Inland American Retail Management LLC v. Cinemaworld of Florida, Inc.

Supreme Court
No. 2012-151-Appeal.
(PB 08-5051)
Inland American Retail Management LLC :
v. :
Cinemaworld of Florida, Inc. :
NOTICE: This opinion is subject to formal revision before publication in
the Rhode Island Reporter. Readers are requested to notify the Opinion
Analyst, Supreme Court of Rhode Island, 250 Benefit Street, Providence,
Rhode Island 02903, at Tel. 222-3258 of any typographical or other
formal errors in order that corrections may be made before the opinion is
published.
Supreme Court
No. 2012-151-Appeal.
(PB 08-5051)
Inland American Retail Management LLC :
v. :
Cinemaworld of Florida, Inc. :
Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.
OPINION
Justice Flaherty, for the Court. The resolution of this appeal hinges on the
interpretation of a clause concerning the allocation of real estate taxes that appears in a written
lease between Inland American Retail Management LLC (Inland) and Cinemaworld of Florida,
Inc. (Cinemaworld). Relevant to this appeal, a trial justice of the Superior Court—ruling on
cross-motions for summary judgment—declared as a matter of law that the formula allocating
Cinemaworld’s reasonable share of real estate taxes should be based on the square footage of its
leased premises. Relying on that conclusion, the trial justice granted partial summary judgment
in Cinemaworld’s favor with respect to its motion seeking an accounting, and he denied Inland’s
request for costs. Inland appeals from that decision, arguing that the trial justice erred when he
adopted a formula that was not supported by the language of the lease. Inland also argues that
the trial justice erred in declining to award interest, late charges, expenses, and attorneys’ fees,
all of which, Inland argues, are mandated by the lease. This case came before this Court on May
7, 2013, pursuant to an order directing the parties to show cause why the issues raised in this
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appeal should not summarily be decided. After considering the parties’ written and oral
submissions, and after reviewing the record, we conclude that cause has not been shown and that
this case may be decided without further briefing or argument. For the reasons set forth in this
opinion, we vacate the judgment of the Superior Court.
I
Facts and Travel
A
The Lease
Inland and Cinemaworld were successors-in-interest to a twenty-year ground lease,
entered into on December 16, 2003, for the rental of what is now a movie theater in the Lincoln
Mall Shopping Center (Lincoln Mall or Shopping Center). 1 Under the terms of the lease,
Cinemaworld incurred certain liabilities and expenses. These included “Minimum Rent,” which
was specifically defined in the lease, and “Additional Rent,” which was described in the lease as
“[a]ll other sums as shall become due and payable by Tenant to Landlord under this Lease.”
Article 1, section 1.01(i); Article 3, sections 3.01(a), (b).
Under the umbrella of “Additional Rent”—and the matter which gives rise to the
underlying dispute—was the requirement that Cinemaworld pay an amount equal to the real
estate taxes “levied, assessed, or otherwise imposed” against the movie theater. The provisions
1
On December 16, 2003, Inland’s predecessor-in-interest, LB Lincoln Mall Holdings LLC (LB
Lincoln Mall), entered into a lease with Cinemaworld’s predecessor-in-interest, Cinema World,
Inc., to rent approximately 60,000 gross square feet, which included the land, buildings, and
improvements thereon, as defined in the lease, located at the Lincoln Mall Shopping Center. On
December 10, 2004, Cinema World, Inc. assigned all of its right, title, and interest as a tenant
under the lease to Cinemaworld. In May 2006, MB Lincoln Mall, LLC (MB Lincoln Mall)
purchased the Lincoln Mall from LB Lincoln Mall, and Inland became its managing agent.
Prior to the closing between MB Lincoln Mall and LB Lincoln Mall, LB Lincoln Mall
and Cinemaworld executed a release agreement and estoppel certificate, which are not at issue in
this case.
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of the lease concerning the apportionment of real estate taxes included Article 9, entitled
“Taxes,” and Article 25, entitled “Tenant’s Property.”
Under section 9.01(a), “Taxes” were defined as “all taxes * * * commonly and generally
referred to as ‘real estate taxes’ * * * levied, assessed, or otherwise imposed upon, the Land or
any part thereof, the Building(s) and Improvements * * *.”2 The lease also provided that
Cinemaworld was required to exercise “its best efforts to take the steps necessary to have the
Premises [it leased] assessed as a separate tax parcel”—something that Cinemaworld did not do.
