Enniss Family Realty I, LLC v. Schneider Nat'l Carriers, Inc., Civil Action No. 3:11cv739–KS–MTP.

• Court: United States District Courts. 5th Circuit. Southern District of Mississippi
• Writing for the Court: KEITH STARRETT
• Citation: 916 F.Supp.2d 702
• Parties: ENNISS FAMILY REALTY I, LLC, Plaintiff v. SCHNEIDER NATIONAL CARRIERS, INC., Defendant.
• Docket Number: Civil Action No. 3:11cv739–KS–MTP.
• Decision Date: 02 January 2013

916 F.Supp.2d 702

ENNISS FAMILY REALTY I, LLC, Plaintiff
v.
SCHNEIDER NATIONAL CARRIERS, INC., Defendant.

Civil Action No. 3:11cv739–KS–MTP.

United States District Court,
S.D. Mississippi,
Jackson Division.

Jan. 2, 2013.

[916 F.Supp.2d 703]

Douglas G. Mercier, Seth C. Hall, Simmons Law Group, PA, Ridgeland, MS, for Plaintiff.

David C. Dunbar, Eric R. Price, Morton W. Smith, DunbarMonroe, P.A., Ridgeland, MS, for Defendant.

MEMORANDUM OPINION AND ORDER
KEITH STARRETT, District Judge.

This matter is before the Court on Defendant Schneider National Carrier, Inc.'s (“Schneider”) Motion to Strike Expert [37]; Schneider's Motion to Declare Lease Agreement and Amendments Ambiguous, to Declare Enniss's Interpretation as Unreasonable and to Declare Penalties Unenforceable (“Motion to Declare”) [38]; ¹ Plaintiff Enniss Family Realty I, LLC's (“Enniss”) Daubert Motion to Exclude Expert Opinions of Steven Rogers (“ Daubert Motion”) [42]; Enniss's Motion for Summary Judgment [44]; Enniss's Motion to Strike Steve Parent's October 4, 2012, Affidavit and for Leave to File Surreply (“Motion to Strike”) [54]; and Schneider's Motion for Leave to Supplement Motion for Declaratory Relief Outside of Dispositive Motion Deadline and Deadline for Amending Pleadings (“Motion for Leave”) [59]. ² Having considered the submissions of the

[916 F.Supp.2d 704]

parties, the record and the applicable law, the Court finds that:

1) Enniss's Motion for Summary Judgment [44] should be denied;

2) Schneider's Motion to Declare [38] should be granted in part and denied in part;

3) Schneider's Motion to Strike Expert [37] should be granted in part and denied in part;

4) Enniss's Daubert Motion [42] should be granted in part and denied in part;

5) Enniss's Motion to Strike [54] should be denied; and

6) Schneider's Motion for Leave [59] should be granted in part and denied in part.

BACKGROUND

This dispute centers upon the calculation of rental payments due to Enniss as the landlord under the terms of a commercial lease agreement where Schneider is the tenant. Enniss principally contends that the clear and unambiguous terms of the lease agreement require Schneider to pay $49,807.82 per month beginning in September of 2009. Schneider's position is that the rental fee cannot be determined solely by the terms of the parties' agreement and that $41,895.42 is the correct amount pursuant to parol evidence and certain canons of contract construction. The parties do not dispute that a base monthly rental fee of $38,750.00 is required under the terms of the lease agreement starting in September of 2009. The rub lies in calculating adjustments to that base fee pursuant to changes in the Consumer Price Index (“CPI”).³

In 1999, Schneider, as tenant, entered into a Standard Commercial Lease Agreement (“Lease” or “Agreement”) [38–1] with Anika & Associates, Inc. (“Anika”), as landlord, for seventeen thousand (17,000) square feet of industrial/warehouse space located at 301 East Metro Parkway, Brandon, Mississippi, 39042 (the “leased premises” or “subject property”). The beginning rent was $11,758.33 for the first sixty (60) months of the Lease. CPI adjustments are and were to be made on the 61st, 121st and 180th months (2004, 2009, and 2014, respectively) following the commencement of the Lease. The first CPI adjustment was made in September, 2004 to the beginning rent, and the rent was increased to $13,170.50. This adjustment occurred without issue.

On or about July 24, 2006, the Lease was amended to account for an expansion of the industrial/warehouse space on the leased premises. ( See 1st Amendment to Lease [38–2].) The definition of the “Premises” in the Lease was expanded to include a “Building” encompassing approximately fifty thousand (50,000) square feet. Also, the “Base Rent,” as originally defined in the Lease exclusive of CPI adjustments, was changed to $38,750.00 per month effective November 1, 2006, or the date Schneider actually obtained possession of the expanded “Premises.” Beginning September 1, 2009, and running until August 31, 2019, the “Base Rent” was to be “$38,750.00 (plus CPI)”. This Amendment also foreclosed Schneider's ability to terminate the Lease prior to January 1, 2011. Further, Schneider and Anika ratified and adopted all of the remaining terms and conditions of their original Agreement. On or about October 25, 2006, Schneider and Anika amended the Lease a second time. ( See 2nd Amendment to Lease [38–3].) This Amendment extended the Lease term to March 31,

[916 F.Supp.2d 705]

2027; changed “Base Rent” to $38,750.00 per month effective April 1, 2007; and set “Base Rent” between September 1, 2009 and March 31, 2027, at “$38,750.00 (plus CPI)”.

