City of Webster Groves v. CCATT LLC
| Decision Date | 21 July 2020 |
| Docket Number | No. 4:18-CV-1910 RLW,4:18-CV-1910 RLW |
| Parties | CITY OF WEBSTER GROVES, MO, Plaintiff, v. CCATT LLC, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
This matter is before the Court on the Plaintiff City of Webster Groves, MO's ("City") Motion to Dismiss Defendant CCATT LLC's Counterclaim (ECF No. 33) under Federal of Civil Procedure 8(a), 10(b), and 12(b)(6). The Motion has been fully briefed. The Court will grant the Motion to the extent that CCATT LLC ("CCATT") will be ordered to amend its Counterclaim to replead its causes of action in Count I in separate counts as required by Rule 10(b) of the Federal Rules of Civil Procedure. The Motion is denied in all other respects.
This action is a dispute over amounts allegedly due under and the attempted termination of a Ground Lease dated August 15, 1997 (the "Lease") of certain real property located in and owned by the City for the construction and operation of a communications tower (the "Tower Site"). The City sued in state court and asserted claims for breach of contract (Count I), declaratory judgment (Count II), and unlawful detainer (Count III). The case was removed to federal court on the basis of diversity jurisdiction pursuant to 28 U.S.C. §§ 1332, 1441, and 1446. CCATT filed an Answer, Affirmative Defenses, and Counterclaim (ECF No. 18) asserting one count of breach of contract/breach of the implied covenant of good faith and fair dealing.
The City filed a Motion to Remand this case to state court (ECF No. 20). The next day, the parties filed a joint Motion to Stay the case (ECF No. 24) pending resolution of the Motion to Remand. The Court granted the Motion to Stay and stayed the case (ECF No. 26). It subsequently denied the Motion to Remand and lifted the stay by Memorandum and Order of September 3, 2019 (ECF No. 31). The City then filed the instant Motion to Dismiss CCATT's Counterclaim. (ECF No. 33.)
The Court issued a Case Management Order on October 1, 2019 (ECF No. 42), and referred the case to alternative dispute resolution on December 18, 2019. (ECF No. 45.) The parties attended mediation on March 5, 2020, and filed a Memorandum that stated in part:
At the recommendation of the mediator, the Hon. Mark D. Seigel, the parties agree that they will attempt to negotiate in good faith, within 60 days and by May 5, 2020, a new lease and a resolution of the litigation. The parties recognize that this period of negotiation will result in the necessity for the extension of pretrial scheduling agreement and the trial setting. The parties agree that they will request an extension of pretrial discovery and a new trial setting. The foregoing agreement reflects the parties' desire to focus their efforts on settlement and otherwise conserve judicial resources.
(ECF No. 50). The parties subsequently filed two Joint Status Reports which stated that settlement negotiations were ongoing, requested additional thirty-day periods for those efforts, and asked that the action remain stayed during the negotiations.1 (ECF Nos. 53, 55.) The parties' third Joint Status Report states that "they do not believe that further settlement discussions and a continued stay would be fruitful at this time." (ECF No. 57 at 1.)
Accordingly, the Court will address the City's Motion to Dismiss CCATT's Counterclaim and then issue an amended scheduling order.
CCATT's Counterclaim alleges that in August 1997, the City entered into the Lease with Eastern Missouri Cellular Limited Partnership, a predecessor in interest to Defendant New Cingular Wireless PCS, LLC ("New Cingular"). (Doc. 18 ¶¶ 2-3.) CCATT pleads on information and belief that in April and May of 2013, the City and New Cingular entered into a First Amendment to Ground Lease (the "Amendment") which, among other things, significantly extended the term of the Lease and increased the amount of rent to be paid thereunder in the future. (Id. ¶ 4.) The Amendment was executed by Steven Wylie, the City's City Manager. (Id. ¶ 5.) The Amendment includes a "Landlord Acknowledgment" of representative capacity signed by a notary public of the State of Missouri that states:
I certify that I know or have satisfactory evidence that Steven Wylie is the person who appeared before me, and said person acknowledged that said person signed this instrument, on oath stated that said person was authorized to execute the instrument and acknowledged it as the City Manager of City of Webster Groves, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument.
(Id. ¶ 6; (ECF No. 18-2 at 7)) (emphasis added).
Section 10 of the Amendment states:
10. Charges. All charges payable under the Lease such as utilities and taxes shall be billed by Landlord within one (1) year from the end of the calendar year in which the charges were incurred; any charges beyond such period shall not be billed by Landlord, and shall not be payable by Tenant. The foregoing shall not apply to Base Rent which is due and payable without a requirement that it be billed by Landlord. The provisions of this subsection shall survive the termination or expiration of the Lease.
