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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Norville v. Carr-Gottstein Foods Co. (02/06/2004) sp-5778

Norville v. Carr-Gottstein Foods Co. (02/06/2004) sp-5778

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA

ALLAN J. NORVILLE and KENAI   )
PLAZA/CARR'S-SAFEWAY, L.L.C., )
                                )      Supreme  Court   Nos.   S-
10643/10684
               Appellants/Cross-   )
               Appellees,          )
                              )    Superior Court No.
     v.                       )    3AN-01-8595 CI
                              )
CARR-GOTTSTEIN FOODS CO.,     )    O P I N I O N
                              )
                Appellee/Cross-     )    [No. 5778 - February  6,
2004]
               Appellant.          )
                              )


          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Peter A. Michalski, Judge.

          Appearances:   Gregory A.  Miller,  Peter  C.
          Nosek,  Birch,  Horton,  Bittner,  &  Cherot,
          Anchorage,   for  Appellants/Cross-Appellees.
          William  J. Evans, H. Ryan Fortson, Dorsey  &
          Whitney  LLP,  Anchorage, for Appellee/Cross-
          Appellant.

          Before:    Fabe,  Chief  Justice,   Matthews,
          Eastaugh, Bryner, and Carpeneti, Justices.

          MATTHEWS, Justice.

INTRODUCTION

           The question presented is whether a landlord's refusal

to  consent  to a sublease was unreasonable.  The superior  court

granted  summary judgment in favor of the tenant on  this  issue.

We conclude that this was error because there were genuine issues

of material fact and the tenant was not entitled to judgment as a

matter of law.

FACTS AND PROCEEDINGS

           Allan  Norville  owns  a  shopping  center  in  Kenai.

Beginning in 1991, Carr-Gottstein Foods Co. (Carrs), leased space

in  the  center  under a twenty-five year lease.  In  1995  Carrs

asked  Norville  to consent to a sublease for a Bank  of  America

branch. Article 13 of the lease required Carrs to seek Norville's

consent prior to subletting and provided that consent was not  to

be  withheld unreasonably.  Norville initially did not consent to

the sublease.  He explained:

          I  have not granted permission to proceed for
          currently I am discussing the possibility  of
          locating a bank branch on one of the pads  at
          the   center.    I  have  agreed   with   the
          prospective tenant that if a bank is  located
          on  the pad, the balance of the center  would
          be  restricted  and  no other  bank  will  be
          located in the shopping center.  The covenant
          would  be  similar  to the  covenant  in  our
          lease,  wherein  I  am not allowed  to  place
          another food store on the site.
          
But  a week later, after receiving a call from John Cairns, Carrs

president, Norville consented.  He stated that he did so for  two

reasons:  "[F]irst because [Cairns] is a personal friend  .  .  .

and,  second, the fact that Carrs had a large amount of long-term

debt  and  the added cash flow would help the company."   In  his

letter granting consent Norville wrote that "the consent to allow

the  Bank  of  America branch shall in no way be construed  as  a

waiver of our rights under the lease."

          Bank of America operated a branch bank in the center as

a subtenant of Carrs until April of 1999.  In early 1999 Safeway,

Inc.,  purchased  all  the shares of Carrs  and  Carrs  became  a

subsidiary  of  Safeway.   Since  all  post-acquisition  dealings

between the parties involved Safeway employees, we refer to Carrs

after the acquisition as "Safeway."

           In July 1999 Safeway wrote Norville requesting that he

consent  to  a sublease to Alaska USA Federal Credit Union.   The

proposed  area  was  the  same space  that  had  been  previously

occupied by Bank of America.  Safeway's property manager, Jeanese

Riggs, contacted Norville to follow up on the request.  According

to  Riggs, Norville "advised me that he would not consent to  the

sublease  unless he was given a percentage of the sublease  rent.

He  claimed  he  was  entitled to this  because  his  ability  to

negotiate with another bank to locate in his shopping plaza would

be adversely impacted."

