Merry Homes, Inc. v. Luu

In this commercial lease dispute, we determine whether a landlord may enforce a lease to operate a “nightclub or bar” and for “no other” purpose when the tenant cannot legally obtain a liquor license for the leased premises and the lease requires that any activity on the premises comply with applicable law.

After a bench trial, the trial court entered a judgment declaring the commercial lease between Merry Homes, Inc. and Chi Hung Luu void for illegality, since the lease only authorized the operation of a nightclub or bar at the premises and Luu was unable to obtain a liquor license due to the premises’ proximity to a public school. The trial court awarded Luu $6000 for the security deposit, $25,300 in attorney’s fees, and denied Merry Homes’ counterclaim for unpaid rent. In nine issues, Merry Homes (1) challenges the legal and factual sufficiency of fifteen different findings of fact and conclusions of law; (2) contends the trial court erred in holding the lease void for illegality, using an admission made by a co-defendant against Merry Homes, awarding attorney’s fees to Luu, and denying Merry Homes’ recovery on its counterclaim; and (3) asserts that six findings of fact should be disregarded as irrelevant to the issue of enforceability of the lease. We hold that the trial court correctly determined that Luu could not legally perform under the lease, and therefore affirm the judgment of the trial court.