Modern Woodmen American v. Ahold
| Decision Date | 01 February 2016 |
| Docket Number | CIVIL ACTION NO. 5:15-CV-243 (MTT) |
| Parties | MODERN WOODMEN OF AMERICA, Plaintiff, v. KONINKLIJKE AHOLD, Defendant. |
| Court | U.S. District Court — Middle District of Georgia |
Defendant Koninklijke Ahold ("Ahold") has moved for judgment on the pleadings against Plaintiff Modern Woodmen of America ("MWA"). (Doc. 11). For the following reasons, Ahold's motion is DENIED.
This case arises from a dispute regarding Ahold's alleged breach of a guaranty. On December 6, 1991, Ahold's subsidiary BI-LO, Inc. entered into a lease agreement with Pridemore Development Company ("Pridemore"). (Doc. 1, ¶¶ 7-8). The lease named BI-LO, Inc. as the tenant of Pridemore's grocery store and provided that "[u]pon an assignment of this Lease by Tenant, Tenant shall not be released by said assignment from any liability or obligation for the future performance or breach of any covenant or condition specified herein." (Id.; Doc. 1-2 at 24).
An unsigned, undated form guaranty was "made a part" of the lease and attached to it. (Doc. 1-2 at 4, 55). On April 10, 1992, Ahold signed the guaranty stating it, as guarantor, would "guarantee the payments of rents by Lessee under theLease ...." (Doc. 1-3). The guaranty further stated that Ahold "irrevocably and unconditionally guarantees the due fulfillment by Lessee of its obligations to pay the rents provided in the Lease, as and when due, under the Lease as amended from time to time ...." (Id.). MWA alleges that Ahold also guaranteed "future lease modification agreements duly executed by BI-LO." (Doc. 1, ¶ 9). Pridemore and BI-LO, Inc. executed a Confirmation of Lease Term Agreement on September 15, 1993. (Id. ¶ 15; Doc. 1-5). This agreement provided that the lease term would expire on January 31, 2013. (Doc. 1-5).
While Ahold did not sign the guaranty when the lease agreement was executed, MWA alleges it was Ahold's "practice and custom," being located in the Netherlands, not to immediately execute the guaranty agreement upon the execution of the lease. (Doc. 1, ¶ 10). MWA further alleges "the Guaranty [was] an integral part of the Lease" and "relates back to the execution of the Lease...." (Id. ¶ 11). Indeed, "Ahold ... represented, authorized, and/or acquiesced in the representations made by its then-subsidiary, BI-LO, concerning Ahold's intent and agreement to sign the guaranty agreement as part of the Lease transaction." (Id. ¶ 12).
On October 8, 2000, "BI-LO, Inc. assigned its interest in the Lease to BI-LO, LLC." (Id. ¶ 18). BI-LO, LLC and Pridemore agreed to extend the lease term to January 31, 2017 in a Lease Modification Agreement executed on August 30, 2001. (Id. ¶ 16; Doc. 1-6).
In May 2002, Plaintiff MWA loaned money to Pridemore pursuant to the terms of a promissory note, and they "executed an Assignment of Leases and Rents" in which "Pridemore absolutely and unconditionally assigned to [MWA]" the lease betweenPridemore and BI-LO, Inc., "as well as all rents under [the] lease, including the right to enforce any security given in connection" with the lease. (Docs. 1, ¶ 6; 1-1).
In February 2006, BI-LO, LLC assigned the lease to Southern Family Markets who then assigned the lease to Belle Foods, LLC. (Doc. 1, ¶ 18). MWA alleges that "[p]ursuant to the terms of the Lease, BI-LO remained liable for all rental and other financial obligations required during the Lease's term in the event the assignees defaulted or otherwise failed to perform these obligations." (Id.).
In May 2007, Ahold certified in a Certificate of Guarantor to MWA that "the Guaranty was in full force and effect, but only to the extent of the covenants and obligations of the tenant under the Lease as they existed on January 29, 2005." (Doc. 1-4). Even though the Certificate of Guarantor was executed after BI-LO, Inc. assigned the lease to BI-LO, LLC, Ahold referred to the tenant as "Bi-Lo, Inc. n/k/a Bi-Lo, LLC," or "Bi-Lo." (Id.).
In August 2007, (Doc. 1, ¶ 17). MWA alleges that Rosen Monroe is now "in default under the Note" and "has declared the entire remaining balance on the Note immediately due and payable." (Id. ¶ 21). Further, "pursuant to ... the Assignments of Leases and Rents, [MWA] has revoked Rosen Monroe's license to collect rents under the Lease and is ... directly pursuing enforcement and payment under the Guaranty." (Id.).
