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Macadam Bay Homeowners Association v. Soyster

Court of Appeals of Oregon

June 1, 2017

MACADAM BAY HOMEOWNERS ASSOCIATION, an Oregon nonproft corporation, Plaintiff-Respondent,
v.
David SOYSTER, Joy Soyster, and James Idle, Defendants-Appellants.

          Argued and submitted January 20, 2017

         Multnomah County Circuit Court 140404907 John A. Wittmayer, Judge.

          Terrance J. Slominski argued the cause for appellants. With him on the briefs were David W. Venables and Slominski & Associates.

          Charles R. Williamson argued the cause and fled the brief for respondent.

          Before Armstrong, Presiding Judge, and Tookey, Judge, and Shorr, Judge.

         Case Summary: Defendants appeal from a general judgment granting declaratory relief to plaintiff. Defendants were houseboat owners who leased moorage slips from plaintiff. Defendants' slip leases contained options to extend "[i]f and when" plaintiff "extend[ed]" its own leases with the City of Portland (the city) and the State of Oregon (the state). The lease with the state was extended in 2008; however, plaintiff later chose to enter into an easement agreement with the city instead of extending its then-existing city lease. At the expiration of defendants' slip leases, plaintiff sued defendants, seeking a declaratory judgment that defendants' options were unenforceable because they were subject to an unfulflled condition precedent. Defendants counterclaimed for a declaratory judgment that their options were valid and enforceable and for specifc performance of those options. Both parties moved for summary judgment, and the trial court granted plaintiff's motion and entered a declaratory judgment in favor of plaintiff. On appeal, defendants assign error to that grant of summary judgment. Held: The trial court did not err in granting plaintiff's motion for summary judgment [285 Or.App. 842] and issuing the declaratory judgment in plaintiff's favor. Defendants' options to extend their slip leases were subject to a condition precedent-that plaintiff renew its existing leases with both the city and the state-and that condition was not met. The condition was not met when plaintiff extended its lease with the state in 2008 or when plaintiff later entered into an easement agreement with the city in lieu of extending its city lease. Further, plaintiff was not required to attempt to renew its city lease because the text of defendants' slip leases indicates that defendants were expressly assuming the risk that plaintiff may choose not to extend that lease. Finally, plaintiff did not violate its duty of good faith when it chose not to renew its city lease.

         Affrmed.

         [285 Or.App. 843] SHORR, J.

         Defendants David Soyster, Joy Soyster, and James Idle appeal from a general judgment granting declaratory relief to plaintiff Macadam Bay Homeowners Association (Macadam Bay). On appeal, defendants assign error to the trial court's grant of Macadam Bay's motion for summary judgment. Defendants contend that the trial court incorrectly concluded, as a matter of law, that defendants could not exercise the options contained in the leases that they obtained from Macadam Bay because those options were subject to an unfulfilled condition precedent.[1] We disagree with defendants and conclude that the trial court correctly determined that defendants could not exercise their options. As a result, the trial court properly granted summary judgment to Macadam Bay and issued a declaratory judgment in its favor. Consequently, we affirm.

         Because defendants assign error to the trial court's grant of summary judgment, we view the evidence and all reasonable inferences that may be drawn from the evidence in the light most favorable to the party opposing summary judgment-here, defendants. Jones v. General Motors Corp., 325 Or. 404, 408, 939 P.2d 608 (1997). On November 1, 1983, the State of Oregon (the state) leased to the City of Portland (the city) submerged and submersible land located on the Willamette River near SW Macadam Avenue in Portland so that a houseboat moorage could be constructed at that location (the DSL lease). That original DSL lease was to expire on October 31, 2013. On November 8, 1983, Macadam Bay entered into a lease (the upland lease) with the city for the "tract of land" directly up-bank from the submerged and submersible lands that had been conveyed to the city in the DSL lease. The upland lease also sublet the city's interest in the DSL lease to Macadam Bay. The upland lease was set to expire on November 8, 2013. The Macadam Bay moorage was completed in 1986, and, at that time, Macadam Bay entered into individual lease agreements (the slip leases) [285 Or.App. 844] for houseboat slips with defendants. Both of the slip leases expired on October 31, 2013. The upland lease between the city and Macadam Bay contained an option to renew. It provided:

"At the end of the term of this lease, if [Macadam Bay] is not then in default, [it] shall have the right, at [its] option, to renew [the] lease of these premises for a period of ten (10) years immediately consecutive to the end of the initial lease term. If such option is so exercised and [Macadam Bay] is not in default of the lease at the end of that renewal term, [it] shall then have the right, at [its] option, to lease the premises for a second immediately consecutive ten (10) year term. *** Immediately following [Macadam Bay's notice to the city of a desire to exercise either option], the parties shall promptly begin good-faith negotiations on the amount of money rent to be paid by [Macadam Bay] for the renewal period in question. If the parties do not agree *** on the amount of such rent, [the amount of rent will be determined by arbitration]."

         Defendants' slip leases also contained options.[2] The slip leases stated:

"[Macadam Bay's] existing leases with the City of Portland and the State of Oregon terminate on or about November 1, 2013. However, [Macadam Bay] may extend its leases for two additional 10-year terms. If and when [Macadam Bay] extends its leases with the City of Portland and the State of Oregon, and if Tenant is not then in default, Tenant shall have the right, at his option, to extend this Agreement * * *."

         The slip lease addendums also provided that "[Macadam Bay] will notify Tenant on or before August 1, 2013 if the first additional extension is available."

         The DSL lease did not contain an option to extend; however, the city and the state entered into a new DSL lease in 2008 to expand the leased area to include a location [285 Or.App. 845] where two houseboats were moored that was not included in the original leasehold. Like the original DSL lease, the 2008 DSL lease only covered the "state-owned submerged lands" occupied by Macadam Bay. The new DSL lease is effective from November 1, 2007 to October 31, 2022, and contains an option to renew for an additional 15 years. The purpose of setting the expiration date of the 2008 DSL lease to October 31, 2022, was to allow Macadam Bay and the city to extend the upland lease in 2013 without having to go back to the state to create another new DSL lease "if Macadam Bay wishe[d] to extend their [upland] lease in 2013."

         In accordance with the 2008 DSL lease, the city and Macadam Bay amended the upland lease to include the new boundaries covered by the DSL lease, but did not agree to extend the termination date of the upland lease and did not indicate in any way that ...


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