Section 9.01(b). According to Inland, some tenants at the Lincoln Mall had their premises
assessed and levied as a separate tax parcel and, pursuant to the lease, paid real estate taxes
directly to the Town of Lincoln. The remainder of the Lincoln Mall, including the premises
leased to Cinemaworld, was taxed to Inland as a single parcel, and, therefore, pursuant to the
lease, Cinemaworld was required to make monthly payments to Inland of a “reasonably
estimate[d]” real estate tax, which was equal to one-twelfth of Lincoln Mall’s real estate taxes
for their leased premises for the current calendar or fiscal year. Section 9.02(b). The lease
further provided that at the end of each year—after Inland had received all of the tax and
assessment bills that were attributable to the Lincoln Mall—“Landlord shall furnish Tenant a
written statement of the actual amount of the Taxes for such year,” and the tenant would either
pay or be credited for the difference between the amount of actual taxes due for the year and the
“reasonably estimate[d]” amount that was paid. Section 9.02(b).
2
“Premises” is defined in the lease as “[t]he Land, the Building and the Improvements (as
hereinafter defined).” Article 1, section 1.01(e). “Land” is further defined as the area “shown
cross-hatched on the Preliminary Site Plan attached hereto as Exhibit B and made a part hereof,”
section 1.01(c); “Building” is defined as “[t]he building to be constructed on the Land by Tenant,
as described in [Article 6, s]ection 6.01,” section 1.01(d); and “Improvements” is defined as “any
improvements existing on the Land as of the date hereof, the improvements to be constructed
thereon by Tenant pursuant to the terms of this Lease as part of Tenant’s Work * * * and such
other improvements as Tenant may from time to time construct * * *,” Article 2, section 2.01(a).
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Also relevant to this appeal is section 25.01, entitled “Taxes on Tenant’s Property,”
which provided, in pertinent part, that “Tenant shall be responsible for * * * any and all taxes * *
* with respect to * * * [t]he Premises.” With regard to the manner of payment, this section
provided that if a tenant’s premises was not assessed as a separate tax parcel, “Tenant shall pay
to Landlord Tenant’s reasonable share [of those taxes] as reasonably determined by Landlord in
consultation with Tenant.” Id.
B
The Underlying Dispute
On July 7, 2008, counsel for Inland forwarded a notice of default to Cinemaworld, citing
a failure to pay the full amount of real estate taxes and alleging that, under the terms of the lease,
$117,114.42 was due for taxes. The formula Inland employed to allocate the tax bill to the
individual tenants, including Cinemaworld, was “on a pro rata basis by dividing each tenant’s
gross leasable square footage (60,000 for Cinemaworld) by the total gross leasable square
footage for the Shopping Center.”
Cinemaworld notified Inland that it disagreed with Inland’s allocation of the real estate
taxes and requested a breakdown of the figures used in the calculation. However, according to
Cinemaworld, Inland simply responded with a list of the square footage of all of the Lincoln
Mall tenants and a copy of the bill that it had previously sent to Cinemaworld. Despite
Cinemaworld’s objection to Inland’s demand for the payment of unpaid taxes, on July 15, 2008,
Cinemaworld paid $67,000 toward the real estate taxes that Inland claimed were due and owing.
On August 1, 2008, notwithstanding Cinemaworld’s payment, Inland filed a complaint
for breach of the lease for Cinemaworld’s alleged failure to make timely payments as required by
the lease. Cinemaworld filed responsive pleadings and, following an avalanche of amended
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pleadings and other motions, both sides filed cross-motions for summary judgment in November
2009. In support of its motion for summary judgment, Inland maintained that the language of the
lease was unambiguous and that it clearly required that real estate taxes be allocated by the
square footage of Cinemaworld’s leased premises, including the taxes attributable to parking and
common areas. Conversely, Cinemaworld argued that the proper assessment of real estate taxes
should not include the taxes attributable to parking and common areas. On June 1, 2010, Inland
filed a supplemental memorandum in support of its motion for summary judgment, in which
Inland asserted—for the first time—that the allocation of real estate taxes should be based on the
fair market value of the leased premises.
