South Carolina CVS Pharmacy v. KPP Hilton Head, LLC

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

South Carolina CVS Pharmacy, LLC, Appellant,

v.

KPP Hilton Head, LLC, Respondent.

Appellate Case No. 2020-001446

Appeal From Beaufort County
Marvin H. Dukes, III, Master-in-Equity

Opinion No. 6005
Heard June 6, 2023 – Filed July 26, 2023

REVERSED

Walter Hammond Cartin, Katon Edwards Dawson, Jr., and
Jeffrey Evan Phillips, all of Parker Poe Adams &
Bernstein, LLP, of Columbia, for Appellant.

Thomas A. Pendarvis, of Pendarvis Law Offices, PC, of
Beaufort, and Philip Benjamin Zuckerman, of Berger
Singerman LLP, of Fort Lauderdale, FL, both for
Respondent.

HEWITT, J.: This case is about an option to renew a commercial lease. The
master-in-equity found that the tenant—South Carolina CVS Pharmacy, LLC—did
not comply with the lease's deadline for giving the landlord notice of intent to
exercise the option. CVS argues this decision was error.
The key facts are not in dispute. The deadline fell on a Sunday. Written notice of
CVS's intent to renew the lease was delivered to the local post office and available
for the landlord to pick up on Saturday; the day before the deadline. The landlord
did not retrieve the notice until the following week.

The case turns on the lease's language. For the reasons that follow, we agree with
CVS and reverse.

FACTS

The lease is a twenty-year lease that ran from April 1999 to January 2020. It
included four options to renew the lease for five years. The first parties to the lease
have all moved on. The original landlord assigned its interest to KPP Hilton Head,
LLC (KPP). The original tenant assigned its interest to CVS.

The lease required CVS to give notice that it would exercise the option no later than
ninety days prior to the current term expiring. Here, it meant CVS had to provide
notice by Sunday, November 3, 2019. The dispute in this case centers on the lease's
"notice" clause. The text of the clause is block quoted below with a line break added
between sentences for the reader's ease.

[Notice] shall be given or served as follows: by mailing
the same to the other party by registered or certified mail,
return receipt requested, or by overnight courier service
provided a receipt is required, at its Notice Address set
forth in Part I hereof, or at such other address as either
party may from time to time designate by notice given to
the other.

The date of receipt of the notice or demand shall be
deemed the date of the service thereof (unless the notice
or demand is not received or accepted in the ordinary
course of business, in which case the date of mailing shall
be deemed the date of service thereof).

The parties refer to the parenthetical section at the end as the "service upon mailing
exception."

The parties do not dispute the basic facts. On October 30—the Wednesday before
the deadline—CVS mailed written notice to the landlord via certified mail, return
receipt requested. The landlord (KPP) has no office building and only receives mail
at a P.O. Box. The notice arrived at the post office on Saturday, November 2—the
day before the deadline—and was available for pickup by 9:45 a.m. that morning.
KPP did not check its mail until Wednesday, November 6; three days after the
deadline. KPP took the position that CVS's notice was untimely and refused to honor
the option. CVS then filed this action.

Both parties moved for summary judgment. The master granted KPP's motion. The
master relied on 33 Flavors Stores of Virginia, Inc. v. Hoffman's Candies, Inc., 296
S.C. 37, 40, 370 S.E.2d 293, 295 (Ct. App. 1988), for the proposition that an option
to renew a lease must be strictly construed against the party claiming the option. The
master further found the notice clause was unambiguous, that it specifically required
a signed receipt, that the date the receipt was signed was the date of service, and that
KPP did not receive the notice until it signed for the notice at the post office. The
master found the notice would still have been untimely even if KPP checked its mail
the first business day after the notice arrived because Monday, November 4 was still
after the November 3 deadline. The master interpreted the "service upon mailing
exception" as only covering situations when the intended recipient refused to accept
notice or failed to abide by the normal method of receiving deliveries, which did not
apply to these facts.

CVS filed a motion for reconsideration, which the master denied. This appeal
followed.

ISSUE

Did the master err in finding CVS did not timely exercise its option to renew the
lease?

