Title: THOMAS A. SKEOCH v. ELECTRI-CENTER, A Wyoming Corporation

State: wyoming

Issuer: Wyoming Supreme Court

Document:

THOMAS A. SKEOCH v. ELECTRI-CENTER, A Wyoming Corporation1989 WY 162778 P.2d 104Case Number: 89-60Decided: 07/27/1989Supreme Court of Wyoming
THOMAS A. SKEOCH, 
APPELLANT (DEFENDANT),

v.

ELECTRI-CENTER, A WYOMING 
CORPORATION, APPELLEE (PLAINTIFF).

Appeal from the District 
Court, TetonCounty, Elizabeth A. Kail, 
J.

Floyd R. King of 
King & King, Jackson, for 
appellant.

Frank Hess and 
Juline Christofferson, Jackson, for appellee.

Before CARDINE, C.J., and THOMAS, URBIGKIT, MACY 
and GOLDEN, JJ.

URBIGKIT, 
Justice.

[¶1.]     An inflation index rent 
escalator clause is presented in this written lease interpretation controversy. 
The trial court ruled for appellee/tenant and awarded judgment for excess rental 
charges by applying the Wyoming Cost of Living Index instead of the United 
States Consumer Price Index which had been used by the building owner. We 
affirm.

[¶2.]     Appellate issues are 
described as:

1. Which index should 
have been issued; and

2. If the state index is 
used, did the trial court error in adaptation of the dates of the base 
period?

[¶3.]     In 1979, appellant 
Thomas A. Skeoch (landlord) entered into a ten-year term written lease for a 
store facility with appellee Electri-Center (tenant). The stated rent was $1,500 
per month with this rental adjustment clause:

At the end of each two 
year period, from the date of this Lease, the rental shall be adjusted to 
provide for a rate per annum equal to $18,000.00 plus such additional amount, if 
any, as shall be sufficient to give the Lessor for each lease year a total net 
rent equal to the purchasing power of $18,000.00 during January, 1979. Within 
thirty (30) days after the publication and issuance thereof, Lessor shall 
deliver to the Tenant a copy of the Consumer Price Index, hereinafter called the 
index, for the State of Wyoming, compiled by the Department of Labor and 
Statistics of the State of Wyoming, and shall give the Tenant notice of the rent 
increase, if any, to be in effect for the following two year period. Pending the 
determination of the additional amount, if any, to be paid by the Tenant, the 
Tenant shall continue to pay the net rent at the rate of $1,500.00 per month, or 
such additional amount as determined by prior adjustments, and when the 
additional amount has been determined, the Tenant, on the first day of the month 
immediately following the new computation, shall pay to the Lessor such amount 
due from January 1 of the lease year to the date of such computation. If at any 
time required for the determination of the additional rent the Department of 
Labor and Statistics does not publish a Cost of Living Index, the parties shall 
use such other index as is then generally recognized and accepted for similar 
determinations of purchasing power.

From the date of 
initiation of possession in 1979 until 1987, landlord biannually notices cost of 
living escalation rent increases, which billings tenant then paid monthly for 
the next two years. In 1987, tenant learned that the index being applied was the 
United States Consumer Price Index (federal index) and not the Wyoming Cost of 
Living Index (state index). The record establishes that the contractually 
described state index had been, until 1978, compiled by the Department of Labor 
and Statistics for the State of Wyoming, which function had then been 
transferred to the Wyoming Department of Administration and Fiscal Control 
(DAFC), Division of Research and Statistics. By reasoning that the Department of 
Labor and Statistics for the State of Wyoming no longer published an index, landlord 
elected to apply the federal index. The index differences permitted collection 
of an extra $12,439.94 by using the federal index, which sum defines the scope 
of this litigation.

[¶4.]     With considerable 
detail and resourcefulness, landlord argues that the state index is less 
reliable, the lease was ambiguous in provisions and his selection of the federal 
index was justified with discontinuance of the Department of Labor and 
Statistic's compilation. Point is also made that tenant did not object until 
June 1987 so that any refund should not exceed a two year last adjustment period 
computation.

[¶5.]     The trial court in 
answering landlord's contention and ruling for tenant in decision letter 
found:

2. That paragraph 7 of 
the Lease Agreement between the parties (Plaintiff's Exhibit 2) calls for rental 
adjustment to be based upon "the consumer price index . . . for the State of 
Wyoming, compiled by the Department of Labor 
and Statistics of the State of Wyoming."

3. That the State of 
Wyoming 
publishes the [sic] "The Wyoming Cost of Living Index" though responsibility for 
such publication has been changed from the State Department of Labor and 
Statistics to the State Department of Administration and Fiscal Control 
Statistics Research Division.

4. That the State of 
Wyoming 
publication should have been the index used to adjust the rentals under 
paragraph 7 of the Lease, not the Consumer Price Index as published by the 
United States Government.

5. That the testimony of 
witness Simmons set forth three different methods of calculation of overpayments 
and the Court finds that the calculations as set forth in Plaintiff's Exhibit 7 
represent the appropriate computations.

[¶6.]     Under our frequently 
stated standard of review, we discern substantial and sufficient evidence to 
sustain that decision.

"Our rule is that where 
the sufficiency of evidence is an issue we uphold the judgment if there is 
evidence to support it, and in so doing we look only to the evidence submitted 
by the prevailing party and give to it every favorable inference which may be 
drawn therefrom, without considering any contrary 
evidence."

Smithco 
Engineering, Inc. v. International Fabricators, Inc., 775 P.2d 1011, 1015 
(Wyo. 1989) (No. 88-66, decided 6/16/89) 
(quoting Hance v. Straatsma, 721 P.2d 575, 578 (Wyo. 1986)).