On January 7, 2011, the trial justice rendered a written decision on the cross-motions for
summary judgment. The trial justice found that “neither party appear[ed] to dispute the basic
formula by which to calculate Cinemaworld’s ‘reasonable share’ of the Taxes,” and, based on
this, he concluded “that Cinemaworld’s reasonable share should be computed by multiplying the
tax bill by a fraction, the numerator of which is the square footage of the theater and denominator
of which is the square footage of the Shopping Center.” 3 He also found that each party should
bear its own attorneys’ fees, costs, and expenses.
On October 4, 2011, Inland filed a motion for reconsideration, which the trial justice
denied. Inland timely appealed, arguing that the trial justice erred by adopting a formula for
3
Specifically, the trial justice provided that he calculated Cinemaworld’s share of the real estate
taxes by:
“(1) taking the entire tax bill for the Shopping Center; (2)
excluding the taxes attributable to the parking and common areas;
(3) and multiplying the remaining tax bill by a fraction, the
numerator of which is the square footage of the Building, and the
denominator of which is the current leasable square footage of the
Shopping Center which is not separately assessed to other tenants.”
The trial justice also appointed a special master to provide an accounting as to the amount of real
estate taxes owed by Cinemaworld under the terms of the lease.
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calculating taxes that was not supported by any language found in the lease and by denying its
request for interest, late charges, expenses, and attorneys’ fees.
II
Standard of Review
It is well established that this Court reviews a trial justice’s decision to grant summary
judgment de novo, “employing the same standards and rules used by the [trial] justice.” Empire
Fire and Marine Insurance Companies v. Citizens Insurance Co. of America/Hanover Insurance,
43 A.3d 56, 59 (R.I. 2012) (quoting Generation Realty, LLC v. Catanzaro, 21 A.3d 253, 258
(R.I. 2011)). We will affirm a lower court’s grant of summary judgment “[i]f we conclude, after
viewing the evidence in the light most favorable to the nonmoving party, that there is no genuine
issue of material fact to be decided and that the moving party is entitled to judgment as a matter
of law * * *.” Id. (quoting Pereira v. Fitzgerald, 21 A.3d 369, 372 (R.I. 2011)); see also Rule
56(c) of the Superior Court Rules of Civil Procedure.
III
Analysis
A
Lease Interpretation
Initially, we note that we do not agree with the trial justice’s conclusion that “neither
party appears to dispute the basic formula by which to calculate Cinemaworld’s ‘reasonable
share’ of the Taxes.” Although it is true that the parties insisted both below and on appeal that
the lease agreement was unambiguous, both parties nonetheless strongly advocate for different
interpretations of the provisions concerning the calculation of real estate taxes. Inland maintains
that the full amount of real estate taxes that are due under the lease should be calculated by
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multiplying the fair market value of Cinemaworld’s leased premises by the applicable tax rate.
Cinemaworld, however, argues that the trial justice appropriately construed the terms of the lease
in allocating the real estate taxes based on the square footage of the leased premises.
In reviewing the lease, we apply the laws of contract interpretation. See Elena Carcieri
Trust-1988 v. Enterprise Rent-A-Car Co. of Rhode Island, 871 A.2d 944, 947 (R.I. 2005)
(applying contract-interpretation principles to a lease agreement). As is the case in contract
interpretation, whether a lease is ambiguous or not is a question of law that this Court reviews on
a de novo basis. Furtado v. Goncalves, 63 A.3d 533, 537 (R.I. 2013). In determining whether a
lease is ambiguous, “we give words their plain, ordinary, and usual meaning. * * * The
subjective intent of the parties may not properly be considered by the Court; rather, we consider
the intent expressed by the language of the [lease].” Id. (quoting Derderian v. Essex Insurance
Co., 44 A.3d 122, 128 (R.I. 2012)). Thus, if a lease “is clear and unambiguous by its terms,
‘what is claimed to have been the subjective intent of the parties is of no moment.’” Id. (quoting
Young v. Warwick Rollermagic Skating Center, Inc., 973 A.2d 553, 560 (R.I. 2009)). “In
situations in which the language of a [lease] is plain and unambiguous, its meaning should be
determined without reference to extrinsic facts or aids.” Id. (quoting Garden City Treatment
Center, Inc. v. Coordinated Health Partners, Inc., 852 A.2d 535, 542 (R.I. 2004)).
