Opinion
Civil Action No. 3:01-CV-706-H
March 31, 2003
Robert D. McClure, Kruger, Schwartz Morreau, Jason Christopher Vaughn, Louisville, KY, for Plaintiffs.
Lawrence Irwin Young, Romines, Weis Young, Louisville, KY, Douglas T. Logsdon, W. Brent Rice, McBrayer, McGinnis, Leslie Kirkland, Lexington, KY, David A. Pike, Floud Keith Brown, Pike Legal Group, Shepherdsville, KY, R. Kenyon Meyer, Dinsmore Shohl, Louisville, KY, James A. Comodeca, Dinsmore Shohl, Cincinnati, OH, for Defendants.
MEMORANDUM OPINION
Plaintiffs, the Hulda Schoening Family Trust and Keith Schoening Trustee, allege that Defendants GTE Wireless, Inc. ("GTE"), Powertel/Kentucky ("Powertel"), Crown Communications, Inc. ("Crown"), and Nextel WIP Lease Corporation ("Nextel") to recover costs have breached two land lease agreements concerning a telecommunications tower. Defendants argue that the leases do not prohibit third parties from "co-locating" on the tower. The Court views the dispute as one of straightforward contract interpretation. Plaintiffs, GTE, Powertel, and Crown have all filed cross motions for summary judgment. Nextel has filed a motion to dismiss. After carefully considering the parties' memoranda, the Court is able to resolve all of the issues.
Specifically, Plaintiffs filed a four-count complaint alleging the following. First, Powertel breached a contract in which it agreed to lease a parcel of land. Second, GTE violated a separate lease when it allowed for collocation, as well as breached the covenants of good faith and fair dealing. Third, Crown and Nextel's occupation of the land constitutes a continuing trespass. Fourth, Crown also violated a lease and the covenants of good faith and fair dealing when it permitted collocation.
I.
This case arises from a simple lease arrangement between Plaintiffs and Contel Cellular ("Contel") executed in 1995. The two parties negotiated a lease which allowed Contel to use part of Plaintiffs' property to erect a cell phone tower ("the Lease"). Accordingly, Contel installed a telecommunications tower and equipment on Plaintiffs' property located on Bunton Road in Louisville, Kentucky, and paid rent beginning in December, 1995.
After Contel assumed the lease and used the tower, it sold its interest to GTE. At some point thereafter Plaintiffs entered negotiations with Powertel which, if completed, would allow Powertel to lease a separate parcel of land on Poplar Level Road and erect its own tower. However, Powertel never signed the Poplar Level Road lease. Instead Powertel arranged to sublease part of the tower now owned by GTE. This meant that, rather than constructing a separate tower, Powertel placed its telecommunications equipment on the GTE cellular tower. Plaintiffs claim that GTE had no right under the Lease to allow Powertel to place additional telecommunications on the tower.
Shortly thereafter, the Lease changed hands again when GTE sold its interest to Crown. Just as GTE had done with Powertel, Crown subleased additional space on the tower to Nextel. Like Powertel, Nextel also installed its own equipment on the tower pursuant to its sublease with Crown. Plaintiffs then amended their Complaint to add claims against Crown and Nextel, again arguing that the Nextel sublease breached the original Lease. Plaintiffs believe they are entitled to the rent Powertel and Nextel currently pay to Crown. Resolution of whether Powertel and Nextel were allowed to "collocate" on the tower will therefore largely decide the main issues in this case.
At a conference in the Court's chambers, the parties roughly estimated that Plaintiff is getting $800/month under the Lease, while Powertel and Nextel are each paying approximately $1750/month to Crown under their sublease arrangements.
II
This dispute calls for basic contract interpretation. All parties agree that a sublease or assignment unequivocally took place. Where the Court and the litigants diverge is in conceptualizing the ultimate issue. Looking at the problem broadly, the parties contend the main issue is whether the Lease even permits collocation under its sublease provision. The Court sees the question more narrowly as whether the Lease allows a sublessee to place their own communications equipment on the tower. Having carefully read the lease agreement, the Court concludes it does not.As the only portion of the lease clearly delineating the scope of a subtenant's rights, the analysis must begin with paragraph 15. That provision states in relevant part,
Tenant may sublet or assign its rights under the Lease without Landlord's prior written consent to a sub-tenant or assignee solely for the purpose of allowing such sub-tenant or assignee to use the Communications Equipment for transmission of radio signal telecommunications and such assignee shall have, hold and possess all of the rights and privileges held by Tenant hereunder, including but not limited to the right to make such minor modifications, or construct improvements to the Property necessary for its use of the Communications Equipment for transmission of radio signals.
Lease Agreement, ¶ 15 (emphasis added).
From this language, the Court concludes that the Lease permits a sublease or assignment and that it restricts the scope of such a sublease. The language plainly says that the tenant may only allow a sub-tenant or assignee "to use the Communications Equipment." In other words, the Lease does not specifically permit a sublessee or assignee to add additional Communications Equipment. To the contrary, the language only allows lessees to use the "Communications Equipment."
