Opinion ID: 867537
Heading Depth: 2
Heading Rank: 2

Heading: Interpretation of Addendum

Text: ¶ 14 The parties' February 1999 addendum to the lease contained the following, new provisions relating to notice and the option to purchase: NOTICES All notices, requests, demands and other communications required or permitted under this Lease (a Notice) shall be deemed given if given in writing and delivered personally, delivered by commercial delivery service, delivered by courier, or mailed by certified mail return receipt requested, postage or delivery charges prepaid, to the party to receive the Notice.... .... All Notices shall be deemed given when received, as evidenced by the acknowledgment of receipt issued with respect thereto by the entity making the delivery. .... TENANT'S OPTION TO PURCHASE Landlord [Andrews] grants to Tenant [Blake] the option to purchase the Property described in Exhibit A hereto at the term [sic] of this Lease for the price of Three Hundred Thousand Dollars ($300,000).... The option granted hereby shall terminate if not exercised in writing before October 1, 1999.... ¶ 15 Blake contends the above provisions did not purport to set exclusive methods of giving effective notice of his exercise of the option or nullify actual notice received by methods other than those listed. According to Blake, the addendum's notice clause was merely a safe harbor provision that did not exclude written notice actually received by other means. Therefore, he argues, his September 20 letter to Andrews, although sent by ordinary mail, was both timely and effective. ¶ 16 In contrast, Andrews contends the addendum's notice provision set forth the exclusive means of effectively giving notice and neither stated nor implied that it was merely a safe harbor. Andrews further asserts that Blake failed to timely and properly exercise the option because he did not send the September 20 letter by one of the means specified in the addendum and, in any event, Andrews did not receive that letter. ¶ 17 The trial court did not resolve this issue but, rather, resorted to equitable principles to grant relief to Blake, implicitly assuming his exercise of the option was untimely. The court of appeals, however, concluded as a matter of law that Blake did not timely and effectively exercise the option to purchase and that Blake's September 20 letter could not be treated as effective notice because Andrews disputed ever having received that notice. We disagree with the court of appeals' reasoning and conclusion on this point. ¶ 18 The addendum's notice provision, as Blake correctly argues, did not establish the sole or exclusive means of effectively exercising the option to purchase set forth in the addendum. The option to purchase provision in the addendum merely stated that the option shall terminate if not exercised in writing before October 1, 1999. That provision implicitly required Andrews's actual receipt, before October 1, of Blake's written exercise of the option. See Korey v. Sheff, 3 Mass.App. Ct. 266, 327 N.E.2d 896, 897 n. 5 (1975) ([T]imely notice of intent to exercise an option to renew is effective upon receipt of such notice.); see also Salminen v. Frankson, 309 Minn. 438, 245 N.W.2d 839, 840 (1976) (notice of the exercise of an option must be received within the option period in order to be effective; notice of exercise of option mailed by optionee on option's expiration date but received by optionor two days later not effective); Restatement (Second) of Contracts § 63 (1979) (unless the offer provides otherwise, an acceptance under an option contract is not operative until received by the offeror). But the option to purchase provision in the addendum neither referred to the addendum's notice provision nor required the exercise[ ] in writing to be accomplished in any particular manner. ¶ 19 Moreover, the addendum's notice provision did not clearly require all notices or other communications to be delivered by one of the methods specifically prescribed therein. For example, the notice clause did not state that any notices shall be deemed given only if given in writing and delivered by one of those methods. As the drafter of the addendum, Andrews, had he intended that construction, could and should have stated that any notice had to be sent by one of the listed methods in order to be valid and effective. See Central Housing Inv. Corp. v. Federal Nat'l Mortgage Ass'n, 74 Ariz. 308, 311, 248 P.2d 866, 868 (1952) ([A] contract is to be construed most strongly against the party who prepared it.); cf. Bothell v. Two Point Acres, Inc., 192 Ariz. 313, ¶ 14, 965 P.2d 47, ¶ 14 (App.1998). ¶ 20 The language in the addendum's notice provision that notices shall be deemed given merely means that notice automatically is effective if given by one of the methods prescribed therein. But that clause does not necessarily mean that notice is effective if and only if one of those prescribed methods is used. Construing the notice and option to purchase provisions in the addendum together, and seeking to harmonize those clauses, we conclude that they neither preclude nor automatically render ineffective written exercise of the option to purchase sent by regular mail. See, e.g., Korey, 327 N.E.2d at 897 (notice provision in lease that stated `any such notice to the Lessor shall ... be deemed duly given if and when mailed by registered mail' ... [did] not require that written notice be sent by registered mail, to the exclusion of other modes of transmission, in order effectively to exercise the option to renew); Osprey L.L.C. v. Kelly-Moore Paint Co., 984 P.2d 194, 199 (Okla.1999) (lease provision stating option notice may be delivered personally or by certified or registered mail does not bar other modes of transmission which are just as effective). ¶ 21 We find support for our conclusion in University Realty & Development Co. v. Omid-Gaf, Inc., 19 Ariz.App. 488, 508 P.2d 747 (1973), which both parties cite in support of their positions and which the court of appeals distinguished. The court in University Realty held that personal, hand delivery of a written notice exercising an option to renew a lease was effective although the lease called for delivery by registered mail. Even when a lease requires notice to be made in a particular way, the court ruled, generally speaking any method of transmission of notice of renewal of a lease may be employed which is effective to bring such notice home to the lessor and serves the same function and purpose as the authorized method. Id. at 490, 508 P.2d at 749. ¶ 22 Andrews contends, and the court of appeals agreed, that University Realty is distinguishable and inapplicable here because, unlike Andrews, the lessor there admittedly received the timely notice. But Andrews's denial of having received the letter that Blake and his CFO state was sent by ordinary mail on September 20 does not necessarily entitle Andrews to summary judgment. See Nafstad v. Merchant, 303 Minn. 569, 228 N.W.2d 548, 550 (1975) (issue of whether optionor had received optionee's timely letters exercising option to purchase property submitted to jury pursuant to special interrogatory). Rather, triable questions of fact exist on whether Andrews received that letter. [2] If the trier of fact finds that Andrews received the September 20 letter before the October 1 deadline, then as a matter of law, Blake timely and adequately exercised the option to purchase. [3] See id. And, in that event, the trial court should direct judgment in favor of Blake based on any such finding. ¶ 23 On the other hand, if the trier of fact determines that Andrews did not receive Blake's September 20 letter, the inquiry does not end there. Rather, in that event, another issue surfaces: may Blake be equitably excused from his failure to timely exercise the option and, if so, under what conditions? We therefore turn to that issue.