Opinion ID: 1922921
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Heading: When Woolworth Vacated the Premises

Text: The question of when Woolworth vacated the premises turns on the proper construction of the word vacate in Article 4(b) of the lease. General principles of contract interpretation apply. Leases of real property are to be construed as contracts. Capital City Mort. Corp. v. Habana Vill. Art & Folklore, Inc., 747 A.2d 564, 567 (D.C.2000). Our task in construing the lease is, therefore, to determin[e] what a reasonable person in the position of the parties would have thought the disputed language meant. 1010 Potomac Assocs. v. Grocery Mfrs. of Am., Inc., 485 A.2d 199, 205 (D.C.1984). The writing must be interpreted as a whole, giving a reasonable, lawful, and effective meaning to all its terms. Id. Where the language in question is unambiguous, its interpretation is a question of law for the court. Id. The language of Article 4(b) is not ambiguous merely because Woolworth and Saul disagree over its meaning. See Sacks v. Rothberg, 569 A.2d 150, 154-55 (D.C.1990). Rather, [a] lease or a clause therein is ambiguous if it is susceptible of more than one reasonable interpretation. Hart v. Vermont Inv. Ltd. P'ship, 667 A.2d 578, 584 (D.C.1995). That inquiry, itself one of law, is to be resolved on the basis of the face of the language itself, giving that language its plain meaning, without reference to any rules of construction. Id. (internal quotation marks and citations omitted). Like most courts that have construed commercial lease provisions specifying the parties' rights in the event the tenant vacates the demised premises, we see no significant ambiguity here. When used in connection with real property, the term vacate has a settled and relatively narrow meaning. That standard meaning makes sense in the context of Article 4(b); it furthers the evident purpose of the provision in which the term vacate is used. We are compelled to reject the alternative construction of the term vacate that Woolworth proposes and the trial judge adopted because that construction is contrary to the normal usage and is incompatible with the aim of Article 4(b). [8] In standard legal usage that long predates the execution of the 1949 lease at issue in this appeal, to vacate premises means simply [t]o move out; to make vacant or empty; to leave; especially, to surrender possession by removal; to cease from occupancy. BLACK'S LAW DICTIONARY 1794 (3d ed.1933) (citing Ruble v. Ruble, 264 S.W. 1018, 1020 (Tex.Civ.App. 1924) and Polich v. Severson, 68 Mont. 225, 216 P. 785, 787 (1923)). The act of vacating alone is sufficient; an intention (expressed or otherwise) on the part of the occupier of the premises to discontinue operations is not required. By comparison, the term abandon does require the specific intent to relinquish or give up a right or interest; [i]t includes the intention, and also the external act by which it is carried into effect. BLACK'S LAW DICTIONARY 4 (3d ed.1933). Hence abandonment is defined to mean vacating property with the intention of not returning. Id. Although this court has not had occasion before now to construe the term vacate in a lease, other courts that have done so have recognized and adhered to its traditional meaning. For example, in PRC Kentron, Inc. v. First City Ctr. Assocs. II, 762 S.W.2d 279 (Tex.App.1988), the tenant leased a floor of an office building for use as its headquarters. The lease provided that the tenant would be in default if it desert[ed] or vacate[d] any substantial portion of the Premises. Id. at 280. When the tenant decided to move its headquarters out of state, it removed its personnel, working files, equipment, and most of its furnishings from the premises. Although the tenant argued that it continued to pay rent when due and intended within a reasonably short time either to sublet the premises or to restaff its offices there, id. at 282, the court held that the tenant had vacated the premises and thereby breached the lease. Distinguishing such terms as desert and abandon, the court held that in ordinary parlance, the term vacate means only to render the premises without content or occupant, and does not require an intent to forsake. Id. Using the ordinary meanings of the words, and finding the lease provision unambiguous, the court concluded that the lease clearly provides that Tenant is in default if it moves out, regardless of how long it is gone, whether it intends to return, and whether it pays rent in the meantime. Id. at 283. See also Scot Props. v. Wal-Mart Stores Inc., 138 F.3d 571, 574 (5th Cir.1998) (agreeing with PRC Kentron that the term vacate does not contain the element of intent to forsake that is found in the terms desert and abandon); Liqui-Box Corp. v. Estate of Elkman, 238 N.J.Super. 588, 570 A.2d 472, 477 (App.Div.1990) (holding that, since vacating required no evidence of intent beyond an intentional removal of animate and inanimate objects, the tenant had vacated the premises even though it continued to pay rent as required by the lease and was trying to negotiate a sublease arrangement when it moved out); Bishop's Corner Assocs. Ltd. P'ship v. Service Merch. Co., Inc., 45 Conn.Supp. 443, 720 A.2d 531, 536 (1997), aff'd, 247 Conn. 192, 718 A.2d 966 (1998) (While abandonment necessarily implicates an intent to give up the leasehold interest; vacating has generally been construed to mean a more physical emptying of the building. Thus, a building can quite easily be vacated without being abandoned.). Of course we do not construe the term vacate in a vacuum. The question is what the term means as it is used in Article 4(b) of the lease between Saul and Woolworth. Article 4(b) provided for Woolworth to pay additional rent based on its sales, unless it vacated the premises, in which case Woolworth would have to pay One in Three rent instead. Under ordinary circumstances, therefore, Article 4(b) tied the additional rent that Saul would receive to the success or failure of Woolworth's retail efforts at the premises (subject to the floor provided by the minimum annual rent). This economic arrangement made sense and was fair to Saul so long as Woolworth continued to operate a store at the premises. If