Saunders Real Estate Corp. v. Landry

• Decision Date: 27 April 2001
• Docket Number: No. 99-447-Appeal.,99-447-Appeal.
• Citation: 769 A.2d 1277
• Parties: SAUNDERS REAL ESTATE CORPORATION, Agent for Boston Development Company Limited Partnership-I State v. Joel D. LANDRY et al.
• Court: Rhode Island Supreme Court

769 A.2d 1277

SAUNDERS REAL ESTATE CORPORATION, Agent for Boston Development Company Limited Partnership-I State v. Joel D. LANDRY et al.

No. 99-447-Appeal.

Supreme Court of Rhode Island.

April 27, 2001.

Present WILLIAMS, C.J., LEDERBERG, BOURCIER, FLANDERS, and GOLDBERG, JJ.

Samuel D. Zurier, Richard A. Licht, Providence, for plaintiff.

Joel D. Landry, Thomas F. Connors, Providence, for defendant.

OPINION

PER CURIAM.

The defendants, Joel D. Landry and Thomas Connors (collectively, defendants), have appealed from the entry of a partial summary judgment and subsequent award of damages in favor of the plaintiff, Saunders Real Estate Corporation. This case came before the Supreme Court for oral argument on April 3, 2001, pursuant to an order directing the parties to show cause why the issues raised in this appeal should not be summarily decided. After hearing the parties' arguments and examining their memoranda, we are of the opinion that cause has not been shown and that the issues raised by this appeal should be decided summarily.

The facts of this case are essentially undisputed. In January 1991, defendants leased from plaintiff a law office suite located at One State Street in Providence, Rhode Island. The commercial lease was signed by defendants as tenants "jointly and severally" and as "Guarantors of Tenant[s'] Obligation." The initial lease term was for fifty-six calendar months, terminating on August 31, 1995. The lease contained a provision for the "Extension of Lease Term," pursuant to which the lease wasrenewed automatically for additional successive periods of five years. The lease also provided that if defendants elected not to extend, they were required to give written notice six months before the expiration of the original term. In turn, plaintiff was required to notify defendants in writing of a cancellation of the right of extension within the same time periods, unless defendants were in default of their obligations, in which case plaintiff could notify defendants at any time before the end of the lease term. The rental amount was set at a monthly minimum that increased from $2,417 to $3,625 over the initial term of the lease and could be further increased by the Consumer Price Index. In addition, defendants were responsible for a $423 "Monthly Electric Charge" subject to an increase by plaintiff, a share of plaintiff's real estate taxes, and a portion of plaintiff's increase in operating costs. In the event that defendants did not pay their rent or other charges in a timely manner, plaintiff had the "right to give defendants a written notice to quit or vacate the [p]remises," five days after which the lease terminated.

The defendants regularly made late payments, and on some of these occasions, plaintiff sent notices of default; defendants always paid the delinquent rent and continued to occupy the premises. In August 1995, the last month of their initial lease term, defendants vacated the premises without having given a written notice of their election not to renew the lease. In November 1995, plaintiff informed defendants that the original term of the lease was automatically extended for an additional five years, that defendants now owed $22,966.60, and that failure to pay within five business days would cause plaintiff to exercise its rights under the lease. The defendants made no further payments for any amounts accrued under the lease after August 1, 1995. According to testimony by Brian Marsden (Marsden), plaintiff's director of leasing, plaintiff made immediate efforts to obtain a replacement tenant, but the property remained vacant for ten months. The plaintiff eventually negotiated a lease agreement for the premiseswith Merit Capital Associates for a three-year term, commencing July 1, 1996, with monthly minimum rents ranging from $1,200 to $2,658.

In December 1995, plaintiff filed an action for breach of contract and guaranty in Superior Court. Based on the undisputed fact that defendants had failed to provide a required written notice of their intent not to renew, plaintiff's motion for partial summary judgment on the breach of contract and on the guaranty was granted in September 1997, reserving only the issue of damages for further proceedings. Following a trial before a different Superior Court justice, judgment was entered for plaintiff in June 1999, ordering defendants to pay a total of $178,309 for damages, pre-judgment interest, and attorney's fees. The defendants filed the instant appeal, contending that the automatic renewal clause of the lease was unenforceable because it did not specify the exact rental amount for the new term or contain a method to determine such rent if the parties could not agree, or in the alternative, the clause did not apply because tardy rental payments placed defendants into default that terminated the lease and resulted in a month-to-month tenancy. The defendants also suggested that the terms of the lease were sufficiently onerous as to violate public policy and that, therefore, the lease was void ab initio, and that damages were assessed incorrectly.

Summary Judgment

"This Court reviews the granting of a motion for summary judgment on a de novo basis, applying the same criteria as the trial court. * * * Only when a review of the admissible evidence viewed in the light most favorable to the nonmoving party reveals no genuine issues of material fact, and the moving party is entitled to judgment as a matter of law, will this Court uphold the trial justice's grant of summary judgment." Carlson v. Town of Smithfield, 723 A.2d 1129, 1131 (R.I.1999) (per curiam).

We note at the outset that although the lease in this case referred to an "Extension of Lease Term" under which all the conditions of the original lease for an additional term are continued, the lease section at issue was a renewal clause because it allowed for an upward adjustment of rent. Vartabedian v. Peerless Wrench Co., 46 R.I. 472, 474, 129 A. 239, 240 (1925). This Court has held a renewal clause that left the renewal rental to be fixed by future agreement between the parties void for uncertainty and indefiniteness when "[n]o method was provided in the lease for the determination of the rent if the parties could not agree upon the amount." Id. See...