Date: 09-18-2001

Case Style: Broken Arrow Partnership v. PBC Investment Opportunities, Inc. d/b/a Alternative Therapy

Case Number: 2001 OK CIV APP 118

Judge: John F. Reif

Court: Oklahoma Court of Appeals

Plaintiff's Attorney: Jody R. Nathan of Feldman, Franden Woodard & Farris, Tulsa, Oklahoma, for Appellant

Defendant's Attorney: Ronald L. Wallace, Oklahoma City, Oklahoma, for Appellee

Description: Unknown1 This appeal arises from a forcible entry and detainer proceeding brought by Landlord, Broken Arrow Partnership, to recover premises leased to Tenant, PBC Investment Opportunities, Inc. The case began March 7, 2000, with the filing of a small claims affidavit that generally stated "the defendant [Tenant] is wrongfully in possession of [the premises and] the plaintiff [Landlord] is entitled to possession thereof." Tenant filed an answer March 14, 2000, contending the right to continued possession based on the parties' written lease and complete timely payment of rent.

After the answer, the small claims court transferred the case to a district court docket believing it was an ejectment action. On April 11, 2000, Landlord filed its motion for remand back to the small claims court. The motion for remand clarified the basis of Landlord's recovery by stating that Tenant "breached the lease agreement by . . . failing to operate its business [Alternate Therapy & Massage] in compliance with all applicable laws as is specifically required by the lease [in that] in November of 1999, an employee of Alternative Therapy was arrested for soliciting a lewd act upon an undercover police officer." The district court granted the motion to remand. After remand to small claims, and the granting and vacation of a default judgment, the small claims court granted a summary judgment in favor of Tenant on August 30, 2000.

2 Tenant based its motion for summary judgment on certain undisputed facts and the express language of the lease. In particular, Tenant stressed (1) "Landlord has continuously accepted lease payments under said lease and the [Tenant] . . . is current on its lease payments," (2) "Landlord's true claim to possession arose from [one] arrest that occurred involving [an employee] on November 10, 1999, [but] her business relationship with [Tenant] was immediately terminated on November 11, 1999," (3) "[t]he lease . . . provides . . . a tenant's material breach of a covenant shall be cured within ten (10) days after the notice thereof by Landlord," and (4) "Landlord never gave any notice to [Tenant] to cure any material breach prior to the filing of this action [including] failure to operate its business in material compliance with all applicable laws."

3 In its response to the motion for summary judgment, Landlord acknowledged that it based its recovery of the premises on Tenant's failure to conduct its business operations in material compliance with all applicable laws, focusing on the arrest of November 10, 1999. However, Landlord also sought recovery of the premises based on a number of citations issued by the Tulsa Police Department to Tenant's massage business and several employees on April 25, 2000. Landlord stressed that these citations were further proof of Tenant's failure to conduct its business in compliance with the law. Landlord also stressed that the lease identified certain breaches for which notice and cure were required, but that breach of the provisions relating to the lawful use of the premises did not provide for notice and cure before default could be declared and enforced.

4 In granting summary judgment to Tenant, the trial court took note of the November 10, 1999, arrest, but did not mention the citations issued April 25, 2000. The court also took note of the provisions in the lease that stated, "Tenant shall not use, nor permit the use of anything in the Leased Premises . . . for any unlawful purpose or in any unlawful manner" and that declared a default when "Tenant fails to operate its business in material compliance with all applicable laws." The court also referred to two other provisions that stated default can be declared where a breach "shall not have been cured within ten (10) days after notice" and that Landlord's remedies arise "[u]pon the occurrence of any event of default by Tenant, and the failure by Tenant to remedy such default within the time permitted." The trial court concluded that the notice provisions were not clear and should be construed against Landlord, because Landlord drafted the lease. The court held that Landlord could not recover the leased premises, notwithstanding the undisputed fact they had been used for an unlawful purpose and in an unlawful manner, because Landlord had not given Tenant notice of this breach/default and opportunity to cure.

* * *

Click the case caption above for the full text of the Court's opinion.

Outcome: ¶19 Based on the foregoing, we hold that the trial court erred in granting summary judgment in favor of Tenant, and further erred in refusing to vacate that summary judgment upon a timely "term-time" motion to vacate by Landlord. We vacate the order denying the motion to vacate and remand with directions to grant the motion to vacate. Thereupon, the court is directed to vacate the summary judgment and the award of attorney fees and costs to Tenant. The court is further directed to enter summary judgment in favor of Landlord.

Plaintiff's Experts: Unknown

Defendant's Experts: Unknown

Comments: None