Summary
In VLC One, the Court of Appeals of Washington held that a month-to-month holdover tenancy creates a new tenancy but does not renew or extend the original lease.
Summary of this case from Jamison v. Trinity Therapy Servs., Inc.Opinion
No. 61945-4-I.
February 9, 2009.
Appeal from a judgment of the Superior Court for King County, No. 07-2-29925-4, Douglas D. McBroom, J., entered June 6, 2008.
Affirmed by unpublished per curiam opinion.
VLC One, LLC (VLC) appeals the trial court's order granting summary judgment in favor of Stanley and Joyce Davis. VLC argues that Stanley Davis's personal guarantee that the tenant would perform under a lease remained in effect because VLC never consented to the assignment of the lease and the Davises' assignee remained on the property after the lease term ended. But Davis guaranteed the tenant's performance only during the term of the lease or if the lease was extended or renewed. VLC knew that the Davises sold their business, the lease was not renewed or extended and, therefore, the Davises' assignee remained on the property under a month-to-month tenancy. Under these circumstances, the trial court properly granted summary judgment in favor of the Davises. We affirm.
FACTS
Stanley and Joyce Davis owned Northwest Marketing Concepts, Inc. (NMC). In December 1999, NMC entered into a lease for space in a business park owned by North Creek Properties (North Creek). Stanley Davis personally guaranteed NMC's performance under the lease:
The Guarantor unconditionally guarantees to Landlord prompt payment of all sums and timely performance of observance of all the terms, covenants, conditions and agreements to be performed or observed by Tenant under the Lease throughout the entire term of the Lease, including any extension and/or renewal thereof, or any addendum or amendment thereto.
The lease term was to end on July 31, 2005.
VLC succeeded North Creek as the owner of the business park. Later, the Davises agreed to sell NMC to Brad Mesaros and Michael Powers. In November 2004, VLC agreed to allow NMC to assign the lease to the new owners upon condition that the new owners complete an application and allow VLC to review their business documents.
NMC closed the sale with Mesaros and Powers on December 15, 2004. Immediately afterward, the managing member of VLC, Roger White, met with the new owners. Mesaros and Powers, who formed a company called NMC Acquisition, but continued doing business as Northwest Marketing Concepts, talked with White about needing space after the lease ended. They considered moving to a new space, but no agreement was reached before the lease term ended on July 31, 2005. NMC Acquisition instead continued renting the original space on a month-to-month basis. The company, however, became delinquent in the rent. In November 2006, NMC Acquisition vacated the property without curing the delinquency.
In September 2007, VLC sued the Davises, claiming that Stanley Davis was liable for NMC Acquisition's debt based upon his personal guarantee of the lease. Davis answered and then asked the court to grant summary judgment in his favor. He argued that he was entitled to judgment as a matter of law because his obligation as guarantor ended when the lease term ended on July 31, 2005.
VLC also asked the court to grant summary judgment in its favor, arguing that it was entitled to judgment as a matter of law because Stanley Davis's personal guarantee applied to any extension or renewal of the lease. The trial court granted summary judgment in Davises' favor. This appeal followed.
ANALYSIS
VLC One argues that the trial court erred when it granted summary judgment in favor of the Davises and denied summary judgment in favor of VLC One. We disagree.
A trial court may grant a motion for summary judgment when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. The same standard applies when this court reviews orders granting summary judgment. The court must consider facts and reasonable inferences in the light most favorable to the nonmoving party, and summary judgment should be granted only if, considering the evidence presented, reasonable persons could reach but one conclusion.
Cerrillo v. Esparza, 158 Wn.2d 194, 199, 142 P.3d 155 (2006).
Hubbard v. Spokane County, 146 Wn.2d 699, 707, 50 P.3d 602 (2002).
VLC contends that the trial court erred by relying upon Glesener v. Balholm, arguing that, although Glesener was properly decided, its facts distinguish it from VLC's case. The facts in Glesener are distinguishable, but the distinction makes no difference to the outcome in our case.
50 Wn. App. 1, 747 P.2d 475 (1987).
In May 1980, H.L. Balholm entered into an agreement to lease property from John Glesener. The lease was to expire on June 30, 1985. On July 3, 1980, Balholm assigned his lease to Jim Miller. Glesener consented to the assignment, but he reserved any rights he had against Balholm under the lease.
Miller became delinquent in the rent before the lease term expired in June 1985, but he expressed his intention to renew the lease. Glesener considered allowing Miller to remain in possession of the property until November 1985. But approximately one month after the lease expired, Miller vacated the premises, damaging the building in the process.
