Eighty Hundred Clayton Corp. v. Lake Forest Dev. Corp., ED110390
| Court | Court of Appeal of Missouri (US) |
| Writing for the Court | James M. Dowd, Judge. |
| Parties | EIGHTY HUNDRED CLAYTON CORP., Respondent, v. LAKE FOREST DEVELOPMENT CORP, Appellant. |
| Docket Number | ED110390 |
| Decision Date | 26 July 2022 |
EIGHTY HUNDRED CLAYTON CORP., Respondent,
v.
LAKE FOREST DEVELOPMENT CORP, Appellant.
No. ED110390
Court of Appeals of Missouri, Eastern District, Fourth Division
July 26, 2022
Appeal from the Circuit Court of St. Louis County 21SL-CC00107 Honorable William M. Corrigan, Jr.
Michael E. Gardner, C.J., James M. Dowd, J., and Lisa P. Page, J.
OPINION
James M. Dowd, Judge.
This dispute concerns whether a lessee exercised its option to renew a commercial lease (Lease). Appellant-lessor Lake Forest Development Corporation appeals the judgment in which the trial court declared (1) that respondent-lessee EHCC Clayton Corporation's actions of holding over and continuing to pay rent after the previous lease term ended on October 31, 2019, constituted as a matter of law the exercise by EHCC of its option to renew the Lease for another 10-year term through October 31, 2029, and (2) that Lake Forest, by accepting the rent payments, waived its right under the Lease to receive formal written notice of EHCC's intent to renew. We agree with the trial court and affirm.
Lake Forest makes numerous assertions of trial-court error, some of which we dismiss for violating Rule 84.04.[1] As for the points we review here, Lake Forest asserts the trial court erred (1) by failing to treat EHCC's president's testimony that he knew of no excuse for EHCC's failure to give timely written renewal notice as a judicial admission that the Lease had not been renewed; (2) by failing to treat EHCC's attempt to cure its failure to give such timely written notice as a binding admission that the Lease had expired on October 31, 2019; (3) by failing to find that EHCC's counsel's May 28, 2020, letter did not cure EHCC's failure to give timely written renewal notice; (4) by failing to declare that EHCC failed to satisfy the conditions precedent to the exercise of its renewal option; (5) by failing to find that EHCC's inconsistent rent payments post-October 31, 2019, did not support a finding that an implied tenancy existed between the parties; (6) by finding that EHCC's rent payments made after Lake Forest purported to terminate the Lease failed to support a finding that an implied tenancy existed; and (7) by failing to find that EHCC's failure to provide timely written renewal notice meant the Lease was not renewed and had terminated. We find no merit in any of Lake Forest's viable points.
Background
In 1959, Lake Forest, as sub-lessor, entered into the Lease with EHCC, as sub-lessee, for real estate located along Clayton Road in Richmond Heights, Missouri. In 1960, EHCC opened a newly-constructed 52-lane bowling alley now known as Tropicana Lanes. Following multiple renewals, the most recent 10-year term-the one at issue in this case-was set to expire on October 31, 2019.
The Lease gives EHCC the option to renew the Lease for successive ten-year terms until 2049 at the same price, which EHCC has done multiple times. To exercise its option to renew,
the Lease requires EHCC to notify Lake Forest in writing at least six months before the end of the term. In this case, October 31, 2019 was the end of the term, meaning the notice to renew was due no later than April 30, 2019. There is no evidence that EHCC notified Lake Forest in writing by April 30, 2019 of its intent to renew.
As far as rent is concerned, the Lease requires EHCC to pay $1,250 monthly rent plus six percent of monthly gross receipts from the bowling business, which are in excess of $20,833.[2]To calculate this additional rent, the Lease requires EHCC to provide Lake Forest a statement of monthly gross receipts along with a statement from a CPA by October 1 of each year of the annual gross receipts from the bowling business for each fiscal year ending August 31. If Lake Forest is not satisfied with any such statement, the Lease requires it to notify EHCC within sixty days of its dissatisfaction.
According to Lease paragraph 36, if rent remains unpaid more than thirty days past due, or if EHCC fails "to fulfill any of the other terms and conditions hereof at the time and in the manner called for herein,... [Lake Forest] may, at its option, declare a forfeiture" of the Lease.[3]To do so, Lake Forest is required to provide EHCC written notice at least sixty days before the forfeiture's effective date and "state specifically and in detail the ground or cause for which the right of forfeiture is claimed." The purpose of the sixty-day notice of forfeiture is to give EHCC an opportunity to cure the default. If it cures the default, Lake Forest's "right of forfeiture" is "abated and discontinued."
