OSPREY LLC v. Kelly-Moore Paint Co.

Decision Date25 May 1999
Docket NumberNo. 90,206.,90,206.
Citation1999 OK 50,984 P.2d 194
PartiesOSPREY L.L.C., a limited liability company, Plaintiff/Appellant, v. KELLY-MOORE PAINT CO. INC., a California corporation, Defendant/Appellee.
CourtOklahoma Supreme Court

Anton J. Rupert, Oklahoma City, for Plaintiff/Appellant.

Darian B. Anderson, Edmond, for Defendant/Appellee.

¶ 1 KAUGER, J

¶ 2 The first impression question presented is whether a faxed or facsimile delivery of a written notice renewing a commercial lease is sufficient to exercise timely the renewal option of the lease. Under the facts presented, we hold that it is.

¶ 3 FACTS

¶ 4 The appellant, Osprey, an Oklahoma limited liability company (Osprey), owns commercial property in Edmond, Oklahoma. On March 18, 1977, the appellee, Kelly-Moore Paint Company (Kelly-Moore), a California corporation, negotiated a fifteen-year lease for its Edmond, Oklahoma, store with Osprey's predecessors James and Victoria Fulmer.1 The lease contained two five-year renewal options which required that the lessee give notice of its intent to renew the lease at least six months prior to its expiration date. The lease also provided that all notices "shall be given in writing and may be delivered either personally or by depositing the same in United States mail, first class postage prepaid, registered or certified mail, return receipt requested."

¶ 5 It is undisputed that after the first fifteen years, Kelly-Moore timely informed Osprey's predecessors by certified letter of its intent to extend the lease an additional five years. The first five-year extension was due to expire on August 31, 1997. According to the property manager of Kelly-Moore, she telephoned one of the owners of Osprey in January of 1997, to inform him that Kelly-Moore intended to extend its lease for the remaining five-year period. On Friday, February 28, 1997, the last day of the six-month notification deadline, Kelly-Moore faxed a letter of renewal notice to Osprey's office at 5:28 p.m., Oklahoma time. Kelly-Moore also sent a copy of the faxed renewal notice letter by Federal Express the same day.

¶ 6 Although the fax activity report and telephone company records confirm that the fax was transmitted successfully and that it was sent to Osprey's correct facsimile number, Osprey denies ever receiving the fax. The Federal Express copy of the notice was scheduled for delivery on Saturday, March 1, 1997. However, Osprey actually received it on Monday, March 3, 1997. In a letter dated March 6, 1997, Osprey acknowledged that it had received Kelly-Moore's Federal Express notice; denied that the notice was timely according to the terms of the lease; and it rejected the notice as untimely. In July of 1997, Osprey wrote Kelly-Moore reminding it to vacate the premises by August 31, 1997. Kelly-Moore refused to vacate, insisting that it had effectively extended the lease term for the remaining five years.

¶ 7 On September 2, 1997, Osprey filed an action for forcible entry and detainer in the district court of Oklahoma County. It alleged that Kelly-Moore wrongfully possessed the property and that it refused to vacate the premises. Kelly-Moore argued that it was entitled to possession of the property because of its timely renewal of the lease. After a trial on the merits, the trial court granted judgment in favor of Kelly-Moore, finding that the faxed notice was effective. Osprey appealed. The Court of Civil Appeals reversed, determining that the plain language of the lease required that it be renewed for an additional term by delivering notice either personally or by mail, and that Kelly-Moore had done neither. We granted certiorari on April 13, 1999, to address the question of first impression.

¶ 8 UNDER THE FACTS PRESENTED, THE FAXED DELIVERY OF THE WRITTEN NOTICE OF RENEWAL TIMELY EXERCISED THE RENEWAL OPTION OF THE LEASE.

¶ 9 The precise issue of whether a faxed or facsimile delivery of a written notice to renew a commercial lease is sufficient to exercise timely the renewal option of the lease is one of first impression in Oklahoma. Neither party has cited to a case from another jurisdiction which has decided this question, or to any case which has specifically defined "personal delivery" as including facsimile delivery.