[¶7.]     The evidence in the 
case illuminates different perspectives which might exist between the state 
index which is derived from shopper's identification of price changes within the 
state and the alternatively constructed geographical expanded model used by the 
federal government for its index. The judiciary need not be called to select the 
more accurate, if that might be possible, by comparison of the different 
methodology used in compilation, since the parties made the decision in the 
lease to use the state index. That index, originally prepared by the Department 
of Labor and Statistics of the State of Wyoming, was proven to be the same index 
which, by state government reorganization in 1978, was transferred to DAFC. That 
1978 reorganization was apparently unknown to the drafters of the lease when the 
lease document was prepared in 1979.

[¶8.]     No error is found in 
the decision of the trial court to conclude that usage of that state index was 
provided by terms of the lease and should have been followed in computation by 
the landlord. Although erroneously described, the index was easily identified 
and no basic ambiguity results.1 A determination whether an 
ambiguity exists is a decision made as a matter of law by the court. Kelliher v. 
Herman, 701 P.2d 1157 (Wyo. 1985). Furthermore, landlord provided no 
evidence that the basic method in state index compilation occurred to create an 
injustice in application. The system used by the state agency did not change. 
The finite difference as reflected by trial evidence was that the federal index 
escalated faster during the compilation period because the state index was more 
geographically specific. This was not a non-existent index case; the Wyoming index involved a 
change of agency for the preparation of a continued index. The trial court 
consequently utilized the same index that had been negotiated. State v. Pennzoil 
Co., 752 P.2d 975 (Wyo. 1988). Consequently, the cited case of 
Seattle-First Nat. Bank v. Earl, 17 Wn. App. 830, 565 P.2d 1215 (1977) is 
inapplicable.

[¶9.]     The next issue is taken 
with application of any overpayment award to the entire lease period and not 
just the last two years. This contention is answered by tenant in asserting that 
the failure of the landlord to follow the terms of the lease by "deliver[ing] to 
the Tenant a copy of the Consumer Price Index," excused inaction when notice of 
the switched methodology had not been provided or a copy of any index given. 
Tenant argues that failure of the landlord to advise of adaptation of the 
federal index or to supply a copy with the notice of rent increase justified a 
claim for refund for the entire period when the contractually required notice of 
the index had not been provided. In judgment decision, the trial court adopted 
this argument and this court has no basis in contractual interpretation of 
laches, estoppel or waiver theories which requires reversal. Tenant's lack of 
knowledge and landlord's lack of notice abjures laches or waiver. See Moncrief 
v. Sohio Petroleum Co., 775 P.2d 1021 (Wyo. 1989) (

Nos. 88-87 and 
88-88, decided 6/16/89); Roth v. First Sec. Bank of Rock 
Springs, Wyo., 684 P.2d 93 
(Wyo. 1984); and Murphy v. Stevens, 645 P.2d 82 
(Wyo. 
1982).

Laches is a form of 
equitable estoppel based on an unreasonable delay by a party in asserting a 
right. The party asserting equitable estoppel as a defense must show that he 
lacked knowledge of the facts or was without the means of discovering them. The 
party asserting laches or equitable estoppel must also show that he relied upon 
the plaintiff's actions and changed his position in reliance thereon to his 
prejudice. "`* * * Unless the delay has worked injury, prejudice or disadvantage 
to the defendants or others adversely interested, it is not of itself laches. * 
* *'" Hartnett v. Jones, Wyo., 629 P.2d 1357, 1364 
(1981).

The burden is on the one 
who asserts laches to prove prejudice.

 

Murphy, 645 P.2d  
at 91.2

[¶10.]  The third argument has a more perplexing 
content. The refined computation prepared by tenant which was adopted by the 
trial court was based on a first quarter of the year to first quarter of the 
third year calculation. Landlord contends that the base comparison period should 
have been either by the last quarter of the year so that the escalation is 
effective for change from January 1st to January 1st or only for January. The 
latter contention would deny use of the state index which is only computed on a 
quarterly basis, while the federal index has a monthly publication.3 Initially, the lease was intended 
to commence with a January date, but occupancy delays in remodeling required a 
later execution and delayed signing until March 6, 1979 for a possession date of 
April 1. The lease then finally expired March 31, 1989.

[¶11.]  The parties agree that the state index 
was only published quarterly. With that factual component established, we find 
no error in the trial court decision to accept the computation based on a 
comparison between the first quarter just before the term commenced with the 
quarter that expired before the new adjustment would be made two years later. 
The factual conclusion of the trial court in determining the base point for 
computation was properly founded in logic and the written contractual terms. 
Johnson Storage & Moving Co. v. Victory, Inc., 774 P.2d 636 (Wyo. 
1989).

[¶12.]  Affirmed.

FOOTNOTES

1 The record reflects that 
the drafter of the lease agreement was a representative of the landlord. Goodman 
v. Kelly, 390 P.2d 244 (Wyo. 1964).

2 In text as stated in the 
brief, it is questionable whether landlord really argued laches, waiver or 
estoppel directly, but rather argued that any refund was limited to a two-year 
period since "previous rent adjustments had been accepted and paid." No case 
authority was cited on laches or waiver. E.C. Cates Agency, Inc. v. Barbe, 764 P.2d 274 (Wyo. 
1988).

3 The difference shown 
between tenant's exhibit 7 and exhibit 6 apparently totals $1,987.28; $12,738.72 
compared to $10,751.44. If the second quarter was used, the overpayment totaled 
about $18,000.