This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2000).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C0-01-1969

 

 

Isidro Perez,

Respondent,

 

vs.

 

Las Americas, Inc.,

Appellant.

 

 

Filed June 4, 2002

Affirmed

Halbrooks, Judge

 

 

Hennepin County District Court

File No. HC01424512

 

Timothy B. Poirier, Lowry Hill Law Offices, 1900 Hennepin Avenue South, Minneapolis, MN 55403 (for respondent)

 

Jordan S. Kushner, 636 Sexton Building, 529 South 7th Street, Minneapolis, MN 55415 (for appellant)

 

 

 

            Considered and decided by Halbrooks, Presiding Judge, Peterson, Judge, and Huspeni, Judge.*

U N P U B L I S H E D   O P I N I O N

HALBROOKS, Judge

            Appellant Las Americas, Inc., challenges a district court order sustaining the housing court’s decision in this unlawful detainer action.  Appellant contends that the court erred in finding that (1) extrinsic evidence is not required to resolve the ambiguity in the lease option, (2) the option is too indefinite to be enforced, and (3) promissory estoppel does not apply.  Because the option is unambiguous, appellant’s part performance does not cure the indefiniteness in the option, and promissory estoppel is inappropriate in an unlawful detainer action, we affirm.

FACTS

            In November 1995, Richard G. Gray, Jr., began leasing space to appellant Las Americas, Inc., to operate a grocery store.  The lease extended through December 31, 2000, and included the following paragraph:

Lessor grants to lessee two (2) consecutive 5 year option periods for renewal and extension of this lease, terms and conditions shall be determined at time of the exercise of the options.

 

Appellant claims that Gray promised that this option would allow appellant to rent the space for 15 years without a rent increase, so that appellant could recoup the investment it made to renovate the space.  Appellant and Gray entered into a second lease approximately one year later for the adjoining storage space.  This lease also extended through December 31, 2000, and included an identical option clause.

            Respondent Isidro Perez, the owner of a bakery next to appellant’s store, purchased the building from Gray on October 30, 2000.  Soon after, respondent informed appellant that he would not renew the lease, but would rent the premises to appellant on a month-to-month basis.  Appellant responded with a letter claiming the right to extend its lease.  In January 2001, respondent advised appellant that he was increasing the rent, but appellant continued to pay the old rate.

            Respondent brought this action in the Hennepin County housing court, seeking restitution for the rent increase that appellant failed to pay.  Appellant sought to explain the lease option with extrinsic evidence, but the housing court found that the lease option unambiguously provided for a renewal of the lease.  The court further found that the renewal clause was too indefinite to be enforced and that appellant’s part performance of the lease did not cure this defect.  The housing court also summarily denied appellant’s defense of promissory estoppel.  As a result, the housing court concluded that the lease had been converted to a month-to-month lease at the increased rate and ordered appellant to pay the increase.  The district court sustained the decision.  This appeal follows.

D E C I S I O N

            Appellant first argues that the court erred in finding that the option provision is unambiguous.  It contends that the terms “renewal” and “extension” are legally inconsistent and, therefore, require extrinsic evidence to resolve the ambiguity.  Whether a contract provision is ambiguous is a question of law, which we review de novo.  Lamb Plumbing & Heating Co. v. Kraus-Anderson, 296 N.W.2d 859, 862 (Minn. 1980).  A contract is ambiguous when its terms are irreconcilable or reasonably susceptible to more than one meaning.  O’Shaughnessy v. Smuckler Corp., 543 N.W.2d 99, 101 (Minn. App. 1996), review denied (Minn. Mar. 28, 1996).  When determining whether an ambiguity exists, we interpret the contract so as to give effect to all its terms.  Indep. Sch. Dist. No. 877 v. Loberg Plumbing & Heating Co., 266 Minn. 426, 436, 123 N.W.2d 793, 799-800 (1963). 

It is well established that “renewal” and “extension” have distinct meanings in the context of lease options:

The legal distinction between an extension and a renewal of a lease is that an extension merely continues the original lease, while a renewal requires a new lease.

