Capital Commercial Properties, Inc. v. Vina Enterprises, Inc.
| Decision Date | 15 September 1995 |
| Docket Number | No. 941926,941926 |
| Parties | CAPITAL COMMERCIAL PROPERTIES, INC. v. VINA ENTERPRISES, INC. Record |
| Court | Virginia Supreme Court |
Rodney F. Page, Washington, DC (Eric B. Bruce; Howard B. Possick; Arent, Fox, Kintner, Plotkin & Kahn, on briefs), for appellant.
George H. Ragland, Jr., Falls Church (Mary Ellen Slugg, Falls Church; Robert J. Zelnick, Woodbridge; Ragland & Kawamoto, Falls Church; Szabo, Quinto, Zelnick & Erickson, Woodbridge, on brief), for appellee.
Present: CARRICO, C.J., and COMPTON, STEPHENSON, WHITING, 1 LACY, HASSELL and KEENAN, JJ.
The primary issue we consider in this appeal is whether an "option to extend" provision in a lease is ambiguous.
The tenant, Vina Enterprises, Inc., executed a lease with Capital Commercial Properties, Inc. Vina leased approximately 22,020 square feet of ground floor area in the Plaza Seven Shopping Center, located in the City of Falls Church. Vina subdivided the demised space and sublet the demised space to certain shopkeepers, who operated a "mini-mall" known as the Eden Center.
The original leasehold period was 10 years. The lease contains the following paragraphs pertinent to this dispute. Paragraph 34(A), described as the "Option to Extend," states in relevant part:
34. (A) Provided Tenant shall not then be in default under any of the agreements and conditions in this lease contained, Tenant shall have the right, at its election, to extend the original term of this lease for an additional period of five (5) years commencing upon the expiration of the original term, provided, further, that Tenant shall give Landlord notice of the exercise of its election hereunder not less than six (6) months prior to the expiration of the original term. Provided Tenant shall not then be in default under any of the agreements and conditions in this lease contained, Tenant shall have the right, at its election, to extend the original term of this lease as previously extended for an additional period of five (5) years commencing upon the expiration of the original term as previously extended, provided, further, that Tenant shall give Landlord notice of the exercise of its election hereunder not less than six (6) months prior to the expiration of the original term as previously extended.
Paragraph 15(A) of the lease, which governs defaults, states in relevant part:
15. (A)(1) If Tenant shall default in the payment of rent or any other payment required of Tenant and if Tenant shall fail to cure said default within seven (7) days after Landlord shall give notice thereof to Tenant, or (2) if Tenant shall default in the performance or observance of any other agreement or condition on its part to be performed or observed hereunder and if Tenant shall fail to cure said default within fifteen (15) days after Landlord shall give notice thereof to Tenant ... then, in any of such cases, Landlord lawfully may, immediately or at any time thereafter, and without any further notice or demand, enter into and upon the demised premises, or any part thereof in the name of the whole, by force or otherwise, and hold the demised premises as if this lease had not been made.
Paragraph 24 of the lease, which governs failure of performance, states in relevant part:
24. (A) If Tenant shall default in the performance or observance of any agreement or condition in this lease contained on its part to be performed or observed, other than an obligation to pay money, and shall not cure such default within thirty (30) days after notice from Landlord specifiying [sic] the default, Landlord may, at its option, without waiving any claim for damages for breach of agreement, at any time thereafter cure such default for the account of Tenant, and any amount paid or any contractual liability incurred by Landlord in so doing shall be deemed paid or incurred for the account of Tenant, Tenant agreeing to reimburse Landlord promptly therefor or save Landlord harmless therefrom. Landlord may cure any such default as aforesaid prior to the expiration of said waiting period, but after notice to Tenant, if the curing of such default prior to the expiration of said waiting period is reasonably necessary to protect the real estate or Landlord's interest therein or to prevent injury or damage to persons or property.
Relying upon paragraph 34(A), Vina gave Capital notice of its intent to exercise the option to extend. Upon receipt of Vina's notice, Capital informed Vina that the option could not be exercised because of certain purported defaults. Vina sought to cure the purported defaults and notified Capital of its efforts to do so.
Thereafter, Vina forwarded to Capital a new notice of its intention to extend the lease. Vina also requested that Capital notify Vina whether Capital believed Vina had exercised properly the option to extend the lease. Capital did not respond to Vina's requests, nor did Capital assert any additional defaults until the option renewal period had expired.
Vina filed this action seeking a declaration that it had properly exercised the option to extend and, therefore, it was entitled to lease the demised premises for an additional term of five years. At the conclusion of a bench trial, the trial court held, among other things, that the lease is ambiguous and that Vina had properly exercised its right to extend the lease for a term of five additional years. We awarded Capital an appeal.
First, Capital argues that Vina does not have a right to exercise the option to extend because Vina was in default when it attempted to extend the original leasehold term. Vina argues that the evidence presented below indicates that it was not in default. We disagree with Vina.
Paragraph 9(A) of the lease states:
9. (A) Tenant agrees that during the term of this lease the demised premises will be used and occupied solely for the purposes specified in Article 32 of this Lease and for no other purpose(s) whatsoever.
There is no dispute between the litigants that Article 32 of the lease does not permit Vina or its subtenants to operate a travel agency on the demised premises.
Gioan Nguyen, president of Vina, testified that one of Vina's sub-tenants conducted a business known as Liberty Travel Service in the demised premises and that this business was conducted during the option renewal period. Nguyen also testified that another travel agency, Blue Skies Travel Services, also sublet a portion of the demised premises during that period. Without question, these unauthorized uses constitute defaults within the meaning of paragraph 34(A), and it is an elementary principle of landlord-tenant jurisprudence that a tenant is responsible for the sub-tenant's breach...
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