CHARLES A. BROWN, JR. AND NORMAN NOLTEMEYER, D/B/A BROWN NOLTEMEYER CO. v. BLUE BOAR CAFETERIA COMPANY AND BB HOLDINGS, INC.
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RENDERED: May 7, 1999; 2:00 p.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
NO.
1997-CA-002045-MR
AND
1997-CA-002983-MR
CHARLES A. BROWN, JR. AND
NORMAN NOLTEMEYER, D/B/A BROWN NOLTEMEYER CO.
v.
APPELLANTS
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE THOMAS KNOPF, JUDGE
ACTION NO. 95-CI-00731
BLUE BOAR CAFETERIA COMPANY
AND BB HOLDINGS, INC.
APPELLEES
OPINION AFFIRMING IN 1997-CA-002983-MR
AND ORDER DISMISSING 1997-CA-002045-MR
** ** ** ** **
BEFORE:
GUDGEL, CHIEF JUDGE; GUIDUGLI AND SCHRODER, JUDGES.
GUIDUGLI, JUDGE:
Blue Boar Cafeteria Company (Blue Boar) appeals
from the following three orders of the Jefferson Circuit Court:
(1) the order entered on July 20, 1995, which held Blue Boar’s
discontinuance of use of the leased premises did not terminate
its obligations to Brown Noltemeyer Company (Brown Noltemeyer);
(2) the order entered on August 11, 1995, which denied its motion
to reconsider and vacate; and (3) the order entered on
February 1, 1996, which awarded damages to Brown Noltemeyer in
the amount of $301,534.10.
Brown Noltemeyer appeals from an
order of the Jefferson Circuit Court entered on July 11, 1997,
which held that BB Holdings, Inc. was not liable for the judgment
against Blue Boar.
The two cases have been consolidated for our
review.
In February 1986, Brown Noltemeyer leased certain real
property in Clarksville Towne Center in Clarksville, Indiana, to
Blue Boar for a term of fifteen years.
In January 1995, Blue
Boar gave notice to Brown Noltemeyer that it planned to
discontinue use of the leased premises in thirty days.
According
to Blue Boar’s interpretation of the lease, discontinuance of the
use of the premises terminated the lease.
disagreed and filed suit in circuit court.
Brown Noltemeyer
Blue Boar filed a
counterclaim alleging negligence, mismanagement, and breach of
the lease by Brown Noltemeyer.
The circuit court found the pertinent provision of the
lease, Article X, section 10.10, was not ambiguous and Blue Boar
did not have the power to terminate the lease.
Blue Boar then
filed a motion to reconsider claiming the court’s order was
inconsistent with its finding that Article X, section 10.10 was
unambiguous and asking the court to specifically review the "sole
remedy" language.
The circuit court denied Blue Boar’s motion to
reconsider and set a hearing to determine damages.
On February
1, 1996, the circuit court awarded $301,534.10 in damages in
favor of Brown Noltemeyer.
Blue Boar then appealed the orders.
In August 1997, this Court dismissed Blue Boar’s notice
of appeal as interlocutory because the circuit court had not
adjudicated Blue Boar’s counterclaim and the requisite language
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under Kentucky Rules of Civil Procedure (CR) 54.02 was not
included in the February 1, 1996 order.
On October 10, 1997, the
circuit court amended the order to include the CR 54.02 language.
This appeal followed.
On appeal, Blue Boar alleges the circuit court erred by
failing to find Article X, section 10.10 of the lease was
ambiguous and that Blue Boar had the power to terminate the
lease.
Second, Blue Boar alleges that the circuit court mis-
interpreted the introductory language to the pertinent provision
of Article X, section 10.10 and the "sole remedy" language which
followed.
Finally, Blue Boar argues that the circuit court erred
by awarding damages under the default provisions of the lease and
by not granting Blue Boar a credit for the leasehold improvements
left on the demised premises.
Article X, section 10.4 of the lease provided that the
"[l]ease shall be governed by and construed in accordance with
the laws of the State of Indiana."
Despite a choice of law
clause, Kentucky will apply its own laws when there are
sufficient contacts and no overwhelming interests to the
contrary.
Paine v. La Quinta Motor Inns, Inc., Ky. App., 736
S.W.2d 355 (1987).
Brown Noltemeyer, a Kentucky partnership,
filed this suit against Blue Boar, a Kentucky corporation,
alleging breach of a lease of real property located in Indiana.
Because Kentucky and Indiana law are significantly similar in
their approach to contract interpretation, we will address Blue
Boar’s claims in concurrence with both states laws.
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The construction of a contract, as a matter of law, is
one for the court.
Phelps v. Sledd, Ky., 479 S.W.2d 894, 896
(1972); Battershell v. Prestwick Sales, Inc., Ind. App., 585
N.E.2d 1 (1992).
In the absence of ambiguity, a contract will be
enforced according to its terms, applying the plain and ordinary
meaning of the language.
Obryan v. Massey Ferguson, Inc., Ky.,
413 S.W.2d 891 (1966); City of Evansville v. Braun, Ind. App.,
619 N.E.2d 956 (1993).
"A contract is not rendered ambiguous
simply because the parties do not agree on its proper
construction or their intent upon executing the contract."
Overberg v. Lusby, 727 F. Supp. 1091, 1093 (E.D. Ky. 1990),
affirmed in 921 F.2d 90 (6th Cir. 1990).
The dispute over Blue Boar’s alleged power to terminate
the lease arises from the language found in Article X, section
10.10 of the lease.
