Business Property Lending, Inc. v. Adventure 2000, LLC
3:18-cv-02227
| S.D. Ill. | Apr 25, 2019Background
- Adventure 2000/Carlyle Properties owned a commercial property leased to Advance Auto Parts under a 15‑year lease.
- Adventure 2000 executed a $1,227,500 mortgage with Business Property Lending, Inc. (the Lending Company) that forbade terminating the lease or receiving lease sums without the lender's consent; default on the mortgage allowed the lender to collect rents.
- The lease was subordinated to the mortgage by a separate agreement signed by the Lending Company, Adventure 2000, and Advance Auto Parts; that agreement also barred Advance Auto Parts from paying rent or other sums more than one month in advance without the lender’s written consent.
- After Adventure 2000 defaulted on the mortgage, Advance Auto Parts and Adventure 2000 executed a confidential Lease Termination Agreement (without the lender’s knowledge) under which Advance Auto Parts paid $352,250 "in full satisfaction of any and all monetary obligations due by [Advance Auto Parts] under the Lease."
- The Lending Company sued for breach of contract and civil conspiracy in state court; Advance Auto Parts removed the action to federal court and moved to dismiss under Rule 12(b)(6). The court severed and remanded the foreclosure claim but retained the breach and conspiracy claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Advance Auto Parts breached the subordinated‑lease agreement by making the $352,250 payment | The payment violated the clause barring payment of "rent or any other sums becoming due under the lease" without lender consent; the termination agreement expressly states the payment satisfied "monetary obligations…under the Lease." | The $352,250 was a termination fee or liquidated damages, not payment of rental income covered by the subordinated‑lease restriction. | Court denied dismissal: the subordinating agreement covers "any other sums becoming due under the lease," and the termination agreement labels the payment as satisfaction of lease obligations. |
| Whether the complaint meets the Rule 12(b)(6) plausibility standard | The complaint pleads a valid contract, plaintiff's interest/performance, a plausible breach by Advance Auto Parts, and resulting injury. | Advance Auto Parts argued the complaint fails to state a claim because the payment was not covered by the contract. | Court held the complaint plausibly states a breach and survives 12(b)(6). |
| Whether a civil conspiracy claim predicated on contract breach can proceed when co‑conspirators are parties to the contract | The conspiracy claim is also premised on the mortgage (to which Advance Auto Parts is not a party), alleging Advance induced Adventure 2000 to breach the mortgage via the termination agreement. | Advance Auto Parts argued conspiracy based on the subordinating agreement fails because all relevant parties to that contract are parties to the suit (no non‑party co‑conspirator). | Court denied dismissal: because the conspiracy claim also rests on the mortgage (Advance Auto Parts not a party), the allegation that Advance induced breach is sufficient at this stage. |
| Whether distinguishing termination fees from rent defeats plaintiff's contract theory | Plaintiff relied on the plain text covering "any other sums" and the termination agreement's own language treating the payment as satisfying lease obligations. | Advance Auto Parts cited caselaw treating termination fees differently from rent and argued that distinction controls. | Court found the textual scope of the subordinating agreement and the termination agreement's explicit language control; prior authorities do not override clear contract terms. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for complaints)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading requirements and plausibility)
- Avila v. CitiMortgage, Inc., 801 F.3d 777 (7th Cir.) (elements of breach of contract claim)
- Erickson v. Pardus, 551 U.S. 89 (complaints must be construed as true at pleading stage)
- ADM All. Nutrition, Inc. v. SGA Pharm Lab, Inc., 877 F.3d 742 (7th Cir.) (enforcement of express contract terms)