Opinion ID: 1735146
Heading Depth: 3
Heading Rank: 2

Heading: The substitute barge

Text: ¶ 51. After the Port Authority's decision to reaffirm the denial of Gulfside's plan to construct a hotel, Gulfside requested the right to substitute two different barges for the Copa vessel. The MDECD denied those requests by letter dated November 29, 1995. ¶ 52. In addition to the approval clauses found in articles XII (2) and V(8), the lease contained the following provision under article V, entitled PRE-CONDITIONS FOR LESSEE OPERATIONS: Prior to commencing operations of dockside gaming activities permitted and authorized by the Mississippi Gaming Control Act of 1990, the following provisions must be met: LESSOR must preapprove in writing any Vessel which LESSEE proposed to locate and operate on the Leased Premises. If prior approval is not obtained, LESSEE shall not be allowed to permanently dock and will be required immediately to remove the vessel at its expense. LESSORS may at its discretion, at LESSEE's expense, remove any unapproved Vessel located at the Port by LESSEE. If prior approval is not obtained, the Lease shall automatically terminate as provided for hereunder. ¶ 53. The chancellor found that the Port Authority had no obligation to consent to the substitution of a barge for the Copa vessel. We agree. ¶ 54. As emphasized above, this Court will look at the instrument as a whole, and its meaning will be determined from the entire agreement as written. In examining the entire lease agreement, we find no provision in the lease which gives Gulfside the right to substitute a barge for the preapproved gaming vessel. In fact, as the Port Authority points out, Gulfside did not point to any evidence, extrinsic or otherwise, that indicates that Gulfside and the Port Authority ever contemplated the substitution of a barge for the Copa vessel after the vessel was pre-approved and gaming operations had begun. ¶ 55. The Court's review of the language of the entire agreement as well as a review of the reasonableness of Gulfside's actions satisfies both the inquiry under the express terms of the contract and under the implied covenant of good faith and fair dealing. We accordingly affirm the chancellor's denial of Gulfside's counterclaim for breach of contract and breach of implied covenant of good faith and fair dealing. Cross-Appeal I. WHETHER THE COURT ERRED IN DENYING DECLARATORY JUDGMENT AND SPECIFIC PERFORMANCE THAT THE PORT AUTHORITY HAS EFFECTIVELY EXERCISED ITS RIGHT OF CANCELLATION PURSUANT TO ARTICLE XV OF THE ORIGINAL LEASE. II. WHETHER THE COURT ERRED IN DENYING DECLARATORY JUDGMENT THAT THE PORT AUTHORITY HAD USED ITS BEST EFFORTS, PURSUANT TO ARTICLE XV OF THE LEASE, IN OBTAINING PROPERTY ON THE PORT FACILITY FOR RELOCATION OF GULFSIDE'S OPERATION. ¶ 56. The pertinent term and cancellation provisions of the lease are as follows: The term of this Lease (Term) shall be (7) years. If the LESSEE has complied with all the terms, covenants and conditions of this Lease, as of the expiration of the Primary Term, the LESSEE shall have the option to extend the Lease for three renewal periods of five (5) years under the same terms and provisions of the Lease ... Third lease amendment, article IV.    LESSOR shall have the right to cancel this Lease at any time after the expiration of the Primary Term of this Lease for reason of Port expansion of its own facilities to handle expanded shipping and related commerce activities, unrelated to any business or enterprise which may compete with LESSEE's operations....    Should it be necessary for the LESSOR to exercise its right under this Article, LESSOR shall use its best efforts to aid LESSEE in obtaining property on the Port facility for the relocation of LESSEE's operation, and LESSEE shall have the right of first refusal for any available location on LESSOR's premises which LESSOR determines does not interfere with normal Port operations. Original lease, article XV. ¶ 57. On July 3, 1996, the Port Authority gave notice of its intent to cancel Gulfside's lease upon the expiration of the primary term of the lease. The letter incorporated the language required by the lease that the premises was needed for port expansion to handle expanded shipping and related commercial activities. ¶ 58. The chancellor found the cancellation provision to be ambiguous, resorted to parol evidence, and interpreted it as follows: The court finds the purpose of the cancellation provision was to give the Port the right to terminate a lease or relocate a tenant only if the Port actually had a specific, immediate and real maritime need for the Copa Leased Premises as a result of expanded shipping and related commerce activities. ¶ 59. The chancellor based his interpretation on Edwards' testimony that at the time the original lease was negotiated, he