The pertinent portions are:
Tenant shall...operate one hundred percent (100%) of
the Leased Premises during the entire Term... with due
diligence and efficiency so as to produce all of the
Gross Sales which may be produced by such manner of
operation....Notwithstanding the foregoing, or anything
else in this Lease to the contrary, in the event the
Tenant elects to discontinue its business and the use
and occupancy of the Demised Premises, or to
substantially reduce its use thereof ("Discontinuance
of Use"), Tenant may, upon not less than 30 days notice
to Landlord, do so and Landlord’s sole remedy for such
Discontinuance of Use shall be the right to elect to
terminate this Lease. Landlord may elect such
termination at any time within thirty (30) days
following the receipt of notice of Discontinuance of
Use.
Blue Boar alleges the circuit court tacitly
acknowledged that this language was ambiguous by finding its
alleged right to terminate the lease rendered Brown Noltemeyer’s
right to terminate the lease under the same section meaningless.
-4-
This finding does not acknowledge any ambiguity, but rather,
points out the shortcomings of Blue Boar’s argument by applying
its interpretation to the plain language of the lease.
We agree
with the circuit court’s interpretation of Article X, section
10.10 as being unambiguous.
Blue Boar argues the circuit court erred in its
interpretation of the introductory phrase, "[n]otwithstanding the
foregoing, or anything else in this Lease to the contrary...."
While the circuit court did state that the phrase "clearly is
referring to the language immediately above it", the court did
not, as Blue Boar contends, expressly negate its application to
the entire lease.
Inasmuch as the circuit court may have implied
such a limiting interpretation, we find the plain language of the
phrase makes it applicable to the entire lease.
It is clear that the obligation to operate one-hundred
percent of the premises and other obligations in the lease, such
as the contingent obligation to pay percentage rent, were subject
to Blue Boar’s right to discontinue use of the premises.
Because
Blue Boar had the right to discontinue use of the premises, Brown
Noltemeyer could not treat such discontinued use as a default
under the lease.
Once Blue Boar discontinued use of the
premises, Brown Noltemeyer had the option of; (1) terminating the
lease and looking for a new tenant who would operate one-hundred
percent of the premises and trigger the payment of percentage
rent, or (2) not terminate the lease and maintain Blue Boar as a
tenant knowing that the obligation to pay percentage rent would
-5-
never become due.1
Ultimately, Brown Noltemeyer decided to keep
Blue Boar as a tenant and not terminate the lease.
Finally, Blue Boar argues the circuit court erred by
awarding damages under the default provisions and by not giving
Blue Boar a credit for the leasehold improvements left on the
premises.
The damages were broken down into the following
categories:
unpaid rent, common area maintenance, taxes, late
charges, real estate commissions, and renovation costs.
Specifically, Blue Boar contests the damages awarded as a result
of renovation costs incurred by Brown Noltemeyer.
Because the lease was not terminated, Blue Boar
continued to have an obligations under the lease.
Only when Blue
Boar refused to perform these obligations, such as the obligation
to pay the fixed rent, did it default on the lease.
Therefore,
it was not clearly erroneous for the circuit court to calculate
damages in accordance with the default provisions.
Furthermore,
the circuit court correctly applied Article VII, section 7.1.10
and Article IX, section 9.2 in denying Blue Boar a credit for the
leasehold improvements left on the premises which were not used
in the renovation by Brown Noltemeyer.
In an attempt to enforce the judgment, Brown Noltemeyer
discovered that Blue Boar had distributed a majority of its
assets to BB Holdings, Inc.
In April 1996, Brown Noltemeyer
filed an amended complaint seeking to enforce the judgment
1
Article III, section 3.1 (b) provides: "A percentage
rent in an amount equal to 5% of the Gross Sales in excess of
$1,300,000 for each Lease year payable during the initial period
of the Lease Term;"
-6-
against BB Holdings, Inc.
On July 11, 1997, the circuit court
found that BB Holdings, Inc. was not liable for the judgment
against Blue Boar.
Brown Noltemeyer appeals the order.
Brown Noltemeyer’s notice of appeal was "clocked and
dropped" on August 8, 1997, but the filing fee was not paid until
August 12, 1997, one day after the time period required by CR
73.02 (1)(a) had expired.
Pursuant to CR 73.02 (1)(b), the
circuit clerk did not file the notice of appeal until the filing
fee was paid on August 12, 1997.
Brown Noltemeyer argues that
the notice of appeal was timely filed despite the failure to pay
the filing fee.
Brown Noltemeyer incorrectly relies on Foxworthy v.
Norstam Veneers, Inc., Ky., 816 S.W.2d 907 (1991).
In Foxworthy,
the Kentucky Supreme Court held that the failure to pay the
filing fee was not automatically fatal or jurisdictional.
In
that case, the appellant had timely mailed a notice of appeal and
the clerk entered it in the docket sheet as filed, even though
the filing fee had not been paid.
The appellant then proceeded
under the mistaken belief that he had strictly complied with CR
73.02 (1)(a).
Foxworthy is not applicable to the case at bar.
Here, the circuit clerk did not record the notice of appeal in
the docket sheet until after the filing fee was paid, not before.
There was no justifiable reason to believe that Brown Noltemeyer
had met the requirements of CR 73.02.
Accordingly, we find the
failure to timely pay the filing fee to be fatal to the appeal.
For the reasons stated above, the orders of the
Jefferson Circuit Court finding Blue Boar had breached the lease
-7-
and awarding damages pursuant to the default provisions are
hereby affirmed.
And, it is ORDERED that appeal No. 1997-CA-
002045-MR be DISMISSED.
ALL CONCUR.
ENTERED:
May 7, 1999
/s/ Daniel T. Guidugli
JUDGE, COURT OF APPEALS
BRIEF FOR APPELLANTS:
BRIEF FOR APPELLEES:
David L. Sage, II
Louisville, Kentucky
John David Dyche
Louisville, Kentucky
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