Title: Wesco Inc. v. Hay-Now Inc.

State: vermont

Issuer: Vermont Supreme Court

Document:

NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.


                                 No. 91-238


 Wesco, Inc.                                  Supreme Court

                                              On Appeal from
      v.                                      Chittenden Superior Court

 Hay-Now, Inc., John P. Hayes,                March Term, 1992
 Pamela Hayes, Kentucky Fried
 Chicken of Burlington, Inc.
 and John P. Hanzas


 John P. Meaker, J.


 Craig Weatherly and Charles T. Shea of Gravel and Shea, Burlington, for
   plaintiff-appellant

 Ronald W. Kish of Ward, Kish & Babb, South Burlington, for defendants-
   appellees Hay-Now, Inc. and Hayes

 Thomas E. McCormick and Harrison B. Lebowitz of NcNamara, Fitzpatrick,
   McCormick & Mertz, Burlington, for defendants-appellees Kentucky Fried
   Chicken and Hanzas



 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.



      JOHNSON, J.   Plaintiff, Wesco, Inc. (Wesco) appeals from summary
 judgment in its declaratory judgment action seeking construction of the
 terms of its lease agreement with defendant, Hay-Now, Inc. (Hay-Now).  We
 affirm.
      Wesco is the successor in interest to Northern Terminals, Inc. (NTI),
 which, on January 7, 1969, leased land located at 295 Shelburne Road in
 Burlington to Kentucky Fried Chicken of Burlington, Inc. (KFC) and John P.
 Hanzas (Hanzas).  On that same date, NTI leased property adjacent to the
 KFC/Hanzas parcel, at 315 Shelburne Road, to Tom Simoneau (Simoneau), who
 thereafter operated a gasoline station and convenience store at that
 address.  KFC/Hanzas and Simoneau shared rights to a common parking area
 adjacent to their respective businesses.  Hay-Now is successor in interest
 to KFC/Hanzas.
      On January 25, 1978, NTI informed Simoneau of its intention to sell the
 property at 315 Shelburne Road to the Justin Corporation, whereupon Simoneau
 sued NTI, seeking to enjoin the prospective sale on the grounds that it
 violated a provision in his lease that gave him the right of first refusal
 in the event that NTI decided to sell the property.  The Chittenden Superior
 Court issued a preliminary injunction that prevented the sale and that
 remained in effect through the conclusion of the litigation on September 28,
 1984.  On that date, the court permanently enjoined the sale on the grounds
 that NTI had breached the first refusal provision of its lease with
 Simoneau.
      Meanwhile, on April 28, 1980, prior to resolution of the Simoneau/NTI
 litigation, KFC/Hanzas and NTI, predecessors in interest to Hay-Now and
 Wesco, respectively, signed a stipulation that permitted KFC/Hanzas to
 construct an addition to its restaurant at 295 Shelburne Road in exchange
 for a rent increase, to one thousand dollars ($1000) per month. The parties
 recognized in that stipulation that "rights to the common parking areas are
 held by Tom Simoneau pursuant to a Lease with the herein Lessor . . . and
 that said rights could interfere with the ability of the herein Lessees to
 construct the addition to the existing building."
      They therefore stipulated that if Simoneau's opposition "or any other
 encumbrance . . . [that] interferes with the ability of the Lessees to
 construct such addition or alteration is not removed by August 1, 1984, . .
 . then the Lessees' rent shall abate to the sum of $650.00 per month until
 such encumbrance is removed."  The parties further stipulated that "(i)f any
 such encumbrance is not removed by August 1, 1985, then the rent shall
 continue abated at the sum of $650.00 per month until the Lease ends in
 accordance with its terms."
      On July 15, 1980, pursuant to their shared rights in the common parking
 area, KFC/Hanzas requested from Simoneau permission to construct the afore-
 mentioned addition. Simoneau refused because he was involved in litigation
 with NTI concerning the prospective sale of 315 Shelburne Road.  As of
 August 1, 1984, Simoneau remained opposed to the expansion.  Hence, pursuant
 to the stipulation signed by KFC/Hanzas and NTI on April 28, 1980,
 KFC/Hanzas paid the abated rental amount of $650 per month, which NTI
 accepted without objection.  Simoneau still occupied 315 Shelburne Road and
 still opposed the expansion as of August 1, 1985, so, again pursuant to
 stipulation, KFC/Hanzas continued to pay NTI $650 per month after that date
 and NTI continued to accept that amount without objection.
      On September 5, 1986, NTI sold 295 Shelburne Road to Wesco. Between
 October 1, 1986 and April 1, 1988, KFC/Hanzas paid Wesco rent in the amount
