Tuesday, May 01, 2012

Ginsberg v. Gamson (Cal. Ct. App. - April 30, 2012)

Here's a multiple choice question for you:

Parties enter into a lease for a commercial retain premises.  The initial lease term is for five years, but an addendum to the lease also gives the tenant the option (if there's no default) to "extend the Term of this Lease for 5 (FIVE) YEARS additional FIVE year periods upon the same terms and conditions herein contained."  Note the "s" at the end of the word "periods".  This provision also refers to "each option term" -- presumably meaning there may be more than one.

The rent payable for any additional term(s) under the lease is to be calculated by using the consumer price index for 1996 over the CPI for 2001 times $3,000, and then next to this equation the word "(etc.)" appears -- presumably meaning that future terms will have an adjustment of 2001 over 2006, etc.

The parties renewed the lease for one five-year term, and then the tenant tried to renew for another five-year term, but the landlord refused.

Which of the following is the correct interpretation of the lease:

(A)  The lease only permitted one extension of five years.
(B)  The lease permitted multiple five-year extensions (subject to a statutory cap of 99 total years).
(C)  It is unclear whether the lease permitted multiple five-year extensions; the lease did not "by express terms or clearly by implication" permit multiple extensions.

The Court of Appeal concludes that the correct answer is (C) -- reversing the trial court's contrary ruling at a bench trial -- and that accordingly, the result is (A).