Present: Carrico, C.J., Compton, Stephenson, Whiting, 1 Lacy,
Hassell, and Keenan, JJ.
CAPITAL COMMERCIAL PROPERTIES, INC.
v. Record No. 941926 OPINION BY JUSTICE LEROY R. HASSELL
September 15, 1995
VINA ENTERPRISES, INC.
FROM THE CIRCUIT COURT OF ARLINGTON COUNTY
William T. Newman, Jr., Judge
The primary issue we consider in this appeal is whether an
"option to extend" provision in a lease is ambiguous.
The tenant, Vina Enterprises, Inc., executed a lease with
Capital Commercial Properties, Inc. Vina leased approximately
22,020 square feet of ground floor area in the Plaza Seven
Shopping Center, located in the City of Falls Church. Vina
subdivided the demised space and sublet the demised space to
certain shopkeepers, who operated a "mini-mall" known as the Eden
Center.
The original leasehold period was 10 years. The lease
contains the following paragraphs pertinent to this dispute.
Paragraph 34(A), described as the "Option to Extend," states in
relevant part:
34. (A) Provided Tenant shall not then be in
default under any of the agreements and conditions in
this lease contained, Tenant shall have the right, at
its election, to extend the original term of this lease
for an additional period of five (5) years commencing
upon the expiration of the original term, provided,
further, that Tenant shall give Landlord notice of the
exercise of its election hereunder not less than six
(6) months prior to the expiration of the original
term. Provided Tenant shall not then be in default
under any of the agreements and conditions in this
lease contained, Tenant shall have the right, at its
election, to extend the original term of this lease as
previously extended for an additional period of five
1
Justice Whiting participated in the hearing and decision
of this case prior to the effective date of his retirement on
August 12, 1995.
(5) years commencing upon the expiration of the
original term as previously extended, provided,
further, that Tenant shall give Landlord notice of the
exercise of its election hereunder not less than six
(6) months prior to the expiration of the original term
as previously extended.
Paragraph 15(A) of the lease, which governs defaults, states
in relevant part:
15. (A) (1) If Tenant shall default in the
payment of rent or any other payment required of Tenant
and if Tenant shall fail to cure said default within
seven (7) days after Landlord shall give notice thereof
to Tenant, or (2) if Tenant shall default in the
performance or observance of any other agreement or
condition on its part to be performed or observed
hereunder and if Tenant shall fail to cure said default
within fifteen (15) days after Landlord shall give
notice thereof to Tenant . . . then, in any of such
cases, Landlord lawfully may, immediately or at any
time thereafter, and without any further notice or
demand, enter into and upon the demised premises, or
any part thereof in the name of the whole, by force or
otherwise, and hold the demised premises as if this
lease had not been made.
Paragraph 24 of the lease, which governs failure of
performance, states in relevant part:
24. (A) If Tenant shall default in the
performance or observance of any agreement or condition
in this lease contained on its part to be performed or
observed, other than an obligation to pay money, and
shall not cure such default within thirty (30) days
after notice from Landlord specifiying [sic] the
default, Landlord may, at its option, without waiving
any claim for damages for breach of agreement, at any
time thereafter cure such default for the account of
Tenant, and any amount paid or any contractual
liability incurred by Landlord in so doing shall be
deemed paid or incurred for the account of Tenant,
Tenant agreeing to reimburse Landlord promptly therefor
or save Landlord harmless therefrom. Landlord may cure
any such default as aforesaid prior to the expiration
of said waiting period, but after notice to Tenant, if
the curing of such default prior to the expiration of
said waiting period is reasonably necessary to protect
the real estate or Landlord's interest therein or to
prevent injury or damage to persons or property.
Relying upon paragraph 34(A), Vina gave Capital notice of
its intent to exercise the option to extend. Upon receipt of
Vina's notice, Capital informed Vina that the option could not be
exercised because of certain purported defaults. Vina sought to
cure the purported defaults and notified Capital of its efforts
to do so.
Thereafter, Vina forwarded to Capital a new notice of its
intention to extend the lease. Vina also requested that Capital
notify Vina whether Capital believed Vina had exercised properly
the option to extend the lease. Capital did not respond to
Vina's requests, nor did Capital assert any additional defaults
until the option renewal period had expired.
Vina filed this action seeking a declaration that it had
properly exercised the option to extend and, therefore, it was
entitled to lease the demised premises for an additional term of
five years. At the conclusion of a bench trial, the trial court
held, among other things, that the lease is ambiguous and that
Vina had properly exercised its right to extend the lease for a
term of five additional years. We awarded Capital an appeal.
First, Capital argues that Vina does not have a right to
exercise the option to extend because Vina was in default when it
attempted to extend the original leasehold term. Vina argues
that the evidence presented below indicates that it was not in
default. We disagree with Vina.
Paragraph 9(A) of the lease states:
9. (A) Tenant agrees that during the term of
this lease the demised premises will be used and
occupied solely for the purposes specified in Article
32 of this Lease and for no other purpose(s)
whatsoever.
There is no dispute between the litigants that Article 32 of the
lease does not permit Vina or its subtenants to operate a travel
agency on the demised premises.
Gioan Nguyen, president of Vina, testified that one of
Vina's sub-tenants conducted a business known as Liberty Travel
Service in the demised premises and that this business was
conducted during the option renewal period. Nguyen also
testified that another travel agency, Blue Skies Travel Services,
also sublet a portion of the demised premises during that period.
