Court Opinion

ID: 3016424
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:15:33.539699+00
Date Added: 2024-06-11T11:46:59.110697
License: Public Domain

___________

                                    No. 95-3095
                                    ___________

Cloverleaf Properties, Inc.,             *
now Leonard O'Brien,                     *
                                         *
     Plaintiff - Appellant,              *
                                         * Appeal from the United States
     v.                                  * District Court for the
                                         * Eastern District of Missouri.
McDonald's Corporation,                  *
                                         *        [UNPUBLISHED]
     Defendant - Appellee.               *
                                    ___________

                       Submitted:   February 15, 1996

                           Filed:   March 12, 1996
                                    ___________

Before BEAM, LOKEN, and MORRIS SHEPPARD ARNOLD, Circuit Judges.
                               ___________

PER CURIAM.

     In 1973, a McDonald's Corporation franchisee leased property in St.
Charles,   Missouri,    from   Cloverleaf   Properties,   Inc.,   to    operate   a
McDonald's restaurant.     The twenty-year lease gave the lessee options (i)
to extend the lease for four five-year extension periods, at escalating
rents; and (ii) to purchase the property for $235,000 "after exten[s]ion
of initial term of this lease or any exten[s]ion thereafter."          The original
parties to the lease later assigned the lessee's interest to McDonald's and
the lessor's interest to Leonard O'Brien, Cloverleaf's owner.

     At the end of the initial twenty-year term, McDonald's gave notice
it was exercising the option to purchase.         O'Brien then commenced this
action in state court seeking a declaratory judgment that the option to
purchase may not be exercised until the end of
the first five-year lease extension period.    After McDonald's removed, the
              1
district court held that the lease agreement is ambiguous concerning when
the option to purchase may be exercised and heard parol evidence on that
question at a bench trial.    The court then credited the testimony of the
lease negotiator for   McDonald's, found that the parties intended "to grant
McDonald's the option to purchase the property immediately after the
expiration of the initial [twenty-year] term," and entered judgment
affording McDonald's declaratory and specific performance relief.

     On appeal, O'Brien argues that the district court erred in holding
the lease agreement ambiguous and in admitting parol evidence as to the
parties' intent in providing a purchase option.    Instead, the court should
have held that the lease grants McDonald's an option to purchase only after
the expiration of the first five-year lease extension period.             After
carefully reviewing the record and considering the parties' contentions on
appeal, we conclude that the district court correctly held that the lease
agreement is ambiguous on the question at issue -- whether "after extension
of the initial period" means after the start of, or after the end of, the
first five-year lease extension period.       Thus, the court properly heard
parol evidence on this issue, and its findings of fact regarding the
parties' intent are not clearly erroneous.      Accordingly, we affirm.    See
8th Cir. Rule 47B.

     A true copy.

           Attest:

                  CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.

      1
       The HONORABLE JEAN C. HAMILTON, Chief Judge of the United
States District Court for the Eastern District of Missouri.

                                    -2-