Eagle Run Square II v. Lamar's Donuts

• Decision Date: 02 October 2007
• Docket Number: No. A-05-1038.,A-05-1038.
• Citation: 15 Neb. App. 972,740 N.W.2d 43
• Parties: EAGLE RUN SQUARE II, L.L.C., a Nebraska limited liability company, appellee, v. LAMAR'S DONUTS INTERNATIONAL, INC., a Nebraska corporation, appellee, and Jack L. Irwin, appellant.
• Court: Nebraska Court of Appeals

740 N.W.2d 43

15 Neb. App. 972

EAGLE RUN SQUARE II, L.L.C., a Nebraska limited liability company, appellee, v. LAMAR'S DONUTS INTERNATIONAL, INC., a Nebraska corporation, appellee, and Jack L. Irwin, appellant.

No. A-05-1038.

Court of Appeals of Nebraska.

October 2, 2007.

Jerrold L. Strasheim, of Baird Holm, L.L.P., Omaha, for appellant.

James E. Lang and Kathleen M. Foster, of Laughlin, Peterson & Lang, Omaha, for appellee Eagle Run Square II, L.L.C.

INBODY, Chief Judge, and CARLSON and MOORE, Judges.

CARLSON, Judge.

INTRODUCTION

Eagle Run Square II, L.L.C. (Eagle Run), a Nebraska limited liability company, brought an action in the district court for Douglas County to recover on a personal guaranty signed by Jack L. Irwin. The trial court found that the guaranty was ambiguous and allowed the jury to hear extrinsic evidence to determine the meaning of the guaranty. The jury subsequently determined that Irwin was liable to Eagle Run on the guaranty in the amount of $95,032.78. On appeal, Irwin contends that among other errors, the trial court erred in finding that the guaranty was ambiguous. For the reasons stated below, we reverse, and remand with directions.

BACKGROUND

On November 16, 1999, Eagle Run and Lamar's Donuts International, Inc. (Lamar's), entered into a written lease whereby Eagle Run leased property in a shopping center near 129th Street and Maple Road in Omaha, Nebraska, to Lamar's for a retail doughnut store. The lease required Lamar's to make monthly rental payments as well as payments for other charges. The lease had a guaranty agreement attached to it.

The guaranty at issue was executed by Irwin as guarantor on October 11, 1999. Just below the title of the one-page document, before the text begins, the document reads, "TO: EAGLE RUN SQUARE II L.L.C." and, on the same line, "TENANT: LAMAR'S DONUTS INTERNATIONAL, INC." The first paragraph of the typed text reads as follows:

For the purpose of inducing M & M Property Partners, (herein called "Owner") to enter into a Lease, dated September ___, 1999, with the tenant named above (herein called "Tenant"), the undersigned (herein called "Guarantor" whether one or more), jointly and severally, unconditionally guaranty the prompt and full payment of all rent to be paid by the Tenant, Paragraph # 3, and the performance by the Tenant of all the terms, conditions, covenants and agreements of the Lease irrespective of any invalidity or unenforceability of any provision thereof or the security therefore [sic].

(Emphasis supplied.) On the executed copy, "September" is crossed out and "Oct" is handwritten in above it, along with "11th" in the space for the day. The guaranty sets forth other rights and obligations of the property owner and lease guarantor, and the final paragraph states that the guaranty "shall inure to the benefit of Owner." The guarantor is not named in the typed text of the document. At the bottom of the document, October 11, 1999, is filled in as the date the guaranty was executed, and it is signed by Irwin.

On March 26, 2002, Eagle Run initiated a lawsuit against Lamar's and Irwin. The petition alleged that Lamar's had failed and refused to pay rental and other charges due under the November 16, 1999, lease for the months of November 2000 through March 2002. The petition further alleged that Irwin executed a lease guaranty, attached to the lease, in which Irwin unconditionally guaranteed the payment of all rental and other charges due by Lamar's to Eagle Run under the lease and the performance by Lamar's of all the lease's terms, conditions, covenants, and agreements. The petition alleged that demand had been made upon Irwin under his personal guaranty for the payment of such sums, but that such payment had not been made.

On April 23, 2003, Irwin filed a motion for summary judgment alleging that the guaranty signed by Irwin on which Eagle Run based its cause of action against him does not inure to the benefit of Eagle Run or apply to the November 16, 1999, lease as claimed by Eagle Run, but, rather, by its own terms, inures to the benefit of M & M Property Partners and applies to an October 11, 1999, lease. The trial court ultimately overruled Irwin's motion on January 12, 2004.

On June 5, 2003, Eagle Run filed a motion for summary judgment against Lamar's. On April 12, 2004, the trial court granted Eagle Run's motion and entered judgment against Lamar's in the amount of $84,084.10.

On March 3, 2005, Eagle Run filed an amended complaint against Lamar's and Irwin, restating the allegations made in the initial petition but alleging that Lamar's had failed and refused to pay rent and other charges from November 2000 through the date of filing.

