City of Seymour v. Lamar Advantage GP Co., LLC

          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: ...