Felco, Inc. v. Doug's North Hill Bottle Shop, Inc.
| Decision Date | 04 June 1998 |
| Docket Number | No. 970234,970234 |
| Citation | 579 N.W.2d 576 |
| Parties | FELCO, INC., Plaintiff and Appellant, v. DOUG'S NORTH HILL BOTTLE SHOP, INC., and Janet Knudson, Defendants and Appellees. Civil |
| Court | North Dakota Supreme Court |
Richard P. Olson (argued) and Scott A. Miller (on brief) of Olson Burns Lee, Minot, for plaintiff and appellant.
Tom P. Slorby, Minot, for defendants and appellees.
¶1 Felco, Inc., appeals from a judgment entered upon a jury verdict dismissing its action against Doug's North Hill Bottle Shop, Inc., and Janet Knudson for unpaid percentage rent and from an order denying judgment as a matter of law, or in the alternative, a new trial. We conclude, as a matter of law, the lease is unambiguous, payment of past due percentage rent was not waived under the lease, part performance is not consistent only with existence of the alleged oral agreement, the new written lease was not a complete integration, and the parol evidence rule does not bar evidence of the alleged oral agreement. We also conclude Felco's claim was not barred by N.D.C.C. § 41-02.1-54 and interest is to be determined as a matter of law. We therefore reverse and remand for a determination by the trier of fact of the existence of an executed oral agreement and, if not found, for entry of judgment on the amount of percentage rent owed and computation of interest at the legal rate.
¶2 In 1980, J.R. (Jules) and Evelyn Feldmann leased commercial property to Doug and Janet Knudson, beginning January 1, 1981, and ending December 31, 1986, 1 with an option to renew the lease for an additional five-year term. The Knudsons operated Doug's North Hill Bottle Shop (Doug's) on the leased property. The lease provided for a minimum annual rent of $17,400 to be paid in monthly installments of $1,450, or, if greater, three and one-half percent of Doug's base sales for the lease year. Doug Knudson exercised the option to renew the lease until December 31, 1991. Ownership of the property was eventually transferred to Felco, Inc., of which Jules Feldmann is president. The Knudsons and Merlin Cooper also formed a corporation--Doug's North Hill Bottle Shop, Inc.--which succeeded to Doug and Janet Knudson's interests in the leased property.
¶3 In December 1989 or early 1990, Feldmann and Associates, of which Jules Feldmann, who is a certified public accountant, is president, began providing accounting services for Doug's. From 1988 to 1992, Doug's had sales in excess of the amount needed to trigger the percentage rent provision of the lease, but Doug's paid only the minimum annual rent.
¶4 When the renewal expired at the end of 1991, the lease became a month-to-month lease. In 1995, Kay Undlin, then sole stockholder of Doug's, sought a new five-year lease from Felco in order to sell the business. On July 6, during negotiations for the new lease, Feldmann sent Undlin a copy of the new lease to sign and also told her sales from previous years may have triggered the percentage rent provision. The new lease was not signed until December 29, 1995, but by its terms was made effective retroactively to January 1, 1995. The new lease was substantially similar to the 1980 lease, except it called for the monthly rent to eventually increase from $1,750 in 1995 to $2,000 in 1998 and 1999, and contained no option to renew.
¶5 Subsequently, Felco concluded Doug's owed $51,185.96 in past due percentage rent, but Doug's refused to pay. Felco sued. The jury decided Doug's had delivered a statement of base sales to Felco, and judgment was entered dismissing Felco's action. Felco moved for judgment as a matter of law or, in the alternative, for a new trial. The trial court denied Felco's motions without explanation.
¶6 Felco appeals the May 16, 1997, judgment and the June 23, 1997, order denying its post-trial motions. The district court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. § 27-05-06. This Court has jurisdiction under N.D. Const. art. VI, §§ 2 and 6, and N.D.C.C. §§ 28-27-01, 28-27-02, and 28-27-29.1. The appeal is timely under N.D.R.App.P. 4(a).