           In  subsequent communications, Norville indicated that

he  would  approve the sublease for seventy-five percent  of  the

rent  paid by Alaska USA, an amount just under $3,000 per  month.

According  to Norville, he conditioned his consent upon receiving

a  portion of Alaska USA's rent because he "was still planning to

develop  a  bank  on  the bank pad of the  center,"  and  he  had

"continued concerns that any other bank would be put  off  by  an

Alaska  USA  in-store bank . . . competing with it  in  the  same

shopping  center."   He  stated that he "feared  that  the  prior

existence  of the BofA branch office was one of the  reasons  why

[he] still had no bank tenant, and that if [he] could find such a

tenant  the market rate [he] could charge would be diminished  by

the  Alaska USA branch within Carrs."  He also stated that he was

motivated in part by concerns that this was the first step  in  a

series  of  subleases to which Safeway would "demand consent"  in

order to reduce its own operations in the center.

           In  September  1999 Safeway accepted Norville's  terms

under  protest.   Safeway made it clear  that  it  believed  that

Norville  did  not  have reasonable grounds for conditioning  his

approval  of the sublease and stated, "we . . . intend to  pursue

this matter . . . ."  Alaska USA began operating in the subleased

space in August of 1999 and continues to do so.

           In  June 2001 Safeway sued Norville, alleging that his

withholding   of  consent  for  the  Alaska  USA   sublease   was

unreasonable  and  in violation of the lease.  Safeway  sought  a

declaration that Norville was required to consent to the sublease

unconditionally  and asked for judgment for  the  amount  of  the

sublease rental paid to Norville.

            After  Norville  answered  and  some  discovery   was

conducted, Safeway moved for summary judgment.  Safeway's  theory

was that Norville had withheld consent to the sublease solely  on

the  basis of the intended use of the space for banking.  Safeway

argued that under the lease it had the right to use its store for

any  services offered in similar stores, and that banking is  one

such  service.   Since that use was permitted  under  the  lease,

Safeway  argued that it was unreasonable for Norville to withhold

consent to the sublease.

          In response, Norville argued that the reasonableness of

his  conditional consent was a question of fact.   Norville  also

took  issue with the contention that the lease permitted  banking

as  a  use.  Finally, Norville argued that use was not  the  sole

basis for his refusal.

          After oral argument, the superior court granted summary

judgment  for  Safeway.   The  final  judgment  entered  required

Norville  to refund thirty-one monthly payments from  the  Alaska

USA  sublease, amounting to $91,930.50, plus interest, costs, and

attorney's fees.

     Relevant lease provisions

           As  already  indicated, the term of the Norville-Carrs

lease  was  twenty-five years.  Approximately 70,992 square  feet

were  leased.   A minimum annual rent of $851,904 was  specified,

and  a  percentage rent was to be charged to the extent  that  it

exceeded  the minimum.  The percentage rate was two  percent  for

gross sales exceeding $40,000,000 to be reduced to one-and-a-half

percent  on gross sales exceeding $50,000,000.  "Gross sales"  do

not  encompass  "minimum and base rents  from  subtenants."   The

tenant  is  required  to "use, occupy, operate  and  conduct  its

business  in  the entire Demised Premises in such  manner  as  to

produce the maximum volume of Gross Sales . . . ."

           The  two  most important clauses to the resolution  of

this dispute are the "Tenant's Use Clause" and the "Assignment or

Subletting Clause."

          The Tenant's Use Clause, section 1.1(i) provides:

