COURT OF APPEALS DECISION DATED AND RELEASED October 1, 1996 |
NOTICE |
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. |
No. 95-0879
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT I
Seventh & Michigan
Partnership,
a Wisconsin general
partnership,
Nancy Pearson and
Helen Kissinger,
Plaintiffs-Appellants-
Cross Respondents,
v.
Estate of Sidney
Spector and
Jeffrey D. Berlin,
d/b/a Spector and
Berlin,
Defendants-Respondents-
Cross Appellants.
APPEAL and CROSS-APPEAL
from a judgment of the circuit court for Milwaukee County: LOUISE M. TESMER, Judge. Reversed and cause remanded.
Before Wedemeyer, P.J.,
LaRocque and Myse, JJ.
PER CURIAM. This is an appeal from a summary judgment
in a case requiring interpretation of a commercial lease. Seventh & Michigan Partnership, Nancy
Pearson, and Helen Kissinger (collectively, Seventh & Michigan) appeal from
a judgment dismissing their claim for unpaid rent and granting judgment against
them on a counterclaim for breach of a lease.
The Estate of Sidney Spector and Jeffrey D. Berlin d/b/a Spector and
Berlin (Spector and Berlin) obtained the judgment on the counterclaim. Spector and Berlin cross-appeal from the
judgment.
Seventh & Michigan
contends that the trial court erred when, as a matter of law, it concluded that
the lease was ambiguous, determined the intent of the parties, and calculated
damages. Spector and Berlin contend
that the trial court impermissibly denied prejudgment interest, erroneously
concluded that the amount of attorney's fees and expenses requested was
unreasonable, and erroneously denied reasonable fees for legal work performed
by Berlin. We conclude that there is an
issue of material fact regarding the meaning of language used in connection
with the lease. Consequently, summary judgment
is not appropriate. Therefore, we
reverse the judgment and remand the case to the circuit court for further
proceedings. Because we reverse the
judgment, we do not address the issues raised by Seventh & Michigan
regarding calculation of damages or by Spector and Berlin in the cross-appeal.
In 1988, Spector and
Berlin leased office space in a building owned by Seventh & Michigan
Partnership.[1] The space was unfinished at the time of
leasing, and prior to execution of the lease, Renner Architects prepared a
blueprint for the Spector and Berlin office suite. The blueprint contained a notation "Rentable Area .....
1,824 S.F." When the lease was
executed, the demised premises were identified as "an area consisting of
approximately 1,824 square feet of space in the third floor of the property
known as 700 West Michigan Street."
The lease also contained the following provision concerning rent:
A. Base Rent. The
Tenant shall pay to the Landlord rent at the rate of $12.00 per square foot for
1,824 square feet of office space for a total of $21,999 per year, payable in
advance in equal monthly installments of $1,824 on the first day of each month
during the term of this Lease commencing April 1, 1988 ("Base Rent").
After
the office suite was finished in accordance with the blueprints, Spector and
Berlin took possession of the area, and they remained in possession during the
term of the lease.
Near the end of the
lease's term, Spector and Berlin were dissatisfied with the amount of their
rent, and they investigated office space in other buildings. Their office suite was measured and,
according to Berlin's deposition testimony, was found to be 1,408 square
feet. Spector and Berlin claimed that,
under the lease, the office suite was to contain 1,824 square feet within its
walls and that Seventh & Michigan had breached the lease. Spector and Berlin stopped paying rent to
recoup what, they believed, were prior overpayments.
Nine months after
Spector and Berlin stopped paying rent, Seventh & Michigan filed an action
to collect the unpaid rent. Spector and
Berlin filed a counterclaim for breach of the lease. Seventh & Michigan denied that it breached the lease. It claimed that "rentable" as used
on the blueprint is a term of art within the commercial leasing industry and
that it meant the tenant's actual space plus a share of the common areas.
On cross-motions for
summary judgment, the trial court ruled that the lease was ambiguous, but that,
as a matter of law, the parties intended the square footage figure in the base
rent clause to refer to space actually useable by the tenant, i.e., space
within the walls of the office suite.
The court found that 1,824 square feet overstated the area and inflated
the rent.
Summary judgment is used
to determine whether there are disputed issues for trial. U.S. Oil Co. v. Midwest Auto Care
Servs., Inc., 150 Wis.2d 80, 86, 440 N.W.2d 825, 827 (Ct. App.
1989). When reviewing a grant of
summary judgment, we apply the same methodology as the trial court. Id. Summary judgment is appropriate when material facts are not
disputed and the moving party is entitled to judgment as a matter of law. Section 802.08(2), Stats. The summary
judgment process is not a "‘short cut to avoid a trial.'" State Bank of La Crosse v. Elsen,
128 Wis.2d 508, 511, 383 N.W.2d 916, 917-18 (Ct. App. 1986) (citation
omitted). The party seeking summary
judgment bears the burden of showing that there are no issues of material fact. Id. at 512, 383 N.W.2d at
918. All doubts about factual matters
are resolved against the party moving for summary judgment. Id.
