This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1998).
STATE OF MINNESOTA
IN COURT OF APPEALS
Midway Warehouse Limited Partnership,
Ramsey Action Programs, Inc.,
Filed May 30, 2000
Ramsey County District Court
Geoffrey P. Jarpe, Daniel R. Kelly, Maun & Simon, 801 Nicollet Mall, 2000 Midwest Plaza Building West, Minneapolis, MN 55402 (for respondent)
Larry E. Reed, Hassan & Reed, Ltd., 2311 Wayzata Boulevard, Minneapolis, MN 55405 (for appellant)
Considered and decided by Amundson, Presiding Judge, Randall, Judge, and Huspeni, Judge.*
Appellant appeals from the district court’s order granting summary judgment based on its construction of a lease provision outlining proper notice for termination of the lease. Appellant first argues that the court erred by misinterpreting a key lease phrase. Alternatively it argues that the phrase is ambiguous and thus requires a jury determination. Furthermore, it argues that respondent breached the lease by failing to renegotiate the lease in good faith. Finally, appellant challenges the district court’s computation of damages and award of attorney’s fees. We affirm.
On June 30, 1994, appellant Ramsey Action Programs, Inc. (RAP) entered into a lease agreement with JLT Warehouse Limited Partnership, predecessor in interest of respondent Midway Warehouse Limited Partnership (Midway), for space at 2213 Charles Avenue in St. Paul. The lease allowed for RAP’s Fare SHARE Program (Fare SHARE), to use the premises for a ten-year term, commencing September 1, 1994, and ending August 31, 2004. The lease allowed RAP to terminate prematurely under certain conditions.
Article 3 of the lease covers issues regarding the commencement, duration, and termination of the lease and states:
During the initial three years of the term of this Lease, Tenant [RAP] may give Landlord [Midway] not less than six months written notice of its intention to vacate the Premises and terminate this Lease effective at the end of any calendar month on the condition that prior to such notice Tenant terminate its Fare SHARE Program. In the event the Lease is terminated by notice within the initial three years of the term, Tenant shall pay to Landlord upon demand all of Landlord’s costs associated with the buildout of the premises.
After the initial three years of the term of this Lease, Tenant may give Landlord not less than six months written notice of its intention to vacate the Premises and terminate this lease * * * on the condition that prior to such notice (1) Tenant terminates [Fare SHARE] or (2) Tenant loses a substantial portion of [Fare SHARE] funding * * * .
Article 6-A of the lease specifies that Midway “shall deliver the Premises in their condition without any improvements by Landlord, except as outlined on Exhibit ‘C’ hereto.” Exhibit C is the document outlining the buildout of the premises per Article 3 but there is nothing in Exhibit C that expressly limits buildout expenses to those in Exhibit C.
After the commencement of the lease, RAP began to lose money and funding. On January 27, 1997, two years and five months into the lease term, RAP sent Midway notice that RAP intended to terminate the lease, effective August 1, 1997. On February 17, 1997, RAP reiterated the August 1 termination date and indicated that it may want to move out earlier if Midway could find another tenant. On May 21, 1997, Midway wrote to remind RAP that, under the terms of the lease, RAP was responsible for costs associated with the buildout of the premises and set a payment deadline of June 6, 1997. On June 19, 1997, RAP served Midway with a summons and complaint for a declaratory judgment that RAP was not obligated to pay buildout costs. Four days later, RAP wrote Midway declaring the August 1 termination date in their previous letters to be in error, and informing Midway that it was always RAP’s intention to terminate September 1, 1997.
RAP dismissed the declaratory judgment action after Midway insisted upon the dismissal as a condition preliminary to any discussion regarding lease renegotiation. Several times over the course of the next few months, RAP attempted to negotiate a new lease with Midway. Each time, Midway did not respond.
On August 21, 1997, RAP reiterated its intent to vacate the premises by September 1, 1997. On August 27, 1997, Midway replied, insisting once again on payment of the buildout costs, and declaring that Midway would “pursue all remedies available to enforce the lease.” Midway then brought this action claiming damages of $192,000 for buildout costs.
On August 4, 1998, Midway filed a motion for summary judgment, RAP did not respond. On September 1, 1998, the district court held a hearing on the motion. RAP did not attend. On September 3, 1998, the district court entered default judgment against RAP. On September 22, 1998, RAP filed a motion to vacate the default judgment based on RAP’s counsel’s claim that he had never received the summary judgment pleadings. The district court granted that motion, but found that RAP had received the pleadings and thus awarded Midway costs and fees associated with the prior motion for summary judgment.
