Hudson, Holeyfield & Banks, G.P. v. MNR Hospitality, LLC

This case involves a lease that allowed a restaurant to operate inside a hotel building. During the term of the lease, the original
owner-lessor sold the hotel building to a successor, who then sold the hotel building to the appellant. The appellant tried to “buy out” the tenant and cancel the lease, but the tenant refused. The appellant proceeded with demolition of the interior of the hotel. Thereafter, the tenant experienced a series of problems with the building, including major water leaks, lack of climate control, and other problems, which led the tenant to file this lawsuit. After a three-day bench trial, the trial court concluded that the appellant maintained the premises in an uninhabitable state, amounting to a constructive eviction of the tenant. The trial court found that the appellant repeatedly and intentionally disturbed the tenant’s quiet enjoyment of the premises through its failure to maintain climate control in the hotel, failure to maintain windows and doors in the building, and allowing the building to be closed by Shelby County Code Enforcement for approximately six months. It found that the appellant engaged in extreme, outrageous, and intentional conduct intended to destroy the tenant’s business and drive the tenant to vacate the premises, constituting an unlawful ouster of the tenant and retaliatory eviction. The trial court calculated the tenant’s lost profits for the remaining term of the lease at $595,025. Due to the extremity of the appellant’s actions, the trial court also awarded the tenant punitive damages. On appeal, the appellant does not challenge the trial court’s findings regarding liability on the underlying causes of action. It only challenges the calculation of the award of lost profits and the award of punitive damages. For the following reasons, we affirm the award of lost profits as modified but vacate and remand for further proceedings regarding punitive damages.