### IN THE S UP REME COURT OF TENNESS EE AT NAS HVILLE O ct obe r 7, 200 4 S es sio n
STA UBA CH RET AIL S ERV ICES -SOU THEA ST, LLC v. H. G. HILL REA LTY CO

. App e al b y P e r m iss ion fro mth e Co ur t o f Appe als Chancery Court

for Davidson County No. 01-3292-II Ir vin H. Kilcrease , Jr., Chancellor

No. M2002- 02661-SC-R11- CV - F iled March 22, 2005

We g rante d th is a

pp e a l to de te rm inewh e the r an u ne xec ute d b ro ke ra g e a g re e me nt i nc or po rate d in to an executed le ase c onstitut es an e nforc eable contra ct, there by requiring payment of a br okera g e fe e to o n e o f th e r e a l e s tate b r o k e r s w h o p r o v id e d s e r v ic e s p u r s u a n t to th e u n e xe c u te d a g r e e me n t. We
co n cl u d e t h atal l p ar t i es t o t h e b ro k er age agr ee m en tas s en t ed t o i t s t er m s an d t h att h e b ro k er age
a g re e me nt’ s “ oc c up a nc y ” re qu ir e me nt w a s satis fi ed. Ac c or din g ly , w e ho ld that th e a g re e me nt i s
e nf or c e able , a ndwe a ff

irm the Cou rt of Ap pe a ls’ a wa rd of theun pa id c omm iss ionto the re a l e state broker

.
Te nn. R . A pp. P . 1 1 A ppe al b y P e r m iss ion ; J udgm e nt of t he Co ur t o f Appe als Affir m e d; Rem anded to the Trial Court

J ANI CE M. H OL DER , J ., delivere d the opinion of the court, in which F RAN K F. D R OW OT A , III , C.J ., and E. R I L EY A NDE R S ON and W I L L I AM M. B ARKE R , J J ., and A L L EN W. W A LL A CE , S P .J ., joined.

B arb ara Ha wl e y Smith a ndEu g e ne N. B uls o , Jr

. , N a s h v i l le , T e nn e sse e , f or theDe fe nd a nt- Ap pe llant, H. G. Hill Realty

Co.

Brigid M. Car

penter and Glenn D . Tac kett, J r., Na shville, Ten n essee , for the Plaintiff- Appellee , Staub a c h Re ta il Se rv ic e s- Sou the a st, LL C.

OP IN ION
H. G. Hill Realty

Company

(“H . G. Hill”) owne d a tra ct of re al pro p er t yin Nashville, Te nn e sse e

. H. G. Hi ll re ta ine d a bro ke r, Sou the a st Ve ntu re , L L C (“ Sou the a st Ve ntu re ” ), to l oc a te a long -term tenant for the pr operty . Staubach R et ai l Service s-Southeast, LL C (“Staubac h”) contac ted Southeast Venture and expressed an interest in t he property on behalf of i ts client, dekor, I nc. (“ dekor” ), a home improvement re tailer ba sed in Geor g ia.T he p arti e s h a v e n eit he r b riefed no r arg ue d t he eff ec t o f t his s ett l em en t up o n the rights of t he p arti es. 1
A c c o rd ing ly, w e e x p re ss n o o p inio n a s to the e ff e c t o f t h is se ttl e m e n t.
-2- On Febr u ar y 2 3 , 2000, H. G. Hill and dekor enter ed into a “B uild-to-Suit R etail L ease ” (“le ase” ) in which H. G

. Hill a g ree d to c onstruct an 80,000 squa re- foot building for

dekor’ s use as
a re ta il s tor e . A rtic le 44 of thele a se pr ov ide d th a t:

L a n d lo r d c o v e n a n ts a n d a g r e e s to p a y B r o k e r ’ s c o mm is s io n in accordanc e with a separate agreem ent ex ecute d by and betwee n Landlord and Broker , a nd fu rthe r a g re e s to ind e mni fy Te na nt f or a ll claims and demands made by Br oker. . . . The terms and provisions of th a t c e rta inB r

o ke r a ge Agree ment, an unex ecute d photocopy of which is attached hereto a s Exhibit “N” and incorporated here in by

re fe re nc e , a re inc or

po ra te d in to t

his Le as e an d ma de a p ar t he re of.
(empha sis suppli ed.)

