Dog House Investments, LLC, operated a dog camp in Nashville, Tennessee. They leased a property from Teal Properties, Inc. which was owned by Jerry Teal, its sole shareholder. Under the lease, the landlord promised that he would repair any damages that made the property “untenantable.” When a flood occurred, Dog House notified Jerry and told him that the property was untenantable. Jerry told Dog House that the flood damages would be covered by insurance but took no initiative in restoring the property. Both parties later agreed that Dog House would go ahead and do the repairs and Teal Properties would reimburse them later. Dog House spent $39,000 on repaid and submitted for their reimbursement. Teal Properties then recovered $40,000 from their insurance company but did not reimburse Dog House. Dog House was close to bankruptcy so they filed a suit against Teal Properties and Jerry. The court held Jerry personally liable for the repair costs but he appealed.
answer the questions below:
a) There was a lease agreement between 'Tenant' Dog House Investments LLC and 'Landlord' Teal Properties Inc owned by Jerry Teal. As per the agreement between both parties Teal Properties Inc required to make all repairs to the building during the lease period if the property is "untenantable". The flood caused damage to the building. As per the contract Dog House notified Jerry Team of the damage. Teal informed Tenant that the building was covered by insurance. After agreement with Jerry Teal that post repairs Teal would reimburse the repair cost, Dog House went ahead and did the repairs to the building. But after the insurance money came Teal failed on his promise and did not reimburse the repair costs to Dog House. This here is a clear breach of contract.
b)The act of Jerry Teal is certainly unethical because as per agreement it is very clear that if any stage during the lease period if the property is 'untenantable' it would be the 'Landlord' who would do the repairs. But when the time arrived Teal stated that flood damages would be covered by insurance and did not take initiative in restoring the property. Even after the repairs were done by Dog House Teal failed to reimburse the expenses after receiving the insurance claim.
c) This suit could have been avoided had Teal paid the repair costs to Dog House after he received the insurance claim. It could have also been avoided if Teal in first place done the building repairs himself or paid Dog House for the repairs himself and then adjusted that amount with the Insurance Claim.
d) It is clear that Jerry Teal was the sole shareholder of the Teal Properties. Teal's action is definitely seems to be intentional here. The court would have considered a number of factors to disregard the corporate form of business organization. In this case, court would have considered the following factors. Teal owned the property but leased it through the Corporation. Insurance claim was paid to the Corporation but Teal failed to reimburse Dog House once he received the claim. The argument clearly here is breach of lease contract which both parties have agreed and signed.
Dog House Investments, LLC, operated a dog camp in Nashville, Tennessee. They leased a property from...
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