 of $650 per month. In May of 1988, however, Wesco concluded that it was
 entitled to receive from Hay-Now, the successor in interest to KFC/Hanzas,
 rent in the amount of $1,000 per month, the amount that KFC/Hanzas and NTI
 had agreed would be due if encumbrances to the expansion of 295 Shelburne
 Road were removed by August 1, 1985.
      On September 11, 1989, Wesco commenced this action against Hay-Now,
 seeking declarations that the correct amount of rent due was $1,000 per
 month beginning August 1, 1984 and that the lease between Wesco and Hay-Now
 had terminated because Hay-Now had breached by underpaying its rent.
       On February 1, 1991, Wesco moved for summary judgment. The Chittenden
 Superior Court denied the motion and granted summary judgment for Hay-Now.
 Wesco appeals.
       Wesco presents three separate arguments that are properly consolidated
 into one, namely, that, as of August 1, 1984, Wesco was entitled to receive
 rent in the amount of $1,000 per month from Hay-Now because that date marked
 the termination of Simoneau's lease with NTI, his claim of right to the
 parking area shared with KFC/Hanzas (now Hay-Now) and the "encumbrance"
 posed by his objection to the restaurant expansion.  In Wesco's view, no
 encumbrances to the expansion remained on August 1, 1984 and, therefore,
 pursuant to the stipulation agreed to by the parties' predecessors in
 interest, Hay-Now owed Wesco $1,000 per month rent, as of that date.
 Accordingly, Wesco maintains, the trial court erred in rejecting Wesco's
 motion for summary judgment and in granting Hay-Now's motion for summary
 judgment.
      Hay-Now counters that the trial court acted properly because the
 conduct of the parties reflects Wesco's acknowledgment that Simoneau's
 continued occupancy of 315 Shelburne Road and his continued opposition to
 the restaurant expansion after August 1, 1984 constituted an "encumbrance"
 that justified the payment of the reduced monthly rent, $650, by KFC/Hanzas
 and, later, by Hay-Now. We agree with Hay-Now.
      It is well established in Vermont that "to prevail on a motion for
 summary judgment, the moving party must satisfy a stringent two-part test.
 First, there must be no genuine issues of material fact between the parties,
 and second, the moving party must be entitled to judgment as a matter of
 law."  Northern Aircraft v. Reed, 154 Vt. 36, 44, 572 A.2d 1382, 1387
 (1990); V.R.C.P. 56(c).
      In the present case, the parties agree that there are no genuine issues
 of material fact in dispute.  The sole remaining question of law is whether
 Simoneau's continued objection after August 1, 1984 to the proposed
 restaurant expansion at 295 Shelburne Road was an "encumbrance" that
 justified the payment of reduced rent by Hay-Now to Wesco.
      Wesco's own conduct vis-a-vis Hay-Now compels the conclusion that
 Simoneau's actions were an encumbrance.  The stipulation, quoted above,
 clearly indicates that Simoneau's opposition to the planned expansion at 295
 Shelburne Road is included within the category of "encumbrances" that would
 potentially prevent the expansion and trigger a reduced rental payment to
 Wesco.
      Moreover, long after August 1, 1984, and for nearly two years, Wesco
 accepted rental payments from Hay-Now of $650 per month instead of $1,000
 per month.  Wesco's action was consistent with the view that Simoneau's
 objection to the expansion constituted an encumbrance.  In other words,
 Wesco's conduct after August 1, 1984 suggests that Wesco construed the word
 "encumbrance" in the April 28, 1980 stipulation agreed to by NTI and
 KFC/Hanzas in the same way that those parties had construed it.  See Howard
 v. Maple Leaf Farm Associates, Inc., 151 Vt. 555, 557, 563 A.2d 996, 997
 (1989) (intention of parties to contract was evident from parties'
 subsequent conduct).
      Wesco attempts to divert our attention from the stipulation and its own
 conduct to the issue of whether Simoneau possessed a legal right to prevent
 construction of the restaurant addition after his lease ended on July 31,
 1984.  It is immaterial whether Simoneau, as a holdover tenant, had lost his
 right to oppose the expansion because, in fact, he remained on the property
 and opposed the expansion as late as August 1, 1985, the triggering date
 for permanent rental abatement.  That was precisely the situation the
 parties anticipated, and the trial court, in granting summary judgment for
 Hay-Now, properly gave effect to their intent.


      Affirmed.

                                             FOR THE COURT:



                                              __________________________
                                              Associate Justice