Jones v. Landmark Leasing, Ltd.

• Decision Date: 07 October 1997
• Docket Number: No. 71904,71904
• Citation: 957 S.W.2d 369
• Parties: Larry W. JONES, et al., Plaintiffs/Respondents, v. LANDMARK LEASING, LTD., Defendant/Appellant.
• Court: Missouri Court of Appeals

Page 369

957 S.W.2d 369

Larry W. JONES, et al., Plaintiffs/Respondents, v. LANDMARK LEASING, LTD., Defendant/Appellant.

No. 71904.

Missouri Court of Appeals,

Eastern District,

Division Two.

Oct. 7, 1997.

Motion for Rehearing and/or Transfer to

Supreme Court Denied Nov. 24, 1997.

Application for Transfer Denied

Jan. 27, 1998.

Steven M. Hamburg, St. Louis, for defendant/appellant.

R.A. Wegman, Hillsboro, for plaintiffs/respondents.

RHODES RUSSELL, Judge.

Landmark Leasing Limited ("lessee") appeals from the summary judgment granted to Larry Jones ("lessor") on lessor's petition for declaratory judgment. Lessor had asked the trial court to declare that a lease agreement between lessor and lessee would terminate on August 23, 1996, in that lessee had failed to provide timely notice of its intent to exercise the option to renew. Lessee also appeals the denial of its motion for summary judgment in which it sought a finding that special circumstances existed which warranted the trial court's equitable intervention to relieve lessee from its failure to comply with the strict terms of the renewal option clause. Lessee further appeals the trial court's order finding lessee in default for not timely answering lessor's petition and the court's order denying lessee's motion to strike portions of lessor's affidavits. We find that the summary judgment in favor of lessor was proper in that there was no issue of material fact that lessee failed to give lessor timely written notice that it was exercising the third and final option to extend the lease, and, lessor did not have to show that lessee's claim of equitable intervention failed as a matter of law because that claim was not properly pled in its answer. We affirm.

The facts in this case are fairly detailed but generally uncontested by the parties. The initial term of the lease began on April 1, 1973 and was to terminate on August 23, 1986. The lease provided lessee with the option to extend the lease for three periods of five years each after the completion of the initial term, provided that lessee gave lessor written notice of renewal at least 240 days before the expiration of the lease. Written notice, under the terms of the lease, was to be delivered in writing by certified mail.

Prior to its expiration, lessee exercised its first option to extend the term of the lease by letter to lessor dated February 5, 1985. The letter was not sent by certified mail, nor was it sent at least 240 days before August 23, 1986. Lessor nonetheless honored lessee's exercise of its first option to renew. The lease was extended through August 23, 1991.

Lessee exercised its second option to extend the term of the lease by letter to lessor dated December 6, 1990. The letter was sent by regular mail and it extended the term of the lease for the second renewal term through August 23, 1996.

In January 1996, lessor realized that he had not received notice from lessee that it was exercising its third and final option to extend the lease. ¹ On April 22, 1996, lessor's attorney sent a letter to lessee informing him that since written notice had not been timely received, the lease would end on August 23, 1996, and that the premises should be tendered the following day.

In response, lessee's attorney sent a letter to lessor's attorney explaining that his client believed that he had given at least oral notice to lessor that he intended to exercise his renewal term. Lessee's attorney explained that his client's intention to renew the lease was clear from a December 19, 1990 letter in which lessee projected the future operational cash flows for the property through the year 2001. Lessee's attorney also stated that if lessee had failed to give notice of its intention to renew, then this letter was intended to be notice of the exercise of the option to renew.

Lessor filed a declaratory judgment action seeking a determination that the lease would expire on August 23, 1996, in that lessee had failed to give timely written notice as required by the lease. In addition to lessee being named as a defendant, Dairy Queen, Master Treats, and Herschel's Discount Tire Company were also joined in the action.

Lessee filed a motion to dismiss the petition for failure to state a claim on July 17, 1996. Lessee claimed that the petition failed to stated a claim upon which relief could be granted because lessor's requests for a declaratory judgment as to the rights of lessor and lessee under the lease, along with the determination as to the possessory rights of lessee and its subtenants, constituted two separate actions for relief and were improperly joined. The motion to dismiss was denied on August 28, 1996.

