CALDWELL LAND AND CATTLE, LLC, an Idaho limited liability company, aka CALDWELL LAND & CATTLE COMPANY, LLC, Plaintiff-Respondent,
JOHNSON THERMAL SYSTEMS, INC., an Idaho corporation, Defendant-Appellant.
from the District Court of the Third Judicial District, State
of Idaho, Canyon County. Christopher S. Nye, District Judge.
court's amended final judgment vacated and
Hawley, Troxell, Ennis & Hawley, LLP, Boise, for
appellant. Lynnette Michele Davis argued.
& Hanni, Salt Lake City, Utah, for respondent. William
BURDICK, CHIEF JUSTICE
appeal stems from an unlawful-detainer and breach-of-contract
action filed by Caldwell Land and Cattle, LLC,
("CLC") after purchasing a building where the
holdover tenant, Johnson Thermal Systems ("JTS"),
asserted a right to remain on the property. The dispute
centers on the interpretation of a lease between JTS and the
original property owner which granted JTS an option to extend
the lease. JTS contends it properly exercised the option; CLC
contends JTS did not. The district court held that JTS failed
to exercise the option and thus became a holdover tenant. The
court further held that when JTS did not vacate within the
proper timeframe, JTS unlawfully detained the premises and
was liable for the ensuing damages. JTS timely appeals.
FACTUAL AND PROCEDURAL BACKGROUND
February 2012, JTS, a producer of industrial refrigeration
equipment, entered into a lease agreement (the
"Lease") with the Gilbert Family Trust
("Gilbert") for a commercial property located in
Caldwell, Idaho. The Lease granted JTS an option to renew for
two one-year terms but required JTS to give Gilbert at least
60 days' prior written notice of its intent to do so
before the Lease's expiration. In addition, all
amendments, modifications, or changes to the Lease were to be
made in writing and signed by the parties. In March 2013, JTS
and Gilbertsigned a written amendment to the Lease
which expressly stated that JTS was exercising its option to
extend the Lease for one of its additional one-year terms.
The amendment extended the Lease until April 15, 2014.
2014, JTS began constructing a new facility at a different
location. In the meantime, JTS and Gilbert's agent
discussed plans for renewing the Lease beyond its expiration
on April 15, 2014. Gilbert was aware that JTS planned to move
its operation once the new facility was completed, and JTS
knew Gilbert was hoping to sell the property. During
negotiations, Gilbert presented possibilities of
month-to-month, 6-month, and one-year terms at different
rates. On April 10, 2014 JTS told Gilbert via email that it
"would like to do a 6 month lease with the option to go
month to month for an additional 3-6 months."
Gilbert drafted and signed an amendment extending the Lease
until October 15, 2014 (the "Extension Amendment").
The Extension Amendment set rent for the 6-month term at $6,
000 per month. If JTS wished to extend the Lease at the
conclusion of the 6-month term, the Extension Amendment
provided two possible arrangements: JTS could extend the
Lease either for an additional 6-month term at $6, 000 per
month, or on a month-to-month basis at $6, 250 per month. All
other terms and conditions remained "in full force and
effect" unless "specifically amended."
this 6-month extension term, JTS and Gilbert's agent
discussed extending the lease beyond October 15th. However,
JTS never definitively answered whether it would elect to
extend the Lease or which arrangement it would select if it
did choose to extend. JTS consistently gave Gilbert possible
vacation dates that were considerable time before April 15,
2015 (the would-be termination date if the second 6-month
extension were selected). For example, JTS informed Gilbert
in August 2014 that it was "hoping on the December move
in on the new building, but it could be January." A
month later, Gilbert's agent asked JTS to keep him
informed of their planned vacancy of the building. The agent
advised JTS that he had told Gilbert that JTS was
"shooting for December 15th." He also informed JTS
that Gilbert would be signing a listing agreement and
installing a "For Sale" sign on the property in the
15, 2014 passed without a written or oral agreement extending
the lease. JTS continued to occupy the building and paid $6,
000 in rent for November and December 2014. In November 2014,
Gilbert entered into an agreement to sell the property to
CLC. CLC is a single-purpose LLC created to own and manage
the property. Its sole purpose was to lease the property to
Caldwell Peterbilt. In the first week of December,
Gilbert's agent informed JTS that Gilbert was selling the
property and that she and CLC aimed to close by December 31,
2014. JTS was also informed that CLC would issue a 30-day
eviction notice. JTS then asserted that it had exercised the
6-month extension. Less than a week later, Gilbert sent JTS a
written "Notice of Termination" which required JTS
to surrender possession on January 31, 2015, at which point
the lease would terminate. The termination notice also
required JTS to leave the property in the same condition it
was in upon entering the Lease including the removal all
and CLC closed on the property in late December 2014. After
this, CLC and JTS had discussions centering on when JTS could
be out by the earliest. The parties were unable to reach an
agreement. On January 22, 2015, CLC filed a complaint for
unlawful detainer based upon JTS's representation that it
would not surrender the property on January 31. The complaint
sought possession of the property. A week later, on January
29, JTS reiterated its position that it had exercised the
6-month extension and stated that it did not plan to vacate
the premises until April 15, 2015.
