LANDMARK HHH, LLC v. Gi Hwa Park

Present: All the Justices

LANDMARK HHH, LLC
OPINION BY
v. Record No. 072365 JUSTICE LAWRENCE L. KOONTZ, JR.
January 16, 2009
GI HWA PARK

FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
R. Terrence Ney, Judge

In this appeal, we consider whether the circuit court

correctly determined that under a lease for commercial real

estate the landlord was liable for contract damages for the

loss sustained by the tenant when the roof of the leased

premises leaked during a rainstorm, inundating the leased

premises and causing substantial damage to the tenant’s

inventory. We further consider whether the court erred in

failing to hold that the provisions of the lease requiring the

tenant to maintain hazard insurance and hold the landlord

harmless for any insured losses barred the tenant from seeking

to obtain damages for all the losses sustained.

BACKGROUND

This case was tried by the circuit court, sitting without

a jury. Upon appellate review, the court’s judgment is

entitled to the same weight as a jury verdict and will not be

set aside unless it appears from the evidence that the

judgment is plainly wrong or without evidence to support it.

Code § 8.01-680; Hickson v. Commonwealth, 258 Va. 383, 387,
520 S.E.2d 643, 645 (1999). Accordingly, we recite the facts

in this case in the light most favorable to the tenant, the

party in whose favor the circuit court rendered its judgment.

Government Micro Res., Inc. v. Jackson, 271 Va. 29, 35, 624

S.E.2d 63, 66 (2006).

In May 1998, Gi Hwa Park entered into a commercial lease

with Landmark HHH, LLC (Landmark) for a retail space located

in the Plaza at Landmark, a shopping center in Fairfax County.

Park intended to operate a clothing store called The Four

Seasons in the leased space, specializing in high-end imported

men’s suits and related accessories. As relevant to this

appeal, the lease contained the following provisions:

16(b) Tenant, at its sole cost and expense, shall be
responsible for providing a policy of fire and
extended coverage insurance, insuring Tenant’s
inventory, . . . and all other contents in the
Premises . . . .

25(a) Landlord shall endeavor to keep the foundation,
roof, and the outer walls . . . of the Premises in
good repair and make such repairs to the foundation,
roof and outer walls as are necessary following
Landlord’s knowledge of the necessity of said repairs
. . . .

37(c) Landlord and Tenant hereby release the other
from any and all liability or responsibility to the
other or anyone claiming through or under them, by way
of subrogation or otherwise, from any loss or damage
to property caused by fire or any other perils insured
under policies of insurance covering such property
(but only to the extent of the insurance proceeds
payable under such policies), even if such loss or
damage is attributable to the fault or negligence of

2
 the other party, or anyone for whom such party may be
responsible.

Within three weeks of Park’s opening of The Four Seasons

and continuing through September 2005, leaks in the roof

allowed water to flow into the store, damaging the ceiling and

causing wet spots throughout the store. The leaks would occur

several times during the year, especially when precipitation

was heavy. Tony Park, Park’s son and manager of The Four

Seasons, contacted Landmark’s property manager multiple times

concerning the leaks. Landmark took various remedial steps to

attempt to repair the damage to the interior of the store and

to repair the roof.

Between September 2005 and February 2006, in response to

complaints from Park and other tenants, Landmark undertook to

replace the entire roof of the shopping center. Landmark

hired Waterproofing Consulting Company, Inc. (WCC) to design

and monitor the installation of a new roof. On WCC’s

recommendation, Landmark contracted with Potteiger-Raintree,

Inc. to perform the actual installation. Despite the addition

of the new roof, water continued to leak into The Four

Seasons, and Tony Park again reported this fact to Landmark,

which referred the matter to WCC. WCC and Potteiger-Raintree

took corrective measures to connect a drain and repair

3
improperly installed flashing, but intermittent leaks

continued to occur.

On the morning of June 26, 2006, following a night of

record rainfall in Northern Virginia, Tony Park arrived at The

Four Seasons and immediately noticed an “unbearable stench,”

and, after turning on the lights, discovered that the entire

store had been flooded. The ceiling tiles had fallen in, and

there was substantial water damage to the store’s inventory.

