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Michael Labalo, Appellant, vs. North Country, Inc., Respondent. C4-97-9, Court of Appeals Unpublished, July 15, 1997.

This opinion will be unpublished and may not be cited except as provided by Minn. Stat. sec. 480A.08, subd. 3 (1996). STATE OF MINNESOTA IN COURT OF APPEALS C4-97-9 Michael Labalo, Appellant, vs. North Country, Inc., Respondent. Filed July 15, 1997 Affirmed. Randall, Judge Dakota County District Court File No. C1-96-6641 Gary D. Pihlstrom, 950, One Financial Plaza, 120 South Sixth Street, Minneapolis, Minnesota, 55402 (for appellant). Suzanne M. Spellacy, 3200 World Trade Center, 30 East Seventh St., St. Paul, Minnesota, 55101 (for respondent). Considered and decided by Randall, Presiding Judge, Toussaint, Chief Judge, and Kalitowski, Judge. UNPUBLISHEDOPINION RANDALL, Judge Appellant Michael Labalo challenges the district court's denial of his motion to amend his complaint and the court's grant of summary judgment for respondent North Country, Inc., on Labalo's suit for rent and expenses under a commercial lease. We affirm. FACTS On April 1, 1990, appellant Michael Labalo purchased a shopping mall in which respondent North Country, Inc. was a tenant. In buying the mall, Labalo assumed the right to receive all monies owed by North Country under a lease between North Country and the former owner of the mall. The original term of North Country's lease, entered into by Steven Kopesky, as president of North Country, expired on October 31, 1987. North Country and Labalo's predecessor in interest executed a lease addendum, however, extending the lease until April 30, 1988. The lease contained options for North Country to renew under the same terms for up to two three-year periods following expiration of the lease term on April 30, 1988. Under the lease, North Country could
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Michael Labalo, Appellant, vs. North Country, Inc., Respondent. C4-97-9, Court of Appeals Unpublished, July 15, 1997.

exercise its option to renew only by providing Labalo with a written notice of exercise 60 days before expiration of the lease term. North Country executed a written renewal of the lease for May 1, 1988, through April 30, 1991, at a monthly rate of approximately $5,555 including common area maintenance, taxes, and insurance. By letter dated December 10, 1991, North Country informed Labalo that North Country would begin withholding rent for costs incurred by North Country in heating and cooling unused rental space adjoining the property rented by North Country. Labalo did not respond to this letter. North Country did not submit a notice to renew for the second option period running from May 1, 1991, though April 30, 1994. North Country remained on the premises, however, and continued to send a check for $5,555 (or $4,555 or $5,055 when North Country withheld its increased utility costs) to Labalo every month until November 1994. Labalo objected on at least three occasions to North Country not paying more rent, but negotiated every one of the rent checks and never attempted to evict North Country. Nor did Labalo sue North Country to recover rent while he still owned the mall. On October 25, 1995, Labalo, acting pro se, sued North Country. In his complaint, Labalo alleged that after expiration of the lease, North Country remained on the premises on a month-to-month basis. The complaint further alleged that North Country failed to pay the full rent due from February 1990 to November 1994. Labalo requested damages for the unpaid rent plus interest and penalty in the amount of $13,288. North Country moved for summary judgment on August 26, 1996. Labalo retained counsel on September 13, 1996. On September 16, 1996, the parties deposed Labalo and Kopesky. On September 18, 1996, two days before the motions hearing and one month before the scheduled trial, Labalo moved to amend and for summary judgment. By its motion to amend, Labalo sought to add Kopesky as a defendant and add claims for improper set-off and rent owing under the holdover provision of the lease. Labalo alleged for the first time in its motion to amend that after April 30, 1991 (the expiration date of the lease term following the written renewal), North Country became a holdover tenant subject to the holdover provision of the lease. Labalo claimed that under the holdover provision, North Country owed Labalo $13,288 each month, including North Country's pro rata share of costs and one and one-half times the base rent owed from May 1991 through October 1994, when Labalo sold the mall. At the September 20, 1996, motions hearing, North Country responded to Labalo's motion to amend by alleging that the parties had orally agreed Labalo would permit North Country to remain on the premises after expiration of the lease term on April 30, 1991, in exchange for North Country's monthly payment of $5,555 to Labalo. Labalo did not address North Country's arguments in support of its motion for summary judgment either in his motion to amend or at the motions hearing. On September 30, 1996, the district court granted North Country's motion for summary judgment and denied Labalo's motion to amend on the grounds that no new facts justified an amendment, the claims Labalo sought to add were not legally viable, and North Country would suffer undue prejudice if the court allowed amendment. In addition, the court granted summary judgment in favor of North Country because it concluded the doctrines of waiver and accord and satisfaction and the statute of frauds barred recovery on the lease. DECISION I. A district court has "wide discretion to grant or deny an amendment [to the pleadings], and its action will not be reversed absent a clear abuse of discretion." Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn. 1993). A court does not abuse its discretion by denying a motion to amend when the moving party fails to establish that the claims it seeks to add have a basis in law and fact. See Envall v. Independent Sch. Dist. No. 704, 399 N.W.2d 593, 597 (Minn. App. 1987) (holding that courts may deny amendments to add claims not legally cognizable), review denied (Minn. Mar. 25, 1987). Here, Labalo sought to add claims for recovery under the holdover and set-off provisions in the parties' lease and to
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Michael Labalo, Appellant, vs. North Country, Inc., Respondent. C4-97-9, Court of Appeals Unpublished, July 15, 1997.

