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Central Parking System of Missouri LLC v. Tucker Parking Holdings LLC

Court of Appeals of Missouri, Eastern District, Fifth Division

April 18, 2017

CENTRAL PARKING SYSTEM OF MISSOURI, LLC, Respondent,
v.
TUCKER PARKING HOLDINGS, LLC AND TUCKER PARKING EQUITIES, LLC, Appellants.

         Appeal from the Circuit Court of the City of St. Louis Honorable David L. Dowd

          Philip M. Hess, Chief Judge.

         Introduction

         Tucker Parking Holdings, LLC and Tucker Parking Equities, LLC (collectively "Tucker") appeals from the judgment of the Circuit Court of the City of St. Louis in favor of Central Parking System of Missouri, LLC ("Central"). This case arises out of a dispute between the parties over who is responsible for the expenses relating to the near-collapse of a parking garage owned by Tucker and operated and leased by Central. The trial court determined that Tucker was responsible for the expenses, and granted Central damages in the amount of $4, 161, 424.76 for costs Central paid to evacuate and stabilize the parking garage. We affirm.

         Factual Background[1]

         The evidence, viewed in the light most favorable to the trial court's judgment, is as follows.[2]

         In 1998, Central[3] leased a multilevel parking garage located at 306-310 North Tucker Blvd., St. Louis, Missouri (the "Garage") from 310 North Tucker, LLC ("Predecessor"). The Garage was built in 1967, and was constructed using cast-in-place concrete slabs supported by a button-head post-tensioning ("PT") system. The button-head PT system design was commonly used during the time of the Garage's construction, but has since become obsolete.

         Central entered into a Restated Lease with Predecessor in April 2000 (the "Lease"). The Lease provided that Central was solely responsible for maintenance and structural repairs to the Garage, but contained an exception for repairs necessitated by normal wear and tear. Specifically, Section 8(a) of the Lease stated that:

Tenant shall, throughout the term of this lease, maintain the Premises (and all structural components thereof) . . . in good order, condition and repair, and Tenant shall not commit or suffer any waste with respect thereto. Except as specifically set forth in this lease, Tenant shall promptly make all repairs, interior and exterior, structural and nonstructural, ordinary as well as extraordinary, foreseen as well as unforeseen, necessary to keep the Premises in good and lawful order and condition (normal wear and tear and damage from fire or other casualty excepted) . . . . (Emphasis added).

         In addition, Section 15(a), governing the expiration of the Lease, also included a wear and tear exception, requiring Central to surrender the Garage to Predecessor at the termination or expiration of the Lease "broom clean, in good order and condition, ordinary wear and tear and damage from casualty and fire excepted . . . ." The Lease also included an "as is" clause in Section 30, stating that:

[Central] has examined [the Garage] and is fully familiar with the physical condition thereof, and [Central] accepts the same "AS IS" on the Commencement Date. Except as expressly set forth to the contrary in this lease, [Central] assumes all risks, if any, resulting from any latent or patent defects in [the Garage] . . . . [Predecessor] made no representation or warranties in respect of the physical condition [of the Garage] . . . .

         In 2007, Tucker purchased the Garage from Predecessor for $4, 125, 000. Tucker did not inspect the condition of the Garage's PT system when it purchased the Garage.

         In March 2013, Tucker hired an engineering firm, Carl Walker, Inc. ("Carl Walker") to provide an appraisal of the Garage in order to determine repairs Central might be required to make prior to the Lease's expiration on March 31, 2015. In its report, Carl Walker determined that the Garage's concrete slabs showed signs of "widespread deterioration resulting from corrosion of the embedded reinforcing steel" and that there was approximately 21, 500 square feet of delaminated concrete in the Garage. Carl Walker advised that additional testing was necessary to determine the condition of the PT system, and it recommended a budget of $2, 470, 000 for concrete repairs, exclusive of any repairs to the PT system that might be required. Tucker provided Central with a copy of the Carl Walker report shortly thereafter.

         At approximately the same time, Central hired its own engineering firm, Walker Restoration Consultants ("Walker Restoration") to investigate the condition of the Garage's PT system. Walker Restoration's principal, Dan Moser, performed excavations at the Garage in order to visually inspect the PT system. Mr. Moser produced a report ("Moser 2013 Report") which estimated that 55% of the Garage's joist PT tendons were either broken or under partial tension. The Moser 2013 Report estimated a budget of $2, 276, 000 was necessary to repair the PT system. This put the combined estimate of repairs at approximately $4, 800, 000. Central did not disclose the full Moser 2013 Report to Tucker, despite Tucker's repeated requests.

         In June 2013, Central offered to pay Tucker $1, 483, 500 in exchange for a release from its obligations under the Lease to repair the Garage. Tucker rejected this offer, as well as Central's later offer in 2014 to enter into a new five year lease that would shift the obligations of structural maintenance and repair onto Tucker.

