Balogh Assocs. VII v. Dick's Sporting Goods, Inc.

• Decision Date: 30 September 2022
• Docket Number: 1:20CV872
• Parties: BALOGH ASSOCIATES VII LLC, Plaintiff, v. DICK'S SPORTING GOODS, INC., Defendant.
• Court: U.S. District Court — Middle District of North Carolina

BALOGH ASSOCIATES VII LLC, Plaintiff, v. DICK'S SPORTING GOODS, INC., Defendant.

No. 1:20CV872

United States District Court, M.D. North Carolina

September 30, 2022

MEMORANDUM OPINION AND ORDER

OSTEEN, JR., DISTRICT JUDGE

Before this court is a Motion for Summary Judgment filed by Plaintiff Balogh Associates VII LLC (“Balogh” or “Plaintiff”), (Doc. 23). Also before this court is Defendant Dick's Sporting Goods, Inc.'s motion for supplemental briefing, (Doc. 40), and cross-motion for summary judgment, (Doc. 40-1).

This court will deny Plaintiff's motion for summary judgment on its breach of contract claim and Defendant's motion for supplemental briefing. Defendant's cross-motion for summary judgment will be granted in part and denied in part. This court will grant the motion insofar as Defendant was permitted to pay Substitute Rent for May 2020 and deny the motion as to all other claims.

I. FACTUAL BACKGROUND

This court reviews the facts and draws all reasonable inferences in the light most favorable to nonmoving party when considering a motion for summary judgment. See Scott v Harris, 550 U.S. 372, 378 (2007). The following facts are uncontested.

In 2005, Defendant, as tenant, signed a lease with JG Winston-Salem, LLC, as landlord (“Lease”). (Compl. (Doc. 3) ¶ 6; Lease (Doc. 23-1) at 4.)^[1] On January 28, 2019, JG Winston-Salem assigned its rights in the Lease to Hanes Mall Parcels, LLC. (Compl. (Doc. 3) ¶ 8; Ex. B (Doc. 23-2) at 1.) On September 27, 2019, Hanes Mall Parcels assigned its rights in the Lease to Plaintiff. (Compl. (Doc. 3) ¶ 9; Ex. C (Doc. 23-3) at 1.)

Under the Lease, Defendant was required to pay “Minimum Rent” each month. (Lease (Doc. 23-1) § 4.1.) Minimum Rent was determined based on the year of the Lease and was payable “in advance, without notice or demand and without offset or abatement except as expressly set forth herein, upon the first day of each calendar month included within the term of [the] Lease.” (Lease (Doc. 23-1) § 4.1(a)-(b).) In March, April, and May 2020, Minimum Rent was $90,750 a month. (See Compl. (Doc. 3) ¶ 11; compare Lease (Doc. 23-1) § 4.1(a)(ii), with Lease (Doc. 23-1) § 6.1).)

The Lease also provided that, in certain circumstances, Substitute Rent could be paid in lieu of Minimum Rent and defined Substitute Rent as “two percent (2%) of Gross Sales, but never more than the Minimum Rent for that month that would have otherwise been payable . . . .” (Lease (Doc. 23-1) § 1.5(c)(i).)

On March 19, 2020, Defendant sent Plaintiff a letter. (Ex. D (“March 19 Letter”) (Doc. 23-4) at 1.) The letter stated that “[t]he COVID-19 (Coronavirus) Pandemic constitutes a force majeure event. As such, any store closures resulting from or in response to the COVID-19 (Coronavirus) Pandemic are permitted under the terms of the Lease.” (Id.) Defendant sent Plaintiff another letter on March 27, 2020. (Ex. E (“March 27 Letter”) (Doc. 23-5) at 1-2). This letter stated that Defendant had “temporarily closed all of [its] stores . . . effective March 19, 2020” because of the COVID-19 pandemic. (Id. at 1.) It also stated that

[b]ased on the language of our lease, and our rights at law and in equity, we have determined that DSG has the right to abate all rent beginning as of the date of this closure, including, without limitation, minimum rent, percentage rent, substitute rent, co-tenancy rent, charges for taxes, common area costs and insurance (collectively, “Rent”). Legal rights aside, we recognize the significant and mutual financial pain caused by this unprecedented situation. In that light, DSG is prepared to offer the following:

• At locations where we closed in response to Governmental Mandates or Landlord Mandates, all Rent will abate from the date of this closure until the later of June 30, 2020, or the date that DSG re-opens for business; and

• At locations where our closure was not in response to Governmental Mandates or Landlord Mandates, all Rent that would otherwise have been due under the lease for the period from the date of this closure through June 30, 2020, shall be deferred and paid back, interest free, in equal monthly installments over a twelve-month period commencing January 1, 2021.

(Id. at 1-2.)

