PER CURIAM:
This is an appeal from an order entered March 23, 2009, in the Circuit Court of Cabell County, West Virginia, granting summary judgment in favor of Appellee City National Bank of West Virginia ("City" or "lessee") and against Appellant Frederick Management Company, LLC ("FMC" or "lessor"). Lessor FMC argues that genuine issues of material fact exist as to whether City, its lessee, breached the parties' Lease Termination Agreement (also referred to as "LTA") by failing to deliver 4,000 square feet of office space that City leased from FMC and subleased to the law firm of Frazier & Oxley, L.C. It is FMC's contention that its breach of contract claim against City should have been considered by a jury.
Upon careful consideration of the petition for appeal, the briefs and arguments of counsel, all matters of record and the applicable legal authority, and for the reasons discussed below, we reverse the order of the circuit court and remand this case for further proceedings.
Many of the underlying facts of the present appeal are familiar to this Court as we twice considered issues related thereto in the previous cases of State ex rel. Frazier & Oxley, L.C. v. Cummings, 212 W.Va. 275, 569 S.E.2d 796 (2002) ("Frazier & Oxley I") and State ex rel. Frazier & Oxley, L.C. v. Cummings, 214 W.Va. 802, 591 S.E.2d 728 (2003) ("Frazier & Oxley II"). Thus, in this opinion, we shall recount some of the relevant facts discussed in Frazier & Oxley I and II, while also including those facts which are germane to resolution of the issues raised in the case sub judice.
The St. James Building is a twelve-story building located in Huntington, West Virginia, which was purchased by FMC in April 1999. Almost twenty years earlier, in May 1980, the building's then owner, the First Huntington Building Corporation,
Under the terms of the prime lease, the lessee bank could terminate the lease by giving the lessor written notice of its intention to vacate the premises sixty days prior to the expiration of the original term or any renewal thereof. The lessee bank could also terminate the lease by providing ninety days notice and paying one year's rent as a penalty. The lessor reserved no right to terminate the prime lease.
On or about June 15, 1987, the lessee bank entered into a written sublease with the law firm of Frazier & Oxley, L.C. (also referred to as "the law firm") for the mezzanine level of the leased office space.
One day after the sublease was entered into, on June 16, 1987, the law firm assigned all if its rights and obligations thereunder to William Frazier, one of its partners. On June 17, 1987 (the following day), Mr. Frazier subleased back to the law firm the right to occupy the mezzanine level for $4,000.00 per month for the first six years and thereafter for $2,000 per month. Frazier & Oxley I, 212 W.Va. at 278, 569 S.E.2d at 799.
In 1996, lessee and sublessor Old National Bank became a part of City and Old National Bank's location in the St. James Building became a branch office of City. As a result, Appellee City became the lessee under the prime lease and the sublessor under the sublease. In April 1999, ownership of the St. James Building was transferred to the appellant herein, FMC, with such transfer occurring subject to the prime lease and sublease discussed above. It is FMC's contention that it was unaware of the sublease between City and Frazier & Oxley when it acquired ownership of the building and for sometime thereafter. See discussion, infra.
Subsequently, City and Frazier & Oxley became involved in a dispute related, in part, to the sublease. On or about November 9, 1999, a settlement agreement was entered into between the parties, which provided, in relevant part, that the term of the sublease shall be concurrent with the term of the prime lease, "`or any extensions or renewals thereof, and shall expire ... upon the expiration
Sometime prior to April 2000, City determined that its banking operation located in the St. James Building had become unprofitable. On April 25, 2000, Matthew Call, Chief Operating Officer and Executive Vice President of City Holding Company (City's parent company), Larry Dawson, Senior Vice President of City Holding, and Robert Hardwick, Regional President of City's Huntington branch, all of whom had authority to act on behalf of City, attended a dinner meeting with John Hankins and Fred Davis, who were then co-owners of FMC. According to the deposition testimony of Messrs. Call and Hardwick, the purpose of the meeting was to inform FMC that City would not be renewing its lease in the St. James Building upon expiration of the then current renewal term on October 31, 2000. They further testified that at the end of the April 25, 2000, meeting, City made FMC fully aware of City's intention not to renew the lease at the end of the current renewal term. It is undisputed that although the terms of the prime lease provided that City, as lessee, could only terminate the lease by giving the lessor (FMC) written notice of its intention to vacate the premises sixty days prior to the expiration of, inter alia, any renewal thereof, no such written notice was ever tendered to FMC.
