Workshops Portland Carson, L.L.C. v. Carson Oil Co. Inc., 3:15-cv-01234

Workshops Portland Carson, LLC (Landlord) leased part of a Portland property to Carson Oil Co., Inc. (Tenant); original 1998 lease included options to extend.
A 2013 one-year lease was drafted; an "Option" (Exhibit C) giving Tenant one 5-year extension was added but did not fix the future rent formula.
Workshops emailed (Oct 2013) that it would value the premises and propose a rental structure based on market value after Tenant exercised the Option; Tenant timely gave notice to exercise in Dec 2013.
Workshops proposed $18,000/month for the Option period; Tenant countered ~$5,000 and consultants recommended ~$4,125–$5,000. Negotiations stalled and the 2013 lease expired; Tenant remained as a holdover and later completed environmental remediation.
Workshops sued for holdover rent and remediation costs; Tenant counterclaimed for breach of the implied covenant of good faith and fair dealing and promissory estoppel. Workshops moved for partial summary judgment on both counterclaims.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Exhibit C (Option) is part of the 2013 lease and subject to the implied covenant	Option is unenforceable as it lacks a definite rent and wasn’t incorporated into the lease	Option is effectively part of the lease and the covenant applies	Option is part of the lease under Oregon law (documents construed together); covenant applies
Whether Workshops breached the implied covenant by proposing $18,000 and refusing further negotiation	Workshops had unfettered discretion to propose rent; duty limited to offering negotiation	Workshops had duty to exercise discretion consistent with parties’ reasonable expectations; facts show excessiveness and failure to negotiate	Summary judgment denied — whether covenant was breached is a fact question for trial
Whether the Oct 2013 email can support promissory estoppel	The email was indefinite and parol evidence is barred by the lease integration clause; no enforceable promise or reasonable reliance	Tenant could reasonably rely on the landlord’s valuation promise and changed position	Summary judgment granted for Workshops — promissory estoppel barred by parol evidence rule and integrated lease

Karamanos v. Hamm, 267 Or. 1 (1973) (option to extend must provide a method to determine rent)
Best v. U.S. Nat'l Bank of Oregon, 303 Or. 557 (1987) (good-faith duty can limit contractual discretion when no method is provided)
Mcinnis v. Lind, 198 Or. App. 139 (2005) (separate documents may be construed as one contract if connection is unmistakable)
Arnett v. Bank of America, N.A., 874 F. Supp. 2d 1021 (D. Or. 2012) (discussion of good-faith limits on contractual discretion)
Pacific First Bank v. New Morgan Park Corp., 319 Or. 342 (1994) (unilateral contractual discretion may reflect parties’ expectations and not be circumscribed)
Uptown Heights Assoc. Ltd. P’ship v. Seafirst Corp., 320 Or. 638 (1995) (contract terms can demonstrate parties’ reasonable expectations regarding discretion)
Tolbert v. First Nat'l Bank of Oregon, 312 Or. 485 (1991) (good-faith inquiry examines objective reasonable expectations)
U.S. Nat'l Bank of Oregon v. Boge, 311 Or. 550 (1995) (good-faith doctrine does not alter express contractual rights)
Neiss v. Ehlers, 135 Or. App. 218 (1995) (elements of promissory estoppel)
Bixler v. First Nat'l Bank, 49 Or. App. 195 (1980) (promissory estoppel elements framed)
Abercrombie v. Hayden Corp., 320 Or. 279 (1994) (parol evidence rule and complete integration)