3637 Green Rd. Co., Ltd. v. Specialized Component Sales Co., Inc.

Majority - Eileen A. Gallagher, P.J.

Yes, the trial court did not err in enforcing the oral modification, in concluding Specialized Component Sales Co., Inc. was liable only for rent through December 2012, and in offsetting the security deposit. Enforcement of Oral Modification: The court reasoned that no-oral-modification and written waiver provisions, like any other contractual term, can be waived by the parties' actions. The record contained substantial, competent, credible evidence that 3637 Green Road Co., Ltd. waived these provisions through its subsequent course of conduct acknowledging the rent reduction. Specialized Component Sales Co., Inc. paid the reduced monthly rent of $1,473.75 for eight or nine years without objection from 3637 Green Road Co., Ltd. Furthermore, 3637 Green Road Co., Ltd.'s own statement of account attached to its complaint reflected that the reduced rent was invoiced and paid, showing a zero balance after each payment, indicating a clear, unequivocal, and decisive act inconsistent with an intent to insist on the original rent or the anti-modification clauses. Specialized Component Sales Co., Inc.'s continued leasing of the premises, rather than finding a cheaper location, constituted sufficient "new and separate consideration" for the rent reduction. Even absent new consideration, the modification was enforceable because 3637 Green Road Co., Ltd.'s refusal to enforce it would result in fraud to Specialized Component Sales Co., Inc., who relied on the reduction by remaining on the premises. The doctrine of partial performance removed the oral agreement from the Statute of Frauds, as both parties unequivocally acted upon the reduced rent for a significant period, and Specialized Component Sales Co., Inc. detrimentally changed its position by remaining. Termination of Tenancy: R.C. 5321.17(B), which mandates 30 days' notice for month-to-month tenancies, does not apply to commercial leases, as defined by R.C. 5321.01(A)-(D) which relate to residential premises. The original lease itself specified that remaining in possession after expiration created a month-to-month tenancy subject to its conditions. For commercial properties, a month-to-month holdover tenant does not need to give specific advance notice of termination; vacating at the end of any month ends the tenancy without further rent liability. The court found 3637 Green Road Co., Ltd.'s "changing of the terms of the rental agreement" by requiring vacation of one suite or increased rent, constituted a termination of the entire month-to-month lease as of October 31, 2012. Specialized Component Sales Co., Inc. fulfilled its lease obligation to "deliver the keys at the office of Lessor or Lessor’s agent" when Sulzberger handed them to Goldkrantz on December 3, 2012, providing sufficient notice of vacation. Therefore, Specialized Component Sales Co., Inc. was only liable for November and December 2012 rent. Security Deposit Offset: The fifth lease extension clearly stated Specialized Component Sales Co., Inc. had paid a security deposit, with a required total of $1,751. Sulzberger testified he believed the full amount was paid and never applied. 3637 Green Road Co., Ltd. offered no testimony or evidence to contradict this, nor to show the deposit was previously applied to late payments or exhausted by damages (as no costs for property removal were established). The burden was on 3637 Green Road Co., Ltd. to establish that the deposit was not available. Therefore, the trial court did not err in finding the $1,751 security deposit was available and offsetting it against the November and December 2012 rent. Hearsay: The court found no "hearsay statements made by Nelson Barman" were introduced. Sulzberger testified only to his half of the conversation with Barman and the subsequent rent reduction, not to Barman's out-of-court statements. Even if Barman's statements were offered, they would be admissible under Evid.R. 801(D)(2) as statements by a party's agent concerning a matter within the scope of employment.