Gibbons Ranches, L. L.C. v. Bailey, Nos. S–14–109
| Court | Supreme Court of Nebraska |
| Writing for the Court | Cassel, J. |
| Citation | 857 N.W.2d 808 |
| Parties | Gibbons Ranches, L.L.C., appellant, v. Joel D. Bailey and Jaimee Bailey, husband and wife, appellees. Gibbons Ranches, L.L.C., appellant, v. Circle B Farms, Inc., doing business as a Nebraska corporation, and Tom Bailey, appellees. |
| Docket Number | S–14–110,Nos. S–14–109 |
| Decision Date | 23 January 2015 |
857 N.W.2d 808
Gibbons Ranches, L.L.C., appellant
v.
Joel D. Bailey and Jaimee Bailey, husband and wife, appellees.
Gibbons Ranches, L.L.C., appellant
v.
Circle B Farms, Inc., doing business as a Nebraska corporation, and Tom Bailey, appellees.
Nos. S–14–109
S–14–110
Supreme Court of Nebraska.
Filed January 23, 2015
Bradley D. Holbrook, Kearney, and Nicholas A. Buda, of Jacobsen, Orr, Lindstrom & Holbrook, P.C., L.L.O., for appellant.
Christopher P. Wickham, Broken Bow, of Sennett, Duncan, Jenkins & Wickham, P.C., L.L.O., for appellees.
Heavican, C.J., Wright, Connolly, Stephan, McCormack, Miller–Lerman,and Cassel, JJ.
Syllabus by the Court
1. Leases: Judgments: Appeal and Error.The interpretation of a lease is a question of law that an appellate court decides independently of the district court.
2. Motions for New Trial: Appeal and Error.An appellate court reviews a denial of a motion for new trial for an abuse of discretion.
3. Contracts: Parties: Intent.To create a contract, there must be both an offer and an acceptance; there must also be a meeting of the minds or a binding mutual understanding between the parties to the contract.
4. Contracts: Parties: Intent.A contract is not formed if the parties contemplate that something remains to be done to establish contractual arrangements or if elements are left for future arrangement.
5. Contracts: Parties.When an agreement stipulates that certain terms shall be settled later by the parties, such terms do not become binding unless and until they are settled by later agreement.
6. Contracts: Parties.A fundamental and indispensable basis of any enforceable agreement is that there be a meeting of the minds of the parties as to the essential terms and conditions of the proposed contract.
7. Statute of Frauds: Contracts: Evidence.The written evidence required by the statute of frauds must contain the essential terms of the contract.
8. Leases.When an express lease agreement contemplates the payment of rent in money, the amount of rent is an essential term of the agreement.
9. Leases.Because rent is an essential term in a lease agreement, an agreement to agree on it in the future is not enforceable.
10. Contracts.In interpreting a contract, a court must first determine, as a matter of law, whether the contract is ambiguous.
11. Contracts: Words and Phrases.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.
12. Contracts.When the terms of a contract are clear, a court may not resort to rules of construction, and the terms are to be accorded their plain and ordinary meaning as an ordinary or reasonable person would understand them.
13. Contracts.The fact that the parties have suggested opposing meanings of a disputed instrument does not necessarily compel the conclusion that the instrument is ambiguous.
14. Contracts.A contract is viewed as a whole in order to construe it.
15. Parol Evidence: Contracts.The general rule is that unless a contract is ambiguous, parol evidence cannot be used to vary its terms.
16. Contracts: Intent.An unambiguous contract is not subject to interpretation or construction, and in such a contract, the intention of the parties must be determined from its contents alone.
Cassel, J.
I. INTRODUCTION
A landlord leased separate properties to different tenants using nearly identical written documents. The parties dispute whether the leases were enforceable for their stated 5–year terms or whether a clause providing for “annual review of rental rates” resulted in unenforceable “agreements to agree.” In the landlord's appeals from declaratory judgments for the tenants, we conclude that the leases unambiguously contemplated only an annual “review” and did not require annual agreement. With a minor modification, we affirm the judgments.
II. BACKGROUND
1. Parties
Gibbons Ranches, L.L.C., is a ranching entity in Custer County, Nebraska. For many years, it leased its farm ground to Joel D. Bailey and Jaimee Bailey, husband and wife, and to B Agri–Services, Inc., doing business as Circle B Farms (Circle B). We refer to the Baileys and Circle B collectively as “the tenants.”
2. Leases
On March 7, 2011, Gibbons Ranches and Circle B entered into a 5–year lease agreement retroactive to March 1. Later in
March and April, Gibbons Ranches and the Baileys entered into 5–year lease agreements with the same beginning date as the Circle B lease.
For convenience, we quote from the Circle B lease. We have italicized the numbers which were different from those in the Bailey leases. Otherwise, the language in each lease was identical. With this understanding, the provisions concerning rent stated:
1. The term of this lease shall be five (5) years. An annual review of rental rates and terms will be completed in January of each year. The final year of this contract will be 2015. Less[o]r hereby leases to Lessee to occupy and use for agricultural purposes only during the crop year (year one) March 1, 2011 to March 1, 2012, the land of Less[o]r in Custer County, Nebraska, consisting of approximately 561 (190$) acres irrigated and 240 (80$) acres of dry land and grass as described on Exhibit “A” attached hereto (hereinafter referred to as the “Property”). Rental agreement also includes full use of the Quonset and grain bins located on said property.
2. Lessee agrees to pay Less[o]r as rent for said land the annual sum of $125,790.00, which shall be paid in two installments as follows: first half $62,895.00, due April 15 and second half, $62,895.00, due November 1st. The consideration for this lease is cash in the amount of $125,790.00 regardless of the correct number of acres and the price assigned to each acre. Delinquent payment shall bear interest at the rate of 10% per annum until paid.