add Kopesky as a defendant. Where a lease contains a provision permitting the lessee to renew the lease by giving the lessor timely notice of such renewal, and the lessee holds over and pays rent that the lessor accepts, the lessee has exercised its option to renew and the lessor has waived the requirement of written notice. Kean v. Story & Clark Piano Co., 121 Minn. 198, 201-02, 140 N.W. 1031, 1031 (1913); Caley v. Thornquist, 89 Minn. 348, 350, 94 N.W. 1084, 1085 (1903). The parties' lease contained a provision granting North Country the right to renew the lease through April 30, 1994, by providing Labalo with written notice of the exercise of this option. North Country did not give Labalo written notice of its intent to renew the lease. North Country did, however, remain on the premises, and paid the monies due under the lease, except for the utility expenses it set off and its pro rata share of the additional expenses alleged by Labalo. North Country, as a practical matter, clearly exercised its option to renew the lease through April 30, 1994. For his part, Labalo accepted and negotiated every monthly rent and expense check he received from North Country. Thus, he waived the requirement that North Country provide him written notice to renew the lease. As a result, North Country avoided becoming a holdover tenant (from May 1, 1991, to April 30, 1994) within the scope of the holdover provision. Consequently, Labalo's claim that he is entitled to one and one-half times rent from a "holdover tenant," North Country, lacks merit. The district court also correctly rejected Labalo's claim that he was entitled to additional rent from North Country under the holdover provision of the lease from May 1, 1994, though November 1, 1994. That provision stated: Should North Country continue to occupy the lease premises after expiration of this lease term or any renewal thereof * * * such remaining in possession shall not, except at the option of the LESSOR, extend the term of this Lease, and North Country shall promptly vacate said premises; and if for any reason North Country does not promptly vacate the premises at the end of the term, North Country agrees to pay LESSOR a rental equal to one and one-half (1-1/2) times the rent provided to be paid during the term of this Lease. The lease does not specify a particular manner for Labalo to exercise the option to extend the term of the lease. After expiration of the lease renewal on April 30, 1994, Labalo continued to accept and negotiate North Country's monthly rent checks. On these facts, Labalo's acceptance and negotiation of North Country's checks constituted a waiver of the requirement that North Country pay Labalo one and one-half times the normal rent due. Accordingly, the district court did not err by finding that Labalo's claim for additional rent under the holdover provision was not viable. Labalo also sought by amendment to assert a claim for wrongful set-off. The lease provides in relevant part: North Country waives and disclaims any present or future right to apply any payment or part payment of rent, or to set-off or counterclaim in any action for rent, against any obligation of LESSOR, however incurred, and agrees that it will not claim or assert such right, set-off, or counterclaim. North Country notified Labalo by letter in late 1991 that North Country would withhold rent as a set-off of expenses it alleged were the obligation of Labalo. North Country went ahead and paid only partial rent throughout parts of 1992. However, Labalo never responded to North Country's letter or sought to enforce the terms of the lease. We cannot say the trial court erred by finding Labalo waived the right to enforce the provision prohibiting set-off. Labalo further argues that he was entitled to recover against Kopesky because "[i]t was Mr. Kopesky, not any corporation or other entity, that signed the lease extension * * * ." Kopesky did sign the lease addendum without noting that he did so on behalf of Leisure Specialists or the Lift. The addendum itself, however, stated that it was the "Tenant" that agreed to the terms of the addendum, and the lease defined Tenant as Leisure Specialists or the Lift. It is clear from the record that Kopesky did not sign the addendum in his individual capacity, and thus, Labalo was not entitled to recover from him personally. Labalo contends that the district court should have permitted him to amend his complaint under Minn. R. Civ. P. 15.02 to conform to new evidence discovered during the deposition of Kopesky. Contrary to Labalo's assertions, the record indicates that Labalo knew or had constructive knowledge of all material facts before Kopesky's deposition. The district court, acting within its discretion, properly denied Labalo's motion to amend under rule 15.02.