                Tenant  shall use the Demised  Premises
          for   the  principal  purpose  of  conducting
          thereon  a general food supermarket including
          sales  of  deli-type  foods  for  on-premises
          consumption, with the privilege of  including
          in   the   Demised  Premises  a   drugs   and
          toiletries  department, a notions department,
          a   variety  and  soft  goods  department,  a
          housewares and hardware department, a  ready-
          to-wear clothing and accessory department,  a
          prescription    pharmacy,    an    automotive
          accessory  and  supply department,  a  floral
          department,  a  photo/sound/video  department
          and a department or departments selling other
          items  or  offering such services  compatible
          with  the items or services offered by Tenant
          for   sale   in   the  foregoing   enumerated
          departments  and  items  sold  and   services
          offered  from  time to time in other  general
          food  supermarkets  operated  by  Tenant   or
          others.   Tenant  may also  use  the  Demised
          Premises to the extent incidental to the uses
          described above, for the installation and use
          of  one or more machines and/or devices which
          effect  or facilitate the transfer, crediting
          and  /or debiting of funds, the determination
          of  account balances, the cashing  of  checks
          and/or any and all functions relating to such
          type  of  activities as may  now  or  in  the
          future   be   performed  or  facilitated   by
          machines  and/or devices.  Tenant  shall  not
          use   the  Demised  Premises  for  any  other
          principal  use or purpose without  the  prior
          written consent of Landlord.
          
            The  Assignment  or  Subletting  Clause  provides  in

relevant part:

                13.1 Tenant expressly covenants that it
          will  not  assign this Lease or any  interest
          therein, nor sublease or suffer or permit the
          Demised  Premises or any part thereof  to  be
          used  by  others, without the  prior  written
          consent  of Landlord in each instance,  which
          consent      will     not     be     withheld
          unreasonably. . . .
          
               . . . .
          
                13.4 . . . .  If Landlord shall consent
          to  any  particular assignment or subletting,
          such  consent shall be deemed consent to that
          particular  transaction only and not  to  any
          other or future transaction.
          
     Contentions

           On appeal both parties treat Norville's consent to the

Alaska USA sublease conditioned on receiving seventy-five percent

of  the  rent  paid by Alaska USA as equivalent to a  refusal  to

consent to the sublease.  We accept this characterization.

           Norville argues that whether his refusal to consent to

the  Alaska USA sublease was unreasonable is a question  of  fact

that  should  not  have  been resolved by summary  judgment.   He

contends that he withheld consent for two reasons.  The first was

because of "his long-standing desire to find a full-service  bank

to  lease  a `bank pad' in another part of the shopping  center."

The  second  was related to rent receipts on Safeway's  premises.

He  points out that by subleasing to a bank the space used by the

bank  no  longer  contributes to gross sales  and  thus  to  rent

calculated  on  a  percentage  basis.   He  contends  that  these

reasons,   considered   either  individually   or   collectively,

justified his withholding of consent.

           In response to Norville's first reason for withholding

consent,  Safeway argues that the motive to lease other space  in

the  center to a bank is unreasonable as a matter of law  because

under the Tenant's Use Clause it was entitled to use its premises

for  banking.   Safeway stresses that Norville's  "objection  was

use.   He did not want a bank in the supermarket.  Since the  use

clause  gives [Safeway] the right to put an in-store branch  bank

in   the  premises,  Norville's  objection  to  Alaska  USA   was

unreasonable  as  a matter of law."  According  to  Safeway,  its

allegation  that  Safeway is permitted under the  use  clause  to

install  a branch bank also answers Norville's argument  that  he

withheld  consent to the sublease because it would not contribute

to  gross  sales:  "Where the terms of the governing  lease  give

[Safeway] the right to the activity, any disadvantage imposed  on

Norville  is  irrelevant.   As just  shown,  in-store  banks  are

included  in [Safeway's] right to offer `items sold and  services

offered  from  time  to time in other general  food  supermarkets

operated by tenant or others.' "

           Norville,  in  turn, contests the  claim  that  branch

banking  is a permitted use.  He contends that specific  language

in  the  use clause permits only machine based banking activities

and  that  this  language controls the permission  to  engage  in

branch  banking  that  might otherwise be found  in  the  general

language of the use clause.

DISCUSSION

           One  premise of Safeway's argument is that  under  the

lease  Norville must consent to any sublease that is  for  a  use

that  would  be  permitted  under  the  Tenant's  Use  Clause  if

conducted  by  Safeway.  A second premise is that  banking  is  a

permitted use under the Tenant's Use Clause.  We believe, for the

reasons  that  follow, that the first premise is incorrect  as  a

matter  of law, and the correctness of the second premise depends

on unresolved extrinsic evidence.1

     Can the landlord object to a sublease for uses that would be
     permitted to the tenant?
     
