DDR Rio Hondo, L.L.C. v. Sunglass Hut Trading, L.L.C.
2013 Ohio 1800
Ohio Ct. App.2013Background
- Lease: DDR Rio Hondo, L.L.C. leased 500 sq ft of Plaza Rio Hondo to Sunglass Hut, starting Feb 11, 2007, for 10 years.
- Rent terms include minimum rent ($3,333.33/month) and a percentage rent based on gross sales; percentage rent due 30 days after each lease year.
- Co-tenancy provision (Article XXV) allows 6% of gross sales as alternative rent if occupancy thresholds are not met, payable in lieu of minimum and percentage rent.
- Sunglass Hut audited occupancy levels and discovered the co-tenancy threshold was never satisfied; elected to pay alternative rent and creditFuture rent.
- DDR filed suit Oct 2010 for rent breach; Sunglass Hut counterclaimed for declaratory relief that its April 2009 election to pay alternative rent was proper and sought attorney fees.
- Summary judgment granted to Sunglass Hut; DDR appeals challenging the election timing, contract ambiguity, and attorney-fee award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Sunglass Hut could retroactively elect alternative rent. | DDR: no retroactive election; contract requires timely election. | Sunglass Hut: co-tenancy clause not definite on election deadline or waiver; retroactive election allowed. | Ambiguous contract; retroactive election proper only if supported by extrinsic evidence; SJ reversed in part. |
| Whether the co-tenancy clause is ambiguous and precludes summary judgment. | DDR: contract language clear and unambiguous. | Sunglass Hut: clause clearly allows 6% alternative rent when thresholds unmet. | Contract ambiguous; extrinsic evidence needed; SJ improper. |
| Whether attorney-fee award to Sunglass Hut was proper. | DDR: no Fee award if not prevailing on all dispositive issues. | Sunglass Hut prevailed on some aspects per lease terms. | Attorney-fee award vacated pending further proceedings. |
Key Cases Cited
- Inland Refuse Transfer Co. v. Browning-Ferris Indus. of Ohio, Inc., 15 Ohio St.3d 321 (Ohio 1984) (contract ambiguities preclude summary judgment; extrinsic evidence proper)
- Sunoco, Inc. v. Toledo Edison Co., 129 Ohio St.3d 397 (Ohio 2011) (interpretation of contract; different terms must be given effect within whole agreement)
- Mark-It Place Foods v. New Plan Excel Realty Trust, Inc., 156 Ohio App.3d 65 (Ohio App. 4th Dist. 2004) (contract interpretation governs lease economics)
- Saunders v. Mortensen, 101 Ohio St.3d 86 (Ohio 2004) (intent of parties inferred from contract language; whole-instrument rule)
- Clark v. Humes, 2008-Ohio-640 (Ohio 2008) (read contract as a whole; enforce clear terms; ambiguity leads to factual issues)