¶7 Felco argues the trial court erred in denying its motion for judgment as a matter of law under N.D.R.Civ.P. 50.
¶8 This Court reviews the denial of a motion for judgment as a matter of law under "the same standard that the trial court was required to apply initially." Okken v. Okken, 325 N.W.2d 264, 267 (N.D.1982); accord Perry v. Reinke, 1997 ND 213, p 12, 570 N.W.2d 224. The trial court's decision to deny or grant judgment as a matter of law is based upon "whether or not the evidence, when viewed in the light most favorable to the party against whom the motion is made, leads to but one conclusion as to the verdict about which there can be no reasonable difference of opinion." Okken at 267.
¶9 The threshold issue involves the interpretation of the rent provision of the lease:
"2. Rent. Tenant will pay to Landlord as annual rent for the premises the greater of a) $17,400 per "lease year" (minimum annual rent), or b) a sum equal to 3 1/2 percent of the Tenant's "base sales" made during the "lease year" upon the premises (percentage rent).
....
(Emphasis added).
¶10 Felco asserts it did not waive the percentage rent owed by Doug's under the lease because it is not making a claim for "additional rent," but is seeking only the amount of percentage rent Doug's acknowledges it would have owed. Doug's argues "percentage rent" and "additional rent" are synonymous and, as such, once Felco received the statement of base sales, the ninety-day period for claiming additional rent began to run.
¶11 While the trial court did not specifically interpret the lease, it consistently stated there was no evidence the lease was ambiguous. The trial court apparently agreed with Doug's interpretation of the lease, because the special verdict form required the jurors to decide whether a statement of base sales was delivered to Felco, and explained a "yes" answer dismissed Felco's action. Felco objected to the special verdict form and the effect of an affirmative answer. The jury answered "yes," and judgment was entered on the jury verdict.
¶12 The interpretation of a lease to determine its "legal effect is a question of law, fully reviewable on appeal." See, e.g., Industry Fin. Corp. v. Redman, 383 N.W.2d 847, 848 (N.D.1986). "The language of a contract is to govern its interpretation if the language" is unambiguous. N.D.C.C. § 9-07-02; Williston Educ. Ass'n v. Williston Pub. Sch. Dist. No. 1, 483 N.W.2d 567, 570 (N.D.1992). "Whether or not a contract is ambiguous is a question of law that we independently review on appeal." Williston Educ. Ass'n at 570. "A contract is ambiguous when rational arguments can be made for different positions about its meaning." Id. This Court reads contracts as a whole to give meaning to each word and phrase. See N.D.C.C. § 9-07-06; see also Martin v. Allianz Life Ins. Co., 1998 ND 8, p 15, 573 N.W.2d 823 ( insurance policy).
¶13 Doug's proffered interpretation fails to give separate meaning to the language "additional rent." Under its interpretation, "additional rent" has the same meaning as "percentage rent." We conclude, as a matter of law, the language in the lease is unambiguous and the term "additional rent" refers only to "additional" percentage rent, beyond the amount of percentage rent the tenant acknowledges, and the financial documents required to be provided by the tenant indicate, to be due. This conclusion is further supported by the terms of the lease which require "the excess of percentage rent over the minimum annual rent, if any" to be paid within 45 days of the end of the lease year, but allow 90 days from the mailing or delivery of the statement of base sales before a claim for "additional" rent is deemed waived.
¶14 Under this interpretation, the 90-day period does not begin to run as to the amount of percentage rent owed. Only if Felco were seeking "additional rent," that is, "additional" percentage rent, by making an examination of Doug's financial records within 45 days of the date a statement of base sales is delivered by Doug's would the 90-day period be relevant. Felco has conceded it is making...
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...1992). A contract is ambiguous when rational arguments can be made for different positions about its meaning. Felco, Inc. v. Doug's North Hill Bottle Shop, Inc., 1998 ND 111, P12, 579 N.W.2d 576. Whether or not a contract is ambiguous is a question of law. Moen v. Meidinger, 547 N.W.2d 544,......
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