Westcor Co. Ltd. Partnership v. Pickering
| Decision Date | 17 May 1990 |
| Docket Number | CA-CV,No. 1,1 |
| Citation | 164 Ariz. 521,794 P.2d 154 |
| Parties | The WESTCOR COMPANY LIMITED PARTNERSHIP, a limited partnership, Plaintiff-Appellee, v. Bryant PICKERING, Defendant-Appellant. 88-491. |
| Court | Arizona Court of Appeals |
Plaintiff, The Westcor Company Limited Partnership (landlord), and CompuShare Corporation (tenant), an Arizona corporation, were the parties to a three-year written lease agreement for the premises located at a shopping center in Phoenix, Arizona. The term of the lease commenced on November 15, 1983, and ended three years after the commencement date. Defendant Bryant Pickering (guarantor) was one of three persons who signed a written guarantee of said lease agreement. Landlord sued tenant and the three guarantors for breach of the lease. Landlord filed a motion for summary judgment against tenant and guarantor on October 30, 1987. The other guarantors had filed a petition for bankruptcy. The trial court granted the motion for summary judgment and final judgment was entered on January 20, 1988, in favor of landlord and against tenant and guarantor in the sum of $34,311.22 plus prejudgment interest of $861.75, together with attorney's fees in the amount of $2,541 and costs in the sum of $84 plus accruing costs. Guarantor timely appealed.
The guarantee was in a separate written document entitled, "Guarantee of Lease." The guarantee does not expressly state the length of time it is to be effective nor does it state that it applies to any extension or renewal of the original lease term. The lease and the guarantee were executed on July 25, 1983. On the same date, landlord and tenant executed a document entitled, "Option to Renew." The option granted tenant the right to renew the lease for an additional three-year period with the option to be exercised in writing not less than 180 days prior to the expiration of the original lease term. It also provided that if the option to renew was exercised, the renewal would, with one exception, be upon the same terms and conditions as contained in the original lease, but without an additional option to extend. The one exception was the amount of the minimum guaranteed annual rental together with a formula for determining an adjustment to that rental. Tenant did not exercise its option within the time limits specified within the lease. No extensions of time were given for the exercise of said option prior to the expiration of the lease. The lease expired November 15, 1986. On December 19, 1986, landlord wrote a letter to tenant which reads:
December 19, 1986
Mr. Randall Jones
CompuShare, Inc.
Dear Mr. Jones:
Your signature below will serve as your agreement to exercise your option to renew your lease agreement with The Westcor Company Limited Partnership, to extend the term of your lease for one three (3) year period commencing November 14, 1986 and expiring November 13, 1989.
In addition, based on our budget estimates, your monthly 1987 Common Area Maintenance charge will be $.096 per square foot and Real Estate Taxes and Insurance will be $.066 per square foot. Therefore, following is the calculation of your monthly Rental Charges for 1987:
Minimum Rent $4,111.25
Common Area Maintenance 364.00
Real Estate Tax and Insurance 250.00
5.325% Rental Tax 251.62
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Total: $4,976.87
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Monthly Rental Charges are due and payable in advance no later than the first day of each month. As in the past, you will not receive a monthly statement. Please pay monthly from this invoice, making your check payable to VILLAGE SQUARE II.
For the period November 14, through December, 1986, a balance in Minimum Rent plus 5.325% Rental Tax is due as follows:
December 19, 1986
CompuShare, Inc.
November 1 - 13 /$3,795.00 x 12 / 365 x 13 days = $1,621.97
November 14 - 30 /$4,111.25 x 12 / 365 x 17 days = 2,297.79
December, 1986 /$4,111.25 4,111.25
Less amount paid (Same Period) (7,590.00 )
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441.01
5.325% Rental Tax 23.49 [sic]
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Total $ 464.49
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Please make your check payable to Village Square II in the amount of $464.49 and send to this office at your earliest convenience.
Should you have any questions, please feel free to call.
BY S/Randall Jones
Tenant accepted and approved the "renewal" but did not date the same. Approximately five months after November 14, 1986, tenant defaulted and left the premises. Landlord stated in its complaint and in an affidavit that tenant "renewed" the lease on or about December 19, 1986. Randall Jones, as president of tenant, filed his affidavit which said that tenant did not accept and approve the "renewal" until February 11, 1987. There is no indication in the record of any oral discussions between landlord and tenant with respect to renewing the lease. The first indication of the possibility of "renewal" of the lease is landlord's December 19 letter.
The guarantor asserts that the guarantee did not cover the renewal term provided for in the lease in the event the option to renew was exercised. We agree.
A contract of guarantee will be strictly construed to limit the liability of the guarantor. See Consolidated Roofing & Supply v. Grimm, 140 Ariz. 452, 682 P.2d 457 (App.1984). In the case of Zero Foods Storage, Inc. v. Udell, 163 So.2d 303 (Fla.App.1964), the court stated:
It appears that there is a split of authority as to whether or not a guarantee not identified as a continuing one will carry over to an extended or renewal term, when the option is exercised by the action or inaction on the part of the lessee without the participation or consent of the guarantor. However, it appears that the better reasoning is contained in those authorities which hold that a guaranty of the performance of a written lease for a specific term does not continue into a successive term ..., without the express terms to show that the lease was of a continuing nature.
Id. at 304 (emphasis added) (citation omitted).
In Zero Foods, the term of the lease was from August 1, 1956, through July 31, 1961. It provided for an automatic extension of the lease unless the lessee gave written notice at least six months prior to August 1, 1961, of its intention not to extend the original term. The guarantee stated:
WHEREAS, ZERO FOOD STORAGE, INC., a Florida corporation, has heretofore executed a lease to GEORGIA BROILERS OF FLORIDA, INC., a Florida corporation, ... covering the period from August 1, 1956 to and including July 31, 1961; and
....
1. LAURANCE UDELL hereby guarantees his full, prompt and faithful payment, performance and compliance by GEORGIA BROILERS OF FLORIDA, INC., a Florida corporation, its successors and assigns of all of the terms and conditions of the above described Lease. [Emphasis added.]
The pertinent portion of the present guarantee reads as follows:
NOW, THEREFORE, in consideration of the execution of said Lease by The Westcor Company Limited Partnership, as Landlord, the Undersigned hereby conditionally guarantees the full performance of each and all of the terms, covenants, and conditions of said Lease to be kept and performed by Tenant, including the payment of all rentals and other charges to accrue thereunder. [Emphasis added.]
Landlord asserts that Zero Foods is not applicable to this case because:
In Zero Foods the Guarantee specified the period which was covered as August 1, 1956 to July 31, 1961. The option period was specifically excluded from this Guarantee. Such is not the case herein. Here the Guarantee is limited only to "all the terms and conditions of the above described lease"; such terms and conditions include the option and extension. There is no limiting language as found in Zero Foods.
We disagree.
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