Thrifty Payless v. Hillside

----ooOoo----

Thrifty Payless, Inc.,
a California corporation dba Rite Aid,
Plaintiff and Appellee,

v.

Hillside Plaza, Ltd.,
dba Hillside Plaza Properties,
Defendant and Appellant.

MEMORANDUM DECISION
(Not For Official Publication)

Case No. 20000904-CA

F I L E D
October 12, 2001 2001 UT App 296 -----

Third District, Salt Lake Department
The Honorable Stephen L. Henriod

Attorneys:
Matthew G. Bagley and Scott O. Mercer, Salt Lake City, for Appellant
Stephen G. Morgan and Cynthia K.C. Meyer, Salt Lake City, for Appellee

-----

Before Judges Bench, Billings, and Davis.

BILLINGS, Judge:

Hillside first argues Rite Aid made its tax reimbursement payment for the 1999 property taxes in calendar year 2000 and therefore, pursuant to the terms of the lease, cannot use its 2000 tax reimbursement to offset its 1999 percentage rent payment.

The relevant provision of the lease, section 4, provides: (4) TAXES. Landlord shall pay or cause to be paid all taxes levied against the Shopping Center, including general property taxes and special improvement taxes or assessments, and shall indemnify Tenant and hold Tenant harmless from any and all claims or demands for payment of any such taxes or assessments. . . .

Tenant agrees to reimburse Landlord for the amount of such taxes assessed against the Premises during the original term of this Lease (or as the same may be extended). . . . Tenant shall also reimburse Landlord for its pro rata share of the general property taxes assessed against the Common Areas. . . . Tenant shall reimburse Landlord for its share of such general property taxes within 30 days after receipt by Tenant of a statement setting forth the amount due Landlord under the provisions of this article, together with the original tax bill or a true copy thereof and a computation of the amount to be paid by Tenant, determined as provided in this article. All amounts paid by Tenant pursuant to this article, may be deducted by Tenant from any percentage rent due for the calendar year in which such taxes were paid, regardless of who may own Landlord's interest in this Lease at the time. Tenant may, in its own name or in the name of Landlord, contest any such assessment or tax but, in any such event, Landlord shall share in all costs and expenses of contesting such assessment or tax as its interest may appear. (Emphasis added.)

Hillside asserts that it is unambiguous that the term "such taxes" in the emphasized portion above refers to Rite Aid's tax reimbursement payments. Rite Aid responds that the lease is clear and unambiguous that the term "such taxes" refers to Hillside's obligation to pay property taxes, because Rite Aid was never actually paying property taxes; rather it was simply reimbursing Hillside for its payment of taxes. Thus, Rite Aid asserts that because Hillside paid such taxes in 1999, Rite Aid can offset its 1999 percentage rent payment with its reimbursement of those taxes, even though it did not reimburse Hillside until January 2000.

We conclude that Rite Aid's interpretation of section 4 of the lease is reasonable and correct. Section 4 unambiguously states that Hillside is the party responsible for actually paying taxes on the property: "Landlord shall pay or cause to be paid all taxes levied against the Shopping Center . . . and shall indemnify Tenant and hold Tenant harmless from any and all claims or demands for payment of any such taxes . . . ." (Emphasis added.) It is equally clear that Rite Aid is not responsible for paying taxes per se; rather it is reimbursing Hillside for Hillside's payment of "such taxes." Section 4 states: "Tenant agrees to reimburse Landlord for the amount of such taxes . . . ."

In sum, we think the term "such taxes" when read not in isolation, but in the context of the entire lease unambiguously refers to Hillside's payment of property taxes. Therefore, Rite Aid can deduct its tax reimbursement payment from its percentage rent despite the fact that it made its reimbursement payment in a different calendar year.

Hillside next argues that Rite Aid waived its right to offset its percentage rent payments in 1994, 1995, and 1996 because it waited until 1999 to assert its rights to the same. Hillside asserts that because waiver may be implied from inaction, Rite Aid's inaction in asserting its right to offset at the same time it submitted its percentage rent reports constitutes a waiver of the right to offset.

