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Seven Corners Shopping Center Falls Church, VA. Limited Partnership v. Chesapeake Enterprises USA LLC

March 13, 2009

SEVEN CORNERS SHOPPING CENTER FALLS CHURCH, VA. LIMITED PARTNERSHIP, PLAINTIFF,
v.
CHESAPEAKE ENTERPRISES USA LLC D/B/A QUIZNOS, RNS, INC., CHINTA MANI LAMICHHANE, LALITA LAMICHHANE, KALPANA ARYAL, GAJENDRA ARYAL, SANJAYA THAPA, BADRI LAMICHHANE, RANJANA PANDEY, KEDAR NATH PANDEY AND NAAMAN SHABAN, DEFENDANTS.



The opinion of the court was delivered by: Michael A. Telesca United States District Judge

ORDER

DECISION and INTRODUCTION

Plaintiff Seven Corners Shopping Center Falls Church, Va. Limited Partnership ("plaintiff"), brings this action for breach of contract against Chesapeake Enterprises USA LLC d/b/a Quiznos ("Quiznos"), Chinta Mani Lamichhane, Lalita Lamichhane, Kalpana Aryal, Gajendra Aryal, Sanjaya Thapa, Badri Lamichhane, Ranjana Pandey and Kedar Nath Pandey (collectively "defendants"), RNS, Inc. ("RNS") and Naaman Shaban ("Shaban") (collectively "defaulting defendants").*fn1 Plaintiff moves to renew its motion for summary judgment pursuant to Federal Rule of Civil Procedure 56. Plaintiff previously filed a motion for summary judgment, which the Court denied without prejudice under Rule 56(f) to allow the defendants the opportunity to conduct discovery. See Seven Corners Shopping Ctr. Falls Church, VA. Ltd. Partnership v. Chesapeake Enter. USA LLC, et al., 2008 WL 1766617 (W.D.N.Y.2008) ("April 2008 Order").*fn2 In addition, plaintiff argues that despite the opportunity granted by the April 2008 Order, defendants failed to conduct any discovery and the period of time to conduct such discovery has expired. Further, plaintiff argues that the Lease obligates defendants to pay plaintiff's legal fees. Accordingly, plaintiff's request that leave be granted for plaintiff's to submit an application for legal fees at the conclusion of this motion for summary judgment.

Defendants have opposed plaintiff's renewed motion for summary judgment and have filed a motion for partial summary judgment. They do not dispute that plaintiff is entitled to certain sums but argue that there is a genuine dispute as to the actual amount that plaintiff is entitled.*fn3 Defendants contend that the narrow issue presented here, which requires a dismissal of most of plaintiff's claims is whether a commercial landlord, can be entitled to collect rents and fees from a prior tenant, after the landlord has opted to re-rent the property for its own benefit. See Defs. Br. at 1. For the reasons set forth in more detail below, I grant in part and deny in part plaintiff's motion for summary judgment and grant in part and deny in part defendants' motion for partial summary judgment.

BACKGROUND

As noted above, this is plaintiff's second motion for summary judgment. Accordingly, the Court assumes familiarity with the procedural and factual background set forth in its prior decision in this matter. See April 2008 Order. Thus, the Court will not repeat all the facts of this case and will only address the most pertinent information as it relates to this summary judgment motion. The following facts are undisputed except where characterized otherwise.

A. Facts

On or about June 5, 2006, plaintiff, defendants, and defaulting defendants entered into an Assignment, Assumption and Amendment of the Lease Agreement (the "Assignment Agreement") whereby RNS agreed to accept full assignment of the Lease and assume responsibility for all liabilities and obligations of Quiznos under the Lease. According to defendants, as of June 5, 2006 they relinquished possession and ceased control of the Premises. Plaintiff claims that beginning in October 2006, defendants failed to pay the rental amount due under the Lease.*fn4 Defendants claim that they were not in possession of the Premises during that time. However, from speaking with Shaban, they were under the impression that while he was having some financial difficulties, he was making arrangements with plaintiff to resolve any outstanding balances on the rent. It is undisputed that by January 2007, the defaulting defendants had vacated the Premises.*fn5