Also during the April 25, 2000, dinner meeting between representatives of City and FMC, the possibility of City maintaining a drive-thru only banking facility at the St. James Building location was discussed and, over a period of time, agreed upon. Messrs. Call and Hardwick both testified that City's decision not to renew the prime lease was in no way conditional on the parties' agreement on a drive-thru only lease.
Following the April 25, 2000, meeting, City, as sublessor, did not notify its sublessee, Frazier & Oxley, that it would be ending the prime lease when the current renewal term expired on October 31, 2000. It is unclear from the record under what circumstances Frazier & Oxley learned the prime lease was going to end on October 31, 2000.
After City advised FMC it would not be renewing its lease, but before the Lease Termination Agreement was drafted, Mr. Hankins, FMC's co-owner, forwarded proposed floor plans to prospective tenants which showed the mezzanine space as being occupied by Frazier & Oxley and which referred to the law firm as a "tenant." On August 23, 2000, before the LTA was executed, Mr. Hankins wrote a letter to City's Robert Hardwick, which referred to City's intention to end the prime lease but also keep a drive-thru facility: "`If we decide to proceed, it will probably be necessary to cancel your existing lease and to enter into a new lease for the reduced space. We will also take the responsibility of negotiating a new lease for the law firm located on the mezzanine.'"
For his part, Mr. Hankins explained in deposition testimony that FMC considered the mezzanine to be part of the bank facility. He stated that he first learned that Frazier & Oxley occupied the mezzanine pursuant to a sublease with City during the discovery phase of its eviction case against the law firm. See discussion, infra. Prior thereto, Mr. Hankins believed Messrs. Frazier and Oxley occupied the mezzanine offices solely because of their status as board members of Old National Bank and, later, City,
A Lease Termination Agreement was ultimately drafted by Mr. Hankins (who is also a lawyer) and presented to representatives of City on September 27, 2000. The LTA provided, in relevant part, that a lease agreement had been entered into "for that certain banking facility located on the ground floor and mezzanine located in the St. James Building at Tenth Street and Fourth Avenue[.]" The LTA further provided that "for and in consideration of the premises which are not mere recitals, but are an integral part of this agreement. ... [t]hat certain lease ... dated November 1, 1979 is hereby terminated effective October 31, 2000, at which time possession of the main banking facility located within the St. James Building will be surrendered to" FMC.
Simultaneously therewith, the parties executed a separate lease agreement for a drive-thru facility commencing on November 1, 2000, and ending on October 31, 2001, with a renewal option for additional one-year periods. Mr. Hankins also drafted the drive-thru lease agreement.
City's Robert Hardwick testified that it was his understanding that if City did not renew the prime lease, it would be giving up all of the space covered by the lease. (Hardwick 57) Furthermore, although he had not considered whether the LTA would have an impact on Frazier & Oxley's occupancy in the mezzanine office spaces, he testified that
Similarly, Mr. Call testified that he "would have understood that the term `main banking facility' under the term of the lease would have included anything in the lease." When specifically asked if he "understood that the main banking facility included the mezzanine[,]" Mr. Call testified,
Mr. Call further testified that "it's common sense if you don't renew your lease and you have no intentions of coming back, then you leave. ... So that would mean to me from a layman, not a lawyer, that I vacate the premises that is under the terms of that lease." He also testified that
Mr. Hardwick testified that before he signed the LTA on behalf of City, he was advised by Mr. Alderman, City's legal counsel, that both the LTA and drive-thru lease "were acceptable and that I had approval to
City subsequently moved its banking facility out of the lobby of the St. James Building. However, Frazier & Oxley continued to occupy the mezzanine office spaces of the building.
When City did not renew its drive thru lease after the first year, FMC leased the lobby and later, the drive-thru facility, to Fifth Third Bank. Fifth Third also signed an option to lease the mezzanine,
The circuit court granted partial summary judgment in favor of FMC and City and ordered the law firm "`to vacate and quit the premises and immediately surrender possession to'" FMC. Frazier & Oxley I, 212 W.Va. at 279, 569 S.E.2d at 800. Thereafter, Frazier & Oxley filed a petition for writ of prohibition with this Court seeking to vacate and/or stay the circuit court's summary judgment order. Frazier & Oxley argued that under the terms of the prime lease, City "could have properly exercised its rights of termination or non-renewal by providing sixty days notice, or, alternatively, by providing ninety days notice and paying a penalty." Id., 212 W.Va. at 280, 569 S.E.2d at 801. Instead, the law firm argued, City and FMC "circumvented the express provisions of the lease by entering into a voluntary agreement for termination[,]" which resulted in City surrendering its leasehold. Id. According to Frazier & Oxley, because a surrender occurred and the prime lease neither terminated nor expired, the rights of the law firm as sublessee were not affected. Id.
