United States District Court, N.D. New York
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Pope & Schrader, LLP, Alan J. Pope, Esq., of Counsel, Binghamton, NY, for Plaintiff.
Thompson Coburn LLP, Dudley W. Von Holt, Esq., Paul T. Sonderegger, Esq., of Counsel, St. Louis, MO, for Plaintiff.
Hinman, Howard & Kattell, LLP, Dawn J. Lanouette, Esq., Jeanette N. Simone,
Esq., of Counsel, Binghamton, NY, for Defendant.
MEMORANDUM-DECISION AND ORDER
MAE A. D'AGOSTINO, District Judge.
Plaintiff Gander Mountain Company (" plaintiff" or " Gander Mountain" ) commenced the within action seeking monetary damages, declaratory judgment and injunctive relief against defendant Islip U-slip LLC (" defendant" ). Presently before the Court is defendant's motion to dismiss plaintiff's complaint in its entirety pursuant to Fed.R.Civ.P. 12(b)(6) and 12(b)(7). (Dkt. No. 14). Plaintiff has opposed defendant's motion. (Dkt. No. 19).
Plaintiff operates a national retail network for stores for hunting, fishing, camping, marine products and accessories. In or around January 2004, plaintiff and Pathmark Stores, Inc. (" Pathmark" ) began negotiating a lease for the premises (" Premises" ) located at 528 Harry L. Drive, Johnson City, New York. The premises included a building consisting of approximately 47,500 square feet. The purpose of the lease (" Lease" ) was for the operation of a Gander Mountain retail store.
The Premises is in a location that is directly adjacent to Finch Hollow Creek, which is a tributary of the Susquehanna River. Finch Hollow Creek discharges into Little Choconut Creek which then discharges into the Susquehanna River. The Premises lie between Finch Hollow Creek (south) and Harry L. Drive (north). From 1986 through 2000, the area in and around Johnson City, New York experienced at least four severe flood events. In March 1986 and April 1993, the Susquehanna River, Little Choconut Creek and Finch Hollow Creek flooded the Premises. In January 1996, the Susquehanna River, Little Choconut Creek and Finch Hollow Creek flooded adjacent properties including the Premises. A significant portion of Harry L. Drive, the only means of ingress and egress from the Premises, was closed due to the January 1996 flood. In February 2000, the river and creeks again flooded the Premises.
From January 15, 2004 through April 15, 2004, plaintiff conducted its due diligence with respect to the Premises. During that time, plaintiff hired Certified Environment Services (" CES" ) to perform an Environmental Site Assessment. Part of the task of performing the assessment was to gather historical information on the Premises, including past use, zoning designation, flood plain designation and events of past flooding. On or around February 19, 2004, Pathmark reported that it did not possess any environmental reports for the Premises. On or about March 1, 2004, CES produced a map indicating that the Premises was located within a 500 year flood plain. CES sent Pathmark's Director of Real Estate a questionnaire which was to be completed before the Environmental Site Assessment was issued. On or about March 31, 2004, CES advised plaintiff that it had contacted Pathmark's Director of Real Estate on three occasions but that Pathmark was unresponsive. During the due diligence period, Pathmark failed to produce any information related to past flood events at the Premises. On or about April 9, 2004, CES sent it's Environmental Assessment to plaintiff without any additional information from Pathmark.
On April 16, 2004, plaintiff and Pathmark entered into the Lease whereby
plaintiff agreed to lease the premises. The initial term of the lease was fifteen (15) years. Section 12.2 of the Lease provides:
Tenant's Property Insurance
Tenant shall, commencing on the Commencement Date and continuing during the Lease terms, keep in full force and effect an all risk policy of insurance insuring (a) at least eighty percent (80%) of their full replacement value Tenant's merchandise, trade fixtures, furnishings, equipment and all other items of personal property of Tenant located on or within the Premises; and (b) to its full replacement value, all buildings and improvements on the Premises. Such insurance may be furnished by Tenant under any blanket policy carried by it, under a separate policy therefore or through Tenant's self-insurance. Upon request by Landlord, Tenant shall provide to Landlord a certificate of insurance naming Landlord an any fee mortgagee as additional insureds and providing that the applicable insurance may not be canceled without at least thirty (3) days written notice to Landlord.
