Heathcote Associates v. Chittenden Trust Co.

• Decision Date: 29 January 1997
• Docket Number: No. 2:96-CV-128.,2:96-CV-128.
• Citation: 958 F.Supp. 182
• Parties: HEATHCOTE ASSOCIATES, a Limited Partnership, Plaintiff, v. CHITTENDEN TRUST COMPANY, d/b/a The Chittenden Bank, Defendant.
• Court: U.S. District Court — District of Vermont

Page 182

958 F.Supp. 182

HEATHCOTE ASSOCIATES, a Limited Partnership, Plaintiff, v. CHITTENDEN TRUST COMPANY, d/b/a The Chittenden Bank, Defendant.

No. 2:96-CV-128.

United States District Court, D. Vermont.

January 29, 1997.

Michael B. Rosenberg, Robert Alan Pinel, Miller, Eggleston & Cramer, Ltd., Burlington, VT, for plaintiff.

Robert B. Hemley, Craig Weatherly, Gravel & Shea, Burlington, VT, for defendant.

OPINION AND ORDER

SESSIONS, District Judge.

This is an action in diversity arising out of a contract dispute between Plaintiff Heathcote Associates ("Heathcote") and Defendant Chittenden Trust Company ("Chittenden"). Heathcote seeks specific performance as well as damages for Chittenden's alleged breach of contract. Heathcote has also alleged claims of failure to deal in good faith under the contract, fraud, and promissory estoppel. Pending before the Court is Chittenden's Motion to Dismiss, which Heathcote opposes. For the reasons stated below, the Motion is GRANTED in part and DENIED in part.

I. Factual Background

For the purposes of this motion, the Court assumes the following facts to be true. Plaintiff Heathcote is a limited partnership registered in the State of New York with its principal place of business in New York City, New York. No members of the partnership are residents of the State of Vermont. Defendant Chittenden is a banking corporation organized under the laws of the State of Vermont and does business under the name "The Chittenden Bank." Its principal place of business is in Burlington, Vermont.

Heathcote owns improved property known as "Mall 189" ("the Mall") (formerly known as "The South Burlington Outlet Center") in South Burlington, Vermont. Chittenden operates a branch banking facility in a building at the Mall that it leases from Heathcote, pursuant to a lease agreement dated April 1, 1991 ("Lease Agreement"). The building is separate from but adjacent to the main building of the Mall.

Attached to the Lease Agreement is a rider ("Rider"), executed the same day as the Lease Agreement. Paragraph 3 of the Rider modifies the obligations of the parties under the Lease Agreement if Chittenden provides an alternative design for a two-lane drive-thru that is acceptable to Heathcote and that is approved by the City of South Burlington. The Rider requires Heathcote to cooperate with Chittenden in signing any documents necessary for Chittenden to obtain approval from South Burlington. Once approval is secured, the Rider modifies the duration and rent of the tenancy specified in the Lease Agreement.

In February, 1992, the parties signed a document entitled "Lease Proposal." (Paper No. 7, Ex. A) The Lease Proposal describes a twenty-five year lease, to be entered into by Chittenden, of a building to be constructed at the northerly side of the Mall for use as a branch banking facility. The Lease Proposal states that the building is to be "approx. as shown" on a plan attached to the document and labeled as "`A' dated 2/18/92." ("Exhibit A Plan"). It specifies a rent schedule, financing, mall access, rent commencement and additional charges, and requires that approval from the City of South Burlington be obtained for the proposed bank facility. Finally, the Lease Proposal states, "The above shall be subject to a mutually satisfactory lease agreement and all necessary approvals by the Town of South Burlington." Amendment to Complaint, Ex. A (Paper No. 2, Ex. A).

The Exhibit A Plan was submitted for approval to the City of South Burlington, but was subsequently withdrawn when the City informally advised the parties that the design would not be approved. The parties then agreed to modify the design to incorporate teller windows and an automatic teller machine (ATM) into the existing Chittenden bank rather than into a new structure. Both this proposal and the Exhibit A Plan were designed by the same engineering firm.

The City of South Burlington formally rejected the new design and the request for a zoning variance. With Chittenden's support and encouragement, Heathcote appealed the City's decision in Vermont Superior Court. Heathcote bore the costs of this appeal. On July 18, 1995, the Chittenden Superior Court granted a zoning variance and approved the design for the banking facility that the City of South Burlington had formally rejected. Heathcote incurred approximately $100,000 in costs in redesigning the facility and obtaining the variance for it.

On or about October 12, 1995, Chittenden wrote Heathcote and informed it that "Chittenden Bank can't enter into a 25 year, single term, lease" and that Chittenden had "decided to not accept your drive-up lane proposal and will stay with our current lease." Bishop Letter (Paper No. 7, Ex. C). Heathcote subsequently filed this lawsuit, alleging five counts against Chittenden: specific performance of a contract; damages for breach of contract; breach of implied covenant of good faith and fair dealing; fraud; and promissory estoppel.

