Goodman Jewelers, Inc. v. Walnut Brewery, Inc.
| Decision Date | 22 August 2011 |
| Docket Number | Case No. 1:10-cv-01392-TWP-MJD |
| Parties | GOODMAN JEWELERS, INC., GOODMAN COURT STREET, INC., and GOODMAN QUAD LIMITED, d/b/a TWO NORTH MERIDIAN CO., Plaintiffs, v. WALNUT BREWERY, INC., a Colorado Corporation, Defendant. |
| Court | U.S. District Court — Southern District of Indiana |
This case comes before the Court on Plaintiffs' Goodman Jewelers, Inc., Goodman Court Street, Inc., and Goodman Quad Limited, d/b/a Two North Meridian Co.'s (collectively "Landlord") Complaint for Declaratory Judgment (Dkt. 1) of the parties' rights and responsibilities under the terms of a restaurant lease. Defendant Walnut Brewery, Inc.'s ("Tenant") filed a Rule 12(b)(6) Motion to Dismiss (Dkt. 10) to which the Court gave notice of Rule 56 Conversion (Dkt. 20). Tenant has moved this Court to grant Summary Judgment (Dkt. 26) in its favor against Landlord and Landlord has filed a Cross Motion for Summary Judgment against Tenant (Dkt. 34). For the reasons stated herein, the Court GRANTS Tenant's Motion for Summary Judgment (Dkt. 26) and DENIES Landlord's Motion for Summary Judgment (Dkt. 34).
On or about September 16, 1995, Landlord and Tenant entered into a Restaurant Lease Agreement ("Lease"). The Lease involved approximately 10,002 square feet of property locatedin downtown Indianapolis, Indiana. The Lease was scheduled to terminate on May 31, 2011. However, Tenant was provided the option to extend the term of the Lease for two additional terms of sixty months. The Lease contained the following language:
Article II - Grant, Term and Options to Extend
Article XXI - Miscellaneous
21.05 Notices and Payments: Any notice by Tenant to Landlord must be served either by certified mail, postage prepaid, addressed to Landlord at the place designated for the payment of rent, or at such other address as Landlord may designate from time to time....
Restaurant Lease Agreement, Ex. A to Pls.' Compl.
Pursuant to the Lease provisions, Tenant was required to provide notice two hundred and seventy (270) days prior to the expiration of the then existing term in order to exercise its right to renew. Two hundred and seventy days before the scheduled end of the lease term was September 3, 2010.
On August 9, 2010, Tenant sent a signed letter to Landlord expressing its intent to exercise the option to renew. This letter was signed by John Buerge, Director of Development and Property Management of Rock Bottom Restaurants, Inc. and sent "signature required" through third party courier United Parcel Services ("UPS"). UPS delivered the letter to Landlordon August 12, 2010. Tenant also sent an email expressing its intent to exercise the option to renew the Lease to Landlord on August 9, 2010.
On September 16, 2010, over a month after the UPS delivery and nearly two weeks after the September 3, 2010 deadline, Landlord notified Tenant that it deemed Tenant's attempt at renewal ineffective, and that the Lease would expire on May 31, 2011. Tenant then filed suit with this Court seeking declaratory judgment.
Additional facts will be added as needed.
Conversion of a Rule 12(b)(6) motion into a motion for summary judgment "is appropriate when the court determines that no triable issues of material fact exist." Milwaukee Typographical Union No. 23 v. Newspapers, Inc., 639 F.2d 386, 390 (7th Cir. 1981); see also Chicago-Midwest Meat Assoc. v. City of Evanston, 589 F.2d 278, 281-82 (7th Cir. 1978), cert. denied, 442 U.S. 946 (1979). The question of whether an optionee has properly exercised an option is a matter of contract construction, a question of law of which summary judgment is particularly appropriate. Pinkowski v. Calumet Tp. of Lake County, 852 N.E.2d 971 (Ind. Ct. App. 2006); Forty-One Assoc., LLC v. Bluefield Assoc., L.P., 809 N.E. 2d 422, 426 (Ind. Ct. App. 2004). Rule 56(c) of the Federal Rules of Civil Procedure governs summary judgment.
