Tartano Amusement Company, Inc. v. Mitchell Associates, Inc.
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IN THE COURT OF APPEALS
OF THE
STATE OF MISSISSIPPI
NO. 2001-CA-00970-COA
TARANTO AMUSEMENT COMPANY, INC. AND VINCENT SCOTT
CLEMENTS
v.
MITCHELL ASSOCIATES, INC.
DATE OF TRIAL COURT JUDGMENT:
TRIAL JUDGE:
COURT FROM WHICH APPEALED:
ATTORNEYS FOR APPELLANTS:
ATTORNEY FOR APPELLEE:
NATURE OF THE CASE:
TRIAL COURT DISPOSITION:
DISPOSITION:
MOTION FOR REHEARING FILED:
CERTIORARI FILED:
MANDATE ISSUED:
APPELLANTS
APPELLEE
04/23/2001
HON. J. N. RANDALL JR.
HARRISON COUNTY CHANCERY COURT
JOHN G. MCDONNELL
DAVID CLIFTON MORRISON
CHARLES PRINGLE
CIVIL - REAL PROPERTY
LEASEHOLD ESTATE HELD TO BE TERMINATED.
AFFIRMED - 05/21/2002
7/30/2002; amended mandate 9/9/2002
BEFORE SOUTHWICK, P.J., THOMAS, AND IRVING, JJ.
THOMAS, J., FOR THE COURT:
¶1. Mitchell Associates, Inc. sued for a determination that the Taranto Amusement Company, Inc., and
Vincent Scott Clement's leasehold rights to a strip of land on Highway 90 in Biloxi, Mississippi had expired
for failure to renew in the manner prescribed by the lease. The chancellor held that Taranto and Clements
failed to give timely notice to renew and the lease was extinguished. Aggrieved, Taranto and Clements
assert the following issues:
I. THE CHANCELLOR ERRED IN FINDING THAT THE WAIVER OF THE WRITTEN
RENEWAL NOTICE OF THE THIRD RENEWAL IN 1995 DID NOT CONSTITUTE A
WAIVER OF SUBSEQUENT WRITTEN RENEWAL NOTICES.
II. THE CHANCELLOR ERRED IN RULING THAT MITCHELL ASSOCIATES, INC.
WAS WITHIN ITS RIGHTS IN TERMINATING THE APPELLANT'S LEASEHOLD
RIGHTS IN THE PROPERTY FOLLOWING THE EXPIRATION OF THE THIRD
RENEWAL TERM.
III. THE CHANCELLOR ERRED IN DENYING THE APPELLANT'S MOTION FOR A
NEW TRIAL.
Finding no error, we affirm.
FACTS
¶2. The facts before the Court in this case are undisputed. Both parties filed an agreed statement of facts
and asked that the trial court determine the case based on the question of law. On October 17, 1980,
Mitchell Associates, Inc., leased a parcel of land fronting 115 feet on the north side of U.S. Highway 90,
Beach Boulevard, to Taranto Amusement Company. The original or primary term of the lease was for five
years beginning on December 1, 1980, and ending November 30, 1985. The lease included an option for
Taranto to renew the lease for three successive terms of five years each. In order to exercise the renewal
option, the lease required Taranto to give Mitchell ninety days notice in writing. The lease provides for a
base monthly rental adjusted annually to reflect changes in the Consumer Price Index.
¶3. By lease agreement dated June 22, 1984, Taranto was granted options to renew the lease for two
additional five-year terms after the first three had expired. Taranto met the requirements of the lease in 1985
and the lease was renewed for another five-year term. Similarly, in 1990, written notice was provided and
Taranto renewed for another five-year term. On June 25, 1991, Taranto assigned its interest in the lease to
Vincent Scott Clements as co-tenant. Mitchell consented to this assignment.
¶4. In 1995, no notice was given by either Clements or Taranto that the lease was to be renewed for
another term. However, they remained in possession of the property and paid rentals with adjustments as
though the lease had in fact been renewed. Mitchell did not terminate the lease and permitted Clements to
remain in possession of the property despite the lack of written notice. The third renewal term expired on
November 30, 2000.