Defendants claim that plaintiff did not contact them to discuss the defaulting defendants' vacating the Premises or plaintiff re-renting the Premises. Plaintiff relet the Premises to a nail salon business on or about February 2007. In this regard, defendants contend that plaintiff did not contact them, either written or otherwise, to ask for consent prior to entering into an agreement or to relet the Premises or notify them it had re-rented the Premises to the nail salon business. Plaintiff did not start collecting rent from the nail salon business until September 1, 2007. Defendants' argue that plaintiff has not provided this Court with a copy of the new lease or any details concerning the nature of the agreement with the new tenant, other than vague indications that the new tenant pays less rent. See Defs. Br. at 4. Plaintiff counters by claiming that despite having been given the opportunity to conduct discovery, defendants never did. See Reply Affidavit of Nicholas Vassello ("Vassello Reply Aff.), ¶ 3.*fn6

B. Lease Provisions

Section 7.01 of the Lease provides in pertinent part In the event that Tenant vacates or abandons the leased premises during the term of this Lease, or fails to take possession and operate its business as stated in this SECTION, the whole sum to be paid as rental and additional rental throughout the entire term of this Lease including the fixed minimum rental herein provided for, shall immediately become due and payable unless prohibited by law. Owner, at its option, may re-enter the leased premises and relet the same and it is expressly agreed that Tenant shall not be entitled to credit for the rents so received until the sum due from Tenant to Owner, including damages, expenses, attorney's fees, cost of alterations and repairs as herein provided shall have been fully paid, and nothing in this paragraph shall be deemed to have waived any other right or remedy of Owner. According to plaintiff, pursuant to the Assignment Agreement, Guaranty*fn7 and consistent with § 7.01 of the Lease, in the event the Premises were vacated, plaintiff had the right to accelerate the rent and any additional rent due for the entire lease term. Defendants claim that while they do not dispute the authenticity of the document, they argue that the acceleration clause of § 7.01 is unenforceable as a matter of law.

Section 22.01 of the Lease provides in pertinent part In the event Owner has not received from Tenant any rental due hereunder within ten (10) days after the same shall be due, or if Tenant fails to perform any other of the terms, conditions or covenant of this Lease to be observed or performed by Tenant for more than ten (10) days after written notice of such default shall have been given to Tenant... or if Tenant shall discontinue doing its business in the leased premises as defined in SECTION 7.01 of this Lease, or if Tenant shall abandon the leased premises... Owner besides other rights or remedies it may have, shall have the immediate right of re-entry... all without service of notice or resort of legal process[.]

Section 22.02 of the Lease provides in pertinent part Should Owner elect to re-enter as herein provided, or should it take possession pursuant to any legal proceedings... it may either terminate this Lease or it may from time to time without terminating this Lease, make such alterations and such repairs as may be necessary in order to relet the leased premises...upon such terms and conditions as Owner at its sole discretion may deem advisable[.] If such rentals received from such reletting during any month be less than that to be paid during that month by Tenant hereunder, Tenant shall pay any such deficiency to Owner. Such deficiency shall be calculated and paid monthly. No such re-entry or taking possession of the leased premises by Owner shall be construed as an election on its part to terminate this Lease unless a written notice of such intention be given to Tenant or unless the termination thereof be decreed by a court of competent jurisdiction.

Plaintiff argues that § 22.02 is a "survival of rent clause" commonly used in commercial leases. See Pl. Reply Br. at 3. In addition, plaintiff contends that § 22.02 does not require plaintiff to notify defendants of its intent to re-enter and relet the Premises. See id. Instead, § 22.02 begins with the word "Should Owner elect to re-enter, as herein provided[.]" See id. According to plaintiff the "herein provided" can be found in §§ 7.01 and 22.01 of the Lease, which provide that plaintiff could re-enter if the rent ...


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