The term "Communications Equipment" was not a vague or ill-defined term for the parties. To the contrary, it was important enough that the parties specifically defined it in the Lease. It is a defined term as follows:
For the purposes of this Lease, all of Tenant's tower, equipment, building, fences, panels, generator, cables, wires, antennas, microwave dishes, and accessories shall hereinafter collectively be referred to as appropriate, as "Communications Equipment" or "Communications Center."
Lease Agreement, ¶ 5.
Because the parties agreed to this definition, a proper reading of paragraph 15 requires the Court to substitute the language in paragraph 5 for the term "Communications Equipment." Doing so, the Court concludes that, while a sublease or assignment is contractually permissible, such a sublessee or assignee may only utilize the Tenant's communications equipment. In this case, the tenants (GTE and Crown) erected antennas needed for their own use and then, as part of the sublease arrangement, Powertel and Nextel added additional antennas. Consequently, Powertel and Nextel did not use "the Communications Equipment" (or the Tenant's equipment) as permitted by Paragraph 15. Rather, they added what can only be characterized as new communications equipment.
The Court finds additional support for this interpretation in another portion of Paragraph 5, which specifically creates additional rights in the subtenant. It states, "Tenant, or any assignee or any subtenant of Tenant may construct or erect such additional storage buildings on the Property as reasonably required for the maintenance or operation of the Communications Equipment." Lease Agreement, ¶ 5. Tellingly, this is the only provision of this kind. Thus, the Court concludes the parties mutually agreed that, beyond the rights available under Paragraph 15, the only other right a subtenant would possess was the right to erect buildings needed to maintain the Tenant's Communications Equipment. Interpreting the contract so as to also permit a subtenant to construct additional antennas would render this sentence meaningless; a step the Court finds no logical reason to make.
The Court finds clear language which limits the uses under the Lease. To the extent the parties dispute the powers granted to a sublessee, standard rules of law regarding contract interpretation also favor Plaintiffs' interpretation. In the absence of any clear evidence of the parties' intent, the Court must construe the language against the drafter, who bears the burden for the contract's lack of clarity. See, e.g., Republic/NFR C Parking v. Reg'l Airport Auth., 2003 U.S. Dist. LEXIS 295 (W.D.Ky. 2003); John Edward Murray, Jr. Murray on Contracts § 88(G) (1990); John Calamari Joseph M. Perillo, The Law of Contracts § 3.13 (4th ed. 1988). Here, Brent Rice, GTE's attorney, prepared and drafted the lease. GTE and its attorneys are undoubtedly experienced in all aspects of these industry issues. They could have specifically permitted co-location, but clearly did not do so. Any ambiguities or disputes should be construed in Plaintiffs' favor.
In short, GTE and Crown went beyond the scope of their contractual powers when they authorized Powertel and Nextel to erect additional antennas. The Lease Agreement clearly states that, as sublessees, Powertel and Nextel were only authorized to use GTE and Crown's Communications Equipment. This also limited them to GTE and Crown's antennas. For these reasons, the Court concludes that GTE and Crown breached the Lease when they allowed Powertel and Nextel to collocate.
III.
The Court next considers whether Crown and Nextel's unauthorized occupation of Plaintiff's land constitutes a continuing trespass. Again, all parties agree that GTE and Crown lawfully possessed the land and the tower. They now dispute whether GTE and Crown's sublease means Plaintiff can hold Nextel, as an impermissible sublessee, liable for trespass. This Court has previously undertaken a comprehensive review of the basic elements of trespass. Mercer v. Rockwell Internat'l Corp., 24 F. Supp.2d 735, 740 (W.D.Ky. 1998). In Mercer the Court noted that the difference between an intentional and negligent trespass was that, while both required "intrusion," negligent trespass also required "harm." Id. Because there appears to be no evidence of harm — quite to the contrary, Plaintiffs will ultimately profit significantly from this alleged "trespass" — the Court analyzes whether the lesser hurdle required for intentional trespass has been met.
Neither Plaintiffs nor Crown appear to have addressed this claim anywhere in their memoranda as it relates to Crown. Although the Court ultimately finds that Nextel's actions do not constitute a trespass, the fact that the Court holds against Crown in Part II suggests the outcome on the trespass claim ultimately is not particularly significant.
Nextel did not "intrude" upon Plaintiff's property. Black's Law Dictionary defines "intruder" to mean one "who enters upon land without either right of possession or color of title." Black's Law Dictionary 739 (5th ed. 1979) As a sublessee, Nextel obtained permission from Crown, whom it thought lawfully possessed the land. In fact, one could therefore say that Nextel possessed a license: "The permission by competent authority to do an act which, without such permission, would be illegal, a trespass, or a tort." Black's Law Dictionary 828. Although Plaintiffs may argue GTE and Crown were not "competent" in that they lacked authority to issue this type of sublease, Nextel did not know this fact. Consistent with this logic, Kentucky law provides that no trespass liability exists when an individual or entity in possession of the property consents to the presence of an alleged trespasser. Adams' Administrator v. Callis Hughes, 69 S.W.2d 711, 713 (Ky. 1934) ("To enter or otherwise invade the premises of another by authority or permission of the owner or person in possession is not a trespass"). The Court thus follows the common law rule that where a party in lawful possession authorizes entry onto the land, a valid trespass claim cannot exist. Id.
