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COURT OF APPEALS DECISION DATED AND RELEASED August 14, 1996 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
Nos. 96-0592
96-0593
96-0594
96-0595
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT II
No. 96-0592
BROOKHILL CAPITAL
RESOURCES, INC., as
general
partner and on behalf
of
Westgate Mall
Properties,
a New Jersey limited
partnership,
Plaintiff-Appellant,
v.
SPIEGELHOFF FABRICS,
INC.,
Defendant-Respondent.
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No. 96-0593
BROOKHILL CAPITAL
RESOURCES, INC., as general
partner and on behalf of
Westgate Mall Properties,
a New Jersey limited partnership,
Plaintiff-Appellant,
v.
JALENSKY SPORTS
CENTER, INC.,
Defendant-Respondent.
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No. 96-0594
BROOKHILL CAPITAL
RESOURCES, INC., as general
partner and on behalf of
Westgate Mall Properties,
a New Jersey limited partnership,
Plaintiff-Appellant,
v.
RANDALL STORES, INC.,
a foreign corporation,
Defendant-Respondent.
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No. 96-0595
BROOKHILL CAPITAL
RESOURCES, INC., as general
partner and on behalf of
Westgate Mall Properties,
a New Jersey limited partnership,
Plaintiff-Appellant,
v.
DAVID A. CARLSON, d/b/a
SUE'S HALLMARK SHOP,
Defendant-Respondent.
APPEALS from judgments
of the circuit court for Racine County:
DENNIS J. FLYNN, Judge. Reversed
and cause remanded.
SNYDER, J. Brookhill
Capital Resources, Inc. appeals from a summary judgment disposing of its claim
to past common area maintenance (CAM) charges from four Westgate Mall
tenants. On appeal, Brookhill contends
that summary judgment should not have been granted because there are factual
issues regarding whether the stated time for performance was essential to the
contract. Brookhill seeks reversal of
the summary judgment. We conclude that there
are issues of material fact in dispute and summary judgment was improper.
In January 1995,
Brookhill filed a complaint against four tenants: Spiegelhoff Fabrics, Inc.; Jalensky Sports Center, Inc.; Randall
Stores, Inc.; and David A. Carlson, d/b/a Sue’s Hallmark Shop, for unpaid CAM
expenses for 1991, 1992, 1993 and 1994.
Brookhill has separate, yet similar, leases with all four tenants, and
because the four claims were similar, the cases were consolidated.[1]
Under the leases, the
tenants must make prorated monthly CAM payments based upon the preceding year’s
actual CAM expenditures. It is
undisputed that the tenants have paid these monthly installments. Additionally, all four leases include a
provision that requires Brookhill to submit to the tenants a reasonably
detailed account reconciling these payments with the actual expenses
incurred. The leases for Spiegelhoff
and Jalensky expressly state that the preceding year's actual CAM costs should
be submitted within ninety days from the end of the lease year. Randall's lease states that within fifteen
days from the end of each month Brookhill should provide that month's actual
CAM costs. Carlson's lease does not
enunciate any specific time. None of
the leases contain a “time is of the essence” clause.
Brookhill's accounting
department underwent reorganization during 1991 and 1992, and consequently,
Brookhill did not provide the tenants with the respective CAM charges until
November and December 1993. Also, the actual
CAM charges for 1993 were submitted in June 1994 and for 1994 in March
1995. It is undisputed that the tenants
have not made these payments.
In response to
Brookhill's claim, the tenants contend that they are not obligated to pay these
CAM charges because they were not supplied with an accounting within the time
stated by the lease provisions.
Further, they contend that the CAM charges were inflated because
Brookhill wrongly included the cost of repairing and resurfacing the mall
parking lot which occurred in 1992 and 1994.
Accordingly, the tenants moved for summary judgment dismissal.
The trial court granted
partial summary judgment to Jalensky, Spiegelhoff and Carlson dismissing the
CAM cost claims for 1991, 1992 and 1993.
Randall was granted judgment for 1991 through 1994. The basis of the dismissal was that the
charges were not timely submitted. This
was a result of the trial court’s finding that time was of the essence. For the three leases stating a specific time
for submission, the trial court employed the tenet of contract law that
unambiguous language in a contract must be enforced as written. For Carlson’s lease, with no specified time
for performance, the trial court used a reasonableness standard and determined
that the submissions were not made within a reasonable time. Finally, the trial court interpreted the
definition of CAM costs provided in the leases and determined that resurfacing
the parking lot did not constitute a CAM expense. With regard to the remaining CAM costs for 1994, the trial court
concluded that these charges were in dispute and refused summary judgment on
the matter. Brookhill’s appeal
followed.[2]
We apply the summary
judgment statute, § 802.08(2), Stats.,
in the same manner as the trial court. Green
Spring Farms v. Kersten, 136 Wis.2d 304, 315, 401 N.W.2d 816, 820
(1987). Because that methodology is
well known, it need not be repeated here.
