Bain v. Pioneer Plaza Shopping Center Ltd. Liability Co., 93CA0814
| Decision Date | 09 February 1995 |
| Docket Number | No. 93CA0814,93CA0814 |
| Parties | Norton BAIN and The Bain Corporation, a Colorado corporation, Plaintiffs-Appellants and Cross-Appellees, v. PIONEER PLAZA SHOPPING CENTER LIMITED LIABILITY COMPANY, a Colorado limited liability company; Stum Enterprises, a Colorado general partnership; Elroy E. Stum; Merlyn E. Stum, individually and as trustee for Tammy Lynn Stum Trust, Gretchen Ann Stum Trust, Jennifer Dawn Stum Trust, Heidie Sue Stum Trust, Valerie Lou Stum Trust, and Eric Lewis Stum Trust; Verlyn D. Stum, individually and trustee for Carolyn Eileen Stum Trust, Christine Elaine Stum Trust, and Catherine Ellen Stum Trust; Theolyn Stum Wilson, individually and as Trustee of Andrea Sue Wilson Trust and Melanie Ruth Wilson Trust, Defendants-Appellees and Cross-Appellants. . V |
| Court | Colorado Court of Appeals |
Trott, Kunstle & Hughes, James A. Reed, Daniel M. Winograd, P.C., Daniel M. Winograd, Colorado Springs, for plaintiffs-appellants and cross-appellees.
Silverman & Riley, William S. Silverman, Denver, Hendricks, Hendricks & Shakes, P.C., David L. Shakes, Colorado Springs, for defendants-appellees and cross-appellants.
Opinion by Judge DAVIDSON.
In this action for declaratory judgment, defendants, Plaza Shopping Center Limited Liability Company (Pioneer Plaza); Stum Enterprises; Elroy E. Stum; Merlyn E. Stum, individually and as trustee for Tammy Lynn Stum Trust; Gretchen Ann Stum Trust; Jennifer Dawn Stum Trust; Heidie Sue Stum Trust; Valerie Lou Stum Trust; Eric Lewis Stum Trust; Verlyn D. Stum, individually and as trustee for Carolyn Eileen Stum Trust; Christine Elaine Stum Trust; Catherine Ellen Stum Trust; Theolyn Stum Wilson, individually and as Trustee of Andrea Sue Wilson Trust; and Melanie Ruth Wilson Trust, (the Stums) appeal from the summary judgment entered in favor of plaintiffs, Norton Bain and The Bain Corporation. The primary issue in this case is whether the subground lease at a shopping center remained in effect after the master ground lease of the sublessor was terminated. We hold that it did not and, therefore, reverse.
The following facts are undisputed. The Stums own land in Colorado Springs that has been developed into a shopping center. Plaintiffs subleased a portion of that property, pursuant to the terms of a master lease between the Stums and the shopping center developer, and built a liquor store on the site.
The master ground lease between the Stums and the sublessor contained a provision which allowed subtenants an option to obtain, upon their request, an agreement from the Stums that, in the event the master lease should be terminated, the Stums would honor the sublease as if it were a direct lease with them.
This provision, set forth in paragraph 11(b) of the master lease, provides, in pertinent part:
Tenant may sublet the whole or any portion of the premises from time to time without notice or consent of the Landlord. Landlord agrees that upon request of any subtenant, mortgagee or beneficiary of a deed of trust of the premises or any part thereof to which Landlord has subordinated his interest to execute agreements providing that, in the event this lease is cancelled or terminated for any reason whatsoever, any sublease of the premises or any portion thereof will become a direct lease between Landlord and sub-tenant if such sub-tenant is not then in default under said sublease.
Plaintiffs occupied the site for fifteen years but did not request that the Stums execute a non-disturbance agreement pursuant to paragraph 11(b) during the time the master lease was in effect.
During plaintiffs' subtenancy, Lowell Ing, the successor in interest to the shopping center developer, borrowed money from Seafirst Mortgage Corporation and gave Seafirst a deed of trust on the master leasehold as collateral. Seafirst also entered into a direct and independent agreement with the Stums that permitted Seafirst to enter into a new master lease for the shopping center if the master lease with Ing were to be terminated.
In early 1990, Ing defaulted under the master lease. The Stums served Ing and Seafirst with a notice of default and a 45-day demand for possession in accordance with the provisions of the master lease. Ing failed to cure the default and the Stums served Ing with a statutory demand for possession pursuant to § 13-40-104, C.R.S. (1987 Repl.Vol. 6A) which notified Ing that his tenancy was to be terminated as of the third day following service of this demand.