IV.
Last, the Court considers whether Powertel breached a lease for the Popular Level Road property. Plaintiffs' claim is that, although Powertel did not actually sign the lease, a series of events created a binding contract which Powertel breached when it refused to pay rent. Plaintiffs argue that three actions cumulatively amount to Powertel's acceptance of this lease. First, after several negotiations, a Powertel representative told Plaintiff over the phone that Powertel had agreed to lease the property under the terms of the written agreement. Second, when a representative of a company working for Powertel delivered a final draft of the lease, the representative intimated that Powertel had decided to lease the premises and Plaintiffs should sign it if they agreed. Third and most importantly, Plaintiffs rely on a February 4, 1998 letter that a company working for Powertel sent to Plaintiffs, saying "Powertel has selected your property as the location for one of its site locations" and plans to do an environmental survey of the land. In response, Powertel argues that, under Kentucky's Statute of Frauds, KRS 371.010, none of these actions create a binding agreement. This issue calls for a simple application of Kentucky's Statute of Frauds.
The Statute of Frauds requires that when one party seeks to enforce an agreement, the party to be charged must have signed the contract if it is "for the sale of real estate, or any lease thereof for longer than one year." KRS 371.010(6). In this case, it is clear the second lease was to run for a period longer than one year. In fact, the agreement provided that the "initial term of this Lease shall be for five (5) years . . ." See Williamson v. Stafford, et al., 190 S.W.2d 859, 860 (1945) (noting that "when it was contemplated by the parties that the contract would not, and could not, be performed within the year, even though it was possible of performance within that time, it comes within the inhibition of the Statute [of Frauds]").
As to the second requirement, Plaintiffs argue that they are the "party to be charged," because they owned the property and, as the landlord, were the party bound to execute the lease. But that interpretation misconstrues the rule. Properly characterized, the Statute of Frauds defines the party to be charged as the party who allegedly has not executed their end of the bargain and is therefore "charged" with following through on their supposed obligation. See Cowden Mfg. Co. v. System Equip., 608 S.W.2d 58 (Ky.Ct.App. 1980) (holding that a computer lease did not violate the statute of frauds where the plaintiff-lessor, which was seeking enforcement, did not sign the agreement, since the "party to be charged," the lessee, did sign it); Karr's Adm'r v. Harmon, 116 S.W.2d 947 (Ky. 1938). Plaintiffs want to enforce the lease they contend was made by the two parties; they claim that Powertel is not fulfilling its contractual obligations. But Powertel never signed the lease; nor has it erected a cell phone tower, paid rent, or taken any actions that suggest it accepted the contract through implied affirmation. In short, this lease clearly must comply with Kentucky's Statute of Frauds and simply does not. Although it is in writing, its scope exceeds one year and the party to be charged has not signed it.
In an effort to circumvent this fact, Plaintiff contends that the February 4, 1998 letter constitutes an acceptance. The Court has carefully considered this argument but finds the letter simply cannot pass muster. To qualify as an acceptance under the Statute of Frauds, a supplementary writing must refer to the underlying contract and the contract terms must be ascertainable without resort to parol evidence. Nicholson v. Clark, 802 S.W.2d 934, 938-39 (1990). Courts adhere tightly to this rule, refusing to find an acceptance where the land description in the supplementary writing is not specific enough to withstand the need to resort to parol evidence. See Chaney v. Noland, 387 S.W.2d 308 (1964) (finding that an acceptance failed to meet the requirements of the statute of frauds because it did not identify the forty-four acre land parcel the parties had agreed upon). In this case, the very short February 4, 1998 letter — sent by SpectraSite, Powertel's environmental auditor — merely states "Powertel has selected your property." It is not signed by Powertel, nor does not it lay out the metes and bounds of the property. Resorting to parol evidence to ascertain the meaning of this letter is essential. For the foregoing reasons, the Court finds the second lease negotiated between Plaintiffs and Powertel is not enforceable.
The Court will enter an order consistent with this memorandum opinion.
ORDER
The Court has considered the parties motions and memoranda. Being otherwise sufficiently advised,
IT IS HEREBY ORDERED that, as to the Bunton Road Lease, Plaintiffs' Motion for Summary Judgment as to Count II is SUSTAINED. GTE and Crown's Motions for Summary Judgment are DENIED.
IT IS FURTHER ORDERED that, as to the Poplar Level Road Lease, Plaintiffs' Motion for Summary Judgment as to Count I is DENIED; Powertel's Motion for Summary Judgment is SUSTAINED and Count I is DISMISSED WITH PREJUDICE.
IT IS FURTHER ORDERED that Nextel's Motion to Dismiss Count III is SUSTAINED and that Count is DISMISSED WITH PREJUDICE as to Nextel.
The Court will schedule a conference to discuss further action in this case.