After reviewing the record and the lease document itself, we are of the firm opinion that
the provisions of the lease at issue are ambiguous. At the outset, we note that section 9.01 of the
lease provides that the term “real estate taxes” is to mean its “commonly and generally” accepted
sense; however, the lease provides no further assistance as to the meaning of this term or in
determining how to allocate Cinemaworld’s share thereof. Because the term “real estate taxes”
is not defined in the lease, we often refer to sources such as dictionaries to give a term its plain,
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ordinary, and usual meaning. See Garden City Treatment Center, Inc., 852 A.2d at 542-43 (in
determining the plain meaning of a word, this Court will often apply a common meaning as
provided by a recognized dictionary). Nevertheless, a reference to the dictionary provides no
assistance in attempting to clarify the meaning of “real estate taxes.” Indeed, Black’s Law
Dictionary defines the term “tax” as “[a] charge, usu[ually] monetary, imposed by the
government on persons, entities, transactions, or property to yield public revenue,” and the term
“property tax” as “[a] tax levied on the owner of property (esp. real property), usu[ually] based
on the property’s value.” Id. 1594, 1596 (9th ed. 2009). These definitions, however, offer no
guidance as to how the real estate taxes are to be calculated under the terms of the particular
lease at issue here.
In addition, when viewing the lease in its entirety, the sections of the lease relating to the
allocation of “real estate taxes” appear to be internally inconsistent. See W.P. Associates v.
Forcier, Inc., 637 A.2d 353, 356 (R.I. 1994) (“In determining whether an agreement is clear and
unambiguous, the document must be viewed in its entirety and its language be given its plain,
ordinary and usual meaning.”). Article 9 of the lease imposes an obligation on Cinemaworld to
pay “the actual amount of the [real estate t]axes for such year,” although the lease provides no
explicit formula or guidance as to how to calculate the “actual amount” of real estate taxes.
Section 9.02(b) (emphasis added). Similarly, Article 25 of the lease provides that Cinemaworld
is required to pay a “reasonable share” of “any and all taxes,” including the real estate taxes
assessed against Inland, yet Article 25 fails to define how the “reasonable share” of real estate
taxes should be calculated. 4 Section 25.01 (emphasis added). Thus, in addition to not clearly
4
The full text of Article 25, section 25.01 provides:
“Tenant shall be responsible for, and shall pay, prior to
delinquency, any and all taxes, assessments, levies, fees and other
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delineating how real estate taxes are to be calculated, Articles 9 and 25 of the lease appear to be
in conflict as each give rise to different methods of calculating real estate taxes: Article 9, section
9.02(b) imposes an obligation on Cinemaworld to pay “the actual amount” of real estate taxes,
while Article 25, section 25.01 imposes an obligation on Cinemaworld to pay a “reasonable
share” thereof. See Rotelli v. Catanzaro, 686 A.2d 91, 95 (R.I. 1996) (contract language is
usually ambiguous where the terms are inconsistent on their face). 5 Accordingly, given the
different possible ways of calculating real estate taxes, and after reviewing the lease in its
governmental charges of every kind or nature (collectively,
‘Charges’) levied or assessed by an[y] municipal, county, state,
federal or other taxing or assessing authority upon, against or with
respect to:
“(i) The Premises or any leasehold interest therein, or
any use thereof, including, without limitation, any use and/or
occupancy tax,
“(ii) All fixtures, furnishings, equipment, merchandise
and personal property of any kind owned by Tenant and placed,
installed or located in, within, upon or about the Premises, and
“(iii) All or any portion of the Rentals payable by Tenant
to Landlord; irrespective of whether any of such items described in
clauses (i) through (i) [sic] above are assessed as real or personal
property, and irrespective of whether any of such items are
assessed to or against Landlord or Tenant.
“If at any time during the Term any of such Charges are not
levied and assessed separately and directly to Tenant (for example,
if the same are levied or assessed to Landlord, or upon or against
the Shopping Center and/or the land underlying the Shopping
Center), Tenant shall pay to Landlord Tenant’s reasonable share
thereof as reasonably determined by Landlord in consultation with
Tenant.” (Emphases added.)
While section 25.01 uses the term “real * * * property,” that term is synonymous with real estate.
See Black’s Law Dictionary 1337 (9th ed. 2009) (defining “real property” as “[a]lso termed * * *
real estate”).