           We  turn  first  to Safeway's argument  that  Norville

cannot  object on the basis of use to a sublease for a  use  that

would  be  permitted to Safeway.  The language of the lease  does

not support Safeway's contention.  The subletting clause does not

specify  any limitation on the right of the landlord to  withhold

consent  other  than reasonableness.  Further, the  Tenant's  Use

Clause  limits permitted uses to those by "a department," a  term

that  in  normal  usage  would not encompass  a  subtenant.   The

applicable  language  of  the  use clause,  elided  for  ease  of

understanding,  is  as follows:  "Tenant shall  use  the  Demised

Premises  for  the  principal purpose  of  conducting  thereon  a

general food supermarket . . . with the privilege of including in

the Demised Premises . . . a department . . . selling other items

or  offering . . . items sold and services offered from  time  to

time  in  other  general food supermarkets . . . ."   The  normal

meaning of "department" used in this context is "a division of  a

store handling a distinct class of merchandise < the furniture ~>

."2  This would not seem to encompass a space leased

to  a  separate  entity.3  The prohibition of subletting  without

consent,  together with the Tenant's Use Clause's  definition  of

permitted uses as those by "a department," suggest that the lease

does  not  erect  a  categorical rule barring the  landlord  from

withholding  consent on the basis of use to a  proposed  sublease

that entails uses that would be permitted to the tenant.

           Further,  there are practical reasons why  withholding

consent in such circumstances might be reasonable.  The scale  of

a  tenant-operated  department under  the  use  clause  might  be

expected  to be smaller than the operations of a separate  store.

For  example, the quantity of the hardware offerings found  in  a

typical supermarket is much less than in a hardware store.

           Why would scale make a difference to a landlord?   One

reason  may  be  that  the particular use  in  question  is  less

remunerative  in rent per square feet to the landlord  than  core

supermarket uses.  This would have an impact on percentage rents.

The  landlord, to use the hardware example, might be  willing  to

tolerate  the  relatively  small commitment  in  square  feet  to

hardware  sales that would be expected in a supermarket  hardware

department, but could reasonably object to the larger  commitment

of  space  necessary for a full-scale hardware  store.4   Another

reason  might be that the landlord is seeking to attract a  store

as  a  primary  tenant  in  the same complex  that  would  be  in

competition with the proposed subleasee.  While the scale of  the

competition offered by sales from a department of the supermarket

might  not deter the prospective new tenant from taking space  in

the  shopping  center,  the  greater  competition  offered  by  a

subleasee could well be a deterrent.

          These examples parallel the reasons offered by Norville

in opposition to summary judgment.  Norville's reasons - concerns

about  competition with a primary tenant and about the fact  that

the  subleased space would not be contributing to gross sales for

purposes of percentage rent calculations - seem plausible.   They

are consistent with reasons found to be acceptable in a number of

cases involving shopping centers.

           In  general,  the standard is that a sublease  may  be

refused  if  doing  so is commercially reasonable.5   It  is  not

reasonable  for a landlord to deny consent in order to  charge  a

higher rent than he originally contracted for.6  A landlord's

          desire  for  a better bargain than contracted
          for  has  nothing to do with the  permissible
          purposes of the restraint on alienation -  to
          protect   the   lessor's  interest   in   the
          preservation   of   the  property   and   the
          performance of the lease covenants.  " `[T]he
          clause  is for the protection of the landlord
          in   its  ownership  and  operation  of   the
          particular  property - not  for  its  general
          economic protection.' "[7]
          
           Refusing  to consent to a sublease because a  proposed

subtenant  would compete with other businesses in the center  and

thereby  potentially prejudice the landlord's  relationship  with

other  tenants  has  been recognized as a permissible  basis  for

withholding consent.8  Refusing to consent to a sublease  because

gross  sales,  and  thus percentage rents, will  be  impaired  is

likewise   a  legitimate  reason.9   Under  the  current   lease,

Norville's interest in maximizing gross sales is recognized by an

explicit  covenant.   Thus, Norville's  reasons  for  withholding

consent  are not impermissible under the lease's explicit  terms.

