Ross Dress for Less, Inc. v. Makarios-Oregon, LLC, Case No. 3:14-cv-01971-SI

Decision Date25 March 2016
Docket NumberCase No. 3:14-cv-01971-SI
Parties Ross Dress For Less, Inc., Plaintiff, v. Makarios-Oregon, LLC, and Walker Place, LLC, Defendants.
CourtU.S. District Court — District of Oregon

180 F.Supp.3d 745

Ross Dress For Less, Inc., Plaintiff,
v.
Makarios-Oregon, LLC, and Walker Place, LLC, Defendants.

Case No. 3:14-cv-01971-SI

United States District Court, D. Oregon.

Signed March 25, 2016


180 F.Supp.3d 751

Thomas V. Dulcich and Rebecca A. Boyette, Schwabe Williamson & Wyatt , PC, 1211 S.W. Fifth Avenue, Suite 1900, Portland, OR 97204; Gregory D. Call and Tracy E. Reichmuth, Crowell & Moring , LLP, 275 Battery Street, 23rd Floor, San Francisco, CA 94111. Of Attorneys for Plaintiff.

Jeffrey M. Edelson and Molly K. Honoré, Markowitz Herbold , PC, 1211 S.W. Fifth Avenue, Suite 3000, Portland, OR 97204. Of Attorneys for Defendant Makarios-Oregon, LLC.

Keith A. Pitt, Nicholas J. Slinde, and Phillip J. Nelson, Slinde Nelson Stanford , 111 S.W. Fifth Avenue, Suite 1940, Portland, OR 97204. Of Attorneys for Defendant Walker Place, LLC.

OPINION AND ORDER

Michael H. Simon, District Judge.

Plaintiff Ross Dress For Less, Inc. (“Ross” or “Plaintiff”) brings this declaratory action against its two downtown Portland landlords, Defendant Makarios-Oregon, LLC (“Makarios”) and Walker Place, LLC (“Walker Place”) (collectively “Defendants”). Ross seeks a judicial declaration that its proposed end-of-lease plans satisfy Ross's obligations under the relevant leases. Makarios and Walker Place both assert counterclaims for a judicial declaration clarifying the scope of Ross's end-of-lease obligations and breach of contract. Walker Place brings an additional counterclaim for statutory waste under Oregon Revised Statutes (“ORS”) § 105.805. All three parties have filed motions for partial summary judgment. For the reasons that follow, each party's motion is GRANTED IN PART AND DENIED IN PART.

STANDARDS

A party is entitled to summary judgment if the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The moving party has the burden of establishing the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The court must view the evidence in the light most favorable to the non-movant and draw all reasonable inferences in the non-movant's favor. Clicks Billiards, Inc. v. Sixshooters, Inc. , 251 F.3d 1252, 1257 (9th Cir.2001). Although “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge ... ruling on a motion for summary judgment,” the “mere existence of a scintilla of evidence in support of the plaintiff's position [is] insufficient ....” Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 252, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citation and quotation marks omitted).

Where parties file cross-motions for summary judgment, the court “evaluate[s] each motion separately, giving the non-moving party in each instance the benefit of all reasonable inferences.” A.C.L.U. of Nev. v. City of Las Vegas , 466 F.3d 784, 790–91 (9th Cir.2006) (quotation marks and citation omitted); see also

180 F.Supp.3d 752

Pintos v. Pac. Creditors Ass'n , 605 F.3d 665, 674 (9th Cir.2010) (“Cross-motions for summary judgment are evaluated separately under [the] same standard.”). In evaluating the motions, “the court must consider each party's evidence, regardless under which motion the evidence is offered.” Las Vegas Sands, LLC v. Nehme , 632 F.3d 526, 532 (9th Cir.2011). “Where the non-moving party bears the burden of proof at trial, the moving party need only prove that there is an absence of evidence to support the non-moving party's case.” In re Oracle Corp. Sec. Litig. , 627 F.3d 376, 387 (9th Cir.2010). Thereafter, the non-moving party bears the burden of designating “specific facts demonstrating the existence of genuine issues for trial.” Id. “This burden is not a light one.” Id. The Supreme Court has directed that in such a situation, the non-moving party must do more than raise a “metaphysical doubt” as to the material facts at issue. Matsushita , 475 U.S. at 586, 106 S.Ct. 1348.

