Opinion ID: 1702621
Heading Depth: 1
Heading Rank: 6

Heading: ground lease was extended in 1998 for 10 years

Text: Dodge I's first two assignments of error deal with the duration of the Ground Lease renewal. The district court found that the parties agreed to a 10-year renewal period and that therefore, the Ground Lease extended until May 31, 2008. For reasons that will be explained below, we agree with the district court's conclusion that Singer's 1995 telephone conversation with Baer was not an effective extension of the Ground Lease. But the parties agree that the continued payment and acceptance of rent after 1998 effected an extension of the Ground Lease. The question, under those circumstances, is what term is implied by such an extension. Dodge I argues that the district court erred in finding a 10-year renewal period in the Ground Lease, and specifically contends that it was error to find Davenport's acceptance of rent after expiration of the original term of the Ground Lease constituted only a 10-year extension. A court interpreting a contract must first determine as a matter of law whether the contract is ambiguous. [9] A contract written in clear and unambiguous language is not subject to interpretation or construction and must be enforced according to its terms. [10] However, a contract is ambiguous when a word, phrase, or provision in the contract has, or is susceptible of, at least two reasonable but conflicting interpretations or meanings. [11] In the instant case, the district court effectively concluded that the Ground Lease was ambiguous and determined that the duration of the Ground Lease renewal period was 10 years. The Ground Lease provides, in pertinent part: Tenant shall have the right and option. . . to renew the term of this lease for additional periods of time, each of which shall not be less than ten (10) years in duration, upon the same terms and conditions as in this lease contained . . . save and except that in no event shall the date of termination of any such extension or renewal period extend beyond May 31, 2059, such option in each such instances to be exercised in the following manner[.] This provision is susceptible to different interpretations. By the terms of the Ground Lease, a tenant would be able to renew the term of the lease for an additional period of time ranging from 10 to 60 years. Thus, when the parties agree to renew the Ground Lease, it is not at all clear for what duration, except that the additional periods of time will not be less than 10 years or extend beyond 2059. In other words, the Ground Lease is ambiguous regarding the effect of an unspecified holdover extension of the lease. Having concluded that the Ground Lease is ambiguous, we turn next to its meaning. A court is not free to rewrite a contract or to speculate as to terms of the contract which the parties have not seen fit to include. [12] Rather, when a court has determined that ambiguity exists in a document, an interpretative meaning for the ambiguous word, phrase, or provision in the document is a question of fact for the fact finder. [13] In this regard, therefore, if a contract is ambiguous, the meaning of the contract is a question of fact, and a court may consider extrinsic evidence to determine the meaning of the contract. [14] A written instrument is open to explanation by parol evidence when its terms are susceptible to two constructions or where the language employed is vague or ambiguous. [15] The district court's finding that the parties agreed to a 10-year renewal period, and that the Ground Lease was extended only until May 31, 2008, is not clearly erroneous; it is fully supported by the record. To begin with, Maenner's report, which was provided to all the parties and with which none of them disagreed, indicates that the parties understood the Ground Lease to renew in 10-year increments. In particular, the term increments, and reference to ongoing terms of renewal, suggests the parties foresaw multiple renewal periods and, therefore, did not consider the first renewal, in 1998, to extend the lease until 2059. Consistent with Maenner's report, Davenport's e-mail to Dodge I in November 2007, regarding Dodge I's failure to renew the Ground Lease for an additional 10 years, is consistent only with an understanding of a 10-year renewal term. Dodge I's response, stating that Dodge I thought its intent to renew was clear, but also serving formal notice of renewal for an additional ten (10) year term (i.e., ending in 2018), is also consistent only with such an understanding of the Ground Lease. Singer's response was not that the Ground Lease did not require renewal after 10 yearsit was that Singer thought the Ground Lease already had been renewed for another 10 years. But the 10-year renewal period was assumed. Singer was, in effect, confirming the parties' understanding that the original renewal was for 10 years. When we consider the judgment in a light most favorable to Davenport, as we must, we conclude that the district court's factual finding that the renewal term was 10 years was not clearly erroneous. Although the parties could have extended the Ground Lease for a period longer than 10 years, so long as it did not extend beyond 2059, the language of the Ground Lease, illuminated by the dealings of the parties, suggests that a holdover extension of the lease would be for a 10-year period. The Dodge entities' first assignment of error is without merit.