On or about August 18, 2004, plaintiff began operating its retail store. In June 2006, the Susquehanna River caused massive flooding in Johnson City, New York, cresting at 33.66 feet. As a result, Little Choconut Creek and Finch Hollow Creek flooded the Premises. During June 2006, plaintiff's store on the Premises was filled with three to six feet of water which caused a complete loss of inventory. After the event, plaintiff's store on the Premises was closed for 92 days while a large construction and remodeling project was undertaken to restore the property for use as an operable commercial retail building.
On July 8, 2010, defendant purchased the Premises from Pathmark.
In September 2011, Tropical Storm Lee struck the region with heavy rains. The Susquehanna River crested at 33.66 feet and caused Little Choconut Creek and Finch Hollow Creek to flood the Premises. The Premises had to be evacuated and the flooded region was declared a major disaster area. Plaintiff's store on the Premises was filled with five to eight feet of water which caused a complete loss of inventory.
From October 2011 until April 2012, plaintiff attempted to obtain insurance for an operating store that is necessary to continue business in Johnson City to satisfy Section 12.2 of the Lease. Plaintiff was unable to obtain insurance under an all-risk property insurance policy due to the previous history of flooding at the Premises. Plaintiff discontinued operations at the Premises. On May 15, 2012, plaintiff filed a complaint in the within action. On July 16, 2012, defendant filed a motion to dismiss on the following grounds: (1) plaintiff waived all claims against defendant based upon the Certificate of Estoppel; (2) the complaint fails to state a valid claim for frustration of purpose; (3) plaintiff's claims are barred by the applicable statute of limitations; (4) there is no fiduciary duty between a landlord and tenant; (5) the negligence claims are duplicative of the breach of contract claims; and (6) plaintiff failed to name an indispensable party. Plaintiff opposes defendant's motion and asserts that defendant improperly relies upon documents that are beyond the " four corners" of plaintiff's complaint.
I. STANDARD ON A MOTION TO DISMISS UNDER 12(B)(6)
A motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the party's claim for relief and pleadings without considering the substantive merits of the case. Global Network Commc'ns v. City of New York, 458 F.3d 150, 155 (2d Cir.2006); Patane v. Clark, 508 F.3d 106, 111-12 (2d Cir.2007). In considering the legal sufficiency, a court must accept as true all well-pleaded facts in the pleading and draw all reasonable inferences in the pleader's favor. See ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir.2007) (citation omitted). This presumption of truth, however, does not extend to legal conclusions. See Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citation omitted). " Generally, consideration of a motion to dismiss under Rule 12(b)(6) is limited to consideration of the complaint itself" unless all parties are given a reasonable opportunity to submit extrinsic evidence. Faulkner v. Beer, 463 F.3d 130, 134 (2d Cir.2006). In ruling on a motion to dismiss pursuant to Rule 12(b)(6), a district court generally must confine itself to the four corners of the complaint and look only to the allegations contained therein. Robinson v. Town of Kent, N.Y., No. 11 Civ. 2875, 2012 WL 3024766, at *3-4 (S.D.N.Y.2012) (citing Roth v. Jennings, 489 F.3d 499, 509 (2d Cir.2007)).
To survive a motion to dismiss, a party need only plead " a short and plain statement of the claim," see Fed.R.Civ.P. 8(a)(2), with sufficient facts " to ‘ sho[w] that the pleader is entitled to relief[.]’ " Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quotation omitted). Under this standard, the pleading's " [f]actual allegations must be enough to raise a right of relief above the speculative level," see id. at 555, 127 S.Ct. 1955 (citation omitted), and present claims that are " plausible on [their] face." Id. at 570, 127 S.Ct. 1955. " The plausibility standard is not akin to a ‘ probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (citation omitted). " Where a complaint pleads facts that are ‘ merely consistent with’ a defendant's liability, it ‘ stops short of the line between possibility and plausibility of entitlement to relief.’ " Id. (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955). Ultimately, " when the allegations in a complaint, however true, could not raise a claim of entitlement to relief," Twombly, 550 U.S. at 558, 127 S.Ct. 1955, or where a plaintiff has " not nudged [its] claims across the line from conceivable to plausible, the [ ] complaint must be dismissed[.]" Id. at 570, 127 S.Ct. 1955.
