Summary of a Recent
Judicial
Development in
Commercial Transactions
Limited Discovery Allowed to Determine Parties' Intent
Regarding Renewal of Lease
Walt McCarterNational AgLaw Center Research Associate
Summary of Decision
In Alabama Farmers Cooperative, Inc. v. Jordan, No. 3:07-CV-543-JDM, 2008 WL 4500037 (W.D. Ky. Sept. 30, 2008), the United States District Court for the Western District of Kentucky denied a plaintiff's motion for partial summary judgment and permitted limited discovery on the issue of whether its lease had been fully renewed or merely extended, as it was unclear whether the parol evidence rule barred the admission of extrinsic evidence in interpreting the parties' intentions.
Background
The Alabama Farmers Cooperative (Coop) leased fifteen acres and the mobile homes on that property for five years under two separate lease agreements, both of which contained an option to renew for an additional five years. Id. at *1. The leases did not specify the trigger for renewal. Id. When the original five-year term ended, the Coop continued to occupy and make payments for the property, but the lessor claimed that the Coop had not renewed the leases. Id. The Coop brought this action and moved for partial summary judgment on the issue of whether the leases had been renewed. Id.
Arguments
The Coop argued that it had valid leases with an option to purchase the land and trailers through 2010. Id.
The lessor argued that the leases did not automatically renew by virtue of the Coop's continued possession and payment of rent, and that the renewal provision required the parties to enter new leases. Id. at *2.
Analysis and Holdings
The court found that it was unclear whether the parol evidence rule barred the admission of extrinsic evidence in this situation where the leases contained no complete integration clauses; therefore, the court denied the Coop's motion for partial summary judgment and permitted limited discovery to further determine the parties' intent. Id. at *2-3.
The case was decided on September 30, 2008.