Ex hibit “N” of the lease provides that H. G. Hill, Sout heast Ve nture, a nd Staubach e ntere d int o a “ B ro ke ra g e Ag re e me nt” in anti c ipatio n o f the le a se . A c c or din g to the br ok e ra g e a g re e me nt,
[t ]he Owner a g re es t o pay a lea sing c ommissi on of F ive Hundre d Thousand Dollar s ($500,000.00) to the B roker and Co-B roker , for the development of

an 80,000 squar e foot re tail b u i l d i ng [.] . . . The leasing commission shall be pay able one-half upon execution of the le a se a ndon e -h a lf

up on oc c up a nc y

of thePr op e rty

by theTe na nt.

Con sis te nt w ithArtic le 44 , th e sig natur e s o f the par tie s’ re pr e se ntativ e s d o n ot a pp e ar o n E xhibi t “N.”

H. G. Hi ll s a tis fi e d th e fi rs t in sta llm e nt of th e le a sin g c omm iss ionby pay ing $1 25 ,0 00 to Southeast Venture an d $ 125,000 to Staubach. Pursuant to the lea se ag ree ment, dekor r eadie d the bu ild ing fo r r e ta il u se , a c c e pti ng de liv e ry of sto re fi xtur e s, hiring e mpl oy e e s, a ndins ta lli ng loc ks

. Ho we ve r, de ko r d id n ot o pe n th e sto refo r bu sin e ss a ndde fa ult e d o n th e le a se be fo repay ing thefi rs t month’s rent. On S eptember 21, 2001, H. G. Hill and dekor enter ed into an ag ree ment providing for termination of the lea se in return for a payment of $1,275,000 by dekor. 1

S t au b ac h fi l ed an ac t i o n ag a i n s tH. G. Hi l l s ee k i n g t o en fo rc e t h e t er m s o f t h e b ro k er age ag ree ment either a s a party to the ag ree ment or as a

third-par ty benef iciary of the lea se. Staubac h filed a mot i o n for summary judgme nt, claiming that it was entitled to its porti on of the sec ond installment of the commission because dekor ha d occupie d the building prior to default on the lease. The trial c ourt g rante d Staubach’ s motion and ordered H. G. Hil l to pay Staubach its portion of the second installment of the br okera g e commission.-3-

Onapp eal , the Cou rt

of Ap pe a ls a ff

irme d th e tria l c ou rt ’s jud g me nt. Th e int e rm e diate appellate court concluded that H. G . Hill assented to the terms of the broke rag e ag ree ment attache d to the l ease by executing the lease ag ree ment. The Court of Appeals further c oncluded that Staubac h
was e ntitled to it s portion of the sec ond installment of the leasing c o m m i s s i o n beca use dekor occupie d the building prior to defaulting on the lea se. We g rante d revie w.

AN AL YSI S

A contra ct “must result fr om a meeting of the minds of the pa rties in mutual as s en t t o the te rm s, mus t be ba se d up on a su ff ic ie nt c on sid e ratio n, fr e e fr om f ra udor un du e inf lue nc e , n ot a g a ins t public policy

and suff iciently definite to be e nforc ed.” D oe v. HCA Hea lth Servs. of Tenn., Inc., 46 S.W. 3d19 1, 19 6 (T e nn . 2 00 1) (c itatio ns omi tte d) . In d e te rm ini ng mutua lit y of a sse nt, c ou rt s mu st apply an objec tive standard ba sed upon the pa rties’ manife stations. T.R. Mills Cont rac tors, I nc. v. WR H Enters., L

L C, 93 S.W .3d 861, 866 (Tenn. Ct. App. 2002).

A d e te rm inatio n o f the pa rt ie s’ int e nti on s g e ne ra lly inv olv e s a qu e sti on of la w a pp ro priate for summary

judgme nt pr ovided that the moving party has established the a bsence of a g enuine issue
a s to a ny mate ri a l f a c t. S e e Te nn . R. Civ . P. 56 .0 4; P la nte rs Gi n Co. v. F e d. Compr e ss & War e ho us e Co. , 7 8 S. W.3 d 8 85 , 8 90 (T e nn . 200 2)

