Session April 13, 2017
from the Chancery Court for Davidson County No. 14-0384-II
Carol L. McCoy, Chancellor
landlord of a shopping mall commenced this action against a
commercial tenant for breach of a lease. The tenant claimed
it had an enforceable oral agreement to terminate the lease
with the former landlord. The landlord contended that the
original lease contained a "no oral modification"
clause; thus, the oral agreement to terminate the lease was
unenforceable. After the landlord presented its proof at
trial, the court dismissed the case pursuant to Tenn. R. Civ.
P. 41.02(2), ruling that the oral termination agreement
between the tenant and the former landlord was enforceable
despite the "no oral modification" clause in the
lease. This appeal followed. When a defendant files a Tenn.
R. Civ. P. 41.02(2) motion for involuntary dismissal at the
conclusion of the plaintiff's proof at trial, the only
evidence the trial court may consider in determining whether
the proof was sufficient to demonstrate a right to the relief
is "the plaintiff's proof" at trial. Tenn. R.
Civ. P. 41.02(2). We have determined that the trial court
erroneously considered facts and documents not found in the
plaintiff's proof. Excluding the extraneous facts and
documents, the evidence presented at trial preponderates
against the trial court's factual findings and its
conclusion that the landlord's predecessor in interest
and the tenant entered into a binding lease termination
agreement. Accordingly, we reverse and remand for further
R. App. P. 3 Appeal as of Right; Judgment of the Chancery
Court Reversed and Remanded
W. White, Nashville, Tennessee, for the appellant, Global
Mall Partnership d/b/a Global Mall at the Crossings.
Randall J. Fishman and Richard S. Townley, Memphis,
Tennessee, for the appellee, Shelmar Retail Partners, LLC
d/b/a City Gear, LLC.
G. Clement, Jr., P.J., M.S., delivered the opinion of the
Court, in which Richard H. Dinkins and W. Neal McBrayer, JJ.,
G. CLEMENT JR., P.J., M.S.
plaintiff, Global Mall Partnership ("Global Mall"),
owns and operates Global Mall at the Crossings ("the
Mall"), which was formerly known as Hickory Hollow Mall.
CBL & Associates Management, Inc. ("CBL")
managed Hickory Hollow Mall, LP ("Hickory Hollow")
and acted as its agent at all times material to this action.
Global Mall purchased the Mall from Hickory Hollow. The
closing occurred on October 30, 2012, at which time Hickory
Hollow assigned six commercial leases to Global Mall. The
defendant, Shelmar Retail Partners, LLC d/b/a City Gear, LLC
("City Gear"), was a tenant at the time of the
closing, and its lease was assigned to Global Mall.
Gear entered into a five-year lease agreement with Hickory
Hollow in March 2005 for the purpose of operating a retail
clothing store at the Mall. In August 2010, City Gear and
Hickory Hollow executed an agreement extending the lease
through June of 2015. In addition to paying a minimum annual
rent, City Gear agreed to pay 5% of any gross sales exceeding
$1.3 million per year. If less than two anchor tenants
remained, and the non-anchor tenants occupied less than 65%
of the square footage in the Mall, the rent would be reduced
to 5% of City Gear's gross sales. The lease prohibited
City Gear from operating another store within a three-mile
radius of the Mall during the lease term. It also stated that
the lease could not be modified "in any manner other
than by agreement in writing signed by all the parties hereto
or their successors in interest."
2012, all of the anchor tenants had departed from the Mall,
and CBL presented City Gear with a proposed lease termination
agreement. The effective date of termination was left blank
on the proposal. Moreover, the proposal included a disclaimer
in bold type, "This transmittal is not an offer to enter
into the Agreement, and until the Agreement has been approved
and fully executed by [Hickory Hollow], the Agreement is not
an enforceable contract." For reasons not explained in
the proof presented at trial, City Gear did not sign the May
City Gear did not have a duly executed written termination
agreement with Hickory Hollow, City Gear entered into a lease
agreement in June of 2012 with another of CBL's clients,
The Courtyard at Hickory Hollow Limited Partnership. City
Gear intended to relocate to The Courtyard at Hickory Hollow
("the Courtyard") as soon as construction at the
Courtyard was completed. Even though the Courtyard lease,
like the Hickory Hollow lease, prohibited City Gear from
operating another store within a three-mile radius, the
Courtyard lease was not contingent upon City Gear obtaining a
contemporaneous termination of its lease with Hickory Hollow.
September 13, 2012, CBL provided City Gear with an unsigned,
second draft of a proposed termination agreement. This
proposal also stated in bold type, "This transmittal is
not an offer to enter into the Agreement, and until the
Agreement has been approved and fully executed by [Hickory
Hollow], the Agreement is not an enforceable contract."
As was the case with the May proposal, City Gear did not sign
or respond to the September proposal even though CBL sent two
follow-up emails urging City Gear to sign and return the
proposed termination agreement.
very next day, on September 14, Hickory Hollow entered into a
contract to sell the Mall to the plaintiff, Global Mall.
