Opinion
No. 05-07-01035-CV
Opinion issued April 3, 2008.
On Appeal from the 193rd District Court, Dallas County, Texas, Trial Court Cause No. 06-03441-L.
Before Justices MOSELEY, BRIDGES, and LANG-MIERS.
MEMORANDUM OPINION
Jefferson Bank appeals the trial court's judgment extending the real estate rental contract between the parties and setting the rental rate at $17.50 per square foot. In five issues, Jefferson argues no evidence supports the trial court's judgment extending the parties' rental contract and setting rent at $17.50 and the trial court's findings that Jefferson misled BMD, BMD did not learn about Jefferson's contention that the lease agreement had not been renewed, and estoppel and ratification preclude Jefferson from arguing the lease was not renewed. We affirm the trial court's judgment.
Jefferson leased a commercial property from BMD beginning in March 1996. The lease was for five years, with two five-year renewal terms. In March 2001, Jefferson exercised its first renewal option. In August 2005, Jefferson gave written notice of its intention to exercise the second renewal option. Jefferson's notice provided it was subject to BMD management reaching an agreement on the fair market value adjustment in rent for the extension period. BMD proposed that the rent would increase five percent per year. Under the terms of the original lease, if the parties could not agree on the rental adjustment for a renewal period, the parties were to try to agree on a single appraiser to provide a fair market value. Jefferson proposed that Rick Callahan provide a fair market rental value, and BMD agreed.
Callahan finished his appraisal and proposed a renewal rental rate of $14.18 per square foot per year. Jefferson rejected Callahan's appraised value and responded with a proposed rental rate of $13.00 per square foot. The parties ultimately agreed to use a new appraiser, Chuck Mullinax, who set a rental rate of $17.50 per square foot. Jefferson did not agree with this appraised value, but Jefferson began paying rent at the $17.50 per square foot rate after BMD notified Jefferson that failure to pay at that rate might constitute an immediate default under the lease. Jefferson filed suit, seeking declaratory relief concerning the parties' rights under the lease. The trial court ultimately entered judgment that the lease was extended for a five-year renewal term beginning March 1, 2006, at the appraised rate of $17.50 per square foot. This appeal followed.
In its first and second issues, Jefferson challenges the trial court's conclusions of law that the parties' lease agreement is extended for five years at the $17.50 per square foot rate is not supported by any evidence. Specifically, Jefferson argues there is no writing satisfying the statute of frauds extending the lease, and the parties never agreed to the rental rate for the renewal period.
In reviewing a legal sufficiency point of error, the reviewing court must consider only the evidence and inferences tending to support the challenged findings and disregard all evidence and inferences to the contrary. If there is more than a scintilla of evidence to support the challenged findings, the no evidence challenge fails. Leitch v. Hornsby, 935 S.W.2d 114, 118 (Tex. 1996). We may sustain a no evidence point only when the record discloses one of the following: (1) there is a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla of evidence; or (4) the evidence establishes conclusively the opposite of a vital fact. See Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997).
The statute of frauds prohibits enforcement of any agreement that cannot be performed within one year unless the agreement, or a memorandum of the agreement, is documented in a writing that contains all the material terms of the agreement and is signed by the person to be charged. See Tex. Bus. Com. Code Ann. §§ 26.01(a), (b)(6) (Vernon Supp. 2007)Tex. Bus. Com. Code Ann. (Vernon Supp. 2006); Cohen v. McCutchin, 565 S.W.2d 230, 232 (Tex. 1978). The writing must be complete within itself in every material detail and must contain all essential elements so the contract between the parties may be ascertained without resort to oral testimony. Cohen, 565 S.W.2d at 232.
Here, the original lease between the parties grants Jefferson, as tenant, two options to extend the lease term for additional terms of five years "on the same terms, conditions, and covenants set forth in the Lease Agreement." On the first day of a particular extension, the base rent is to be increased to the "fair rental value" of the premises. If the parties cannot agree upon a single appraiser within fifteen days of tenant's exercise of the option to extend the lease, each party shall appoint a separate appraiser by giving written notice within ten days. Within ten days of the appointment of the two appraisers, they shall appoint a third appraiser. If either landlord or tenant fails to appoint its appraiser within the prescribed time period, the single appraiser appointed shall determine the fair rental value of the premises. The parties agreed that Mullinax would appraise the property, Jefferson did not appoint a separate appraiser by giving written notice within ten days. Instead, Jefferson began paying rent in accordance with Mullinax's appraisal and filed suit seeking declaratory judgment of the parties' rights under the lease.
Jefferson argues the parties were negotiating a renewal option agreement, but Jefferson never signed the agreement, resulting in Jefferson being a hold-over tenant after the expiration of the first extension on February 28, 2006. On the contrary, the lease and its option provisions for extending the lease constituted one entire contract for a term of fifteen years, five years certain, and two additional five-year periods to be made certain upon Jefferson's exercise of its lease extension privilege. Pruett Jewelers, Inc. v. J. Weingarten, Inc., 426 S.W.2d 902, 904 (Tex.Civ.App.-Tyler 1968, writ ref'd n.r.e.). The extended term of the lease under consideration was fixed by and was a part of the original lease. Id. Thus, the lease contained all the material terms of the contract so as to satisfy the statute of frauds. Cohen, 565 S.W.2d at 232. Where the lessee has the privilege of an extension and holds over upon timely given notice that he intends to exercise the privilege, he holds for the additional term under the lease, and not under the notice. Pruett Jewelers, 426 S.W.2d at 904. Accordingly, the lease was extended for five years by Jefferson's notice to extend the lease, and the appraisal to which the parties agreed determined the rent to be paid. See id. Under these circumstances, we conclude sufficient evidence supported the trial court's conclusion the lease was extended for five years at a rental rate of $17.50 per square foot. See Havner, 953 S.W.2d 706, 711; Pruett, 426 S.W.2d at 904. We overrule Jefferson's first and second issues. Because of our disposition of Jefferson's first and second issues, we need not address Jefferson's issues, raised in its third, fourth, and fifth issues, that no evidence supported a finding that Jefferson acted deceptively with respect to the renewal option agreement, BMD did not learn Jefferson contended there was no renewal of the lease, and that estoppel and ratification preclude Jefferson from arguing the lease agreement was not renewed.
We affirm the trial court's judgment.