Langdon v. United Restaurants, Inc.
| Decision Date | 30 May 2003 |
| Docket Number | No. WD 60707.,WD 60707. |
| Citation | 105 S.W.3d 882 |
| Parties | Walter J. LANGDON and Evelyn A. Langdon, Appellants, v. UNITED RESTAURANTS, INC. d/b/a Stanford & Sons Restaurant & Comedy House, Respondent. |
| Court | Missouri Court of Appeals |
Thomas. E. Thompson, Dennis Owens, Kansas City, MO, for Appellants.
Thomas R. Buchanan, Kansas City, MO, for Respondent.
Before SMITH, P.J., LOWENSTEIN and HARDWICK, JJ.
Walter and Evelyn Langdon appeal from the trial court's judgment denying their claims for rent and possession and unlawful detainer against United Restaurants, Inc. The Langdons contend: 1) the court erroneously interpreted the percentage rent provision in the parties' commercial lease agreement; and 2) the evidence is insufficient to prove the Langdons waived and were estopped from claiming any breach by United. We affirm the trial court's judgment.
Walter and Evelyn Langdon own commercial property located at 504 Westport Road in Kansas City. During the 1970's and 1980's, the Langdons leased the property to a tenant who operated a restaurant and bar, known as Stanford & Sons, from that location.
In 1990, the Langdons agreed to lease the property to United Restaurants, Inc. for continued operation of Stanford & Sons. On March 13, 1991, the parties executed a lease agreement that established a fixed minimum monthly rental for the premises for five years. In addition to the fixed rental fee, the lease provided that United would pay the Langdons percentage rent in "a sum equal to six (6) percent of the annual gross receipts, as hereafter provided, in excess of the sum of One Million Dollars ($1,000,000)." The term "annual gross receipts" was defined in the lease as: "receipts from gross sales of [United] and of all licensees, concessionaires and tenants of [United], from all businesses conducted upon or from the leased premises by [United]." The lease required United to pay the percentage rent within thirty days after each lease year. The lease also obligated United to provide the Langdons with annual financial statements within thirty days after each calendar year. United had options to extend the lease for three additional five-year terms.
In 1993, United leased additional space at 508 Westport Road, located in the Manor Square shopping mall and adjacent to the Langdon's property. The new space, leased from Manor Square, was used as a dance hall and dining club. United constructed a hallway to connect the new space with the Stanford & Sons restaurant/bar. Patrons could access the dance hall from both the Manor Square mall and restaurant. Food served in the dining club was generally prepared in the restaurant's main kitchen located at 504 Westport Road.
Approximately one year later, United leased additional space at Manor Square and opened a billiards room. A second entrance was opened to connect the billiards room to the Stanford & Sons restaurant at 504 Westport Road. In 1996, United leased a third space in Manor Square. The billiards room was moved to that space, and United opened a comedy club where the billiards room had been located. Patrons were able to access the comedy club from both the Manor Square mall and the Stanford & Sons restaurant. The comedy club had its own ticket window, separate bar, and a small kitchen, but much of the food was prepared in the main kitchen at 504 Westport Road.
All three of the Manor Square spaces were subject to separate leases, at least one of which included a percentage rent clause. United paid percentage rent to Manor Square pursuant to the lease for the comedy club space from March 1999 through February 2000.
With regard to the restaurant property at 504 Westport Road, United exercised options to extend its five-year lease with the Langdons in 1996 and 2001. No percentage rent was ever paid by United under the original or extended lease agreements. United also did not provide annual financial statements until the Langdon's son, Tom Langdon, took over management of the lease in 1997 and requested such records in order to have the property appraised. In response, United produced financial records for 1994 through 1997, showing that its total annual revenues for the restaurant/bar, dance hall, dining club, billiards room, and comedy club exceeded $1,000,000 in each of those three years.1
In May 2000, the Langdons filed a petition against United for "Rent and Possession Action and Unlawful Detainer" in Jackson County Circuit Court. The petition alleged United breached the lease agreement by: (1) failing to pay the percentage rental; (2) failing to provide annual financial statements; and (3) making unauthorized alterations to the leased property. As a result of these breaches, the Langdons alleged United unlawfully held the property at 504 Westport Road. The Langdons sought possession of the premises and damages for rent and repair.