5
Although the heading of section 25.01, “Taxes on Tenant’s Property,” seems to indicate that
that particular section is limited to personal property and excise taxes assessed and levied against
the tenant, we note that headings serve only as an aid in a court’s interpretation. See Town of
East Greenwich v. O’Neil, 617 A.2d 104, 109 (R.I. 1992) (applying that canon of construction to
a statute). Indeed, the text of section 25.01 is broader than the heading and applies to any taxes
assessed either to or against “real or personal property” and “to or against Landlord or Tenant.”
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entirety and according the language its plain, ordinary, and usual meaning, section 9.01—
requiring Cinemaworld to pay “all taxes * * * commonly and generally referred to as ‘real estate
taxes’”—is susceptible to more than one reasonable interpretation and, therefore, is ambiguous.
Rotelli, 686 A.2d at 94 (A contract is ambiguous “when it is reasonably and clearly susceptible
to more than one interpretation.”).
In an effort to blunt the force of the foregoing conclusion, Inland argues that the real
estate taxes should be calculated by multiplying the fair market value of Cinemaworld’s leased
premises by the applicable tax rate. First, Inland maintains that pursuant to G.L. 1956 § 44-5-
12(a)—which provides, in pertinent part, that “[a]ll real property subject to taxation shall be
assessed at its full and fair cash value * * * to be determined by the assessors in each town or
city”—the provisions of the lease that address the allocation of real estate taxes cannot mean
anything other than that Cinemaworld must pay the taxes apportioned to its specific, assessed
value. We disagree.
Inland’s position rests on the assumption that the term “real estate taxes” as used in the
lease has the same meaning as applied under § 44-5-12. However, this statutory definition does
not automatically render that term to be unambiguous. Although the parties used a phrase that
has a statutory definition in Rhode Island, there is nothing in the lease to suggest that the parties
intended to adopt this discrete, statutory definition of “real estate taxes.” See Garden City
Treatment Center, Inc., 852 A.2d at 543 (“Contracting parties are free to define a term as they
see fit, but they must do so in writing if they intend the term to carry a technical definition.”).
Indeed, “[w]e decline to read nonexistent terms or limitations into a contract.” Pearson v.
Pearson, 11 A.3d 103, 109 (R.I. 2011).
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Because the term “real estate taxes” as used in the lease is neither defined within the
document, nor specifically governed by the statute, we are satisfied that the term is ambiguous
and reasonably susceptible to more than one interpretation. Thus, although contract
interpretation is a question of law, when the contract terms are ambiguous, interpretation of the
terms becomes a question of fact. Accordingly, at this stage of the proceedings—interpreting
ambiguous contractual language—statutes and common-law principles should be considered as
only part of the surrounding circumstances from which to discern the intent of the parties. See
Citizens for Preservation of Waterman Lake v. Davis, 420 A.2d 53, 58 (R.I. 1980) (While it is
well settled that existing law is an implied term of every contract, “existing law is an extrinsic
aid to discerning the contracting parties’ intent” in construing an ambiguous contract.); see also
11 Samuel Williston, A Treatise on the Law of Contracts § 30:21 at 286 (4th ed. Lord 2012)
(“[T]he rule that existing law is incorporated into every contract * * * does not go so far as to
mean that statutory definitions in a particular code govern the interpretation of every ambiguous
phrase in a private agreement.”). A resort to such outside sources is not permitted to aid or
explain the intended meaning of the parties, unless and until the contract language is found to be
ambiguous. See Furtado, 63 A.3d at 537; Merrimack Mutual Fire Insurance Co. v. Dufault, 958
A.2d 620, 624-25 (R.I. 2008) (“[B]efore the trial justice may look to extrinsic evidence an
ambiguity must be found in the terms of the contract.”). However, in this case, because we
conclude that the language of the lease is ambiguous, we agree with Inland that § 44-5-12 is
certainly one of several pieces of extrinsic evidence that should be considered to resolve the
ambiguity. Nonetheless, it is not appropriate to consider this evidence on a motion for summary
judgment because the intent of the parties is a question of fact. Lennon v. MacGregor, 423 A.2d
820, 822 (R.I. 1980).
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Additionally, Inland argues that the allocation of real estate taxes in this case should be
determined by references to the valuation of Cinemaworld in “Property Record Card
Summar[ies]” that were provided by the municipality. However, in our view, Inland’s reliance
on the “Property Record Card Summar[ies]” is misplaced. Those summaries were used by the
tax assessor in determining the amount of real estate taxes to be levied against the Lincoln Mall.