¶5. Neither Taranto nor Clements gave notice to Mitchell that they intended to renew the lease for a fourth
renewal term. On November 10, 2000, Mitchell, acting through his attorney, notified Clements and Taranto
that the lease term expiring on November 30 would not be extended and that their leasehold rights would
terminate on that date and they should vacate the premises. Since the expiration of the third renewal term
on November 30, 2000, Clements has remained in the property. Mitchell has not accepted rental
payments, but rent has been paid into a trust account held by Clements and Taranto's attorney.
¶6. Harrison County Chancellor J. N. Randall, Jr. found that the lease includes separate options for renewal
including the original three terms and the latter two renewal terms. Each option to renew is separately and
individually numbered and each specifically includes the requirement of written notice at least ninety days in
advance of the end of the term. The chancellor found that even if Mitchell waived the requirement in 1995,
the requirement for the 2000 renewal would still be an independent and material requirement. The
chancellor went on to find that Mitchell did not waive the necessity for timely written notice and was within
its rights to terminate the leasehold rights in the property.
ANALYSIS
I. DID THE CHANCELLOR ERR IN FINDING THAT THE WAIVER OF THE
WRITTEN RENEWAL NOTICE OF THE THIRD RENEWAL IN 1995 DID NOT
CONSTITUTE A WAIVER OF SUBSEQUENT WRITTEN RENEWAL NOTICES?
II. DID THE CHANCELLOR ERR IN RULING THAT MITCHELL ASSOCIATES, INC.
WAS WITHIN ITS RIGHTS IN TERMINATING THE APPELLANT'S LEASEHOLD
RIGHTS IN THE PROPERTY FOLLOWING THE EXPIRATION OF THE THIRD
RENEWAL TERM?
¶7. We combine the appellant's first two issues and examine them together. The findings of a chancellor will
not be disturbed or set aside on appeal unless manifestly wrong and not supported by credible evidence, or
unless an erroneous legal standard was applied. Memphis Hardwood Flooring v. Daniel, 771 So. 2d
924, 930 (¶30) (Miss. 2000). All of the evidence before the chancellor and now before this Court comes
from the agreed statement of facts.
¶8. The appellants argue that permitting them to remain in possession of the property for five years after
expiration of the second option term constituted a waiver by Mitchell of the necessity of giving notice as
required by the lease. The chancellor found this argument to have no basis in law or fact. Finding no
Mississippi case law directly on point, the chancellor distinguished the two cases brought forward by
Clements and Taranto, Bennett v. Waffle House, 771 So. 2d 370 (Miss. 2000), and Vice v. Leigh, 670
So. 2d 6 (Miss. 1995). Both of these cases concern the effect of repeated and/or long-standing defaults by
a lessee upon the lessee's right to exercise the option to renew. Neither case involves the failure of a lessee
to give notice of intent to exercise an option to extend or renew the lease.
¶9. Bennett dealt with a breach of the lease to which the lessor did not object for fifteen years, and the
court held that the lessor was estopped to use the breach as grounds for refusal of the lessee's option to
renew. Bennett, 771 So. 2d at 373. The breach was totally unrelated to the renewal option and occurred
during the first fifteen year term. Id. In Vice, a primary lease term of fifteen years included an option to
renew provided that the lessee was not in default. Vice, 670 So. 2d at 6. On numerous occasions the lessee
had sublet the property without consent, but there was evidence the lessor knew of the subleases and did
not object or declare default. Id. at 8. The supreme court held that by failing to object to the violations of
conditions during the term of the lease, the lessor had waived his right to use these breaches as grounds to
deny lessee's right to renew. Id. at 10. Again, the breaches had nothing to do with the right to renew and
occurred during the first lease term.
¶10. The Mississippi Supreme Court quoted a Nevada Supreme Court decision in Vice which stated:
[T]he distinction must be observed between a waiver of the right to terminate the lease and a waiver
of the conditions precedent to the Lessee's right of renewal. A waiver is the intentional relinquishment
of a known right. . . Acceptance of rent clearly speaks an intent not to terminate a lease . . . but it
cannot be said that acceptance of rentals or other performance speaks any intent to release a Lessee
from an unrelated promise or condition. The neglect of the landlord to strictly enforce his right of
forfeiture for breach of a condition does not entitle the tenant to a renewal when such renewal is
dependent upon faithful performance of conditions.
