This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
IN COURT OF APPEALS
Howard Hallin,
Respondent,
vs.
Judi A. Garri, (fka Gagnon),
Appellant,
and
Judi A. Garri, (fka Gagnon),
Appellant,
vs.
Howard Hallin,
Respondent.
Isanti County District Court
File No. C0011299
Kenneth Hertz, Hertz and Associates, 3853 Central Avenue Northeast, Columbia Heights, MN 55421 (for appellant)
Keith D. Johnson, Wold, Jacobs & Johnson, Barristers Trust Building, 247 Third Avenue South, Minneapolis, MN 55415 (for respondent)
Considered and decided by Anderson, Presiding Judge, Toussaint, Chief Judge, and Wright, Judge.
WRIGHT, Judge
In this lease dispute involving consolidated cases, respondent-landlord sued appellant-tenant in an eviction proceeding and tenant sued landlord for specific performance of the purchase option in the lease. Tenant appeals the district court’s summary judgment granting restitution of landlord’s property in the eviction action and denying tenant’s request for specific performance of the purchase option. We affirm.
In the spring of 1994, appellant Judy Garri (Garri)[1] answered respondent Howard Hallin’s (Hallin) newspaper advertisement for a rental home in Isanti, Minnesota. Following several discussions between the parties regarding rental and purchase options, Garri and her brother, both licensed real estate agents, drafted the “Property Lease with Option to Purchase” (lease agreement). The lease agreement was executed by Hallin and Garri on June 3, 1994, setting the term of the lease for 28 months beginning on May 1, 1994, and ending on October 1, 1996, and the purchase price at $73,500. The lease agreement specifically provided that
[t]enant may exercise the option at any time during the term of the Lease or any extension thereof by * * * delivering written notice to Landlord of Tenant’s intent to exercise the Option together with Earnest Money of One Thousand Dollars * * * and * * * The Purchase Agreement for the Property * * * .
After October 1, 1996, Hallin continued to accept rent from Garri. The parties neither entered into a new lease nor provided written or oral notice of a lease extension. Throughout this period, Garri continued to rely on the purchase price of $73,500. She attempted to make arrangements to purchase the property, but was unable to obtain financing. In a letter dated June 27, 2001, Hallin advised Garri that, after commissioning a market analysis that estimated the property value to be around $140,000, he was listing the home for sale with a real estate agent. Hallin offered to sell Garri the property for $90,000. When Garri was unable to obtain financing, Hallin mailed another letter to her on July 12, 2001, directing her to vacate the property by October 1, 2001.
On September 26, 2001, Garri attempted to exercise the option to purchase the property for $73,500. Hallin refused to sell Garri the property at that price, and filed an eviction complaint when she failed to vacate the premises.
Both parties filed motions for summary judgment. Garri sought dismissal of the eviction complaint and specific performance of the purchase option. Hallin sought restitution of his property pursuant to the eviction action. On March 5, 2002, the district court heard all claims in a consolidated summary judgment hearing and granted summary judgment in favor of Hallin. The district court ruled that Hallin’s acceptance of Garri’s rent payment after the written termination date for the 28-month lease agreement resulted in the extension of the lease agreement for an additional 28 months. The lease agreement, along with its purchase option, expired on February 1, 1999. The purchase option, therefore, was no longer in effect when Garri attempted to exercise it in September 2001. Garri now appeals.
On appeal from summary judgment, this court asks whether there are any genuine issues of material fact, and whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). No genuine issue of material fact exists “[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party.” DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (alteration in original) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356 (1986)). “[T]he party resisting summary judgment must do more than rest on mere averments.” Id. at 71. A genuine issue for trial must be established by substantial evidence. Id. at 69-70. This court views the evidence in the light most favorable to the party against whom summary judgment was granted. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). Summary judgment is appropriate when a party fails to make a showing sufficient to establish the existence of an element essential to the party’s case. Bersch v. Rgnonti & Assocs., Inc., 584 N.W.2d 783, 786 (Minn. App. 1998), review denied (Minn. Dec. 15, 1998).
In order to determine the nature of the parties’ property rights, we must first determine the duration of the lease agreement. There is no dispute that the term of the original lease agreement extended for 28 months, from May 1, 1994, to October 1, 1996. Because the lease agreement expressly provided Garri the option to extend the lease for an indefinite period and Hallin continued to accept Garri’s rent, Garri argues that the lease agreement, including the purchase option, remained in effect when she attempted to purchase the home. We disagree.
