Scenic Galveston, Inc. v. Infinity Outdoor, Inc.

• Decision Date: 24 July 2001
• Docket Number: No. Civ.A. G-00-751.,Civ.A. G-00-751.
• Citation: 151 F.Supp.2d 812
• Parties: SCENIC GALVESTON, INC. v. INFINITY OUTDOOR, INC.
• Court: U.S. District Court — Southern District of Texas

151 F.Supp.2d 812

SCENIC GALVESTON, INC. v. INFINITY OUTDOOR, INC.

No. Civ.A. G-00-751.

United States District Court, S.D. Texas, Galveston Division.

July 24, 2001.

Timothy A Beeton, Simpson Beeton et al, Galveston, TX, for Scenic Galveston, Inc., plaintiff.

Richard Lee Rothfelder, Rothfelder and Falick, Houston, TX, for Infinity Outdoor, Inc. fka Outdoor Systems, Inc., defendant.

ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

KENT, District Judge.

Plaintiff brings this declaratory judgment action seeking a determination that Defendant exercised its right under a billboard contract to terminate the agreement. Now before the Court is Plaintiff's Motion for Summary Judgment. For the reasons stated below, Plaintiff's Motion is GRANTED.

I. BACKGROUND

Plaintiff is the owner of land, along Interstate 45, on which Defendant was allowed, by lease, to maintain billboards. Under the terms of the lease, Defendant, the tenant, was allowed to maintain up to eight billboards on Plaintiffs, the landlord, property. In return, Defendant paid $ 495.00 per month in rent. The lease, which was entered into in 1993, had a forty-year term. Both Plaintiff and Defendant are successors in interest to the original parties to the lease, J.J. and E.S. Tamburine (landlord) and Jules Lauve Jr., Inc. (tenant).

Plaintiff brings this declaratory judgment action seeking a judicial determination that Defendant exercised its right under the lease contract to terminate the lease. The lease provides in relevant part:

If at any time the advertising structures of the Tenant on the premises hereby leased are entirely or partially obscured or destroyed without fault on the part of the Landlord, or if Tenant be prevented by authorities having jurisdiction, or by adjacent property owners or persons in charge thereof, from constructing or maintaining its advertising structures, this agreement shall terminate at the option of the Tenant ...

Prior to the Defendant's acquisition of its interest in the lease, two of the eight billboards were lost to storms. All of the billboards were non-conforming and hence could not be rebuilt under state law. In the summer of 2000, after Defendant had acquired its interest in the lease, a third billboard was lost due to the action of a state agency. Consequently, Defendant sent a letter to Plaintiff on August 24, 2000 stating "we are hereby terminating our lease with you and no future rent payments will be made." Plaintiff contends that by sending this letter, Defendant exercised its option to terminate the lease. Defendant claims, however, that it only intended to partially terminate the lease and pay a prorated portion of the rent for the remaining five billboards. As evidence of this intent, Defendant points out that on September 1, 2000, Defendant tendered a rent payment of $ 412.50, a one-sixth reduction from the prior amount of $ 495.00. Plaintiff deposited the check. Defendant also tendered the same amount on October 1, 2000, and Plaintiff deposited this check as well. Yet, on October 4, 2000, Plaintiff sent a letter to Defendant stating that Defendant's August 24, 2000 letter terminated the lease in its entirety, and Plaintiff refunded the rent payments.

Plaintiff argues that it properly took Defendant's letter to constitute an exercise of Defendant's termination right. It argues in the alternative that even absent Defendant's letter, Defendant's payment of a lesser amount constituted a breach of the lease, entitling Plaintiff to rescind.¹

Defendant argues that its letter indicated an intention to partially terminate the lease. It argues that industry custom, as well as the subsequent course of conduct — payment of a lesser amount and acceptance thereof by Plaintiff — demonstrates that it did not intend to completely terminate the lease. Defendant also argues that even if it was not allowed, under the terms of the lease, to partially terminate, Plaintiff should be allowed to recover only the deficiency in rent payment, not rescind the lease. Finally, Defendant argues that Plaintiff's aim as a nonprofit organization is the elimination of billboards in Galveston. In that regard, Defendant provides evidence that Plaintiff took an active role in the state agency action which resulted in the loss of the third billboard and hence knew that only one billboard was lost.

