Summary of Davidow v. Inwood North Professional Group, S. Ct. TX [1988]

Relevant Facts: Resp/Pl Inwood filed an action against Pet/df Davidnow for unpaid rent. They entered into a 5 yr lease at $793.26 /mo as rent.  Inwood would provide air conditioning, electricity, water, janitor-security-maintenance services, light fixtures.  Shortly after moving in the air conditioning did not work, the roof leaked = stained ceilings and rotting carpet; pests and rodents infested the building; hallways were unlit for months; no maintenance or cleaning was provided; the parking lot was filled with trash; there was no hot water and the electricity was out for several days b/c Inwood failed to pay the bill.  Df moved and discontinued to pay rent 14 months before lease expired.

Legal Issue(s): Whether there is an implied warranty of suitability by a commercial landlord that the leased premises are suitable for their intended purpose as medical office space?

Court’s Holding: Yes

Procedure: Jury found Inwood breached, Df recover lost time and relocation expenses.  Ct of App reversed; Inwood recover unpaid rent and df recover nothing.  S. Ct. reversed, Inwood recovers nothing.

Law or Rule(s):   An implied warranty of suitability means that at the inception of the lease there are no latent (possible/idle) defects in the facilities that are vital to the use of the premises for their intended commercial purpose AND that these essential facilities will remain suitable.

Court Rationale: In light of the many similarities between residential and commercial tenants and the modern trend toward increased consumer protection, a number of courts have indicated a willingness to apply residential property warranties to commercial tenancy situations.  Although minor distinctions exist, those differences do not justify limiting the warranty to residential leaseholds.  If the parties expressly agree that the tenant will repair certain defects, then those provisions control.  The jury found Inwood leased the space to Df for use as a medical office AND that Inwood knew of the intended use. The evidence further indicates that Df was unable to use the space for the intended purpose b/c of the omissions and acts of Inwood.  Df’s obligation to pay rent and Inwood’s implied warranty of suitability are mutually dependent.  Inwood breached the warranty and Df was justified in abandoning the premises and discontinuing rent payments.

Plaintiff’s Argument: The defense of material breach of the covenant to repair is insufficient as a matter of law to defeat a LL’s claim for unpaid rent. Texas law.

Defendant’s Argument: The lease expressly stated that LL would provide essential service for the intended purposes, and the LL knew of the intended purpose. Failure is a breach and df is not obligated to act further.