Shadow Industries, LLP v. Hoffman, et al.

Shadow Industries, LLP, appealed a district court judgment dismissing its eviction action and holding the tenants David and Chris Hoffman had timely exercised their option to extend the term of the parties’ lease agreement. Shadow argued the district court erred in finding the parties’ lease agreement to be ambiguous, finding the option to extend the lease expired on February 1, 2019, and finding the Hoffmans timely exercised their option to extend the lease. The North Dakota Supreme Court found the district court’s interpretation of the lease as having ambiguity as to when the lease terminated was premised upon the court’s observation that “[w]hen ‘crop years’ end and begin is undefined.” To this, the Supreme Court disagreed that the lease was ambiguous and failed to define the end of the lease. The Supreme Court found the lease terminated at the end of the 2018 crop year. "While determining when the end of the 2018 crop year occurred may be a question of fact, the term is not ambiguous simply because it requires a future event or contingency." There was testimony that the crop year ended no later than October 2018; following the harvesting of their crops and still in 2018, the Hoffmans deep ripped the land, tilled to create fall bedding, and applied fertilizer to prepare for the 2019 crop year. "On the basis of these facts, and the absence of any contrary facts in the record, we conclude as a matter of law the 2018 crop year ended and the lease terminated in 2018." Because the facts of this case compelled a finding the 2018 crop year ended in 2018 and the lease terminated at the end of the 2018 crop year, the Court found the exercise of the option in January 2019 was not timely and the lease terminated. It therefore reversed judgment and remanded for further proceedings.