Title: Clark v. Albertville Nursing Home, Inc.

State: alabama

Issuer: Alabama Supreme Court

Document:

545 So. 2d 9 (1989)
E.L. CLARK
v.
ALBERTVILLE NURSING HOME, INC. and Audrey Cole.
88-70.

Supreme Court of Alabama.
April 28, 1989.
Rehearing Denied May 26, 1989.
*10 T.J. Carnes of Carnes & Carnes, Albertville, for appellant.
James D. Walker, Albertville, and J. Donald Reynolds, Montgomery, for appellees.
HOUSTON, Justice.
E.L. Clark sued Albertville Nursing Home ("the nursing home") and Audrey Hopper (now Audrey Cole) in the Marshall County Circuit Court, claiming that the nursing home was indebted to him for failure to pay a 5% increase in monthly rental allegedly due under a real estate lease. Clark filed a motion for summary judgment, and the trial court denied that motion.
The trial court heard ore tenus testimony and entered a judgment in favor of the nursing home, stating, in pertinent part, that the court found, as a fact, that the lease agreement was made to conform with the requirements of the Medical Services Administration ("Medicaid") of the Alabama State Department of Public Health. We affirm.
The issues before us are whether the trial court erred in admitting parol evidence and whether Clark is entitled to the accrued 5% increase in rent pursuant to the lease agreement.
In December 1976, Clark entered into a lease agreement for a ten-year term to begin January 1977, with Ms. Cole and the Albertville Nursing Home, Inc., to operate a nursing home from the facility he owned. The lease called for rental payments to Clark at the rate of $75.00 per bed per month and contained a provision for a 5% increase in rent after five years. Clark and Ms. Cole submitted that lease to Medicaid for its approval. Thereafter, Ms. Cole advised Clark that Medicaid had approved her facility for reimbursement at the rate of only $63.68 per bed. Subsequently, in April 1977, the parties executed a second lease identical to the first lease except for changing the rate of rental payments per bed to the rate approved by Medicaid.
The controversy in this case concerns the "escalator clause" of the second lease, which provided for an automatic increase in rent after five years. Ms. Cole testified that in 1981, following Medicaid's annual regulatory agency audit of her nursing home, she was advised by Medicaid that the 5% increase would not be approved. Thereafter, Ms. Cole continued making rental payments each month for the amount stated in the second lease, without the 5% increase. Clark claims that he made repeated oral requests to Ms. Cole to pay the 5% increase and that each time she agreed to pay. Ms. Cole, however, denied that there was any communication with Clark regarding a demand for a 5% increase, except for the time that she showed him the notice from Medicaid stating that it would not approve the increase. With 11 months remaining on the lease, Clark filed suit, claiming damages representing the 5% monthly increase aggregated over 48 monthsa value of $20,326.56.
*11 Clark contends that the trial court erred in allowing parol evidence concerning the lease, because, he says, all prior negotiations and agreements were merged into and became part of the written contract, and because the general rule is that parol evidence of prior negotiations between the parties offered to explain, contradict, vary, or subtract from the written terms of a contract is not admissible. League v. Giffin, 347 So. 2d 1332 (Ala.1977).
Ms. Cole contends that the 5% increase was not enforceable because, she says, prior to its execution, she and Clark orally agreed 1) that the rental payments would be the maximum rent for which they could obtain approval by Medicaid and 2) that they would adjust the rent to conform to that amount. This contention was supported by the testimony of Ms. Cole and that of Charles R. Hare, Jr., the attorney who drew up the lease agreement. The trial court allowed the evidence of this oral agreement over Clark's objection.
The general rule of contract law is that, if a written contract exists, the rights of the parties are controlled by that contract, and parol evidence is not admissible to contradict, vary, add to, or subtract from, its terms, Tyler v. Equitable Life Assur. Soc. of the United States, 512 So. 2d 55 (Ala.1987); Gunnells v. Jimmerson, 331 So. 2d 247 (Ala.1976), in the absence of mistake or fraud or ambiguity, League v. Giffin supra; Gunnells v. Jimmerson, supra.
While we agree that no fraud or mistake existed when the parties entered into the lease agreement, we cannot agree that there was no ambiguity. The pertinent provisions of the lease agreement are as follows:
The ambiguity in the lease agreement in the instant case arises when paragraphs 1, 3, and 20 are considered together. If read alone, paragraph 1 clearly authorizes a 5% automatic increase in rental payments. However, if integrated with paragraphs 3 and 20, the 5% increase appears to have been subject to the regulations of Medicaid after Medicaid's determination based on required cost reports and financial statements.
Thus an ambiguity existed as to the terms of the lease agreement, and the trial court properly admitted parol evidence to aid in the interpretation of the contract and to show the purpose and character of the transactions. League v. Giffin, supra.
Ms. Cole's testimony, in pertinent part, was as follows:
Under the "ore tenus rule," a presumption of correctness accompanies the trial court's judgment when it has made findings of fact based on oral testimony without a jury, and its judgment will not be reversed unless it is shown to be plainly and palpably wrong, considering all of the *13 evidence and all inferences that can be logically drawn from the evidence. King v. Travelers Ins. Co., 513 So. 2d 1023 (Ala. 1987); McCrary v. Butler, 540 So. 2d 736 (Ala.1989). The trial court's judgment in such a case will be affirmed, if, under any reasonable aspect of the testimony, there is credible evidence to support the judgment. McCrary v. Butler, supra; Jones v. Jones, 470 So. 2d 1207 (Ala.1985).
From our review of the record, we conclude that the trial court's finding that Ms. Cole and Clark entered into a lease agreement that was to conform to the requirements of Medicaid is supported by the evidence and is not plainly and palpably erroneous; therefore, since Medicaid would not agree to the 5% increase in monthly rent for the second five-year period, Clark was not entitled to such an increase.
For the foregoing reasons, we affirm the judgment of the trial court.
AFFIRMED.
HORNSBY, C.J., and JONES, SHORES and KENNEDY, JJ., concur.