Rathbun v. Cato Corp.
| Citation | 93 S.W.3d 771 |
| Decision Date | 21 November 2002 |
| Docket Number | No. 24578.,24578. |
| Parties | Margaret C. RATHBUN and Jack W. Rathbun, Trustees, For the Rathbun Trust Dated January 10, 1986, Plaintiffs-Appellants, v. The CATO CORPORATION, Defendant-Respondent. |
| Court | Court of Appeal of Missouri (US) |
John C. Holstein, Michael D. Textor, Shughart Thomson & Kilroy, Springfield, for appellant.
Paul F. Sherman, Daniel, Powell & Kiefer, LLC, Springfield, for respondent.
Margaret C. Rathbun and Jack W. Rathbun, trustees of The Rathbun Trust ("Lessor"), filed suit against The CATO Corporation ("Lessee") for rent and possession, claiming that Lessee had not paid the full amount of lease payments required by a lease agreement entered into by the parties in July 1997 ("the Lease"). Lessee filed a counterclaim seeking a declaration that it was obligated to pay rent only in the amount it had been paying rather than the amount claimed by Lessor. Lessor appeals from an adverse judgment in which the trial court found for Lessee on the petition and on Lessee's counterclaim.
The leased premises was approximately 3300 square feet of commercial retail space ("the premises") at the Ozark Corners Shopping Center in Ozark, Missouri ("the shopping center"). The primary term of the Lease was five years, ending January 31, 2003, at a monthly rental of $2200. In addition, the Lease called for Lessee to pay three percent of its annual gross retail sales in excess of $880,000, as well as a pro rata share of the real estate taxes, insurance, and common area maintenance of the shopping center. It also provided for three automatic five-year renewals at increased rent unless Lessee gave notice of its intent not to renew.
When the parties entered into the lease, Wal-Mart Discount Department Store ("Wal-Mart") and Consumer Foods Grocery Store ("Consumers") were tenants on either end of the shopping center. The Lease contained the following provision, which is at issue here (the "Inducement provision"):
27. INDUCEMENT. As an inducement to LESSEE for entering into this Lease, LESSOR warrants that the following major anchor tenants are open for business, or will open for business prior to or concurrent with LESSEE ... as follows:
WAL-MART DISCOUNT DEPARTMENT STORE 54,000 SQ. FT
CONSUMER FOODS GROCERY STORE 33,539 SQ. FT
LESSOR warrants that in the event either one of said tenants should not be open for business when LESSEE is scheduled to open for business, or should thereafter vacate its premises or cease its operations in the Shopping Center, then LESSEE may delay its opening date and rental commencement date until the first of LESSEE'S scheduled store opening seasons after both of said major anchor tenants are open for business. LESSEE shall also have the option to cancel this Lease, however, in such event; LESSOR shall have six (6) months after such major anchor tenant vacates or ceases operations in said space for said space to be occupied by another tenant open for business and operating a similar type and size business as that of such vacating tenant before LESSEE may exercise this option to cancel, and provided that LESSEE notifies LESSOR of its intent to cancel in writing thirty (30) days prior to such cancellation.
During the period of such major anchor tenant's vacancy, LESSEE may abate monthly fixed rent, annual percentage rent and all other charges payable hereunder by LESSEE, and pay LESSOR in lieu thereof, on a monthly basis, an amount equal to one-half (½) of the monthly fixed rent that would otherwise be due under this Lease. See Exhibit "E".1
The Lease also provided that if occupancy of the shopping center fell below 80%, Lessee had the option, among other things, to remain in the premises with abatement of monthly rent, annual percentage rent, and other charges payable under the lease until the 80% occupancy threshold was met by Lessor. Finally, an exhibit to the Lease provided that Lessee would be allowed $26,400 in construction costs to accommodate its tenancy, and that Lessee would recover those costs by withholding $1100 in rent each month until the allowance was fully recovered.
Lessee occupied the premises beginning in November 1997, and deducted $1100 from its monthly fixed rent until October 1999 pursuant to the construction costs allowance. Consumers, however, ceased its operations in the shopping center in April 1999, causing the occupancy rate of the shopping center to be less than 80%. Lessee, relying on the 80% occupancy provisions of the Lease, paid no rent from May 1999 through October 1999 ($1100 was withheld as reimbursement of construction costs, and another $1100 was withheld because of the occupancy deficiency). In November 1999, having been reimbursed for its constructions costs, Lessee began paying monthly rent of $1100, relying on the Lease provision that a vacancy of one of the two anchor tenant locations permitted Lessee to pay one-half of the fixed monthly rent.
