Lemond Properties, LLC v. Chart, Inc.

Filing 41

ORDER granting 7 Motion for Summary Judgment; denying 21 Motion for Summary Judgment (Written Opinion) Signed by Senior Judge David S. Doty on 1/19/2018. (DLO)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 17-4624(DSD/DTS)
Lemond Properties, LLC,
Plaintiff,
v.

ORDER

Chart Inc.,
Defendant.
John L. Krenn, Esq. and Gray Plant Mooty, 80 South 8th Street,
Suite 500, Minneapolis, MN 55402, counsel for plaintiff.
Jason R. Asmus, Esq. and Briggs & Morgan, PA, 80 South 8th
Street, Suite 2200, Minneapolis, MN 55402, counsel for
defendant.
This matter is before the court upon the cross motions for
summary judgment by plaintiff Lemond Properties, LLC and defendant
Chart,

Inc..

Based

on

a

review

of

the

file,

record,

and

proceedings herein, the court grants Lemond’s motion and denies
Chart’s motion.

BACKGROUND
This

contract

dispute

arises

out

of

the

parties’

lease

agreement involving industrial property in Owatonna, Minnesota.
Under the agreement, Chart agreed to lease the property from Lemond
for manufacturing purposes.

McGregor Decl. Ex. 1 §§ 1.1-1.3.

The

lease commenced on November 23, 2011, and the parties agreed it
would expire by its terms on November 30, 2023.

Id. §§ 3.1-3.2.

The lease also includes the following early termination provision:
Tenant shall have, in its sole discretion, the right to
terminate this Lease upon completion of the third (3rd)
Lease Year or the completion of the seventh (7th) Lease
Year, as applicable, by (1) providing Landlord with
twelve (12) months written notice prior to the start of
such applicable Lease Year (either the 3rd or the 7th)
that it is exercising its early termination rights ....
Id. § 3.3.
agreement.

On November 26, 2013, the parties amended the lease
Id. Ex. 2.

Among other changes, Chart agreed to waive

its early termination rights as to the third lease year.

Id. § C.

In 2015, Chart stopped manufacturing in the property, but continued
paying rent as set forth in the agreement.

Compl. ¶ 13.

Then, on

September 18, 2017, Chart sent a letter notifying Lemond that it
was terminating the lease effective at the end of the seventh lease
year (November 30, 2018).

McGregor Decl. Ex. 3.

Lemond responded

that the notice was untimely because Chart was required to give
twenty-four months’ notice before the completion of the seventh
lease year, i.e., on or before December 1, 2016.

Id. Ex. 4.

Lemond then commenced this suit seeking a declaration that
Chart’s termination notice is of no legal force or effect and that
the lease will not expire until November 30, 2023. Soon thereafter
both parties moved for summary judgment.1

1

If the court determines that extrinsic evidence is required
to decide the case, Chart requests a stay pursuant to Federal Rule
of Civil Procedure 56(d) so that the parties may engage in
discovery.
2

DISCUSSION
I.

Summary Judgment Standard
“The court shall grant summary judgment if the movant shows

that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”

Fed. R. Civ.

P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
A fact is material only when its resolution affects the outcome of
the case.
(1986).

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

A dispute is genuine if the evidence is such that it could

cause a reasonable jury to return a verdict for either party.

Id.

at 252.
On a motion for summary judgment, the court views all evidence
and inferences in a light most favorable to the nonmoving party.
Id. at 255.

The nonmoving party, however, may not rest on mere

denials or allegations in the pleadings but must set forth specific
facts sufficient to raise a genuine issue for trial.
U.S. at 324.

Celotex, 477

A party asserting that a genuine dispute exists - or

cannot exist - about a material fact must cite “particular parts of
materials in the record.”

Fed. R. Civ. P. 56(c)(1)(A).

If a

plaintiff cannot support each essential element of a claim, the
court must grant summary judgment because a complete failure of
proof regarding an essential element necessarily renders all other
facts immaterial.

Celotex, 477 U.S. at 322-23.

3

II.

Timeliness of Termination Notice
This case turns on the interpretation of the early termination

provision.

“The cardinal purpose of construing a contract is to

give effect to the intention of the parties as expressed in the
language they used in drafting the whole contract.”

Art Goebel,

Inc. v. N. Suburban Agencies, Inc., 567 N.W.2d 511, 515 (Minn.
1997).2

Construction

of

an

unambiguous

contract

is

a

legal

question for the court, while construction of an ambiguous contract
is a factual question for the jury.

Denelsbeck v. Wells Fargo &

Co., 666 N.W.2d 339, 346 (Minn. 2003).

A contract is ambiguous if

“it is reasonably susceptible to more than one interpretation.”
Art Goebel, Inc., 567 N.W.2d at 515.

“Where the parties express

their intent in unambiguous words, those words are to be given
their plain and ordinary meaning.”

