Heathman Hotel v. McCormick & Schmick Restaurant 

Summarized by:

  • Court: Oregon Court of Appeals
  • Area(s) of Law: Contract Law
  • Date Filed: 03-01-2017
  • Case #: A157710
  • Judge(s)/Court Below: Egan, J. for the Court; Armstrong, P.J.; & Hadlock, C.J.
  • Full Text Opinion

A contract term is ambiguous if, when examined in the context of the contract as a whole, including the circumstances under which the contract was formed, it is susceptible to more than one plausible interpretation. Milne v. Milne Construction Co., 207 Or App 382, 388, 142 P3d 475 (2006).

Defendant, McCormick & Schmick Restaurant Corporation, appealed a grant of summary judgment for Plaintiff, Heathman Hotel Portland, LLC, declaring that Defendant had no right to exercise its second option to renew the parties’ restaurant lease. Defendant assigned error to the trial court’s conclusion that the terms of the lease between the parties were unambiguous. On appeal, Defendant argued that summary judgment was not appropriate because the amended lease was ambiguous as to whether the parties were operating under the first or second option to extend the lease. Plaintiff responded that the trial court correctly concluded that the amended lease unambiguously provided that Defendant exercised its first option to renew, and further contended that the terms under which the second option could be exercised included the requirement that Defendant "average at least $7.5 million in gross sales for the two lease years before the year in which its notice of renewal was given." A contract term is ambiguous if, when examined in the context of the contract as a whole, including the circumstances under which the contract was formed, it is susceptible to more than one plausible interpretation. Milne v. Milne Construction Co., 207 Or App 382, 388, 142 P3d 475 (2006). Disputes over the meaning of contract provisions may be disposed of by summary judgment if the provisions are unambiguous. Id. In this case, the Court observed the amendment stated explicitly “[t]enant has exercised its option to extend the lease term, and Landlord and Tenant have agreed the lease term will be extended for a period of five years.”  The Court concluded this language unambiguously indicated that in 2009, Defendant exercised its first renewal option. Therefore, Defendant had no right to exercise its second renewal option because it had not meet the minimum gross sales requirement as required by the lease. Affirmed. 

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