Clear Channel Outdoor, Inc. v. a Quality, Inc.

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
February 13, 2007 Session

CLEAR CHANNEL OUTDOOR, INC. v. A QUALITY, INC, D/B/A MR.
PRIDE, ET AL.

A Direct Appeal from the Chancery Court for Shelby County
No. CH-03-1755 The Honorable D. J. Alissandratos, Chancellor

No. W2006-00946-COA-R3-CV - Filed April 9, 2007

This case involves the interpretation of a lease agreement as it pertains to ownership of an
advertising sign structure. The trial court found that Defendant/Appellee, the Lessor under the lease,
is the owner of the sign structure pursuant to the terms of the lease. Plaintiff/Appellant contends that
the plain language of the lease indicates that it is the owner of the disputed sign. We affirm and
remand.

Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Chancery Court Affirmed and
Remanded

W. FRANK CRAWFORD , P.J., W.S., delivered the opinion of the court, in which ALAN E. HIGHERS,
J. and DAVID R. FARMER , J., joined.

Robert L. J. Spence, Jr. and Carrie C. Thomas of Memphis, Tennessee for Appellant, Clear Channel
Outdoor, Inc.

Robert E. Craddock, Jr. and Kacey L. Faughnan of Memphis, Tennessee for Appellees, A Quality
Inc., d/b/a Mr. Pride and A Quality, PMM, Inc.

OPINION

Clear Channel Outdoor, Inc. (“Clear Channel,” or “Appellant”) is a Delaware corporation
engaged in the outdoor advertising business. A Quality, Inc. d/b/a Mr. Pride (“Mr. Pride,” or
“Appellee”) is a Tennessee corporation, which owns and operates several car washes throughout
Shelby County. One of Mr. Pride’s locations is at 4957 Poplar Avenue, Memphis, Tennessee. The
sign structure at issue in this case (the “Poplar Sign”) is located at this address.

On or about February 16, 1993, the parties entered into a “Lease Agreement” (the “Lease”)
for use of the Poplar Sign. In the Lease, Naegele Outdoor Advertising Company, Clear Channel’s
predecessor in interest, is listed as the Lessee, and Mr. Pride is listed as the Lessor.1 The Lease
reads, in pertinent part, as follows:

1. Lessor does hereby lease and demise to the Lessee, the sign boards
on the Premises described in Exhibit A attached hereto and made part
hereof.2

* * *

4. This Lease Agreement may be terminated by Lessor with respect
to one or more locations on fifteen (15) days prior written notice by
registered mail to the office of the Lessee in the event of development
of locations requiring removal or alteration of the sign structure
which Lessee has leased on any location set out in Exhibit A to this
Lease. In such event Lessee shall remove the sign structure from the
Premises indicated by Lessor within 30 days from the receipt of the
notice from Lessor....

* * *

6. Lessee shall have the right and obligation to maintain the
advertising sign structures and equipment on the demised Premises
set out in Exhibit A and shall further have the right to post, paint,
illuminate and maintain advertisements on such structure.

7. The equipment and materials placed upon the leased sign structure
and Premises (as set out in Exhibit A) by Lessee shall remain the
personal property of and shall be removed by the Lessee within thirty
(30) days after the expiration of the term hereof or any extension
hereof.

8. Lessor shall have the right and option to purchase the materials
and equipment placed upon the sign structure by Lessee as described

1
To avoid confusion, the names Naegele Outdoor Advertising Company and Clear Channel may be used
interchangeably in this Opinion. W e acknowledge that Naegele Outdoor entered into the Lease; however, any benefit
thereunder inures to Clear Channel and any obligation contained therein is binding upon Clear Channel. Consequently,
the entities will be considered one and the same for purposes of this appeal.

2
Exhibit A to the Lease reads, in relevant part, as follows:

A. The area currently occupied by existing sign structure on the property known
as Mr. Pride Car W ash, 4954 Poplar Avenue, Memphis, Tennessee, Naegele’s
having the right of reasonable ingress and egress.

