### IN THE COURT OF APP EALS OF TENNESS EE AT JAC KSON Jul y 21, 200 4 S es sio n
ONE COMME RCE SQUARE, LLC v . AUSA LIFE I NSURANCE COMPANY, INC.

A Dire ct A ppeal f

romthe Chancer y Court for Shelby Cou nty No. CH-01-1015- 3 The Hon orable Arnold B. Goldin , Chancellor

No. W2003-02956-C OA-R3-C V - F iled Septem ber 8, 2004

Appellant purc haser

of commer cial building sue d appelleeseller to re co v er pay ment of a tenant improveme nt allowancemade by th e appelleeto a tenant pur suant to a lea se ag ree ment assig ned to the purchaser as part of t he transaction. The tria l court g rante d appelleeseller summary judgme nt based upon a

construction of t h e t er m s of the a ssignment transfer ring the lease to the pu rc ha se r. Ap pe llant p ur c ha se r a pp e a ls. We a ff

irm.

Tenn. R. App . P . 3; Appeal as of Right; Judgme nt of th e Chancer y Court Affi rm ed

W. F RAN K C RAW FORD , P.J ., W.S ., delivere d the opinion of the court, in which A L AN E. H I G H ERS , J . and H OL L Y M. K I RBY , J ., joined.

H e n r y C

. S h e l t o n a n d A m y

M

. P e p k e o f

M e m p h i s f

o r A p p e l l a n t , O n e C o m m e r c e S q u ar e , LLC

Henry L . Klein and Br

uce M. Smith of Memphis for Appe llee, AUSA Life Insuranc e Company , I nc.

OP IN ION

On J une 9, 1999, AUSA Life Insuranc e Company , I nc. (“ AUSA,” “ Def endant,” or “Appe llee”) and an e ntity known as De vel o p m ent S ervic es Group, Inc. (“ DSG”) e ntere d into a Purchase and Sale Ag ree ment (the “ Ag ree ment”). U nder the Ag ree ment, AUSA agr eed to sell the
rea l property known as the One Commerce Square Building, Memphis, Tenne ssee ( the “Prope rty ”) to D SG or its a ssigne e. There afte r, DSG assig ned its rig hts a s purcha ser to One Commerce Squar e, LL C (“OCS,” “Plaintiff,” or “A ppellant”)

. On or ab o u t S eptember 1, 1999, OCS purchase d the Property from AUSA. In connec tion with the sale of the Property , the parties entere d into an “Assig nment and Assumption of L ease s and Se c urity De po sit s” (the “ As sig nme nt” ). Th e As sig nme nt r e a ds a s f oll ow s:-2- A U S A Li f

e I n s u r a n c e C o m p a n y , I n c
. ( “ A s s i g n o r ” ), in consideration of the sum of Ten and No/100 Dollars ($10.00) in hand paid and other g ood and valuable c onsideration, the r ece ipt of which is hereby acknow ledg ed, her eby

assig ns, transfe rs, sets over and
c on ve y s to On e Com me rc e Squ are , L L C (“ As sig ne e ” ), a ll its i nte re st a s L e sso r in a nd to a ll le a se s in e ff e c t at th e re a l pr op e rty
.. .c omm on ly known as One Commerc e Square , Memphis, Tennesse e, as shown on the ce rtified Rent Roll attached he reto a s Ex hibit “B” (“ E x i s t i ng L ease s”). Assigne e hereb y

ac ce p t s t h e f

o re go i n g As s i gn m en tan d agrees to assume, fulfill, perf orm and discha

rg e all the va

rious commitments, obli g ations and liabilities of Assignor under an d by virtue of the Ex isting L ease s here by assig ned, which arise on or afte r the ef fec tive date hereof

, including the return of

security deposits, and does her eby

ag ree to defe nd, indemnify and hold harmless Assignor from any and all claims or l osses incurre d by Assignor by rea son of thefailu reof As si gnee f ro m a nda ft e r the e ff

e c tiv e date he re of

to fu lf ill , p e rf orm a nddis c ha

rg e a ll o f the va

ri ou s c omm itm e nts , obligations and liabilit ies of Assig nor under and by virtue of the Exist ing L e a se s ass ig ne d he re un de r, inc lud ing the re turn o f s e c urity deposits, which ari s e o n or af ter the date her eof, inc luding losses relating to re ason a

