Mobile Eye Center v. Van Buren Partnership

• Decision Date: 25 January 2002
• Citation: 826 So.2d 135
• Parties: MOBILE EYE CENTER, P.C. v. VAN BUREN PARTNERSHIP.
• Court: Alabama Supreme Court

826 So.2d 135

MOBILE EYE CENTER, P.C. v. VAN BUREN PARTNERSHIP.

1010116.

Supreme Court of Alabama.

January 25, 2002.

Daniel G. Blackburn and Cynthia J. Sherman of Blackburn & Conner, P.C., Bay Minette, for appellant.

W. Beatty Pearson and Michelle A. Meurer of Pearson, Cummins & Hart, L.L.C., Spanish Fort, for appellee.

HOUSTON, Justice.

Van Buren Partnership ("Van Buren") filed this declaratory-judgment action against Mobile Eye Center, P.C. ("the Center"), in the Baldwin Circuit Court, asking for a declaration that a renewal option in a 1994 lease agreement between Van Buren and the Center required that the Center give notice that it would not renew the lease 120 days before the expiration of the lease term, and that, because notice of nonrenewal was not given, the lease was automatically renewed for a five-year term. The trial court entered a judgment declaring that it was undisputed that the Center did not give written notice that it did not intend to renew the lease, and, therefore, that, under the renewal provision of the lease, the lease was automatically renewed for an additional five years. Furthermore, the trial court declared that because the Center had continued to occupy the leased premises and to pay rent, it had ratified the renewal provision. The Center appeals. We reverse and render a judgment for the Center.

The facts in this case are undisputed. On October 18, 1994, Van Buren and the Center entered into a commercial lease agreement; the term of the lease agreement was from September 1, 1995, to August 31, 2000. The two pertinent clauses in the lease are the holdover clause and the renewal clause. Those clauses provide:

"HOLDING OVER. Should the Lessee continue to occupy the premises after the expiration of said term or after a forfeiture incurred, then, except as otherwise provided for in this paragraph, the Lessee shall continue as a tenant under the terms of this lease (except as to duration) from year to year, and each holding over period annually thereafter shall in like manner create and cause a similar extension of this lease from year to year. PROVIDED, HOWEVER, that if the said Lessee continues to remain in the premises after the expiration of the said term or after a forfeiture incurred, the Lessor, at any time, whether rent has been accepted by the Lessor or not, reserves the unqualified right, or option to notify the Lessee in writing of his election to terminate the lease or any extension thereof, said termination to be effective sixty (60) days from which said notice is given, unless less than sixty (60) days remain in said year, in which event the effective date of termination shall be the last day of the calendar month following the date on which notice is given."

"RENEWAL OF LEASE. With the mutual consent of the parties this lease may be renewed for an additional five (5) year period, at a rental price term to be negotiated by the parties, subject to the same terms and conditions contained herein, excepting the requirement herein to negotiate the rental price term. Lessee shall give Lessor 120 days written notice if it does not intend to renew said lease. At the expiration of such additional five (5) year period, the provisions of this paragraph shall provide for a second renewal of the lease, and which is controlled by the terms and conditions herein."

(Emphasis added.)

On August 14, 2000, Robert Merritt, a principal partner in Van Buren, sent a letter to James W. Hartman III, the chief financial officer of Premier Medical Management, Inc.¹ In that letter, Merritt notified the Center that because he had not received notice that it did not intend to renew its lease, he assumed, pursuant to the terms of the lease, that it would be renewing the lease for an additional five-year period. He also stated that he would like to meet to discuss a new rental rate for the new term. On August 18, 2000, William Hunt, an agent of Van Buren, sent a letter to the Center notifying it that the monthly rent would be raised from $3,090 to $3,530, beginning September 1, 2000. However, on August 25, 2000, Hartman notified Merritt in writing that the Center did not agree with the assertions in the August 14 and the August 18 letters and would like to resolve the conflicting interpretations of the provisions of the lease.

There is no evidence in the record indicating that the parties ever agreed to a five-year renewal term. In fact, Merritt himself testified at trial that the Center never agreed to an additional five-year lease. Nevertheless, at the expiration of the original lease term, the Center remained on the leased premises, and it paid an average monthly rent of $3,450.

The Center later notified Van Buren that at the end of what it believed to be the one-year holdover period, it would vacate the premises. Van Buren then filed this declaratory-judgment action, asking the court...