Inspectors from Fairfax County visited the store the following

day, June 27, 2006, and informed Tony Park that because of the

store’s condition, he would have to close the business

temporarily.

Shortly after the flooding, extensive repairs were made

to The Four Seasons. Even after the repairs were completed, a

bad odor remained in the store and much of the inventory was

not recoverable despite efforts to clean it. Although The

Four Seasons briefly re-opened in the late summer and early

fall of 2006, the store was closed permanently in November

2006.

In a complaint filed October 16, 2006 in the Circuit

Court of Fairfax County, Park sought to recover damages from

Landmark for breach of its lease obligation to provide a

serviceable roof and to provide her with the quiet enjoyment

4
of the leased premises. Park asked for $550,000 in

compensatory damages, principally for the lost inventory.

At trial, in addition to evidence consistent with the

above-recited facts, Park presented testimony from Kyong Ho

Kim, a commercial roof repair expert, who opined that the new

roof had been improperly installed. Kim testified that there

were gaps in the cap flashing where the flashing connected

with one of the roof’s expansion joints; this gap allowed

water to flow underneath the roofing surface and into the

building. Furthermore, Kim testified that the roof contained

an insufficient number of drains to accommodate the influx of

water coming from a higher, larger adjoining roof of a

department store in the shopping center.

At the conclusion of the evidence, the circuit court held

that section 25(a) of the parties’ lease required Landmark to

keep the roof in good repair, regardless of any notice of

defects. Thus, despite the fact that Landmark had contended

that it did not have sufficient notice that the newly

installed roof would fail, the court ruled that the failure of

the roof constituted a breach of Landmark’s duties under the

lease. The court further held that the provision in section

16(b) of the lease requiring Park to maintain insurance on

inventory and the limitation of liability provision in section

37(c) did not insulate Landmark from being subject to a claim

5
for breach of the lease. The court noted that the lease had

been drafted by Landmark and, thus, it was Landmark’s burden

to show that the lease was intended to make Park solely

responsible for any property loss. In the court’s view, no

such intention was found in the express language of the lease.

The court awarded Park $298,762.56 in damages consisting of

$282,618.00 for two-thirds of the value of the lost inventory,

$11,014.50 for certain incidental expenses incurred in

attempting to mitigate damages, and $5,130.06 as a return on

the security deposit on the leasehold.

DISCUSSION

A lease is a contract and “‘when the terms of a contract

are clear and unambiguous, a court must give them their plain

meaning.’” Levisa Coal Co. v. Consolidation Coal Co., 276 Va.

44, 57, 662 S.E.2d 44, 51 (2008) (quoting Pocahontas Mining

L.L.C. v. Jewell Ridge Coal Corp., 263 Va. 169, 173, 556

S.E.2d 769, 771 (2002)). “On appeal, we review a trial

court’s interpretation of a lease under a de novo standard.”

Id. We do not accord any deference to the circuit court’s

interpretation of the lease “because we are afforded the same

opportunity as the circuit court to interpret the terms of the

parties’ contract.” Pocahontas Mining L.L.C. v. CNX Gas Co.,

LLC, 276 Va. 346, 352, 666 S.E.2d 527, 531 (2008).

6
 Landmark first contends that the circuit court erred when

it found Landmark breached the lease by failing to provide a

leak-free roof. According to Landmark, the lease required

Park or another tenant to give Landmark notice of a defect in

the new roof and that Landmark be given an opportunity to

remedy the defect before it would be in breach of the lease.

Landmark contends that any notice it had of defects with the

new roof was not sufficient to impose liability upon it

because it took reasonable steps to have the contractor and

subcontractor remedy the defects, and it had no notice that

the roof would fail entirely. We disagree.

Landmark’s contention places too narrow a construction on

section 25(a) of the lease. That provision requires Landmark

to keep the roof “in good repair” at all times during the

period of the lease. The further requirement that Landmark

“make such repairs . . . as are necessary following

[Landmark’s] knowledge of the necessity of said repairs” is

not a limitation on the principal duty to provide a

serviceable, leak-free roof. The duty to keep the roof in

good repair would be effectively negated if necessary repairs

to the roof were only required when Landmark was notified by a

tenant of defects in the roof.