STANDARD OF REVIEW

"An appellate court reviews the granting of summary judgment under the same
standard applied by the trial court under Rule 56(c), SCRCP." Bovain v. Canal Ins.,
383 S.C. 100, 105, 678 S.E.2d 422, 424 (2009). Here, there were cross-motions for
summary judgment, so there is no dispute the case qualifies for resolution as a matter
of law. Wiegand v. U.S. Auto. Ass'n, 391 S.C. 159, 163, 705 S.E.2d 432, 434 (2011).

ANALYSIS
We begin with the lease's language, for those terms define the scope of the
agreement. First, we note the lease's instruction that it should be construed according
to its plain meaning and not for or against either party. Second, we note that the
notice clause is not tied to the renewal option, but applies "[w]henever, pursuant to
this Lease, notice or demand shall or may be given to either of the parties by the
other."

There is no doubt that the notice clause requires a return receipt, but it is equally
evident that the clause does not equate the date of service with the date that any
return receipt is signed. The clause contains multiple disjunctives: it says notice
shall be "given or served" and explains that the notice upon mailing exception
applies when notice is not "received or accepted" in the ordinary course of business.
Disjunctives suggest alternatives—the clause implies differences between notice
being "given," notice being "served," notice being "received," and notice being
"accepted." See Stevens Aviation, Inc. v. DynCorp Int'l LLC, 407 S.C. 407, 417, 756
S.E.2d 148, 153 (2014) ("[A]n interpretation that gives meaning to all parts of the
contract is preferable to one which renders provisions in the contract meaningless or
superfluous." (quoting Crown Laundry & Dry Cleaners, Inc. v. United States, 29
Fed. Cl. 506, 515 (1993))). The clause does not define what constitutes receipt.

The Restatement explains:

A written revocation, rejection, or acceptance is received
when the writing comes into the possession of the person
addressed, or of some person authorized by him to receive
it for him, or when it is deposited in some place which he
has authorized as the place for this or similar
communications to be deposited for him.

Restatement (Second) of Contracts § 68 (Am. Law Inst. 1981) (emphasis added). A
particular agreement might have language contrary to the general rule, but one way
to approach this dispute would be to ask whether the lease's language suggests that
constructive receipt (depositing notice in a mailbox or post office box, for example)
would count as receiving notice. Given the disjunctives we outlined above, we
believe it does. A rule limiting notice to actual receipt and hinging the time of receipt
on the recipient's signature seems like it would be easy to write and would not be
written the way this clause is written.

Though they are not binding, a few federal decisions are useful. These cases involve
the requirement that a plaintiff in certain types of cases act within ninety days of
receiving a right to sue letter from the Equal Employment Opportunity Commission.
Some circuits have adopted the view that rather than wrestle with whether receipt
includes constructive receipt, the dispute should instead be resolved by applying
common understandings of receipt to the facts of individual cases. See Bell v. Eagle
Motor Lines, 693 F.2d 1086, 1087 (11th Cir. 1982) (explaining the court will
approach the matter of determining when receipt occurred on a case by case basis).
This approach has led courts to hold, for example, that a wife's receipt of a letter to
her husband triggered the start of the period for her husband to sue, id., and that
receipt occurred when the postal service delivered a slip of paper notifying the
plaintiff there was a letter at the post office for her to pick up, Watts-Means v. Prince
George's Fam. Crisis Ctr., 7 F.3d 40, 42 (4th Cir. 1993). We think this case is cut
from the same cloth as those. See also Harvey v. City of New Bern Police Dep't, 813
F.2d 652 (4th Cir. 1987) (similar to Bell).

One argument KPP has made throughout this litigation is that CVS had years to
exercise its option and that CVS is simply paying the price for waiting to the last
minute. KPP also argues that CVS knew or should have known to act earlier because
the renewal notice for a different CVS store took eleven days for a return receipt to
be executed, making it obviously unlikely that notice sent four days before the
deadline would arrive in time.

We accept these points, but we do not see how they factor into deciding what it
means to receive notice under the lease. CVS had a long time to consider renewing
the lease, but that does not justify the master shortening the lease's deadline for
giving notice to eighty-eight days from ninety (this was the practical effect of the
master's ruling). Notice of CVS's intent to renew the lease arrived at its final
destination and was available for pick up the day before the deadline. We reverse
the decision that this did not constitute timely receipt of the notice.

CONCLUSION

For these reasons, the master's decision is

REVERSED.

THOMAS and MCDONALD, JJ., concur.