Paape v. Northern Assurance Co., 142 Wis.2d 45, 50, 416
N.W.2d 665, 667 (Ct. App. 1987).
Summary judgment is a drastic remedy and should not be granted unless
the law that resolves the issue is clear.
Lecus v. American Mut. Ins. Co., 81 Wis.2d 183, 189, 260
N.W.2d 241, 243 (1977).
Where complex issues are
presented to a court on summary judgment, they often cannot be decided on the basis
of affidavits and depositions. See
Peters v. Holiday Inns, Inc., 89 Wis.2d 115, 129, 278 N.W.2d 208,
215 (1979). If the presented materials
are subject to conflicting interpretations or reasonable people might differ as
to their significance, summary judgment is inappropriate. Grams v. Boss, 97 Wis.2d 332,
339, 294 N.W.2d 473, 477 (1980).
We first address the
tenants' contention that the leases clearly state the time within which
Brookhill is to submit the annual CAM charges.
They argue that the timely submission of these costs is a condition
precedent to fulfilling their promise to make the requested payments. They also maintain that the time stated in
the lease was purposefully included to afford the tenants the opportunity to
incorporate into the price of their merchandise any excess costs associated
with maintaining common areas. Thus,
the tenants contend that the time provision was essential to the lease and
Brookhill’s failure to timely perform constitutes a breach of contract.
In opposition to the
summary judgment motion, Brookhill argues that because there is no language to
the contrary in the leases, time is not of the essence. Also, Brookhill offered undisputed
affidavits showing that the tenants had accepted late CAM cost submissions in
the past. Brookhill contends that this
willingness to accept late submissions constitutes an implied waiver or
contract modification.
The trial court found as
a matter of law that the leases for Jalensky, Spiegelhoff and Carlson
unambiguously state the time in which Brookhill was to submit the CAM
costs. For example, Spiegelhoff’s lease
states: “Within ninety (90) days after
the end of each Lease Year ... Landlord shall furnish Tenant a statement in
reasonable detail of Landlord’s actual Common Area Costs ....” The court then looked to accepted law that
“unambiguous contractual language must be enforced as it is written” in
granting summary judgment for the tenants.
State v. Windom, 169 Wis.2d 341, 348, 485 N.W.2d 832, 835
(Ct. App. 1992).
We agree with the trial
court that the Spiegelhoff, Jalensky and Carlson leases contain a clause which
unambiguously states a time for performance.
However, Wisconsin case law recognizes a distinction between a breach of
a substantive promise and a breach of promise as to the time of
performance. Courts “have treated stipulations
as to time as subsidiary and of less importance than the thing promised
....” Zuelke v. Gergo,
258 Wis. 267, 270-71, 45 N.W.2d 690, 692 (1951) (quoted source omitted). Furthermore, a nonmaterial breach of
contract does not excuse performance by the nonbreaching party. See Entzminger v. Ford Motor
Co., 47 Wis.2d 751, 755, 177 N.W.2d 899, 901-02 (1970). Unless the time for performance is of the
essence, contractual time provisions are not generally material. Huntoon v. Capozza, 57 Wis.2d
447, 452-53, 204 N.W.2d 649, 652 (1973).
Whether time is of the essence in a contract is a factual question. Employers Ins. v. Jackson, 190
Wis.2d 597, 616, 527 N.W.2d 681, 688 (1995).
Commonly, time is not of
the essence unless the contract expressly makes it so or the parties’ conduct
clearly indicates that intent. Stork
v. Felper, 85 Wis.2d 406, 411, 270 N.W.2d 586, 589 (Ct. App.
1978). Moreover, simply including the
time for performance in a contract does not make time of the essence. Buntrock v. Hoffman, 178 Wis.
5, 13, 189 N.W. 572, 575 (1922). There
must also be a provision specifying the effect of nonperformance within the
designated time. Id.[3]
The leases do not state
that time is of the essence, nor do they provide a consequence for failure to
timely perform. Whether Brookhill's
failure to submit the CAM costs in accordance with the leases constitutes a
breach of contract is a material issue of fact. Thus, concluding that the tenants are no longer obligated to pay
the CAM costs because they were untimely submitted requires a finding of fact
that the stated time is essential to the leases. It is this determination that precludes summary judgment
disposition.
Finally, with regard to
Carlson’s lease, the trial court correctly noted that when no time for
performance is expressly stated, a reasonable time is implied. Delap v. Institute of Am., Inc.,
31 Wis.2d 507, 512, 143 N.W.2d 476, 478 (1966). However, “what constitutes a reasonable time [for performance]
within the facts of a given case presents a question of fact.” Id. (quoted source
omitted). Since reasonableness is a
question of fact, it was improperly decided on summary judgment. Consequently, this issue also should be
decided by the finder of fact.