ble attorne y ’s fe es and e x penses incur red to re solve
su c h c la ims or

los se s. Assignor shall rema in liable for pe rforming and discharg ing obligations and liabilit ies relating to E x isting L ease s for which it was responsible and which arose during Assignor ’s owner ship of One Commerce Squar e prior to the date h ereof, with the exception of obligations or liabilit ies related to the payment of money for whic h a proration credit has been g iven to Assigne e (in whic h instance suc h payment o b l i gat i on shall be Assig nee’ s and is here by assumed by As sig ne e ) andAs sig no r s ha ll d e fe nd , indem nif y a ndho ld h arm le ss Assigne e fr om such claims or l o s ses incurr ed by Assigne e arising prior to the ef

fec t i ve date here of and a s a re sult of Assignor ’s ob lig a tio ns un de r the Exist ing L e a se s. Assignor specific ally agrees to re main liable for pay ing any specific monetary amount s which may be owe d to any

tenant under the Exi sting L ease s arising out of disputes relate d to billi ng s for Tena nt’s Share of

Oper ating Costs, butonly during Assignor ’s
owner ship of One Commerce Square prior to the date he reof and not he re a ft e r, a ndAs sig no r s ha ll d e fe nd , in de mni fy a ndho ld h arm le ssT he po r t i on of t he A mendm ent r el at i ng t o t he t en an t im provemen t al l owance r eads , i n r el eva nt par t , as 1 fo l l o w s:

9. T ena nt I mp r ovement Al l owance
. ( a) Su bj ec t t o t h e con di t i on s set for t h be l ow, La n dl or d s h al l pr ov i de T en an t w i t h t h e fol l owi n g t en an t i mpr ov eme n t al l owa n ce s : (i ) on Fe br u ar y 9, 1995, $1 72 , 37 0, r epre s ent i ng $5. 00 per r ent abl e s quar e f oo t wi t h r es pect t o t he D emi s ed P rem i ses (t he “ Fir st A l l o wance P ayment”) , and (i i ) on M arch 1, 20 0 0 , an am o unt eq ual t o $5

. 0 0 pe r r ent ab l e square fo o t o f o f f i ce space t hen b ei ng l eased by T enant ( t he “ Second Al l ow a n c e P ay ment ”) , ex cl udi ng an y port i on of t he D emi s ed P r emi s es t h at T en an t h as n ot i f

i ed Landl or d of

i t s i n t en t i on t o v ac at e pu r s u an t t o Par ag r aph 3 o r 4 a bo v e
. Bot h t h e F i r s t Al l ow a n c e Pa y me n t a n d t h e S e c on d A l l ow a n ce P ayment m ay b e used b y T enant t o pe rf o rm r e n o v at i o n and i m p rovem ent s t o t he D e m ise d P re m ise s a n d /o r th e p a ym e n t o f re n t d u e he re u n d e r... -3- Assigne e fr om pay ment of such spe cific mone tary amo u n ts

. A s s ig nee shall promptly

pay to Assignor

any and all amounts paid by tenant un de r E xistin g L e a se s f

or Op e ratin g Cos ts i nc ur

re d, or a ttribu ta

bleto the period of time, prior to the date here of.

IN WI TNESS W HEREOF , Assignor and Assig nee ha ve e xe c u te d th is A s s ig n me n t a s of the 1 day of September , 1999, st which Assig nment is effe ctive on that date

.

One of the lease s assig ned was that of t he law firm of Glankler Br own, P LL C (“Glankle r”)

. On Aug ust 31, 1994, Glankler had ente red into a Sec ond L ease Amendment (the “Amendme nt”) for
an ex tension of i ts exis ting L ease
. The Ame ndment, inte r a lia , g a ve Gl a nk le r the op tio n to va c a te certain space on the 18 floor of the b u i l d i n g. The Ame ndment also provided f or a te nant th improvement allowa nce to be paid to Glankler by the landlord in two (2) inst allments of $172, 3 7 0

. 0 0 , th e f

ir s t i n s ta ll me n t b e in g p a y ab leo n F e b ru ar y 9 , 1 9 9 5 , a n d th e s e c o n d in s tallment pay able on Ma

rch 1, 2000. TheAmendment further provide d that if the tena nt exercised its option to vacate part of the spac e, ther e would be a reimburse ment of a portion of any tenant improveme nt a llo wanc e a llo c a te d to thete na nt. 1

G l a n k l e r c o m p l e t e d i t s t e n a n t i m p r o v e m e n t s p r i o r t o t h e p u r c h a s e a n d s a l e o f t h e P r o p e rt y. AUSA paid Glankle r its fir st te nant improvement a llowance of $172,370.00, which be came due on F e br ua ry 9, 19 95

