### UNITED STATES COURT OF APPEALS Tenth Circuit Byron White United States Courthouse

1823 Stout Street Denver, Colorado 80294 (303) 844-3157 Patrick J. Fisher, Jr. Elisabeth A. Shumaker Clerk Chief Deputy Clerk January 14, 1998

TO: ALL RECIPIENTS OF THE CAPTIONED ORDER AND JUDGMENT
RE: 96-6250, United Associates v. Walmart Stores December 8, 1997
By order of this date the Court has entered an orde r directing publication of the order and judgment entered on December 8, 1997. A copy of the published version is attached for your convenience.

Very truly yours, Patrick Fisher, Clerk

Keith Nelson Deputy Clerk

encl.

## F I L E D United States Court of Appeals Tenth Circuit 

### DEC 8 1997 

### PATRICK FISHER Clerk 

### PUBLISH UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

UNITED ASSOCIATES, INC., Plaintiff-Appellant,

v. WAL-MART STORES INC., a Delaware corporation, Defendant-Appellee, and JOHNSON FOODS INC., an Oklahoma Corporation, Third-Party Defendant. No. 96-6250

Appeal from the United States District Court for the WesternDistrict of Oklahoma (D.C. No. CIV-93-1287-A)
Gary R. Underwood (A. Daniel Woska, with him on the briefs), of Woska Helms Dowd Underwood & Hasbrook, Oklahoma City, Oklahoma, for PlaintiffAppellant.-2-

Jon B. Comstock, Senior Corporate Litigationn Couns el, Wal-Mart Stores, Inc., Bentonville, Arkansas, for Defendant-Appellee.

Before SEYMOUR , Chief Judge, LOGAN , Senior Circuit Judge, and MURPHY , Circuit Judge.

SEYMOUR , Chief Judge. At issue in this diversity action is the interpretation under Oklahoma law of a commercial lease between Wal-Mart, the lessee, an d United Associates, the lessor. The district court granted Wal-Mart’s moti on for summary judgment and denied United’s cross-motion. United appeals. We review the district court’s grant of summary judgment de novo. See Kaul v. Stephan , 83 F.3d 1208, 1212 (10th Cir. 1996). On September 1, 1983, Wal-Mart entered into a 20-ye ar lease with United’s predecessor in interest to rent premises in a shopp ing center in Muskogee, Oklahoma. The lease includes the following pertine nt provisions: (a) a fixed annual rent of $ 104,595.00 and an addit ional percentage of the gross sales if the sales reach a certain level; (b) a right to assign or sublet the lease without th e consent of the landlord; (c) a use clause stating that “[i]t is understood an d agreed that the Demised Premises will be used by Lessee in the oper ation of a discount department store, but Lessor agrees the De mised Premises may be used for any lawful purpose” except as a sup ermarket or grocery store, Aplt. App. at 181; (d) a right “at any time” to “remove any and all fixtures, goods and equipment installed by [the Lessee] in or on the De mised Premises,”-3- Aplt. App. at 187; (e) a right, which extends to any of Wal-Mart’s assi gnees or sublessees, to make alterations to the premises for business purposes; (f) a default clause which is triggered if the premi ses are “deserted for more than thirty (30) days,” Aplt. App. at 191, and (g) an integration clause. Wal-Mart operated a discount store on the premises from September 1983 to October 1990, when Wal-Mart closed its store and mo ved. Before relocating, Wal-Mart assigned the lease to Omega Limited Partne rship, and Omega in turn subleased the premises to Johnson Foods, Inc. It i s undisputed that Wal-Mart is current on all financial obligations under the leas e. We address first United’s argument that the distric t court erred in declaring the lease unambiguous. The Oklahoma Supreme Court has held that “a lease is in the nature of a contract and is controlled by princ iples of contract law.” Mercury Inv. Co. v. F.W. Woolworth Co. , 706 P.2d 523, 529 (Okla. 1985). We must therefore interpret this lease “so as to give effec t to the intent of the parties at the time the contract was formed.” Id. “ [W]here a contract is complete in itself and, as viewed in its entirety, is unambiguous, its language is the only legitimate evidence of what the parties intended. ” Id. Our review of the lease persuades us the district court was correct in holding that the lease here, viewed in its entirety, is unambiguous. United next asserts that Wal-Mart breached the expr ess language of the lease by moving out of the premises. Since it is u ndisputed that the lease contains1 United also argues that the use clause requires Wal -Mart to operate a

discount store on the premises. However, the broadlanguage of the use clause here allows the premises to be used for any lawful purpose except as a grocery store or supermarket. In any event, the Oklahoma S upreme Court has held that use clauses are restrictive and not mandatory in nature, i.e., such clauses simply restrict the permissible uses of the space but do n ot impose a mandatory obligation to actually use the space in the manner proscribed. See Monte Corp. v. Stephens , 324 P.2d 538, 539 (Okla. 1958). -4- no express continuous operation clause, United reli es on the default clause which provides that Wal-Mart is in default if “the Demise d Premises shall be deserted for more than thirty (30) days.” Aplt. App. at 95. 1 At the outset, we note that “[a] contract must be considered as a whole so as t o give effect to all its provisions without narrowly concentrating upon some clause or language taken out of context.” Mercury , 706 P.2d at 529. Other provisions of the lease a llow Wal-Mart to assign or sublet the lease without cons ent for any purpose other than a supermarket and to remove any fixtures, goods, an d equipment at any time. The lease also permits any of Wal-Mart’s sublessees or assignees to alter the premises for business purposes. The lease thus clearly cont emplates a situation where WalMart removes its goods and allows an assignee or sublessee to move in and conduct another business on the premises. Reading the lease as a whole and in light of the fact that Wal-Mart has remained current on all financial obligations, it would be illogical to conclude that Wal-Mart’s acti ons amount to desertion within the meaning of the lease.-5-

United finally contends that Wal-Mart violated impl ied obligations in the lease. The common law imposes an implied covenant of good faith and fair dealing on all contracts made in Oklahoma. See First Nat’l Bank v. Kissee , 859 P.2d 502, 509 (Okla. 1993). We are persuaded that Wal-Mart has not breached this covenant simply by exercising its rights to as sign the lease and remove its goods from the premises under valid, bargained-for provisions of the lease. Cf. Devery Implement Co. v. J.I. Case Co. , 944 F.2d 724, 728-29 (10th Cir. 1991) (holding under Oklahoma law that implied covenant o f good faith not violated by exercise of otherwise valid, bargained-for terminat ion-at-will clause). United urges this court to find other implied obligations in the lease such as an implied covenant to operate a discount store. As a general rule, implied covenants are disfavored. Mercury , 706 P.2d at 530. Moreover, Oklahoma courts refus e to rewrite a lease by implying a covenant that is contrary to the express terms for which the parties have bargained. See id. at 532, 534. To imply an obligation of continuous use here would plainly contradict the express terms of the lease and would result in rewriting the parties’ agreement, w hich we will not do. Cf. Grisaffi v. Dillard Dep’t Stores, Inc. , 43 F.3d 982 (5th Cir. 1995) (refusing to imply obligation of continuous operation in face of express right to assign or sublet); Cascade Drive Ltd v. Wal-Mart Stores, Inc. , 934 F.2d 61, 62 (5th Cir. 1991) (same).
We AFFIRM the district court.