Court Opinion

ID: 999142
Source: CourtListenerOpinion
Date Created: 2013-07-04 17:21:21.519684+00
Date Added: 2024-06-11T09:57:21.280930
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

RETAIL DESIGNS, INCORPORATED, a
Georgia corporation,
Plaintiff-Appellant,

v.                                                                    No. 98-2437

CATO CORPORATION, a Delaware
corporation,
Defendant-Appellee.

Appeal from the United States District Court
for the Southern District of West Virginia, at Charleston.
Charles H. Haden II, Chief District Judge.
(CA-98-266-2)

Argued: May 6, 1999

Decided: July 9, 1999

Before WILKINSON, Chief Judge, and TRAXLER and KING,
Circuit Judges.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: Erik T. Engle, PULLIN, KNOPF, FOWLER & FLANA-
GAN, Charleston, West Virginia, for Appellant. Harley E. Stollings,
Summersville, West Virginia, for Appellee. ON BRIEF: Gary E. Pul-
lin, PULLIN, KNOPF, FOWLER & FLANAGAN, Charleston, West
Virginia, for Appellant.

_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Retail Designs, Incorporated ("Retail Designs"), the owner of a
shopping center, sued its tenant, Cato Corporation ("Cato"), for fail-
ing to pay the full amount of rent that Retail Designs believed was
due under its lease. In response, Cato contended that because of Retail
Designs's failure to secure other, appropriate tenants for the shopping
center, Cato could pay rent at a reduced rate specified in the lease.
The district court agreed with Cato's reading of the lease and, con-
cluding that the lease was unambiguous, granted Cato's motion for
summary judgment. Because we agree that the lease unambiguously
permits Cato to pay rent at the reduced rate, we affirm.

I.

Cato operates retail clothing stores. In 1985, Cato entered into a
lease agreement with Walk Associates, under which Cato leased retail
space at a newly developed strip mall in Summersville, West Vir-
ginia. Under the original lease agreement (the "Lease"), Cato was
required to pay both a fixed amount of rent per month and an addi-
tional sum equal to a percentage of Cato's yearly gross revenues.

Also under the Lease, Walk Associates warranted that certain
major tenants--a discount department store, a food store, and a drug
store--would be operating in the shopping center when Cato opened
for business and that those tenants would continue to do business in
the shopping center. Paragraph 29 of the Lease provided specific rem-
edies for breach of this warranty:

          LESSOR warrants that in the event any one of said tenants
          should not be open for business when LESSEE opens for
          business, or should thereafter vacate its premises or cease its

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            operation in the Shopping Center, LESSEE shall have the
            following options:

            (a) LESSEE may cancel this Lease . . . ; or

            (b) During the period of such major tenants [sic]
            vacancy, LESSEE may abate fixed rent and pay
            LESSOR percentage rent only equal to four per-
            cent (4%) of gross retail sales . . . .

J.A. 110.

The Lease was amended twice in 1987. Only the Second Lease
Amendment is relevant here. Among its other provisions, the Second
Lease Amendment specified the terms upon which the Lease could be
renewed:

            5. RENEWAL OPTION. Provided LESSEE is not in default,
            upon expiration of the original term of the Lease on January
            31, 1998, this Lease shall be automatically renewed for a
            period of five (5) years . . . under the same terms and condi-
            tions except monthly fixed rent shall be FOUR THOU-
            SAND AND NO/100 DOLLARS ($4,000.00) plus
            percentage rent . . . equal to five percent (5%) of all com-
            pleted gross retail sales . . . .

J.A. 141.

Retail Designs later acquired Walk Associates' interest in the
Lease through a series of assignments. In 1992, the shopping center's
original discount department store went out of business. Cato then
stopped paying fixed monthly rent and instead paid only percentage
rent, as permitted by Paragraph 29 of the Lease. When the Lease
renewed on February 1, 1998, Cato continued to pay rent at this
reduced rate, because no new discount department store had yet
opened in the shopping center.

But Retail Designs demanded that Cato instead pay the full $4000
fixed monthly rent called for in the "Renewal Option" provision of

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the Second Lease Amendment. Cato refused, arguing that the rent-
abatement language of Paragraph 29 continued to apply, even after
the Lease had renewed. Retail Designs then sued Cato in the Southern
District of West Virginia for breach of contract.

Both parties moved for summary judgment, each arguing that the
contractual language unambiguously supported its position. In a well-
reasoned memorandum opinion, the district court granted summary
judgment for Cato. The district court explained that, under the
Renewal Option, the Lease expressly renewed "under the same terms
and conditions" as the original Lease. The court concluded that those
"terms and conditions" included Paragraph 29's rent-abatement provi-
sions. As a result, the court held that the $4000 fixed rent called for
in the Renewal Option never became due, because (1) the discount
department store remained vacant, and (2) Paragraph 29 expressly
permitted Cato to abate fixed rent "during the period of [a] major ten-
ant['s] vacancy."

Retail Designs appeals, arguing that the Renewal Option's express
requirement of $4000 fixed monthly rent trumps the abatement provi-
sion of Paragraph 29.

II.

We have carefully considered the briefs and oral arguments of the
parties and those portions of the record pertinent to their various argu-
ments. Having done so, we find no reversible error in the district
court's grant of summary judgment in Cato's favor. We adopt the
opinion of the district court and affirm on its reasoning. Retail
Designs, Inc. v. Cato Corporation, No. 2:98-0226 (S.D. W. Va. Aug.
24, 1998) (unpublished).

AFFIRMED

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