During the winter of 2011–12, Gibbons Ranches and Circle B's president reviewed and negotiated a modification of the rental rates for the 2012 crop year. The Baileys agreed to the same new rates and signed a new lease in April 2012 which reflected the new rental amount. A new lease with the modified rental rates for irrigated acres and for dryland acres was prepared for Circle B, but Circle B's president refused to sign it. Despite the absence of a revised lease for Circle B, all of the tenants paid rent in accordance with the new rates.
The parties did not reach an agreement on rental rates for the 2013 crop year. The tenants submitted checks based on the 2012 rental rates and proceeded to farm Gibbons Ranches' land.
3. Lawsuits
In June 2013, Gibbons Ranches sued the tenants in separate actions. In the complaints, Gibbons Ranches sought, among other things, a declaratory judgment to determine its rights under the leases, including the rental rates and terms for the 2013 crop year. Gibbons Ranches alleged that the tenants refused to negotiate in good faith the terms of the leases for the 2013 crop year and that the tenants farmed its ground for the 2013 crop year at rental rates that were less than what was fair and reasonable. The tenants alleged in their respective answers that Gibbons Ranches' rights, status, and legal relations were sufficiently stated in the leases.
4. District Court Judgment
After a consolidated trial, the district court entered a declaratory judgment in each case. The court found that the leases were valid and enforceable agreements through 2015. The court determined that the tenants were not under an obligation to agree to alter the terms, that the leases were unambiguous, and that the parol evidence rule applied to exclude extrinsic evidence from being considered to interpret
the parties' respective rights and obligations under the leases.
Gibbons Ranches moved for a new trial in each case, and the district court overruled the motions. Gibbons Ranches timely appealed, and we moved the cases to our docket under our statutory authority to regulate the caseloads of the appellate courts of this state.1 The cases were consolidated for briefing, argument, and disposition.
III. ASSIGNMENTS OF ERROR
Gibbons Ranches assigns that the district court erred in (1) determining that the leases were valid and enforceable through 2015; (2) determining that the leases were unambiguous as
a matter of law; (3) determining that the parol evidence rule applied to exclude extrinsic evidence to interpret the parties' intent in entering into the...
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B. Thomas & Co. v. Universal Warranty Corp., 8:18-CV-112
...does not necessarily compel the conclusion that the instrument is ambiguous.Gibbons Ranches, L.L.C. v. Bailey, 289 Neb. 949, 955-56, 857 N.W.2d 808, 813-14 (2015). Parol evidence cannot be used to vary the terms of an unambiguous contract, and the Court must determine the intention of the p......
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Smith v. King, No. A-19-999.
...of the minds of the parties as to the essential terms and conditions of the proposed contract. Gibbons Ranches v. Bailey , 289 Neb. 949, 857 N.W.2d 808 (2015). An alleged oral compromise and settlement agreement not made in open court is unenforceable where it is in violation of the statute......
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Fecht v. Christensen (In re Elevator), No. S-14-899.
...68. Spanish Oaks v. Hy-Vee, supra note 65, 265 Neb. at 147, 655 N.W.2d at 403. 69. See, e.g., Gibbons Ranches v. Bailey, 289 Neb. 949, 857 N.W.2d 808 (2015); Podraza v. New Century Physicians of Neb., 280 Neb. 678, 789 N.W.2d 260 (2010); Sack Bros. v. Tri-Valley Co-op, supra note 63. 70. In......
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Fecht v. Christensen (In re Elevator), No. S–14–899.
...Spanish Oaks v. Hy–Vee, supra note 65, 265 Neb. at 147, 655 N.W.2d at 403.69 See, e.g., Gibbons Ranches v. Bailey, 289 Neb. 949, 857 N.W.2d 808 (2015) ; Podraza v. New Century Physicians of Neb., 280 Neb. 678, 789 N.W.2d 260 (2010) ; Sack Bros. v. Tri–Valley Co-op . , supra note 63.70 In re......
-
B. Thomas & Co. v. Universal Warranty Corp., 8:18-CV-112
...does not necessarily compel the conclusion that the instrument is ambiguous.Gibbons Ranches, L.L.C. v. Bailey, 289 Neb. 949, 955-56, 857 N.W.2d 808, 813-14 (2015). Parol evidence cannot be used to vary the terms of an unambiguous contract, and the Court must determine the intention of the p......
-
Smith v. King, No. A-19-999.
...of the minds of the parties as to the essential terms and conditions of the proposed contract. Gibbons Ranches v. Bailey , 289 Neb. 949, 857 N.W.2d 808 (2015). An alleged oral compromise and settlement agreement not made in open court is unenforceable where it is in violation of the statute......
-
Fecht v. Christensen (In re Elevator), No. S-14-899.
...68. Spanish Oaks v. Hy-Vee, supra note 65, 265 Neb. at 147, 655 N.W.2d at 403. 69. See, e.g., Gibbons Ranches v. Bailey, 289 Neb. 949, 857 N.W.2d 808 (2015); Podraza v. New Century Physicians of Neb., 280 Neb. 678, 789 N.W.2d 260 (2010); Sack Bros. v. Tri-Valley Co-op, supra note 63. 70. In......
-
Fecht v. Christensen (In re Elevator), No. S–14–899.
...Spanish Oaks v. Hy–Vee, supra note 65, 265 Neb. at 147, 655 N.W.2d at 403.69 See, e.g., Gibbons Ranches v. Bailey, 289 Neb. 949, 857 N.W.2d 808 (2015) ; Podraza v. New Century Physicians of Neb., 280 Neb. 678, 789 N.W.2d 260 (2010) ; Sack Bros. v. Tri–Valley Co-op . , supra note 63.70 In re......