Sy-Lene of Washington, Inc. v. Starwood Urban Retail

• Decision Date: 29 July 2003
• Docket Number: No. 132,132
• Citation: 829 A.2d 540,376 Md. 157
• Parties: SY-LENE OF WASHINGTON, INC. v. STARWOOD URBAN RETAIL II, LLC.
• Court: Maryland Court of Appeals

829 A.2d 540

376 Md. 157

SY-LENE OF WASHINGTON, INC. v. STARWOOD URBAN RETAIL II, LLC.

No. 132, Sept. Term, 2002.

Court of Appeals of Maryland.

July 29, 2003.

Morris Topf, Bethesda, for petitioner.

Kathleen A. Ellis (Regan K. La Testa of Piper Rudnick LLP, on brief), Baltimore, for respondent.

Argued before BELL, C.J., and ELDRIDGE, RAKER, WILNER, CATHELL, HARRELL and BATTAGLIA, JJ RAKER, Judge.

In this case, the parties disagree as to the construction of a contract providing for parking spaces in a retail shopping plaza located in Chevy Chase, Maryland. Petitioner, Sy-Lene, filed a complaint pursuant to the Maryland Uniform Declaratory Judgments Act, Maryland Code (1974, 1998 Repl.Vol., 2001 Cum.Supp.) § 3-406 of the Courts and Judicial Proceedings Article, seeking construction of the lease agreement and a declaration of the parties' rights under it. The trial court granted respondent Starwood's Motion to Dismiss. The Court of Special Appeals affirmed. We will reverse, finding the lease terminology ambiguous as a matter of law.

I. Background

Petitioner, Sy-Lene of Washington, Inc., ("Sy-Lene"), operates a retail lingerie shop. In June 1998, Sy-Lene entered into a ten-year lease¹ with Somerset Properties Limited Partnership ("Somerset") to lease retail space in the shopping center located at 5500-5516 Wisconsin Avenue, Chevy Chase. In October 1998, respondent, Starwood Urban Retail ("Starwood"), purchased the plaza from Somerset and assumed the lease with Sy-Lene. The parties' dispute pertains to Article XL of the lease, which provides, in relevant part: "Tenant shall pay to Landlord $30.00 per month for each employee parking space as is needed for its employees at the Premises.... Landlord reserves the right to limit the number of employee parking spaces to be provided Tenant pursuant to this Article."

On or about January 30, 1999, Sy-Lene requested from Starwood's garage manager five reduced-fee employee parking spaces for February 1999.² The garage manager refused Sy-Lene's request, and Sy-Lene contacted Starwood directly. Starwood informed Sy-Lene, by letter, that there was "currently no availability" for employee parking. Over the next two-and-a-half years, Starwood, through its garage manager, denied many of Sy-Lene's requests for monthly reduced-fee employee parking spaces. During that time, Starwood's garage manager charged Sy-Lene as much as $85.00 per month per employee space. Finally, on October 24, 2001, Starwood, through its garage manager, notified Sy-Lene that it would cancel Sy-Lene's monthly parking agreement effective November 1, 2001, and that the only parking available to Sy-Lene's employees would be daily parking at a cost of $8 per day.

On October 29, 2001, Sy-Lene brought suit against Starwood in the Circuit Court for Montgomery County, under the Maryland Uniform Declaratory Judgments Act, Maryland Code (1973, 1998 Repl.Vol., 2001 Cum.Supp.), § 3-406 of the Courts and Judicial Proceedings Article. In its Complaint, in Count I, captioned Declaratory Judgment, Sy-Lene sought a construction of Article XL and a declaration that the lease required Starwood to supply Sy-Lene with at least ten reduced-fee employee parking spaces; in Count II, captioned Injunction, Sy-Lene sought an injunction, directing Starwood's parking garage managers to provide a minimum of ten reduced-fee employee parking spaces, enjoining its managers to reflect these reduced fees retroactively and prospectively, and directing Starwood to provide Sy-Lene with detailed information regarding common area maintenance costs, which Sy-Lene was required to pay to Starwood under the lease; and in Count III, captioned Damages, Sy-Lene sought damages for the costs Sy-Lene incurred in paying for parking for its employees, plus court costs and attorneys' fees.

Starwood filed a Motion to Dismiss. Following a hearing on the motion, the court dismissed the Complaint, ruling as follows:

"The Court does not feel that [Article XL] is ambiguous. It is as clear and as plain as day. If there are parking spaces available, the employees can have parking spaces as is needed, but the landlord reserves the right to limit the number, and implicit in that, quite clearly—to limit the number means it can be zero.

"And the plaintiff has failed to state a cause of action as to Count 1. The motion to dismiss is granted.

"As to Count 2—I suppose Count 2 and 3 really follow my ruling with respect to Count 1.

...

"Accordingly, I will grant the motion with respect to Count 2....