JTS vacated the property around February 12, 2015, after the
City of Caldwell approved an early move into its new
facilities. JTS made no repairs to the property and left in
place a leased 480V electrical transformer which JTS had
installed a year earlier. On February 23, 2015, JTS contacted
Idaho Power to request that they remove the transformer.
After Idaho Power removed the transformer, Peterbilt called
Idaho Power to reinstall the transformer on March 2.
Peterbilt would take possession of the property in May 2015.
amended its complaint on March 24, 2015. The complaint no
longer sought possession of the property, but sought damages
associated with JTS's alleged unlawful detainer. In
addition, the amended complaint alleged breach of contract;
breach of the implied covenant of good faith and fair
dealing; and intentional and malicious injury to property.
JTS counterclaimed for breach of contract; constructive
eviction; and for a refund of the security deposit and the
unearned portion of the February 2015 rent.
than two years later, in August 2017, the district court held
a three-day bench trial. In the written decision which
followed, the district court ruled that the plain language of
the Lease required all amendments, modifications, or changes
to be in writing and signed by the parties. Determining that
the Extension Amendment did not alter or eliminate the
writing requirement, the court ruled that the Extension
Amendment's 6-month extension needed to be put in
writing. Since the parties failed to create a written
extension, the district court ruled that JTS and Gilbert
created a "month-to-month" or "at-will"
tenancy when JTS paid, and Gilbert accepted, $6, 000 in rent
after the extension deadline passed. For the
unlawful-detainer claim, the court found JTS liable for
failing to vacate by the Notice of Termination's January
31, 2015 deadline. For the breach-of-contract claim, the
court found JTS liable for failing to vacate after its term
expired, removing the transformer without CLC's
permission, and failing to make repairs. The district court
also found that JTS breached the implied covenant of good
faith and fair dealing by failing to give timely notice to
CLC of when it would vacate the property and by failing to
pay the higher rent for the month-to-month option. Finding
that JTS agreed to indemnify CLC in the Lease, the court
ruled that CLC was entitled to $86, 389.26 in damages for
unpaid rent, damages and costs caused by removal of the
transformer, costs to repair the property, and damages
related to Peterbilt's inability to move into the
building on February 1st (such as rent due on extending
Peterbilt's prior lease, costs of an idle employee, and
the district court's findings of facts and conclusions of
law were entered, CLC requested attorney's fees under
Idaho Code section 6-324, Idaho Rule of Civil Procedure
54(e)(1), and the Lease. Meanwhile, JTS moved to reconsider,
alter, or vacate the judgment. The court summarily denied
JTS's motion. The district court awarded CLC $150, 000 in
attorney's fees under the Lease and Idaho Code section
6-324 in addition to around $3, 400 in costs as a matter of
right. The district court then entered a final judgment
awarding damages, costs, and attorney's fees. JTS timely
ISSUES ON APPEAL
the district court err in concluding that the JTS did not
intend to exercise the 6-month option to extend the Lease?
the district court err by hearing CLC's contract claims
in a proceeding that began as an unlawful detainer claim for
the district court err in awarding damages to CLC based on
unlawful detainer or breach of contract?
the district court properly award attorney's fees to CLC
either party is entitled to attorney's fees on appeal?
STANDARD OF REVIEW
of a trial court's conclusions following a bench trial is
limited to ascertaining whether the evidence supports the
findings of fact, and whether the findings of fact support
the conclusions of law." Borah v. McCandless,
147 Idaho 73, 77, 205 P.3d 1209, 1213 (2009) (citing
Benninger v. Derifield, 142 Idaho 486, 488-89, 129
P.3d 1235, 1237-38 (2006)). "This Court will not set
aside a trial court's findings of fact unless the
findings are clearly erroneous." Id.