Midway then filed a second motion for summary judgment. RAP opposed that motion and supported their position with the affidavit of Dale Anderson, RAP’s Executive Director, which reiterated RAP’s position regarding the interpretation of the disputed clause and challenged many of the buildout costs alleged by Midway. Midway presented evidence that Prosper Waukon, Fare SHARE’s Program Director, negotiated and oversaw the buildout. In response, RAP submitted a second affidavit from Anderson claiming that Waukon was without authority to agree to additional buildout expenses.
The district court interpreted the lease as requiring RAP to pay buildout costs if it gave its termination notice within the first three years of the lease. Furthermore, the court found and concluded that both RAP’s initial notice and its amended notice were given within the first three years of the lease, requiring RAP to pay buildout costs. The district court also found no support in the record for the assertion that Waukon did not have authority to agree to additional buildout expenses. Finally, the court concluded that RAP’s challenge to some of the buildout expenses was vague and unsupported as Anderson was without specific knowledge of the negotiations. Pursuant to these findings and conclusions, the district court granted Midway’s motion and entered judgment in favor of Midway in the amount of $192,000. This appeal followed.
RAP first challenges the district court’s construction of the lease provision requiring RAP to pay buildout costs. The provision at issue states, “[i]n the event the Lease is terminated by notice within the initial three years of the term, Tenant shall pay [buildout costs].” The court construed the phrase “within the initial three years of the term” to modify “notice,” and not “terminated” thereby obligating RAP to pay for the buildout costs. RAP argues that the contract should have been interpreted so “three-years” would modify “terminated.” At a minimum, they argue that the district court should have determined the lease to be ambiguous.
In reviewing an order granting summary judgment, this court determines whether any genuine issues of material fact remain and whether the district court erred in application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990) (citation omitted). Generally, contract interpretation is a question of law, subject to de novo review. Info Tel Communications, LLC v. Minnesota Pub. Utils. Comm’n, 592 N.W.2d 880, 884 (Minn. App. 1999). Furthermore, whether or not a contract is ambiguous, that is to say reasonably susceptible to more than one construction, is a question of law. Blackburn, Nickels & Smith, Inc. v. Erickson, 366 N.W.2d 640, 643-44 (Minn. App. 1985), review denied (Minn. June 24, 1985). If the contract is properly determined to be ambiguous, its interpretation is then a question of fact. City of Virginia v. Northland Office Properties Ltd. Partnership, 465 N.W.2d 424, 427 (Minn. App. 1991), review denied (Minn. Apr. 18, 1991).
Leases are contracts, and should therefore be interpreted according to ordinary rules of contract interpretation. Amoco Oil Co. v. Jones, 467 N.W.2d 357, 360 (Minn. App. 1991). The objective of judicial interpretation of disputed contract provisions is to ascertain and give effect to the intention of the parties, Midway Ctr. Assocs. v. Midway Ctr., Inc., 237 N.W.2d 76, 78 (Minn. 1975), ascertaining that intent by examining the plain language. Amoco, 467 N.W.2d at 360. The meaning of the contract is determined by examining the intent as it is written, and not what was intended to be written. Wessels, Arnold & Henderson v. National Medical Waste, Inc., 65 F.3d 1427 (8th Cir. 1995).
Because “notice” and not “terminated” immediately precedes “within the initial three years of the term,” the unambiguous meaning of the phrase is that the three-year window is a notice provision. That is, buildout costs are to be paid if notice is given within the first three years.
RAP argues that strict application of grammar rules would lead to a result contrary to the intent of the parties, and it is clear that such construction would be error. See Patterson v. Grettum, 83 Minn. 69, 71, 85 N.W. 907, 907-08 (1901) (declining to follow rules of grammar in interpreting a notice when contrary intent was evident). But RAP’s argument which assumes that the addition of a six-month notice requirement to the three-year period specified throughout Article 3 would lead to an unintended result—the creation of a three-and-one-half year initial term. RAP is correct that this construction effectively makes the initial term three and one half years, but there is no reason why this is an unintended result. In fact, this appears to be the most sensible interpretation of the clause because other Article 3 language referring to a three-year period consistently refers to the time of “notice.”
Contract language should be construed as a whole and all clauses should be interpreted to be harmonious and meaningful. Chergosky v. Crosstown Bell, Inc., 463 N.W.2d 522, 525 (Minn. 1990); Brookfield Trade Center, Inc. v. County of Ramsey, 584 N.W.2d 390 (Minn. 1998). The first termination provision of Article 3 begins “During the initial three years of the term of the lease, [RAP] may give [Midway] not less than six months written notice.” A sensible reading of this provision is that the first termination provision applies if Midway gives (at least six months) notice of its intention during the first three years. Furthermore, the second termination provision clearly applies if, after the initial three years, RAP gives Midway notice. Construing the lease in its entirety, the three-year marker is clearly a notice provision.