The Second Circuit has held that, on a motion to dismiss, a court may consider " documents attached to the complaint as an exhibit or incorporated in it by reference, ... matters of which judicial notice may be taken, or ... documents either in plaintiffs' possession or of which plaintiffs had knowledge and relied on in bringing suit." Brass v. Am. Film Tech. Inc., 987 F.2d 142, 150 (2d Cir.1993). The Second Circuit has clarified, however, that " [b]ecause this standard has been misinterpreted on occasion, we reiterate ... that a plaintiff's reliance on the terms and effect of a document in drafting the complaint is a necessary prerequisite to the court's consideration of the document on a dismissal motion; mere notice or possession is not enough." Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir.2002) (citation and footnote omitted).
Defendant moves to dismiss plaintiff's entire complaint arguing that plaintiff waived and/or is equitably estopped from asserting claims against Islip based upon the Tenant Estoppel executed on July 7, 2010. Defendant claims that, " based upon the clear language of the Estoppel Certificate, Gander Mountain has agreed that it will not assert the claims against Islip" .
On a Rule 12(b)(6) motion, the Court may consider: " (1) facts alleged in the complaint and documents attached to it or incorporated in it by reference, (2) documents integral to the complaint and relied upon in it, even if not attached or incorporated by reference, (3) documents or information contained in defendant's motion papers if plaintiff has knowledge or possession of the material and relied on it in framing the complaint, (4) public disclosure documents required by law to be, and that have been, filed with the Securities and Exchange Commission, and (5) facts of which judicial notice may properly be taken under Rule 201 of the Federal Rules of Evidence." Caldwell v. Gutman, Mintz, Baker & Sonnenfeldt, P.C., 2012 WL 1038804, at *4 (E.D.N.Y.2012). " The plaintiff's failure to include matters, of which as pleaders, they had notice and which were integral to their claim— and that they apparently most wanted to avoid— may not serve as a means of forestalling the district court's decision on the motion." Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 44 (2d Cir.1991).
In this matter, plaintiff argues that the Court should not consider the document within the context of the 12(b)(6) motion. The certificate/document was not attached or referenced in plaintiff's complaint but is annexed to defendant's motion papers. The document is signed by plaintiff and provides:
Pathmark Stores, Inc. (" Landlord" ) has notified Gander Mountain Company (" Tenant" ) that it is under contract to sell the Premises to Islip U-Slip LLC (" Purchaser" ) and this certificate will be delivered to Purchaser in connection with such sale. Tenant hereby states and declares that, as of the date hereof and based on the current actual knowledge and information of Tenant's officers and directors, as follows: [...]
Plaintiff does not deny knowledge and/or possession of the document. However, plaintiff argues that even if the court accepts the document as part of the record, the certificate does not bar the claims asserted herein as it was " based upon facts now known" . The Court agrees. The Second Circuit has explained that, " [t]he general purpose of an estoppel certificate is to assure one or both parties to an agreement that there are no facts known to one and not the other that might affect the desirability of entering into the agreement and to prevent the assertion of different facts at a later date." Bank of New York Mellon Trust Co. v. Morgan Stanley Mortg. Capital, Inc., 2011 WL 2610661, at *6 (S.D.N.Y.2011) (citing ReliaStar Life Ins. Co. of New York v. Home Depot U.S.A., Inc., 570 F.3d 513 (2d Cir.2009)). At this juncture, there are material, factual issues surrounding the document that preclude dismissal and cannot be resolved at the early stages of this litigation. Accordingly, defendant's motion to dismiss plaintiff's complaint based upon the Tenant Estoppel/Certificate of Estoppel is denied.
In the alternative, defendant moves to dismiss plaintiff's individual causes of action based upon additional theories which the Court will discuss these requests/causes of action seriatim.
III. FRUSTRATION OF PURPOSE
In Count I of the complaint, plaintiff seeks a declaratory judgment against defendant and a finding that, due to the September 2011 flood event and plaintiff's inability to procure insurance to conduct its ongoing business operations on the Premises, the Lease is hereby terminated. Defendant argues that the inability to obtain an all risk insurance policy cannot frustrate the lease or render plaintiff's performance impossible.
The Restatement of Contracts (Second) § 265 (1981) provides:
Where, after a contract is made, a party's principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are ...