CROSSROADS PLAZA, LLC. v. Oren

• Decision Date: 29 August 2001
• Citation: 31 P.3d 508,176 Or. App. 306
• Parties: CROSSROADS PLAZA, LLC., Appellant, v. Izzy OREN, and Roman Lozovsky, dba Grandma's Bagels and Deli, Respondents.
• Court: Oregon Court of Appeals

31 P.3d 508

176 Or. App. 306

CROSSROADS PLAZA, LLC., Appellant, v. Izzy OREN, and Roman Lozovsky, dba Grandma's Bagels and Deli, Respondents.

98CV0445ST; A108483

Court of Appeals of Oregon.

Argued and Submitted January 5, 2001.

Decided August 29, 2001.

Martin E. Hansen, Bend, argued the cause for appellant. With him on the briefs were William F. Buchanan, and Karnopp, Petersen, Noteboom, Hansen, Arnett & Sayeg, LLP.

Gerald A. Martin, Bend, argued the cause for respondents. With him on the brief was Francis & Martin.

Before EDMONDS, Presiding Judge, and ARMSTRONG and KISTLER, Judges.

ARMSTRONG, J.

Plaintiff is the developer of Crossroads Plaza, a shopping center in Bend, Oregon. It appeals from a judgment in favor of defendants, lessees of the center, in an action for breach of the parties' lease. The trial court held that the lease permitted defendants to cancel it when the shopping center failed to reach 40 percent occupancy for 90 consecutive days after its opening. We affirm.

The facts are not in dispute. Before Crossroads Plaza opened, defendants executed a lease for space to operate a delicatessen in it. The lease contained the following provision:

"Tenant shall have the right to terminate this Lease in the event occupancy in Crossroads Plaza falls beneath forty (40) percent of the leasable ground floor area for more than ninety (90) consecutive days."

The provision was common in leases for Crossroads Plaza; plaintiff originally included it at the request of a prospective tenant who ultimately decided not to lease any space. Plaintiff and defendants never discussed the provision during the negotiation of the lease. In the summer of 1997, plaintiff's leasing agent placed a sign on the property, after the parties had executed the lease, stating that the premises were 55 percent leased. According to plaintiff's principal, the sign was based on "letters of intent, letters of interest, space that's already been discussed or attempted to be spoken for" as well as space for which plaintiff had a signed lease from a tenant. In fact, Crossroads Plaza was not 40 percent leased until December 1998.

Defendants moved into the center and began business in December 1997. The business was not profitable, and on April 6, 1998, defendants notified plaintiff that they were terminating the lease, relying on the provision in dispute. Plaintiff denied that the provision permitted defendants to terminate the lease and filed this action for damages for breach of the lease. Both parties moved for summary judgment. Plaintiff argued that the provision unambiguously required occupancy in the center to rise above 40 percent before it could "fall[ ] beneath" that level. Because it had not risen that high when defendants sought to terminate the lease, defendants had no authority to take that action. Defendants argued that the provision either unambiguously referred to any period of 90 consecutive days below 40 percent occupancy or that it was at least ambiguous. If the lease was ambiguous, then the court had to construe it in favor of defendants, the parties in whose favor the provision was made. See ORS 42.260.¹ The court granted defendants' motion and denied plaintiff'...