Moreover, we do not agree with Landmark’s contention that

by undertaking to replace the roof it could, in effect, shield

7
itself from the responsibility of providing a serviceable roof

unless and until a tenant gave notice that the new roof was

defective. To the contrary, maintenance of the roof was in

the exclusive control of Landmark, and when it undertook to

replace the roof as part of its responsibility to Park and the

other tenants in the shopping center, Landmark bore the sole

responsibility to assure that the new roof would be “in good

repair” as required by the lease terms. 1

Finally, Landmark asserts that when read together

sections 16(b) and 37(c) evince an intention of the parties to

absolve each other of liability for any loss or damage to

1
We do not address Landmark’s assertion that Park might
have sought to recover from WCC or Potteiger-Raintree. Even
assuming that Park might have maintained an action against the
contractors as a third-party beneficiary of the contracts with
Landmark, she was not required to do so, nor would any
potential liability of the contractors absolve Landmark of its
duties under the lease. We also will not consider Landmark’s
assignment of error contending that the circuit court erred
“by imputing the arguable negligence of the landlord’s
independent contractors to the landlord.” In support of this
argument, Landmark relies exclusively on cases arising in tort
against landlords for personal injuries to tenants or invitees
as the result of the negligence of third-party contractors.
Park’s complaint was for breach of the lease, thus negligence
was not an issue in the case. Moreover, the record does not
support the contention that the court’s judgment was premised
on a finding of negligence in the installation of the roof.
Rather, the court found that the failure of the roof, whether
by reason of its negligent installation or some other cause,
was a breach of Landmark’s lease obligation to maintain the
roof.

8
property, and that the circuit court ignored these provisions

by allowing Park to maintain this suit. Again, we disagree.

Section 16(b) of the lease required Park to maintain

insurance on her inventory, which she did. The language of

this section, however, does not limit either party’s ability

to bring suit against the other for violations of the lease.

Similarly, section 37(c) required Park to absolve Landmark

from any losses she sustained “to the extent of the insurance

proceeds payable” on such losses. The plain language of this

section only prohibits Park from obtaining a double recovery

on a loss sustained and requires Park to release Landmark from

any claim of subrogation by her insurer. 2

We agree with the circuit court that had Landmark, as the

drafter of the lease, desired to be exempt from all liability

for losses sustained by Park as the result of the common

hazards to which the property would be subject, it was

required to express the exemption in the plain language of the

lease. See e.g. Nextel WIP Lease Corp. v. Saunders, 276 Va.

509, 516, 666 S.E.2d 317, 321 (2008) (quoting Parrish v.

2
During oral argument of this appeal, Park’s counsel
averred that the judgment included a credit for proceeds from
the insurance on the inventory. Application of this credit is
not reflected in the final order. However, Landmark has not
challenged the amount of the judgment by an assignment of
error and, therefore, we are not concerned in this appeal with
whether such a credit was owed and applied.

9
Robertson, 195 Va. 794, 800, 80 S.E.2d 407, 410 (1954))

(recognizing the principle that a landlord has “the power of

providing expressly in his favor” when drafting a lease).

Indeed, a further provision of the lease expressly limited

Landmark’s liability, stating that “[i]n no event shall

Landlord be liable to Tenant for loss of business or

consequential damages.” Landmark is, in effect, asking the

Court to find implicit in the lease a term that it could have

expressly included, but failed to do so. However, when

interpreting a contract, we construe it as written and will

not add terms the parties themselves did not include. TM

Delmarva Power, L.L.C. v. NCP of Virginia, L.L.C., 263 Va.

116, 119, 557 S.E.2d 199, 200 (2002).

Accordingly, we hold that the circuit court did not err

in holding that Landmark’s failure to provide a serviceable,

leak-free roof constituted a breach of its lease with Park and

that the lease did not absolve Landmark from liability for the

damage sustained by Park with respect to her inventory.

CONCLUSION

For the foregoing reasons, the judgment of the circuit

court will be affirmed.

Affirmed.

10