Whether  they  are genuine and reasonable under the circumstances

of this case are questions of fact that remain to be litigated.

     Is general branch banking a permitted use?

           Safeway argues that because many supermarkets  contain

banks,  banking is a service "offered from time to time in  other

general food supermarkets" and thus is a permitted use under  the

first  sentence  of  the  Tenant's  Use  Clause.   Neither  party

contests  that  currently, as well as in 1990, many  supermarkets

contain  branch  banks.   But Norville  argues  that  the  second

sentence  of the use clause specifically addresses the only  type

of  banking  permitted  under  the lease.   The  second  sentence

provides:

          Tenant  may also use the Demised Premises  to
          the  extent incidental to the uses  described
          above, for the installation and use of one or
          more machines and/or devices which effect  or
          facilitate  the  transfer,  crediting  and/or
          debiting  of  funds,  the  determination   of
          account  balances,  the  cashing  of   checks
          and/or any and all functions relating to such
          type  of  activities as may  now  or  in  the
          future   be   performed  or  facilitated   by
          machines and/or devices.
          
           Norville  argues  that  the  language  "the  transfer,

crediting and/or debiting of funds, the determination of  account

balances,  the  cashing of checks and/or any  and  all  functions

relating to such type of activities" refers to banking functions.

He  contends  that  because the only banking functions  permitted

under  the  lease are those that are performed by  machines,  the

second  sentence operates as a limitation on the type of  banking

permitted  under  the lease.  Safeway counters  that  the  second

sentence is permissive rather than restrictive because it  begins

"[t]enant  may  also  use."  Norville  responds  that  the  first

sentence does not expressly mention banking and that, in context,

the  second sentence must be read as a limitation that  excludes,

by  implication,  banking functions not  conducted  by  machines,

otherwise it would have no meaning.

           Norville also argues that relevant extrinsic  evidence

clarifies  the  meaning  of  the use clause.   In  opposition  to

Safeway's  motion for summary judgment, Norville filed a  lengthy

affidavit.  The affidavit discusses the conversations leading  to

the  execution  of  the lease in late 1990 between  Norville  and

Michael  Moxness,  Carrs'  attorney.   The  affidavit  states  in

relevant part:

          One  of the issues discussed with Mr. Moxness
          was  the  right  to install in-store  banking
          ATMs in the store.
          
               In the development plan for the shopping
          center, various building pads were located on
          the periphery of the center.  One of the pads
          was  designated to be used for a future  bank
          location, and accordingly in the negotiations
          I  never consented to a bank being located in
          the Carrs Grocery Store.
          
                 During   the  course  of  negotiations
          various   issues  were  discussed  with   Mr.
          Moxness  concerning the uses  that  would  be
          allowed  in  the  center.   The  negotiations
          resulted  in  reaching the agreement  as  set
          forth   in   Paragraph  1.1(i).   Carrs   was
          permitted  to use the premises as  a  general
          food  supermarket,  and Carrs  could  install
          automatic teller machines (ATMs).  The intent
          of  the  restriction was to allow me, as  the
          developer,  to place a full service  bank  on
          the bank pad designated for that development,
          and to allow Carrs to install only ATMs.
          
           Norville's  affidavit may merely  be  referring  to  a

subjective  intent that was never expressed in  discussions  with

Moxness.   If  so,  it  would  not serve  as  relevant  extrinsic

evidence.   Testimony of a party as to his subjective  intentions

concerning  the meaning of a particular clause in a  contract  is

not  probative  unless  the  party  in  some  way  expressed   or

manifested his understanding at the time of contract formation.10

But  in  reviewing grants of summary judgment we are required  to

view the evidence submitted in opposition to a motion for summary

judgment in a light most favorable to the opponent, resolving all

reasonable  implications that can be drawn from such evidence  in

favor  of the opponent.11  Viewed using this standard, Norville's

affidavit  implies  that  the question  whether  Carrs  would  be

allowed  to  place  a  full-service  bank  on  its  premises  was

discussed  at  the  time  the lease  was  entered  into  and  the

negotiating  parties agreed that only ATMs and  similar  machines

would  be  permitted.   As so construed, the  affidavit  presents

probative extrinsic evidence.