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 in Paragraph 7 hereinabove at its depreciated value at the expiration
of this Lease Agreement or any extension hereof or at the time of
cancellation of this Lease Agreement, whichever shall first occur,
which in no event shall exceed $1,000. In the event that this Lease
Agreement is cancelled or terminated and Lessor does not wish to
purchase the materials and equipment placed upon the sign structure,
Lessee agrees to remove the materials and equipment and restore each
of the Premises to its original state at the time of Lessee’s original
acquisition of leasehold at no cost to Lessor no later than thirty (30)
days after termination or expiration of the Lease Agreement as such
termination or expiration may relate to any or all locations.

9. The Lessee shall not have the right at any time during the term of
this Lease Agreement to modify the advertising sign structure on the
Premises or the dimensions thereof without the prior written consent
of Lessor.

* * *

11. Lessor represent[s] and warrants that it is the Lessee or Owner of
all of the above described Premises and has the authority to enter into
this Lease Agreement.

* * *

16. Lessee shall be responsible for any and all costs associated with
relocation, maintenance and removal of the materials and equipment
from the Premises described in Exhibit A to this Lease Agreement,
including any permits or other governmental requirements in relation
thereto.3

The term of the Lease was from September 15, 1993 through September 14, 2003. On
September 12, 2003, Clear Channel filed a “Verified Complaint for Injunctive and Declaratory
Relief” (the “Complaint”) against Mr. Pride. In its Complaint, Clear Channel requests that Mr. Pride
be enjoined from removing or modifying the Poplar Sign, and that the trial court declare the rights
and obligations of the parties as to the ownership of the Poplar Sign pursuant to the terms of the
Lease. On March 30, 2004, Mr. Pride filed its Answer to Clear Channel’s Complaint as well as its
own Counter-Complaint. In the Counter-Complaint, Mr. Pride asserts that it is the true owner of the

3
W e note that there were numerous leases by and between the parties and/or their predecessors in interest prior
to the 1993 Lease. However, it is uncontested that the 1993 Lease is controlling in this case. The relevant portion of
the Lease reads: “[T]his Lease Agreement supersedes all prior written, verbal, express, or implied agreements between
Lessor and Lessee....”

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Poplar Sign, and requests damages for lost advertising revenues allegedly incurred during Clear
Channel’s alleged wrongful detainer of the Poplar Sign.4

On August 27, 2004, Mr. Pride filed a Motion for Default Judgment based upon Clear
Channel’s alleged failure to answer the Counter-Complaint. Thereafter, on September 30, 2004,
Clear Channel filed its Answer to the Counter-Complaint, in which Clear Channel again asserts
ownership of the Poplar Sign.

The trial court bifurcated the issues of ownership of the Poplar Sign and the determination
of damages. On March 9, 2006, the trial court held a hearing to determine ownership of the Poplar
Sign. On March 10, 2006, the trial court entered an “Order Correcting Clerical Mistake,” which
Order added A Quality PMM, Inc., a wholly owned subsidiary of A-Quality, Inc., as an additional
party and as the correct entity owning the Poplar Sign. The trial court entered an Order on March
29, 2006 finding that Mr. Pride is “vested with sole and exclusive ownership of the sign structure
located at 4954 Poplar Avenue.” Because the issue of damages and ownership had been bifurcated,
the court made the March 29, 2006 final pursuant to Tenn. R. Civ. P. 54.02. Clear Channel appeals
and raises one issue for review as stated in its brief:

Whether the Court erred when ruling on Clear Channel Outdoor,
Inc.’s Declaratory Judgment action that A Quality, Inc. and/or A
Quality PMM, Inc., are vested with the sole and exclusive ownership
of a billboard located at 4954 Poplar Avenue in Memphis, Tennessee.

