Ovens v. Quality Acquisitions

Ovens v. Quality Acquisitions, unpublished opinion per curiam of the Court of Appeals, issued October 28, 2003 (Docket Nos. 236800 and 238885), 2003 WL 22442786

      Ovens, LLC and Sweet Onion, Inc., owners of Bennigans Restaurant, allege breach of contract, trespass, and breach of covenant of quiet enjoyment.  This case involved a dispute over cross access easements serving two restaurants leasing parcels on a planned development site owned by Ovens, LLC. Hooters restaurant leased a parcel of land adjacent to Bennigans that is owned by the same landowner, Quality Acquisitions, LLC.  Under recommendation by the City of Portage, the Hooters site plan included cross access through the Bennigans parking lot.  Bennigans understanding was that it had exclusive access to its leased parcel and that Hooters customers would not be using its parking spaces or driving across its site for access to Hooters. Quality Acquisitions acknowledged that Bennigans was not informed of these provisions associated with Hooters’ site plan.  After Bennigans filed complaints, the parties agreed to put up barriers to prevent construction equipment from using the Bennigans parking lot. 

      The court denied Bennigans request for a preliminary injunction prohibiting cross access and use of their parking and granted summary disposition to the defendants.  Bennigans appealed, restating their complaints of breach of the covenant of quiet enjoyment.  The appeals court noted that the trial court gathered from communications between the parties that defendant wanted and plaintiff understood that “defendant’s design concept for the development called for a regular flow of people and traffic across the parcel boundaries of all tenants and that No tenant was to have exclusive right to any portion of the site.”  According to the lease, agreements between parties shall not be changed unless an official change is made in the lease.  “When a contract contains an integration clause parol evidence is not admissible to demonstrate that the contract is not integrated.” Therefore, the court can only consider information from the official, signed lease. 

      The appellate court then reviewed the lease and found that it makes no mention of future businesses or use of the parking lot as cross access.  Instead, the lease assigns both the building and parking space over to Bennigans, aside from any maintenance or utility work that the landowner must execute.  Yet the lease also stated that Bennigans must comply with all “statutes, laws, rules, orders, regulations and ordinances affecting the Premises or any part of the use thereof.”  Furthermore, standard property law allows the lessor to transfer no greater rights than he possesses. Prohibiting cross-access would have violated city ordinances and transferred a right to the lessee that Quality did not possess. “Bennigans had no right to prevent the imposition of cross-access regulations because Quality never had an absolute right to deny cross access on the property that was zoned as commercial planned development property.”

      There was no breach of covenant of quiet enjoyment because, according to Slatterly v Madiol,257 Mich. App. 242, 258; 668 N.W.2d 154 (2003), a breach is only achieved when the landlord “obstructs, interferes with, or takes away from the tenant in a substantial degree the beneficial use of the leasehold.” 

      As far as Bennigans’ claims related to shared parking, the lease made no mention of the possibility of sharing the parking facility.  By default, all property is exclusively signed to the lessee unless otherwise stated.  No ordinance or rule requires sharing of parking space, so Quality was “not entitled to judgment as a matter of law with respect to cross-parking.” With the exception of the shared parking claim, the appellate court mostly affirmed the judgments of the trial court. 

NOTES: Definitions for two of the legal terms used in this case study are as follows. 1) “parol evidence rule”: if there is evidence in writing (such as a signed contract) the terms of the contract cannot be altered by evidence of oral (parol) agreements purporting to change, explain or contradict the written document. 2)  “De novo”: Latin for “anew,” which means starting over, as in a trial de novo. For example, a decision in a small claims case may be appealed to a local trial court, which may try the case again, de novo.