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Michael Labalo, Appellant, vs. North Country, Inc., Respondent. C4-97-9, Court of Appeals Unpublished, July 15, 1997.

II. On an appeal from summary judgment, a reviewing court must ask whether any genuine issues of material fact exist and whether the district court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). The reviewing court "must view the evidence in the light most favorable to the party against whom judgment was granted." Fabio, 504 N.W.2d at 761. A district court shall grant a motion for summary judgment where the pleadings, depositions, answers to interrogatories, and affidavits and admissions on file show that no genuine issue of material fact exists and that either party is entitled to a judgment as a matter of law. Minn R. Civ. P. 56.03 (1996); see Fabio, 504 N.W.2d at 763 (affirming grant of summary judgment). In deciding a motion for summary judgment, a district court must not decide factual issues, but rather must determine whether any material factual issues exist. Nord v. Herreid, 305 N.W.2d 337, 339 (Minn. 1981). A district court may, however, make findings of fact to clarify the basis for its decision. Whisler v. Findeisen, 280 Minn. 454, 455, n.1, 160 N.W.2d 153, 154 (1968). Where the material facts are not in dispute, a court may decide the question of waiver as a matter of law. Montgomery Ward & Co. v. County of Hennepin, 450 N.W.2d 299, 304 (Minn. 1990). "A waiver is a voluntary and intentional relinquishment or abandonment of a known right." Id. The court may infer the intention to relinquish or abandon the right from the party's conduct. Stephenson v. Martin, 259 N.W.2d 467, 470 (Minn. 1977); see, e.g., In re Estate of Sangren, 504 N.W.2d 786, 790 (Minn. App. 1993) (holding that party's failure to object to assignment made in its presence until four months later constituted waiver), review denied (Minn. Oct. 28, 1993). Here, Labalo alleged in his complaint filed on October 25, 1995, that North Country failed to pay adequate rent starting in February 1990--five and one-half years earlier. Labalo objected to North Country not paying more rent, but took no further action while he owned the mall to recover the monies he claimed North Country owed him. Instead, Labalo accepted and negotiated every monthly check from North Country. Labalo did not evict North Country or even attempt to do so. He sued North Country only in October 1995, a year after he had sold the mall and was no longer North Country's landlord. Even viewing the evidence in the light most favorable to Labalo, the district court properly found, as a matter of law, that Labalo waived the right to collect additional monies from North Country under the lease and the alleged month-to-month tenancy that followed the lease. Affirmed.

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