II. LEGAL STANDARD

Summary judgment is appropriate if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). When a motion for summary judgment is made, the nonmoving party must set forth specific facts showing that there is a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Issues of material fact are "genuine" only if they require resolution by a trier of fact. See id. at 248, 106 S.Ct. at 2510. The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Only disputes over facts that might affect the outcome of the lawsuit under governing law will preclude the entry of summary judgment. See id. at 247-48, 106 S.Ct. at 2510. If the evidence is such that a reasonable fact-finder could find in favor of the nonmoving party, summary judgment should not be granted. See id.; see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Dixon v. State Farm Fire & Cas. Co., 799 F.Supp. 691 (S.D.Tex.1992) (noting that summary judgment is inappropriate if the evidence could lead to different factual findings and conclusions). Determining credibility, weighing evidence, and drawing reasonable inferences are left to the trier of fact. See Anderson, 477 U.S. at 255, 106 S.Ct. at 2513.

Procedurally, the party moving for summary judgment bears the initial burden of "informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrates the absence of a genuine issue of material fact." Celotex Corp., 477 U.S. at 323, 106 S.Ct. at 2553; see also Fed. R.Civ.P. 56(c). The burden then shifts to the nonmoving party to establish the existence of a genuine issue for trial. See Matsushita, 475 U.S. at 585-87, 106 S.Ct. at 1355-56; Wise v. E.I. DuPont de Nemours & Co., 58 F.3d 193, 195 (5th Cir.1995). The Court must accept the evidence of the nonmoving party and draw all justifiable inferences in favor of that party. See Matsushita, 475 U.S. at 585-87, 106 S.Ct. at 1355-56. However, to meet its burden, the nonmovant "must do more than simply show that there is some metaphysical doubt as to the material facts," but instead, must "come forward with `specific facts showing that there is a genuine issue for trial.'" Id. at 586-87, 106 S.Ct. at 1355-56 (quoting Fed.R.Civ.P. 56(e)).

III. ANALYSIS

The parties agree that Texas law governs this contract dispute. Under Texas law, the language used by parties to a contract should be accorded a plain grammatical meaning, unless it definitely appears the intention of the parties would thereby be defeated. See Reilly v. Rangers Management, Inc., 727 S.W.2d 527, 529 (Tex.1987); Lyons v. Montgomery, 701 S.W.2d 641, 643 (Tex.1985). If the contract is worded so that it can be given a certain and definite meaning or interpretation, it is not ambiguous, and therefore a court should construe the contract as a matter of law. See United States v. Fidelity & Deposit Co., 10 F.3d 1150, 1152 (5th Cir.1994) (holding that if the contract can be given a definite and certain meaning or interpretation, the contract is not ambiguous and will be construed by the Court as a matter of law); Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983) (mandating that unambiguous provisions appearing in a contract must be given the plain meaning of their terms); City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515, 518 (Tex.1968) (noting that absent ambiguity, "the construction of the written instrument is a question of law for the Court"). Consequently, a fact issue arises as to the proper interpretation of a written contract only if the contract is ambiguous. In re Fender, 12 F.3d 480, 489 (5th Cir. 1994). An agreement, however, is not ambiguous merely because the parties disagree upon its correct interpretation; rather, it is ambiguous only if both competing interpretations offered are reasonable. See D.E.W., Inc. v. Local 93, Laborers' Int'l Union, 957 F.2d 196, 199 (5th Cir.1992) (applying Texas law). In this case, neither party argues that the lease agreement is ambiguous, although both put forth different interpretations. The Court finds that the clauses at issue are susceptible to only one reasonable interpretation, and therefore the Court must review the contract as a matter of law. See Kelley-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 465 (Tex.1998) (commenting that a contract is not ambiguous merely because the parties advance conflicting interpretations). In addition, because the agreement is not ambiguous, the Court may not consider industry custom. See Cook Composites, Inc. v. Westlake Styrene Corp., 15 S.W.3d 124, 132-33 (Tex.App. — Houston [14th Dist.] 2000, pet. dism'd).

Because the lease provision at issue in this case contains no ambiguity, it therefore must be construed in accordance with its plain meaning. From a plain reading of the contractual provision upon which both parties rely, it is clear that Defendant did not have the right to partially terminate the contract. The lease stated that in the event of an entire or partial loss of use, the agreement would terminate at the option of the tenant. The contract does not distinguish between total and partial termination, though the drafters clearly knew how to make such a distinction, having made...