RAP’s argument that the lease is ambiguous and therefore requires a jury determination is without merit. “A contract is ambiguous if it is susceptible to more than one interpretation based on its language alone.” Metropolitan Sports Fac. Comm’n v. General Mills, Inc., 470 N.W.2d 118, 123 (Minn. 1991). RAP asserts that because the parties have two different interpretations of the clause, it is inherently ambiguous. If this were the law, every case where contractual language was disputed would result in a fact-question. Contrarily, ambiguity only arises from reasonable and conflicting interpretations. Untiedt v. Grand Lab., Inc., 552 N.W.2d 571, 574 (Minn. App. 1996), review denied (Minn. Oct. 15, 1996). As the district court’s interpretation is consistent with other clauses in the lease as well as well-established canons of construction, alternative interpretations would not be reasonable, and the clause is not ambiguous.
RAP also argues that the district court erred in not considering parol evidence offered in support of their interpretation. Parol evidence is admissible to resolve ambiguities in a contract, Mrozik Constr., Inc. v. Lovering Assocs., Inc., 461 N.W.2d 49, 52 (Minn. App. 1990), but not to create ambiguities. Kenko Inc. v. Lowry Hill Constr. Co., 392 N.W.2d 18, 20 (Minn. App. 1986), review denied (Minn. Oct. 22, 1986). As this contract is unambiguous, the district court’s failure to consider parole evidence was not in error.
RAP contends that even if the district court properly granted summary judgment on the issue of liability under the contract, it erred when it granted summary judgment on the issue of damages. RAP suggests that significant issues of fact remained regarding the proper calculation of “buildout” costs.
There is no genuine issue of material fact when the record, taken as a whole, could not support a finding for the nonmoving party. DLH Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997). The party resisting summary judgment must make more than general assertions constituting speculation and conjecture, State Farm Mut. Auto. Ins. Co. v. Ford Motor Co., 572 N.W.2d 321, 325 (Minn. App. 1997), or rest on mere averments. DLH, 566 N.W.2d at 71. To the contrary, a genuine issue for trial must be established with substantial evidence. Id. at 69-70.
In opposing summary judgment on this issue, RAP raised the question of authorization for buildouts beyond those in Exhibit C by declaring that Waukon was without authority to order such buildouts. The district court, incorrectly describing Waukon as the “property manager,” ruled that Waukon had apparent authority to modify the lease buildout provisions because RAP clothed him with such authority by designating him as their property manager.
A manager has apparent authority to bind his employer to such contracts reasonably related to the business entrusted to him. Foley v. Wabasha-Nelson Bridge Co., 207 Minn. 399, 403, 291 N.W. 903, 905 (1940). Waukon’s title as program director of Fare SHARE clothed him with apparent authority to alter the terms of the contract so as to expand the construction beyond that listed in Exhibit C. As the Fare SHARE program director, he could be expected to know the specific needs of Fare SHARE and be authorized to have the building prepared to meet those needs. Anderson only denied granting Waukon actual authority, and as Waukon made no affidavit regarding his actions, RAP did not successfully defeat Midway’s summary judgment motion on the damages issue because they did not successfully deny Waukon’s apparent authority.
RAP also argues that Midway was obligated to renegotiate the lease in good faith under the lease’s second termination provision, which states:
[i]n the event the * * * program is being downsized but not terminated, [RAP] agrees that at the time of giving its notice * * * it will negotiate in good faith with [Midway]* * *.
RAP’s reliance on this provision is in error. The entire paragraph only applies if RAP had given notice after the initial three years. Furthermore, by its plain language, the clause only binds RAP and not Midway, to good faith negotiation.
Finally, RAP argues that the district court improperly awarded costs and attorney fees to Midway after RAP failed to respond to Midway’s first summary judgment motion. On review, we will not reverse a district court’s award of attorney fees absent an abuse of discretion. Becker v. Alloy Hardfacing & Eng’g Co., 401 N.W.2d 655, 661 (Minn. 1987). It is within the district court’s discretion to award costs and fees when one party’s neglect results in the other party’s loss of time and expense. See Finden v. Klaas, 268 Minn. 268, 272, 128 N.W.2d 748, 751 (1964) (stating that a court could alleviate prejudice resulting from delay and default proceedings by “requiring as a condition to vacate the judgment that defendant pay * * * a reasonable attorney’s fee”). As the district court awarded costs and attorney fees because it found that RAP’s attorney received the first summary judgment pleadings and failed to respond, we conclude that the district court did not abuse its discretion in awarding attorney’s fees to Midway.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.