In August 2000, Lessee was notified by Lessor that a new tenant, Sutherland's Express Home Improvement Store ("Sutherland's"), had agreed to take the Consumers location, and that, beginning September 1, 2000, the rent would return to the $2200 fixed monthly payment and the requirements for reimbursement of pro rata shares of other expenses provided for in the Lease would once again apply. Lessee, however, continued to pay only $1100 per month as fixed rent, and failed to pay its pro rata share of the common area maintenance, insurance and taxes.
The underlying suit followed. Following a bench trial, the court entered a judgment against Lessor on the petition, and for Lessee on the counterclaim, declaring Lessee was "entitled to pay at the abated rent amount of $1,100 per month for loss of major anchor tenant [Consumers], an amount equal to one-half (½) of the monthly fixed rent in lieu of all other charges hereafter." It also entered judgment for Lessee in the amount of $5100 for attorney fees. The trial court entered findings of fact and conclusions of law, including the following:
5. The language of Section 27 INDUCEMENT, is clear and explicit in providing [Lessee] a modification of rent to ½ of the monthly fixed rent during the period a major anchor tenant expressly identified as [Consumers] vacated the shopping center.
6. [Sutherland's] and [Consumers] are not similar type businesses in the fair and ordinary sense of their operations, one being a hardware store and the other a grocery store, so that [Sutherland's] is not a suitable replacement tenant for [Consumers].
10. Words of the Lease Agreement, given their ordinary meaning, entitle [Lessee] at Section 27 to abate rent to ½ the fixed monthly rent in lieu of all other charges for the vacancy of major anchor tenant [Consumers].
11. Abatement to ½ a reasonable construction of the Lease Agreement so as to provide [Lessee] a substantial inducement to locate in the [Lessor's] shopping center its ladies apparel business between the traffic flow generated by and between a grocery store and a discount store.
12. The Lease Agreement between the parties is an integrated unambiguous written contract.
13. [Lessee] has paid in full its rent to date in accord with the [Lease].
14. This Court declares [Lessee] obligated to pay at the abated rent amount of $1,100.00/month per the [Lease] for loss of major anchor tenant [Consumers].
On this appeal, Lessor presents five points relied on, four of which relate to the construction of the Lease. The fifth relates to the testimony of an expert called by Lessee.
On appeal from a court-tried case, a judgment will be affirmed unless it is not supported by substantial evidence, is against the weight of the evidence, or erroneously declares or erroneously applies the law. Parnell v. Sherman, 899 S.W.2d 900, 901 (Mo.App. S.D.1995). In assessing challenges to the trial court's findings of fact, the appellate court defers to the trial court's superior ability to judge the credibility of witnesses. Id. While we defer to the trial court's factual findings, we independently evaluate its conclusions of law. Kassebaum v. Kassebaum, 42 S.W.3d 685, 692 (Mo.App. E.D.2001). In our review, we accept the evidence and inferences favorable to the prevailing party and disregard all contrary evidence. Id.
Lessor first contends that the portion of the judgment declaring that Lessee is entitled to pay abated rent of $1100 per month "hereafter" is inconsistent with the clear and unambiguous renewal provisions of the Lease, in that they provide that Lessee is to pay specified increases in rent if the Lease is renewed. Lessor's theory under this point is based on paragraph 6 of the Lease, entitled "Renewal Options." It provided, in part:
6(a) Provided LESSEE is not in default, upon expiration of the original term of this Lease on January 31, 2003 this Lease shall be automatically extended and renewed for a period of five (5) years from February 1, 2003 to January 31, 2008, under the same terms and conditions except monthly fixed rent shall be TWO THOUSAND FOUR HUNDRED SEVENTY FIVE AND NO/100 DOLLARS ($2,475.00) plus percentage rent payable within ninety (90) days after the end of each Lease year equal to three percent (3%) of all completed gross retail sales made from the Premises in excess of base sales of NINE HUNDRED NINETY THOUSAND AND NO/100 DOLLARS ($990,000.00) unless at least ninety (90) days prior to January 31, 2003, LESSEE shall give written notice to LESSOR that it does not intend to renew this Lease for the additional five (5) year term. (emphasis added.)
Paragraphs 6(b) and (c) provided for two subsequent five-year renewals using the same language as paragraph 6(a), except that the amount of the fixed rent for each...
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