Building owners deserve trial, Court rules

By Steve Korris | Dec 3, 2010

CHARLESTON – Owners of the St. James Building in Huntington deserve a jury trial over possession of their mezzanine, the Supreme Court of Appeals have ruled.

The Justices on Nov. 23 reversed Cabell Circuit Judge Jane Hustead, who ruled that the owners couldn't take a breach of contract suit against City National Bank to a jury.

The owners allege that when they bought the building, lease holder City National didn't tell them they couldn't dislodge the law firm of Frazier & Oxley from the mezzanine.

Hustead found three reasons for her decision, but the Justices held that she got all of them wrong. Their unsigned opinion made it sound as if they wished they could serve on the jury.

They wrote that Frazier was a board member of Old National Bank of Huntington in 1979, when it leased the property from First Huntington Building Corporation.

"Interestingly, Mr. Frazier, while president of the Old National Bank's board of directors, was also the president of the First Huntington Building Corporation," the Justices wrote. "He signed the prime lease on behalf of the lessor building corporation while Mr. Oxley, his partner and the bank board's secretary, signed on behalf of the Old National Bank."

In 1987, Frazier & Oxley executed a sublease for the mezzanine at $250 a month for 4,000 square feet.

"The low rent amount was apparently in consideration for renovations and improvements required of the mezzanine level and which were to be undertaken by Mr. Frazier," the Justices wrote.

The firm assigned its rights to Frazier, who subleased the mezzanine back to the firm at $4,000 a month for six years and $2,000 after that.

In 1996, the bank became a branch of City National Bank of West Virginia.

A dispute broke out between the new bank and the firm, and they settled it in 1999.

Also in 1999, Frederick Management Company bought the building.

In 2000, City National executives Matthew Call, Larry Dawson and Robert Hardwick told building owners John Hankins and Fred Davis they would not renew the lease.

Hankins drafted a lease termination agreement, and City National bankers signed it without asking for any changes.

Frederick Management leased the lobby to Fifth Third Bank, with an option to lease the mezzanine.

Fifth Third Bank exercised the option in 2001, and Frederick Management sent notice for Frazier & Oxley to clear out.

Frazier & Oxley refused, and Frederick Management filed an eviction complaint.

Frazier & Oxley filed a third party complaint against City Bank.

Circuit Judge John Cummings ordered the firm to vacate and surrender possession.

Frazier & Oxley appealed for a writ of prohibition, and the Justices granted it in 2002.

They directed Cummings to figure out whether City Bank surrendered the lease to Frederick Management or whether the lease was terminated.

Back in circuit court, Frederick Management moved to amend its complaint by adding City Bank as defendant for failure to disclose the sublease.

Cummings granted it, and the firm and the bank appealed for a writ of prohibition.

The Justices granted it in 2003, writing that they remanded the case for a limited factual determination and not to allow an additional theory of recovery.

Cummings granted summary judgment in favor of the firm in 2004.

Frederick Management then filed a breach of contract claim against City National.

Last year, Hustead granted summary judgment in favor of City National.

She ruled that the issues previously decided were identical were identical to those before her, and that the parties had a full and fair opportunity to litigate the prior action.

She excused City National from performing under the lease termination agreement, finding it impossible for the bank to require Frazier & Oxley to vacate the mezzanine.

She declared the agreement ambiguous and construed it against Frederick Management.

On the first point, the Justices wrote that "the issue decided in the eviction proceeding is not identical to the breach of contract issue presented herein."

They wrote that the owners claim City National failed to ensure the space was vacated.

They wrote, "In contrast, the issue decided in the eviction proceeding between Frederick Management and Frazier & Oxley was solely that of surrender."

On the second point, they chided Hustead for ignoring a precedent that would have kept her from excusing the bank's performance.

They wrote, "City did not notify its subtenant that it intended to end the prime lease even though there was ample time for it to give proper written notice such that surrender would not have occurred."

On the third point, they ruled that Hustead shouldn't have construed the agreement against Frederick Management.

They didn't order her to construe it against City National.

They ordered her to let jurors decide.

Thomas Craig and Todd Biddle, of Bailes, Craig & Yon in Huntington, represented Frederick Management.

Ancil Ramey, Hannah Curry and Peter Raupp, of Steptoe & Johnson in Charleston, represented City National.

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