Plaintiff not entitled to portion of termination fee

Where plaintiff claims entitlement to a portion of a $3.7 million termination fee that defendant lessor received from the lessee for the lessee’s early termination of a lease, defendant is granted summary judgment because the lease does not provide for such distribution.

Overview

Defendant is the successor lessor of a building. Ace American Insurance is the successor lessee. The lease provided plaintiff Hall & Associates with a monthly leasing commission. If the lessee purchased the building, plaintiff would receive a one-time three percent payment and the monthly commissions would end.

Ace vacated before the lease expired and paid a $3.7 million termination fee to defendant. Plaintiff claims it is entitled to a portion of the fee.

“The precise issue before the Court is Plaintiff’s contention that, pursuant to paragraph 14 of the Lease Agreement, it is owed a portion of the termination fee because, according to Plaintiff, the termination fee necessarily includes rents to be paid under the Lease Agreement.

“In turn, Defendant contends that based on the plain meaning of paragraph 14 of the Lease Agreement, coupled with the evidence before the Court, there is no factual issue supporting Plaintiff’s assertion that it is entitled to a portion of the termination fee, and Defendant is thus entitled to judgement as a matter of law.”

Discussion

“The Lease Agreement, which is a contract between Branch and Ace, and to which Plaintiff is a third-party beneficiary, is completely integrated. Under the plain language of the Lease Agreement, Ace is obligated to pay Plaintiff 6% of monthly rents received, or 3% of the sales price if Ace were to purchase the building.

“What is not contemplated by the plain language of the Lease Agreement is payment by Ace (or Defendant) of some undetermined amount of a termination fee, some of which may represent a rent.

“As a threshold matter, there is no evidence before the Court as to what part of the termination fee, if any, is rent. To the contrary, the affirmative evidence before the Court is the testimony of Plaintiff’s President that the termination fee is a one-time payment that is not a monthly rental payment.

“As to the termination fee itself, the Court strongly suspects that the duties and obligations of the parties as to that fee are set forth in the Listing Agreement, which is a contract between the parties.

“However, the Listing Agreement is not before the Court, and this Court declines to modify the plain language of the contract before it (i.e., the Lease Agreement), which does not contemplate a commission on amounts to be paid, if any, when the lease is terminated.

“In fact, the absence of any term or provision in the Lease Agreement requiring that the lessor and/or the lessee pay a commission to Plaintiff when the lease is terminated evidences an intent by the parties not to require a commission payment under these circumstances.”

Defendant is granted summary judgment.

Edwin C. Hall Associates, Inc. v. Samantha-Barie, LLC, Case No. CL20-33, Jan. 13, 2023. City of Salem Circuit Court (Carson). John K. Prillaman, Christopher W. Stevens for the parties. VLW 023-8-003, 5 pp.