Boca Park Marketplace Syndications Group, LLC v. Ross Dress for Less, Inc.
2:16-cv-01197
| D. Nev. | Mar 28, 2018Background
- Boca Park owns Boca Park Marketplace; Ross leases a 30,000 sq. ft. store (Store 522) under a long-term lease with Minimum Rent plus Reimbursements and a co-tenancy clause tied to anchors (Target, Vons, Office Max).
- Lease’s co-tenancy/Guaranteed Co-Tenancy provisions allow Ross to pay Substitute Rent (the lesser of Minimum Rent or 2% of monthly gross sales) if required co-tenants vacate, and give Ross termination rights after 180 consecutive days of Reduced Occupancy.
- Vons left (Aug 31, 2015); Boca Park amended the lease to substitute Haggen as a co-tenant; Haggen ceased operations (Dec 6, 2015), prompting Ross to invoke the co-tenancy provision and claim overpaid rent.
- Ross elected to pay Minimum Rent "under protest," paid Boc a substantial sum representing differences through Jan 2017, and sought a refund of alleged overpayments; Boca Park refused, calling the co-tenancy provision an unenforceable penalty.
- Both parties moved for summary judgment; Boca Park moved to strike certain defendant materials and both parties sought to seal financial materials.
- The court denied both summary judgment motions, granted Boca Park’s motions to strike certain expert and financial exhibits, and granted sealing requests for confidential financial materials; case set for trial and pretrial deadlines given.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether co-tenancy provisions are unenforceable liquidated damages/penalty | Co-tenancy functions as a liquidated-damages clause that is grossly disproportionate to Ross’s actual damages and thus an unenforceable penalty | The provisions are a negotiated dual-rent structure (Minimum vs. Substitute Rent) reflecting lowered value when an anchor leaves; not a penalty | Denied summary judgment to both parties; court cannot resolve enforceability as a matter of law on summary judgment and reserved equitable factfinding for trial |
| Whether material facts establish entitlement to judgment as a matter of law | Boca Park contends sales data show no significant loss from Haggen’s closure, so no disproportionate rent reduction | Ross proffers sales-impact analysis showing store sales declined post-Haggen and disputes Boca Park’s data; factual dispute exists | Court found competing factual proofs and denied summary judgment; resolution requires trial factfinding |
| Whether Boca Park is estopped from challenging the co-tenancy clause because it signed the First Amendment | Boca Park says clause is unenforceable despite amendment | Ross argues ratification / equitable estoppel bars challenge | Court held Boca Park is not equitably estopped from challenging enforceability based on its signing the First Amendment |
| Admissibility / use of defendant’s financial analysis and expert declaration | Boca Park moved to strike McGillis declaration and sales analysis as improper expert material and insufficient methodology | Ross relied on McGillis declaration and attached Sales Impact Analysis in support of its motion | Court granted Boca Park’s motions to strike those materials (struck expert/declaration and analysis) and denied fees without prejudice |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
- Scott v. Harris, 550 U.S. 372 (assessment of record as a whole on summary judgment)
- Kamakana v. City & Cty. of Honolulu, 447 F.3d 1172 (strong presumption of public access; sealing standard)
- Ready Transp., Inc. v. AAR Mfg., Inc., 627 F.3d 402 (court’s docket-control powers)
- Khan v. Bakhsh, 306 P.3d 411 (Nev. law on liquidated damages vs. penalty)
- Mason v. Fakhimi, 865 P.2d 333 (Nev. definition and review of liquidated damages clauses)
- Loomis v. Lange Fin. Corp., 865 P.2d 1161 (court decides enforceability of liquidated damages as a matter of law)