On "March 23, 2009, BI-LO filed for ... Bankruptcty ..., and the Lease was rejected by [the] bankruptcy court." (Id. ¶ 18). Belle Foods, LLC continued to make payments under the lease until it filed for bankruptcy. (Id. ¶ 19). Since Belle Foods, LLC's bankruptcy, no "Fixed Rent or Additional Rent payments under the Lease for the period January 1, 2014 until the filing of this action" have been paid. (Id. ¶ 31). MWA alleges that "BI-LO" as the lessee "is in default under ... the Lease due to its adjudication of bankruptcy ...." (Id. ¶ 29). MWA further alleges that despite the repeated demands it has made, "Ahold has breached the Guaranty it executed by refusing to pay the past due and future Fixed Rent and Additional Rent payments for the remaining term of the Lease." (Id. ¶ 34).
Pursuant to Fed. R. Civ. P. 12(c), "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." "Judgment on the pleadings is appropriate when there are no material facts in dispute and the moving party is entitled to judgment as a matter of law." Douglas Asphalt Co. v. Qore, Inc., 541 F.3d 1269, 1273 (11th Cir. 2008) (citing Cannon v. City of W. Palm Beach, 250 F.3d 1299, 1301 (11th Cir. 2001)). A motion for judgment on the pleadings is governed by the same standard as a Rule 12(b)(6) motion. See Mergens v. Dreyfoos, 166 F.3d 1114, 1117 (11th Cir. 1999) ().
To avoid dismissal pursuant to Fed. R. Civ. P. 12(b)(6), a complaint must contain sufficient factual matter to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "At the motion to dismiss stage, all well-pleaded facts are accepted as true, and the reasonable inferences therefrom are construed in the light most favorable to the plaintiff." Garfield v. NDC Health Corp., 466 F.3d 1255, 1261 (11th Cir. 2006) (internal quotation marks and citation omitted). However, "where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not 'show[n]'—'that the pleader is entitled to relief.'" Iqbal, 556 U.S. at 679 (alteration in original) (quoting Fed. R. Civ. P. 8(a)(2)). "[C]onclusory allegations, unwarranted deductions of facts or legal conclusions masquerading as facts will not prevent dismissal." Oxford Asset Mgmt., Ltd. v. Jaharis, 297 F.3d 1182, 1188 (11th Cir. 2002). The complaint must "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Twombly, 550 U.S. at 555 (alteration in original) (internal quotation marks and citation omitted). Where there are dispositive issues of law, a court may dismiss a claim regardless of the alleged facts. Marshall Cty. Bd. of Educ. v. Marshall Cty. Gas Dist., 992 F.2d 1171, 1174 (11th Cir. 1993).
Ahold raises four arguments in support of its motion: (1) "[t]he Purported Guaranty limits Ahold's obligation to remit rent payments due from BI-LO, Inc. only under the Lease"; (2) "Ahold has been released from the Purported Guaranty" because "BI-LO, LLC and Pridemore changed the terms of the Lease without the consent ... of Ahold"; (3) "MWA ... lacks standing, as it is neither a party to nor an intended third-partybeneficiary of the Purported Guaranty"; and (4) "[t]he Purported Guaranty ... fails for lack of consideration." (Doc. 12 at 5, 13-14, 16).
Ahold relies on two arguments to support its position that it is liable for only BI-LO, Inc.'s obligations under the lease. First, Ahold's obligations under the guaranty terminated when BI-LO, Inc. assigned the lease to BI-LO, LLC because "Lessee" in the guaranty refers to only BI-LO, Inc. and not BI-LO, LLC. (Doc. 12 at 5). Second, even if Ahold's obligations did not end after the assignment to BI-LO, LLC, they ended when BI-LO, LLC assigned the lease. (Id.).
Caves v. Columbus Bank, etc., Co., 264 Ga. App. 107, 114-15, 589 S.E.2d 670, 676 (2003) (footnote omitted). A guarantor's "liability is established by the terms of the guaranty." Hood v. Peck, 269 Ga. App. 249, 251, 603 S.E.2d 756, 758 (2004).
Citing PlayNation Play Systems, Inc. v. Jackson, 312 Ga. App. 340, 718 S.E.2d 568 (2012), Ahold argues that Georgia law "requires a strict reading of the word 'lessee'" in the guaranty to be limited to BI-LO, Inc. alone and not BI-LO, LLC or any other assignee. (Docs. 12 at 5; 14 at 6-7). In PlayNation, the defendant guaranteed the debt obligations of a fictitiously named company "Swingset Planet" whose name was subsequently changed to "PlayNation Parties and Playgrounds." 312 Ga. App. at 340, 718 S.E.2d at 569. PlayNation Parties and...
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