Glesener sued both Miller and Balholm. An arbitrator ruled in favor of Glesener against Miller, but dismissed the claim against Balholm. Glesener requested a trial de novo under MAR 7.1. The court granted summary judgment in favor of Balholm, ruling as a matter of law that Miller and Glesener entered into a new relationship after the original lease expired and, therefore, Balholm was not liable for the damage to the premises.
Glesener appealed. The court of appeals affirmed, concluding that negotiations between Miller and Glesener to allow some form of tenancy after the lease term expired did not operate to renew or extend the original lease. Rather, a new tenancy resulted. Because the damage to the property occurred after the lease between Balholm and Glasener expired, the trial court did not err in dismissing Balholm on summary judgment.
Glesener, 50 Wn. App. at 8.
Similarly, the trial court properly granted summary judgment in the Davises' favor. Stanley Davis guaranteed the tenant's performance throughout the lease term, including any extensions or renewals. Davis sold NMC and assigned the lease to NMC Acquisition. VLC and NMC Acquisition attempted to negotiate a new lease, but they were unable to agree before the original lease expired. After the lease expired, a new month-to-month tenancy arose.
VLC argues that Glesener is distinguishable because the landlord in that case consented in writing to Balholm's assignment of the lease to Miller, whereas VLC did not give written consent to Davis's assignment of the lease to NMC Acquisition. But VLC knew that the Davises sold their business to Mesaros and Powers, and it accepted rent from them. Under these circumstances, VLC is estopped from disputing the validity of the assignment.
VLC asserts that Roger White knew that Davis wanted to sell his business, but Davis did not provide any information about the sale, and White did not consent to the assignment and never heard of NMC Acquisition or saw the assignment until after VLC sued Davis. VLC, however, does not argue that genuine issues of material fact should have precluded summary judgment.
Field v. Copping, Agnew Scales, 65 Wash. 359, 362, 118 P. 329 (1911) (cited with approval in OTR v. Flakey Jake's Inc., 112 Wn.2d 243, 770 P.2d 629 (1989)).
VLC contends that the clear language of the guarantee expresses Davis's intent to be liable under the lease if the tenant remained on the premises after the lease term ended. But Davis guaranteed the tenant's performance beyond the original lease term only if the lease was extended or renewed.
Technically, Davis also guaranteed the tenant's performance if the lease was amended or something was added to it, but no issues are raises in regard to those guaranties.
Black's Law Dictionary defines "renewal" as [t]he re-creation of a legal relationship or the replacement of an old contract with a new contract, as opposed to the mere extension of a previous relationship or contract.
Black's Law Dictionary 1322 (8th ed. 2004).
Black's Law Dictionary indicates that the word "extension," when properly used in connection with a lease, is [t]he continuation of the same contract for a specified period.
Black's Law Dictionary 622 (8th ed. 2004).
The lease in this case was not renewed or extended. Rather, a month-to-month tenancy resulted when VLC accepted rent from NMC Acquisition after the lease expired. Essentially, an entirely new tenancy was formed.
See Worthington v. Moreland Motor Truck Co., 140 Wash. 528, 532, 250 P. 30 (1926) (month-to-month tenancy resulted between lessor and lessee's assignee after lessee vacated the premises, lessor acquiesced when assignee took possession, and lessor accepted rent from assignee before the lease term expired).
See Washington State Bar Ass'n, Real Property Deskbook § 27.3(3)(b)(iii).
The Davises assigned the lease to NMC Acquisition, the lease expired without VLC and NMC Acquisition agreeing to renew or extend it, and NMC Acquisition remained in possession of the property under a month-to-month tenancy. Davis's guarantee ended when the lease expired. All of the cases cited by VLC are distinguishable and, except for one case cited for a general principle of law, are from foreign jurisdictions. The trial court properly granted the Davises' motion for summary judgment and properly denied VLC's counter-motion.
ATTORNEYS FEES
VLC asks for its attorney fees on appeal, citing the attorney fees provision in the lease. VLC, however, is not the prevailing party. Moreover, VLC sued the Davises under the guarantee, which did not include an attorney fees provision, and therefore, neither party is entitled to attorney fees.14 We, therefore, do not award attorney fees to either VLC or the Davises.
CONCLUSION
The trial court properly granted summary judgment in favor of the Davises and against VLC. The decision of the trial court is affirmed, and neither side is awarded attorney fees on appeal.