When a tenant exercises a right of extension by remaining on the premises and paying rent, the lease is extended for another term. Kean v. Story & Clark Piano Co., 121 Minn. 198, 200, 140 N.W. 1031, 1032 (1913).
If the lease can be continued by the party holding the option merely on timely notice or on some other condition, no new lease is required, and the option is an extension.
Unity Investors Ltd. P’ship v. Lindberg, 421 N.W.2d 751, 754 (Minn. App. 1988). Under these circumstances, the landlord’s acceptance of rent constitutes a waiver of any notice requirement set forth in the lease.
The extension provision of the lease agreement in this case provides, in pertinent part:
The landlord further agrees that at the end of the term of the lease, Tenant has the right, at Tenant’s sole option, to extend the term of the Lease for an indefinite period so long as tenant is not then in breach of any material provision of the Lease.
(Emphasis added.) In Hildebrandt v. Newell, an action by a lessor against a holdover lessee for past-due rent, the supreme court held that because the extension period of the lease was indefinite, the one-year lease was extended for an additional one-year term. Hildebrandt v. Newell, 199 Minn. 319, 321, 272 N.W. 257, 258 (1937); see also 49 Am. Jur. 2d Landlord and Tenant § 158 (1995) (original lease terms continue as implied intention of parties). Absent a definite term for the duration of the lease’s extension, any extension due to holdover and payment is limited to the duration of the original lease. Hildebrandt, 199 Minn. at 321, 272 N.W. at 258. Holdover by the tenant under an indefinite extension provision renews all of the terms of the original lease except the extension clause. Id.
Because the term of the lease extension is indefinite, after the October 1, 1996, expiration date of the original lease, Garri’s holdover and timely payment of the rent resulted in an extension of all terms of the original lease, except the right of extension, for one additional 28-month period. See id. The purchase option, a provision of the original lease, therefore, remained in effect until the lease extension expired on February 1, 1999.
Garri remained a tenant beyond February 1999. By continuing to pay rent after the lease extension expired, the lease term became month-to-month. See Mid Continent Mgmt. Corp. v. Donnelly, 372 N.W.2d 814, 816 (Minn. App. 1985), review denied (Minn. Oct. 24, 1985). As such, Garri’s tenancy was at will. See Thompson v. Baxter, 107 Minn. 122, 124, 119 N.W. 797, 798 (1909) (defining tenancy at will as one that has no definite term); 49 Am. Jur. 2d Landlord and Tenant § 133 (1995). With Garri’s at-will tenancy, the rent requirements and landlord covenants remained in force. See Minn. Stat. § 504B.161 (2000) (enumerating landlord covenants). The purchase option, however, was no longer in effect. See Hildebrandt, 199 Minn. at 321, 272 N.W. at 258. The district court correctly concluded that the lease extension, along with Garri’s option to purchase the property for $73,500, expired on February 1, 1999. We, therefore, affirm the district court’s denial of Garri’s request for specific performance.
Garri next argues that if we conclude that the lease terminated, then we also must reverse the eviction action, because the eviction action commenced more than three years after the termination, in violation of Minn. Stat. § 504B.311 (2000). This argument also fails.
Minn. Stat. § 504B.311 provides, in pertinent part, that
[n]o person may bring an eviction action against an occupant of any premises where the occupant’s lease, * * * was terminated more than three years before the beginning of the action and where the occupant of the premises * * * [was] in quiet possession for three consecutive years immediately before the filing of the eviction.
As discussed above, the district court correctly found that the lease was extended for an additional 28-month term and terminated on February 1, 1999. The at-will tenancy that followed was subject to termination on a month’s notice by either party. Thompson, 107 Minn. at 124, 119 N.W. at 798. Hallin terminated the at-will tenancy when he served his July 2001 notice to vacate the premises by October 1, 2001. When Garri refused to vacate, Hallin filed an eviction action on October 30, 2001. Under the statute, Hallin’s deadline to evict Garri was not until February 1, 2002, three years from the expiration of the lease extension. The eviction action was timely filed.
Affirmed.
[1] Over the course of the lease term and these proceedings Garri has also used the names of Judy Walker and Judy Gagnon.