. I n re vie wi ng thetria l c ou rt ’s g rant o f s umm ary jud g me nt, this Court m ust review the rec ord de novo w ithout a presumpt i o n of cor rec tness. See Mooney

v. Sneed, 30 S.W.3d 304, 306 (Tenn. 2000).
Although the lease ref

ers to a “separate agr eeme nt executed by and between L andlord a nd Br oker,” the parties never executed a se parate ag ree m en t. The only evidenc e of an ag ree ment betwee n H. G. Hill, Staubach, and Southeast Venture is the unexecuted ag ree ment attache d to the le a se . H ow e ve r, a

writt e n c on tr a c t is no t r equ ir ed to be si gn e d to be bin din g on thepa rt ie s. T. R. Mil ls Con tr a c tor s, I nc ., 93 S.W. 3d a t 865. Mo re ov e r, H. G. Hi ll s ig ne d a le a se a g re e me nt e xpre ssl y incorporating the terms of the unexecuted broker ag e ag ree ment. This Court has previously held that
a w ri t i n g m ay b e i n co rp o ra t ed b y re fe re n ce i n t o a w ri t t en co n tra ct , t h er eb y re q u i ri n g b o t h wr i t i n gs to be construe d t o gether . See McCall v. Towne Square, I nc., 503 S.W.2d 180, 183 (Tenn. 1973). Be cause the terms of the lease expressly incorporated the unex ecute d broker ag e agr eeme nt into the lease , the lang uag e of the broker ag e ag ree ment (Exhibi t “ N”) became a pa rt of the lea se. B y

signing thele a se , H . G . H ill a c c e pte d th e te rm s o f the br ok e ra g e a g re e me nt.

I n an attempt to cre ate a g enuine issue of m aterial fac t, H. G. Hill submitt ed to the trial c ourt aff idavits of J ames W. Granbe rry

(“G ranbe rry ”), its Executive Vice President of De velopment, and Ce le ste Pa tte rs on (“ Pa tte rs on ” ), its Chi e f F inanc ia l O ff ic e r, in w hic h th e y

ma int a ine d th a t th e y

did
no t a sse nt t o th e un e xec ute d b ro ke ra g e a g re e me nt a tta c he d to the le a se . T he se a ff ida vit s f urthe r s tate that H. G. Hill ag ree d that the s econd installm ent of the commi ssion would be due when de kor beg an paying r ent, an event t hat di d not occur

. The parol evidenc e rule does notpermit contra cting parties to “use e x trane ous evidenc e to alter , vary , or qualify the pl ain m eaning of an unambig uous written
c on tr a c t.” GR W En te rs . v . D a vis , 7 97 S.W. 2d60 6, 61 0 ( Te nn . Ct . A pp . 1 99 0) . Furthe rm or e , to allow a pa rty to a contract to admit that the party signe d the contract but to deny that the terms of theStaubach f urt her maint ai ned i t co ul d recove r i t s p o rt i o n o f the seco nd ins t al l m ent o f c o m m i ss i o n und er t he 2
l ease as a t hi rd- p art y be nef i ci ary

. B ecause we have d et erm i ned that S t aub ach m ay reco ver as a pa rt y t o t he b rokerage agr eement , we nee d not addres s t hi s i s s ue.
-4- c on tr a c t e xpre ss the pa

rty ’s a g re e me nt wo uld de str oy the va lue of c on tr a c ts. Se e Gi le s v . A lls tate I ns . Co ., 87 1 S. W.2 d 1 54 , 1 57 (T e nn . Ct . A pp . 1 99 3) . H . G

. Hi ll c ou ld ha ve re fu se d to sig n th e le a se if it dis a g re e d wi th the te rm s o f the br ok e ra g e a g re e me nt a tta c he d to thele a se . Ins te a d, H. G. Hi ll pa id the fi rs t in sta llm e nt o f thec omm iss ionin a c c or da nc e wi th the te rm s o f the br ok e ra g e a g re e me nt, thu s e xpre ssi ng its a sse nt t o it s te rm s.