Following a two-day bench trial, the court entered judgment in favor of United and against the Langdons on their petition. The court determined that no percentage rent was due under the lease agreement because United's gross receipts solely from the restaurant/bar business conducted at 504 Westport Road did not exceed $1,000,000 in any year.2 The court also found the Langdons took no enforcement action in response to United's failure to provide financial statements from 1991-1996 and thereby waived that contractual requirement. Similarly, the court found that the Langdons waived, through inaction, a provision in the lease prohibiting United from altering the property without the lessor's consent. Based on these waivers, the court held the Langdons were estopped from seeking to declare United in breach of the lease agreement.
The Langdons raise two points on appeal. First, they contend the trial court erroneously interpreted the lease agreement in finding that United's percentage rent was to be based solely on the gross receipts of the restaurant/bar business located at 504 Westport Road. Second, Appellants contend the evidence is insufficient to support the court's determination of waiver and estoppel on the unlawful detainer claim.
In reviewing this court-tried case, we must affirm the judgment unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). We must defer to the trial court's factual determinations, reviewing the evidence in a light most favorable to the judgment and disregarding all contrary evidence. King v. City of Independence, 64 S.W.3d 335, 338 (Mo.App. W.D. 2002). Questions of law, however, are reserved for the independent judgment of the appellate court without deference to the trial court's determination. Craven v. State ex rel. Premium Standard Farms, Inc., 19 S.W.3d 160, 163 (Mo.App. W.D. 2000).
The Langdons contend the trial court erroneously applied the law of contract by interpreting the lease agreement to require that United pay percentage rent solely based on the gross receipts of the Stanford & Sons restaurant/bar business conducted at 504 Westport Road. Appellants argue the court ignored the plain language of the lease terms — "business conducted on or from the leased premises" — and refused to give effect to the parties' intent that percentage rent would be based upon earnings from the leased premises even if the earnings were not generated on the premises.
In rendering judgment against the Langdons, the trial court determined "the provisions of the Lease pertaining to percentage rent are subject to more than one interpretation, and are vague and ambiguous." The court therefore considered extrinsic evidence to determine the intent of the parties and made the following findings:
At the time the lease herein was drafted, [the Langdons] were aware that the previous tenant, Stanford Glazer had expanded and connected his business to the premises in Manor Square. [The Langdons], therefore, were in a superior position to anticipate that a tenant at 504 Westport Road could expand its business to the adjoining location(s) at Manor Square, and, had they intended to share in the revenue derived from the adjoining premises, could have so stated with specificity. To adopt a different interpretation of the lease would construe the ambiguity in favor of [the Langdons], who drafted the agreement, and would essentially remake the Lease to give [the Langdons] a better bargain than they had contemplated.
As discussed herein, we find no error in the trial court's application of the law of contract to the facts of this case.
The interpretation of a lease agreement is a question of law, to which the general rules of contract construction apply. Sonoma Mgmt. Co. v. Boessen, 70 S.W.3d 475, 479 (Mo.App. W.D.2002); Wetherbee, Ltd. v. Allred, 969 S.W.2d 756, 758 (Mo.App. W.D.1998). The cardinal rule of contract interpretation is to ascertain the parties' intention and to give effect to that intention. Sonoma, 70 S.W.3d at 479. The intent of the parties is to be based upon the terms of the contract alone and not on extrinsic evidence unless the contract language is ambiguous. Id. An ambiguity arises only if the terms are reasonably open to more than one meaning, or the meaning of the language is uncertain. Id. Mere disagreement between the parties does not render contractual terms ambiguous. Id. Rather, the test is whether the disputed language, in the context of the entire agreement, is reasonably susceptible to more than one construction when the words are given their plain and ordinary meaning. Blackman v. Blackman, 767 S.W.2d 54, 59 (Mo.App. W.D. 1989). If a court determines a contract is ambiguous, the resolution of the ambiguity becomes a factual determination entitled to deference by the appellate court. Id.
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