Without question, these unauthorized uses constitute defaults
within the meaning of paragraph 34(A), and it is an elementary
principle of landlord-tenant jurisprudence that a tenant is
responsible for the sub-tenant's breach of the lease. 1 Milton
R. Friedman, Friedman on Leases § 7.702 (3d ed. 1990).
Therefore, we hold that Vina was in default when it attempted to
extend the original term of the lease.
Next, Vina argues that the lease, when read as a whole, is
ambiguous, and any ambiguity should be construed against Capital,
the drafter of the lease. Vina contends that paragraphs 15(A)
and 24 require that Capital notify Vina in the event of a default
or a failure of performance, and, therefore, a similar notice
requirement is applicable in paragraph 34. Hence, Vina says that
it is entitled to an additional term of five years because
Capital failed to notify Vina of any default, thus depriving Vina
of an opportunity to cure any default.
Capital argues that the lease is unambiguous and that the
option to extend did not require Capital to notify Vina of any
defaults that Vina had not cured during the period in which Vina
could have exercised its option to extend. Thus, Capital says
that Vina is not entitled to extend the lease for an additional
term. We agree with Capital.
We follow the "plain meaning" rule when construing written
instruments:
[W]here an agreement is complete on its face, is plain
and unambiguous in its terms, the court is not at
liberty to search for its meaning beyond the instrument
itself . . . . This is so because the writing is the
repository of the final agreement of the parties.
Berry v. Klinger, 225 Va. 201, 208, 300 S.E.2d 792, 796 (1983)
(quoting Globe Company v. Bank of Boston, 205 Va. 841, 848, 140
S.E.2d 629, 633 (1965)); Management Enterprises v. The Thorncroft
Co., 243 Va. 469, 472, 416 S.E.2d 229, 231 (1992). The word
"ambiguity" is defined as "the condition of admitting of two or
more meanings, of being understood in more than one way, or of
referring to two or more things at the same time." Berry, 225
Va. at 207, 300 S.E.2d at 796 (quoting Webster's Third New
International Dictionary 66 (3d ed. 1976)). Additionally, and
just as important, "we must interpret the agreement as written
and we are not free to rewrite its terms." Management
Enterprises, 243 Va. at 472, 416 S.E.2d at 231; Graphic Arts
Mutual Ins. v. C.W. Warthen Co., 240 Va. 457, 460, 397 S.E.2d
876, 877-78 (1990).
The plain language used in the option to extend does not
require Capital to give Vina notice of any defaults. There is
simply no such requirement in paragraph 34(A), and we will not
impose such a requirement where none exists. It is true, as Vina
observes, that paragraphs 24 and 15(A) require that Capital give
notice of defaults to Vina and permit Vina to cure such defaults.
However, these notice provisions, which are found in separate
paragraphs of the lease dealing with the tenant's default and
possible loss of possession during the lease, do not render the
plain language in paragraph 34(A), giving the tenant the right to
extend the lease, capable "of being understood in more than one
way, or of referring to two or more things at the same time."
Berry, 225 Va. at 207, 300 S.E.2d at 796. Accordingly, we hold
that paragraph 34(A) of the lease is not ambiguous and that this
paragraph does not impose a contractual duty upon Capital to give
notice of a default to Vina. 2
Paragraph 20 of the lease, which governs waivers, states:
20. Failure of Landlord to complain of any act or
omission on the part [of] Tenant, no matter how long
the same may continue, shall not be deemed to be a
waiver by Landlord of any of its rights hereunder. No
waiver by Landlord at any time, express or implied, of
any breach of any provision of this lease shall be
deemed a waiver of a breach of any other provision of
this lease or a consent to any subsequent breach of the
same or any other provision. If any action by Tenant
shall require Landlord's consent or approval,
Landlord's consent to or approval of such action on any
one occasion shall not be deemed a consent to or
approval of such action on any subsequent occasion or a
consent to or approval of any other action on the same
or any subsequent occasion. No payment by Tenant or
acceptance by Landlord of a lesser amount than shall be
due from Tenant to Landlord shall be deemed to be
anything but payment on account, and the acceptance by
Landlord of a check for a lesser amount with an
endorsement or statement thereon or upon a letter
accompanying such check that such lesser amount is
payment in full shall not be deemed an accord and
satisfaction, and Landlord may accept such check
without prejudice to recover the balance due or pursue
any other remedy. Any and all rights and remedies
which Landlord may have under this lease or by
operation of law, either at law or in equity, upon any
breach shall be distinct, separate and cumulative and
shall not be deemed inconsistent with each other, and
no one of them, whether exercised by Landlord or not,
shall be deemed to be in exclusion of other, any two or
more or all of such rights and remedies being
2
We find no merit in Vina's argument that Capital is
equitably estopped from asserting that Vina is in default.
As we have held, paragraph 34(A) does not require that
Capital give notice of any default to Vina, and, hence,
equitable estoppel is not applicable.
exercisable at the same time.
Vina argues that this paragraph conflicts with paragraph
34(A) because the two paragraphs do "not lend themselves to
harmonious interpretation" and that the paragraphs, when read
together, create an ambiguity. We disagree. Paragraph 20, among
other things, makes it clear that Capital's failure to complain
of any act or omission on the part of the tenant does not
constitute a waiver of Capital's legal rights and/or remedies.
We simply find no language in paragraph 20 that conflicts with or
creates an ambiguity with the language in paragraph 34(A).
Accordingly, we will reverse the judgment of the trial court
and enter final judgment here on behalf of Capital.
Reversed and final judgment.