This Court agreed with Frazier & Oxley insofar as it set forth the rights of a sublessee when a prime lease is surrendered rather than ending on its own terms. We defined "surrender" as, inter alia, "the giving up of a lease before its expiration." Id., at syl. pt. 4, in part, 212 W.Va. at 277, 569 S.E.2d at 798, and determined that when a lessee surrenders a lease to his or her lessor, such surrender will not operate to defeat the rights of the sublessee. Id., at syl. pt. 3. On the other hand, we noted, "`the termination of the primary lease terminates the sublease.'" Id., 212 W.Va. at 281, 569 S.E.2d at 802 (quoting Cato v. Silling, 137 W.Va. 694, 714, 73 S.E.2d 731, 743 (1952)). Accordingly, this Court granted Frazier & Oxley's petition for writ of prohibition and remanded the matter on the issue of whether City surrendered the prime lease to FMC, or whether the prime lease was terminated.
On remand following Frazier & Oxley I, FMC filed a motion to amend its complaint against Frazier & Oxley to include the claim that the sublease was void against FMC because it was not recorded, and to add City as a first-party defendant alleging it failed to disclose the sublease and breached its contract
After this Court decided Frazier & Oxley II, the circuit court granted summary judgment in favor of Frazier & Oxley. In its judgment order entered March 10, 2004, the court concluded, inter alia, that the parties to the prime lease, FMC and City, voluntarily terminated the lease by mutual agreement and that, accordingly, there was a "surrender" of the lease because the lease "did not nonrenew, expire or terminate pursuant to its express terms and conditions. ... As indicated by the Court in Frazier & Oxley I, `City National Bank subleased part of the leased premises in the St. James Building to Frazier & Oxley; City National cannot now surrender the leased premises to [FMC] and thereby defeat the rights of the subtenant.'" As a result of the circuit court's order, the law firm continued to occupy the mezzanine space in the St. James Building. FMC did not appeal the circuit court's order.
Following the circuit court's order granting summary judgment in favor of Frazier & Oxley and against FMC in the eviction case, FMC filed a breach of contract claim against City on or about April 9, 2004, alleging City breached the terms of the Lease Termination Agreement. As indicated above, the LTA executed on September 27, 2000, by FMC and City, in relevant part, recounted that a lease agreement had been entered into "for that certain banking facility located on the ground floor and mezzanine located in the St. James Building at Tenth Street and Fourth Avenue[.]" The LTA further provided that "for and in consideration of the premises which are not mere recitals, but are an integral part of this agreement. ... [t]hat certain lease ... dated November 1, 1979 is hereby terminated effective October 31, 2000, at which time possession of the main banking facility located within the St. James Building will be surrendered to" FMC.
In its complaint against City, FMC alleged, inter alia, that "[i]n the recitals of the Lease Termination Agreement, the `banking facility' was described as the ground floor and mezzanine located in St. James" and that at the end of the October 31, 2000, term, "the Main Banking Facility would be vacated." The complaint further alleged that under the LTA, City "was to deliver to [FMC] possession of the main banking facility, which included the ground floor and Mezzanine which was occupied by [Frazier & Oxley], on November 1, 2000. ... [FMC] has not received possession of part of the main banking facility known as the mezzanine as it is occupied by Frazier & Oxley."
Ultimately, the circuit court granted summary judgment, ruling on various legal theories in favor of City.
The circuit court also found certain terms of the LTA to be ambiguous. Specifically, the LTA provided, in relevant part, that a lease agreement had been entered into "for that certain banking facility located on the ground floor and mezzanine located in the St. James Building[.]" (Emphasis added) The LTA further provided "[t]hat certain lease ... dated November 1, 1979 is hereby terminated effective October 31, 2000, at which time possession of the main banking facility located within the St. James Building will be surrendered to" FMC. (Emphasis added) The circuit court proceeded to construe the evidence against FMC as the party who drafted the LTA and to interpret the evidence as proving that Mr. Hankins drafted the agreement with the knowledge that Frazier & Oxley occupied the mezzanine offices pursuant to a sublease with City. The court concluded that "the LTA did not impose upon City a contractual obligation to surrender the mezzanine, which was occupied by Frazier & Oxley."
