Echo Consulting Services, Inc. v. North Conway Bank

Brief Fact Summary.

Echo Consulting Services (Echo) (plaintiff) was a tenant in a building that was later purchased by North Conway Bank (North Conway) (defendant).Echo sued North Conway, claiming that all these disruptions effected a constructive eviction, partial actual eviction, and breach of an implied covenant of quiet enjoyment.

Synopsis of Rule of Law.

Constructive eviction occurs when a landlord, by omission or affirmative action, deprives a tenant of the use or enjoyment of the leased property, even though there has not been an actual, physical eviction or exclusion.

Facts.

Echo Consulting Services (Echo) (plaintiff) was a tenant in a building that was later purchased by North Conway Bank (North Conway) (defendant). The lease granted, inter alia, “common right of access thereto [and] common use of the parking lot.” North Conway assumed the lease and became Echo’s landlord. The building underwent renovations, as a result of which Echo also complained of noise, dirt, and occasional power outages. The construction also made the rear parking lot inaccessible. North Conway changed the locks to one of the building’s two entrances; thus Echo employees could use only the back entrance after regular business hours. Echo claimed that access through even that entrance was obstructed and difficult. The parties dispute the extent of these interferences. Echo sued North Conway, claiming that all these disruptions effected a constructive eviction, partial actual eviction, and breach of an implied covenant of quiet enjoyment. The Superior Court ruled against Echo on all its claims. Echo appealed, arguing that the trial court erred in not finding a constructive or actual eviction and that it applied the wrong legal test regarding quiet enjoyment.

Issue.

Whether there must be intent to evict on the part of a landlord for a tenant to establish a constructive eviction and whether the covenant of quiet enjoyment only protects a tenant against repossession by the landlord or one claiming superior title.

Held.

North Conway did not promise to make any particular entrance available; merely that the premises would be accessible. Similarly, any disturbance from the construction was intermittent and temporary and thus not an actionable interference of Echo’s rights. Therefore, the decision of the lower court is affirmed. The trial court understandably yet incorrectly applied the traditional rule and held that North Conway did not breach the covenant of quiet enjoyment. Therefore, this court reverses and remands for reconsideration of the facts in light of this holding.

Discussion.

Constructive eviction occurs when a landlord, by omission or affirmative action, deprives a tenant of the use or enjoyment of the leased property, even though there has not been an actual, physical eviction or exclusion. For example, a tenant is constructively evicted if the landlord fails to address a nuisance created by neighboring tenants, fails to make the premises safe for habitation, fails to perform a statutory obligation, or fails to perform a lease covenant. The covenant of quiet enjoyment, in an expansion of the traditional rule, protects a tenant not only against denial of actual possession but extends to substantial interferences with the tenant’s use or enjoyment of the premises. In modern society there are many ways in which a landlord may cause an interference with a tenant’s use and enjoyment of the leased premises, even if they do not rise to the level of a constructive eviction. Such interferences may reduce the value of the lease and call for compensation. Moreover, particularly in commercial leases, tenants should not be forced to wait for actual dispossession after they have already expended considerable capital in establishing themselves on the premises.