Simon Prop. Group v. Mich. Sporting Goods
| Decision Date | 30 November 2005 |
| Docket Number | No. 79A02-0411-CV-989.,79A02-0411-CV-989. |
| Citation | 837 N.E.2d 1058 |
| Parties | SIMON PROPERTY GROUP, L.P., Appellant/Cross-Appellee/Plaintiff, v. MICHIGAN SPORTING GOODS DISTRIBUTORS, INC., Appellee/Cross-Appellant/Defendant. |
| Court | Indiana Supreme Court |
Andrew J. Detherage, Charles P. Edwards, Mark J. Crandley, Barnes & Thornburg LLP, Indianapolis, for Appellant.
Dean F. Pacific, James J. Rabaut, Janet L. Ramsey, Matthew T. Nelson, Warner Norcross & Judd LLP, Grand Rapids, MI, Max Layden, Layden & Layden, Lafayette, for Appellee.
Simon Property Group, L.P., ("Simon") brings this interlocutory appeal of the trial court's grant of the motion to correct error filed by Michigan Sporting Goods Distributors, Inc., ("MC Sports") after the court granted Simon's motion for summary judgment. Simon raises one issue, which we restate as whether the trial court abused its discretion when it granted MC Sports' motion to correct error because MC Sports had waived its arguments by failing to raise them prior to the court's grant of summary judgment. MC Sports cross-appeals, arguing the trial court erroneously granted summary judgment to Simon regarding the availability of additional remedies under the relevant section of the contract.
We affirm and remand.
Simon owns and operates shopping malls, including the Tippecanoe Mall in Lafayette, Indiana. MC Sports is a retailer of sporting goods. On or about June 29, 2001, MC Sports and Simon entered into a fifteen-year lease for space at the Tippecanoe Mall. Section 24.23 of that lease provides:
So long as Tenant is open and operating in the Premises for the use permitted herein and is not in default under this Lease, Landlord will not lease space in the Center to any operator of a "full-line" sporting goods store (hereinafter referred to as "Competing Business"). If Landlord violates or suffers the violation of this paragraph and fails to cure such violation within ninety (90) days after receipt of Tenant's notice, then Tenant shall have the right to pay in lieu of Minimum Rent, Percentage Rent and additional rent (except taxes and utilities) the lesser of an amount equal to (i) the Minimum Annual Rent due and payable under this Lease or (ii) four percent (4%) of Adjusted Gross Sales until the Competing Business ceases operation in the Center. Notwithstanding the foregoing, this paragraph shall be inapplicable to (a) any tenant or occupant open for business in the Center on the date of this Lease; (b) any existing Major Tenant in the Center or any subsequent transferee of such Major Tenant to the extent that the Landlord has no consent or approval rights over the permitted use of such subsequent transferee, and (c) any tenant selling specialty licensed soft goods and (d) any Tenant selling historic memorabilia. For purposes of this paragraph, a "full-line" sporting goods store shall be deemed any store selling "hard goods" (such as, but not limited to, fitness, athletic and/or outdoor equipment) in an area greater than 10,000 square feet.
(App. at 27.)
On or about February 2, 2004, Simon leased space in the Tippecanoe Mall to Dick's Sporting Goods. Because MC Sports believed Simon's lease of space to Dick's violated Section 24.23 of MC Sports' lease with Simon, MC Sports filed an action against Simon in federal court, seeking damages and injunctive relief for Simon's breach of contract.1
On May 28, 2004, in the Tippecanoe Circuit Court, Simon filed a declaratory judgment action against MC Sports, asking the court to determine the parties' rights and obligations under the lease. Specifically, Simon asserted it "is initiating this lawsuit to confirm that the remedies available to MC Sports for any violation of Section 24.23 of the Lease are those expressly agreed to by Simon and MC Sports in that section of the Lease." (Id. at 25.) Simon requested the court "declare that MC Sports' exclusive remedies for any violation of Section 24.23 of the Lease are those agreed to by Simon and MC Sports in that section of the Lease, as set forth in Paragraph 7 of this Complaint and in Section 24.23 of the Lease." (Id.)
MC Sports filed an Answer, which included affirmative defenses and a counterclaim.2 The counterclaim asserted Simon breached Section 24.23 of its contract with MC Sports by leasing space in the Tippecanoe Mall to Dick's, which MC Sports alleged is a "full-line sporting goods retailer." (Id. at 32.) MC Sports requested an injunction, monetary damages, and rescission of the contract between MC Sports and Simon.
The same day it filed its answer, MC Sports moved for summary judgment.3 The conclusion of the brief in support of that motion requested summary judgment only as to "Simon's claim that MC Sports' remedies are limited to seeking reduced rent." (Id. at 48.) The argument deals only with the remedy provision, but asserts: "Simon effectively concedes that the lease with Dick's is a breach of its Lease with MC Sports." (Id. at 38.)