It is from the circuit court's order granting summary judgment in favor of City that FMC now appeals.
In this appeal, we are asked to review a circuit court's entry of summary judgment. It is well established that "`[a] circuit court's entry of summary judgment is reviewed de novo.' Syllabus point 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994)." Syl. Pt. 1, Toth v. Board of Parks and Recreation Com'rs, 215 W.Va. 51, 593 S.E.2d 576 (2003). In conducting our de novo review, we apply the same standard utilized in the circuit court. Namely,
Toth, at syl. pt. 2, 215 W.Va. at 51, 593 S.E.2d at 576. Finally, we note that, "`[t]he circuit court's function at the summary judgment stage is not to weigh the evidence and determine the truth of the matter, but is to determine whether there is a genuine issue for trial.' Syllabus point 3, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994)." Toth, at syl. pt. 3, 215 W.Va. at 52, 593 S.E.2d at 577.
We first address whether the circuit court properly applied the doctrine of collateral estoppel to bar FMC's breach of contract claim against City. In syllabus point three of Holloman v. Nationwide Mut. Ins. Co., 217 W.Va. 269, 271, 617 S.E.2d 816, 818 (2005), this Court recognized that four conditions must be satisfied in order for collateral estoppel to foreclose a claim for damages:
The circuit court determined that all of the conditions set forth in Holloman were satisfied such that collateral estoppel applied to bar FMC's claim. We disagree. Indeed, we find the first condition to be dispositive because the issue decided in the eviction proceeding is not identical to the breach of contract issue presented herein. In the present case, lessor FMC avers that City, its lessee, breached the terms of the parties' Lease Termination Agreement because, among other things, City failed to ensure that the office space occupied by its subtenant, Frazier & Oxley, was vacated at the end of the then current lease term. FMC contends that City knew in April 2000 that it would not be renewing the lease ending October 31, 2000, and that it had ample time to properly notify its subtenant, Frazier & Oxley. FMC argues that if City had given the law firm timely and proper notification of its intention not to renew the prime lease, Frazier & Oxley would have vacated the premises at the end of the then current lease term and a surrender would not have occurred.
In contrast, the issue decided in the eviction proceeding between FMC and Frazier & Oxley was solely that of surrender. In that case, the circuit court determined that, as a matter of law, City's surrender of the prime lease to FMC did not defeat the rights of City's subtenant, Frazier & Oxley. This Court is of the opinion that whether City failed to ensure that Frazier & Oxley vacated the mezzanine office space under the LTA and whether such failure was a breach of the terms of the LTA are issues entirely separate from the issue of City's surrender of the prime lease to FMC and the legal effect of that surrender on Frazier & Oxley. Because the first condition of collateral estoppel is not satisfied, it does not apply to bar FMC's breach of contract claim against City. Accordingly, it was error for the circuit court to conclude that FMC's breach of contract claim was barred by the doctrine of collateral estoppel.
Next, we address whether the circuit court erred in concluding that City was entitled to summary judgment even if collateral estoppel did not apply to foreclose FMC's breach of contract claim against City. According to the circuit court, "City cannot be found to have breached the LTA by failing to perform an act that it was prohibited by the law of surrender from performing." In other words, because it was determined in the eviction case that surrender of the prime lease terminated City's rights as sublessor, City had no legal right to remove Frazier & Oxley as a subtenant or to deliver the mezzanine office space to FMC; thus, any provision in the LTA which may or may not require City to deliver the mezzanine space occupied by Frazier & Oxley is unenforceable. For this reason, the circuit court concluded that City's nonperformance under the LTA is excused.
In this appeal, FMC contends that under the doctrine of impracticability, genuine issues of material fact exist as to whether City's performance under the LTA was legally prohibited as a result of the surrender of the prime lease, and as such, the circuit court erred in granting summary judgment on this issue. We agree.
In syllabus point two of Waddy v. Riggleman, 216 W.Va. 250, 252, 606 S.E.2d 222, 224 (2004), this Court established four requirements that must be satisfied for the doctrine of impracticability to apply, thereby excusing a party's promised performance under a contract:
From our review of the record, we find, at the very least, that there are genuine issues of material fact regarding whether surrender of the prime lease resulted without the fault of City (the third requirement).
We find that the circuit court improperly weighed the evidence when it is clear that genuine issues of material fact exist as to whether City's performance under the LTA was rendered impracticable as a result of the surrender of the prime lease. Thus, it was error for the circuit court to grant summary judgment in favor of City on this issue.
