leased premises not
authorized by the lease is guilty of committing waste. See
Roanoke Marble & Granite Co. v. Standard Gas & Oil Supply Co.,
155 Va. 249, 257, 154 S.E. 518, 521 (1930); see also Rosenblum,
231 F.2d at 325. Here, the rental for the building in the year
the painting occurred was $2,925.00 per month. According to the
estimate secured by Runnymede, it will cost Runnymede $18,676.00
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to restore the building to its original state, the equivalent of
more than six months’ rent, an amount which, by any measure,
demonstrates the substantial nature of the alteration of the
premises made by the tenant in this case without permission.
The painting of the building, therefore, constituted an
alteration requiring the prior permission of Runnymede. And,
under the circumstances of this case, because Select Management
did not seek permission prior to undertaking the painting, it is
in no position to claim that the permission was unreasonably
withheld.
Finding no error in the proceedings below, we will affirm
the judgment of the trial court.
Affirmed.
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