for any reason Woolworth shut down its store and ceased operations, its sales would be non-existent and the economic rationale for Saul to accept percentage rent based on sales would disappear. The evident purpose of the One in Three rent provision was to address that contingency. To effectuate the purpose of that provision, we therefore should construe the term vacate as coextensive with cessation of operations pure and simple, in accordance with its settled meaning as discussed above, regardless of Woolworth's specific intentions in the matter. [9] From Saul's standpoint, the economic impact of a prolonged cessation of business operations at the store was the same whatever Woolworth intended. Woolworth argues, however, that the term vacate must be understood to require an intent on its part to cease business operations because other provisions of the lease permitted Woolworth to shut down temporarily in order to renovate the premises or convert them to a different use (such as a FootLocker store) and then reopen. [10] That is, provisions of the lease permitted Woolworth to remove any and all of its trade fixtures and other property and to make whatever structural alterations it wished in the premises, and the lease did not include a continuous operation requirement or any restriction on the use that Woolworth made of the premises. A lease containing similar provisions was before the court in Oklahoma Plaza Investors v. Wal-Mart Stores, Inc., 155 F.3d 1179 (10th Cir.1998). The landlord in that case claimed that Wal-Mart, the tenant, vacated the premisesan event of default under the leasewhen it closed its store, assigned the lease to a third party, and allowed the premises to remain empty for over two years (while continuing to meet its minimum rent obligations). The court disagreed with the landlord because the lease gave Wal-Mart the right to use the premises for any purpose (except a supermarket), to remove its goods at any time, and to assign the lease without the landlord's consent. Wal-Mart cannot `vacate' within the meaning of this lease,  the court held, by doing what the lease expressly provides. Id. at 1181 (emphasis added). So too, in this case, Woolworth argues, it cannot vacate by doing what its lease expressly provides it can do. We think that Woolworth's reliance on Wal-Mart Stores is misplaced. In that case the court was confronted with an apparent contradiction: the lease permitted the tenant to assign it without the landlord's consent and leave the demised premises, and yet the lease also made it an event of default for the tenant to vacate the premises. To resolve that seeming inconsistency, the court found it necessary to reject the ordinary meaning of the term vacate. But we are faced with no such necessity in this case. There is no inherent inconsistency for us to resolve in the Woolworth lease, because the Woolworth lease did not make vacating the premises an event of default. [11] Vacating merely meant that Woolworth's additional rent obligation was to be calculated on the basis of past rather than current sales volume. That provision was entirely compatible with the other provisions in the lease that allowed Woolworth considerable freedom to operate in the premises as it saw fit. We are inclined to agree that a reasonably brief closure of the store for remodeling would not be equivalent to vacating under Article 4(b) even if the store was emptied temporarily of its contents for that purpose. We incline to that view not merely because the lease permitted Woolworth to remove its property and make alterations, but also because a reasonably brief interruption of business for remodeling does not implicate the economic concerns that led to the inclusion of the One of Three rent provision in Article 4(b). [12] But that is not what happened here. In the first place, the evidence shows unequivocally that when Woolworth shut down and emptied its Park Road store in October 1997, it did not have a firm intent to reopen the store as a converted FootLocker or otherwise. Woolworth shut down the store indefinitely, without knowing what if anything it would do thereafter in the premises. Even though Woolworth was negotiating seriously and in good faith to modify its lease so as to enable it to pursue a permanent conversion, and even though Woolworth made meaningful preparations for such a conversion, its intention to reopen as a permanent FootLocker store was contingentit depended on the success of the negotiations. Woolworth did not intend to open a permanent FootLocker under its existing lease. And although Woolworth considered installing a temporary FootLocker outlet store as an alternative possibility if the negotiations were unsuccessful, Woolworth did not embrace that alternative until January 1998 more than two months after it closed its general merchandise store. In short, this case is not properly characterized as one in which the tenant intended only to close down temporarily for renovation or conversion of the premises. More important in our thinking, though, is that whatever Woolworth's intentions, the fact remains that it ceased operations in October 1997, emptied the premises at that time, and never did reopen for business or otherwise make use of the premises thereafter. The closing was not temporary, it was permanent. The lease provisions that Woolworth cites may justify treating a temporary closure as something other than vacating, but it does not follow that those provisions mandate treating a permanent closure the same way. To do that would be unacceptable, we think, because it would thwart the purpose of the One of Three rent provision in Article 4(b). We conclude that Article 4(b) uses the term vacate in its standard sense. Even if Woolworth was considering the possibility that it might open a FootLocker outlet at the site, when Woolworth permanently closed its Park Road store to the public, removed its employees, inventory and trade fixtures, and turned a key to the store over to its landlord, Woolworth vacated the demised premises within the meaning of Article 4(b). Woolworth therefore became obligated to pay One of Three rent in lieu of percentage rent for calendar year 1997 as well as for subsequent years for the duration of the lease.