Commercial Resource Group, LLC v. The J.M. Smucker Co.

753 F.3d 790 (8th Cir. 2014)

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Nature of the Case

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Facts

D leased a commercial building from P. The parties negotiated an amendment to the lease in 2005. The amendment provided that the lease would continue for an initial two-year term, and it gave D an option to renew the lease for up to four additional one-year terms. After the initial term, the lease was set to renew automatically on July 1st of each year unless D provided P written notice of its intent to terminate 180 days prior, i.e., by January 1st. D decided to close down its West Fargo facility. On December 22, 2009, D sent a notice of termination to P by way of Federal Express; however, D sent the notice to the original address instead of a new 2006 address. On December 23, 2009, D received an email from FedEx stating 'FedEx attempted, but was unable to complete delivery.' D took no action. FedEx sent a second email a week later, on December 30, 2009. The second email stated, 'FedEx attempted, but was unable to complete delivery.' The package was being returned to D. D took no additional action prior to the January 1st deadline for terminating the lease. D sent a second termination notice to the 2006 address. The notice was dated January 4, 2010, and it arrived on January 5, 2010. The notice terminated and also explained that D had sent a timely termination notice to the original address, but that notice had been returned 'as undeliverable.' The parties disagree as to whether this second notice effectively terminated the lease. The district court found that D had substantially performed the contract and should not be held responsible for a 'minor delay' that was the result of 'an honest mistake in mailing.' It held that 'to punish D in the form of hundreds of thousands of dollars . . . would be an unconscionable result . . . especially where time was not of the essence to the contract and where the untimely notice did not result in any demonstrable injury to P.' The district court granted D summary judgment on the basis of substantial performance. P appealed.