4:21-cv-00572
E.D. Mo.Nov 9, 2022Background
- Family Dollar leased commercial premises from Tsai in Sept. 2019 (20‑year term); it spent >$500,000 on tenant improvements and opened Jan. 2020.
- The City filed eminent‑domain proceedings in 2020; Family Dollar alleges it did not learn of the State Action until Tsai’s Termination Notice dated Mar. 31, 2021 (received Apr. 6, 2021).
- An arbitration/award in the State Action resulted in $6,368,700 paid into the state court registry; the state court released the award to Tsai May 26, 2021; Family Dollar’s motion to intervene was denied.
- The Lease’s Eminent Domain clause: tenant entitled to file for relocation damages; landlord has exclusive rights to claim for land/improvements; parties may file separate claims but a single award should be allocated to respective interests.
- Family Dollar sued Tsai asserting Count I: breach of lease (failure to notify/add tenant, wrongful disbursement of award, breach of quiet enjoyment) and Count II: breach of implied covenant of good faith and fair dealing.
- Court rulings: granted Tsai’s motion to dismiss Count II for failure to state a claim and granted Tsai’s Rule 12(c) motion for judgment on the pleadings as to Count I.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of implied covenant of good faith and fair dealing | Tsai had discretion under the Lease and acted in bad faith by not notifying Family Dollar, opposing intervention, and seeking disbursal of award to deny tenant recovery | Lease contains no express term giving Tsai discretion to act regarding notice/participation; actions were permitted by Lease and public procedures; lack of diligence ≠ bad faith | Dismissed — Plaintiff failed to identify an express contractual grant of discretion that Tsai abused; allegations insufficient to show bad faith |
| Breach of lease for failing to notify/add tenant and for receiving full award | Lease’s language and landlord’s representations created obligation to notify and to split any single award; Family Dollar lost opportunity to recover relocation/leasehold compensation | Lease did not require landlord to notify or add tenant; award addressed only landlord’s land/improvement damages; tenant’s remedy under Lease is relocation damages (to be pursued via the Redevelopment Agreement/Office of Relocation Assistance) | Judgment for Tsai — Lease language, Redevelopment Agreement, and state court record show award was for Tsai’s interests; Family Dollar alleged no relocation damages and had procedural avenues to claim them |
| Breach of covenant of quiet enjoyment | Tsai’s participation in State Action and failure to add/notify constituted constructive eviction and deprived quiet enjoyment | Quiet enjoyment requires actual or constructive eviction; Lease anticipated redevelopment and potential assignment; Section 27 must be read with Section 30, which put tenant on notice | Judgment for Tsai — no eviction shown; Lease disclosures and remedies (rent abatement, relocation process) preclude quiet‑enjoyment claim under these facts |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for pleading)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions not entitled to pleading‑stage assumption of truth)
- Arbors at Sugar Creek Homeowners Ass'n v. Jefferson Bank & Trust Co., 464 S.W.3d 177 (Mo. 2015) (Missouri recognizes implied covenant of good faith in contracts)
- Jennings v. Bd. of Curators of Mo. State Univ., 386 S.W.3d 796 (Mo. Ct. App. 2012) (implied covenant cannot create new obligations beyond contract terms)
- Koger v. Hartford Life Ins. Co., 28 S.W.3d 405 (Mo. Ct. App. 2000) (party cannot use contract language conferring unilateral action to deny expected benefits)
- Cordry v. Vanderbilt Mortg. & Fin., Inc., 445 F.3d 1106 (8th Cir. 2006) (lack of diligence is not necessarily bad faith in implied‑covenant context)
- St. Louis Cnty. v. Frank, 908 S.W.2d 847 (Mo. Ct. App. 1995) (specific lease provisions govern allocation of condemnation awards between landlord and tenant)
- Santa Fe Trail Neighborhood Dev. Corp. v. W.F. Cohn & Co., 154 S.W.3d 432 (Mo. Ct. App. 2005) (procedures for allocating single condemnation awards between fee owner and leasehold interests)