may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1998).
STATE OF MINNESOTA
IN COURT OF APPEALS
Filed August 17, 1999
Affirmed as modified
Beltrami County District Court
File No. C998353
Ralph T. Smith, Smith Law Firm, P.A., 115 Fifth Street Northwest, Bemidji, MN 56601 (for respondent)
James B. Wallace, 201 East First Street, P.O. Box 27, Park Rapids, MN 56470 (for appellant)
Considered and decided by Crippen, Presiding Judge, Short, Judge, and Harten, Judge.
In 1986, Kraus-Anderson, Inc. (landlord) and Johanneson's, Inc. (tenant) entered into a 15-year lease that provides the tenant will pay a pro rata share of the landlord's expenditures for maintaining the common areas in a Bemidji shopping center. In 1995, the landlord hired a commercial real estate management company and began imposing an additional 5% management fee calculated on the tenant's gross revenues. The tenant objected to the change in billing and filed this declaratory judgment action. After a bench trial, the trial court concluded the landlord was levying an impermissible common area maintenance charge. On appeal, the landlord argues the trial court erroneously rewrote the parties' contract. We affirm as modified.
The findings of a trial court, sitting without a jury, are entitled to the same weight on review as a jury verdict. Rehberger v. Project Plumbing Co., 295 Minn. 577, 578, 205 N.W.2d 126, 127 (1973). Our review is limited to determining whether the trial court's findings are clearly erroneous. Minn. R. Civ. P. 52.01. A trial court's findings will be reversed only if, upon review of the entire record, we are left with the definite and firm conviction that a mistake has been made. Gjovik v. Strope, 401 N.W.2d 664, 667 (Minn. 1987).
The lease states that the landlord had "sole discretion" in determining expenditures and maintenance for the common areas and the tenant agrees to pay a proportionate share of "all expenditures incurred by LANDLORD in managing, maintaining, [and] repairing" the common areas. The trial court determined the "5% management fee" was an "overhead" charge and not an "expenditure" attributable to the tenant under the parties' lease. The record demonstrates: (1) from 1986 through 1995, the landlord charged the tenant only for tenant's share of actual maintenance expenditures and the salary and fringe benefits of the shopping center's manager; (2) in 1995 and without the tenant's knowledge, the landlord entered into a contract with its wholly owned subsidiary for the management and maintenance of the common areas; (3) the contract provided that the landlord would pay a management and maintenance fee equivalent to 5% of the gross revenues of the tenant for management services such as licenses and general office overhead and staff; and (4) in 1996, the landlord began collecting this fee from the tenant, but personnel and services maintaining the common area did not change. Viewing the record in the light most favorable to the trial court's decision, we cannot say the trial court erred by concluding the 5% management fee was not an "expenditure," but was an impermissible "overhead" charge. See Midway Ctr. Assocs. v. Midway Ctr., Inc., 306 Minn. 352, 356, 237 N.W.2d 76, 78 (1975) (stating court ascertains parties' intent by determining what parties reasonably meant to accomplish in view of contract as whole, plain language, and surrounding circumstances); Black's Law Dictionary 577, 1103-04 (6th ed. 1990) (defining "expend" as paying out to receive something in return and "overhead" as continuous administrative or executive costs incident to management but not attributable to any identifiable product or service); Webster's Unabridged Dictionary 1275 (2nd ed. 1983) (defining "overhead" as general, continuing costs involved in running business, such as rent, furnishings, lighting, heating, insurance, and office expenses).
The landlord also argues the trial court erred by prematurely determining that all management fees in future lease years would be calculated in the same fashion as used in 1995 and prior years. We agree. The lease provides the tenant must pay a proportion of expenditures, but it does not define a method of calculating expenditures or restrict the amount of expenditures. Although expenditures must be charges provided for by the lease, we conclude the trial court erred by restricting the method of calculating expenditures. See Foley Bros. v. St. Louis County, 158 Minn. 320, 326, 197 N.W. 763, 765 (1924) (noting court cannot change terms of contract or construe away its true meaning and intent as understood by parties at time it was adopted). Therefore, we affirm the trial court's conclusion that the fee was not an expenditure, but modify by removing the trial court's restriction on the calculation of future expenditures.
Affirmed as modified.