Expeditors Int'l of Washington, Inc. v. Troiani Seattle, LLC

• Decision Date: 13 February 2012
• Docket Number: No. 66207-4-I,66207-4-I
• Court: Washington Court of Appeals
• Parties: EXPEDITORS INTERNATIONAL OF WASHINGTON, INC., a Washington corporation, Respondent, v. TROIANI SEATTLE, LLC, a Washington limited liability company; PAUL S. MACKAY, SR. and GAIL MACKAY, and the marital community thereof; CHAD MACKAY and JENNIFER MACKAY, and the marital community there of; RICHARD TROIANI and JANE DOE TROIANI, and the marital community thereof; and KENNETH SHARP and JANE DOE SHARP, and the marital community thereof, Appellants.

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC., a Washington corporation, Respondent, v. TROIANI SEATTLE, LLC, a Washington limited liability company; PAUL S. MACKAY,

SR. and GAIL MACKAY, and the marital community thereof; CHAD MACKAY

and JENNIFER MACKAY, and the marital community there of; RICHARD TROIANI

and JANE DOE TROIANI, and the marital community thereof; and KENNETH SHARP

and JANE DOE SHARP, and the marital community thereof, Appellants.

No. 66207-4-I

COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION ONE

FILED: February 13, 2012

UNPUBLISHED OPINION

Appelwick, J. — Troiani's lease with Expeditors allowed Troiani to assign the lease to affiliates under certain conditions. It did not mention assignment to third parties. Troiani attempted to assign the lease to a third party and, at the assignee's request, asked Expeditors for consent. After Expeditors refused, Troiani ceased payment. The trial court granted Expeditors motion for partial summary judgment, ruling that Troiani breached the lease. We determine that Troiani retained the right to assign the lease to third parties. Therefore, triable issues of fact remain. We reverse.

FACTS

In July 2003, Troiani Seattle LLC entered into a lease with Expeditors International of Washington Inc. for restaurant space in Expeditors' building located on Third Avenue in downtown Seattle. Troiani's performance was personally guaranteed by Paul Mackay, Chad Mackay, Richard Troiani, and Kenneth Sharp.

The lease constituted "the entire agreement between the parties and [could] not be modified except in writing signed by both parties." The assignment provision did not mention third parties:

12. ASSIGNMENT AND SUBLETTING.

12.1 Landlord's Consent. Tenant shall have the right to assign or sublease the Premises under this Lease to an affiliate ("Affiliate") provided that (i) Landlord determines that the Affiliate is an entity which is controlled by, controls, or is under common control with Tenant, or an entity into which Tenant is merged or with which Tenant is consolidated, (ii) Landlord determines that the net worth of the Affiliate is no less than the greater of a) net worth of Tenant upon execution of this Lease or b) net worth of Tenant immediately prior to said transfer, (iii) Tenant notifies Landlord of any such assignment or sublease at least thirty (30) days prior to its effective date, and (iv) Tenant promptly supplies Landlord the following in connection with any such request:

a. True and complete copy of the proposed sublease,assignment and all side letters or other agreements pertaining thereto;

b. Current financial statements, including income and expense statements and balance sheets, or other adequate financial information, for the then current year-to-date and two most recent years for the prospective sublessee or assignee;

c. Current credit report from a recognized credit agency identifying the credit history of the prospective sublessee or assignee; and,

d. Any other documents or information requested by Landlord regarding such assignment or sublease or such Affiliate.

Landlord's decision with regard to acceptance or rejection of a sublease or assignment shall be given in writing within fifteen (15) days after delivery of the items specified in this Paragraph 12.1. In addition, in the event the proposed assignee or subtenant is not an individual, personal guaranties shall be required of the principals as a condition to Landlord's consent.

. . . .

12.3 Continued Responsibility. Regardless of any approved assignment or sublease of this Lease, Tenant shall not be released from liability nor shall any guaranties be affected or releases as a result of such assignment or sublease. However, in the event of a default by any such assignee or sublessee, Landlord shall give Tenant notice of the default, shall accept cure of the default by Tenant within ten (10) days after such notice and shall permit Tenant to reenter and repossess the Premises for the then unelapsed portion of the Lease Term subject to all of the provisions of this Lease. Subsequent amendments or modifications of this Lease without notice to or consent of the Landlord will not relieve the Tenant of any liability under this Lease.

(Boldface omitted.)

It was important to Expeditors that the space be used for a first-class restaurant, and Troiani developed a restaurant with that in mind. In November 2003, Troiani opened an upscale Italian restaurant. But, the restaurant struggled significantly. Over the next six years, Troiani made substantial efforts to generate business. It started ahappy hour, prepared dishes tableside, offered wine tastings, offered coupons with other restaurants, modified the menu, and played with price points. Further, it borrowed over $1.4 million from Paul Mackay to keep the restaurant afloat.

In April 2009, Troiani explained its financial difficulties to Expeditors, and requested a lease modification. Negotiations were unfruitful. By July 2009, Troiani realized it had to list the restaurant for sale. It entered a business opportunity purchase and sale agreement with Cerro Blanco LLC. Cerro Blanco agreed to pay $600,000 to Troiani, and assume Troiani's obligations under the lease. Under the lease terms, Troiani would also remain obligated on the lease. The agreement conditioned the sale on Expeditors' consent. Troiani provided Expeditors with appropriate documents and requested consent for the sale and assignment. Expeditors responded over a month later. It refused to consent and asserted that Troiani had no right to assign the lease to a third party. Expeditors also claimed Cerro Blanco's proposed restaurant was not appropriate for the building. As a result of Expeditors' refusal, Cerro Blanco backed out of the deal.

Troiani tried to negotiate with Expeditors to rebrand the restaurant and modify the lease terms. Negotiations fell through, and Troiani could no longer afford to continue operating. The restaurant closed its doors on September 26, 2009. On October 13, Expeditors sent a letter notifying Troiani it had breached the lease by ceasing operations. On November 2, Expeditors sent another letter notifying Troiani that it was in default. Sometime in November, the lease was terminated and Troiani vacated the premises.

Expeditors sued Troiani for breaching the lease by ceasing restaurantoperations and defaulting, and sued the individual guarantors and their marital communities for breaching their personal guaranties. Troiani and the personal guarantors counterclaimed, asserting that Expeditors tortiously interfered with a business expectancy by not consenting to the assignment, and that Expeditors breached the lease by refusing to consent.

The trial court granted Expeditors' motion for partial summary judgment. It dismissed Troiani's counterclaim for breach of contract. Later, the parties stipulated that the tortious interference claim be dismissed. The trial court left the determination of damages for trial.

Troiani unsuccessfully filed a motion to reconsider and a motion to vacate. Along with its motion to vacate, Troiani attached a draft lease it claimed was admissible as newly discovered evidence. It argued that the draft lease unequivocally showed that Troiani negotiated for the right to assign to third parties, because it showed that the phrase, "nor shall this Lease or any interest thereunder be assignable," had been crossed out from the assignment provision.

A commissioner of this court granted discretionary review.

DISCUSSION

We review a summary judgment order...