"Clear error will not be deemed to exist if the findings
are supported by substantial and competent, though
conflicting, evidence." Mortensen v. Berian,
163 Idaho 47, 50, 408 P.3d 45, 48 (2017) (quoting Pandrea
v. Barrett, 160 Idaho 165, 171, 369 P.3d 943, 949
(2016)). Substantial and competent evidence exists "[i]f
there is evidence in the record that a reasonable trier of
fact could accept and rely upon in making the factual finding
challenged on appeal . . . ." Id.
this Court "exercises free review over matters of law
and is not 'bound by the legal conclusions of the trial
court, but may draw its own conclusions from the facts
presented.'" Morgan v. New Sweden Irr.
Dist., 160 Idaho 47, 51, 368 P.3d 990, 994 (2016)
(quoting Credit Suisse AG v. Teufel Nursery, Inc.,
156 Idaho 189, 194, 321 P.3d 739, 744 (2014)). But this Court
"will not substitute [its] view of the facts for the
view of the district court," so "the trial
court's findings of fact will be liberally construed in
favor of the judgment entered." Mortensen, 163
Idaho at 50, 408 P.3d at 48 (citations omitted).
awarding of attorney fees and costs is within the discretion
of the trial court and subject to review for an abuse of
discretion." In re Estate of Birch, 164 Idaho
631, 633, 434 P.3d 806, 808 (2019) (quoting Smith v.
Mitton, 140 Idaho 893, 897, 104 P.3d 367, 371 (2004)).
Thus, this Court conducts a four-part inquiry to determine
whether the trial court: "(1) correctly perceived the
issue as one of discretion; (2) acted within the outer
boundaries of its discretion; (3) acted consistently with the
legal standards applicable to the specific choices available
to it; and (4) reached its decision by the exercise of
reason." Lunneborg v. My Fun Life, 163 Idaho
856, 863, 421 P.3d 187, 194 (2018) (citing Hull v.
Giesler, 163 Idaho 247, 250, 409 P.3d 827, 830 (2018)).
light of the many issues and arguments raised in this appeal,
we first address (A) whether the district court erred in
determining that JTS failed to exercise the 6-month extension
option. Next, we discuss (B) whether the district court erred
by considering contract claims in a proceedings that began as
an unlawful detainer action for possession. Finding no error,
we then assess whether its award of damages under either
unlawful detainer or breach of contract must be revised.
Concluding that the damages must be revised, we provide (C) a
calculation of the damages awardable in this case. Next, we
take up (D) whether the district court abused its discretion
in awarding attorney's fees below. Lastly, we address (E)
whether either party is entitled to attorney's fees on
JTS became a month-to-month tenant after holding over because
it did not intend to exercise the 6-month option to
district court determined that JTS failed to exercise the
Extension Amendment's 6-month extension option because
the Lease required all amendments, modifications, or changes
to be in writing and signed by the parties. Importantly, the
district court also found that JTS was "clear"
about its intent to move out as soon as the new facility was
completed and that JTS did not intend to exercise the 6-month
extension. In fact, the district court found that
"[u]ntil the present dispute arose, neither [JTS] nor
Gilbert intended to renew the lease for a -month term
after October 15, 2014."
appeal, JTS claims that the Extension Amendment itself was a
modification which changed how it and Gilbert could extend
the Lease going forward. Thus, in JTS's view, all that
was required under the Extension Amendment to trigger the
6-month extension was to pay the rent at the 6-month rate and
continue in possession. In support, JTS relies on the Court
of Appeals' decision in Dante v. Golas to argue
that, because the Extension Amendment lacks the "written
notice" language, it does not require a writing to be
effective. (citing 121 Idaho 149, 823 P.2d 183 (Ct. App.
1992). While JTS's arguments have a legal foundation, the
district court's finding that JTS did not intend to
exercise the lease extension is dispositive of this issue. As
explained below, (1) JTS failed to exercise the 6-month
extension, and, as a result, (2) JTS and Gilbert entered into
an implied-at-law periodic tenancy after the extension was
JTS did not exercise the 6-month extension because it
lacked the intent to exercise the option.
purpose of interpreting a contract is to determine the intent
of the contracting parties at the time the contract was
formed." Thurston Enterprises, Inc. v. Safeguard
Bus. Sys., Inc., 164 Idaho 709, 717, 435 P.3d 489, 497
(2019) (citation omitted). To accomplish this, "the
contract is to be viewed as a whole." Id.
