E. P. Hinkel & Co., Inc. v. Manhattan Co.

• Decision Date: 25 October 1974
• Docket Number: No. 72-1553,72-1553
• Citation: 506 F.2d 201,165 U.S.App.D.C. 140
• Parties: E. P. HINKEL & COMPANY, INC. v. The MANHATTAN COMPANY, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 201

506 F.2d 201

165 U.S.App.D.C. 140

E. P. HINKEL & COMPANY, INC. v. The MANHATTAN COMPANY, Appellant.

No. 72-1553.

United States Court of Appeals, District of Columbia Circuit.

Argued Nov. 2, 1973.

Decided Oct. 25, 1974.

John F. Mahoney, Jr., Washington, D.C., with whom Charles E. Pledger, Jr., Washington, D.C., was on the brief, for appellant.

James A. Treanor, III, Washington, D.C., with whom Bernard J. Long, Jr., Washington, D.C., was on the brief, for appellee.

Before TAMM, ROBINSON and WILKEY, Circuit Judges.

TAMM, Circuit Judge:

Appellee E. P. Hinkel & Co. (Hinkel) brought this action seeking damages and an injunction, alleging that appellant The Manhattan Co. (Manhattan) had breached the provisions of a lease by failing to pay rent and by operating a carpet sales business in violation of a covenant not to compete. Manhattan answered that any breach on its part was excused by Hinkel's conduct, and counterclaimed for damages. After discovery, Hinkel moved for summary judgment. District Court Judge June L. Green granted Hinkel's motion, awarded injunctive relief, and postponed the question of damages for a later hearing. ¹ Judge Green also stayed the injunction pending this appeal by Manhattan which challenges the award of summary judgment and injunctive relief. Although our reasoning differs from that of the learned trial judge, we conclude that Judge Green properly granted Hinkel's motion for summary judgment. We also conclude that Manhattan's challenge to the injunction is now moot.

The facts leading to this dispute are not in conflict. Until 1959, E. P. Hinkel & Co. operated both a rug cleaning, storage, and repair business, and a carpet sales and installation business in the District of Columbia. With the death of E. P. Hinkel, Jr., the Hinkel family decided to lease the rug cleaning business since they could not operate both businesses successfully. J.A. at 28-29. Negotiations between Hinkel and Manhattan began in fall, 1958, culminating in an agreement, signed February 4, 1959, whereby Hinkel leased its rug cleaning business, machinery, equipment, trucks, and the majority of its building to Manhattan for ten years at an annual rental of $50,000 with two five year options to renew. ² The interpretation of the 1959 lease is paramount to this litigation.

In 1967, Hinkel leased its carpet sales business to Manhattan through 1974 at an annual rental of $12,000 with a five year option to renew. In return, Manhattan agreed to extend the original lease of the rug cleaning business through 1974. Manhattan also received an option to purchase both businesses for $130,000 in 1974 or 1979. These additions were reflected as amendments to the 1959 lease which otherwise remained 'in full force and effect . . ..' ³ J.A. at 61.

During October, 1959, the carpet cleaning machinery became inoperative due to ordinary wear and tear. J.A. at 16. Mr. Paul Hinkel was informed of the problem and suggested that Manhattan obtain an estimate of the cost of replacement. J.A. at 68. In May, 1970, Manhattan presented an estimate of $210,000 accompanied by a written demand that Hinkel & Co. replace all worn-out machinery. J.A. at 62-63. The company declined. On December 31, 1970, Manhattan abandoned the premises and refused to pay further rental installments. Virtually simultaneously, on January 1, 1971, Manhattan announced that it would begin operating a carpet cleaning and sales business under its own name.

Throughout this litigation Hinkel has maintained that Manhattan breached the 1959 lease by refusing to make rental payments and by operating a carpet sales business in contravention of a covenant not to compete. On appeal, Manhattan contends that Judge Green erred in granting summary judgment and enjoining it from operating a carpet sales business. It argues now as it did in the trial court that Hinkel had either a contractual duty to replace the machinery or that Hinkel assumed this duty as a matter of law. Hinkel denies the existence of any such legal or contractual duty.

