Fletcher, et al. v. U.S. Restaurant Properties, Inc.
| Docket Number: | 2003-CA-01555-COA | |
| Court of Appeals: |
Opinion Link Opinion Date: 08-24-2004 Opinion Author: Myers, J. Holding: Affirmed |
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| Additional Case Information: |
Topic: Contract - Modification of lease terms - Waiver - Equitable estoppel - Laches Judge(s) Concurring: King, C.J., Bridges, P.J., Lee, Chandler and Griffis, JJ. Non Participating Judge(s): Irving and Barnes, JJ. Procedural History: Bench Trial Nature of the Case: CIVIL - REAL PROPERTY |
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| Trial Court: |
Date of Trial Judgment: 05-27-2003 Appealed from: Lee County Chancery Court Judge: Jaqueline Mask Disposition: DECLARATORY JUDGMENT IN FAVOR OF U.S. RESTAURANT PROPERTIES, INC. Case Number: 02-1114 |
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| Party Name: | Attorney Name: | |||
| Appellant: | Clarence E. Fletcher and CEF Enterprises, Inc. |
DAVID R. SPARKS |
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| Appellee: | U.S. Restaurant Properties, Inc. | MARTHA BOST STEGALL |
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| Topic: | Contract - Modification of lease terms - Waiver - Equitable estoppel - Laches |
| Summary of the Facts: | Clarence Fletcher and CEF Enterprises, Inc. filed a complaint seeking a declaratory judgment against U.S. Restaurant Properties, Inc., arguing that a commercial lease between it and USRP had been modified and that USRP was barred by the doctrines of waiver, equitable estoppel, and laches from seeking rent payments based on gross sales figures. USRP answered CEF’s complaint and also filed a counterclaim. The court ruled that CEF was responsible for the full amount of rent based on the terms of the lease. CEF appeals. |
| Summary of Opinion Analysis: | Issue 1: Modification of lease CEF argues that its payment of percentage rent based on net sales over a period of almost nineteen years effectively modified the written lease which required CEF to pay percentage rent based on gross sales. The subsequent actions of parties pursuant to a contract may support a finding that the original contract has been modified to an extent consistent with the subsequent course of conduct. Here, there is no evidence that USRP had any knowledge that CEF was paying percentage rent contrary to the unambiguous terms of the lease. In addition, there is no evidence that USRP agreed to accept percentage rent based on net sales. Therefore, the lease was not modified, and USRP did not abandon its right to receive percentage rent based on gross sales. Issue 2: Waiver CEF argues that USRP waived its right to percentage rent based on gross sales by continuously accepting the percentage rent tendered. A waiver presupposes a full knowledge of a right existing, and an intentional surrender or relinquishment of that right. CEF presented no evidence that USRP knowingly surrendered its right to collect percentage rent based on gross sales after it became aware of CEF’s conduct. In addition, the lease includes a non-waiver provision. The doctrine of equitable estoppel is also inapplicable since neither USRP nor its predecessor had knowledge prior to the audit that CEF had been calculating its percentage rent on net sales. The doctrine of laches does not bar USRP’s claim since CEF received a benefit by paying a percentage on a smaller sales number. |
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