Vice, at 10 (citing Reno Realty & Inv. Co. v. Hornstein, 301 P. 2d 1051, 1054-1055 (Nev. 1956)).
¶11. The chancellor found that a case from Indiana, Carsten & Midwest Aggregate Corp. v. Eickhoff,
323 N.E. 2d 664 (Ind. 1975), explained the conclusions best. In Carsten, no notice was given despite
sixty days being required expressly in the lease. Carsten, 323 N.E. 2d at 667. Several years after the
primary term had ended, the lessor gave notice that the lease was terminated. Id. The Indiana Supreme
Court held that the holding over by the lessee and acceptance of rent by the lessor did not constitute a
waiver of the written notice requirement of the lease. Id. at 669. The Indiana Supreme Court explained,
"The reasoning behind demanding exact compliance with the terms of the [renewal] option including the
notice provisions is that the Lessor is bound to grant the additional term while the Lessee is free to accept
or reject it." Id. at 300.
¶12. Buckley Brothers Motors, Inc. v. Grand Prix Imports, Inc., 633 P. 2d 1081 (Col. 1981), is also
on point. In Buckley, the lease to Grand Prix was for a primary term of three years with options to renew
for two successive terms of two and five years. The lease required ninety days notice. After the primary
term, Grand Prix failed to give notice as required by the lease but remained in possession of the property
for the length of the two-year term. Buckley Bros. Motors, Inc., 633 P. 2d at 1082. At the conclusion of
this time period, Grand Prix again failed to give notice, and Buckley notified Grand Prix that the lease would
be terminated. The court held "[T]he lessors were under no duty to remind the lessee of its obligations
under the lease, and the lessors' conduct does not excuse strict compliance with the written notice
requirement." Id. at 1084.
¶13. Under Mississippi case law, a "waiver" presupposes a full knowledge of a right existing, and an
intentional surrender or relinquishment of that right. It contemplates something done designedly or
knowingly, which modifies or changes existing rights, or varies or changes the terms and conditions of a
contract. It is the voluntary surrender of a right. To establish a waiver, there must be shown an act or
omission on the part of the one charged with the waiver fairly evidencing an intention permanently to
surrender the right alleged to have been waived. Ewing v. Adams, 573 So. 2d 1364, 1369 (Miss. 1990)
(quoting Ballantine's Law Dictionary 1356 (3d ed. 1969) (citations omitted)). The chancellor found it
significant that each of the five renewal options are separately set forth in individually numbered sections of
the lease and amendment. The terms and conditions are repeated in each section. The chancellor held that
not following the correct procedure under the option for the third renewal term did not constitute a waiver
of the requirements under the separately listed fourth renewal term.
¶14. We find the chancellor's decision to be supported by the evidence and not manifestly wrong. Mitchell
Associates, Inc., did not waive the written notice requirement for the fourth renewal term and was within its
rights in terminating the leasehold rights.
III. DID THE CHANCELLOR ERR IN DENYING THE APPELLANT'S MOTION FOR
A NEW TRIAL?
¶15. "Trial judges are vested with considerable discretion in ruling on motions for new trial, and it has been
noted on numerous occasions that '[t]his Court will reverse a trial judge's denial of request for new trial only
when such denial amounts to a[sic] abuse of that judge's discretion.'" Muhammad v. Muhammad, 622 So.
2d 1239, 1250 (Miss.1993) (citing Bobby Kitchens, Inc. v. Mississippi Ins. Guar. Ass'n, 560 So. 2d
129, 132 (Miss.1989)). The chancellor was able to examine the evidence and make specific findings in his
opinion. We find that the chancellor should be affirmed as his findings were supported by the substantial
evidence in the record and there was no abuse of discretion.
¶16. THE JUDGMENT OF THE CHANCERY COURT OF HARRISON COUNTY IS
AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE APPELLANTS.
McMILLIN, C.J., KING AND SOUTHWICK, P.JJ., BRIDGES, LEE, IRVING, MYERS,
CHANDLER AND BRANTLEY, JJ., CONCUR.
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