Mr. Pride raises three separate issues for review as stated in its brief:

1. Whether Clear Channel Outdoor, Inc. may raise issues not
presented at trial for the first time on appeal?

2. Whether the Court should disregard the arguments and assertions
made by Clear Channel Outdoor, Inc. which are supported by facts
and/or documents outside the appellate record?

* * *

4. Whether the trial court erred by failing to admit the testimony of
David Hogue for the purpose of aiding the court in determining the
meaning to be given the 1993 Lease Agreement?

4
On February 16, 2006, Mr. Pride moved the court for leave to amend its Answer based upon Mr. Pride’s
discovery of “certain developments in the interpretation of current City of M emphis zoning ordinances.” By its amended
answer, Mr. Pride sought to “retract its answer regarding the non-conformity of the sign structure....” Leave to amend
was granted, and the amended answer was filed on March 6, 2006.

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 The interpretation of a written agreement is a matter of law and not of fact; therefore, our
review is de novo upon the record with no presumption of correctness of the trial court's conclusions
of law. NSA DBA Benefit Plan v. Connecticut Gen. Life Ins. Co., 968 S.W.2d 791, 795
(Tenn.Ct.App.1997). In Gray v. Estate of Charles Henry Gray, 993 S.W.2d 59
(Tenn.Ct.App.1998), this Court said:

The cardinal rule for interpretation of contracts is to ascertain the
intention of the parties from the contract as a whole and to give effect
to that intention consistent with legal principles. Winfree v.
Educators Credit Union, 900 S.W.2d 285, 289 (Tenn.App.1995);
Rainey v. Stansell, 836 S.W.2d 117, 118 (Tenn.App.1992). In
construing contracts, the words expressing the parties' intentions
should be given their usual, natural, and ordinary meaning. Taylor v.
White Stores, Inc., 707 S.W.2d 514, 516 (Tenn.App.1985). In the
absence of fraud or mistake, a contract must be interpreted and
enforced as written, even though it contains terms which may seem
harsh or unjust. Heyer-Jordan & Assocs. v. Jordan, 801 S.W.2d 814,
821 (Tenn.App.1990).

Id. at 64.

If the language of a written instrument is unambiguous, the Court must interpret it as written
rather than according to the unexpressed intention of one of the parties. Sutton v. First Nat'l Bank,
620 S.W.2d 526 (Tenn.Ct.App.1981). A contract is not ambiguous merely because the parties have
different interpretations of the contract's various provisions, Cookeville Gynecology & Obstetrics,
P.C. v. Southeastern Data Sys., Inc., 884 S.W.2d at 462 (citing Oman Constr. Co. v. Tennessee
Valley Authority, 486 F.Supp. 375, 382 (M.D.Tenn.1979)), nor can this Court create an ambiguity
where none exists in the contract. Cookeville P.C., 884 S.W.2d at 462 (citing Edwards v. Travelers
Indem. Co., 201 Tenn. 435, 300 S.W.2d 615, 617-18 (1957)). Courts cannot make contracts for
parties but can only enforce the contract that the parties themselves have made. McKee v.
Continental Ins. Co., 191 Tenn. 413, 234 S.W.2d 830 (1950).

In the instant case, the parties stipulate that the 1993 Lease is controlling. Furthermore, the
parties agreed to be bound by the four corners of that Lease with the exception that certain industry
terms used therein may be defined by the relevant portions of Larry Quas’s deposition.5 Mr. Quas,
the real estate manager for Clear Channel, testified, in relevant part, as follows:

Q. Now, when you [Mr. Quas] use the words or the phrase “sign
structure,” tell me what you are referring to.

5
W hile this case was pending before this Court, Mr. Pride filed a separate motion to strike the deposition of
Larry Quas from the record. Because the parties stipulated to the inclusion of certain portions of Mr. Quas’s testimony
at the hearing, we have entered an Order denying that motion.

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A. The billboard.

