Facilities, Inc. v. Rogers-Usry Chevrolet, Inc., No. 2003-CT-00856-SCT.

• Decision Date: 30 June 2005
• Docket Number: No. 2003-CT-00856-SCT.
• Citation: 908 So.2d 107
• Parties: FACILITIES, INC. v. ROGERS-USRY CHEVROLET, INC.
• Court: Mississippi Supreme Court

908 So.2d 107

FACILITIES, INC. v. ROGERS-USRY CHEVROLET, INC.

No. 2003-CT-00856-SCT.

Supreme Court of Mississippi.

June 30, 2005.

Glenn Gates Taylor, Ridgeland, attorney for appellant.

Lem G. Adams, III, Brandon, Christopher Paul Palmer, Jackson, attorneys for appellee. En Banc.

ON WRIT OF CERTIORARI

RANDOLPH, Justice, for the Court.

FACTS AND PROCEDURAL HISTORY

¶ 1. In this dispute over a commercial lease, the facts and procedural history are taken from the record with excerpts from the opinion of the Court of Appeals:

Rogers-Usry Chevrolet ["Rogers-Usry" or "Lessee"] is a car dealership operating in Brandon, Mississippi.¹ In 1985, Rogers-Usry leased [property] from Facilities, Inc. ["Facilities" or "Lessor".] The [property] was to [be used as a retail] car dealership. The lease was for a term of fifteen years, and in 1998 Rogers-Usry and Facilities renewed the lease until April 30, 2015. The lease provided that in addition to a base amount of rent, which would increase annually [after the first ten (10) years] according to the Consumer Price Index, Rogers-Usry would pay Facilities bonus rent [for] new vehicle sales exceed[ing] one hundred vehicles per month.²

* * *

In 2000, Rogers-Usry [obtained] a tract of land a few hundred feet from [the leased property]. . . .³ Rogers-Usry... moved its new car sales to the new location. Although Rogers-Usry continues to [lease] the Facilities property, Rogers-Usry ... argues that it is under no obligation to continue paying Facilities bonus rent for new vehicle sales which [do not] occur on the [property subject to the Lease Agreement].

Rogers-Usry filed an action in 2002 seeking a declaratory judgment on its rent obligations to Facilities under the renewed lease. Rogers-Usry argue[s] that when it moved its new vehicle sales to the new property, it [was] no longer... obligated to pay Facilities [new vehicle sales] bonus rent. Facilities argue[s] that the lease provided in unambiguous terms that Rogers-Usry owed Facilities bonus rent on new vehicle sales whether the sale occurred on the dealership's new property or the sale occurred on the land leased from Facilities.... The chancellor ruled that, under the contract, Rogers-Usry was not obligated to pay Facilities bonus rent for new vehicle sales that did not occur on the property owned by Facilities.

It is from [that] judgment that Facilities [...] timely filed its appeal, arguing the following three points of error: (1) the lease is clear and unambiguous in its terms; (2) the chancellor erred in his interpretation of the bonus rent provision of the lease; and (3) the chancellor's interpretation of the lease deprives Facilities of a substantial benefit of the bargain it made in 1985 and renewed in 1998.

Facilities, Inc. v. Rogers-Usry Chevrolet, Inc., 907 So.2d 960, 2004 WL 2221733 at ¶¶ 1-4 (Miss.Ct.App. Oct. 5, 2004).

¶ 2. The Court of Appeals agreed with the chancellor that the lease contract was not ambiguous as a matter of law. However, it reversed and remanded the case to the Rankin County Chancery Court.⁴ Id. at ¶¶ 5, 10-11. Specifically, the Court of Appeals, viewing the language within the "four corners" of the contract, found that the contract was not ambiguous, and therefore, that the chancellor "erred in concluding that the parties intended for the bonus rent to apply only to new vehicles sold on the property rented by Facilities." Id. at ¶ 10.

¶ 3. Rogers-Usry filed a petition for a writ of certiorari, asserting error in the Court of Appeals' reversal and remand of the trial court's judgment, and we granted certiorari. Rogers-Usry raises as issues the following, which have been restated for clarity:

1. Whether the decision that was rendered by the Court of Appeals conflicts with prior decisions rendered by this Court.

2. Whether the present case involves fundamental issues of public importance requiring determination by this Court.

¶ 4. Following a review of the Lease Agreement/contract as a whole, we conclude that the lease is not ambiguous. The Court of Appeals erred when it considered extrinsic or parol evidence, not found within the "four corners" of the Lease Agreement, after it concluded that the agreement was not ambiguous. Consequently, we are obliged to reverse the judgment of the Court of Appeals and affirm and reinstate the judgment of the Rankin County Chancery Court. As the first issue is dispositive of this appeal, the second issue will not be addressed.

DISCUSSION

¶ 5. "`Questions concerning the construction of contracts are questions of law that are committed to the court rather than questions of fact committed to the fact finder.'" Parkerson v. Smith, 817 So.2d 529, 532 (Miss.2002) (quoting Miss. State Highway Comm'n v. Patterson Enters., Ltd., 627 So.2d 261, 263 (Miss.1993)). We, as an appellate court, employ the de novo standard of review for questions of law. Starcher v. Byrne, 687 So.2d 737, 739 (Miss.1997).