           In response to Norville's affidavit, Safeway filed  an

affidavit of Moxness.  Moxness stated that he had no recollection

of  Norville requesting an exclusion for general banking and that

he  would not have granted such an exclusion.  With reference  to

the  Tenant's  Use  Clause language relating  to  bank  machines,

Moxness stated:

          I  do  not  recall this language as  being  a
          compromise  for excluding banks or  financial
          institutions from the Tenant's Use Clause.  I
          believe  the same ATM language was  typically
          included  in  other  Carrs lease  agreements.
          Had  such language been a compromise for  the
          use  of  banks,  it  would have  been  highly
          unusual  not  to  expressly  include  in  the
          Retail   Lease  Agreement  that  banks   were
          excluded from the Tenant's Use Clause.
          
           As  independent supporting extrinsic evidence  and  in

contradiction  to Moxness's affidavit, Norville offered  evidence

that identical use clauses were used in other 1990 leases between

Carrs  as  tenant  and  Labar Co., a  partnership  in  which  the

principal  owners of Carrs were general partners, as  landlord.12

Norville  cited  evidence that after Carrs was sold  to  Safeway,

Safeway  requested the Labar Co. partnership to give its  consent

to  a  sublease to a bank, and this consent was denied.  Norville

argues that this is evidence that the principals of Carrs in 1990

intended  the language of the use clause to permit only ATMs  and

similar machines, not general banking.

            The  objective  of  contract  interpretation  is   to

determine and enforce the reasonable expectations of the parties.

          In  determining the intent of the parties the
          court  looks to the written contract as  well
          as  extrinsic evidence regarding the parties'
          intent  at  the time the contract  was  made.
          The  parties'  expectations are  assessed  by
          examining  the language used in the contract,
          case  law interpreting similar language,  and
          relevant  extrinsic evidence,  including  the
          subsequent conduct of the parties.[13]
          
Interpretation  of a contract is ordinarily a  question  of  law.

But interpretation "becomes a task for the trier of fact when the

parties  present  extrinsic  evidence  to  clarify  a  contract's

meaning,   when   this   evidence  points   towards   conflicting

interpretations of the contract, and when the contract itself  is

reasonably susceptible of either meaning."14

           In this case the Tenant's Use Clause can reasonably be

interpreted  to  allow  only  banking  by  machine.    Norville's

affidavit  concerning negotiations leading up  to  the  lease  is

extrinsic evidence that supports this interpretation.   The  fact

that  this  extrinsic evidence is refuted by Moxness's  affidavit

does not mean that summary judgment was justified.  Instead,  the

refutation  merely  means  that there  was  a  genuine  issue  of

material fact as to what the extrinsic evidence meant.

            The  evidence  regarding  Carrs'  former  principals'

refusal  to  allow  Safeway to place a bank in  another  shopping

center  under identical lease language is not very detailed.   It

is possible that the landlords refused to consent to the proposed

sublease  on  grounds different than those involved here.   Thus,

while  the  transaction  may prove to be  a  source  of  relevant

extrinsic evidence on remand, we are unable to say at this  point

that it has probative effect.

           As  noted, Norville argues that the specific  language

concerning  banking  functions in  the  second  sentence  of  the

Tenant's  Use Clause modifies the permission that might otherwise

be  inferred  from  the general language of the  first  sentence.

