Health United Family Care, Inc., and its principals Maldonado, Romero, and Benit

Question

Health United Family Care, Inc., and its principals Maldonado, Romero, and Benitex entered into a five-year lease of office space with GFIC Management, Inc., to operate a medical facility. Rent was set at $4,041 per month. As part of the lease, GFIC agreed to expend $17,000 of its funds to renovate the leased space for use as a medical facility, to be finished by October 28 so that the medical facility could open on November 1. The parties agreed in the lease that if the construction was not finished on time, no rent would be due until actual possession. On October 26, Benitez called GFIC President Moses Grad and told him to stop construction. Grad met with Benitez and Romero soon thereafter, and they explained their problem as follows:

Grad: What happened?

Benitez and Romero: The medical board came down hard on us O.K. The problem is that we have one doctor, one doctor, and he is covering (mumble) right now he is under investigation. As a matter of fact, they did investigate us, and right now they are coming down hard on us, and we are under a lawsuit. O.K., and he is ready to lose his license, and they will not give you another building to open O.K. I wish we could put this on hold, and right now if we get into this we cannot open. We cannot open; we have no license to open.

Grad: What’s the problem with getting another doctor?

Benitez and Romero: Right now no doctors want to touch us; we are under investigation.

Grad: I see.

Benitez and Romero: Nobody wants to touch us at all, but right now out attorney has instructed us to get out of it. You know he needs to get into it, but we don’t want hi because it’s going to cost us more money, O.K. We would get some kind of agreement with you to see how we get out of it.

Grad: Is there anything I can do as the landlord of the premises to make you stay in the building?

Benitez and Romero: No, because they won’t give us permission to open.

Grad: Is there anything I can do for you? The only solution at this time that you can see is to cancel the contract, this is the only . . . .

Benitez and Romero: I think that’s what our attorney instructed us to do, is to get out of it because right now our name is not the most popular name out there with the medical board, they will nail us, they are out to get us . . . I think we should put a hold on the construction right now; that’s what we should do.

Grad stopped the construction after this discourse on October 28. Subsequently, Ernesto Maldonado talked with Grad about settling obligations under the lease and stated that if the construction were completed by Grad, he would attempt to find a doctor. At that point, Grad was seeking one year’s rent as damages for breach of the lease. Grad never restarted the construction, and Health United never took possession of the premises. GFIC sued Health United for breach of the lease contract. Health United denied the breach of the lease, contending that GFIC failed to perform a condition precedent by not completing the construction necessary to occupy the space. What legal theory would you rely on to respond to Health United’s position that GFIC failed to perform on the condition precedent? Do you believe Benitez and Romero were prudent in not utilizing their attorney to facilitate and amicable settlement of the contractual obligations? How would you decide this case?

Explanation / Answer

Taking away the oral conversation between the two parties, because the oral conversation do not stand in the court of law. As per the lease agreement, the work has to be completed and handed over on Oct 28, else no rent would be paid. As per the facts the contruction was not done and it was not handed over on Oct 28, hence no rent is due. Benitez and Romero are very prudent in not utilizing the attorney, since the letters of the contract speaks for itself and any lay person would be able to read and understand it.

GFIC will fail the suit.

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