Motorsports Racing Plus, Inc.

v. Arctic Cat Sales, Inc., 666 N.W.2d 320, 323 (Minn. 2003).

A

court determines whether a contract is ambiguous “based solely on
the language of the contract.”

Maurice Sunderland Architecture,

Inc. v. Simon, 5 F.3d 334, 337 (8th Cir. 1993).

“Minnesota courts

assign unambiguous contract language its plain meaning and refrain
from rewriting, modifying, or limiting its effect by a strained
construction.” Feed Mgmt. Sys., Inc. v. Comco Sys., Inc., 823 F.3d
488, 493 (8th Cir. 2016).

Further, courts give effect to all of

2

The lease is governed by Minnesota law.
1 § 16.10; id. Ex. 2 § F.
4

McGregor Decl. Ex.

the

contract’s

provisions

and

must

“attempt

to

avoid

an

interpretation of the contract that would render a provision
meaningless.”

Chergosky v. Crosstown Bell, Inc., 463 N.W.2d 522,

526 (Minn. 1990).
According
unambiguously

to

Lemond,

requires

Chart

the
to

early
provide

termination
at

least

provision
twenty-four

months’ notice of early termination. Chart responds that the plain
language of the provision requires only twelve months’ notice.
Chart also relies on extrinsic evidence, including pre-execution
negotiations, to support its position.3

The court agrees with

Lemond that the early termination provision unambiguously required
Chart to provide at least twenty-four months notice of termination.
Relevant to the facts presented, the provision states that
Chart may unilaterally terminate the lease “upon completion of the
... seventh (7th) Lease Year ... by (1) providing Landlord with
twelve (12) months written notice prior to the start of [the 7th
Lease Year] that it is exercising its early termination rights
....”

Id. § 3.3 (emphasis added).

The seventh lease year runs

from December 1, 2017, through November 30, 2018.

Id. § 4.1.

Under the plain language of the provision, Chart was required to

3

The court will only consider extrinsic evidence if it
concludes that the contract language is ambiguous.
See Summit
Recovery, LLC v. Credit Card Reseller, LLC, No. 08-5273, 2010 WL
1427322, at *4 (D. Minn. Apr. 9, 2010) (“[T]he parol evidence rule
bars admission of extrinsic evidence when the parties have reduced
their agreement to an unambiguous, integrated writing.”).
5

give written notice of termination twelve months prior to December
1, 2017, i.e., twelve months prior to the start of the seventh
lease year.

It is undisputed that Chart failed to do so.

Chart argues that it was only required to provide twelve
months’ notice before the end of the seventh lease year.

In other

words, Chart contends that it was obligated to provide notice of
termination before November 30, 2017, which it did.

Chart’s

interpretation is unavailing; it requires the court to disregard
the words “prior to the start of” the seventh lease year.

The

court cannot do so.
Nor will the court construe the provision unreasonably.
Goebel, Inc., 567 N.W.2d at 515.

Art

Chart argues that “prior to the

start of” simply means that it is obligated to provide twelve
months and one day notice; in other words, by November 30, 2017.
But that interpretation is strained, nonsensical, and would render
the “prior to the start of” language practically meaningless.

If,

for example, the language at issue were excluded entirely from the
provision, notice would have been required by December 1, 2017.
According to Chart, the “prior to the start of” language was
included for the sole purpose of imposing one additional day of
notice (November 30, 2017).

The court is not convinced.

A plain

reading of the provision as a whole belies this interpretation.

6

Had the parties intended to provide a notice period of twelve
months, they could have done so by using the words like “prior to
the end of” or “prior to the expiration of” the lease year instead
of “prior to the start of” the lease year.
the lease’s purchase option provision.

Indeed, they did so in

See id. § 17, Ex. F ¶ 2

(“Tenant may exercise the Purchase Option only by delivering to
Landlord, at least twelve (12) months prior to the expiration of
the Option Term, a written notice of exercise ....”) (emphasis
added).

The failure to similarly phrase the early termination

provision

is

telling

and

further

supports

the

court’s

interpretation.
As

a

result,

interpretation,

the

under
court

settled
concludes

principles
that

of

Chart’s

contract
notice

of

termination was untimely and, therefore, the lease remains in
effect. Because the lease agreement is unambiguous, the court will
not consider extrinsic evidence and denies Chart’s request for a
stay under Rule 56(d).

CONCLUSION
Accordingly, based on the above, IT IS HEREBY ORDERED that
1.

Plaintiff’s motion for summary judgment [ECF No. 7] is

granted; and

7

2.

Defendant’s motion for summary judgment [ECF No. 21] is

denied.
LET JUDGMENT BE ENTERED ACCORDINGLY.

Dated: January 19, 2018
s/David S. Doty
David S. Doty, Judge
United States District Court

8