¶ 6. "The primary purpose of all contract construction principles and methods is to determine and record the intent of the contracting parties." Royer Homes of Miss., Inc. v. Chandeleur Homes, Inc., 857 So.2d 748, 752 (Miss.2003) (citing Kight v. Sheppard Bldg. Supply, Inc., 537 So.2d 1355, 1358 (Miss.1989)). "`In contract construction [cases, this Court's] focus is upon the objective fact-the language of the contract. We are concerned with what the contracting parties have said to each other, not some secret thought of one not communicated to the other.'" Turner v. Terry, 799 So.2d 25, 32 (Miss.2001) (quoting Osborne v. Bullins, 549 So.2d 1337, 1339 (Miss.1989)).

¶ 7. This Court has stated:

¶ 10. This Court has set out a three-tiered approach to contract interpretation. Pursue Energy Corp. v. Perkins, 558 So.2d 349, 351-53 (Miss.1990). Legal purpose or intent should first be sought in an objective reading of the words employed in the contract to the exclusion of parol or extrinsic evidence. [Cooper v. Crabb, 587 So.2d 236, 241 (Miss.1991). . . .] First, the "four corners" test is applied, wherein the reviewing court looks to the language that the parties used in expressing their agreement. Pursue Energy Corp., 558 So.2d at 352 (citing Pfisterer v. Noble, 320 So.2d 383, 384 (Miss.1975)). We must look to the "four corners" of the contract whenever possible to determine how to interpret it. McKee v. McKee, 568 So.2d 262, 266 (Miss.1990). When construing a contract, we will read the contract as a whole, so as to give effect to all of its clauses. Brown v. Hartford Ins. Co., 606 So.2d 122, 126 (Miss.1992). Our concern is not nearly so much with what the parties may have intended, but with what they said, since the words employed are by far the best resource for ascertaining the intent and assigning meaning with fairness and accuracy. Simmons v. Bank of Miss., 593 So.2d 40, 42-43 (Miss.1992). Thus, the courts are not at liberty to infer intent contrary to that emanating from the text at issue. Id. (citing Cooper, 587 So.2d at 241). On the other hand, if the contract is unclear or ambiguous, the court should attempt to "harmonize the provisions in accord with the parties' apparent intent." Pursue Energy Corp., 558 So.2d at 352. Only if the contract is unclear or ambiguous can a court go beyond the text to determine the parties' true intent. Id. "[T]he mere fact that the parties disagree about the meaning of a contract does not make the contract ambiguous as a matter of law." Turner, 799 So.2d at 32; Cherry v. Anthony, 501 So.2d 416, 419 (Miss.1987).

¶ 11. Secondly, if the court is unable to translate a clear understanding of the parties' intent, the court should apply the discretionary "canons" of contract construction. Pursue Energy Corp., 558 So.2d at 352. Where the language of an otherwise enforceable contract is subject to more than one fair reading, the reading applied will be the one most favorable to the non-drafting party. Leach v. Tingle, 586 So.2d 799, 801-02 (Miss. 1991) (citing Stampley v. Gilbert, 332 So.2d 61, 63 (Miss.1976)). Finally, if the contract continues to evade clarity as to the parties' intent, the court should consider extrinsic or parol evidence. [Pursue Energy Corp., 558 So.2d at 353]. It is only when the review of a contract reaches this point that prior negotiation, agreements and conversations might be considered in determining the parties' intentions in the construction of the contract.

Royer, 857 So.2d at 752-53 (emphasis added).

I. The Lease Agreement is Not Ambiguous.

¶ 8. In Polk v. Gibson, 257 So.2d 225 (Miss.1972), this Court upheld the dismissal of a lessor's bill of complaint against a lessee. Gibson, the lessee, leased a building from a predecessor to Polk to operate a discount store. Id. at 226. The terms of the lease agreement provided for $1,500 per month in base rent and bonus rent in the amount of one and one-half percent (1 1/2%) of annual gross sales in excess of $1.2 million dollars. Id. at 228. Polk filed suit against Gibson alleging a breach of the lease agreement. Id. at 226. More specifically, Polk sued Gibson for loss of bonus rent when Gibson moved its discount store to another location and used the leased premises as a warehouse until Gibson entered into a sublease⁵ with another party, Southern Fabrics, Inc., whose annual sales were not sufficient to provide bonus rent to Polk. Id. at 227-31.

¶ 9. In Polk, this Court found that Gibson was only responsible for paying the base rent following its move to another location because there was no language in the lease agreement specifically requiring Gibson to remain in Polk's building and conduct its business there:

This Court takes knowledge of the fact that there is nothing in this language which specifically requires the lessees to remain on said premises in said building and to conduct therein a discount business. The substance of the requirements of the lessees is that they must pay the guaranteed minimum rental of $18,000 per year in monthly installments of

...