. Pur su a nt to the Am e nd me nt, the se c on d ten a nt imp ro ve me nt a llo wanc e be c a me due on Mar ch 1, 2000. AUSA did not pay this second allowanc e as i t t o o k t h e posi tion that the obligation to pay

the sec ond installment arose a fter the September 1, 1999 sale of the Property and , th e re fo re , w a s th e ob lig a tio n of OC S pu rs ua nt t o th e As sig nme nt. OC S ma de de ma ndup on AU SA to make payment to Glankler, w hich demand w as re fused. OCS paid Glankle r the sec ond t enant improvement allowa nce. O CS seeks reimburseme nt in this action.-4-

On May 16, 2001, OCS filed a “Complaint for B rea ch of Contra ct” a g ainst AUSA, seeking reimburse ment of $172,370.00 for AUSA’s alleg ed breac h of t he Assignment. On J une 21, 2001, AUSA filed its “Answer of D efe ndant and Counterc laim,” in which AUSA de nied liabilityfor Glankler ’s sec ond tenant improveme nt allowance under the Assignme nt and counte rcla imed, under theAg re e me nt, fo r c os ts ande xpe ns e s in c ur re d inthelit ig a tio n. OC S a ns we re d th e Cou nte rc la im on September 5, 2001.

On J une 14, 2002, OCS filed “Plaintiff’s Motio n fo r S ummary J udg ment,” along with a statement of undisputed fa cts and affidavits in support there of. On August 15, 2002, AUSA filed “De fendan t’s Response to Plaintiff’s Motion for Summary J udg ment and Counter- Motion for Summary J udg ment,” along with a statement of undisputed f acts in support there of.

The c ross-motions for su m m ary judgme nt were hear d by the trial court on September 9, 20 03 . On Oct ob er 27 , 2 00 3, thetria l c ou rt e nte re d it s “ Or de r Granti ng Sum mary Judg me nt t o Def endant/Counter- Plaintiff” (the “ Orde r”)

. OCS appeals fr om the Orde r and r aises two issues for revie w as stated in its brief :
I . Wh e the r the Chanc e ry

Cou rt e rr e d inho ldi ng that the ob lig a tio n to payT e n a n t f

o r te n a n t imp r o v e me n ts w a s e xis ti n g p r io r to the September 1999 c losing date but did not arise until t he payment was due on Mar ch 1, 2000?

I I . Whether Appe llant waived its rig ht to seek indemnification for pay me nt o f Te na nt’ s te na nt imp ro ve me nt c la im w hic h w a s a lia bil ity of Appe llee’s a

rising prior to the September 1, 1999 c losing date?

Resolution of the first i s s u e in this case is solely depende nt upon the construction of the provisions of the Assi g nment signe d by the parties here to and the Amendme nt signe d by Glankler
a ndAU SA. It is we ll s e ttl e d th a t th e la ng ua g e us e d ina c on tr act mus t betake n a ndun de rs too d in its plain, ordinary , and popular sense. Bob Pe ar

sa ll Moto rs, Inc . v. Re

ga l Chr y sle r- Pl y mouth, I

nc ., 521 S.W .2d 578 (Tenn.1975)

. I n construing contra cts, the words ex pressing the parties’ intentions should be g iven the usual, natu ral, and ordinary meaning

. Ballard v. North Am erican Life & Casual ty Co. , 6 67 S.W. 2d79 (T e nn .Ct .A pp .1 98 3) . I f the la ng ua g e of a writt e n in str

ume nt i s unambig uous, the Court must int erpr et it as written rather than ac co rd i ng to the unexpressed intention of one of the parties. Sutto n v . First Na t’ l Ba nk , 620 S.W .2d 526 (Tenn.Ct.App.1981). A contra ct is not ambig uous mere ly beca use the pa rties have differ ent interpre tations of the contra ct’s various provisions, Cookeville Gy necology & Obstetrics, P.C. v. Southeastern Data Sys., Inc. , 884 S.W .2d at 462 (c iti n g Oman Co nstr . Co . v . T e nne sse e V

all e y Autho rit

y , 486 F.Supp. 375, 382 (M .D .T e nn .1 97 9) ), no r c a n th is C ou rt c re a te a n a mbi g uity

wh e reno ne e xists in the c on tr a c t. Coo ke v ill e P. C. , 8 8 4 S

. W

. 2 d at4 6 2 (c i t i n g Edwards v. Travelers Indem . Co. , 201 Tenn. 435, 300 S.W .2d 615, 617-18 (1957))