Ing failed to cure the default within three days of the demand and the master lease was terminated as of May 24, 1990.
The Stums then filed an unlawful detainer action to recover possession. After possession was restored to the Stums, the property was placed into receivership pending disposition of Seafirst's right to enter into a new lease.
Seafirst assigned its right to enter into a new lease to a third party who then assigned that right to Pioneer Plaza. Pioneer Plaza subsequently negotiated a new master lease with the Stums.
In August 1990, for the first time, plaintiffs requested that the Stums recognize the sublease as a direct lease pursuant to paragraph 11(b). The Stums denied this request.
Because plaintiffs did not have a non-disturbance agreement with the Stums, Pioneer Plaza notified plaintiffs that they were tenants at will.
Plaintiffs filed suit against the Stums and Pioneer Plaza requesting a declaratory judgment that the sublease was still in full force and effect.
When considering plaintiffs' subsequent motion for summary judgment, the trial court ruled that because paragraph 11(b) of the master lease gave plaintiffs the right to request a non-disturbance agreement, and because it was silent as to the time in which a non-disturbance agreement must be requested, a reasonable time must be implied. The trial court then found that the August 1990 demand for a non-disturbance agreement was made within a reasonable time and entered judgment in favor of plaintiffs.
Defendants argue that the trial court erred in granting summary judgment in favor of plaintiffs because, by the plain terms of the master lease, no direct lease with the Stums was to arise unless a non-disturbance agreement was requested before the master lease was terminated. We agree.
The construction of an unambiguous lease is an issue of law; accordingly, this court is not bound by the trial court's conclusions and must construe the lease according to the general rules applicable to written instruments. See Collins v. Shanahan, 34 Colo.App. 82, 523 P.2d 999 (1994), aff'd in part & rev'd in part on other grounds, 189 Colo. 169, 539 P.2d 1261 (1975). The intention of the parties to the lease controls, and such intention ordinarily should be determined in the light of good sense and the plain understanding of the words used. See Charles Ilfeld Co. v. Taylor, 156 Colo. 204, 397 P.2d 748 (1964).
In its order, the trial court apparently interpreted paragraph 11(b) as establishing the termination of the master lease as the event which triggered plaintiffs' right to request a non-disturbance agreement. We do not agree with this construction.
To the contrary, according to the plain language of paragraph 11(b), a request by a sublessee is the event which would trigger the Stums' duty to "execute agreements providing that, in the event [the master lease] is terminated," the sublease would become a direct lease. By this clear language, the request must precede the termination of the master lease.
Thus, even if we assume that the trial court was correct in concluding that, because paragraph 11(b) is silent as to time, a reasonable time must be implied, this reasonable time period necessarily expires when the master lease expires or is terminated. "[O]nce a lease is extinguished it is legally nonexistent." First Interstate Bank v. Tanktech, Inc., 864 P.2d 116, 121 (Colo.1993).
Therefore, after the master lease was terminated, all of its provisions were terminated as well, including the offer to execute a non-disturbance agreement. Cf. Aigner v. Cowell Sales Co., 660 P.2d 907 (Colo.1983) (); Strauss v. Boatright, 160 Colo. 581, 418 P.2d 878 (1966) ().
Plaintiffs contend, however, that because they are third-party beneficiaries of paragraph 11(b), it survives the termination of the master lease. We disagree.
As direct third-party beneficiaries of paragraph 11(b), plaintiffs have a right to enforce its provisions. See E.B. Roberts Construction Co. v. Concrete Contractors, Inc., 704 P.2d 859 (Colo.1985). A third-party beneficiary, however, may not enforce contract provisions entered into for its benefit if, prior to its acceptance by the third party, the contract is annulled, rescinded, or cancelled by the direct parties to the contract. International Trust Co. v. Keefe Manufacturing & Investment Co., 40 Colo. 440, 91 P. 915 (1907); cf. Jorgensen v. St. Paul Fire & Marine Insurance Co., 158 Colo. 466, 408 P.2d 66 (1965) ().
Plaintiffs had the entire life of the master lease, almost fifteen years, in which to determine whether they wished to invoke paragraph 11(b) and obtain the protection afforded by a non-disturbance agreement. The request for such an agreement after the master lease was terminated was untimely as a matter of law and, thus, ineffective. See Bennett's, Inc. v. Krogh, 115 Colo. 18, 168 P.2d 554 (1946) ().
Because plaintiffs did not...
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