873 So. 2d 1091 (Ala. 2003)
In the 1980s David H. Head developed the Saraland Square Shopping Center in Saraland, Alabama, with a Wal-Mart discount store occupying approximately 90,000 square feet on one tract and a Winn-Dixie grocery store occupying approximately 35,000 square feet on the retained tract, plus smaller shops and a 6,000-square-foot space between the anchor buildings.1
Head and Wal-Mart executed an Easements with Covenants and Restrictions Affecting Land (ECR) that restricted building uses to commercial purposes of the type normally found in a retail shopping center.2 Head also entered a 20-year lease with Winn-Dixie requiring monthly rent of $16,041.67 plus one percent of gross sales and a pro rata share of common area maintenance costs.3
Head sold his interest in the Winn-Dixie tract and assigned the lease to Peter Lowe, who formed Bowdoin Square, L.L.C. Bowdoin Square acquired all rights and duties under the ECR.4 Wal-Mart closed its store in 1996, after which Winn-Dixie closed its store in March 1998 but continued paying rent and listing the premises with a realtor for sublease.5
In the fall of 1999, Wal-Mart proposed leasing its vacant building to Hertz Corporation for a call center accommodating up to 623 agents and sought to lease the 6,000-square-foot space for employee interviews and training. Both proposals required amendment of the ECR and Winn-Dixie's consent under the lease.6 In November 1999 Winn-Dixie refused consent, stating that the proposed non-retail use would hamper subleasing efforts and reduce available parking for retail customers.7
Hertz began renovating the 6,000-square-foot space in January 2000.8 Hertz opened the call center in March 2000.9 On March 8, 2000, Winn-Dixie mailed a letter to Bowdoin Square notifying it that Winn-Dixie believed Bowdoin Square had breached the lease. The letter stated in part that the Hertz use constituted a breach and that Winn-Dixie would cease payments until the premises were used for their intended purpose.10
On April 14, 2000, Winn-Dixie purported to terminate the lease and abandoned the premises.11 Bowdoin Square filed suit on April 21, 2000, seeking remaining lease payments. Winn-Dixie counterclaimed for breach.12 The trial court granted partial judgment as a matter of law to Winn-Dixie, limited remedies under paragraph 21 of the lease, and submitted four factual questions to the jury, which returned a general verdict for Winn-Dixie.13 Bowdoin Square appealed.14
Whether paragraph 21 of the lease limited the landlord's remedies for tenant default to the two options expressly stated therein?15
Lease agreements are contracts to which courts apply general principles of contract construction.16 Courts give effect to the unambiguously expressed intent of the parties by according words their ordinary meaning.17 Terms such as 'may' and 'at its option' denote permissive alternatives rather than mandatory restrictions.18
No. Paragraph 21 of the lease between Bowdoin Square and Winn-Dixie provides that upon tenant default the landlord at its option may either terminate the lease or re-enter and relet.19 This language permits resort to common-law remedies such as those available upon abandonment.20 After Winn-Dixie sent its March 8, 2000 letter declaring breaches and ceased payments then abandoned the premises on April 14, 2000, Bowdoin Square was entitled to pursue remedies outside the two listed options.21
Paragraph 21 does not limit Bowdoin Square to only the two remedies stated in the lease.22
Related opinions on this issue
Justice Harwood concurred in the result but dissented from the rationale on this issue.23 He found the operative language in paragraph 21 ambiguous because its syntax leaves room for more than one reasonable interpretation.24 The clause could mean either that the landlord could pursue any remedy available under Alabama law or that its options were confined to the two alternatives expressly listed.25
He distinguished the prior decisions relied upon by the majority as involving more clearly permissive language.26 Harwood would therefore remand for the jury to resolve the ambiguity rather than decide the question as a matter of law.27
Whether the issue of the tenant's abandonment of the premises should have been submitted to the jury?28
Abandonment of a lease occurs when the lessee vacates the premises and manifests a clear intent not to be bound by the lease. Once abandonment is shown the landlord may recover rent for the entire term or accept the surrender. Paragraph 21 does not address abandonment specifically so common-law remedies remain available.29
Yes. Because paragraph 21 speaks only to default in payment or violation of other covenants and does not address the procedure upon abandonment, the factual question whether Winn-Dixie abandoned by vacating after its March 8, 2000 letter and April 14, 2000 termination notice with intent not to pay further rent should have been submitted to the jury rather than precluded by the trial court's erroneous limitation of remedies.30
The trial court erred by not submitting the abandonment issue to the jury.31
Whether Hertz's use of the Wal-Mart building as a call center violated the ECR use provision as a matter of law?32
A contract must be construed as of the date on which it was made according to the intentions of the parties and the circumstances existing at that time. Subsequent events cannot alter its meaning.33
Yes. The ECR executed in the 1980s restricted buildings to commercial purposes of the type normally found in a retail shopping center.34 Expert testimony established that call centers did not exist in 1987 when the ECR was made.35 Therefore Hertz's 2000 use of the Wal-Mart tract as a call center accommodating up to 623 agents violated the ECR as a matter of law when construed at the time of execution.36
The trial court correctly held that the Hertz call center violated the ECR use provision.37
Whether the landlord was entitled to judgment as a matter of law on the tenant's right to terminate the lease and on the tenant's affirmative defenses?38
A tenant may terminate a lease when the landlord materially breaches an essential covenant such as the covenant of quiet enjoyment.39 In Alabama a claim of constructive eviction is subsumed within the covenant of quiet enjoyment and presents a jury question on whether the landlord's conduct deprived the tenant of the bargained-for use of the premises.
No. Although Winn-Dixie had the right to terminate upon a material breach by Bowdoin Square.40 The questions whether Bowdoin Square's failure to prevent the Hertz call center and 6,000-square-foot non-retail use breached the covenant of quiet enjoyment or amounted to constructive eviction after the 1999-2000 events are factual issues.41 These must be resolved by the jury on remand rather than decided by judgment as a matter of law for either party.42
Bowdoin Square was not entitled to judgment as a matter of law on the tenant's termination right or affirmative defenses.43
Whether the landlord could pursue a claim for future rent payments not yet accrued under the lease?44
Under Ala. Code 1975, § 6-5-280, when a contract requires installment payments an action lies only for each accrued breach.45 A landlord may recover rent only as it accrues unless the lease contains an acceleration clause.
No. The 20-year lease between Bowdoin Square and Winn-Dixie contained no acceleration clause.46 After Winn-Dixie abandoned the premises Bowdoin Square could recover only rent that had accrued and remained unpaid. It could not pursue a single claim for all future payments due over the remainder of the term.47
Bowdoin Square could not pursue a claim for future unaccrued rent.48