¶ 10 The contested portions of the lease provide in pertinent part:

". . . 20. OPTION TO RENEW . . . . The Lessee must, in order to exercise each such renewal option give to the Lessor at least six (6) months prior to the expiration of the term hereof or the extended term, written notice of the Lessee's intention to renew this lease as by this paragraph provided. . . .
. . .
26. NOTICES. All notices required to be given hereunder by Lessee or Lessor shall be given in writing and may be delivered either personally or by depositing the same in the United States mail, first class postage prepaid, registered or certified mail, return receipt requested, addressed to the party to receive the same at that party's address hereinabove first written or to such changed address as the party may have from time to time during the term hereof notified the other party. Notices which are mailed shall be deemed delivered three (3) days after having been deposited in the United States mail as herein.
. . .
29. TIME. Time is hereby expressly declared to be the essence of this lease and of all the covenants, agreements, terms, conditions, restrictions and obligations herein contained." (Emphasis supplied)

¶ 11 Osprey argues that: 1) the lease specifically prescribed limited means of acceptance of the option, and it required that the notice of renewal be delivered either personally or sent by United States mail, registered or certified; 2) Kelly-Moore failed to follow the contractual requirements of the lease when it delivered its notice by fax; and 3) because the terms for extending the lease specified in the contract were not met, the notice was invalid and the lease expired on August 31, 1997. Kelly-Moore counters that: 1) the lease by the use of the word "shall" mandates that the notice be written, but the use of the word "may" is permissive; and 2) although the notice provision of the lease permits delivery personally or by United States mail, it does not exclude other modes of delivery or transmission which would include delivery by facsimile. Kelly-Moore also asserts that the lease specified that time was of the essence and that faxing the notice was the functional equivalent of personal delivery because it provided virtually instantaneous communication.

¶ 12 Although the question tendered is novel in Oklahoma, the sufficiency of the notice given when exercising an option contract or an option to renew or extend a lease has been considered by several jurisdictions.2 A few have found that delivery of notice by means other than hand delivery or by certified or registered mail was insufficient if the terms of the contract specifically referred to the method of delivery.3 However, the majority have reached the opposite conclusion.4 These courts generally recognize that, despite the contention that there must be strict compliance with the notice terms of a lease option agreement, use of an alternative method does not render the notice defective if the substituted method performed the same function or served the same purpose as the authorized method.5

¶ 13 A lease is a contract and in construing a lease, the usual rules for the interpretation of contractual writings apply.6 Generally, the terms of the parties' contract, if unambiguous, clear, and consistent, are accepted in their plain and ordinary sense and the contract will be enforced to carry out the intention of the parties as it existed at the time the contract was negotiated.7 The interpretation of a contract, and whether it is ambiguous is a matter of law for the Court to determine and resolve.8 ¶ 14 Language in a contract is given its plain and ordinary meaning, unless some technical term is used in a manner meant to convey a specific technical concept.9 A contract term is ambiguous only if it can be interpreted as having two different meanings.10 Nevertheless, the Court will not create an ambiguity by using a forced or strained construction, by taking a provision out of context, or by narrowly focusing on provision.11 The lease does not appear to be ambiguous. "Shall" is ordinarily construed as mandatory and "may" is ordinarily construed as permissive.12 The contract clearly requires that notice "shall" be in writing. The provision for delivery, either personally or by certified or registered mail, uses the permissive "may" and it does not bar other modes of transmission which are just as effective.

¶ 15 The purpose of providing notice by personal delivery or registered mail is to insure the delivery of the notice, and to settle any dispute which might arise between the parties concerning whether the notice was received.13 A substituted method of notice which performs the same function and serves the same purpose as an authorized method of notice is not defective.14 Here, the contract provided that time was of the essence.15 Although Osprey denies that it ever received the fax, the fax activity report and telephone company records confirm that the fax was transmitted successfully, and that it was sent to Osprey's correct facsimile number on the last day of the deadline to extend the lease. The fax provided immediate written communication similar to personal delivery and, like a telegram, would be timely if it were properly transmitted before the expiration of the deadline to renew.16 Kelly-Moore's use of the fax served the same function and the same purpose as the two methods suggested by the lease and it was transmitted before the expiration of the deadline to renew. Under these facts, we hold that the faxed or facsimile delivery of the written notice to renew the commercial lease was sufficient to exercise timely the renewal option of the lease.

¶ 16 CONCLUSION

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