BACKGROUND

The events in this case date back to the mid-1900s and involve longstanding landlord-tenant relationships in Portland, Oregon's historic downtown. In 1946, J.J. Newberry Co., Incorporated (“Newberry”), a national retail chain of “five-and-dime” department stores, set in motion plans to open its largest store nationwide in downtown Portland. In preparation for the opening of this store, Newberry entered into a lease (the “1946 Failing Lease”) that allowed the department store chain to renovate an existing downtown building (the “Failing Building,” located at 620 S.W. Fifth Avenue) and also construct a new building (the “Richmond Building,” adjacently located at 618 S.W. Fifth Avenue) on the neighboring property.1 After the completion of construction, the Richmond Building's columns and floors aligned exactly with those of the Failing Building, as designed, and the two buildings shared conjoined retail spaces in the basement and on the first and second floors. Newberry opened this Fifth Avenue space for business in 1953.

A. Newberry's Tenancy

1. Requirements to Separate the Failing Building from the Richmond Building

Behind the scenes of the grand opening and ongoing operation of Newberry's downtown department store was a rather unique landlord-tenant arrangement. The arrangement—from its very beginning in 1946 up to the present day—requires, among other things, that the tenants of the Failing Building and Richmond Building separate the buildings when the tenancies end. Before the completion of the Richmond Building, the 1946 Failing Lease provided that the Richmond Building “shall be so constructed that by the installation of partition walls between it and the Failing Building, it can be used as a self contained [sic] building as regards plumbing, heating, wiring and vertical transportation.” Dkt. 61–3 at 18.

Ten years later, on August 31, 1956, the Failing Landlords and Newberry amended and restated the 1946 Failing Lease with a new lease (the “1956 Failing Lease”). This lease, among its many provisions, stated that at the termination of Newberry's tenancy in the Failing Building, Newberry would “at [Newberry's] sole cost and expense do and perform such work as shall be necessary to physically separate, and

180 F.Supp.3d 753

constitute entirely independent and self-sufficient, the [Failing Building] from the adjacent ‘Richmond Building’ premises.” Dkt. 61–2 at 5. The lease, “[w]ithout limiting the generality of the foregoing,” stated that this separation work must include:

removal of the escalators and the closing in of the openings in the floors and walls of the Failing Building which accommodate the same; construction of footings and masonry curtain walls along the easterly boundary line of the demised premises; and such appropriate alterations, changes and relocations of portions of the plumbing, electric, and other systems and apparatuses as may be necessary to make the ‘Failing Building’ space independent of the ‘Richmond Building.’ The material used in said work shall conform to the material of said Failing Building, and the work shall be done in a good and workmanlike manner.

Id.

Also in August of 1956, the Failing Landlords deeded the Richmond Building to Newberry. According to the deed (the “Newberry Deed”), “the foundations and footings” of the Richmond Building and the Failing Building “shall be and remain common foundations and footings for the mutual use and benefit of the parties hereto, their heirs, successors and assigns, so long as said foundations and footings shall stand, and this agreement shall be deemed a covenant running with the land.” Dkt. 61–5 at 2. Notwithstanding the common foundations and footings, the deed also granted to the parties an easement to enter each other's property, exercisable at the time Newberry or its successors ceased to occupy the Richmond Building or Newberry's leased space in the Failing Building,

to the extent reasonably required to remove the escalators crossing the property line and properly close up the openings in the floors which accommodate such escalators, construct such good and sufficient masonry curtain walls along the property line between the Failing Building and the premises hereby conveyed as may be required to physically separate said structures, and make such alterations and changes in and to the electrical, plumbing and other systems and apparatuses as may be necessary to completely separate said buildings.

Id. at 3.

Newberry owned the Richmond Building for no more than a month. In September 1956, Newberry entered into a “sale lease-back” transaction with New York Life Insurance Company (“New York Life”). On the same day, Newberry both deeded the Richmond Building to New York Life and signed a lease (the “1956 Richmond Lease”) with New York Life. Similar to the Newberry...

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