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Jones v. Vcphcs I, LLC

Court of Appeals of Tennessee, Jackson

January 26, 2018

HOMER L. JONES
v.
VCPHCS I, LLC

          Session June 28, 2017

          Appeal from the Chancery Court for Shelby County No. CH-16-0248-2 Jim Kyle, Chancellor

         Following the end of the three-year term of a commercial real estate lease, the tenant continued to occupy the leased premises and pay rent to the landlord. The landlord accepted the rent payments for six months and then notified the tenant that the amount of the required rent had increased. The tenant paid the increased rent but notified the landlord that it was ending its tenancy in thirty days. Contending that the tenant had in effect exercised its option to renew the lease for an additional three years, the landlord demanded that the tenant pay rent for the remainder of the renewal term. The tenant refused, and the landlord brought this action for breach of the lease agreement. Both parties filed motions for summary judgment. Because the trial court found that the lease had not been renewed and the tenant properly terminated the resulting periodic tenancy upon thirty days' notice, the court denied the landlord's motion and awarded summary judgment to the tenant. We agree that the lease was not renewed, but because we conclude that the resulting periodic tenancy was year-to-year, the tenant was required to give at least six months' notice prior to the end of the periodic tenancy. Thus, we affirm in part and reverse in part.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed in Part; Reversed in Part; and Case Remanded

          Carroll C. Johnson III, Memphis, Tennessee, for the appellant, Homer L. Jones.

          Michael Katzman, Memphis, Tennessee, for the appellee, VCPHCS I, LLC.

          W. Neal McBrayer, J., delivered the opinion of the court, in which J. Steven Stafford, P.J., W.S., and Brandon O. Gibson, J., joined.

          OPINION

          W. NEAL McBRAYER, JUDGE

         I.

         A.

         The facts are largely undisputed.[1] On July 21, 2011, Homer Jones leased office space in Memphis, Tennessee, to VCPHCS I, LLC, a limited liability company doing business as Behavioral Health Group. The lease provided for an initial three-year term at a monthly rent of $3, 608. The lease also provided for two three-year options, each at an increased monthly rent. To exercise the option, Behavioral Health Group was required to notify Mr. Jones in writing ninety days prior to the end of the relevant term and pay the rent specified in the lease for that option period.

         Behavioral Health Group did not exercise its renewal option. But, when the original lease term expired on July 31, 2014, Behavioral Health Group did not surrender possession. Instead it continued to occupy the leased premises and pay monthly rent of $3, 608.

         Mr. Jones accepted the rent payments for the remaining five months of 2014 and the first month of 2015. Then, in January 2015, Mr. Jones notified Behavioral Health Group that, to continue to occupy the premises, it must pay an increased monthly rent of $3, 811. The $3, 811 figure corresponded with the rent that would have been due under the second option period of the lease. Mr. Jones also demanded payment of $1, 218, representing the difference between the rent Behavioral Health Group paid for the first six months after expiration of the original lease term and the rent increase sought by Mr. Jones. As requested, Behavioral Health Group paid the $1, 218 and, beginning in February 2015, the increased monthly rental amount.

         On October 30, 2015, Behavioral Health Group notified Mr. Jones that it was terminating the lease effective November 30, 2015. Behavioral Health Group vacated the premises on November 30 and made no additional rent payments. Mr. Jones refused to accept the surrender of the leased premises and ...


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