AzOx LLC v. Bloom Int'l Realty, LLC

CourtUnited States District Courts. 8th Circuit. United States District Court of Minnesota
PartiesAzOx, LLC, Plaintiff, v. Bloom International Realty, LLC, Defendant.
Docket Number20-cv-00910 (SRN/KMM)
Decision Date21 October 2021

Nahid H. Abuelhassan, Abuelhassan Law, PLLC, 332 Minnesota Street Suite W810, St. Paul, MN 55101, for Plaintiff.

Daniel P. Doda, Doda & McGeeney, P.A., 4211st Avenue SW, Suite 300 East, Rochester, MN 55902, for Defendant.



This matter is before the Court on a Motion for Summary Judgment [Doc. No. 21] filed by Defendant Bloom International Realty LLC (Bloom). Based on a review of the files submissions, and proceedings herein, and for the reasons set forth below, the Court GRANTS the motion.

A. The Owners Representative Agreement Between Bloom and AzOx, LLC

In 2015, defendant Bloom, a Delaware corporation headquartered in Abu Dhabi, UAE, entered into a contract with plaintiff AzOx, LLC (Azox), a Rochester, Minnesota project management firm, to oversee the permitting and renovation of the Associated Bank Building in downtown Rochester. (Compl. [Doc. No. 1] at ¶ 1-2; 8.) In March of 2015, the two corporations formalized their agreement regarding the work on the Associated Bank Building in a contract entitled “Owner's Representative Agreement” . (Doda Decl., [Doc. No. 24] Ex. 3 at 1.) The parties have now completed this renovation, and Bloom has paid all fees owed to AzOx under the Owner's Representative Agreement. (Compl. at ¶ 10.)

B. The Exclusive Negotiating Rights Agreement Between Bloom and the City of Rochester

Later in 2015, Bloom became interested in the potential development of a different Rochester property, known as the Riverfront Property. (Carpenzano Decl., [Doc. No. 25] at ¶ 2.) Bloom envisioned the potential for a $200 million development that would include a hotel, parking ramp, public space, and condos. (Id.) On June 11, 2015, Bloom entered into a contract with the City of Rochester (“the City”) entitled the “Exclusive Negotiating Rights Agreement.” (Pl.'s Ex.s [Doc. No. 29] Ex. 13 at 260-262.[1])

The Exclusive Negotiating Rights Agreement outlined the contours of the project and split the proposed project into three phases. In the first phase, Bloom anticipated planning and entering into purchase and development agreements with the City, as well as developing a parking ramp. (Id. at 260.) In the second phase, Bloom anticipated constructing a hotel and condos, and in the third phase, Bloom anticipated adding other improvements to the property. (Id.)

C. Amendment One to the Owners Representative Agreement Between Bloom and AzOx

On September 18, 2015, Bloom and AzOx amended their original contract, the Owner's Representative Agreement, with a one-page document entitled Amendment-Owner Representative Agreement” (Amendment One”). (Doda Decl., Ex. 4 at 1.) Amendment One contemplated that AzOx would continue to represent Bloom during the development and construction of the Riverfront Property under the terms of the original Owner's Representative Agreement as amended. (Id.) Under Amendment One, AzOx would be responsible for the following: (1) securing the Riverfront Property; (2) obtaining development assistance from the City; (3) securing a development agreement with the City; and (4) performing construction consultation work similar to the work that AzOx had performed on the Associated Bank Building project. (Id.) In exchange, Bloom agreed to “reimburse” AzOx a “5% Commission Fee for the Undeveloped Land . . . secured by [Bloom] from the City.” (Id.) Because the Riverfront Property was appraised to be worth $8 million, AzOx's promised five percent fee was valued at $400, 000. (Doda Decl., Ex. 5 at 1.)

D. The Purchase Agreement Between Bloom and the City

Between August and October of 2018, Bloom entered into another contract with the City entitled the “Purchase Agreement.” (Id.) The Purchase Agreement set forth details concerning the planned Riverfront Property development, and included a contingency period that ended on December 31, 2018. (Id. at 4.) During this contingency period, Bloom could determine, at its discretion, whether its proposed use of the Riverfront Property was feasible.[2] (Id. at 3.) Dickson, the co-owner of AzOx, was identified in the agreement as an agent of Bloom, and as someone able to receive notice from the City on behalf of Bloom. (Id. at 9.) AzOx alleges it never saw this Purchase Agreement and lacked knowledge of the feasibility contingency. (Pl.'s Opp'n Mem. [Doc. No. 29] at 8.)

In October 2018, the City approved the Riverfront Property development. (Id. At 4.) And on November 3, 2018, AzOx sent an invoice to Bloom for $100, 000, stating that the [t]otal contract amount is $400, 000.00” and that the $100, 000 was “Payment # 1 due.” (Pl.'s Ex. 11 at 244.) Bloom did not immediately pay this invoice. (Pl.'s Opp'n Mem. At 1-2.) Instead, Bloom and AzOx began negotiating a second amendment to their contract. (Id. at 2.)

