United States District Court, S.D. Indiana, New Albany Division
ORDER ON MOTIONS TO DISMISS AND FOR PARTIAL SUMMARY
JUDGMENT (DKTS. 24, 32)
SARAH
EVANS BARKER, JUDGE
By a
motion for partial summary judgment, Dkt. 32, see
Fed. R. Civ. P. 56(a), and a motion to dismiss for failure to
state a claim, Dkt. 24, see Fed. R. Civ. P.
12(b)(6), Plaintiff and Defendant respectively seek judgment
as a matter of law on a single question of contract
interpretation: Has their contract expired? We conclude that
it has.
Background
Fourteen
years ago, on July 7, 2005, Hoosier Outdoor Advertising
Corporation (“Hoosier Outdoor”) and The Elmore
Family Limited Partnership (“the Elmores”)
entered into a contract (“the Lease”) for the
lease of certain real property owned by the Elmores in
Seymour, Indiana (“the Property”), to be used for
the display of three billboards. The Lease was for a period
of six years beginning August 15, 2005, at $4, 000 annual
rent, and contains the following evergreen clause
(“which is to say, an automatic rollover clause,
” Office & Prof'l Emps. Int'l Union,
Local 95 v. Wood Cty. Tel. Co., 408 F.3d 314, 315 (7th
Cir. 2005)):
Lessor agrees that this contract shall renew itself at each
expiration date unless (60) sixty days [sic] written
notification prior to each expiration date is provided to
Lessee. No. cancellation of this contract is possible by any
entity with powers of eminent domain.
Dkt. 1 Ex. 1, at 7. The Lease is only nine paragraphs in
length and the two above-quoted sentences constitute the
entirety of its sixth paragraph.
The
words “cancel” or “cancellation”
appear nowhere else in the one-page Lease. Id. The
Lease refers three times to its “termination”:
twice in connection with Hoosier Outdoor's rights and
obligations “upon the termination” of the Lease,
and once in connection with Hoosier Outdoor's option
“to terminate” the Lease “upon 30 days
[sic] notice” if the Lease becomes
unprofitable for it for one of five listed reasons.
Id. Thus, the Lease contemplates its own end by one
of only two ways: by expiration following the Elmores'
nonrenewal or by termination at Hoosier Outdoor's option
under the appropriate circumstances.
On
August 15, 2011, the first six-year period ended and, absent
notice of nonrenewal from the Elmores, the Lease renewed
itself automatically for an additional six-year period. On
June 15, 2017, sixty-one days before the end of the second
six-year period, the Elmores sold the Property to Plaintiff
here, the City of Seymour (“the City”), and
assigned to it their rights under the Lease. Sometime
earlier, Hoosier Outdoor had merged with Defendant here,
Lamar Advantage GP Company, LLC (“Lamar”), and
assigned its rights under the Lease to it. The terms of
either assignment do not appear in the record and have not
been otherwise elaborated upon by the parties.
The
same day as the City acquired the Property and stepped into
Hoosier Outdoor's shoes as the lessor under the Lease,
the City's mayor sent Lamar a letter which reads in
relevant part as follows:
Please consider this letter to be our written notice of
cancellation for the billboard lease executed by and between
Hoosier Outdoor Advertising and The Elmore Family Limited
Partnership . . . . As of this day, the City of Seymour has
acquired the land from The Elmore Family Limited Partnership
and is hereby cancelling the lease. We understand that the
lease does not officially expire until 8/15/17. Further, we
understand that you are granted 90 days from the time the
lease is terminated to remove the sign . . . . You may
continue to operate the sign up to and through that date[.]
Dkt. 1 Ex. 1, at 11. Despite receipt of this notice, Lamar
refused and continues to refuse to vacate the Property,
giving rise to this lawsuit by the City for trespass,
ejectment, and a declaratory judgment declaring the Lease
expired.
Analysis
The
City seeks summary judgment on its declaratory judgment
claim. Lamar seeks dismissal with prejudice of the entire
lawsuit. Both parties agree that the dispositive question is
whether the Lease expired on August 15, 2017. Either
party's motion will be granted only if the contract and
other attachments to the complaint unambiguously support its
position (the City has eschewed reliance on extrinsic
evidence in support of its motion). See Hotel 71 Mezz
Lender LLC v. Nat'l Ret. Fund, 778 F.3d 593, 601-02
(7th Cir. 2015) (plaintiff's motion for summary
judgment); Centers v. Centennial Mortg., Inc., 398
F.3d 930, 933 (7th Cir. 2005) (defendant's motion to
dismiss on basis of complaint attachments). Under Erie
Railroad Company v. Thompkins, 304 U.S. 64 (1938), we
apply Indiana law to this removed diversity action,
see Dkt. 1, because that is our default choice,
Jean v. Dugan, 20 F.3d 255, 260 (7th Cir. 1994), and
because neither party disputes its applicability. Wood v.
Mid-Valley, Inc., 942 F.2d 425, 427 (7th Cir. 1991).
The
parties' dispute chiefly revolves around three points. We
begin, as do the parties, with the plain language of the
Lease. Citimortg., Inc. v. Barabas, 975 N.E.2d 805,
813 (Ind. 2012). First, it is undisputed that the City is an
“entity with powers of eminent domain.”
See Ind. Code ch. 32-24-2 (“[Eminent Domain]
Procedures for Cities and Towns”). And the Lease
provides that “[n]o cancellation” of it “is
possible by any entity with powers of eminent domain.”
Dkt. 1 Ex. 1, at 7. Therefore, argues Lamar, the City's
“written notice of cancellation” purports to do
precisely what the Lease prohibits it from doing and is thus
of no force or effect. Not so, counters the City: ...