"The interpretation of a contract begins with the
language of the contract itself." Cristo Viene
Pentecostal Church v. Paz, 144 Idaho 304, 308, 160 P.3d
743, 747 (2007) (quoting Independence Lead Mines Co. v.
Hecla Mining Co., 143 Idaho 22, 26, 137 P.3d 409, 413
(2006)). "An unambiguous contract will be given its
plain meaning." Bakker v. Thunder Spring-Wareham,
LLC, 141 Idaho 185, 190, 108 P.3d 332, 337 (2005).
"A contract is ambiguous if it is reasonably subject to
conflicting interpretations." Id.
"Determining whether a contract is ambiguous is a
question of law over which this Court exercises free
review." Cristo Viene, 144 Idaho at 308, 160
P.3d at 747. However, "interpreting an ambiguous term is
an issue of fact." Thurston Enterprises, Inc.,
164 Idaho at 717, 435 P.3d at 497 (quoting Phillips v.
Gomez, 162 Idaho 803, 807, 405 P.3d 588, 592 (2017)).
contractual options, precision in language is paramount. This
fact is evidenced in Dante v. Golas. 121 Idaho 149,
823 P.2d 183 (Ct. App. 1992). There, the Court of Appeals
examined a lease agreement where the tenants had the option
to assume the mortgage on the property. Id. at 150,
823 P.2d at 184. At issue was the following lease provision:
NOTICE-If lessees wish to assume mortgage prior to 12/31/88,
they agree to give owners at least 30 days notice prior to
the date they wish to assume. This will enable owners to
obtain and complete the proper papers.
1. At the end of this lease, the lessees have the option of
assuming the mortgage at the prevailing rate and terms.
Id. The tenant in Dante provided notice in
mid-December that they wished to purchase the property, but
the landlord refused to sell. Id. The district court
concluded the tenant had complied with the unambiguous terms
of the lease by sending a letter of intent to assume the
mortgage upon expiration of the lease in mid-December.
Id. On appeal, the landlord argued that the tenant
failed to exercise the option in a timely fashion because it
was required to actually assume the mortgage prior to the
expiration of the lease term. Id. The Court of
Appeals disagreed, stating:
The above-quoted language of the lease-option does not
provide that an option to be exercised "at the end of
[the] lease" was subject to the thirty-day notice
requirement; this requirement was expressly limited to an
assumption of the mortgage "prior to" December 31,
1988. As to the argument that the assumption had to have been
actually completed by December 31, 1988, the lease-option
contained no stated condition precedent that performance,
rather than notice of intent to perform, had to take place
during the option period.
the relevant provisions of the Lease gave JTS the option to
renew the Lease so long as it gave prior written notice:
TERM OF LEASE: Lessee shall be entitled to
exclusive possession of the premises for a period of thirteen
(13) months commencing on March 15, 2012 and terminating on
April 15, 2013. The base rent for the first month of the
initial term (3/15/1012-4/15/2012) shall be waived. At least
(60) sixty days prior to the expiration of the lease term,
the Lessee shall give the Lessor written notice of his
intention to renew the lease . . .
OPTION TO RENEW: Upon Lessor's receipt
of written notice by the Lessee at least sixty (60) days
prior to the expiration of this Lease Agreement, Lessor
grants to Lessee an option to renew this Lease for an
additional two (2) terms of one (1) year each commencing with
the expiration for this Lease Agreement. Rent shall increase
on the basis of three percent (3%) with the commencement of
each new term. All other terms of the renewed lease shall be
negotiable . . .
MODIFICATION: This agreement may not be
amended, modified or changed except by a writing signed by
all parties hereto . . .
Extension Amendment, on the other hand, extended the lease
term and granted JTS an option to further extend the lease
1. Extension of Term. The Lease Term of the Lease is hereby
extended Six (6) months, effective as of April 16, 2014. The
Lease Term, as extended by this Amendment, shall expire upon
October 15, 2014 . . .
3. At the conclusion of this lease extension the Tenant shall
have the option to extend the lease agreement for an
additional period of either six (6) months or on a month to
month basis at the following rates:
a. Six Month Term: Base Rent = $6, 000/mo
b. Month to Month Term: Base Rent = $6, 250.00/mo . . . .
4. All other terms and conditions of the Lease Agreement, not
specifically amended hereby, remain in full force and effect.
the contract in its entirety, the district court's
reliance on the modification provision is misplaced. The
modification provision merely provides that all changes must
be in writing as opposed to an oral agreement. The Extension
Amendment is a valid exercise of the modification provision.