The final issue for our review concerns an ambiguity in the Lease Termination Agreement executed on September 27, 2000. As indicated above, the LTA recounted, in relevant part, that a lease agreement had been entered into "for that certain banking facility located on the ground floor and mezzanine located in the St. James Building at Tenth Street and Fourth Avenue[,]" and further, that "for and in consideration of the premises which are not mere recitals, but are an integral part of this agreement. ... [t]hat certain lease ... dated November 1, 1979 is hereby terminated effective October 31, 2000, at which time possession of the main banking facility located within the St. James Building will be surrendered to" FMC. (Emphasis added) With regard to the foregoing, the circuit court determined that
Having determined the LTA was ambiguous, the court proceeded to consider evidence extrinsic to the agreement and to construe the ambiguity against FMC, the party who prepared it. The court ultimately concluded that "the LTA did not impose upon City a contractual obligation to surrender the mezzanine,
On appeal, FMC agrees with the circuit court that certain terms of the LTA are ambiguous. However, FMC contends that, considering the conflicting evidence as to the meaning of the ambiguous terms in the LTA, the ambiguity should have been resolved by a jury.
In past cases, this Court has held that "[w]here a contract is ambiguous, then issues of fact arise and a summary judgment is ordinarily not proper." Syl. Pt. 2, Lee Enterprises, Inc. v. Twentieth Century-Fox Film Corp., 172 W.Va. 63, 64, 303 S.E.2d 702, 703 (1983). See Syl. Pt. 1, Ohio Valley Contractors, Inc. v. Board of Educ. of Wetzel County, 182 W.Va. 741, 391 S.E.2d 891 (1990); Syl. Pt. 2, Glenmark Associates, Inc. v. Americare of W. Va., Inc., 179 W.Va. 632, 633, 371 S.E.2d 353, 354 (1988); Syl. Pt. 2, Buckhannon Sales Co. v. Appalantic Corp., 175 W.Va. 742, 743, 338 S.E.2d 222, 223, (1985). We further held in syllabus point one of Lee Enterprises that
172 W.Va. 63, 64, 303 S.E.2d 702, 703. (Emphasis added) See Syl. Pt. 11, Poling v. Pre-Paid Legal Services, Inc., 212 W.Va. 589, 592, 575 S.E.2d 199, 202 (2002); Syl. Pt. 1, Leasetronics, Inc. v. Charleston Area Medical Center, Inc., 165 W.Va. 773, 271 S.E.2d 608 (1980); Syllabus, McShane v. Imperial Towers, Inc., 165 W.Va. 94, 267 S.E.2d 196 (1980).
In this case, we agree with FMC that there are genuine issues of material fact regarding the use of the phrases "main banking facility" and "certain banking facility" in the LTA such that parol evidence concerning their interpretation should be considered and resolved by a jury. FMC contends that the LTA was intended to terminate the prime lease in its entirety and was not drafted to exclude the mezzanine from City's obligation to vacate. FMC's John Hankins testified that when the LTA was drafted, he was not aware that the law firm occupied the mezzanine pursuant to a sublease, but rather, he believed Messrs. Frazier and Oxley were permitted to use the offices because they were directors and board members of the bank. In contrast, City argues that, in fact, FMC knew of the subtenancy relationship, a fact it denoted on floor plans prepared for prospective tenants. Mr. Hankins explained, however, that the law firm's occupancy on the mezzanine appeared on floor plans because, considering it was already in the space, FMC considered the firm to be a prospective tenant after the prime lease ended. FMC notes further that City's Matthew Call testified that it was his intention to give up the entire lease, even the space the bank was not occupying (i.e., the mezzanine). City's Robert Hardwick similarly testified that he "assumed all along that the mezzanine, the basement, and the whole operation was part of the bank."
City argues, however, that the August 23, 2000, letter from Mr. Hankins to Mr. Hardwick, advising that FMC would take responsibility for negotiating a "new lease" for Frazier & Oxley after the prime lease ended shows that FMC knew that the law firm was occupying the mezzanine pursuant to a sublease. Mr. Hankins testified that his letter referred to the possibility of a "new" lease because he was unaware that one already existed.
As the foregoing demonstrates, there are clearly genuine issues of fact which are material to the question of how the ambiguity in the LTA should be resolved. Thus, the circuit
Based upon all of the above, the summary judgment order entered March 23, 2009, in the Circuit Court of Cabell County, is hereby reversed and this case is remanded for further proceedings.
Reversed and remanded.