In May of 2007, Enniss purchased the subject property from Anika, and Anika assigned all rights and obligations under the Lease to Enniss. ( See Assignment and Assumption of Lease and Rent [38–4].) Thus, Enniss became Schneider's landlord.

From around May 1, 2007, through August 31, 2009, Enniss billed and Schneider paid monthly rent in the amount of $38,750.00.⁴ A CPI adjustment was scheduled to occur in September, 2009. This is when the dispute between Enniss and Schneider arose. Since the dispute turns on calculating a CPI adjustment under the Lease, the Court sets forth below the relevant Lease and Amendment terms:

Lease [38–1]

II. Base Rent

A. Tenant agrees to pay to Landlord base rent for the Premises, in advance, without demand, deduction or set off, for the entire term hereof at the rate of Eleven Thousand Seven Hundred Fifty Eight and 33/100 Dollars ($11,758.33) per month, in advance, except that the rent due for the first month of the term shall be due on the date of execution of this Lease. Thereafter one such monthly installment shall be due and payable without demand on or before the first day of each calendar month succeeding the commencement date during the term hereof, except that the rental payment for any fractional calendar month at the commencement or end of the Lease period shall be prorated.

B. CPI Adjustment. The rent shall be adjusted commencing on the sixty-first month following the Commencement Date, on the One Hundred Twenty First month and on the One Hundred Eightieth month thereafter (the “Adjustment Date”) by the percentage increase (if any) in the Consumer Price Index from the Commencement Date to each Adjustment Date, including any extension thereof. The base for computing the adjustment is the Consumer Price Index–All Urban Consumers, All Items (“CPI–U”), for the Southern Urban Area published by the United States Department of Labor, Bureau of Labor Statistic [sic], in which 1982–84=100 (the “Index”), which is published for August, 1999 (the “Beginning Index”). If the Index published nearest the Adjustment Date (“Adjustment Index”) has increased over the Beginning Index, the Rent specified in Paragraph II.A. shall be adjusted by subtracting the Beginning Index from the Adjustment Index, then dividing the difference by the Beginning Index, and multiplying the quotient of that calculation by the monthly Rent payable during the first sixty months of the term of the Lease ($11,758.33 per month) (the “Beginning Rent”) set forth in Paragraph II.A. The product of that multiplication shall then

[916 F.Supp.2d 706]

be added to the Beginning Rent, and the resulting sum shall be the monthly rent for the sixty month period following the applicable Adjustment Date. By way of illustration only, if the August 1999 figure for the Beginning Index is 120 and the August, 2004 figure is 125 (the first Adjustment Index), then the monthly rent for the ensuing sixty months would be increased by 4.17%, to a monthly rental of Twelve Thousand Two Hundred Forty Eight and 65/100 ($12,248.65) until the next adjustment on the One Hundred Twentieth month.

2nd Amendment to Lease [38–3]

2. Base Rent. The Base Rent, as originally defined in Paragraph II(A) of the Lease Agreement, shall be adjusted to ... ($38,750.00) per month. The effective date of the Base Rent adjustment shall be April 1, 2007, provided that if Landlord can not deliver the possession of the Premises on April 1, 2007, the Base Rent adjustment date shall be the date when Tenant actually obtains the possession of the Premises.

Therefore, the Base Rent, as defined in Paragraph II(A) of the Lease Agreement, shall be as follows: [$38,750.00 (plus CPI) for September 1, 2009—March 31, 2027.]

On September 1, 2009, Enniss began billing $44,413.62 for rent. ( See Sept., Oct. 2009 Invoices [38–5].) Enniss calculated this figure by determining the dollar per square foot rental fee for the original 17,000 square feet Building space, using that fee in the CPI adjustment formula specified under Paragraph II.B. of the Lease, and then multiplying the result of that formula by the 50,000 square feet Building space existing as of April, 2007. On November 1, 2009, Enniss increased the amount billed to $49,145.22. ( See Nov., Dec., Jan. Invoices [38–7].) This amount was based on Enniss's amended position that the entire 50,000 square feet Building space should be used in calculating the CPI adjustment. In accordance with this position, Enniss used the amount of $38,750.00 in the CPI adjustment formula in place of “Beginning Rent.” Apparently due to computational or typographical errors in calculating the rental fee of $49,145.22, Enniss increased the amount billed to $49,807.82 in February of 2010. ( See Feb. Invoice [38–9].)

In November, 2009, Schneider increased its payments from $38,750.00 to $40,688.68. Schneider's basis for the increase was that the 1999 Building space (17,000 square feet) was subject to a CPI adjustment in 2009 with a beginning CPI of August, 1999, while the 2007 space (33,000 square feet) would not undergo a CPI adjustment until 2012, and then only with a beginning CPI of April, 2007. In or around April, 2010, Schneider increased its payments to $41,895.42. This amount is based on Schneider's amended position that a CPI...