HELD: Exercising a fixed-term commercial lease's no-fault early termination provision revises the lease's terms and creates a new termination date. If the tenant remains in the premises after that new termination date, the tenant becomes a holdover tenant under RCW 59.12.030(1).
Experimental Aircraft Association (EAA) rented an aircraft hangar, specifically Building 7, from Spokane Aircraft Board (Airport). The original lease was for five years, from 3/1/2011 to 2/28/2016 and could be terminated early by either party with at least 180 days' advance notice. The lease also outlined ways the lease could be terminated for cause. The original lease had an option to renew for another 5-year term.
In 2016, the parties renewed their agreement for an additional five years, to run through 2/28/2021. Other than an adjusted rent amount, the same terms from the original lease remained in full force and effect.
On 11/28/2017, the Airport exercised the 180-day early termination provision, effective 5/29/2018, citing the hangar would be demolished so a new building could be built.
Over the next nine months, EAA and the Airport looked at moving EAA to another hangar (Building 17) and even extended the termination date to 8/17/2018 accommodate. Ultimately, EAA remained in Building 7, and the termination date passed.
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On 8/20/2018, the Airport brought an unlawful detainer action against EAA, and the court issued a writ of restitution. The writ was executed on 8/27/2018.
Both parties then filed motions for summary judgment. EAA claimed they should have been allowed to stay until the renewed lease's termination date of 2/28/2021, while the Airport claimed their unlawful detainer action was proper because the early termination provision created a new termination date. The superior court sided with the Airport.
However, the Court of Appeals reversed, stating RCW 59.12.030(1) only applied to lessees who hold over after the expiration of a fixed term and did not apply when the term was lawfully shortened. The Airport appealed to the Washington Supreme Court.
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The Washington Supreme Court unanimously reversed and ruled for the Airport.
First, the court ruled that the Airport could lawfully terminate the lease early without cause. EAA claimed the 180-day notice provision conflicted with the termination-for-cause clauses in the lease and therefore the ambiguity made the provision unenforceable. However, the court disagreed. They ruled that there was no ambiguity when reading the entire lease as a whole; each for-cause situation provided its own procedure for termination.
Second, the court agreed that an unlawful detainer action was proper. Contrary to what the court of appeals had concluded, 59.12.030(1) was the only subsection the Airport had; EAA had not violated any other lease terms to trigger the other subsections, such as nonpayment of rent. Further, prior case law confirmed that a lease terminates on the new specified date when an early termination option is properly exercised. If a landlord is required to wait until the (no longer applicable) original expiration date to remove a tenant, it would not only contradict the plain language of their agreement, but could simply produce absurd results in the real world.
Finally, the Washington Supreme Court remanded the issue of attorney fees and other damages to the trial court.
