April 27, 1993
NELSON SANCHEZ, T/A DUDLEY SHOES, APPELLANT
ELEVEN FOURTEEN, INC., APPELLEE
Appeal from the Superior Court of the District of Columbia; (Hon. Ricardo M. Urbina, Trial Judge)
Before Rogers, Chief Judge, and Steadman and Sullivan, Associate Judges.
The opinion of the court was delivered by: Steadman
STEADMAN, Associate Judge : Appellee, Eleven Fourteen, Inc. ("Tenant"), had a long-term lease from Manufacturers Life Insurance Company ("Lessor"), terminable on 180-days notice. Tenant sublet a portion of the premises to appellant, Nelson Sanchez ("Subtenant"), subject to the same termination provision. Lessor gave timely notice of termination of the master lease, to be effective August 31, 1989. Subtenant did not vacate the premises until late December of that year. Tenant brought suit for four months double rent for the holdover period under a provision of the sublease providing for double rent in such circumstances. The trial court granted the Tenant's motion for summary judgment on liability and at a subsequent bench trial on the issue of damages awarded Tenant the double rent sought.
On appeal, Subtenant's principal assertions are that: 1) Tenant had no right to recover any rental or damages since all its rights in the property terminated along with the master lease; and 2) in any event, the sublease provision for double rent was an unenforceable penalty clause. *fn1 We affirm.
It is, of course, fundamental that the rights of a subtenant can, with at least one limited exception to be mentioned, rise no higher than those of his sublessor. Camp v. Goodman, 47 A.2d 516, 517 (D.C. 1946); 1 MILTON R. FRIEDMAN, FRIEDMAN ON LEASES § 7.703 (1990) ("Termination of Prime Lease -- Effect on Sublease") [hereinafter FRIEDMAN]. Therefore, upon the valid termination of the master lease by Lessor, both Tenant's and Subtenant's rights to further lawful possession of the premises came to an end.
A holdover tenant is bound by the terms and conditions of the original lease and is liable to the landlord at least for rent or its equivalent. Eden v. Abrams, 259 A.2d 351, 353 (D.C. 1969); Hampton v. Mott Motors, 32 A.2d 247, 248 (D.C. 1943). Moreover, a tenant is responsible to the landlord for ensuring that his subtenant vacates the property upon the termination of the master lease. Therefore, when the subtenant holds over, it is conceptually a holding over by the tenant.
A tenant has been held liable for damages for holding over after the expiration of the term although the holding over was by his subtenant without the consent and against his will. If the tenant has sublet, it is his duty to see that his subtenant vacates the premises, and he is liable in damages for a wrongful holding over by his subtenant.
49 AM. JUR. 2D Landlord and Tenant § 1121, at 1073 (1970); see also 1 FRIEDMAN, (supra) , § 7.702, at 384. The landlord thus may hold the tenant to the remedies available to a landlord against a holdover tenant, even though the continued occupancy is in fact by a subtenant of the tenant. Cf. Comedy v. Vito, 492 A.2d 276, 279 & n.3 (D.C. 1985); Eden, supra, 259 A.2d at 353.
Under such a legal regime, the tenant does in fact maintain a continuing relationship with the property in question as long as the subtenant remains on the property. Whatever the situation may be if a landlord elects to proceed directly against a subtenant, we conclude that a subtenant who holds over is estopped from denying liability to his or her sublessor under the terms of the sublease when the holding over by the subtenant is in violation of the sublease.
Subtenant invokes an ancient doctrine that permits a subtenant to remain upon subleased property without payment of further rent where a prime tenant voluntarily surrenders the master lease prior to its termination date. The rule's policy basis was to prevent the tenant and landlord from joining to deprive the subtenant of his or her rights. *fn2 See Camp, supra, 47 A.2d at 517-18; ROBERT S. SCHOSHINSKI, AMERICAN LAW OF LANDLORD & TENANT § 8.13, at 574 (1980) [hereinafter SCHOSHINSKI]. However, a surrender, which requires the joint action of both landlord and tenant, see Ostrow v. Smulkin, 249 A.2d 520, 521 (D.C. 1969); Thomas D. Walsh, Inc. v. Moore, 141 A.2d 754, 755 (D.C. 1958), is of course entirely different from a termination in accordance with the terms of both the master lease and the sublease, where the tenant remains liable to the landlord because of the unlawful holding over by the subtenant. Therefore, Subtenant's claim that Tenant had no remaining rights in the property must fail.
We turn then to Subtenant's claim that the double rent clause *fn3 in the sublease imposed an unlawful penalty, rather than permissible liquidated damages. Framed in this manner, *fn4 the issue is whether the clause stipulates damages which, at the time of contracting, can reasonably be expected to result from a breach. Burns v. Hanover Ins. Co., 454 A.2d 325, 327 (D.C. 1982).
The problem of the holdover tenant is one that has been much discussed, it being understood that the damages suffered by the landlord where a tenant stays on beyond the termination of a lease can markedly exceed the rental payments called for in the lease. *fn5 SCHOSHINSKI, (supra) , § 2.24. In the District of Columbia, a statutory provision provides for the payment of double rent by a tenant who holds over after giving notice of an intention to quit, D.C. Code § 45-1407 (1990). This provision, while not strictly applicable here, shows that a double-rent provision in a lease presents no anomaly in our law. In Horn & Hardart Co. v. Nat'l R.R. Passenger Corp., 659 F. Supp. 1258 (D.D.C. 1987), aff'd, 269 U.S. App. D.C. 53, 843 F.2d 546, cert. denied, 488 U.S. 849, 102 L. Ed. 2d 102, 109 S. Ct. 129 (1988), the court upheld the validity of a commercial lease provision which required the tenant to pay three times the average rent upon holding over, noting that "other jurisdictions have approved even more onerous clauses." See generally FRIEDMAN, (supra) , § 18.2, at 956-57 (citing cases). In the case of a holdover sublessee, the problem can be particularly acute since the sublessor will remain liable to the landlord even though enjoying no use of the property. We think the trial court correctly rejected the assertion that the lease clause was unenforceable as a penalty.