Opinion
No. 379, 2011
02-20-2012
EDWARD J. PARKER, Defendant, Appellant, v. BARLEY MILL HOUSE ASSOCIATES, L.P., a Delaware Limited Partnership, Plaintiff, Appellee.
Court: Superior Court of the State of Delaware, in and for New Castle County
C.A. No. N10C-09-034
Before STEELE, Chief Justice, BERGER, and JACOBS, Justices.
ORDER
This 20th day of February 2012, upon consideration of the briefs of the parties and the record in this case, it appears to the Court that:
1. Edward Parker ("Parker"), defendant-below, appeals from a Superior Court award of contract damages to plaintiff-below Barley Mill House Associates ("Barley Mill"). On appeal, Parker argues that the trial court erroneously found that a commercial lease required him to pay two months of rent in addition to what (Parker claimed) was legally owed. Parker also challenges the trial court's award of pre- and post-judgment interest, and its $5,000 attorney's fees award, to Barley Mill. Because we conclude that the term of the amended lease is ambiguous, we reverse and remand.
2. On June 30, 2005, Barley Mill agreed to lease office space to Parker in Greenville, Delaware for Parker's solo accounting practice. Because Barley Mill was renovating the premises, Parker's move in date was uncertain. To account for that uncertainty, the parties' initial written lease (the "original lease") stated in Paragraph 1.5 (entitled "Term") that the rental term would be "[a]pproximately sixty (60) months commencing on the earlier of: (i) the date the Premises is [sic] 'tendered' . . . [or] (ii) July 1, 2005 . . . and ending on a date certain of June 30, 2010, subject to paragraph 3." Paragraph 3 (also entitled "Term") stated that subject to its provisions, "the term and Commencement Date of this Lease shall be as specified in paragraph 1.5." The remainder of Paragraph 3 relevantly provided that if the property is not "tendered" on "the date specified in paragraph 1.5" [July 1, 2005], then the parties would execute an amendment to the lease to establish "the Commencement Date."
3. Paragraph 1.6 of the original agreement, entitled "Base Rent," contained a chart setting forth rental rates and outlining five, one-year terms with increasing rent amounts. The final rental term of the lease was specified as "Months 49 through June 30, 2010." June 30, 2010 was the only end date set forth in the (original) Paragraph 1.6.
Paragraph 1.6's rent provisions are expressly payable "per paragraph 4.1" of the lease, which states that "[e]xcept as may be otherwise provided in this Lease, Tenant shall pay Landlord the Base Rent set forth in paragraph 1.6 . . . without offset or deduction." The following sub-paragraph describes "adjust[ments]" to the tenant's "account" attributable to payments for operating expenses.
4. On September 1, 2005, Parker moved into the premises. On November 17, 2005, the parties executed an amendment to the lease (the "amendment") to reflect the actual commencement date. Paragraph 2 of the amendment, entitled "Commencement Date," stated that: "Section 1.5 . . . is hereby amended to provide that the Commencement Date of the Lease shall be September 1, 2005." Paragraph 3 of the amendment, entitled "Base Rent," stated that "Section 1.6 of the Lease is hereby amended and restated in its entirety as follows." Paragraph 3 then set forth a new chart describing the rental terms. The amended chart outlined five, one-year terms with increasing rent amounts, but with specified term dates throughout, beginning with the newly-established September 1, 2005 Commencement Date. That amended chart indicated that the final term of the lease would run from September 1, 2009 through August 31, 2010. Paragraph 5 of the amended lease, entitled "Miscellaneous," stated that "[e]xcept as expressly set forth herein, the Lease is unmodified and in full force and effect."
Emphasis added.
Emphasis added.
5. In March 2007, Barley Mill asked Parker to execute a "Tenant Estoppel" certificate, which Barley Mill needed to furnish to a lender. The certificate that Barley Mill asked Parker to execute stated that the "expiration of the term of the Lease is: 6/30/10."
6. During the fall of 2009, Parker and his attorney entered into negotiations with Barley Mill to obtain an extension or renewal of the lease. The negotiations were unsuccessful, and Parker's attorney later sent Barley Mill a letter dated February 23, 2010 which stated, in part, that "[t]he purpose of this letter is to confirm the ending date of June 30, 2010 under the lease." Barley Mill did not respond to correct that assertion. On June 1, 2010, Parker personally sent a letter to Barley Mill requesting to meet with a Barley Mill representative to discuss his vacating the premises. Barley Mill did not contact Parker to cure any alleged error or misunderstanding in the amended lease. Instead, Barley Mill cashed Parker's last rental check, on which was written "final Rent Payment."
