Costa v. Katsanos

COSTA_V_KATSANOS.94-029; 163 Vt 586; 664 A.2d 251

[Filed 26-May-1995]

[Motion for Reargument Denied 26-Jun-1995]

NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
as well as formal revision before publication in the Vermont Reports. 
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
order that corrections may be made before this opinion goes to press. 


                                 No. 94-029


Michael L. Costa & Anthony J. Costa               Supreme Court

                                                  On Appeal from
    v.                                            Windsor Superior Court

Kostas Katsanos & Sylvia Katsanos                 February Term, 1995



John P. Meaker, J.

J. David Shaw, Rutland, for plaintiffs-appellants

Bruce M. Lawlor of Lawlor & Koitto, Springfield, for defendants-appellees


PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


     GIBSON, J.  Plaintiffs appeal from a directed verdict entered
against them by the Windsor Superior Court claiming that defendants
were personally liable for damages resulting from the corporate
tenant's refusal to vacate plaintiffs' property when its lease
expired.  We affirm.

     Defendants are the sole shareholders and officers of S & Z,
Inc., which operated a business known as Village Pizza on property
leased from plaintiffs in Ludlow, Vermont.  On February 10, 1983,
plaintiffs and S & Z's promoter executed a lease, which was 
subsequently assigned to S & Z on April 4, 1983.  The lease was for
a five-year term with a monthly base rent plus a 5% annual
cost-of-living increase, and included a renewal option permitting a
new five-year term at a reasonable rent agreeable to both parties.

 

     In May 1987, plaintiffs informed S & Z that if it renewed the
lease, plaintiffs would increase the base rent from $1215 to $4000
per month.  The parties could not reach an agreement on the new rent
after negotiating from May 1987 until February 1988.  On February 8,
1988, plaintiffs began a justice ejectment action pursuant to 12
V.S.A.  4851 in Windsor District Court seeking possession of the
property and damages.  Plaintiffs named only the corporate tenant, S
& Z, and its promoter in the complaint.  S & Z and the promoter
counterclaimed, seeking clarification of their rights under the
renewal clause of the lease.  On February 16, 1988, the promoter and
S & Z moved to remove the ejectment action to the superior court.
Plaintiffs opposed the motion, and the district court denied it.

     In February 1988, defendants purchased a new location for their
business.  They moved the pizza shop from plaintiffs' property to 
the new location in September 1988, but S & Z retained possession of
the former premises in contemplation of further use of the property.
S & Z continued to make rent payments, equal to the base rent under
the expired lease plus 5%, until plaintiffs stopped accepting them
in December 1989.

     Approximately one year after the district court ejectment
action was filed, plaintiffs found a new tenant for their property.
The tenant could not move into the property, however, because S & Z
continued to hold over.  By March 1989, the new tenant was no longer
interested in renting the property.

     On June 21, 1989, the day of the district court trial, the
court entered a consent judgment for plaintiffs.  The judgment
awarded plaintiffs possession of the property and $5000, the
district court's jurisdictional limit at that time.  Plaintiffs were 
unable to find a new tenant for the property until November 1990.

     Almost two years after entry of the district court judgment,
plaintiffs filed the present

 

action in superior court against the promoter, S & Z, and the S & Z
corporate officers individually.  Plaintiffs claimed that defendant
officers, the promoter and S & Z wrongfully retained possession of
the property and that plaintiffs were entitled to damages.  The
court dismissed the complaint against S & Z and the promoter, but
denied the request to dismiss the corporate officers.

     After the close of plaintiffs' evidence, defendants moved for a 
directed verdict.  The court granted the motion.  It reasoned that
because plaintiffs accepted rent after the lease had expired, a
tenancy by implication resulted, thereby extinguishing any claim in
tort for wrongful retention of the property.  Plaintiffs appealed.

     In reviewing a directed verdict, we view the evidence in the
light most favorable to the nonmoving party.  Silva v. Stevens, 156
Vt. 94, 101, 589 A.2d 852, 856 (1991).  If there is any evidence in
the record reasonably supporting the nonmoving party's claim, a 
directed verdict is improper.  Id. at 101-02, 589 A.2d  at 857.

     We affirm the superior court's dismissal of the action because 
defendants were not personally liable to plaintiffs for the wrongful
holdover in this case.  It is well-settled that corporate officers
are liable for their personal torts against third parties even if
the corporation may also be liable.  New England Acceptance Corp. v.
Nichols, 110 Vt. 478, 488, 8 A.2d 665, 670 (1939).  Like all
tortfeasors, corporate officers are liable for their own wrongdoing.
Hardwick-Morrison Co. v. Albertsson, 158 Vt. 145, 149, 605 A.2d 529,
531 (1992).  Although a wrongful holdover "sounds in tort," it is a
claim that arises in the context of a contract between landlord and
tenant.  See Sabourin v. Woish, 116 Vt. 385, 387, 78 A.2d 333, 334
(1951) (action for justice ejectment or wrongful holdover sounds in
tort, but landlord entitled to remedy only when lessee holds over
without right after expiration of lease).  In other words, the
parties to the lease, by the express terms of that lease, define by
and against whom the claim may be brought.

     As tenant, S & Z was obligated to vacate the premises after the
lease terminated. Defendants could not "hold over" in their
individual capacity because they were not tenants under the lease.
S & Z's officers never assumed any personal obligations under the 
lease and were under no individual duty to plaintiffs to turn
possession of the leasehold over to plaintiffs. See 3A J. Solheim &
K. Elkins, Fletcher Cyclopedia of the Law of Private Corporations 
1118, at 219-220 (perm. ed. rev. vol. 1994) (officer not personally
liable for corporation's contract unless contract worded or signed 
to so indicate).  Moreover, plaintiffs have not alleged any
individual wrongdoing of defendants that would warrant holding them
personally liable for unlawfully holding plaintiffs' property.  Cf. 
Wootton Land & Fuel Co. v. John, 153 P. 686, 689 (Colo. 1915)
(corporation's vice-president not personally liable for unlawful 
detention of land where company alone claimed right of possession).
The action against the corporate officers in this case was properly
dismissed.

     We do not reach plaintiffs' other claims of error because the 
cause was properly dismissed below.

     Affirmed.


                              FOR THE COURT:


                              _______________________________________
                              Associate Justice