Family Dollar Stores of Mo., LLC v. Tsai's Inv.
| Decision Date | 07 February 2022 |
| Docket Number | 4:21-CV-572-SRW |
| Parties | FAMILY DOLLAR STORES OF MISSOURI, LLC, Plaintiff, v. TSAI'S INVESTMENT, INC., et al., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
This matter is before the Court on Defendants City of University City and Novus Management, Co.'s Motion to Dismiss Plaintiff's First Amended Complaint or, in the alternative, to Stay this Action, ECF No. 23, and Defendant Tsai's Investment, Inc.'s Motion to Dismiss Plaintiff's First Amended Complaint, ECF No. 25. Plaintiff filed Responses, ECF Nos. 29, 30, and Defendants filed Replies and a Supplemental Memorandum in Support. ECF Nos. 40, 41, 44. Upon Plaintiff's request, the Court held oral arguments on both motions on January 13, 2022. For the following reasons, the Court will grant the Motion to Dismiss filed by Defendants City of University City and Novus Management, Co., and grant in part and deny in part, the Motion to Dismiss filed by Tsai's Investment, Inc.
Plaintiff Family Dollar Stores of Missouri, LLC (“Family Dollar”) filed this action on May 17, 2021, against Defendants Tsai's Investment, Inc. (“Tsai” or “Landlord”), City of University City (“City” or “Condemning Authority”) and Novus Management Co. (“Novus”).
ECF No. 1. After seeking leave from the Court, Plaintiff was permitted to submit an Amended Complaint, which was filed on July 14, 2021. ECF No. 16.
On September 30, 2019, Family Dollar entered into a Lease Agreement (the “Lease”) with Tsai for a commercial premises located at 8618 Olive Boulevard, University City, Missouri (the “Premises”). The Lease term was until September 30, 2023, with three extensions of five years each. Within the Amended Complaint, Family Dollar cites to the Lease's Eminent Domain provision:
16. EMINENT DOMAIN. If all or any part of the Demised Premises, or any part of the Shopping Center parking, service or access areas are taken by public authorities through the power of eminent domain, then Tenant will have the right to terminate the Lease. If this Lease is terminated, then any unearned rent will be refunded to Tenant. If only a part of the Demised Premises or the parking, service or access areas are taken, and if Tenant elects not to terminate this Lease, then the rent will be reduced in the same proportion that the Demised Premises or parking, service or access areas are reduced. Landlord will restore the Demised Premises or parking, service or access areas, as applicable, to as close to their condition as existed prior to the taking as feasible. Tenant shall be entitled to file a claim for relocation damages, and Landlord shall have exclusive rights to claim damages for taking of land and improvements owned by Landlord. Landlord represents to Tenant that local custom is for Landlord and Tenant to file separate eminent domain claims with the public authority, but to the extent a single award is made by the public authority with respect to the Landlord's and Tenant's separate interests (described above), Landlord and Tenant will each be entitled to their separate claims based on their respective interests even if a single award for all damages is given by the public authority.
ECF No. 16 at 3-4. On January 9, 2020, Family Dollar opened its business at the Premises after completing approximately $500, 000 in renovations.
In May of 2020, the City filed a Petition in Eminent Domain (the “State Action”). See City of University City, Mo. v. SSC Acquisitions, Inc., et al., Case No. 20SL-CC02566 (Cir. Ct. of St. Louis Cty.). On September 1, 2020, the State Court determined the City had the right to acquire fee simple ownership of the Premises which Family Dollar leased. On March 29, 2021, the City paid $6, 368, 700.00 (the “Award Funds”) into the registry of the State Court.
Family Dollar asserts it was unaware of the State Action until it received the following letter from Tsai, dated March 31, 2021, which is attached as an exhibit to the Amended Complaint:
ECF No. 16-1.[2] Family Dollar states it was sent a second letter, dated April 1, 2021, from Defendant Novus, directing that it must remit all remaining lease payments to “U City, LLC.” Id. at 4. Family Dollar understood this letter to mean that the Lease was assigned to Novus because, upon its independent investigation, “U City, LLC” was not an entity registered to do business in the State of Missouri.
Plaintiff complains it was not added as a party to the State Action, “nor did the Condemning Authority or Landlord notify Family Dollar such that it could participate in the State Action and pursue claims under the Lease and state law.” ECF No. 16 at 4. Plaintiff alleges the Lease entitled it to file a claim for relocation damages, as per the Eminent Domain provision, but the City and Tsai deprived Family Dollar of that opportunity by not adding it as a party to the State Action or notifying it of the State Action prior to the March 31, 2021 letter.
On May 7, 2021, Family Dollar notified the City in writing “that in order to mitigate its damages, but without waiver of any claims, it would comply with the Termination Notice and vacate the Premises on or before June 28, 2021.” Id. at 6. On May 27, 2021, the State Court entered an Order directing that Tsai be paid the entirety of the Award Funds.
Family Dollar's Amended Complaint seeks the “pure losses associated with walking away from its significant tenant improvements and fixturing, ” Family Dollar's “losses to its registers/point of sale equipment and other computer equipment, along with significant costs associated with opening the Premises (inventory, pre-opening and wind-down payroll, supplies, and grand opening costs), ” “bonus damages, from the date of the condemnation, until the end of its 20-year term of Lease, ” and attorneys' fees. Id. at 6-7.
The Amended Complaint asserts six counts. In Count I, Family Dollar alleges a breach of lease claim against Tsai and Novus for “excluding Family Dollar from the State Action and by moving the State Court for a release of the Award Funds . . . despite the fact that the Lease requires that any ‘single award [] made by the public authority' be split between Landlord and Tenant, ” “by failing to add Family Dollar as a party to the State Action or take any action to notify Family Dollar of the action, so that it could make and prosecute its own claim, as required under the Lease, ” and “by participating in and/or organizing a structure whereby Family Dollar would be evicted from the Premises, despite the fact that the Lease does not permit the Lease to be terminated.” Id. at 7-8. Count I seeks damages, costs, expenses and attorneys' fees. Id. at 8-9.
In Counts II and III, Family Dollar alleges a right to compensation for its leasehold interest in the Premises and inverse condemnation, respectively, against the City. In Count IV, Family Dollar requests a declaratory judgment against all Defendants as to its entitlement to a portion of the Award Funds and damages, including costs and attorneys' fees. In Count V, Family Dollar requests temporary and permanent injunctive relief against Tsai to prevent it from spending the Award Funds during the pendency of this action. Lastly, in Count VI, Family Dollar requests the Court to impose a constructive trust on the Award Funds.
The purpose of a motion to dismiss for failure to state a claim is to test the legal sufficiency of the complaint. As the Supreme Court held in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), a complaint must be dismissed pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted if it does not plead “enough facts to state a claim to relief that is plausible on its face.” Id. at 570. A plaintiff need not provide specific facts in support of his allegations, Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam), but must include sufficient factual information to provide the “grounds” on which the claim rests, and “to raise a right to relief above a speculative level.” Twombly, 550 U.S. at 555 & n.3. See also Schaaf v. Residential Funding Corp., 517 F.3d 544, 549 (8th Cir. 2008). This obligation requires a plaintiff to plead “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. A complaint “must contain either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory.” Id. at 562 (quoted case omitted). On a motion to dismiss, the Court accepts as true all of the factual allegations contained in the complaint, and reviews the complaint to determine whether its allegations show that the pleader is entitled to relief. Id. at 555-56; Fed.R.Civ.P. 8(a)(2).
Defendants City and Novus argue this Court should abstain from exercising jurisdiction over the entirety of this action or in the alternative, dismiss the claims against them for failure to state a claim...
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