told Gulfside's attorney that the cancellation provision would be enforced only if [the Port] actually had that opportunity in hand, and not speculative. ¶ 60. In its cross-appeal, the Port Authority argues that the chancellor incorrectly interpreted the cancellation provision by erroneously concluding that the language is ambiguous and subject to explanation with extrinsic evidence. However, regardless of whether the cancellation provision is ambiguous, we find that the chancellor's interpretation was correct. Therefore, to the extent that his consideration of the extrinsic evidence was error, if any, such error was harmless. See Miss. R. Civ. P. 61 (disregard errors which do not affect the substantial rights of the parties); Miss. R. Evid. 103(a) (no reversal unless evidentiary error affects a substantial right of the party.). See also Lacy v. State, 629 So.2d 591, 594 (Miss.1993) (Parties are bound by what they promise in writing. But we are not bound to adopt a construction not compelled by the instrument in which we would have to believe no man in his right mind would have agreed to.); Frazier v. Northeast Miss. Shopping Ctr., Inc., 458 So.2d 1051, 1054 (Miss.1984) (A construction leading to an absurd, harsh or unreasonable result in a contract should be avoided, unless the terms are express and free of doubt.). ¶ 61. The Port Authority suggests that article XV should be interpreted to allow cancellation of the lease without any real or specific need as a result of expanded shipping and commerce activities. This interpretation is unreasonable. As Gulfside contends, any interpretation allowing only a possible need would effectively give the Port Authority a unilateral right to terminate the lease for any reason after the primary term. The Port Authority's interpretation would lead to a harsh and impractical result, something this Court does not allow. See Lehman-Roberts v. State Highway Comm'n, 673 So.2d 742, 744 (Miss.1996) (Where there is a dispute as to the meaning of a contract clause, a party's interpretation must be reasonable to warrant adoption. ); see also Yazoo Mfg. Co. v. Lowe's Companies, Inc., 976 F.Supp. 430, 436 (S.D.Miss.1997). ¶ 62. Given the chancellor's interpretation, we agree that the Port Authority failed to prove that the lease was canceled because of Port expansion to handle expanded shipping and related commerce activities. This Court will not disturb the findings of a chancellor unless the chancellor was manifestly wrong, clearly erroneous, or an erroneous legal standard was applied. Bell v. Parker, 563 So.2d 594, 596-97 (Miss.1990). As Gulfside notes, the most compelling evidence demonstrating the Port Authority's lack of proof came from Jimmy Heidel's testimony. Heidel, Executive Director of the MDECD at that time, was unable to state any specific, real need for the use of Gulfside's leasehold, testifying as follows: Q. I want to know specifically what was going to be done on that Copa property ... in November of 1995. A. I can't tell you anything specific that was going to go on the Copa property at that date and time in 1995. Q. Let's move to the Summer of 1996 when you gave the termination notice to Copa. What specific and existing need did the Port have for that property? ... A. I can't say that there was anything right then. ¶ 63. As the trial court found, no existing tenant of the Port had stated an immediate and real need for the Copa property for any purpose, other than ITO's desire to continue to place its equipment on a portion of Copa's parking lot. Furthermore, no potential customer had specifically proposed to use the Copa property for shipping or related commerce activities. The record is devoid of any evidence showing a specific, immediate and real maritime need which would require use of Gulfside's leasehold. All of the evidence offered by the Port Authority was either speculative or what the chancellor described as a rethinking of the facility's use to accommodate the commerce that existed when the second lease amendment was executed. ¶ 64. This Court cannot say that the chancellor was manifestly wrong in finding the Port Authority had failed to prove any specific, existing use for the Copa property which would be a sufficient basis for canceling the lease under article XV. Accordingly, we affirm the chancellor's denial of the Port Authority's request for a declaratory judgment that the lease was effectively canceled. ¶ 65. The chancellor held that [s]ince the court declared the Port's cancellation of the lease ineffective, the subject of the alternative site offer is no longer an actual issue in controversy. Affirming the chancellor's ruling denying the requested declaratory relief, we too find moot the issue of best efforts for relocation of Gulfside's operations in case of cancellation of the lease under article XV.