As a freestanding amendment, its terms govern how the option
to extend must be exercised. Previously, the parties signed
amendment to the Lease to renew the Lease, but these
amendments also changed the terms of the Lease. Here, no new
writing would have been required if JTS exercised the options
to extend under the Extension Amendment because all possible
terms, including price and duration, appeared in the
Extension Agreement itself.
next determine whether the Extension Amendment contains a
notice requirement. While the Lease required JTS to give 60
days' written notice of intent to exercise the option to
renew, the Extension Amendment lacked such a requirement. The
option to extend is both semantically and substantively
distinct from the option to renew. A renewal, by its nature,
is a new lease, with new terms, and thus, must be signed
anew. An extension, on the other hand, prolongs the current
lease term rather than creating a new one. Thus, to comply
with the extension's terms, JTS was contractually
required to pay rent and continue in possession. While JTS
can be fairly said to have done that, this does not end the
as here, a lease's option to extend lacks a notice
provision, the prevailing rule is that the court will presume
that a tenant has validly exercised the option when the
tenant holds over and pays the agreed-upon rent. See
Ellis v. Pauline S. Sprouse Residuary Tr., 280 S.W.3d
806, 811 (Tenn. 2009) (listing cases). However, excepted from
this general rule are circumstances where the parties'
intent or conduct rebuts that presumption. See 52
C.J.S. Landlord & Tenant § 112 ("[I]n
determining whether a holding over has effected an extension
or renewal under an option therefor, the holding over should
be considered in connection with the intention of the parties
and the circumstances attending the transaction.").
case presents the exception to the general rule. Any
presumption that JTS exercised the 6-month option to extend
is foreclosed by the district court's factual finding
that JTS did not intend to exercise the option. After the
three-day trial, the district court found that neither JTS
nor Gilbert intended to exercise the 6-month option. This
finding is supported by substantial, competent evidence. The
district court rested this finding upon the written
correspondence between JTS and Gilbert detailing the
touch-and-go nature of JTS's new building, noting that
JTS "made clear" it intended to move out as soon as
it could move into its new facility. The district court also
noted that all of JTS's proposed exit dates would have
occurred prior to the end of the second 6-month option to
extend. Given these findings, the district court did not err
in determining that JTS failed to exercise the 6-month
JTS and Gilbert entered into an implied-at-law periodic
tenancy because JTS paid, and Gilbert accepted, monthly rent
in the absence of a formal agreement.
next inquiry concerns the nature of the leasehold created
after JTS failed to exercise the 6-month option. The district
court ruled that JTS "carried on as a month-to-month or
at-will tenant." While this ruling is not altogether
incorrect, the phrasing is imprecise. Considering the
entirety of the district court's decision, it appears
that the district court meant to construe the leasehold as a
month-to-month periodic tenancy. For the reasons below, we
holdover tenancy is "a tenancy arising when a person who
has been in lawful possession of a property wrongfully
remains as a holdover after his or her interest has
expired." Black's Law Dictionary 1694 (10th ed.
2014). While "holding over" describes the
tenant's action, the tenancy created when a tenant holds
over depends on how the landlord treats the tenant's
holdover. The landlord can either (1) treat the holdover
tenant as a trespasser or (2) hold the tenant to a new
tenancy. See Lewiston Pre-Mix Concrete, Inc. v.
Rohde, 110 Idaho 640, 644- 45, 718 P.2d 551, 555-56 (Ct.
App. 1985). Upon treating the tenant as a trespasser, the
landlord may bring an action for unlawful detainer.
Id. at 556, 718 P.2d at 556. But if lessor
"seeks, implicitly or explicitly, to hold lessee to new
tenancy," then "a new lease arises by operation of
law." Id. Such operation-of-law tenancies may
take different forms-such as at will or periodic. See
id. A tenancy at will has no fixed terms while a
periodic tenancy automatically continues for successive
month-to-month periodic tenancy arose when JTS remained on
the property and Gilbert accepted rent on a monthly basis.
Just as the parties' conduct and intent informs whether
JTS exercised the option to extend, it also informs the
tenancy that is created. See 52 C.J.S. Landlord
& Tenant § 248. Gilbert's acceptance of rent on
a monthly basis evidences the intent to hold JTS to a new
tenancy and supplies the periodic intervals that define the
tenancy. See id. ("In the absence of an express
agreement thereon, a tenancy from month to month arises from
a tenant's holding over where the rent under the prior
lease was on a monthly basis, even though the expired term
was for a period of years, or where the rent during the
holdover tenancy is ...