The Utah Supreme Court squarely addressed the standard for a waiver in Soter's, Inc. v. Deseret Fed. Sav. & Loan, 857 P.2d 935 (Utah 1993). In Soter's, the court outlined the three elements of waiver: "(1) an existing right, benefit, or advantage; (2) knowledge of its existence; and (3) an intention to relinquish the right." Id. at 940; see also K & T, Inc. v. Koroulis, 888 P.2d 623, 628-29 (Utah 1994). "Any waiver 'must be distinctly made, although it may be express or implied,'" from action or inaction. Soter's, 857 P.2d at 940 (citation omitted); see also K & T, 888 P.2d at 629.

In Soter's, the supreme court noted that "intent may be more difficult to prove when waiver is to be implied from conduct or silence," as is the case here, and thus set out the "general principle in our case law that '[m]ere silence is not a waiver unless there is some duty or obligation to speak.'" 857 P.2d at 940 (quoting Plateau Mining Co. v. Div. of State Lands & Forestry, 802 P.2d 720, 730 (Utah 1990)). The lease contains deadlines for many of the parties' obligations and for submitting claims arising thereunder. For example, Rite Aid's tax reimbursement payments are due thirty days after Hillside provides a statement to Rite Aid. However, while the lease provides the parties many clear and certain deadlines regarding their respective obligations, there is no such deadline for Rite Aid to assert its claim to offset its tax reimbursement payments from its percentage rent. Thus, because there is no duty or obligation in the lease itself, nor anything in the record that would imply such an obligation or duty from the parties' prior course of dealing, we conclude Rite Aid did not intentionally relinquish the right to offset through inaction.

Hillside next argues Rite Aid was not entitled to attorney fees and costs. However, the lease clearly states the party in breach of the lease must pay attorney fees and costs. We conclude Hillside breached the lease by refusing to allow Rite Aid to claim its offsets; thus Rite Aid was entitled to its attorney fees and costs.(1) We also award Rite Aid its attorney fees on appeal and remand for a determination of reasonable fees by the trial court.

Hillside finally argues the trial court erred in awarding prejudgment interest to Rite Aid, because Rite Aid did not present its claim for prejudgment interest prior to the trial court granting summary judgment to Rite Aid. It is clear from the record, however, that Hillside had the opportunity to make its argument before the trial court in its objection to Rite Aid's proposed order.

"Prejudgment interest may be awarded in a case where the loss is fixed as of a particular time and the amount of the loss can be calculated with mathematical accuracy." Jorgensen v. John Clay & Co., 660 P.2d 229, 233 (Utah 1983). Because the lease does not specify a different rate, the interest rate is ten percent per annum, as fixed by statute. See Utah Code Ann. § 15-1-1(2) (1999).

In the instant case, Rite Aid's loss can be calculated with mathematical accuracy. However, to make that calculation, the trial court must determine when the loss occurred. While the trial court found the dates to be the time when Rite Aid was entitled to claim its offsets, we conclude the correct time is when Rite Aid actually asserted its rights to the offsets, April 1999. Hillside did not technically breach the lease until it refused to refund the money Rite Aid was entitled to under the lease. That breach occurred in April 1999. We therefore reverse and remand for a re-calculation of prejudgment interest in accordance with our decision.(2)
 
 

______________________________
Judith M. Billings, Judge -----

WE CONCUR:
 
 

______________________________
Russell W. Bench, Judge
 
 

______________________________
James Z. Davis, Judge

1. Hillside also argues that counsel for Rite Aid did not submit an affidavit as required by Rule 4-505 of the Utah Rules of Judicial Administration. The record is clear that counsel for Rite Aid submitted an affidavit complying with the standards of Rule 4-505. The affidavit sets forth the nature of the work, hours spent, and reasonableness of the fees.

Hillside further argues it did not have notice or an opportunity to object to Rite Aid's request for attorney fees because it was not an issue prior to summary judgment. However, the record is clear that Hillside had the opportunity to object and did in fact object to Rite Aid's fee request at the time Rite Aid made the request in its proposed order.

2. At oral argument the parties agreed that the prejudgment interest award would not include interest on the amounts Rite Aid withheld from Hillside from July to September 1999.