This  is  a  position with at least surface appeal.   Since  many

supermarkets  contained banks in 1990, the second sentence  would

seem to have little or no meaning unless it were intended to be a

limitation.   In  contracts, as in statutes, "where  one  section

deals  with a subject in general terms and another deals  with  a

part  of the same subject in a more detailed way, the two  should

be  harmonized  if  possible; but if there  is  a  conflict,  the

specific section will control over the general."15  Here the  two

sentences  can  be harmonized if the first is understood  not  to

cover  banking.   Or,  if  the first sentence  is  understood  to

include  banking,  the sentences can still be harmonized  if  the

limitations of the second sentence are construed to apply to  the

permission to provide banking services granted in the first.  But

we  have  no occasion to rule on this argument at this time,  for

Norville did not move for partial summary judgment.  If  he  had,

it  is  possible Safeway would have been able to offer  extrinsic

evidence  or  arguments as to the meaning of the use clause  that

would contradict Norville's interpretation.

     Other arguments raised by Safeway

           Safeway  argues that the parol evidence rule precludes

consideration  of  the  extrinsic evidence offered  by  Norville.

"The parol evidence rule is a rule of substantive law which holds

that  an  integrated  written  contract  may  not  be  varied  or

contradicted  by  prior  negotiations  or  agreements."16   Three

determinations have to be made before the parol evidence rule can

be  applied:  "(1) whether the contract is integrated,  (2)  what

the contract means, and (3) whether the prior agreement conflicts

with  the  integrated agreement."17  Here we can assume that  the

contract  is  integrated.   The critical  question  is  what  the

contract means.  On this question extrinsic evidence is relevant.

"Extrinsic  evidence may always be received on  the  question  of

meaning."18  Thus Safeway's argument on this point lacks merit.

           Safeway  also  argues that two other grounds  preclude

Norville  from  taking the position that he does  concerning  the

meaning  of  the use clause.  Safeway argues that the statute  of

frauds,  AS  09.25.010(a)(1), and a  lease  estoppel  certificate

signed  by  Norville act as bars to Norville's  position.   These

arguments both lack merit for they assume that the lease  clearly

permits  branch banking under the use clause, whereas the  actual

language,  even  without  consideration  of  extrinsic  evidence,

leaves this question in substantial doubt.

CONCLUSION

           For  the  above reasons the judgment of  the  superior

court   is  REVERSED  and  this  case  is  REMANDED  for  further

proceedings consistent with this opinion.