Counsel for Manhattan has informed us that Manhattan is no longer engaged in the carpet sales business prohibited by the covenant not to compete. Consequently, Manhattan's challenge to the injunction is moot. Although this court's jurisdiction is predicated upon 28 U.S.C. 1292(a)(1), which provides for the interlocutory appeal of orders granting, denying, modifying, or dissolving injunctions, we nevertheless retain jurisdiction to decide the issues concerning summary judgment. An appeal from an order made appealable by 28 U.S.C. 1292 carries with it the power to review the merits of the case. Smith v. Vulcan Iron Works, 165 U.S. 518, 525, 17 S.Ct. 407, 41 L.Ed. 810 (1897); Johnson v. England, 356 F.2d 44, 46 n. 1 (9th Cir. 1966). A resolution of the propriety of awarding summary judgment is still important to both parties as Hinkel's claim for substantial damages awaits determination in the trial court. As Justice, then Circuit Judge, Blackmun said in the strikingly similar case of Hedberg v. State Farm Mutual Automobile Insurance Co., 350 F.2d 924, 933 (8th Cir. 1965), 'it would be a waste of time and seemingly futile to dismiss this appeal as moot now only to have the very same issues brought to us once again after damages have been determined.'

In reviewing a motion for summary judgment, we must determine whether there are genuine issues of material fact, and if not, whether the moving party is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56(c); Dewey v. Clark, 86 U.S.App.D.C. 137, 180 F.2d 766, 770 (1950). In reviewing the grant of this motion we are not bound by the findings of the trial judge, but must undertake an independent review of the record. See National Life Insurance Co. v. Silverman, 147 U.S.App.D.C. 56, 454 F.2d 899, 908-914 (1971). Having carefully reviewed the record from the trial court, including the complaint and answer, the interrogatories, the affidavits, the parties' statements as to genuine issues, and the contract itself, we are convinced that there is no genuine issue of material fact and that Hinkel is entitled to judgment as a matter of law.

Manhattan asserts that the proper interpretation of the 1959 lease raises genuine issues of fact. It argues that a jury trial is necessary to determine whether Hinkel is contractually obligated to replace the worn-out machinery. However, jury trials are only required where the contract is ambiguous. This jurisdiction follows the general rule that the court interprets unambiguous contractual provisions. In so doing, the court does not consider extrinsic evidence, but finds the intention of the parties in the language used to express their agreement. See Vogel v. Tenneco Oil Co., 150 U.S.App.D.C. 383, 465 F.2d 563 (1972); Henson Creek Development Co. v. Richards, 296 F.Supp. 915 (D.D.C.1969); Burbridge v. Howard University,305 A.2d 245 (D.C.App.1973); Minmar Builders, Inc. v. Beltway Excavators, Inc., 246 A.2d 784 (D.C.App.1968); Gagnon v. Wright, 200 A.2d 196 (D.C.App.1964). We have thoroughly examined the contract and find it to be clear and unambiguous. Hence, no jury resolution of the meaning of any contractual term is necessary. We find further that the contract does not explicitly or implicitly obligate Hinkel to replace the worn-out machinery.

The contract before us is a detailed one, defining in separate articles the rights and obligations of the parties with respect to the interior and exterior of the building, Hinkel's rug cleaning business, and the machinery and equipment used in that business. The most significant contractual provision states that:

Manhattan will maintain at its expense, (Hinkel's) machinery, equipment, and trucks in proper operating condition. Upon termination of this lease, or any renewal thereof, Manhattan will return the leased machinery and equipment to Hinkel in such condition as when received, ordinary wear and tear and damage by fire, Act of God, or public enemy excepted; . . . . . . With regard to replacement of Hinkel's above machinery and equipment, Manhattan may replace the same during the term of this lease, and all renewals thereof . . ..

J.A. at 40.

Other important provisions of the lease manifest the care the parties exercised in fashioning this agreement. Manhattan is required to compensate Hinkel if Manhattan replaces machinery that still has value. J.A. at 40. In determining rental payments for the renewal periods, any increase in rent is to be reduced by five percent of the cost of the original machinery no longer in service. J.A. at 44. Manhattan, rather than Hinkel, is to maintain the buildings, equipment, and machinery to District of Columbia Code standards. J.A. at 42.

We think that the plain meaning of the parties' agreement respecting repair and replacement is that Manhattan was required to keep the machinery in good repair, but was not responsible for ordinary depreciation. Manhattan also could replace the existing rug cleaning machinery but was not obligated to do so. Most importantly, nothing in the lease explicitly or implicitly places the burden of replacement on Hinkel. In fact, the most likely inference is that the parties anticipated that Manhattan would, if it so desired, replace the machinery since: 1) Manhattan had exclusive control of the machines and was required to make repairs including those necessary to conform to health and safety codes; 2) Manhattan was to receive credit against future rental increases for equipment and machinery that it replaced; and 3) in 1967, just two years before the equipment wore out, Hinkel gave Manhattan the option to purchase the rug cleaning and carpet sales businesses for $130,000, a nominal purchase price for two businesses that commanded a combined...