Q. The billboard itself, does that include the pole that is attached to
the ground?

A. Yes.

Q. And is there something called the facing?

A. Yes.

Q. What part of the sign is that?

A. That is the part of the sign that carries the advertising message.

* * *

Q. Okay. I’m going to look at the last sentence, then, of that
paragraph [of the Lease]. And what you are saying, “the structure,
equipment, and materials placed upon said premises by the lessee
shall always remain the personal property of and shall be removed by
the lessee within a reasonable time after the expiration of the term
hereof or any extensions thereof,” I’m sorry.

* * *

A. Well, there are three things in that sentence. The structure,
equipment, and materials.

Q. What would be the equipment?

A. Equipment might be ballasts, transformers, light fixtures.

Q. And what about materials?

A. It could be the advertising copy itself, ratchet systems to support
it, things of that nature.

Q. And, obviously, the structure, you are saying, is the sign structure
itself?

A. Is the skeleton of the structure, the steel framework?

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 We first note that Naegele Outdoor Advertising Company, Clear Channel’s predecessor in
interest, is named as Lessee in the Lease, as opposed to Lessor. This fairly obvious fact is not to be
overlooked as it indicates that Clear Channel does not own, outright, the property being leased to
them. Based solely upon the existence of the Lease, into which Clear Channel’s predecessor entered
as the Lessee, it is clear that Clear Channel does not own all of the structure and accouterment of the
Poplar Sign. Had they ownership of the sign structure, the equipment, and the material, there would
be no need for them to lease same. From the granting clause (i.e. Paragraph 1) of the Lease, we
know that the property being leased is the “sign boards on the Premises described in Exhibit A....”
In Paragraph eleven (11), Mr. Pride, as Lessor, “represent[s] and warrants that it is the...Owner of
all of the...described Premises and has the authority to enter into [the] Lease....” Exhibit A to the
Lease defines the “Premises” at issue as “[t]he area currently occupied by existing sign structure on
the property known as Mr. Pride Car Wash, 4954 Poplar Avenue, Memphis, Tennessee.”6 As set out
above, Mr. Quas defines “sign structure” as “the skeleton of the structure, the steel framework.”
Taking the Lease as a whole, it is clear that Mr. Pride is the owner of the “sign structure.” Paragraph
seven (7) of the Lease indicates that Clear Channel owns only the equipment and materials placed
on the sign structure, to wit: “The equipment and materials placed upon the leased sign
structure...remain the personal property of the Lessee.” Clear Channel’s ownership of the equipment
and materials is, of course, subject to Paragraph eight (8) of the Lease, which grants the Lessor, Mr.
Pride, the right to purchase the equipment and materials at the expiration of the Lease. That being
said, there is nothing in the Lease to indicate that Clear Channel owns the actual sign structure.
When taken as a whole, along with Exhibit A and the admitted portions of Mr. Quas’s deposition,
we can only conclude that Mr. Pride is the rightful owner of the Poplar Sign. The separate issues
raised by Mr. Pride are, consequently, pretermitted.

For the foregoing reasons, we affirm the Order of the trial court. The case is remanded for
such further proceedings as may be necessary consistent with this Opinion. Costs of this appeal are
assessed against the Appellant, Clear Channel Outdoor, Inc., and its surety.

__________________________________________
W. FRANK CRAWFORD, PRESIDING JUDGE, W.S.

6
Clear Channel indicates that only the parenthetical language contained in Paragraph D of Exhibit A states that
the sign structure located on Summer Avenue is “owned by Lessor.” Clear Channel asserts that the absence of this
language–“owned by Lessor”– in the other paragraphs, and in particular Paragraph A dealing with the Poplar Sign at
issue here, provides a basis for finding that the Poplar Sign is not owned by Mr. Pride. This argument is tenuous at best.
Paragraph D concerns only ownership of the Summer Avenue sign and, consequently, has no bearing on ownership of
the Poplar Sign, which is the focus of this lawsuit.

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