Court Opinion

ID: 3067885
Source: CourtListenerOpinion
Date Created: 2015-10-15 23:06:59.797303+00
Date Added: 2024-06-11T07:38:22.954554
License: Public Domain

MORRIS BRANSON THEATRE, LLC,                          )
                                                      )
           Plaintiff-Appellant,                       )
v.                                                    )        No. SD33581
                                                      )
CINDY LEE, LLC and DAVID L.                           )        Filed: Oct. 15, 2015
GOODE,                                                )
                                                      )
           Defendants-Respondents.                    )

                      APPEAL FROM THE CIRCUIT COURT OF TANEY COUNTY

                                 Honorable Larry Luna, Associate Circuit Judge

REVERSED AND REMANDED

           This appeal requires us to construe the provisions of a lease agreement ("the Lease")

between Plaintiff Morris Branson Theatre, LLC ("Landlord") and Defendants Cindy Lee,

LLC ("Tenant") and Tenant's president, David L. Goode.1

           The Lease, executed on September 30, 2011, stated that Tenant would lease certain

retail space from Landlord (designated therein as the "Premises") for a stated term of three

years. After execution of the Lease, Tenant utilized the Premises, located adjacent to the

Dick Clark Theater in Branson, to operate the Midtown Café and Club '57. Less than a year

into the Lease's term, Tenant submitted a letter that purported to terminate the Lease based

1
    Defendant Goode personally guaranteed Tenant's obligations under the Lease.

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upon Landlord's failure to make certain repairs following damage inflicted by a tornado that

struck the area. Landlord subsequently filed suit against Tenant for breach of contract.

       After a bench trial, the trial court issued a judgment in favor of Defendants based

primarily upon three separate paragraphs of the Lease. The trial court first construed the

definition of "Premises[,]" contained within Paragraph 1 of the Lease, as including the

exterior walls of the building that housed the Midtown Café and Club '57. Based at least in

part on that interpretation, the trial court found that Landlord had failed to repair and restore

the Premises, within six months, to substantially the same condition it was in before the

tornado struck, thus allowing Tenant to terminate the Lease early under Paragraph 17.

Finally, the trial court concluded that Paragraph 16 of the Lease authorized the awarding of

attorney's fees to Defendants, and it included an award of $15,000 of such fees in the

judgment.

       Landlord now timely appeals, raising three points of alleged error. Finding merit in

two of them, we reverse the judgment and remand the case for further proceedings

consistent with this opinion.

                                     Standard of Review

       We will affirm a judgment following a bench trial unless it is not supported by

substantial evidence, is against the weight of the evidence, or erroneously declares or applies

the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). We leave all credibility

determinations to the trial court, "which is free to believe none, part or all of the testimony

of any witness." Williams Constr., Inc. v. Wehr Constr., L.L.C., 403 S.W.3d 660, 662 (Mo.

App. S.D. 2012). The interpretation of a lease agreement, however, is a question of law we

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review de novo, and we owe no deference to the trial court's interpretation. Collins &

Hermann, Inc. v. TM2 Constr. Co., 263 S.W.3d 793, 796 (Mo. App. E.D. 2008).

                                                The Lease

        We quote Paragraph 1 of the Lease in toto, then recite the relevant portions of

Paragraphs 16 and 17.

                 1.       PREMISES. Landlord is the owner of and hereby leases the
                          Premises (defined below) to Tenant, and Tenant hereby leases
                          from Landlord, in accordance with the terms, provisions and
                          conditions of this Lease, the exclusive use by Tenant of the
                          restaurant space on the first floor and club space in the
                          basement (formerly Dick Clark's AB Grill and Club '57,
                          respectively) (the "Premises") located in that certain building
                          located at 1600 W. Highway 76, Branson, Missouri, legally
                          described in attached Exhibit A, and visually depicted in
                          attached Exhibit B.

                 16.      INDEMNIFICATION. Except with respect to Tenant's . . .
                          breach of its representations and warranties hereunder . . .
                          Landlord shall defend all actions against Tenants with respect
                          to, and shall pay, protect, indemnify and save harmless the
                          Tenant from and against, any and all liabilities, lawsuits,
                          damages, costs, expenses (including reasonable attorneys' fees
                          and expenses), causes of action, claims, demands, or
                          judgments of any nature (i) to which the Tenant is subject to
                          because of the Tenant's interest in the Premises, or (ii) arising
                          from . . . Landlord [sic] violation or breach of this Lease[.2]

