Opinion
No. CX-01-2160
Filed May 28, 2002.
Appeal from the District Court, Stearns County, File No. CX004971.
Robert D. Stoneburner, (attorney pro se for appellants)
Russell R. Cherne, (for respondents)
Considered and decided by Halbrooks, Presiding Judge, Schumacher, Judge, and Hanson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellant-landlords argue that the district court improperly granted summary judgment to respondent-tenants, determining that the parties had not reached an agreement to renew their lease. Because appellants raised no genuine issues of material fact and respondents are entitled to judgment as a matter of law, we affirm.
FACTS
Appellants Robert D. and Jane M. Stoneburner, as landlords, and respondents Burt W. and Cheri Dubow and St. Cloud Optometry Clinic, as tenants, entered into a three-year lease for commercial real estate expiring on September 10, 1992. The lease contained an "Option to Renew" clause giving respondents the option of renewing the lease for an additional five-year period "upon such terms and conditions as may be mutually agreeable to the parties."
Before the end of the lease, the parties began negotiating terms for renewal of the lease through a series of letters. During the negotiations, the lease expired but respondents continued their tenancy and began paying the higher rent that was being negotiated for any renewed lease. The parties continued to negotiate the terms of the renewed lease until October 1992, but a new lease was never signed. In a letter dated September 23, 1992, respondents stated that they accepted appellants' offer on what had been the only issue remaining for negotiation, but then revived another issue by proposing a two-year term with a one-year option, instead of the five-year term assumed in previous negotiations. Appellants rejected this proposal and there were no further negotiations. On November 25, 1992, respondents gave notice that they would vacate the property on January 10, 1993.
Appellants filed suit alleging breach of contract. Respondents moved for summary judgment, arguing that no lease was formed because the parties never reached an agreement on the length of the term. The district court granted summary judgment and this appeal followed.
ANALYSIS
On appeal from summary judgment, this court considers whether there are any genuine issues of material fact and whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). No genuine issue of material fact exists "`[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party.'" DLH, Inc. v. Russ, 566 N.W.2d 60, 69 (Minn. 1997) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356 (1986)). This court views the evidence in the light most favorable to the party against whom summary judgment was granted. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993).
Appellants contend that the lower court erred by granting summary judgment in favor of respondents because (1) the correspondence between the parties established agreement on all essential terms of the new lease; and (2) respondents' payment of the increased rent established the new lease by part performance.
I
Appellants argue that the correspondence between the parties was sufficient to establish a binding agreement to the terms of a new lease. The correspondence shows that the parties had narrowed the issues and reached tentative agreement on most terms, including the five-year term. But every letter ended with at least one unresolved term. When respondents, on September 23, 1992, accepted appellants' offer on what had previously been the only remaining term in dispute, respondents simultaneously revived another term for discussion, the length of the lease, leaving the agreement incomplete. See Markmann v. H.A. Bruntjen Co., 249 Minn. 281, 286, 81 N.W.2d 858, 862 (1957) (stating that acceptances that seek to vary, add to, or qualify the terms of the offer, are not positive and unequivocal, and constitute a rejection of the offer and a counteroffer); Alpha Venture/Vantage Props. v. Creative Carton Corp., 370 N.W.2d 649, 652 (Minn.App. 1985) (holding that an acceptance that qualifies the terms of an offer is in essence a rejection of the offer and is treated as a counteroffer), review denied (Minn. Sept. 19, 1985).
Because respondents' letter did not accept every term of appellants' offer, the letter must be considered a counteroffer, not an acceptance. The parties were still negotiating and their tentative agreement to some, but not all, terms of the renewed lease did not create a binding contract. See Malevich v. Hakola, 278 N.W.2d 541, 544 (Minn. 1979) (holding the evidence revealed negotiations were still in progress, thus there was no meeting of the minds). Appellants could have established the new lease by accepting respondents' counteroffer of a two-year term with a one-year option, but they specifically rejected that counteroffer.
Appellants argue that there are at least genuine issues of material fact that preclude summary judgment, concerning whether respondents' letter of September 23, 1992, constituted a valid acceptance of appellants' offer. In support, appellants rely on Betlatch v. Wayzata Condominium, 281 N.W.2d 328 (Minn. 1979).
In Betlatch, the subtenant's letter reserved the right to purchase the building and stated, with respect to the tenant's proposed terms of a sublease, "we hereby accept your offer and bind ourselves to work out the balance of the details in good faith and as quickly as is practical." Id. at 329. The supreme court reversed the grant of summary judgment, holding that there were genuine issues of material fact as to whether the subtenant's reservation of a right to purchase so altered the tenant's original offer as to be a counteroffer. Id. at 330. While noting that its decision did not imply that there was a valid agreement between the parties, the court concluded that there was some evidence that the parties intended to be bound by the subtenant's letter, at least sufficient to create genuine issues of fact. Id.
We distinguish Betlach because the letter there contained a definitive acceptance and there was some evidence of an intent to be bound by the partial agreement irrespective of the resolution of the reserved issues. Here, there was no similar affirmative language binding the parties. There was no evidence that the parties intended to be bound by their tentative agreement on partial terms until the entire agreement was accepted. Therefore, we conclude that there were no genuine issues of material fact.
Because the parties were still negotiating the length of the renewed lease and that term was material to any agreement, the district court correctly concluded that no binding contract existed. See Markmann, 249 Minn. at 286, 81 N.W.2d at 862 (stating that the parties must express agreement on every term of the contract).
II
Appellants argue that respondents' payment of the increased rent constituted an acceptance of the terms of the new lease through part performance. But the facts do not support this conclusion. After the original lease expired, respondents became month-to-month tenants. Mid Continent Mgmt. Corp. v. Donnelly, 372 N.W.2d 814, 816 (Minn.App. 1985) (holding that where landlord and tenant did not agree upon a definite term, tenants became month-to-month tenants after year lease expired, despite presence of automatic renewal clause in lease), review denied (Minn. Oct. 24, 1985). When appellants gave notice of increased rent, the payment of that rent by respondents was consistent with their status as month-to-month tenants and did not supply any evidence of an unconditional acceptance of the new lease.