Michael v. Boutwell
| Citation | 138 F.Supp.3d 761 |
| Decision Date | 07 October 2015 |
| Docket Number | No. 3:14–CV–00116–DMB–SAA.,3:14–CV–00116–DMB–SAA. |
| Parties | Scott MICHAEL; and Rooster's Blues House, LLC, Plaintiffs v. Clinton L. BOUTWELL; and The Char Grille Seafood & Steaks LLC d/b/a Oxford Grillehouse, Defendants. |
| Court | U.S. District Court — Northern District of Mississippi |
Luther C. Fisher, IV, Luke Fisher Law, PLLC, Oxford, MS, for Plaintiff.
Hiram C. Eastland, III, Attorney at Law, Oxford, MS, for Defendant.
This contract dispute is before the Court on: (1) Defendants' motion to dismiss for failure to state a claim, or in the alternative, for summary judgment, Doc. # 59; (2) Plaintiffs' motion for default judgment, Doc. # 65; and (3) Defendants' motion to dismiss for lack of jurisdiction, Doc. # 72.
Plaintiff Scott Michael owns and operates Plaintiff Rooster's Blues House, LLC ("Rooster's"), a restaurant and bar. Doc. # 62–2 at 7, 97; Doc. # 62–3 at Ex. 3 at 14. Plaintiffs lease a building located at 114 Courthouse Square in Oxford, Mississippi ("Building"), from the Building's owners, Tim Phillips and Andy Phillips. Doc. # 62–3 at 49; Doc. # 62–2 at 40. The Building has an upstairs (second floor), a downstairs (first floor), and a basement, with a fully equipped commercial kitchen on the first floor. Doc. # 62–3 at Ex. 3 at ¶¶ 1, 25.
Prior to May 2013, Plaintiffs operated Rooster's in the Building. Doc. # 62–2 at 97. The Building's first floor was then set up "as a great restaurant" and the second floor was set up as "a nice bar setting." Id. While the floors offered different atmospheres, Rooster's provided its full menu on both floors. Id. Since July 17, 2008, Rooster's has maintained an Alcoholic Beverage Permit through the Mississippi Department of Revenue. Id. at Ex. 4. In order to maintain its permit, Rooster's must derive at least 25% of its revenue from food sales. Doc. # 62–2 at Ex. 5; see also Miss.Code Ann. § 67–1–5(m).
Before May 2013, Defendant Clinton Boutwell owned Defendant The Char Grille Seafood and Steaks, LLC ("Char Grille"), a restaurant then on Jackson Avenue in Oxford. Doc. # 62–3 at 64–65.
Before the events underlying this action, Rooster's was the subject of at least four administrative actions brought by the Mississippi Alcoholic Beverage Commission ("ABC"). Doc. # 62–2 at 53–55. First, on May 26, 2011, Rooster's was either fined or had its license suspended for one week for having an employee intoxicated while on duty.1 Doc. # 60–1 at Ex. 8 at 1. Second, also on May 26, 2011, Rooster's received a letter of reprimand for having an unapproved manager on duty. Id. at Ex. 8 at 3. Third, on May 7, 2012, Rooster's license was suspended for one week for serving alcohol to a minor. Id. at Ex. 7 at 5. And, on October 1, 2012, Rooster's license was suspended for two weeks for having an unapproved manager on duty and for having a "Permittee Intoxicated or Under the Influence of Alcoholic Beverages." Id. at Ex. 13 at 1.
According to Michael, he had "regular friction with the ABC before Mr. Boutwell came." Doc. # 62–2 at 115.
Sometime in 2012, Char Grille outgrew its space on Jackson Avenue and Boutwell began looking for a new location. Doc. # 62–3 at 64–65. At some point, Boutwell spoke with Tim Phillips, who informed Boutwell that Michael's lease on the Building was expiring soon. Id. at 65. Phillips suggested that Boutwell "partner with Scott." Id.
In late January or early February of 2013, Boutwell traveled to Rooster's to discuss a potential sublease with Michael. Doc. # 62–2 at 8–9. Shortly after, Boutwell and Michael entered into negotiations for Boutwell to take over the first floor of the Building and for Boutwell to serve food upstairs from his new restaurant, to be renamed the Oxford Grillehouse ("Grillehouse"). Id. at 9–10; Doc. # 62–4 at 9. At one point during the negotiations, Boutwell represented to Michael that the ABC had approved this arrangement. Doc. # 62–2 at 133. However, in late April or early May of 2013, the ABC informed Michael that he would not be allowed to provide food to Rooster's upstairs for Rooster's to serve its customers. Id. at 133–34. To address this development, Boutwell told Michael that he would provide food to Rooster's customers until Rooster's established its kitchen. Id. The purpose of this arrangement was to allow Rooster's to keep its customer base. Id.