On April 3, 2020, Pauline Balogh, a co-owner of Plaintiff, (Ex. 1, Zoom Dep. of Pauline Balogh (“Def.'s Excerpts Balogh Dep.”) (Doc. 25-1) at 8), emailed Brandon Barnett, a Director of Real Estate at Dick's, memorializing a phone call from earlier that morning, (Ex. 10 (“Email Chain”) (Doc. 23-8) at 3-4). Balogh wrote that she was “willing to defer [Defendant's] base rent from $90750.00 each month to $80000.00 per month for March, April and June. The difference would be paid back starting Jan. 2021 . . . . If this proposal is not accepted, please e-mail me your counter proposal as soon as possible.” (Id. at 4.) Barnett replied a few days later with a “revised proposal,” (id. at 3), which Balogh declined, (id. at 2) .

On April 9, 2020, Balogh and Barnett had a second call to discuss reducing April rent. (See Def.'s Excerpts Balogh Dep. (Doc. 25-1) at 29.) Barnett confirmed the call's substance in an email, stating that “[p]er our conversation we will pay the April rent at ¶ 25% reduction and pay back starting 1/1/2021. Please confirm and I will submit to my team.” (Email Chain (Doc. 23-8) at 2.) Balogh replied “confirming that Dicks can reduce the April rent by 25 percent and defer the difference in full with [sic] Jan 1st 2021.”^[2] (Id. at 1-2.) Barnett responded that “[w]e will process on our end.” (Id. at 1.)

Defendant paid Minimum Rent of $90,750 in March. (See Def.'s Answer to Compl. (“Answer”) (Doc. 7) at 19.) Defendant did not pay any rent in April. (See Compl. (Doc. 3) ¶ 15; Answer (Doc. 7) at 14.) Defendant paid $13,712.85 in May rent. (Compl. (Doc. 3) ¶ 15; Answer (Doc. 7) at 14.)

II. PROCEDURAL BACKGROUND

Plaintiff filed its Complaint in North Carolina state court alleging one claim for breach of contract. (See Compl.

(Doc. 3).) Defendant removed to federal court. (See Doc. 1.) Defendant also answered Plaintiff's Complaint and alleged six counterclaims against Plaintiff. (Answer (Doc. 7) at 19-23.)

After discovery concluded, Plaintiff filed a motion for summary judgment, (Doc. 23), and a brief in support, (Pl.'s Mem. of Law in Supp. of Mot. for Summ. J. (“Pl.'s Br.”) (Doc. 24)). Defendant responded, (Def.'s Resp. to Mot. for Summ. J. (“Def.'s Resp.”) (Doc. 25)), and Plaintiff replied, (Pl.'s Reply (Doc. 27). More than five months after the end of briefing, Defendant filed a motion to (1) accept its response to Plaintiff's motion for summary judgment as a cross-motion for summary judgment and (2) for leave to file a supplemental submission, (Doc. 40), as well as a brief in support, (Def.'s Mem. of Law in Supp. of Mot. (“Def.'s Mem.”) (Doc. 41)). Plaintiff filed a response in opposition. (Pl.'s Resp. to Def.'s Mot. to File Mot. for Summ. J. (“Pl.'s Resp. to Def.'s Mot.”) (Doc. 42.) This court granted Defendant's motion to accept its response as a cross-motion for summary judgment and reserved judgment on the remainder of the motion. (Order (Doc. 45) at 4- 5.)

This court now addresses Plaintiff's motion for summary judgment, (Doc. 23), Defendant's motion for supplemental briefing, (Doc. 40), and Defendant's cross-motion for summary judgment, (Doc 40-1).

III. STANDARD OF REVIEW

Summary judgment is appropriate when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). This court's summary judgment inquiry is whether the evidence “is so onesided that one party must prevail as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). The moving party bears the initial burden of demonstrating “that there is an absence of evidence to support the nonmoving party's case.” Celotex, 477 U.S. at 325. If “the moving party discharges its burden . . ., the nonmoving party then must come forward with specific facts showing that there is a genuine issue for trial.” McLean v. Patten Cmtys., Inc., 332 F.3d 714, 718-19 (4th Cir. 2003).

A factual dispute is genuine and triable when “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248; see also First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289-90 (1968) (recognizing that a dispute is not genuine for summary judgment purposes when one party rests solely on allegations in the pleadings and does not produce any evidence to refute alternative arguments). This court must look to substantive law to determine which facts are material because only those “facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson, 477 U.S. at 248.

In addition, “the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment.” Id. at 247-48 (emphasis in original). “[T]he non-moving party must do more than present a ‘scintilla' of evidence in its favor.” Sylvia Dev. Corp. v. Calvert Cnty., Md., 48 F.3d 810, 818 (4th Cir. 1995) (quoting Anderson, 477 U.S. at 252). “What Rule 56(e) does make clear is that a party cannot rest on the allegations contained in his complaint in opposition to a properly supported summary judgment motion made against him.” First Nat'l Bank of Ariz., 391 U.S. at 289. Summary judgment should “be granted unless a reasonable jury could return a verdict for the nonmovant on the evidence presented.” McLean, 332 F.3d at 719.

When facing cross-motions for summary judgment, this court reviews “each motion separately on its own merits to...