Simon answered MC Sports' counter-claim and requested an extension of time to respond to the summary judgment motion. In response to the counter-claim, Simon denied breaching the contract and asserted a number of affirmative defenses. After conducting discovery, Simon responded to MC Sports' motion for summary judgment. In its response, it asserted MC Sports was not entitled to summary judgment but rather that Simon was entitled to summary judgment because (1) Simon's lease of space to Dick's at Tippecanoe Mall did not breach Section 24.23 of the lease, and (2) if Section 24.23 was violated by the lease to Dick's, MC Sports' only remedy for violation is the rent reduction explained in Section 24.23. Simon never filed a separate motion for summary judgment. On October 15, 2004, Simon filed additional evidence in support of its positions.
On October 18, 2004, MC Sports filed a reply brief and designation of evidence addressing whether the reduced rent provision was MC Sports' only remedy if Simon breached Section 24.23 of the Lease. MC Sports did not address on the merits whether Simon's lease to Dick's violated Section 24.23 of MC Sports' lease.
The court conducted a hearing and then entered summary judgment for Simon. The order included the following:
Findings of Fact
* * * * * *
5. "Specialty licensed soft goods" include goods such as t-shirts, sweatshirts, jackets and hats bearing logos of colleges or professional sports teams. MC Sports dep., Whipple trans. at 231-32.
6. Dick's Sporting Goods, Inc. ("Dicks") sells specialty licensed soft goods at its store at Tippecanoe Mall. Id. at 288; Affidavit of Joseph Queri, ¶ 7.
7. The Lease contains several provisions related to remedies. In some of those provisions, like section 24.23, the parties set forth the remedy that would be available in the event of a violation of the provision. MC Sports dep., Whipple trans. at 194-95, 209-10, Exh. 25 at sections 8.1 and 8.7.
8. In other provisions relating to remedies, where the parties wanted to permit additional remedies, they expressly said so.... Exh. 25 at [Sections 3.3, 4.3, 7.2, 8.2, 18.1, 18.2, 18.6, 20.2].
* * * * * * 11. Section 24.23 of the Lease was negotiated and drafted by both of the parties during the negotiations over the terms of the Lease, with Simon acting as the scrivener for the parties' revisions. MC Sports dep., Whipple trans. at 287-88.
12. During the negotiations over the terms of the Lease, MC Sports asked for the insertion of additional tenant remedies.... This proposal was not incorporated into the final Lease by the parties. See MC Sports' dep., Whipple trans., Exh. 25 at 23.
13. During the negotiations concerning Section 24.23 of the Lease, MC Sports asked that an additional remedy of termination be added to Section 24.23. Affidavit of William E. Conway ¶ 4; MC Sports['] dep., Whipple trans. at 253-54 (emphasis added); see also id. at Exh. 21. Simon rejected the request and confirmed that the reduced rent remedy was the sole remedy for any violation of Section 24.23. Id.
14. In their negotiations over the terms of Section 24.23 of the Lease, Simon and MC Sports agreed that the remedy of reduced rent set forth in that section would be the only remedy for any violation of that section. MC Sports['] dep., Whipple trans. at 214-16, 241-42, 255-56 and Exh. 25; Affidavit of William E. Conway, ¶ 4.
* * * * * *
3. Section 24.23 of the Lease states, in relevant part that, "this paragraph shall be inapplicable to ... any tenant selling specialty licensed soft goods." The evidence designated to the Court is undisputed that the meaning of the term "specialty licensed soft goods" includes goods such as t-shirts, sweatshirts, jackets and hats bearing logos of colleges or professional sports teams. It is likewise undisputed from the evidence designated to the Court that Dick's sells such items. Thus, because Section 24.23 of the Lease between Simon and MC Sports states that it is inapplicable to any tenant selling specialty licensed soft goods, and because Dick's sells specialty licensed soft goods, the Court concludes as a matter of law that the lease between Simon and Dick's does not violate Section 24.23 of the Lease.
4. Section 24.23 of the Lease also states, in relevant part, that "[i]f Landlord violated or suffers the violation of this paragraph and fails to cure such violation within ninety (90) days after receipt of Tenant's notice, then Tenant shall have the right to pay in lieu of Minimum Rent, Percentage Rent and additional rent (except taxes and utilities) the lesser of an amount equal to (i) the Minimum Annual Rent due and payable under this Lease or (ii) four percent (4%) of Adjusted Gross Sales until the Competing Business ceases operation in the Center." This provision of Section 24.23 is similar to other sections of the Lease — like sections 8.1 and 8.7 — that provide only one remedy for a violation of the section; and it is...
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