Opinion ID: 200704
Heading Depth: 2
Heading Rank: 1

Heading: Property Tax Liability

Text: Equitable contends that the lease unambiguously assigned responsibility for taxes on the subject property to Softex. Section 4 of the lease agreement addressed the issue of taxes: (a) In addition to the minimum rental to be paid by LESSEE . . . LESSEE agrees to pay to LESSOR in the manner and at the times hereinafter provided an amount equal to 26.716%4 of all real estate taxes and assessments levied or imposed upon any and all of the parcel of land before described and on the building erected thereupon, and improvements thereto, except that the LESSEE shall be under no obligation to pay any income, corporation, inheritance, devolution, gift or estate tax or any other tax which may be charged or assessed against the LESSOR, or any tax upon the sale, transfer, assignment of the title or estate of the LESSOR which at any time may be assessed against or become a lien upon the DEMISED PREMISES, this leasehold or the rent accruing therefrom. The LESSOR may have received or may receive in the future, tax exemptions on portion of the land and building for which the LESSEE may not be 4 The figure 26.716% is derived from the percentage of the industrial park property that Softex occupied. During its tenancy, Softex leased additional space, bringing its share of the property to 43.076%. -6- entitled, in which case the LESSEE will be responsible for aforementioned percentage of real estate taxes and assessments based on the full assessed value without regard to any tax credits or exemptions. (emphasis added). The first part of § 4(a) states that Softex, as lessee, is responsible for its share of real estate taxes. This responsibility is underscored in the next sentence, which states that the lessee must pay its percentage of the full assessed value of the property, “without regard to any tax credits or exemptions” that the lessor obtains or may obtain in the future. The district court noted that, in this case, it was the lessee, not the lessor, who held an exemption, and concluded that 4(a) “does not speak to [this] inverse situation.” Finding this an ambiguity not addressed by the lease, the district court looked to the tax exemption laws for guidance. The district court concluded that Softex should have had the benefit of a reduction in property taxes, and therefore denied Equitable’s claim for past due property taxes and granted Softex’s claim for reimbursement by Equitable. We take a different view of the lease, which required Softex to pay its share of “all real estate taxes and assessments levied or imposed” on the property owned by Equitable. This unqualified language governs, because nothing in the lease suggests that the parties intended to cap Softex's tax obligation at the tax-exempt rate. If Softex wanted its tax obligation to be pegged -7- to whether it received a discounted tax rate, it should have negotiated such a condition in the lease. See Martin v. Vector Co., Inc., 498 F.2d 16, 24 (1st Cir. 1974). Because the lease is clear, we look no further than its four corners. 31 P.R. Laws Ann. § 3471 (“If the terms of a contract are clear and leave no doubt as to the intentions of the contracting parties, the literal sense of its stipulations shall be observed. If the words should appear contrary to the evident intention of the contracting parties, the intention shall prevail.”); Executive Leasing Corp. v. Banco Popular de P.R., 48 F.3d 66, 69 (1st Cir. 1995) (“[T]o consider the extrinsic evidence at all, the court must first find the relevant terms of the agreement unclear.). In addition to the rationale provided by the district court, Softex points to the absence of an integration clause in the lease, inviting us to consider extrinsic evidence purportedly showing that the parties intended that Softex would not be responsible for its full share of property taxes. See Executive Leasing, 48 F.3d at 69. Even if we assume arguendo that the absence of an integration clause allows us to consider such evidence, the outcome would be no different. Having failed to contest Equitable’s version of the facts or to present a statement of uncontested material facts in support of its own theory of the case, Softex is bound by the facts as presented by Equitable, which -8- do not include the parol evidence on which Softex hopes to rely.5 We conclude that, by virtue of the clear and unambiguous lease terms, Softex bore liability for the specified percentages of the property taxes ultimately imposed on the subject property, as well as the risk that the amounts assessed by the Commonwealth would not be reduced on the basis of a tax exemption. We therefore reverse the district court’s entry of summary judgment in favor of Softex and remand with instructions that judgment be entered in favor of Equitable on this issue.