                 17.      FIRE OR OTHER CASUALTY. In the event the Premises is
                          totally destroyed or partially damaged by fire or other casualty
                          making it inoperable for a period of longer than ninety (90)
                          days, either party may, at its option, terminate this Agreement
                          . . . . In the event the parties do not so terminate this Lease,
                          then, subject to the following provisions of this Paragraph 17,
                          Landlord may proceed as soon as is reasonably practicable, at
                          its sole cost and expense to the extent of insurance proceeds
                          available, if any, to repair and restore the Premises to
                          substantially the same condition as that before the damage
                          occurred . . . . In the event Landlord does not complete such

2
 Paragraph 16 further contains a mirror provision under which "Tenant shall defend all actions against
Landlord . . . and shall pay, protect, indemnify and save harmless the Landlord[.]"

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                       repair and restoration within six (6) months from the date of
                       damage or destruction, Tenant may terminate this Agreement.

                                             Facts

       On February 29, 2012, a tornado struck the Branson area and severely damaged the

building that housed the Midtown Café and Club '57. Interior damage included shattered

windows, water damage to the carpeting, and "blown out" ceiling tiles. Repairs to the

interior of the building were, according to Goode, "mostly" complete fifty-one days after the

tornado; however, Goode noted that the Midtown Café "still had roof leaks" at that time.

       In regard to the exterior of the building, the tornado had caused damage to the roof,

refrigeration units, exterior wall, and "art deco" façade. As part of the ensuing repairs,

Landlord's management decided to "blend" the exterior of the building with the adjacent

Dick Clark Theater. Although Goode "was not okay" with this plan because of the resulting

aesthetic changes, he "didn't feel like [he] had any say in it." The Midtown Café reopened

April 20, 2012, during which time construction continued on the exterior of the building.

       During this construction, the Midtown Café was without exterior neon lighting for a

period exceeding six months from the date of the tornado. Such lighting had adorned the

exterior prior to the tornado, and Goode testified that he had relied on this "flashy" lighting

scheme to attract tourists and customers to the Midtown Café after sunset.

       On August 25, 2012, Goode detected a leak in the kitchen of the Midtown Café—an

area where no leaks had occurred previously. As a result of the leak, the Midtown Café was

closed for business; however, a roofing company soon commenced repairs, which, as

Landlord advised Goode, were projected to be complete by August 29, 2012. The parties

dispute whether this leak was related to the tornado and whether the problem was timely

repaired.

                                               4
         On August, 29, 2012 (exactly six months from the date of the February tornado),

Goode submitted a letter on behalf of Tenant to Landlord indicating that Tenant was electing

to terminate the Lease pursuant to Paragraph 17. In that letter, Goode argued that Landlord

had failed to address certain damage caused by the tornado within Paragraph 17's stated six-

month timeframe.

         As noted above, the trial court concluded that the conditions necessary to allow

Tenant to terminate the Lease pursuant to Paragraph 17 had been satisfied. As support for

its conclusion, the trial court found that: (1) Landlord "failed to restore the [P]remises to its

original appearance and design, which had the effect of significantly altering the appearance

of the building from its original design at the time of the [Lease]"; (2) Landlord "failed to

install any exterior neon or LED lighting to the Premises within six (6) months of the date of

the tornado damage to the Premises"; and (3) Landlord "failed to restore, repair and/or

properly install the roofing and portions of the exterior wall of the Premises prior to August

29, 2012, which forced Defendants to close the Premises due to excessive leaking from the

roof."

                                             Analysis

                        Point I – The "Premises" as Defined by the Lease

         Landlord's first point contends the trial court erred in its interpretation of Paragraph 1

of the Lease. Specifically, Landlord argues that the "Premises"—the property Tenant leased

from Landlord—is restricted to the interior portions of the building described in the Lease

and does not include the exterior portions. We agree.

         If a commercial lease agreement, like any other contract, is unambiguous, we

determine the intent of the parties by giving the words they used in their agreement "their

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plain, ordinary, and usual meaning. Only when the language is ambiguous and not clear will

we resort to extrinsic evidence to resolve a contractual ambiguity." AB Realty One, LLC v.

Miken Techs., Inc., No. ED 101457, 2015 WL 4716131, at *5 (Mo. Ct. App. July 31, 2015)

(internal citations omitted).3 The dictionary is a good source for finding the ordinary

meaning of contract language. Shahan v. Shahan, 988 S.W.2d 529, 535 (Mo. banc 1999).

"[A] contract must be construed as a whole. It must be viewed from end to end and corner

to corner[.]" Parker v. Pulitzer Publ'g Co., 882 S.W.2d 245, 249 (Mo. App. E.D. 1994)

(citation and quotation omitted).