. Courts c annot make contra cts for parties but c an only enfor ce the contra ct that the parties themselves have made. McKee v. C ontin ental Ins. C

o. , 191 Tenn. 413, 234-5-

S.W .2d 830 (1950). The interpre tation of a written contrac t is a matter of la w and not of f act. See Raine y v . St ans e ll , 836 S.W .2d 117 (Tenn.Ct.App.1992). A motion for summary

judgme nt should be g rante d when the movant demonstrates that ther e are no g enuine issues of material fa ct and that the moving party is entitled to a judgme nt a s a matter of law. T en n
. R . Civ.P . 56.04. The pa rty moving f

or summary

judgme nt bear s the burden of demonstrating that no g enuine issue of materia l fac t exi sts. Se e Bain v . W e lls , 936 S.W .2d 618, 622 (Tenn.1997)

. On a motion for summary judgme nt, the court must take the strong est leg itimate view of the e vidence in favor of the nonmoving pa

rty , allow all re asonable infere nces in f av o r o f that party , and disca

rd all counte rvailing evidenc e. Summary j u dg ment is a pref err ed vehic le for disposing of purely

leg al issues. Se e By rd

v . Ha ll , 84 7 S. W.2 d 2 08 (T e nn .1 99 3) ; Bellam y v. Fe deral Express Corp. , 749 S.W .2d 31 (Tenn.1988) . Since the construc tion of a written c ontrac t involves le g a l is su e s, c on str

uc tio n o f the c on tr a c t is pa rt ic ula rl y su ite d to dis po sit ionby

su mma ry jud g me nt. Browder v. Logistics Mana g em en t , Inc. , 1996 WL

181435, 1996 LEXI S Tenn.App. 227 (T e nn .Ct .A pp .1 99 6) ; see also Rainey , at 119. Since only questions of law ar e involved in this issue, there is no presumption of corr ectne ss reg arding the trial court' s g rant of summary judgme nt. Bain a t 62 2. Th e re fo re , o ur

re vie w of the tria l c ou rt ’s g rant o f s umm ary jud g me nt i s de novo on the re cord befor e this Court. Wa rre n v . Es tat e of Kir k , 954 S.W .2d 722, 723 (Tenn.1997)

. The g ravamen of t his issue is when the obligation to pay Glankler the sec ond tenant improvement allowa nce a rose, or came into being. O CS contends that the obligation a rose and wa s fi xeda t th e tim e th e Am end ment wa s si g ne d o n A ug us t 31 , 1 99 4 a ndthat th e ob lig a tio n w a s a persona l c ovenant of AUSA’s. AUSA contends that the obligation to pay Glankler the s econd improvement allowa nce a rose on Ma

rch 1, 2000, the date it was du e and pay able unde r the Amendment.

Thereis no ambiguity

in either th e Am en dment betwee n Glankler and AUSA or

in the As sig nme nt b e tw e e n A USAa ndOC S. Co ns e qu e ntl y , o ur de te rm inatio n of wh e the r AU SA i s li able for the se cond improveme nt allowancerests in the plain lang uag e of the documents.

Under para g raph two of

the Assig nment, OCS specifica lly ag ree d to “dischar g e all the various commitments, obligations and liab i l i t i es of [AUSA] under and by virtue of the E x isting L ease s [, which would undisput edly include the Amendment betwee n AUSA and Glankler,] here by assig ned, which [arose] on or afte r the eff ective date [of the Assignme nt, i.e

. September 1, 1999],....” AUSA, under

para g raph thre e of the Assignme nt “re main[s] liable for pe rforming and discharg ing ob lig a tio ns a nd lia

bil iti e s re latin g to Exist ing L e a se s f or wh ic h it wa s r e sp on sib le a ndwh ic h a ro se during [AUSA’s] owner ship of [t he Property ].” The question of when the obligation to pay Gl a nk le r’ s se c on d impr ov e me nt a llo wanc e aro se c a n o nly be g le a ne d f

ro m th e Am e nd me nt. Turning to the Amendment, P ara g raph 9(a) thereof ( see footnote 1 su

pr a ) spec ifically

g ives Gl a nk le r t he ri g ht t o r e c e ivetw o s e pa rate pay me nts fo r t e na nt i mpr ov e me nts . H ow e ve r, tho se payments are neither due upon the completion of t he tenant improvements, nor are they pay able at AUSA’s discre tion. Rather, the plain lang uag e of the Amendment spec ifies t hat pay ment one is due “on F ebrua

ry 9, 1995" and payment two is due “on Mar ch 1, 2000.” T he ca rdinal rule in c onstruingT he E rnst & Y o un g lease , w hich wa s exe cu t ed i n J uly 1 9 9 9 , rea d s, i n re l ev an t p art, as fo l l o w s: 2

