CBS Holdings, LLC v. Hexagon US Federal, Inc., [Ms. SC-2024-0077, Oct. 18, 2024] __ So. 3d __ (Ala. 2024). The Court (Cook, J.; Parker, C.J., and Shaw, Wise, Bryan, Stewart, and Mitchell, JJ., concur; Sellers and Mendheim, JJ., concur in the result) affirms the Madison Circuit Court’s bench verdict in favor of Hexagon US Federal, Inc. (“HexFed”) on all claims in a dispute involving a commercial lease of a portion of a building.
The trial court’s judgment (1) determined that CBS Holdings “waived its ability to argue that the 2016 lease provided a 12-month base lease term for Bay 301” as opposed to 5 years, (2) reformed the lease on the ground of mutual mistake, (3) [and] determined that “HexFed properly exercised its right to renew the 2016 lease, and (4) award(ed) costs and attorneys’ fees to HexFed.” Ms. *13.
The Court reiterates “[a] waiver is a ‘voluntary and intentional surrender or relinquishment of a known right.’ Bentley Sys., Inc. v. Intergraph Corp., 922 So. 2d 61, 93 (Ala. 2005). The determination of whether a party has waived an issue is a question of fact.” Ms. *14, internal citation and quotation marks omitted. CBS Holdings signed an amendment to the lease and accepted payments under the amended lease. Ms. *15. The Court holds “[t]aken together, these circumstances support the trial court’s finding that CBS Holdings waived its ability to argue that HexFed had [only] a 12-month base lease term for Bay 301.” Ibid.
As to reformation, the Court first explains
A mutual mistake occurs “when the parties have entered into an agreement, but the [contract] does not express what the parties intended under the agreement.” Fadalla v. Fadalla, 929 So. 2d 429, 434 (Ala. 2005). To reform a contract under § 8-1-2, “‘Alabama caselaw requires evidence of the intent of all parties to the instrument.’” Fadalla, 929 So. 2d at 435. See also Palmer v. Palmer, 390 So. 2d 1050, 1053 (Ala. 1980) (“Where it appears that by a mutual mistake of all parties the instrument does not conform to or express their intention …, relief may be had in equity against the other party to the conveyance ….”). The trial court may consider parol evidence in determining the parties’ intent. Brown v. Butts, 214 So. 3d 1181, 1190 (Ala. Civ. App. 2016).
Because HexFed sought the reformation of the 2016 lease in its complaint, it had the burden to “produce clear, convincing, and satisfactory evidence of what the parties actually intended the writing to express.” Fadalla, 929 So. 2d at 435.
Ms. * 17.
The Court affirms reformation of the lease citing testimony that CBS Holdings received projected cash flows of the lessee’s business indicating it “expected to receive the maximum rent, as defined in the 2016 lease, for the full five-year term. Therefore, the trial court’s determination that [the parties] intended for the 2016 lease term to continue past 12 months was not ‘palpably erroneous or manifestly unjust.” Ms. *20, internal quotation marks omitted.
Finally, the Court also affirms the award of attorney fees to HexFed under § 10.3 of the lease allowing recovery of fees by either party to enforce the lease. The Court concludes because HexFed was forced to file this action when CBS Holdings rejected, the attorney fees it incurred were recoverable under § 10.3. Ms. *25.