         According to Paragraph 1 of the Lease, Tenant leased, for its exclusive use,

         the restaurant space on the first floor and club space in the basement
         (formerly Dick Clark's AB Grill and Club '57, respectively) (the "Premises")
         located in that certain building located at 1600 W. Highway 76, Branson,
         Missouri, legally described in attached Exhibit A, and visually depicted in
         attached Exhibit B.

Exhibit A is a legal description for land that makes no reference to the dimensions of any

building. Exhibit B is a copy of an overhead architectural schematic, a portion of which --

roughly one-fifth of the total building area -- has been crudely marked with a hand-drawn

boundary line. The unmarked part of Exhibit B includes the large theater portion of the

building. The trial court, referring to this exhibit, concluded, "The visual depiction of the

Premises attached as Exhibit B used to supplement the definition of the 'Premises' denotes

that the exterior walls of the building are included in the definition of the 'Premises.'"

         Landlord argues, and we agree, that the trial court's reliance on Exhibit B is

misplaced. The plain wording of Paragraph 1 indicates that Exhibit B visually depicts the

building inside which the Premises is located.

3
 Although they reach different conclusions about its meaning, both parties assert that the Lease is
unambiguous.

                                                       6
       This interpretation is supported by the placement of the phrase "(the 'Premises')"

within Paragraph 1. Its location—after the provision, "the restaurant space on the first floor

and club space in the basement[,]" but before the provision, "located in that certain building

located at 1600 W. Highway 76, Branson, Missouri, legally described in attached Exhibit A,

and visually depicted in attached Exhibit B"—denotes that "(the 'Premises')" was meant to

incorporate the former provision, not the latter. Thus, the Premises, so defined and read in

light of the remaining provision, is "located in that certain building located at 1600 W.

Highway 76, Branson, Missouri, legally described in attached Exhibit A, and visually

depicted in attached Exhibit B." (Emphasis added.) This context unambiguously indicates

that the Premises was not the building itself.

       This distinction is supported by and consistent with other portions of the Lease. For

instance, Paragraph 12, which outlines the obligations of Landlord and Tenant to undertake

maintenance and repairs, states, "Landlord shall repair as necessary, pay for at its sole

expense and maintain the roof, exterior walls and anything connected to the exterior walls . .

. of the building that encompasses the Premises[.] (Emphasis added.)

       Additionally, Paragraph 13, which addresses allowable alterations to the Premises,

states that Tenant may make alterations to "the interior of the Premises" but "shall not be

entitled to make any alterations to the exterior of the building that encompasses the

Premises[.]" (Emphasis added.) Paragraph 25 addresses ingress and egress rights to other

parts of the building. It states that the parties "understand and agree that Landlord or third

parties will operate areas of the property that encompass the Premises (the theatre and the

museum), and that it will benefit all operations in the building for there to be unimpeded

pedestrian/customer access to all portions of the building." (Emphasis added.)

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        Webster's Third New International Dictionary defines "encompass" as "to form a

circle about" and "to make a circuit around[.]" WEBSTER'S THIRD NEW INTERNATIONAL

DICTIONARY OF THE ENGLISH LANGUAGE 747 (1976). Thus, under the plain language of the

Lease, the building (of which the "exterior walls" or "exterior" are said to be a part) are not

within the Premises but instead encircle the Premises. As a result, the trial court erred in

concluding that the definition of the "Premises" included the exterior walls of the building.

Point I is granted.

        Point II – Whether Repairs were Substantially Complete under Paragraph 17

        In its second point, Landlord contends the trial court erroneously applied the law

when it concluded that repairs to the Premises were not "substantially complete" per the

terms of Paragraph 17. Landlord relies on Sw. Eng'g Co. v. Reorganized School Dist. R-9,

434 S.W.2d 743, 751 (Mo. App. Spfld.D. 1968), which states that a building is

"substantially complete" when "construction has progressed to the point that the building

can be put to the use for which it was intended, even though comparatively minor items

remain to be furnished or performed in order to conform to the plans and specifications of

the completed building." (Emphasis added.) Landlord argues that because the Midtown

Café reopened in April 2012, it was put to the use for which it was intended and, therefore,

was "substantially complete" as a matter of law. We question whether this principle of law

related to the construction of an entire structure is applicable to Paragraph 17 of the Lease.