On May 12, 2013, the parties executed a sublease for part of the Building. Doc. # 62–2 at Ex. 1. Under the sublease's terms, Plaintiffs leased to Grillehouse "Suite A," described as "the first floor, kitchen and basement" of the Building. Id. at ¶ 1. Plaintiffs retained control of the second floor, identified as "Suite B."
Of relevance here, the sublease provided:
[Rooster's] gives [Grillehouse] the option to serve its menu to customers ... on the second floor and/or balcony. Should [Grillehouse] decide to serve food, it shall obtain permission from [Rooster's] owner, Scott Michael, before proceeding to serve in such a fashion. If [Grillehouse] is allowed to serve food in Suite B, it shall be without any contingency or fee due to [Rooster's]. [Grillehouse] shall not serve alcohol of any type in Suite B and [Rooster's] shall not serve alcohol in Suite A. [Rooster's] will always maintain alcohol sales in Suite B.
Id. at Ex. 1 at ¶ 25. The sublease also contained a merger clause, providing:
Entire Agreement: This agreement constitutes the essential terms of the Agreement between the parties for the purposes stated herein and no other offers, agreements, understandings, warranties or representations exist between the parties. Any additional terms of the Agreement shall be in writing, signed by each owner, and made a part of this Sub–Lease as an addendum thereto.
Id. at Ex. 1 at ¶ 34. Michael testified during deposition that, notwithstanding the merger clause, the parties omitted an "oral agreement" from the sublease; however, Michael could not recall its substance. Id. at 14.
Following execution of the sublease, Boutwell made "a number" of promises to Michael regarding operation of the restaurants.
Doc. # 62–2 at 14. Specifically, Boutwell promised "that he was going to continue to cook upstairs [, that h]e was going to put a kitchen upstairs [and that h]e was going to put kitchen equipment upstairs." Id. To this end, Boutwell provided a menu that was approved by the ABC and "briefly" assisted in the application process for establishing Rooster's kitchen. Id. at 48.
However, following a visit from the ABC regarding Rooster's kitchen, Michael concluded that Boutwell had no intention of fulfilling his promises regarding food or the kitchen. Id. at 44, 68–71, 134. Accordingly, on or before June 17, 2013, Michael acquired a fryer on loan from another company. Id. at 68–71; 134. Michael explained that he obtained the fryer because ABC Agent Daniel Dunlap2 told him, "I want you to have a fryer and I'll approve your kitchen." Id. at 60. According to Michael, the ABC was "trying to help Mr. Boutwell, they were also trying to help me, and they were trying to get us up and going." Id.
On June 17, 2013, following an on-site inspection of Rooster's, Agent Dunlap sent a letter to the ABC recommending approval of Rooster's proposed kitchen space. Doc. # 60–2 at 45, Ex. 3. A week later, on June 24, 2013, Michael submitted an application to renew his Alcoholic Beverage Permit. Doc. # 60–1 at Ex. 4 at 1. The application, which included a Food Establishment Inspection Report from the Department of Health, claimed that Rooster's made 30.1% of its income from food sales from May 2012 through May 2013.3 Id. at Ex. 4 at 2, 4. Following an audit of Rooster's sales numbers,4 the ABC renewed Rooster's Alcoholic Beverage Permit, and Grillehouse opened with its own permit.5 Doc. # 60–1 at 23; Doc. # 60–2 at Ex. 4; Doc. # 62–3 at 73–74.
Approximately three weeks after the installation of the fryer, Michael purchased an identical fryer for permanent use. Doc. # 62–2 at 68. In July or August 2013, the purchased fryer stopped working and was sent out for repair. Id.
One day after the fryer was sent for repair, Dunlap performed an inspection at Rooster's and stated that "he got a complaint on [the] kitchen." Id. Given the short time between the fryer being sent for repair and Dunlap's appearance, Michael felt it was "pretty obvious" that Boutwell had filed the complaint. Id. Dunlap could not recall whether Boutwell had lodged the complaint regarding the fryer. Doc. # 60–1 at 106. Boutwell testified that he informed Dunlap that, at one point, Rooster's had been leasing a fryer and that the lease had expired. Doc. # 62–3 at 71.
Boutwell and Dunlap communicated through text messages for much of December 2013 through May 2014. Id. at Ex. 1. Of relevance to these proceedings, they exchanged the following text messages:
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