On June 5, 1996, Chittenden moved to dismiss the Complaint, pursuant to Fed. R.Civ.P. 12(b)(6), for failure to state a claim on which relief can be granted. Heathcote opposes this motion. Argument was heard on the matter at a hearing on August 6, 1996.

II. Discussion

A. Standard of Review Under Rule 12(b)(6)

On a motion to dismiss pursuant to Fed. R.Civ.P. 12(b)(6), the Court is to consider the legal sufficiency of the claim as stated in the complaint, and is not to weigh facts underlying the claim or the merits of the case. Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir.1985); 5A C. Wright and A. Miller, Federal Practice & Procedure § 1356 (1990). The complaint must not be dismissed "unless it appears `beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Goldman, 754 F.2d at 1065 (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957)). The complaint must be read with "great generosity." Yoder v. Orthomolecular Nutrition Institute, Inc., 751 F.2d 555, 558 (2d Cir.1985) (citing Conley, 355 U.S. at 47-48, 78 S.Ct. 99, 102-03). Taking Plaintiff's allegations as true, the Court must construe the Complaint in the light most favorable to the Plaintiff, and must draw all inferences in Plaintiff's favor. Cosmas v. Hassett, 886 F.2d 8, 11 (2d Cir. 1989); Yoder, 751 F.2d at 562.

In general, the Court may only consider facts alleged on the face of the complaint, and any documents attached as exhibits or incorporated by reference. Cosmas, 886 F.2d at 13. If the Court considers matters outside the pleading, such as affidavits, depositions, or answers to interrogatories, the motion is to be treated as a Rule 56 motion for summary judgment, and the parties are to be given notice and the opportunity to present additional materials. Fed. R.Civ.P. 12(b); Carter v. Stanton, 405 U.S. 669, 671, 92 S.Ct. 1232, 1234, 31 L.Ed.2d 569 (1972) (per curiam) (holding treatment of such motions as Rule 56 summary judgment motions mandatory).

Despite this general framework, the Second Circuit has in recent years permitted District Courts ruling on 12(b)(6) motions to consider written instruments outside the four corners of the complaint when the plaintiff's claims rely on such instruments and the opposing party has notice of them. See Cortec Industries, Inc. v. Sum Holding L.P., 949 F.2d 42, 48 (2d Cir.1991) (permitting consideration of warrant, offering memorandum, and stock purchase agreement because they were documents that plaintiff "had either in its possession or had knowledge of and upon which they relied in bringing suit"), cert. denied, 503 U.S. 960, 112 S.Ct. 1561, 118 L.Ed.2d 208 (1992); Sazerac Co. v. Falk, 861 F.Supp. 253, 257 (S.D.N.Y.1994) (considering instruments supplied by defendants in their 12(b)(6) motion but not attached to complaint); Kramer v. Time Warner Inc., 937 F.2d 767, 773-74 (2d. Cir.1991) (publicly filed securities documents of which plaintiff had notice). Moreover, documents that are "integral" to the complaint, but are only partially quoted therein, may also be considered. San Leandro Emergency Med. Group Profit Sharing Plan v. Philip Morris Cos., 75 F.3d 801, 808-09 (2d Cir.1996); Harsco v. Segui, 91 F.3d 337, 341 (2d Cir.1996) (reviewing letter cited and discussed in complaint, but not attached thereto); I. Meyer Pincus & Assocs. v. Oppenheimer & Co., 936 F.2d 759, 762 (2d Cir.1991) (reviewing prospectus). If factual allegations contained in such documents contradict allegations in the complaint, the document controls. See Feick v. Fleener, 653 F.2d 69, 75 (2d Cir.1981); United States ex rel. Sommer v. Dixon, 524 F.Supp. 83, 85 (N.D.N.Y.1981), aff'd, 709 F.2d 173 (2d Cir.) (per curiam), cert. denied, 464 U.S. 857, 104 S.Ct. 177, 78 L.Ed.2d 158 (1983); Falk, 861 F.Supp. at 257.

In the present case, the Court looks beyond the four corners of the Complaint, but still addresses Defendant's motion under 12(b)(6) rather than Rule 56. The factual allegations considered by the Court are taken from Plaintiff's Complaint, and are assumed to be true only for the purposes of this motion. In addition, the Court considers the Lease Proposal, which was attached to the Amended Complaint as an exhibit thereto, as well as the Lease Agreement, the Rider, and Chittenden's letter of October 12, 1995. These latter three documents were not attached to the Complaint or incorporated by reference, but were instead submitted by Plaintiff Heathcote as attachments to its memorandum opposing Defendant's motion to dismiss. However, the documents are integral to the Complaint and the claims alleged therein, and Defendant Chittenden had notice of them and the opportunity to respond to them. The Court also takes judicial notice of the decision and order of the Chittenden Superior Court granting Heathcote a zoning variance. This is a publicly filed document of which Chittenden had notice, and a copy of which was submitted by...