The goal of judicial
construction of a lease, like a contract, is to determine what the parties
agreed to in a legal sense as evidenced by the language they used. Sampson Inv. v. Jondex Corp., 176 Wis.2d 55, 62, 499 N.W.2d 177, 180
(1993). This may not be the same as
what the parties intended to do. Id. If the terms of the contract are plain and
unambiguous, it is the court's duty to construe the contract according to its
plain meaning even though the parties may have construed it differently. Waukesha Concrete Prod. Co. v. Capitol
Indem. Corp., 127 Wis.2d 332, 339, 379 N.W.2d 333, 336 (Ct. App.
1985). Where, however, a term in a
lease or contract is not defined in the document but has a technical legal
meaning, courts apply the accepted technical meaning. See School Dist. v. Wausau Ins. Co., 170 Wis.2d
347, 374-75, 488 N.W.2d 82, 92 (1992).
The issue in this case
is whether Seventh & Michigan breached the lease by renting an office suite
to Spector and Berlin that contained less than 1,824 square feet within the
walls of the suite. It is undisputed
that the area of the suite was less than 1,824 square feet, and that the difference
represents a share of common areas. The
square-footage issue is material because the summary-judgment materials suggest
that the parties negotiated the rent based on a cost per square foot and the
"base rent" clause states the rent both as an amount per square foot
and as a total annual rent. The lease
does not contain a definition of the terms "space" or
"rentable" or "square footage."
Seventh & Michigan
contends that it did not breach the lease because the blueprint identified the
square footage as "rentable area" and "rentable," in this
context, is a term of art within the commercial leasing industry. In support of its allegation that
"rentable" is a term of art, Seventh & Michigan submitted an
affidavit from John T. Gilligan, a commercial lease broker, who represented
that office space is marketed as "rentable" or
"useable."
"Useable" is the space within the walls of a particular
tenant's office suite.
"Rentable" refers to the tenant's space plus a share of the
common areas. Seventh & Michigan
also submitted an affidavit from Jeffrey Natrop of Renner Architects, which
represented that the calculation of rentable area was made using
"BOMA" standards. The
affidavit does not define "rentable area" or discuss or further
identify "BOMA" standards. In
the summary-judgment materials, Berlin denied knowing or being told that
"rentable square feet" or "rentable area" had any special
significance.
We are satisfied that
neither "rentable area" nor "rentable square feet" has an
established technical legal meaning. We
are unable to find case law adopting the meaning Seventh & Michigan
advocates. Legal commentators, while
generally recognizing the meaning of "useable area" and
"rentable area" advocated by Seventh & Michigan, identify the
topic as marked by confusion. See
Don F. Dagenais, Space Audits in Commercial Leases: Advice for the Landlord's Attorney, 52 J.Mo. Bar 104, 106-07 (1996); Milton R. Friedman, Friedman on Leases
§ 3.1, at 31-32 (3d ed. 1990); Gary
Goldman, Drafting a Fair Office Lease 105-06 (1989).
The summary-judgment
materials submitted by Seventh & Michigan suggest that "rentable
area" and "rentable square footage" have a special meaning from
industry usage. Usage is an habitual or
customary practice, Restatement (Second)
of Contracts § 219 (1979), which may be used to show that clear,
unambiguous language in an agreement has a specialized meaning different from
its plain meaning, Walter H. E.
Jaeger, Williston on Contracts § 648, at 6-7 (3d ed. 1961). Usage is relevant to interpretation of a
particular contract if both contracting parties knew or had reason to know of
the usage and neither knew or had reason to know the other attached a meaning
inconsistent with the usage. Restatement, supra,
§ 220. Whether usage provides a
particular meaning and whether both parties knew or should have known of the
usage is a question of fact. Jaeger, supra, § 649 at
8-9.
Seventh & Michigan's
summary-judgment submissions raises an issue of fact regarding whether
"rentable area" or "rentable square feet" has a specialized
meaning through industry usage.
Although Spector and Berlin claim not to have known of any specialized
meaning, whether they should have been aware of it is also an issue of fact. Neither can be resolved on summary judgment,
and the lease cannot be construed without resolving these factual issues.
Therefore, we reverse
the judgment of the trial court and remand the case for trial. Because we reverse the trial court's
judgment, we do not need to consider whether the trial court applied the
correct standards in determining damages, denying prejudgment interest, or
assessing attorney's fees and costs. See
Gaertner v. 880 Corp., 131 Wis.2d 492, 496 n.4, 389 N.W.2d 59,
61 n.4 (Ct. App. 1986) (if decision on one point disposes of appeal, we do not
reach other issues raised).
By the Court.—Judgment
reversed and cause remanded.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.