When the prior lease term expired on October 31, 2019, EHCC held over in possession and continued to pay monthly rent which Lake Forest continued to accept and deposit. With the
exception of the months of April, May, and June 2020, EHCC made all monthly rent payments from November 2019 through April 2021 within 30 days of their due dates and Lake Forest deposited those payments. Lake Forest stopped depositing EHCC's rent payments when this litigation commenced.
With respect to the April, May, and June 2020 rent payments, EHCC's president Timothy Ronan explained those were not timely paid because the bowling alley was closed pursuant to the county executive's Covid-19 order closing all non-essential businesses. The overdue amounts were paid to and accepted by Lake Forest in April 2021.
On May 19, 2020, some six months beyond the end of the prior lease term and over a year after EHCC's written renewal notice was due, Lake Forest notified EHCC that because Lake Forest had not received EHCC's renewal notice, Lake Forest considered the Lease to be expired as of October 31, 2019. On May 28, 2020, EHCC responded: "With respect to your inquiry regarding the renewal notice that was due by April 30, 2019, such renewal notice would have been hand delivered to Lessor along with the monthly percentage rent payment in January 2019. To the extent Lessor cannot locate the renewal notice, this letter should serve as confirmation of Lessee's renewal of the lease term on the same terms and conditions under the lease for the period from November 1, 2019, through October 31, 2029 (the 'Renewal Term')." After this correspondence, Lake Forest continued to accept and deposit rent payments until early 2021.
On September 25, 2020, Lake Forest's counsel emailed EHCC that its annual CPA gross receipts statement was due October 1, 2020. EHCC timely produced the statement from its CPA, Sikich LLP.
On November 4, 2020, Lake Forest filed its petition for unlawful detainer to terminate EHCC's possession of the property. On January 11, 2021, EHCC filed its own action seeking a
declaratory judgment that it exercised the renewal option as a matter of law by holding over and paying rent, that Lake Forest waived the Lease's written renewal notice requirement by accepting rent, and that the Lease was renewed until November 1, 2029.
Following a December 10, 2021, bench trial, the trial court entered judgment in favor of EHCC. The court found that, while EHCC failed to give its written renewal notice by April 30, 2019, as required by the Lease, "by remaining in possession and paying rent after the expiration of the lease," EHCC elected to exercise its renewal option through October 31, 2029, and that by accepting the rent, Lake Forest waived the Lease's written renewal notice requirement.
Standard of Review
We will affirm the judgment in a court-tried case unless there is "no substantial evidence to support it, it is against the weight of the evidence, erroneously declares the law, or erroneously applies the law." Brown v. Brown, 423 S.W.3d 784, 787 (Mo. banc 2014); Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). We review conflicting evidence in the light most favorable to the judgment. J.A.R. v. D.G.R., 426 S.W.3d 624, 626 (Mo. banc 2014). This Court defers to the trial court's credibility determinations and when the evidence poses two reasonable but different inferences. Id. We accept as true the evidence and inferences favorable to the judgment below and disregard all contrary evidence. United Services Auto. Ass'n Cas. Ins. Co. v. Sorells, 910 S.W.2d 774, 777 (Mo. App. E.D. 1995).
Discussion
Before addressing Lake Forest's arguments, we address the merits of the trial court's ruling that, by holding over and continuing to pay rent after the October 31, 2019, expiration of the parties' prior 10-year lease term, EHCC exercised its renewal option as a matter of law, and
that by accepting those rent payments for well over a year into the new lease term, Lake Forest waived its right under the Lease to receive EHCC's written renewal notice.
The trial court's judgment rests on solid legal footing. Under the law concerning options to extend, when a lease provides that a tenant has the option to extend the term of the lease with a written notice requirement, "the option is for the benefit of the lessee, and [the] written notice requirement is for the benefit of the lessor." Grand Inv. Corp. v. Connaughton, Boyd & Kenter, P.C., 119 S.W.3d 101, 107 (Mo. App. W.D. 2003) (quoting Pelligreen v. Century Furniture & Appliance Co., 524 S.W.2d 168, 171 (Mo. App. 1975)). By...
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