7. On June 30, 2010, Parker vacated the rented office and did not pay rent beyond that date. On September 30, 2010, Barley Mill sued Parker for two months of rent, claiming that the lease did not terminate until August 31, 2010. Parker moved for judgment on the pleadings, arguing that the amendment to the lease did not amend the originally agreed-to June 30, 2010 termination date (described as a "date certain" in Paragraph 1.5). Barley Mill cross-moved for judgment on the pleadings. After oral argument, the Superior Court held that the lease amendment required Parker to pay rent through August 31, 2010, and that "given the subsequent amendment . . . and the language of the lease relative to the start date, while not a model of precision, any ambiguity in this case is meaningless." That was so, the court found, because "the amendment . . . foreclose[s] the issue of . . . the last two month's rent."
8. The Superior Court awarded Barley Mill $8,031.61 in damages, plus $5,000 in attorney's fees. The court also awarded Barley Mill pre- and post-judgment interest "at the maximum rate allowed pursuant to the Lease and/or 6 Del. C. Section 2301."
9. On appeal, Parker challenges the trial court's interpretation of the lease as requiring Parker to pay two additional months of rent, through August 31, 2010. We review the Superior Court's interpretation of contract terms de novo.
See, e.g., Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1195 (Del. 1992).
10. Delaware courts interpret contract terms according to their plain meaning. Only if the language contained within the four corners of the agreement is not "plain and clear on its face" should a court hold that the contract is ambiguous and resort to extrinsic evidence to determine the parties' intent. "The meaning inferred from a particular provision cannot control the meaning of the entire agreement if such an inference conflicts with the agreement's overall scheme or plan." Here, as explained below, because the amended Paragraph 1.6 chart reflects a "term" ending August 31, 2010—not June 30, 2010, as specified in Paragraph 1.5—the meaning of the amendment is ambiguous. Therefore, an evidentiary hearing is needed to determine the contracting parties' intent.
City Investing Co. Liquidating Trust v. Cont'l Cas. Co., 624 A.2d 1191, 1198 (Del. 1993) ("If a writing is plain and clear on its face, i.e., its language conveys an unmistakable meaning, the writing itself is the sole source for gaining an understanding of intent.").
E.I. du Pont de Nemours & Co. v. Allstate Ins. Co., 693 A.2d 1059, 1061 (Del. 1997). See also Rhone-Poulenc, 616 A.2d at 1196 ("[A] contract is ambiguous only when the provisions in controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings."); United Rentals, Inc. v. RAM Holdings, Inc., 937 A.2d 810, 836 (Del. Ch. 2007) ("[T]he conflicting provisions of this contract render it decidedly ambiguous.").
GMG Cap. Invest., LLC v. Athenian Venture Part. I, L.P., __ A.3d __ (Del. Jan. 3, 2012).
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11. Paragraph 1.5, which governs the lease's "term" under (and subject only to) Paragraph 3, was expressly amended solely to reflect "that the Commencement Date of the Lease shall be September 1, 2005." Paragraph 1.5 was not "restated in its entirety" in the amendment, as was Paragraph 1.6. Except "as expressly set forth" in the amendment, the original lease remained "unmodified and in full force and effect." Although amended Paragraph 1.6 states a final annual term as running "through August 31, 2010," that amendment created an ambiguity, because it purports to set a new "end date" without expressly amending the June "date certain" provided in Paragraph 1.5—the "Term" provision of the lease. Therefore, the "term" of the lease, post-amendment, could be reasonably interpreted to be either June 30, 2010 or August 31, 2010.
12. Although Paragraph 1.5 of the lease agreement described the lease term as "approximately" 60 months, that approximation was plainly attributable to the initial uncertainty of the commencement date. By establishing the September 1, 2005 commencement date without modifying the June 30, 2010 "date certain" end date, the amended Paragraph 1.5 described a 58-month term as "approximately 60 months." If, in fact, the lease was intended to be precisely a 60-month term, the caveat "approximately" in Paragraph 1.5 would need to be disregarded.
13. These conflicting provisions create an ambiguity about the significance of the August end date in the amendment. Because that ambiguity must be resolved on an evidentiary record, we reverse and remand to the Superior Court for further proceedings.
NOW, THEREFORE, IT IS ORDERED that the judgment of the Superior Court is REVERSED and the matter is remanded for further proceedings consistent with this Order. Jurisdiction is not retained.
BY THE COURT:
Jack B. Jacobs
Justice