Under Rule 56(c), summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact" and that the moving party is entitled to a judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). As articulated by the Supreme Court, "summary judgment is not a disfavored procedural shortcut, but rather an integral part of the federal rules as a whole." Id. at 327. In ruling on a motion for summaryjudgment, the admissible evidence presented by non-movant must be believed and all reasonable inferences must be drawn in her favor. Zerante v. DeLuca, 555 F. 3d 582, 584 (7th Cir. 2009).
The party moving for summary judgment bears the initial burden of informing the district court of the basis for its motion. Celotex, 477 U.S. at 323. When the moving party produces proper support of its motion, the burden then shifts to the non-movant. It is not enough for the non-movant merely to raise factual arguments that cast "some metaphysical doubt as to the material facts." Baker v. Elmood, 940 F. 2d 1013 (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). A party who bears the burden of proof on a particular issue ... must affirmatively demonstrate, through specific factual allegations, that there is a genuine issue of material fact that requires trial. Hemsworth v. Quotesmith.com, Inc., 476 F.3d 487, 490 (7th Cir. 2007) (citation omitted).
It is not uncommon for a court to be confronted with cross-motions for summary judgment because Rules 56(a) and (b) of the Federal Rules of Civil Procedure allow both plaintiffs and defendants to move for such relief. "In such situations, courts must consider each party's motion individually to determine if that party has satisfied the summary judgment standard." Kohl v. Ass'n. of Trial Lawyers of America, 183 F.R.D. 475 (D. Md. 1998).
The present case centers on the determination of the sufficiency of Tenant's notice to exercise its option to renew the lease agreement. The Court must ultimately determine whether Tenant provided adequate notice of its intention to renew and whether Rock Bottom Restaurants, Inc. ("RBRI") had authority to exercise the option.
The question of whether an optionee has properly exercised an option is a matter of contract construction, a question of law of which summary judgment is particularly appropriate. Forty-One Assoc., LLC v. Bluefield Assoc., L.P., 809 N.E. 2d 422, 426 (Ind. Ct. App. 2004). "When the terms of the contract are clear and unambiguous, those terms are conclusive," and the court must apply the contract provisions. Id. (citations omitted). "When interpreting a contract, a court must ascertain and effectuate the intent of the parties." Id. "The contract must be read as a whole and the language construed so as not to render any words, phrases, or terms ineffective or meaningless. Id.
Landlord argues that this Court cannot excuse Tenant's alternative delivery method. Landlord asserts that refusal of anything less than strict compliance is a consequence of the oft-stated principle of allowing parties the right to contract and fix the terms, provisions and conditions of their agreement. Bethlehem Steel Corp. v. Sercon Corp., 654 N.E. 2d 1163 (Ind. Ct. App. 1995); Rodman v. City of Wabash, 497 N.E. 2d 234, 240 (Ind. Ct. App. 1986) (). However, in the context of option contracts, one party's deviation from the contract may not necessarily render the exercise the option defective. In this area of law, jurisdictions have adopted varied approaches. Some courts have taken a strict compliance approach, while others have opted for a flexible analysis.
A select number of states have held that alternate delivery of notice is insufficient if the terms of the contract specifically provide for an exclusive method of delivery. Landlord cites a plethora of cases in support of its contention that Tenant's deviation from the terms of the option contract rendered its notice ineffective; however Landlord's authorities are distinguishable.
Landlord begins by citing to Western Tire, Inc. v. Skrede, 307 N.W. 2d 558 (N.D. Sup. Ct. 1981). The Western case involved a lessee that had the option to continue the lease for an additional five-year period by sending written notice by registered or certified mail at least 30 days prior to commencement of renewal period. The Western court found that the lease provided for an exclusive means by which the option could be exercised and that by depositing the notice into ordinary mail lessee failed to meet both manner and time period required for exercising option. The Western court went on to say that "the requirement of sending notice by registered or certified mail was designed to eliminate the problem of proving that the notice had been sent on time and was received." Western, 307 N.W.2d at 563. In the Western case however, "the Skredes did not receive the notice of the exercise of the renewal option on April 1, 1978" which was sent through ordinary mail rather than by registered or certified mail as the lease required. Id. at 561.
Landlord next relies on Matter of...
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