(Id. ¶ 19; (ECF No. 18-2 at 5.)) CCATT alleges that to be payable under the Lease as amended by the Amendment, any charges incurred in a calendar year must be billed by the City within oneyear from the end of that calendar year, and any charges not billed within that time period are not payable and/or are waived. (ECF No. 18 ¶¶ 20-22.)
In a series of transactions in October through December of 2013, nonparty Tower Holdings succeeded to New Cingular's rights as tenant under the Lease and Amendment. By written agreement, Tower Holdings retained CCATT to exclusively manage and operate the Tower Site. (Id. ¶¶ 10-11.)
On June 6, 2018, the City sent a Notice of Default/Underpayment letter demanding payment of alleged but unbilled charges, including interest and late fees, dating back to at least 2004 and claimed to total in excess of $200,000, including compound interest although the Lease does not require payment of compound interest. (Id. ¶¶ 27-31.) CCATT responded that Section 10 of the Amendment precluded payment of most of the alleged unbilled charges, and the City responded verbally in a June 28, 2018, telephone conference that the Amendment was void because it was not properly authorized by the City. (Id. ¶¶ 32-34.)
CCATT and the City thereafter engaged in discussions and exchanged letters as to the City's position that the Amendment was void. Among other things, CCATT requested documentation supporting the City's position and offered to cure. (Id. ¶¶ 36-40.) By letter of July 25, 2018, the City rejected CCATT's offer to cure, purported to terminate the Lease, and demanded that CCATT vacate the Tower Site and replace the tower with a light standard. (Id. ¶¶ 39-41.) By letter of August 8, 2018, CCATT responded that the purported termination was premature and invalid. (Id. ¶ 41-46.) CCATT and the City subsequently continued to dispute whether amounts were past due under the Lease or Amendment and what amounts may be due. Ultimately, the City has claimed that CCATT owes $592,659.57 in compound interest and late fees alone, though it has only identified or claimed alleged unpaid rent of $33,778.11. (Id. ¶¶ 47-48.) On September 14, 2018, CCATT made a payment to the City under a reservation of rights in the amount of $80,147.48, the amount of its settlement offer made to the City but rejected by it in July 2018. (Id. ¶ 49.) CCATT's position is that no further payments are due, but the City contends that amounts—some unspecified and undocumented—are due dating back nearly to the Lease's inception, and it continues to demand that CCATT vacate the Tower Site and replace the tower with a light standard. (Id. ¶ 50.) CCATT asserts that none of the City's continued demands are required because the City's notice of default was deficient and ineffective, the Lease was never properly or validly terminated, and it has made payments in excess of amounts that could possibly be owed. (Id. ¶ 51.)
"To survive a motion to dismiss for failure to state a claim, the complaint must show the plaintiff 'is entitled to relief,' Fed. R. Civ. P. 8(a)(2), by alleging 'sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" In re Pre-Filled Propane Tank Antitrust Litig., 860 F.3d 1059, 1063 (8th Cir. 2017) (en banc) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). In reviewing a Rule 12(b)(6) motion, the Court accepts all factual allegations as true and construes all reasonable inferences in the light most favorable to the nonmoving party. Usenko v. MEMC LLC, 926 F.3d 468, 472 (8th Cir.), cert. denied, 140 S. Ct. 607 (2019). The Court does not accept as true a pleader's conclusory allegations or legal conclusions drawn from the facts, however. Waters v. Madson, 921 F.3d 725, 734 (8th Cir. 2019). The complaint must "allege sufficient facts that, taken as true, 'state a claim to relief that is plausible on its face.'" K.T. v. Culver-Stockton Coll., 865 F.3d 1054, 1057 (8th Cir. 2017) (alteration in original) (quoting Iqbal, 556 U.S. at 678) (internal quotation marks omitted). A facially plausible claim is one "that allows the court to draw [a] reasonable inference that thedefendant is liable for the misconduct alleged." Wilson v. Ark. Dep't of Human Servs., 850 F.3d 368, 371 (8th Cir. 2017) (internal quotation omitted).
In addressing a motion to dismiss, a court "may consider the pleadings themselves, materials embraced by the pleadings, exhibits attached to the pleadings, and matters of public record." Mills v. City of Grand Forks, 614 F.3d 495, 498 (8th Cir. 2010) (cited case omitted).
A. The Counterclaim Complies With Rule 8(a)
The City first moves to dismiss on the basis that CCATT's Counterclaim violates Rule 8(a) because it fails to include a...
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