We now turn to the
parking lot resurfacing costs. In
granting summary judgment dismissal, the trial court determined as a matter of
law that repairing and resurfacing the mall parking lot is not a CAM expense
under the leases. In making this
determination, the court interpreted the lease provisions detailing the items
deemed to be CAM costs and principally characterized these costs as day-to-day
or yearly upkeep expenses. The court
reasoned that resurfacing the parking lot was better classified as a capital
expenditure than as a maintenance expense.
Consequently, the court interpreted the leases as excluding any costs
associated with resurfacing the parking lot.
In order to arrive at
this conclusion on summary judgment, the trial court must first find the lease
language unambiguous. This is a
question of law which may be answered on summary judgment. See Lamb v. Manning,
145 Wis.2d 619, 627, 427 N.W.2d 437, 441 (Ct. App. 1988). Also, courts may interpret an unambiguous
contract as a matter of law by looking to the language in the written
instrument. See Gunka v.
Consolidated Papers, Inc., 179 Wis.2d 525, 531, 508 N.W.2d 426, 428
(Ct. App. 1993).
Since the construction
of a written contract raises a question of law, this court owes no deference to
the trial court's interpretation. Kreinz
v. NDII Sec. Corp., 138 Wis.2d 204, 216, 406 N.W.2d 164, 169 (Ct. App.
1987). When contractual language is
clear and unambiguous, we construe it as it stands. Id.
However, a contract that is reasonably and fairly susceptible to more
than one construction is ambiguous. Jones
v. Jenkins, 88 Wis.2d 712, 722, 277 N.W.2d 815, 819 (1979).
All four leases contain
similar sections setting out the types of expenditures in common areas for
which the tenants are financially obligated.
All of the leases include a broad-sweeping definition of CAM costs,
combined with a laundry list of specific expenses. For example, the relevant section of Spiegelhoff’s lease states,
“The Common Area Costs shall cover all costs and expenses of every kind and
nature paid or incurred by Landlord ... in operating, managing, equipping,
policing ... protecting, insuring, heating, cooling, lighting, ventilating,
repairing, replacing and maintaining the Common Areas and Facilities ....”
From this section, one
may read the language to comprise all possible costs of operating and
maintaining the common areas. As the
record indicates, there is no dispute that the parking lot is part of the
common area. Alternatively, when
combined with the leases’ lists of specific expenses, this provision may be
read as merely including short-term maintenance costs, as the trial court
suggested. Furthermore, we note that
none of the leases contain any reference to costs associated with “resurfacing”
the parking lot.[4]
From our analysis, it is
apparent that with regard to resurfacing the parking lot the lease language is
reasonably susceptible to more than one interpretation. Therefore, we conclude that all four leases
are ambiguous as to whether resurfacing the parking lot is a CAM expense.
Moreover, once a court
considers that a contract is ambiguous, the court must consider the intent of
the parties. Capital Invs., Inc.
v. Whitehall Packing Co., 91 Wis.2d 178, 190, 280 N.W.2d 254, 259
(1979). “The cornerstone of contract
interpretation is to ascertain the parties’ true intentions as expressed by
contractual language.” Bank of
Barron v. Gieseke, 169 Wis.2d 437, 455, 485 N.W.2d 426, 432 (Ct. App.
1992). However, the true intent of the
parties is a question of fact. See
Brown v. Hammermill Paper Co., 88 Wis.2d 224, 234, 276 N.W.2d
709, 713 (1979). We therefore conclude
that summary judgment disposition is not appropriate.
In sum, we agree that
three of the leases unambiguously state a specific time for Brookhill to submit
an account of the actual CAM expenses.
However, the tenants may not be relieved of their obligation to pay
their share of the costs unless the fact finder determines that time is of the
essence or, in the alternative, that the charges were not submitted within a
reasonable time. Regarding the
resurfacing issue, we conclude that the language in the relevant lease provisions
is ambiguous since it is reasonably susceptible to more than one
construction. Because Brookhill's
claims present complex, disputed issues of material fact, they cannot be
rightly decided on summary judgment.
By the Court.—Judgments
reversed and cause remanded.
This opinion will not be
published. See Rule 809.23(1)(b)4, Stats.
[2] Following the court's order granting partial summary judgment, the parties reached a settlement agreement on all remaining issues. The court then issued a final judgment, which Brookhill appeals.
[3] Wisconsin
J I—Civil 3048 provides further support:
The
importance of time in connection with the performance of a contract depends
upon the nature of the contract, the terms thereof, and the circumstances
appearing from the conduct of the parties.
Time is not to be regarded as of vital importance or as of the essence
of the contract unless it is clear that the parties intended to make it so by
their conduct or by the terms on which they have agreed.
Time
is not to be regarded as of the essence of the contract merely because a
definite time for performance is stated therein, in the absence of any further
provision regarding the effect of nonperformance at the time stated. Where there is no provision as to the time
for performance, the law will imply a reasonable time which means a somewhat
more protracted time than directly, forthwith, or as soon as possible.
If you determine that performance at the exact time agreed upon was intended to be of vital importance to the parties, you may find that time was of the essence so that failure of the party to perform on time may constitute a breach of contract.