In a recent California case, a coin laundry operator took possession of a closed location, which contained a number of washers approximately 20 years old and cannibalized for parts over time.
In assuming possession of the location, the coin laundry operator installed a substantial quantity of new equipment and refurnished a few dryers that remained from the prior operator.
It quickly became apparent that the location would not provide a profit and was closed by the tenant. In vacating the premises, the tenant removed newly purchased equipment to another location. The tenant, however, did not remove the renovated dryers.
In a subsequent suit for rent, the landlord also sued the tenant for conversion, asserting that the cannibalized washers were wrongfully removed from the premises.
The landlord asserted that the discarding of the washers by the tenant at the outset of taking possession was done without the landlord’s consent or knowledge and resulted in a substantial decrease in the rental value of the premises.
Was the landlord entitled to assert that the actions of the tenant in removing the old equipment from the premises without the landlord’s knowledge or consent constituted a conversion? A cause of action for conversion entitles the successful plaintiff to recover punitive damages.
The tenant claimed that he had verbal consent to discard the washers and that, in any event, the machines were without value. There was no correspondence between the parties, however, and the lease was silent on the issue of the disposition of the old equipment.
Leases generally address the disposition of new equipment installed in a coin laundry and provide that such equipment constitutes “trade fixtures,” which may be removed upon termination of the lease by the tenant. Since each lease can be different, notwithstanding the fact that the lease may be entitled “Standard Form Lease,” it is thus important to review your lease for the provisions pertaining to trade fixtures.
In the lease between these parties, it was provided as follows:
“The term ‘Trade Fixtures’ shall mean Lessee’s machinery and equipment, which can be removed without doing material damage to the Premises… Lessee’s Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee subject to its obligation to repair and restore the Premises per this lease.”
The tenant spent more than $90,000 installing new washers and dryers and related coin laundry equipment. The old equipment was worth perhaps $500 at a junkyard. The new equipment installation team, as a favor to the tenant, removed the old equipment and presumably obtained a few hundred dollars from a junkyard for the equipment.
Is there perhaps a lesson to be learned? Why not obtain the autograph of the landlord permitting the removal of junk equipment the next time you take possession of a coin laundry containing equipment having no value?
[This column is intended to provide general information only, not specific legal advice. If you have a specific question regarding the law, you should contact an attorney.]