Prior to the closing, CBL sent an email to Global Mall's
attorney on September 28 informing Global Mall that City Gear
would be relocating to the Courtyard. The parties closed on
the purchase of the Mall on October 30. As part of the
closing, Hickory Hollow assigned six commercial leases to
Global Mall, including its lease with City Gear. As of the
date of closing, City Gear still had not executed a written
lease termination agreement, and Global Mall had not seen any
draft of a proposed termination agreement with City Gear. The
day after the closing, Hickory Hollow notified City Gear that
its lease had been assigned to Global Mall and that all
future rent payments should be made to Global Mall.
weeks later, on December 20, 2012, City Gear signed and
delivered to CBL the proposed lease termination agreement. On
the same day, CBL delivered the agreement to Global
Mall's attorney, Mark Nobles, with instructions for
Global Mall to sign the agreement. Acting on behalf of Global
Mall, Mr. Nobles promptly notified CBL and City Gear that
Global Mall would not sign the agreement and that it would
enforce City Gear's lease. Shortly thereafter, City Gear
moved out of the Mall and relocated its retail store to the
Courtyard. It also stopped paying any rent to the Mall.
Mall commenced this action by filing a complaint against City
Gear for breach of contract. City Gear responded by filing an
answer and a third-party claim against Hickory Hollow, CBL,
and the Courtyard for indemnification should the court rule
that City Gear breached its lease with Global Mall. It based
its defense to the complaint and its claims against the
third-party defendants on the theory of promissory estoppel.
City Gear alleged that Hickory Hollow and CBL promised City
Gear that they would terminate its lease contemporaneous with
its relocation to the Courtyard. City Gear further alleged
that it reasonably relied on that promise to its detriment by
signing the new lease with the Courtyard and by building the
new space at that location. City Gear also contended that its
lease with the Courtyard contained an implied contractual
term that the Hickory Hollow lease would terminate when the
Courtyard lease became effective.
third-party defendants filed answers denying any liability.
Following discovery, they filed a joint motion for summary
judgment arguing, inter alia, that the oral
agreement between Hickory Hollow and City Gear was
unenforceable. The trial court agreed and summarily dismissed
City Gear's claims against them.
memorandum and order granting summary judgment, the court
found that City Gear's lease with Hickory Hollow
contained a "no oral modification" clause and did
not terminate until June 30, 2015. It found that CBL
attempted to obtain City Gear's signature on a lease
termination agreement in May 2012 and then, again, in
September 2012 to no avail. It also found that each of the
proposed lease termination agreements provided that neither
proposal served as an offer to terminate the lease unless
Hickory Hollow signed it, and Hickory Hollow failed to sign
despite having no duly executed written termination agreement
with Hickory Hollow, City Gear signed a lease with the
Courtyard in June 2012, expecting to relocate in late 2012 or
early 2013. The court also found that the Courtyard lease was
not contingent upon the execution of a lease termination
agreement with Hickory Hollow. Moreover, the court noted that
Hickory Hollow sold the Mall and assigned City Gear's
lease to Global Mall on October 30, 2012. Finally, Global
Mall never signed the lease termination agreement with City
Gear; nevertheless, City Gear vacated the Mall premises and
stopped paying rent.
the "no oral modification" clause in the Hickory
Hollow lease and the disclaimers in the written proposals,
the trial court held that it could not enforce an oral
agreement to terminate the lease, and that the Hickory Hollow
lease "remained valid and binding after it was
assigned" to Global Mall. Based on these undisputed
facts, the trial court summarily dismissed City Gear's
claim against Hickory Hollow, CBL and the Courtyard.
Thereafter, the only remaining parties to this action were
Global Mall and City Gear.
case was tried without a jury on January 25, 2016. The only
witness to testify at trial was Dr. Rajesh Aggarwal. He
stated that he and his wife own Global Mall Partnership d/b/a
Global Mall at the Crossings, and he was the manager of
Global Mall. The most relevant evidence elicited from Dr.
Aggarwal during direct examination is summarized as follows:
Mall entered into a contract to purchase the Mall from
Hickory Hollow on September 14, 2012. The purchase of the
Mall closed on October 30, at which time Hickory Hollow
assigned six commercial leases to Global Mall, including
Hickory Hollow's lease with City Gear. The term of City
Gear's lease went through June 30, 2015. At no time prior
to the closing did Hickory Hollow or CBL inform Dr. Aggarwal
of the agreement to terminate City Gear's lease, nor did
they ask him to agree to an early termination of City
Gear's lease. Moreover, at no time prior to the closing
did Dr. Aggarwal see a proposed lease termination agreement
with City Gear.
December 20, 2012, almost two months after Hickory Hollow
assigned City Gear's lease to Global Mall, CBL forwarded
a proposed termination agreement to Global Mall signed by
City Gear on the same date, with a request that Global Mall
sign and return it to CBL. On behalf of Global Mall, Mr.
Nobles promptly informed CBL it would not sign the agreement.
Shortly after Dr. Aggarwal received the December 20 letter,
City Gear moved out of the Mall and relocated to the
Courtyard and ceased paying rent under the Hickory Hollow
lease. Dr. Aggarwal testified that neither he nor his
attorney communicated with City Gear prior to receiving the
December 20 letter. In response, counsel for Global Mall sent
a letter informing City Gear that its lease at the Mall was
in full force and effect, and Global Mall expected City Gear
to fulfill its obligations under the lease.
cross examination Dr. Aggarwal acknowledged that he saw the
September 2012 email CBL sent to Mr. Nobles, which was
thirty-two days before the closing, in which CBL indicated
that City Gear would be leaving the Mall. Other relevant