 

Unity Investors Ltd. P’ship v. Lindberg, 421 N.W.2d 751, 754 (Minn. App. 1988) (citing Med-Care Assocs., Inc. v. Noot, 329 N.W.2d 549, 551 (Minn. 1983)).  Thus, if a lease can be continued merely by the option-holder giving notice or by some other condition, the option is an extension.  Id.  But if any terms of the additional lease period need to be determined, the additional period is a renewal.  Id.

            Because this provision leaves the terms and conditions to “be determined,” the option does not merely extend the existing lease, but contemplates the creation of new lease terms.  Appellant’s argument fails because it focuses solely on the “renewal and extension” language rather than reading that phrase in the context of the entire paragraph.  See Indep. Sch. Dist. No. 877, 266 Minn. at 436, 123 N.W.2d at 799-800 (stating that a contract should be read as a whole to determine the parties’ intentions).  As such, appellant disregards the language that clarifies the apparent inconsistency.  Because we conclude that the option is not ambiguous when read in its entirety, extrinsic evidence is not required to construe the option.

            Appellant next argues that the court erred in finding that the option was too indefinite to be enforced and that its part performance cures any defect in the option.  We review the construction of contracts de novo.  Affiliated Banc Group, Ltd. v. Zehringer, 527 N.W.2d 585, 587-88 (Minn. App. 1995).  In King v. Dalton Motors, Inc., 260 Minn. 124, 126, 109 N.W.2d 51, 52 (1961), the Minnesota Supreme Court held:   

It is a fundamental rule of law that an alleged contract which is so vague, indefinite, and uncertain as to place the meaning and intent of the parties in the realm of speculation is void and unenforceable.

 

In King, the court held that an option clause was too indefinite to be enforced when it provided:

Lessor agrees to give tenant a first option to extend this lease for an additional five (5) years, the terms and conditions to be agreed upon at the time of the option renewal.  It is also agreed that lessor will give tenant a first option to purchase said property at any time after January 1, 1959, at a price to be negotiated and to be agreeable between the parties at the time of sale.

 

Id. at 125, 128, 109 N.W.2d at 52, 54.  While the court’s analysis focused on the “first option to purchase” language, the court also stated:

Our conclusions apply with like effect to the “first option to extend” provision of the lease * * * since all of the terms and conditions of the renewal lease here were “to be agreed upon.”

 

Id. at 128, 109 N.W.2d at 54.  When a provision is indefinite on its face, a court should nevertheless enforce the clause when it can reasonably surmise the parties’ intent as to the indefinite terms.  See Hartung v. Billmeier, 243 Minn. 148, 151, 66 N.W.2d 784, 788 (1954) (seeking the parties’ intent by examining the contract as a whole and the surrounding circumstances); Johnson v. Quaal, 250 Minn. 154, 157, 83 N.W.2d 796, 798 (1957) (reviewing the parties’ performance subsequent to forming the agreement to see if any of the intended terms are evident from their conduct).

Here, the renewal provision is too indefinite to be enforced because, like King, it explicitly states that all “[t]erms and conditions shall be determined at time of the exercise of the options.”  The clause is void because the meaning and intent of the parties as to those terms is mere speculation.  See King, 260 Minn. at 126, 109 N.W.2d at 52.  Examining the contract as a whole does nothing to fill in the gaps because, by its terms, the parties did not intend to set the terms until the option was exercised.  Similarly, the parties’ performance of the remaining clauses of the lease is of no significance because the “shall be determined” language indicates that none of the terms exist or will exist until the option is exercised.  Thus, the parties’ actions only illustrate what their agreement is, not what it would be if appellant exercised the option.  Because neither the parties’ words nor their actions cure the indefiniteness of the renewal option, we conclude that the provision is unenforceable.

Appellant’s final argument concerns the summary denial of its promissory-estoppel claim.  Because this is an unlawful detainer action, equitable doctrines such as promissory estoppel do not apply.  See Thomey v. Stewart, 391 N.W.2d 533, 536 (Minn. App. 1986) (“[A]n unlawful detainer action merely determines the right to present possession and does not adjudicate the legal or equitable ownership rights of the parties”).  Therefore, the court properly denied appellant’s promissory-estoppel claim.

            Affirmed.



*  Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.