E. Amendment Two to the Owner's Representative Agreement Between Bloom and AzOx

On November 26, 2018, Bloom sent AzOx a contract entitled “Amended and Restated Amendment Agreement (to an Owner Representation Agreement) (Amendment Two”). (Pl.'s Ex. 1.) Dickson signed Amendment Two on behalf of AzOx. (Id. at 10.) It appears that no Bloom representative signed this version of Amendment Two (Id.; Pl.'s Ex. 1.) Amendment Two split the work on the Riverfront Property into two phases. (Pl.'s Ex. 1.) Phase One required AzOx to lead the negotiation with the City for the purchase of the Riverfront Property, and to work with the Mayo Clinic and the Rochester Economic Development Authority to secure development assistance. (Id.) Phase Two required AzOx to provide the services set out in clauses 6-9 of the original Owner's Representative Agreement, which included construction management services such as identifying and hiring contractors and overseeing all construction, permitting, and inspection. (Pl.'s Ex. 1 at 6-7; Doda Decl., Ex. 3 at 1-8.) Amendment Two split the payment of $400, 000 into two phases as well, with the Phase One payment consisting of a lump sum of $100, 000, and the Phase Two payment consisting of a lump sum of $300, 000, to be paid in return for “the Phase Two Riverfront Services” in accordance with the “Milestone Schedule” set out in “Exhibit E.” (Pl.'s Ex. 1 at 7-8.) Plaintiff alleges that Exhibit E was not attached to this contract. (Pl.'s Opp'n Mem. at 2.) The contract also included a clause stating [i]f [Bloom] decides not to undertake the Riverfront Development . . . no Phase Two Riverfront Services Fee will be payable by [Bloom].” (Pl.'s Ex. 1 at 9.)

In opposition to the instant motion, AzOx has attached three versions of Amendment Two: (1) the version that AzOx signed on November 26, 2018; (2) a version that only Bloom signed on December 13, 2018; and (3) a version signed by Bloom on December 13, 2018, and AzOx on December 12, 2018. (Pl.'s Ex.s 1-3.) In support of the instant motion, Bloom submitted a fourth version of Amendment Two-a version that both parties signed on December 13, 2018. (Doda Decl., Ex. 6 at 7.)

The December 13, 2018 version of Amendment Two provided by Bloom removed the section discussing Exhibit E from the November 26, 2018 version. (Id.; Pl.'s Ex. 1 at 9.) It also contained no reference to “Exhibit E” with respect to the terms of payment, but instead stated, “The Phase Two Riverfront Services Fee shall be paid as a lump sum payment of USD 300, 000 which shall be invoiced and paid in 50 monthly Installments of USD 6000 commencing on the last day of the first calendar month following the above referenced ‘Closing Date.' (Doda Decl., Ex. 6 at 6; Pl.'s Ex. 1 at 8.)

F. The Cancellation of the Riverfront Project

In addition to the work that Bloom and AzOx were doing with the City, another entity called the Pontiac Group announced a planned partnership with the City to develop a hotel project. (Carpenzano Decl., Ex. 1) After receiving news about this new venture between the City and the Pontiac Group, on December 11, 2018, Bloom wrote a letter to the City expressing its concerns. (Id.) Bloom was concerned the project would affect the feasibility of its own development project. (Id. at 1.) In the letter, Bloom mentioned a market analysis and feasibility study from a consultant group, Newmark Knight Frank (“NKF”), that Bloom had not yet received. (Id.) Bloom also reiterated its commitment “to redeveloping the Riverfront Property, ” but asked that the City allow it to commit only to the first phase of its development plan with the City. (Id.) In addition, Bloom requested that the City give it six months to reconfigure its plans for the second phase of the Riverfront Property development which involved a hotel. (Id. at 2.) Plaintiff alleges that Bloom did not share a copy of the letter with AzOx or notify it of the letter. (Pl.'s Opp'n Mem. at 11.)

On December 19, 2018, the City responded to Bloom's letter, and included Dickson, co-owner of AzOx, in the response. (Carpenzano Decl., Ex. 2.) The City informed Bloom that it was unwilling to give Bloom six months to reconfigure the second phase of construction and would not allow Bloom to move forward with the first phase without confirmation that Bloom would complete the second phase. (Id. at 2.)

After Bloom received the feasibility report from NKF on December 29, 2018, it cancelled the project. (Carpenzano Decl., Ex. 4; Id. Ex. 3; Def.'s Supp. Mem. [Doc. No. 23] at 2.) Bloom sent a letter to the City to terminate the Purchase Agreement, with an effective date of December 31, 2018. (Carpenzano Decl., Ex. 4.)

Over six months later, on July 8, 2019, AzOx sent Bloom an invoice for the full $400, 000 that it...

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