Star Enterprise v. Wood Joint Venture

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
STAR ENTERPRISE,
Plaintiff-Appellee,
v. No. 96-2667
WOOD JOINT VENTURE,
Defendant-Appellant.
Appeal from the United States District Court
for the District of Maryland, at Greenbelt.
Jillyn K. Schulze, Magistrate Judge.
(CA-96-1360-AW)
Argued: June 2, 1997
Decided: July 8, 1997
Before MURNAGHAN and LUTTIG, Circuit Judges, and TILLEY,
United States District Judge for the Middle District of North
Carolina, sitting by designation.
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Affirmed by unpublished per curiam opinion.
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COUNSEL
ARGUED: Carlton M. Green, GREEN, LEITCH & STEELMAN,
College Park, Maryland, for Appellant. Griffin Vann Canada, Jr.,
MILES & STOCKBRIDGE, P.C., Rockville, Maryland, for Appellee.
ON BRIEF: J. Stephen McAuliffe, MILES & STOCKBRIDGE,
P.C., Rockville, Maryland, for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
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OPINION
PER CURIAM:
Appellee Star Enterprise brought this action seeking specific per-
formance of an option to purchase land pursuant to a lease. The
mag-
istrate granted summary judgment in favor of Star and ordered Wood
Joint Venture to convey the property to Star for the purchase price
of
$52,000. We affirm on the reasoning expressed in the magistrate's
opinion.
I.
Linda V. Wood and Texaco Inc., the original parties to the lease
in question, entered into the lease in 1964. Paragraph 2 of the
lease
provided for a fifteen year term beginning on November 1, 1964.
Paragraph 13 of the lease further provided that the lessee had the
option to extend the lease for up to three additional five year
periods.
Because the lease stated that rent was not to commence until all
gov-
ernmental permits had been acquired for the construction of a gas
sta-
tion, Texaco did not begin payment until September 1, 1967.
The lease was extended three times, but each extension notice was
based on a lease commencement date of September 1, 1967, rather
than the date of the original lease, November 1, 1964. Thus, the
extensions stated that they were from September 1, 1982, September
1, 1987, and September 1, 1992. Wood did not object to the exten-
sions and continued to accept rent.
The lease was assigned twice, pursuant to Paragraph 19, which pro-
vides that "lessee may assign or sub-let the premises, or any part
thereof, provided that lessee shall remain liable to lessor for the
per-
formance of all of the terms hereof." Paragraph 22 further provides
that the agreement "shall be binding upon and shall inure to the
bene-
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fit of the parties hereto and their respective heirs, legal
representa-
tives, and assigns." Plaintiff Star Enterprise was the second
assignee.
When Star Enterprise requested that Wood Joint Venture, the suc-
cessor to Linda V. Wood, grant an exception to the lease for
construc-
tion of a convenience store on the property, Wood Joint Venture
advised Star that it considered the lease to be expired and the
tenancy
to be month-by-month. In response, on February 8, 1996, Star
notified
Wood Joint Venture that it was exercising its option to purchase
the
property pursuant to Paragraph 12 of the lease, which provides:
(12) Options to Purchase. Lessor hereby grants to lessee the
exclusive right, at lessee's option, to purchase the demised
premises, together with all structures, improvements and
equipment thereon, free and clear of all liens and encum-
brances (including leases which were not on the premises at
the date of this lease) at any time during the term of this
lease or any extension or renewal thereof . . . .
Wood Joint Venture refused to convey the property on the grounds
that the option had not been timely exercised. Star therefore
brought
this action seeking specific performance.
II.
Star argues that it exercised the option during the third five-year
extension of the lease, because each extension notice was based on
a
lease commencement date of September 1, 1967, and the last exten-
sion was from September 1, 1992 to September 1, 1997. Wood, on
the other hand, argues that the lease states that it runs from
November
1, 1964, is a fifteen year lease, and provides for only three
extensions
of five years each. Thus, Wood argues that the option could not be
exercised more than thirty years after the lease was signed, i.e.,
could
not be exercised after November 1, 1994.
The magistrate concluded that, regardless of whether the exten-
sions were still in effect, Star could exercise the option to
purchase
because Maryland law permits a holdover tenant to exercise an
option
to purchase provided for in a lease unless the lease evidences an
intent
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to the contrary. See, e.g., Straley v. Osborne, 278 A.2d 64, 68
(Md.
1971) (stating that "a holdover tenancy is on all the terms and
condi-
tions of the original lease, including the option to purchase,
which can
be exercised during the holdover period unless a contrary intention
is
shown"). The magistrate correctly concluded that the lease in
question
indicates that a holdover tenant is permitted to exercise the
purchase
option, as Paragraph 18 provides that a holdover tenancy shall "be
subject to all other terms and conditions of this lease, in the
absence
of a written agreement to the contrary."
Similarly, we find no error in the magistrate's conclusion that
Star
Enterprise, as an assignee, obtained the right to exercise the
option.
Maryland law provides that a lessee has the right to assign absent
a
specific restriction in the lease, Julian v. Christopher, 575 A.2d
735(Md. 1990), and Paragraph 22 of the lease in question provides that
"[t]his agreement shall be binding upon and shall inure to the
benefit
of the parties hereto and their respective heirs, legal
representatives,
and assigns."
We have read the briefs, heard oral argument, and given thorough
consideration to the parties' contentions. Finding no error in the
mag-
istrate's opinion, we affirm on the reasoning that appears therein.
AFFIRMED
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