S i m i l ar l y , S t au b ac h an d S o u t h ea s tVe n t u re d em o n s tra t ed t h ei r a s s en tt o t h e b ro k er age
a g re e me nt. Al tho ug h Stau ba c h did not sig n th e br ok e ra g e a g re e me nt, its a sse nt t o th e a g re e me nt i s demonstrated by its action to enfor ce the ag ree ment. See Hill ard v. Fr anklin, 41 S.W .3d 106, 112 (Tenn. Ct. App. 2000). Southea st Venture’ s acc eptanc e of its shareof the fir st i n s t al lment of the
c omm iss ionde mon str a te s So uth e a st Ve ntu re ’s a c c e ptanc e of its te rm s. Se e T. R. M ill s Co ntr a c tor s, I nc., 93 S.W.3d at 866 (noting that a ssent may b e es t ab l i s hed by the parties’ cour se of de aling s). When a party

who has not sig ned a contra ct demonstrate s its assent by perf orming pursuant to the contra ct and making payments conforming to the c ontrac t’s terms, that party is estopped from denying the binding e ffe ct of the c ontrac t. I d. at 866; see H oyt v. Hoyt, 372 S.W .2d 300, 305 (Tenn. 1963); R.J . Be tterton Mg t. Servs., I nc. v. Whit temore, 769 S.W .2d 214, 216 (Tenn. Ct. App. 1988).

The e vidence establishes that all threeparties to the une x ecute d broker age ag ree ment assented to its terms. Thus, we conclude that the brokerag e ag ree ment is a binding c ontrac t under which Staubac h may

rec over its porti on of t he second installment of t he commission if the contra ct’s conditions were satisfied. 2
Although the broker ag e ag ree ment requires payment of the sec ond installment of the
co m m i s s i o n “u p o n o cc u p an cy , ” t h e t er m“o cc u p an cy ” i s n o td ef i n ed i n ei t h ert h e b ro k er age ag ree ment or the lea se. Howeve r, we are unable to c onclude that the term is ambiguous. A contra ct term is not ambiguous merely beca use the pa rties to the contra ct may

interpre t the term in diffe rent way s. See Johns on v. J ohnson, 37 S.W .3d 892, 896 (Tenn. 2001)

.
We are require d to asce rtain the intention of the pa rties by using the usual, natura l, and ordinary meaning of the lang uag e contained in the contra ct. Guiliano v. Cleo, I nc., 995 S.W.2d 88, 95 (Tenn. 1999)

. Bla ck’s L aw Dictionary 1108 (8 ed. 2004) define s “occ upancy ” in part as “the th act, state or condition of holding , possessing, or res iding in or on something ; actual possession, residenc e, or te nancy , esp[ecially ] of a dwelling or land.” Furthermore , “the term denotes whatever acts a re done on the land to manifest a claim of exclusive control and to indicate to the public that the ac tor has appr opriated the land.” I d.

I n t h e m o n t h s p ri o r t o i t s b re ac h , d ek o r a rr an ged fo r t h e i n s t a l l at i o n o f f i x t u re s , an en er gy manag ement sy stem, lighting , an audio sy stem, and a security sy stem. During the spring of 2001, the construc t i o n company ’s locks we re r emoved, and dekor’ s locks wer e installed. The c ompany-5-

acc epted de livery

of store f ix tures and she lvin g v al ued at more than $100,000 as we ll as kitchen equipment for display

purposes. The company

hired a g ener al manag er, w ho conducte d interviews
a t the sto re a nd hir e d nin e e mpl oy e e s to se rv e a s the sto re ’s ma na g e ri a l sta ff

. I n a dd iti on , d uring late May and ea rly J une of 2001, the g ener al manag er w ent to the building on a daily basis. We conclude these fa cts aresufficie nt to establish dekor’s “ occupancy ” of the premises prior to termination of the le a se , th us satis fying thete rm s o f the br ok e ra g e a g re e me nt.

CO NC LU SION

We h oldthat th e un e xec ute d b ro ke ra g e a g re e me nt i s a va lidc on tr a c t to whi ch H. G. H ill , Staubach, and Southeast Venture d em o n s trated the ir assent a nd that dekor oc cupied the pr emises prior to the termin at i o n of the lea se. Ac cording ly , Staubach is entitled to one-ha lf of the se cond ins ta llm e nt o f the c omm iss ionfr om H . G . H ill . We a ff irm th e jud g me nt o f the Cou rt of Ap pe a ls, which af firmed the trial court’s gr anting of sum mary judgme nt, and remand t he case to the trial c ourt for f urther pr ocee dings c onsistent with thi s opinion.

The c osts of appea l a

re assessed to the appellant, H. G. Hill Realty Co., and its sureties for

w h i c h e x e c u t i o n m a y i s s u e i f n e c e s s ar y.

___________________________________

JANI CE M . H OLDE R, JUS TI CE