Robert Industries, Inc. v. Spence

Massachusetts Supreme Judicial Court · Contracts

ContractsLease interpretationParol evidenceIntegrated agreementparol evidenceintegrationlease interpretationambiguity

Facts

The MDC leased the plaintiff portions of buildings and adjoining areas on George's Island for a five-year food and beverage concession, and the lease required the plaintiff to renovate the premises and pay the MDC ten percent of gross receipts. Paragraph 8 provided that the MDC would not grant a lease to any other person or company that would compete with the concession, but reserved the right to permit patrons to bring their own food and beverages for personal use onto the island. Spence, through a corporation operating harbor boats and sightseeing trips, advertised and ran clambakes on the island for groups, charging for transportation and the clambake; the food was partly prepared on the mainland and then cooked and served on island areas not covered by the plaintiff's lease. Spence and his corporations had no lease from the MDC and paid no fee to it.

Issue

Whether paragraph 8 of the plaintiff's lease with the MDC gave the plaintiff an exclusive right to serve food for money anywhere on George's Island, including against commercial caterers operating without a lease. Also, whether the trial court properly dismissed the defendant corporation's counterclaim based solely on the supposed exclusivity of the plaintiff's rights.

Rule

A written lease may be read in light of the circumstances of its execution to determine whether its terms are uncertain or equivocal as applied to the subject matter, and extrinsic evidence is admissible to elucidate but not contradict or change the terms. Where a lease is a complete integrated agreement, interpretation is directed to the meaning of the writing in light of the circumstances, and the writing governs; a provision forbidding the grant of a competing lease does not by itself prohibit all non-lessee competition.

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Lakefront Parks Authority leased a snack pavilion on Navy Pier in Chicago to Harbor View Concessions, LLC. The lease states that the Authority "shall not lease any other space on the pier to a business that competes with the concession herein granted," and also says visitors may bring their own food for personal use. Later, a private tour company with no lease begins selling boxed lunches from a temporary cart on an open plaza not included in Harbor View's leased premises.

If Harbor View sues claiming the lease gives it the exclusive right to sell food anywhere on the pier, which argument is strongest under the governing rule?

Explanation. A complete written lease is interpreted by its actual terms. A covenant that the landlord will not grant a competing lease does not, by itself, prohibit competition by non-lessees operating outside the tenant's leased premises. The reservation allowing patrons to bring their own food does not transform the clause into a general ban on all other food sales. (Derived from Robert Industries, Inc. v. Spence (n.d.).)