Lessor filed a motion for summary judgment on July 30, 1996. Attached to lessor's motion for summary judgment was an affidavit of lessor. Lessor stated that he had never received any written notice to extend the lease for the last of the three five-year periods. Lessor further stated in the affidavit that he had been told by representatives of another defendant that lessee's general partner had never extended the lease agreement. Lessee subsequently filed a motion to strike this portion of lessor's affidavit because it was allegedly hearsay and not based on lessor's personal knowledge.

Lessee also filed its own motion for summary judgment. In its motion for summary judgment, lessee asserted that it notified lessor of its renewal by letters dated December 19, 1990 and November 6, 1992. However, for purposes of the summary judgment motion, lessee stated that it would assume that the letters were not effective to constitute notice. Lessee contended that even had it failed to comply with the strict terms of the renewal option clause, it should be able to exercise the option in equity since lessor was not prejudiced by lessee's failure to give timely notice, and lessee's failure to give notice was not the result of intentional, willful, or grossly negligent behavior. Thus, according to lessee, it effectively exercised the option to renew in equity on April 30, 1996.

Lessee filed its response and memorandum to lessor's motion for summary judgment and memorandum in support of its motion for summary judgment. In its response in opposition to lessor's motion for summary judgment, lessee first stated that summary judgment was inappropriate because lessor's motion did not comply with Rule 74.04(c). Lessee also asserted that summary judgment for lessor was inappropriate in that there were genuine issues of fact of whether lessee gave notice of its intention to extend the lease for another term and whether lessor knew lessee intended to renew. Lessee asserted that lessor had actual notice that it intended to renew the lease term through the year 2001 from two letters it had sent lessor in 1990 and 1992.

On September 12, 1996, lessor filed an amended petition in which an undiscovered subtenant was added as a defendant. On September 18, 1996, lessor filed a motion for finding of default and for grant of inquiry. Lessor asserted that since lessee had failed to file an answer within ten days of the trial court's order of August 28, 1996 denying lessee's motion to dismiss, lessee was in default. Lessor contended that under Rules 55.25(c) and 55.27, lessee's answer was due no later than September 16.

On September 26, lessee filed a response to lessor's motion for default and a motion for leave to file an answer to lessor's first amended petition. Lessee averred in its motion that it was not in default as it had filed a response to lessor's motion for summary judgment as well as its own motion for summary judgment. Lessee also alleged that lessor's motion for default was moot since it sought to put lessee in default for failing to respond to a pleading which lessor had abandoned and superseded with an amended petition. On October 2, lessor filed an amended motion for summary judgment incorporating its previous motion for summary judgment.

On December 19, the trial court issued its order and judgment. The trial court granted lessor's amended motion for summary judgment finding that lessee's failure to give timely notice caused the lease term to expire on August 23, 1996. The trial court denied lessee's motion for summary judgment. The trial court also sustained lessor's motion for finding of default and grant of inquiry and denied lessee's motions to strike various portions of lessor's affidavits. This appeal follows.

In its first point, lessee contends that the trial court erred in granting lessor's motion for summary judgment and denying its motion for summary judgment. Lessee asserts that lessor had actual notice of its intention to renew the lease and special circumstances warranted equitable intervention from the trial court to relieve lessee from forfeiture. Lessee argues that lessor was not prejudiced by lessee's failure to give timely notice, and its failure to give notice was not the result of intentional, willful, fraudulent, or grossly negligent conduct. Lessee urges that this court should reverse the summary judgment granted in lessor's favor and enter summary judgment on lessee's behalf.

We first consider lessee's claim that the trial court erred in denying its motion for summary judgment. Generally, an order denying a motion for summary judgment is not an appealable order. Lake Center Boatworks, Inc. v. Martin, 804 S.W.2d 842, 844 (Mo.App.1991). This is true even if the denial occurs at the same time summary judgment is granted to the other party. Clooney v. Pre-Paid Legal Services, Inc., 830 S.W.2d 566, 568 (Mo.App.1992).

Lessee acknowledges this general rule, but argues that the denial of its motion for summary judgment is reviewable since the merits of that motion were "intertwined" with the propriety of granting lessor's summary judgment motion. In Kaufman v. Bormaster, 599 S.W.2d 35, 38 (Mo.App.1980), this court indicated that in some instances, federal courts will reach the merits of the...