_______________________________
1Grants  of  motions for summary judgment are reviewed  de  novo.
They  will be affirmed if there are no genuine issues of material
fact  and if the moving party is entitled to judgment as a matter
of  law.   Therchik  v. Grant Aviation, Inc., 74  P.3d  191,  193
(Alaska 2003).  On review, all reasonable inferences of fact  are
drawn  in  favor  of  the nonmoving party.  Alakayak  v.  British
Columbia   Packers,  Ltd.,  48  P.3d  432,  447  (Alaska   2002).
Questions  of contract interpretation are generally questions  of
law  that will be reviewed de novo.  However, fact questions  are
created  when  the meaning of contract language is  dependent  on
conflicting  extrinsic evidence.  Alaska Diversified Contractors,
Inc.  v.  Lower Kuskokwim School Dist., 778 P.2d 581, 584 (Alaska
1989).
2Webster's Third New International Dictionary 604 (1968).
3In   interpreting  contracts,  as  well  as  statutes,   "unless
otherwise  defined,  words will be interpreted  as  taking  their
ordinary, contemporary, common meaning."  State v. Niedemeyer, 14
P.3d 264, 272 n.38 (Alaska 2000) (citation omitted); Day v. A & G
Constr.  Co.,  528  P.2d  440,  447  (Alaska  1974).   See   also
Restatement  (Second)  of  Contracts   201  cmt.  a:   "Unless  a
different   intention  is  shown,  language  is  interpreted   in
accordance with its generally prevailing meaning.  See   202(3)."
Section  202(3)  provides  "[u]nless  a  different  intention  is
manifested,  (a)  where  language  has  a  generally   prevailing
meaning, it is interpreted in accordance with that meaning."
4Such  a sublease could violate the tenant's duty under the lease
to use the space to maximize gross sales.  See supra p. 5.
5Kendall v. Ernest Pestana, Inc., 709 P.2d 837, 845 (Cal. 1985).
6Id.
7Id.  (quoting Ringwood Assocs. v. Jack's of Route 23, Inc.,  379
A.2d 508, 512 (N.J. Super 1977)).
8See,  e.g.,  Warmack v. Merchants Nat'l Bank of Ft.  Smith,  612
S.W.2d 733, 735 (Ark. 1981) (landlord's desire to maintain a good
"mix"  of  tenants  held  to  be  reasonable  justification   for
withholding consent to a sublease which would have added a second
bank  to  shopping center); Pay 'N Pak Stores, Inc.  v.  Superior
Court, 258 Cal. Rptr. 816, 819 (Cal. App. 6 Dist. 1989) (shopping
center  landlord's  refusal  to consent  to  a  sublease  because
proposed  subtenants sold products the landlord  also  sold  held
reasonable).
9See, e.g., Newman v. Hinky Dinky Omaha_Lincoln, Inc., 512 N.W.2d
410  (Neb.  App.  1994) (landlord was reasonable  in  withholding
consent   to   a  sublease  where  the  existing  landlord-tenant
agreement  involved a percentage rent scheme);  Worcester_Tatnuck
Square CVS, Inc. v. Kaplan, 601 N.E.2d 485, 489 (Mass. App. 1992)
(landlord  reasonably  withheld  consent  to  sublease  where   a
percentage rent agreement was in place, even though the agreement
could  only  be  initiated  if  the  tenant's  sales  exceeded  a
designated volume level, and such level had never been achieved);
Haack v. Great Atl. & Pac. Tea Co., 603 S.W.2d 645, 652 (Mo. App.
E.D. 1980) (landlord's refusal to consent to sublease because  of
percentage rent aspect of lease agreement held to be a reasonable
exercise of business judgment).
10Peterson v. Wirum, 625 P.2d 866, 870 (Alaska 1981):

          Differences of opinion among the  parties  as
          to  their subjective intent, expressed during
          the litigation, do not establish an issue  of
          fact   regarding   the  parties'   reasonable
          expectations  at the time they  entered  into
          the   contract,   since   such   self-serving
          statements   are   not   considered   to   be
          probative.   Rather, the court must  look  to
          the  express  manifestations of each  party's
          understanding  of the contract in  attempting
          to  give  effect  to  the intent  behind  the
          agreement.
          
11Alakayak  v. British Columbia Packers, Ltd., 48 P.3d  432,  447
(Alaska 2002).
12In  one  of  the  leases L.J. Carr signed as president  of  the
tenant, Carrs, and as general partner of the landlord.
13Municipality of Anchorage v. Gentile, 922 P.2d 248, 256 (Alaska
1996) (citations omitted).
14Little  Susitna Constr. Co. v. Soil Processing, Inc., 944  P.2d
20, 23 (Alaska 1997) (citing Alaska Diversified Contractors, Inc.
v.  Lower  Kuskokwim  School Dist., 778  P.2d  581,  584  (Alaska
1989)).
15Estate  of Hutchinson, 577 P.2d 1074, 1075 (Alaska 1978).   See
also,  McGary  v.  Westlake Investors, 661 P.2d 971,  974  (Wash.
1983) (en banc) (specific language of lease addendum must prevail
over general terms of lease provision);  Fairchild Square Co.  v.
Green  Mountain Bagel Bakery, Inc., 658 A.2d 31,  35  (Vt.  1995)
("As a matter of contract construction, the specific controls the
general."); In re Macmillan, 204 B.R. 378, 401 (Bkrtcy.  S.D.N.Y.
1997)  ("Definitive, particularized contract  language  generally
takes  precedence  over expressions of intent that  are  general,
summary  or  preliminary."); 5 Margaret  N.  Kniffin,  Corbin  On
Contracts   24.23, at 253-4 (1998).
16Alaska Diversified Contractors, 778 P.2d at 583.
17Id.
18Id.