Opinion
No. C6-02-1677.
Filed: April 22, 2003.
Appeal from Dakota County District Court, File No. C10110592.
Eric J. Magnuson, Paula Duggan Vraa, Rider, Bennett, Egan Arundel, LLP, (for appellant).
James M. Susag, Tamara O'Neill Moreland, Larkin, Hoffman, Daly Lindgren, Ltd., (for respondent).
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
On appeal from summary judgment, appellant City of Lakeville (the city) argues that the district court erred in its conclusion that the city's lease with respondent Heritage Commons, LLC (Heritage) is unambiguous and requires the city to pay real estate taxes on certain outlots as well as the currently developed shopping center. Because the lease is ambiguous, we reverse and remand.
DECISION
On appeal from summary judgment, this court asks two questions: whether there is any genuine issue of material fact and whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).
Both parties sought a district court determination that the lease was unambiguous and that their reading of the lease language was correct. The district court agreed with Heritage that the lease unambiguously requires the city to pay its share of real estate taxes on the entire redevelopment property (27.61 acres). The court rejected the city's reading that it was only responsible for taxes on the property currently occupied by a shopping center (4.9 acres).
Whether a lease or contract provision is ambiguous is a question of law that we review de novo. Lamb Plumbing Heating Co. v. Kraus-Anderson, Inc., 296 N.W.2d 859, 862 (Minn. 1980). A contract is ambiguous if the language of the written document, by itself, is reasonably susceptible to more than one interpretation. Current Tech Concepts, Inc. v. Irie Enters., Inc., 530 N.W.2d 539, 543 (Minn. 1995). Contractual language should be given its plain and ordinary meaning. Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 67 (Minn. 1979).
The lease definition of "property" determines the acreage for which the city is liable for a real estate tax contribution. The only definition of "property" is contained in the lease paragraph entitled "premises," where it states that "[s]uch shopping center and the underlying land are referred to herein, collectively, as the `property.'" The lease describes the "shopping center" as (1) containing the 8,856 square foot premises; (2) "known as Heritage Commons"; and (3) located at Highway 50 and Dodd Boulevard. There is no dispute that the 8,856 square feet falls within both parties' definitions of shopping center and that the shopping center is generally located at the intersection indicated. The dispute focuses on the meaning of the "shopping center known as Heritage Commons" — the city understands it to mean the existing stores and Heritage extends it to the entire redevelopment parcel.
The use of an intersection to identify property falls far short of the specificity provided by a street address. Greater specificity also could have been achieved by reference to a map, plat, or legal description. Cf. Target Stores, Inc. v. Twin Plaza Co., 277 Minn. 481, 488-89, 153 N.W.2d 832, 838-39 (1967) (construing lease that described "premises" by reference to it as a store, of a certain area, contained in a named shopping center with an attached plat map of the shopping center and a legal description). Without more, the lease description of the "shopping center" is ambiguous.
The city cites dictionaries and a city ordinance to support its understanding that a "shopping center" is ordinarily considered to be a collection of stores and the land beneath the stores. While there is general support for this proposition, it does not necessarily follow that the parties intended to limit the "shopping center known as Heritage Commons" to buildings. See id. at 494, 153 N.W.2d at 841.
Heritage's argument that the entire redevelopment property is included in the definition of property is not based on an express reference in the lease to outlots A, B, and C, the redevelopment agreement, or the redevelopment acreage. Heritage's argument is based on the last sentence in the paragraph defining "property," which expressly excludes an approximate five-acre tract from the property, and stating that the excluded five-acre tract is "located in the northwest corner of the shopping center." Again, there is no reference to a legal description, plat, or map of this approximate five-acre tract. While the language excluding the five-acre tract suggests that "shopping center" encompasses more than the existing buildings, the lack of specificity in both the area covered by the shopping center and the five-acre tract render the lease ambiguous.
An examination of the entire lease reveals other references to "shopping center" and "property," but none resolves the ambiguity. Both the district court and Heritage refer to the contemporaneously executed memorandum of lease and the attached legal description of the entire redevelopment property to support Heritage's expanded meaning of the term "shopping center known as Heritage Commons." It is undisputed that the memorandum is one of the documents evidencing the lease agreement. Indep. Sch. Dist. No. 877 v. Loberg Plumbing Heating Co., 266 Minn. 426, 436, 123 N.W.2d 793, 799-800 (1963) (when determining whether ambiguity exists, we interpret contract so as to give effect to all its terms). The memorandum, however, does not purport to further define or clarify the lease terms "property," "shopping center," or "underlying land." It describes "premises," a term defined in the lease and undisputed by the parties, as "certain improvements existing on" the redevelopment property. Therefore, it does nothing to remove the ambiguity in the lease language.
In short, without reference to a map, plat, or legal description of the "shopping center," more than one interpretation of the language is reasonable. Without a clear description of the shopping center, the term "underlying land" is vague. Because the court must look beyond the four corners of the agreement to resolve the definition, the contract is ambiguous. If a contract term is ambiguous, extrinsic evidence of intent is admissible. Reliable Metal, Inc. v. Shakopee Valley Printing, Inc., 407 N.W.2d 684, 687 (Minn.App. 1987); see Johnson v. Quaal, 250 Minn. 154, 157, 83 N.W.2d 796, 798 (1957) (reviewing parties' performance subsequent to forming agreement to see if any of the intended terms are evident from their conduct); Hartung v. Billmeier, 243 Minn. 148, 151, 66 N.W.2d 784, 788 (1954) (seeking parties' intent by examining contract as a whole and surrounding circumstances). Therefore, we remand for further proceedings to determine the parties' intent.
In addition to resolving the ambiguity in the definition of "property," the parties also dispute the meaning of the lease rider limiting all operating expenses to those "reasonable and customary." Despite Heritage's argument to the contrary, the record reflects that the extrinsic evidence on this issue is disputed. Similarly, with regard to Heritage's alleged waiver of its demand for the city's contribution to the real estate taxes for the entire parcel, the city correctly states that "a written contract can be varied or rescinded by oral agreement of the parties, even if the contract provides that it shall not be orally varied or rescinded." Larson v. Hill's Heating Refrig., Inc., 400 N.W.2d 777, 781 (Minn.App. 1987), review denied (Minn. Apr. 17, 1987). Because the city has raised an issue of material fact as to such a waiver, this issue, too, must be resolved in the district court. See Chin v. Zoet, 418 N.W.2d 191, 195 (Minn.App. 1988).
Reversed and remanded.