CONSIDERED ON BRIEFS ON NOVEMBER 30, 2015
REASSIGNED FEBRUARY 17, 2016
FROM THE CIRCUIT COURT OF THE SEVENTH JUDICIAL CIRCUIT
PENNINGTON COUNTY, SOUTH DAKOTA, THE HONORABLE ROBERT A.
F. MARSHALL of Bangs, McCullen, Butler, Foye & Simmons,
LLP Rapid City, South Dakota Attorneys for plaintiff and
H. ANKER JORDAN D. BORDEWYK of Anker Law Group, PC Rapid
City, South Dakota Attorneys for defendants and appellees.
In this second appeal, Tri-City Associates, L.P. argues that
the circuit court erred when it entered a judgment in favor
of Belmont, Inc. In Tri-City Assocs., L.P. v. Belmont,
Inc. (Tri-City I), we had reversed and remanded
the case for the circuit court to enter "findings of
fact and conclusions of law on the effect of Belmont's
failure to give notice of breach and an opportunity to
cure." 2014 S.D. 23, ¶ 24, 845 N.W.2d 911, 918. We
did so because the circuit court did not address whether
Belmont's claims were barred for Belmont's failure to
follow the notice-and-cure provision in the parties'
written lease. We stated that the "court's failure
to address the notice-and-cure issue is problematic because
some courts have concluded that the failure to abide by a
notice-and-cure provision precludes judicial relief."
Id. ¶ 22. On remand, the circuit court entered
supplemental findings of fact and conclusions of law. It
interpreted the notice-and-cure provision to allow for
substantial compliance and found that Belmont substantially
complied. It also found that Tri-City had actual notice of
its material breaches and an opportunity to cure.
Alternatively, the court concluded that, by bringing suit
against Belmont, Tri-City repudiated any intention to perform
its obligation under the lease and made futile the
requirement that Belmont strictly comply with the
notice-and-cure provision. It entered a judgment in favor of
Belmont. Tri-City appeals. We affirm.
Tri-City owned and operated the Northgate Shopping Center in
Rapid City, South Dakota. It entered into a written lease
agreement with Belmont in April 2006 for unfinished
commercial space. The unfinished commercial space required
substantial initial construction work before the lease was to
begin on August 1, 2006. A "work letter" attached
to the lease allocated the initial construction work between
Tri-City and Belmont. The lease also contained a provision
that required Belmont to give written notice to Tri-City of
any alleged breach and give Tri-City the opportunity to cure
any breach within 30 days. Under the terms of the lease, Belmont
could not avail itself of the remedies available under the
terms of the lease at law or in equity until Tri-City had
been afforded the opportunity to cure.
The parties experienced considerable difficulties in
completing the terms of the lease. Tri-City proposed to move
the start date of the lease to January 15, 2007. Belmont did
not respond to the requested modification. Ultimately,
Tri-City did not deliver the premises to Belmont on August 1,
2006, in the condition required under the lease and did not
complete its allocated initial construction work.
After Belmont did not pay rent for the first few months of
the lease, Tri-City served Belmont with a notice of default
under the lease. A month later, Tri-City served Belmont with
a notice to quit and vacate and, in April 2007, sued to evict
Belmont. Belmont answered and asserted that Tri-City
materially breached the lease, which Belmont asserted
relieved it of its duty to pay rent. Then, in October 2007,
Belmont counterclaimed for damages for Tri-City's failure
to perform under the terms of the lease. Tri-City responded
to Belmont's counterclaim that Belmont agreed to accept
the premises "as is." Tri-City also argued that
Belmont failed to provide Tri-City with written notice of
Tri-City's alleged breach and did not give Tri-City an
opportunity to cure as required by the notice-and-cure
provision in the lease.
After a court trial on April 23-24, 2013, the court issued
findings of fact and conclusions of law. It found that
Tri-City breached the lease by failing to complete the
required initial construction and deliver the premises in
broom clean condition. To the court, Tri-City's breach
constituted a material breach because Tri-City's
"failures and delays defeated the very object of the
Lease[.]" The court concluded that Tri-City's
material breaches excused Belmont's duty to pay rent and
excused Belmont's "default of the terms and
conditions of the Lease[.]" The court held that
"because [Belmont's] actions are excused, "
Tri-City "is not entitled to damages." However, the
court concluded that Belmont "suffered substantial
losses because of [Tri-City's] material breach" and
awarded Belmont a judgment against Tri-City in the sum of
$89, 220.67. The court also awarded Belmont reasonable
attorney's fees and costs because the terms of the
parties' lease allowed for such an award to the
prevailing party. The court did not enter any findings of
fact or conclusions of law regarding the effect of lease
provision requiring Belmont to give Tri-City written notice
of default. Tri-City appealed to this Court.
On appeal, Tri-City did not dispute that it materially
breached the parties' lease. It asserted that
"Belmont's defense and counterclaim were barred as a
matter of law by: (1) the lease provision in which Belmont
accepted the premises as is, and (2) Belmont's failure to
give Tri-City notice of its alleged breach and an opportunity
to cure." Tri-City I, 2014 S.D. 23, ¶ 8,
845 N.W.2d at 914. From our review of the parties'
agreement, we concluded that "[a] harmonious reading of
all provisions reflects that the as is clause did not
abrogate Tri-City's post-execution obligations to perform
initial construction and to deliver the premises in broom
clean condition." Id. ¶ 14. We, however,
remanded the case because the circuit court did not address
the effect of the notice-and-cure provision on Belmont's
counterclaim. We directed the court on remand to enter
"findings of fact and conclusions of law on the effect
of Belmont's failure to give notice of breach and an
opportunity to cure." Id. ¶ 24.
On remand, the circuit court did not take additional
evidence. It issued supplemental findings of fact and
conclusions of law. The court ruled that "[t]he intent
of the notice and cure provision of the Lease was to provide
a breaching party with notice that it is in breach of the
lease and provide that party with an opportunity to cure the
breach." The circuit court held that Belmont
"substantially complied with the
'notice-and-cure' provisions of the Lease, "
that Tri-City "had actual notice that it was in breach
of the Lease, " and that Belmont "provided
[Tri-City] with an opportunity to cure the breach."
Alternatively, the court concluded that "[b]y filing
suit against [Belmont] for possession of the premises,
[Tri-City] repudiated the Lease and any intention to perform
under the Lease." The court held that Tri-City's
"repudiation of the lease absolved [Belmont] of any
obligation to provide [Tri-City] notice of breach and
opportunity to cure breach as [Tri-City] had made its
intention not to perform under the Lease unequivocal."
The court again entered a judgment in favor of Belmont for
damages, plus interest, attorney's fees, and costs.
Tri-City appeals and raises the following issue for our
review: Did the circuit court err as a matter of law by