Consequently, they merely provide an explanation as to how the assessment of real estate taxes
for the Lincoln Mall was derived. Indeed, Cinamaworld did not exist as a separate taxable parcel
during the years in question, and, therefore, contrary to Inland’s assertion, the Town of Lincoln
did not “independently assess[] the value of Cinemaworld’s Premises.” Further, the lease itself
does not provide that the parties intended the summaries to be a reliable proxy for the fair market
value that should be affixed to Cinemaworld.
Accordingly, we are of the opinion that the summaries afford Inland no support for its
contention that the lease unambiguously directs that real estate taxes should be allocated by the
fair market value of Cinemaworld’s premises. However, concluding as we do that the lease is
ambiguous in this regard, the summaries may well assist as an interpretive aid to determine the
parties’ intent, but, again, such a determination cannot properly be resolved at the summary
judgment stage. See D.T.P., Inc. v. Red Bridge Properties, Inc., 576 A.2d 1377, 1382 (R.I. 1990)
(“If the terms of a contract are ambiguous, the court will look to the construction placed upon
such terms by the parties themselves as an aid in determining their intended meaning. * * * The
circumstances surrounding the execution of the contract are also relevant to the determination of
that intent.” quoting Woonsocket Teachers’ Guild, Local 951 v. School Committee of
Woonsocket, 117 R.I. 373, 376, 367 A.2d 203, 205 (1976)); see Restatement (Second) Contracts
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§ 203(b) (1981) (course of performance, course of dealing, and usage in custom or industry may
be used in determining the intent of contracting parties).
Finally, Inland maintains that Cinemaworld’s interpretation of the lease is unreasonable.
Specifically, Inland argues that Cinemaworld would obtain an unfair benefit under a formula that
allocates the real estate taxes by square footage, because the Town of Lincoln attributes different
values to the various buildings at the Lincoln Mall, and Cinemaworld’s leased premises, which is
a newer building, has a higher fair market value than most of the other tenants in the Lincoln
Mall. Although we agree with Inland that interpreting the ambiguous language of the lease
should be guided by well-established principles of contract interpretation, including the principle
that contracts are to be construed according to the fair and reasonable meaning of their words,
see Durapin, Inc. v. American Products, Inc., 559 A.2d 1051, 1056 (R.I. 1989), summary
judgment is inappropriate where references to extrinsic evidence and the surrounding
circumstances must be relied on to discern the intent of the contracting parties.
For its part, Cinemaworld maintains that real estate taxes should be calculated based on
the square footage of the leased premises, less the taxes attributable to parking and common area.
As Inland correctly highlights, Cinemaworld’s suggested formula is almost identical to the
formula provided under Article 8 of the lease to determine the “Tenant’s Proportionate Share” of
“Common Area Maintenance Costs.” Section 8.04. In particular, the lease provides that
“Tenant’s Proportionate Share”
“shall mean a fraction, the numerator of which is the leasable floor
area of the Building and the denominator of which is the leasable
floor area of all buildings on the Shopping Center as of the first
day of the applicable calendar year to which Common Area
Maintenance Costs relate.” Section 8.04.
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However, section 8.03(c) specifically provides that the calculation of “Common Area
Maintenance Costs shall not include: * * * Taxes.” Adopting Cinemaworld’s formula would
ostensibly render section 8.03 internally inconsistent with the provisions of the lease that relate
to the allocation of real estate taxes and would effectively negate the separate assessment of the
Common Area Maintenance Costs from the separate assessment of real estate taxes. See
Andrukiewicz v. Andrukiewicz, 860 A.2d 235, 239 (R.I. 2004) (An interpretation that reduces
certain words of a contract to mere surplusage should be rejected.). While we do not agree with
Cinemaworld’s contention that the lease is unambiguous with respect to the allocation of real
estate taxes, we recognize that it is conceivable that both parties intended the allocation of “real
estate taxes” to be based on the leasable square footage—a formula similar to that which Inland
had originally championed. See D.T.P., Inc., 576 A.2d at 1382 (the construction placed upon the
terms of a contract by the parties serves as an aid in determining their intended meaning); see
also In re Dissolution of Anderson, Zangari & Bossian, 888 A.2d 973, 977 n.3 (R.I. 2006)
(“[T]he parties’ subsequent course of performance may be instructive in contract interpretation.”
quoting Reed & Reed, Inc. v. Weeks Marine, Inc., 431 F.3d 384, 388 (1st Cir. 2005)). However,
we leave it to the trier of fact to determine what significance, if any, this may have on the
computation method intended by the parties.
