Linda Miller rented 35 acres of pastureland in Wabaunsee County, Kansas, from William Burnett for $1,000 per year. Miller and her husband used the land to grow and harvest brome grass for their cattle to graze on. The lease was set to end on March 1, 2016.
In February 2016, Miller filed a case in small-claims court alleging that Burnett had violated the terms of the lease. Miller sought damages for half of the cost of fertilizing the land because Burnett had allowed four horses belonging to a neighbor to graze on the rented land. Miller also claimed damages stemming from Burnett denying her access to the land from December 2015 through February 2016. Burnett filed his own claim against Miller, contending that she had not paid the rent the 2015–2016 lease term.
The small-claims court found in favor for Burnett, ordering Miller to pay arrears. Miller then turned to the district court, which affirmed the small-claims court. The district court’s written orders did not make many specific factual findings, stating: “Plaintiff breached implied contract by failing to pay rent. Defendant was obligated upon plaintiff’s breach to mitigate his damages by grazing horses.”
Miller appealed one last time to the court of appeals of Kansas, which accepted it. In its decision, the appellate court explores how certain rules interact with the covenant of quiet enjoyment.
JUDGE LEBEN Miller argues on appeal that she is entitled to damages because Burnett violated the oral lease when he allowed a neighbor’s horses to graze on the pastureland that she rented from him and when he denied her access to the land for 3 months.
When a trial court has made findings of fact and conclusions of law, our standard of review is whether those findings of fact are supported by substantial evidence and whether the findings are sufficient to support its legal conclusions. We then independently review the court’s legal conclusions, without any required deference to the district court.
In most cases, after reciting this standard, we would go on to evaluate whether substantial evidence supports the trial court’s factual findings. In this case, though, we have an initial difficulty—because the transcript of the trial below is not included in the record on appeal, there’s no way for us to decide whether substantial evidence supports the trial court’s factual findings. Simply, since we don’t know what evidence there was at trial, we can’t know whether it was substantial. The burden is on the party making a claim on appeal—here, Miller—to show facts in the record that support the claim; without such a record, the claim of error necessarily fails. So we cannot evaluate Miller’s factual claims or reverse the district court’s judgment based on its factual findings. What we can do, though, is evaluate the district court’s conclusions of law, asking whether the factual findings are sufficient to support the legal conclusions.
The district court found that Miller had failed to pay rent for the 2015–2016 lease term (a fact Miller actually concedes, although she disputes when rent was due under the lease). Not paying rent is a breach of a lease agreement. The district court concluded that because Miller had breached the oral lease by failing to pay rent, Burnett was required to graze the horses on the rented land to mitigate the damages caused by this breach. We disagree.
Usually, if someone breaches a contract—doesn’t do something he or she is required to do by the agreement—the other, nonbreaching party to the agreement can file a lawsuit and be awarded the full amount of damages caused by the breach. But in some circumstances, courts impose a special rule on the nonbreaching party called the “duty to mitigate damages,” which requires the person damaged by a breach of contract to take some action to try to reduce the amount of those damages. This duty is an additional responsibility—instead of just getting damages from the person who caused them, the nonbreaching party first has to try to reduce those damages.
In a landlord-tenant context, only a minority of states recognize a duty to mitigate damages. The majority rule is that if a tenant abandons the lease, the landlord doesn’t have to try to find a new tenant; the landlord can just sue the abandoning tenant for the full amount of rent owed under the lease. But Kansas follows the minority rule: If a tenant abandons a lease, the landlord has a duty to try to find a new tenant rather than just suing the original tenant for any remaining rent. But the duty to mitigate damages doesn’t arise until a tenant abandons the lease. And there’s no suggestion before us that Miller abandoned the lease.
Even so, the district court concluded that Burnett had to mitigate his damages without considering whether Miller had abandoned the lease—its conclusion was based solely on Miller’s nonpayment of rent. We can find no caselaw suggesting that the duty to mitigate damages arises or applies in cases that don’t involve either abandonment or termination of the lease. On the contrary, the Kansas Supreme Court has described it this way: “Kansas follows the minority position, imposing upon a landlord the duty to make reasonable effort to secure a new tenant if a tenant surrenders possession of leased property.” And though the Restatement (Second) of Property follows the majority, no-duty rule, it nonetheless phrases the duty to mitigate as one that could arise only when a tenant abandons the property: “[I]f the tenant abandons the leased property, the landlord is under no duty to attempt to relet the leased property for the balance of the term of the lease to mitigate the tenant’s liability under the lease.” In sum, the district court wrongly concluded that Burnett had a duty to mitigate damages based solely on a nonpayment of rent and without any consideration of whether Miller had abandoned the lease. Nothing in the record available to us suggests that Miller had abandoned the lease.
An additional problem with the district court’s conclusion is that it would allow a landlord to interfere with the tenant’s possession of the rented property.
When a landlord leases property to a tenant, the tenant has exclusive right of possession. The tenant’s right to exclusive possession is encapsulated in what lawyers call the “implied covenant of quiet enjoyment,” which exists in every Kansas lease, including oral farm leases. A “covenant” is simply a promise, and “implied” just means that this promise is a part of every lease, even if the lease doesn’t expressly say anything about it. Black’s “Quiet enjoyment” means that a tenant has possession of the property and is free to come and go from the property without the landlord’s interference. If a landlord were required to mitigate damages caused by the nonpayment of rent when a tenant has not abandoned the property, then the landlord would be required to violate the implied covenant of quiet enjoyment and the tenant’s right to exclusive possession without the landlord’s interference. This significant point was raised in the amicus brief submitted by the Kansas Livestock Association, and it’s a reasonable one. The duty to mitigate damages has its limits. It isn’t a license for landlords to interfere with a current tenant’s use of the rented property.
Saying that a landlord can’t interfere with the tenant’s exclusive use of the property merely due to nonpayment of rent doesn’t leave the landlord without recourse: The landlord has other remedies available when a tenant fails to pay rent but doesn’t abandon the leased property. For example, if a tenant fails to pay rent when it’s due, the landlord can give the tenant notice that the lease will be terminated if rent isn’t paid within 10 days. And specifically related to farm leases, a landlord can enforce a lien (a legal interest in someone else’s property) on the crops growing on the farmland: “Any rent due for farming land shall be a lien on the crop growing or made on the premises.” Either of these options protects the landlord’s right to receive rent without interfering with the tenant’s possessory rights.
So where does all of this leave us? We can’t review the factual findings of the district court in the absence of a transcript, so we must accept those factual findings. But it’s clear to us that the district court’s judgment was based in part on a legal error—its conclusion that Burnett’s duty to mitigate damages authorized him to allow others to graze their horses on the rented pastureland. Because the district court’s judgment is based in part on a legal error, we reverse it. We remand the case for the district court to reconsider application of the law to the facts as it found them in a manner consistent with this opinion.
CRITICAL THINKING:
Why do you think the appellate court decided to review the district court’s reason of law instead of affirming the district court after finding that Miller could not successfully dispute its finding of fact?
ETHICAL DECISION MAKING:
When viewing the limits of various legal duties, principles, and doctrines as they butt heads against one another, we can analyze the value preferences of their creators and interpreters. Which legal rules held supreme over the other in this case and what stakeholders and values does this determination reveal?