334 P.3d 116
Wash. Ct. App.2014Background
- Firgrove Commons 3 LLC appeals a trial court declaratory judgment that Viking Bank does not owe management fees related to Viking Bank’s lease.
- Firgrove argues Viking Bank is responsible under the lease’s triple net structure and its obligation to pay all costs and expenses.
- The lease requires Viking Bank to pay base rent and be “absolutely net,” with Viking Bank paying all costs, charges, insurance, taxes, utilities, and CAM expenses.
- A separate property manager was hired by Firgrove to manage common areas and bill tenants a 5% management fee based on Viking Bank’s rent.
- Viking Bank refused to pay the fee; the trial court found the lease does not expressly or implicitly require payment of the management fee.
- The court interprets section 3.5 de novo, concludes the lease does not require Viking Bank to reimburse the management fee, and affirms the judgment; Viking Bank has paid CAM, taxes, and utilities as obligated, while other administrative tasks were for Firgrove’s benefit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Viking Bank obligated to reimburse the management fee under section 3.5? | Firgrove: lease makes rent triple net and absolute to landlord; includes all costs. | Viking Bank: lease contemplates bank manages its own premises; management fee not within 3.5. | No; bank not required to pay the management fee. |
| Does the management fee relate to CAM maintenance obligations? | Fee facilitates CAM-related services for common areas. | CAM covers only maintenance of common areas; administration fees not CAM. | Fee not within CAM expenses; unallocated portion not required. |
| Do other lease provisions show Viking Bank was intended to manage the premises? | N/A | Lease requires Bank to pay taxes, utilities, insurance, and maintain premises, implying self-management. | Supports interpretation that Viking Bank was to manage its own premises; fee not required. |
Key Cases Cited
- Hearst Commc’ns, Inc. v. Seattle Times Co., 154 Wn.2d 493 (Wash. 2005) (contract interpretation under the objective manifestation theory; extrinsic evidence limited to word meaning)
- Berg v. Hudesman, 115 Wn.2d 657 (Wash. 1990) (ambiguity and factual context affect contract interpretation; context rule allowed extrinsic evidence)
- Simpson Inv. Co. v. Dep’t of Revenue, 141 Wn.2d 139 (Wash. 2000) (maxim as to interpreting general terms with explicit items (ejusdem generis))
- Kitsap County v. Allstate Ins. Co., 136 Wn.2d 567 (Wash. 1998) (contextual interpretation; contract in context of related provisions)
- Johnny’s Seafood Co. v. City of Tacoma, 73 Wn. App. 415 (Wash. Ct. App. 1994) (ambiguities resolved in favor of lessee when drafted by lessor)
- Mut. of Enumclaw v. USF Ins. Co., 164 Wn.2d 411 (Wash. 2008) (contract interpretation with extrinsic evidence where appropriate; ambiguity analysis)
- Wash. State Major League Baseball Stadium Pub. Facilities Dist. v. Huber, Hunt & Nichols-Kiewit Constr. Co., 176 Wn.2d 502 (Wash. 2013) (contract interpretation; de novo review when no extrinsic evidence needed)