Ultimately, after reviewing the interpretations of the lease presented by both parties, and
the somewhat amorphous language of the lease itself, we conclude that there is a genuine issue
of material fact. Because we are unable to determine at this stage which of the reasonable but
conflicting interpretations of the lease the parties intended, those issues of material fact must be
resolved by a trier of fact. See Rotelli, 686 A.2d at 95 (“When a contract is ambiguous, and the
pleadings, discovery materials, and affidavits indicate a dispute in respect to the parties’ intent,
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there exists a genuine issue of material fact that must be resolved by the trier of fact.”).
Accordingly, it is our opinion that the trial justice erred in granting summary judgment in this
case.
B
Interest, Penalties, Expenses, and Attorneys’ Fees
Inland also argues that the lease requires that Cinemaworld pay additional amounts as a
result of its late payment of real estate taxes, pursuant to Article 3, sections 3.02 and 3.03 and
Article 23, section 23.02 of the lease. 6 However, because our review of the record indicates that
6
Article 3, section 3.02 of the lease provides:
“INTEREST. If Tenant shall fail to pay when due any
Rental within ten (10) days of the date due and payable, Tenant
shall pay to Landlord, as Additional Rent, interest on the unpaid
Rental, such interest accruing at the rate of four percent (4%)
above the prime rate of interest announced from time to time by
Citibank, N.A. (or any successor thereto, or if there shall be no
such successor, such other bank or financial institution as Landlord
may designate in writing to Tenant) (the ‘Default Rule’), from the
date due until the date paid.”
Section 3.03 of the lease provides:
“LATE CHARGE. If Tenant shall fail to pay when due any
Rental within ten (10) days of the date of receipt of notice from
Landlord that the same was due and unpaid, then Tenant shall pay
to Landlord, as Additional Rent, a late charge equal to four (4%)
percent of the unpaid Rental, as an agreed and liquidated amount
as compensation for Landlord’s additional administrative expenses
relating to such late payment. The provisions of * * * [s]ection
3.03 and [s]ection 3.02 * * * are in addition to any other remedies
available to Landlord with respect to non-payment of Rental.”
Article 23, section 23.02 of the lease provides:
“LANDLORD’S EXPENSES OF CURE. Bills for any expenses
incurred by Landlord in connection with any performance by it for
the account of Tenant, and bills for all costs, expenses and
disbursements of every kind and nature whatsoever, including
reasonable attorneys’ fees, involved in collecting or endeavoring to
collect the Rental or any part thereof not paid when due or
enforcing or endeavoring to enforce any rights against Tenant,
under or in connection with this Lease, or pursuant to Laws,
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there is a genuine issue of material fact as to the parties’ intent and that a resolution by a trier of
fact is necessary, we need not, and will not, review whether the trial justice erred in declining to
award interest, late charges, expenses, and attorneys’ fees to Inland.
Conclusion
For the forgoing reasons, we vacate the trial justice’s grant of summary judgment and
remand the case for further findings so as to determine the proper formula to calculate real estate
taxes.
including any such cost, reasonable expense and disbursement
involved in re-entering the Premises, instituting and prosecuting
summary proceedings, as well as bills for any property, material,
labor, or services provided, furnished, or rendered, by Landlord or
at its instance to Tenant (all of which expenses shall constitute
items of Additional Rent), may be sent by Landlord to Tenant
monthly, or immediately, at Landlord’s option, and shall be due
and payable immediately upon presentation of such bills to
Tenant.”
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RHODE ISLAND SUPREME COURT CLERK’S OFFICE
Clerk’s Office Order/Opinion Cover Sheet
TITLE OF CASE: Inland American Retail Management LLC v. Cinemaworld of
Florida, Inc.
CASE NO: No. 2012-151-Appeal.
(PB 08-5051)
COURT: Supreme Court
DATE OPINION FILED: June 18, 2013
JUSTICES: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.
WRITTEN BY: Associate Justice Francis X. Flaherty
SOURCE OF APPEAL: Providence County Superior Court
JUDGE FROM LOWER COURT:
Associate Justice Michael A. Silverstein
ATTORNEYS ON APPEAL:
For Plaintiff: Rachelle R. Green, Esq.
For Defendant: Justin T. Shay, Esq.