         In March 2014, Central selected Tarlton Corporation ("Tarlton") to perform repairs on the Garage, including PT system repairs, at a bid price of $2, 892, 000. On July 3, 2014, while in the beginning stages of repairing the Garage, Tarlton notified Walker Restoration that some of the PT floor joists that supported the Garage had cracks. Tarlton also informed Walker Restoration that it heard a series of small pops or explosions that it believed indicated that the joist PT systems were fracturing. Upon this information, Walker Restoration determined that the joists were at risk of collapsing and had to be repaired, which required the Garage to be closed to car traffic. A few days later, additional cracking in the joists was observed and, on Walker Restoration's recommendation, Central completely evacuated[4] the Garage and closed it off from the public. Over the following weeks, Tarlton, at Central's request, began installing a shoring system in the Garage that was composed of thousands of wood and metal support columns. The shoring system prevented the Garage from collapsing and provided structural support for Tarlton to make repairs to the PT system. Central notified Tucker of the emergency and kept Tucker informed of its plan to stabilize and repair the Garage.

         In September 2014, Walker Restoration recommended to Central that the damage to the PT system was so extensive that a steel beam support system was required to be installed throughout the Garage. Walker Restoration estimated that installing such a system could cost $16, 080, 000 or more. On September 5, 2014, Central represented to Tucker that it would be moving forward with the steel beam repair plan.

         In December 2014, both Tucker's engineers and Central's engineers conducted destructive testing at the Garage to investigate the PT system and determine the cause of its failure.[5] Following the tests, Central expressed to Tucker that it did not think it was responsible for the PT system repairs under the Lease because its engineers had concluded that the cause of the PT failure was due to ordinary wear and tear.

         On March 9, 2015, Central and Tucker both filed suit against each other. In its petition, Central sought a declaration that it was not responsible under the Lease for the PT system repairs. Central also filed claims against Tucker for breach of lease, and "unjust enrichment/quantum meruit." Tucker, in its petition, sought a declaration that Central was responsible for the PT system repairs, and filed claims against Central for breach of lease, waste, and negligence. The trial court later consolidated the actions.

         On March 25, 2015, Tucker filed a motion for a temporary restraining order and preliminary injunction. In its motion, Tucker argued that the costs of the shoring system constituted "structural repairs" that fell within Central's obligations under the Lease. Accordingly, Tucker argued, Central was responsible for continuing to maintain the shoring system and pay the ongoing expenses associated with it. The following day, the trial court heard oral argument on Tucker's motion and granted it in part, enjoining Central and Tarlton from removing or altering the shoring system. The trial court did not rule on which party was responsible for paying the costs of the shoring system.

         On March 31, 2015, the Lease term ended and Central vacated the Garage. However, the shoring system was kept in place and monitored by Tarlton.

         The parties agreed to bifurcate the case. In the first phase, the parties agreed to present evidence on Tucker's motion for preliminary injunction in order to determine both the cause of the PT system failure and which party was responsible for the expenses arising from the failure. In the second phase, the trial court was to conduct a damages hearing to determine the damages to be awarded to the party that prevailed in the first phase.

         On July 28, 2015, as part of the first phase, the trial court held an evidentiary hearing on Tucker's motion for preliminary injunction. Following the hearing, the trial court issued its judgment on October 13, 2015, in which it determined that Tucker was responsible for the costs and expenses associated with the PT system failure because the failure occurred due to normal wear and tear. A summary of the trial court's findings of fact and conclusions of law is provided below:

• The PT system failure constituted normal deterioration for a concrete parking structure built in 1967 using a button-head PT system.
• The button-head PT system construction joints were vulnerable to water penetration. Chloride-laden water, brought into the Garage over the years by vehicles entering the Garage, had slowly degraded the PT tendons, ultimately causing the PT system to fail in July 2014.
• The Garage, at the time of the PT system failure, had survived well-beyond its design life.
• The PT system did not fail due to neglect by Central in repairing cracked delaminations over the stressing pockets in a timely matter. Tucker did not know when the delaminations appeared, and did not prove that Central failed to repair the delaminations in a timely matter.
• The PT system failed at multiple locations where the top side concrete "was pristine, " which demonstrated that neglected or cracked concrete was not the cause of the PT system failure.
• The PT system is beyond repair, and Section 8(a) of the Lease did not contemplate a replacement or a rebuild of the Garage.
• Central did not "waive" its rights under the Lease by agreeing to fix the PT system before it knew the extent and cause of the PT system's damage.

         On January 21, following the evidentiary hearing for the second phase of the trial, the trial court issued its judgment regarding the amount of damages Tucker owed Central. A summary of the trial court's findings of fact and conclusions of law is provided below:

• Central notified Tucker immediately when it became aware of the cracking in the Garage's joists in July 2014, and informed Tucker of its plan to repair the Garage. Central gave Tucker detailed updates on the work, and Tucker was fully aware of the magnitude of ...

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