"And Count 3 asks for damages. Considering the ruling in Count 1 and Count 2, Count 3 is dismissed as well."

The Circuit Court filed a written Order reflecting the oral ruling.

Sy-Lene filed a timely appeal to the Court of Special Appeals, arguing that the trial court erred because it dismissed the complaint without issuing a declaration of the parties' rights under Article XL of the lease, and because under Maryland law, Sy-Lene was entitled to an itemized accounting of common area maintenance costs. In an unreported opinion, a majority of the appellate court panel held that the trial court properly dismissed the Complaint because the court, at the hearing on the motion, declared the rights of the parties with respect to Article XL of the contract. Quoting from the transcript of the hearing, the majority noted that the trial court determined that Article XL was not ambiguous and that it did not require Starwood to provide any reduced-fee parking for Sy-Lene's employees. With respect to Sy-Lene's request for detailed accounting of the common area maintenance costs, the intermediate appellate court reversed, holding that Sy-Lene was entitled to an accounting of those costs, and that the trial court should not have denied Sy-Lene's request merely because it was improper in form, presented as a request for an injunction rather than as a request for an accounting.³

We granted Sy-Lene's petition for writ of certiorari. Sy-Lene v. Starwood, 373 Md. 406, 818 A.2d 1105 (2003).

II. Standard of Review

The interpretation of a contract, including the determination of whether a contract is ambiguous, is a question of law, subject to de novo review. See Langston v. Langston, 366 Md. 490, 506, 784 A.2d 1086, 1095 (2001)

; Wells v. Chevy Chase Bank, 363 Md. 232, 250, 768 A.2d 620, 629-30 (2001); Auction & Estate Reps. v. Ashton, 354 Md. 333, 340, 731 A.2d 441, 445 (1999); Calomiris v. Woods, 353 Md. 425, 434-35, 727 A.2d 358, 362-63 (1999). Although the factual findings of the trial court considering parol evidence are to be reviewed under the clearly erroneous standard, such evidence is only admissible after the court finds the contract to be ambiguous. Calomiris, 353 Md. at 435,

727 A.2d at 363.

In the case sub judice, the trial court dismissed the action but then went on to declare the rights of the parties, ruling that Article XL was not ambiguous and thus Sy-Lene was not permitted to introduce parol evidence. The court also found that Sy-Lene was not entitled to ten reduced-fee employee parking spaces, and that Starwood could limit the number of such spaces to zero. The Court of Special Appeals, in reviewing the trial court's findings of law with respect to the lease's construction, correctly identified those rulings as findings of law. Nonetheless, in reviewing this legal conclusion, the majority opinion applied the clearly erroneous standard.⁴ The court stated:

"In a declaratory judgment proceeding, a trial court determines both issues of law and fact. Aetna Casualty & Surety Co. v. Brethren Mutual Ins. Co., 38 Md.App. 197, 206 (1977). We will not disturb the trial court's conclusions as to the facts `unless found to be clearly erroneous.' Id. Therefore, on appeal, we examine the trial court's factual conclusions and ascertain whether they were clearly erroneous. Id. at 206-07, 379 A.2d 1234.

"In the instant case, the court determined as a matter of law that the contract did not obligate [Starwood] to provide [Sy-Lene] with ten reduced-fee parking spaces. It was reasonable for the court to find that the contract language in question was not susceptible to more than one meaning. Because the contract was not ambiguous, [Sy-Lene] was not entitled to produce parol evidence to establish supplemental terms.

"[Sy-Lene] asserts that the trial court erred in finding that the lease provision permitting [Starwood] to `limit' the number of spaces thereby allows it to provide no spaces. Although [Sy-Lene] claims that `limit' can never mean `reduce to zero,' it does not cite, nor can we find, any Maryland case law supporting such a proposition. Consequently, it was not in error for the trial court to find that the lease did not prevent [Starwood] from restricting the number of available reduced-fee parking spaces to zero."

As this Court made clear in Calomiris, and again more recently in Lema v. Bank of America, N.A., 375 Md. 625, 641, 826 A.2d 504, 513 (2003), an appellate court reviews de novo the trial court's findings of law with respect to a contract's ambiguity. "Contract ambiguity ... is not a factual issue and is not, therefore, subject to the `clearly erroneous' standard of review." Id. at 641, 826 A.2d at 513. Thus, the Court of Special Appeals erred when it employed the clearly erroneous standard in reviewing the trial court's findings of law. We shall review de novo the trial court's finding that the contract is unambiguous.

III. Discussion

Before this Court, Sy-Lene contends that the trial court's finding was incorrect because the lease is ambiguous, that standard rules of construction support construction in its favor, and that parol evidence should be admitted to determine the intent of the parties.⁵

Starwood concedes that the Court of Special Appeals employed the incorrect standard of review, but argues that the result was legally correct nonetheless and should be affirmed. According to Starwood, the plain language of Article XL does not prescribe any lower...