U pon t h e Sc h edu l ed Commen ce men t D at e, T en an t s h al l s u bmi t a n a ppl i ca t i on for pay men t of

t h e T en an t I mpr ov eme n t Al l owa n ce t o La n dl or d. T h e appl i ca t i on for p ayment shal l be acco m p ani ed by execut ed f i nal and unco nd i t i o nal l i en wai vers f ro m t he ge ne ral co ntrac t o r an d all sub co ntrac t o rs, m ateria lm e n a nd sup p l i ers. P a ym e n t o f T e n a n t Im p ro v e m e n t A llo w a n c e to T e n a n t sh a ll b e m a d e w ithin twe n ty ( 20 ) bu s i n e s s da y s a f

t e r La n dl or d’ s r e c e i pt t h e r e of i n r e a s on a bl y s a t i s f a c t or y for m. -6- contra cts is to ascertain the intent of the pa rties. Walker v. Te nnessee Farm ers Mut. In s. Co. , 568 S.W .2d 103 (Tenn. Ct. App.1977). Her e, that intent is clea r–Glankle r had no rig ht to pay ment one
u n ti l F e b ru ar y

9 , 1 9 9 5 b e c au s e A U SAh a d n o o b li g a ti o n to p a y u n ti l th a t d a te ; l ik e w is e , G la nkler had no rig ht to pay ment two until March 1, 2000 bec ause AUSA had no obligation to pay until that date . U nd e r the plain an d una mbi g uo us la ng ua g e of thi s Ame nd me nt, the on ly way we c ou ld i mpo se a n o bli g a tio n u po n A USAto p a y these c on d impr ov e me nt a llo wanc e be fo re the Ma rc h 1 , 2 00 0 d a te would be if no spec ific date had bee n written into the contra ct. I n that case , this Court could have applied a r easona

ble time st an d ard in de termining when AU SA should be obligated to make the second pay ment to Glankler. H oweve r, this Court cannot make a contra cts for the parties but can only enfor ce the contra ct that the parties themselves havemade. McKee v . Continental Ins. C o. , 191 Tenn. 413, 234 S.W.2d 830 (1950). Since AUSA a nd Glankler specifie d the dates for payment, we cannot unde rmine their intent by imposing an a rb i t ra ry

obligation on AUSA to pay the sec ond payment prior to Marc h 1, 2000, when, unde r the plain lang uag e of the Amendment, that oblig ation
arose
. We find that AUSA’s oblig ation to pay Glankler ’s s econd pay ment arose on Marc h 1, 2000. Since OCS assumed liabilityfor AU SA’s commitmen t s , obligations, and liabilit ies arising “on or afte r the e ffe ctive date ” of the Assignme nt (i.e. September 1, 1999), O CS w a s c ontrac tually obligated to pay Glankler ’s sec ond improvement allowa nce.
Alternatively , OCS arg ues that AUSA’s pay ment of tenant improvements to Ernst & Young (anothe r tena nt), under a separ ate l ea s e (i

. e. the lease betwee n AUSA and Ernst & Young ), d e mo n s tr a te s th a t a ll te n a n t imp r o v e me n ts , in c lu d in g G lan k le r ’ s , w e r e A U SA ’ s r e s p o n s ib il ity
. We disag ree . I n short, the re cord doe s not indicate that the lang uag e of the Ernst & Young lease was identical to that of the Amendment betwee n AUSA and Glankler

. Be cause a contr act hing es upon 2 the lang uag e used the rein, we cannot a pply a blanke t standard ba sed upon ac tions taken under one contra ct, which is not a c arbon c opy of anothe r. Having found that, under the plain lang uag e of the Assignme nt, OC S is l iable for the payment of Glankle r’s sec ond improvement allowance, we find that the s econd issue c oncerning an alleg ed waiver of O CS’s right to re cover from AUSA is moot.

For the forego i n g rea sons, we af firm the Or der of

the trial court. Costs of this appea l are
a s s e s s e d a g a i n s tt h e A p p e l l a n t , O n e C o m m e r c e S q u ar e , LL C , a n d i t s s u r e t y.-7- __________________________________________ W. F RANK CR A WFO R D , PR E S I D I N G JUDG E, W.S.