        As relevant in this case, Paragraph 17 provides that in the event of fire or other

casualty, Landlord must "repair and restore the Premises to substantially the same condition"

within six months from the date of damage or destruction. If this condition is not met,

Tenant may terminate the Lease. We decline Landlord's invitation to find that repairs to the

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Premises were substantially complete as a matter of law under Sw. Eng'g Co. Even if we

assume that the case is applicable to a lease of interior spaces within a building (a question

we do not decide), that case stands for the proposition that the question of whether a

building is substantially complete is "one of fact for the trial court[.]" Id. Cf. Quality Wig

Co., v. J.C. Nichols Co., 728 S.W.2d 611, 619 (Mo. App. W.D. 1987) (lessor's claim on

appeal that it was in substantial compliance with a lease obligation was without merit

because "[t]he jury decided the issue in favor of the [lessee]").

         Here, the trial court found that "[t]he remaining repairs to the Premises as of August

29, 2012, were not 'minor items' as suggested by [Landlord]." As noted in our resolution of

Point I, the trial court utilized an erroneous definition of the Premises when it applied the

facts to Paragraph 17 of the Lease. As a result, it relied on facts related to the outside of the

building in reaching its conclusion that the Premises had not been "repair[ed] and restore[d]

. . . to substantially the same condition" within six months. That being said, we cannot say,

based on the record before us, that the trial court relied solely on the status of exterior repairs

in reaching its decision. Arguably, the ongoing water leakage was an issue germane to the

interior of the building and, thus, the Premises.4 Whether Landlord failed to repair and

restore the Premises per the requirements of Paragraph 17 is a factual question that the trial

court must decide after applying the correct definition of Premises. Point II is denied.

4
  In the argument portion of its brief, Landlord argues that there is no evidence linking any water leak
occurring after the Midtown Café reopened for business with the February 29, 2012 tornado. We do not
consider this sufficiency of the evidence challenge because it goes beyond the scope of the legal challenge
asserted in Landlord's point relied on. "Errors raised for the first time in the argument portion of the brief and
that are not raised in the point relied on need not be considered by [this court]." Morgan Publ'ns, Inc. v.
Squire Publishers., Inc., 26 S.W.3d 164, 177 n.8 (Mo. App. W.D. 2000) (quotation omitted).

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                               Point III – Attorney's Fees Award

       Point III contends the trial court erred in awarding attorney's fees to Defendants

pursuant to Paragraph 16 of the Lease—an issue rendered moot for purposes of this appeal

by virtue of our disposition of Point I. Nevertheless, we elect to address Landlord's third

point because it raises a question of law that is likely to arise again on remand.

       "Generally, Missouri does not allow recovery of attorney fees and other litigation

expenses in damage actions." Killion v. Bank Midwest, N.A., 987 S.W.2d 801, 809 (Mo.

App. W.D. 1998). However, "[a]ttorney fees may be recovered when provided for by

statute or contract, when incurred because of involvement in collateral litigation, or when

needed to balance benefits in a court of equity." Id. (internal quotation omitted).

       At issue here is Paragraph 16 of the Lease, entitled "INDEMNIFICATION."

Indemnification has been defined as,

       the shifting of responsibility from the shoulders of one person to another.
       Indemnity is a right that inures to the person who has discharged a duty that
       is owed by him, but which, as between himself and another, should have been
       discharged by the other, so that if the other does not reimburse the person, the
       other is unjustly enriched to extent that his liability has been discharged.

SSM Health Care St. Louis v. Radiologic Imaging Consultants, LLP, 128 S.W.3d 534, 539

(Mo. App. E.D. 2003) (internal citations omitted). "As a general rule, indemnification is

allowed in favor of one who is held responsible solely by imputation of law because of his

relation to the actual wrongdoer." Id.

       The language of Paragraph 16 is consistent with the above definition. By means of

mirror provisions, it provides that either party "shall defend all actions" against the other

party. It goes on to state that the parties "shall pay, protect, indemnify and save harmless"

each other from liabilities to which one party is subject to because of its interest in the

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Premises or the other party's violation of the Lease. Thus, Paragraph 16 provides an avenue

where Landlord and Tenant may shift the responsibility for a liability from one to the other,

i.e., where Tenant is exposed to liability to a third party as a result of Tenant's interest in the

Premises or the acts or omissions of Landlord. Because no such situation exists in this case,

Paragraph 16 is inapplicable. Point III is granted.5

           The judgment is reversed, and the cause is remanded for proceedings not inconsistent

with this opinion.

DON E. BURRELL, P.J. - OPINION AUTHOR

NANCY STEFFEN RAHMEYER, J. - CONCURS

WILLIAM W. FRANCIS, JR., J. - CONCURS

5
    The motion filed by Defendants for an award of attorney fees in connection with this appeal is denied.

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