On April 26, 2005, Eagle Run filed a second amended complaint, the operative complaint in this case, against Irwin only. The second amended complaint alleged that Lamar's was in default under the lease for failing to make rent payments as well as other payments due under the lease from November 2000 through the date of filing. It further alleged that judgment had been entered in favor of Eagle Run and against Lamar's in the amount of $84,084.10, that additional amounts had become due and owing after the judgment was entered, and that no sums had been paid by Lamar's. The second amended complaint alleged that Irwin was liable for the default in lease payments and other charges by Lamar's pursuant to the lease guaranty executed by Irwin and attached to the lease, that demand for payment had been made, and that no payments had been made. Eagle Run prayed for judgment against Irwin in the amount of $95,032.78.

A jury trial was held on August 1 through 3, 2005. Prior to the beginning of trial, the court addressed a motion in limine that Irwin had filed on February 7 which asked the court to prohibit any extrinsic evidence in regard to the guaranty. Irwin argued that the key terms of the guaranty were not ambiguous terms and that thus, evidence of the intention of the parties in signing the guaranty was irrelevant. The trial court overruled Irwin's motion in limine.

During the trial, Eagle Run presented evidence to explain the parties' intent in regard to the guaranty. At the end of Eagle Run's evidence, Irwin made a motion for directed verdict, arguing several grounds, one of which was that the terms in the guaranty were not ambiguous. Irwin's motion for directed verdict was overruled. At the end of all the evidence, Irwin renewed his motion for directed verdict, which was overruled. Irwin also asked the court to put on the record its rulings as a matter of law in regard to whether the guaranty and lease were ambiguous. The trial court stated that it found that the guaranty was ambiguous and that the lease was unambiguous.

The jury found that Irwin guaranteed the obligations of Lamar's under the lease between Eagle Run and Lamar's, and it rendered a verdict in favor of Eagle Run in the amount of $95,032.78. The trial court entered judgment on the verdict. The trial court also awarded Eagle Run prejudgment interest in the amount of $13,331.20.

ASSIGNMENTS OF ERROR

Irwin assigns that the trial court erred in (1) finding that the guaranty was ambiguous, (2) concluding that the guaranty and the lease should be considered and interpreted together (3) overruling relevance objections to "evidence concerning the wrong [l]ease," (4) overruling Irwin's motions for directed verdict, (5) finding that there was sufficient competent evidence to establish that the guaranty was enforceable by Eagle Run and covered the lease between Eagle Run and Lamar's, (6) giving certain instructions to the jury and refusing to give other instructions requested by Irwin, and (7) awarding prejudgment interest to Eagle Run.

STANDARD OF REVIEW

The meaning of a contract and whether a contract is ambiguous are questions of law. Kluver v. Deaver, 271 Neb. 595, 714 N.W.2d 1 (2006); Gary's Implement v. Bridgeport Tractor Parts, 270 Neb. 286, 702 N.W.2d 355 (2005).

On a question of law, an appellate court is obligated to reach a conclusion independent of the determination reached by the court below. Id.

ANALYSIS

Irwin's assignments of error include the trial court's finding that the guaranty was ambiguous. A court interpreting a contract must first determine as a matter of law whether the contract is ambiguous. Kluver v. Deaver, supra. See Hillabrand v. American Fam. Mut. Ins. Co., 271 Neb. 585, 713 N.W.2d 494 (2006). A contract written in clear and unambiguous language is not subject to interpretation or construction and must be enforced according to its terms. Kluver v. Deaver, supra; Gary's Implement v. Bridgeport Tractor Parts, supra. A contract is ambiguous when a word, phrase, or provision in the contract has, or is susceptible of, at least two reasonable but conflicting interpretations or meanings. Kluver v. Deaver, supra; Hillabrand v. American Fam. Mut. Ins. Co., supra.

A determination as to whether ambiguity exists in a contract is to be made on an objective basis, not by the subjective contentions of the parties; thus, the fact that the parties have suggested opposing meanings of the disputed instrument does not necessarily compel the conclusion that the instrument is ambiguous. Ruble v. Reich, 259 Neb. 658, 611 N.W.2d 844 (2000); Estate of Stine v. Chambanco, Inc., 251 Neb. 867, 560 N.W.2d 424 (1997). If a contract is ambiguous, the meaning of the contract is a question of fact, and a court may consider extrinsic evidence to determine the meaning of the contract. Ruble v. Reich, supra; Plambeck v. Union Pacific RR. Co., 244 Neb. 780, 509 N.W.2d 17 (1993). In contrast, the meaning of an unambiguous contract is a question of law. Ruble v. Reich, supra; Kropp v. Grand Island Pub. Sch. Dist. No. 2, 246 Neb. 138, 517 N.W.2d 113 (1994). When a contract is unambiguous, the intentions of the parties must be determined from the contract itself. Id.

When the terms of the contract are clear, a court may not...