Northglenn Gunther Toody's, LLC v. HQ8-10410-10450 Melody Lane LLC
702 F. App'x 702
| 10th Cir. | 2017Background
- Melody Lane owns Northglenn Marketplace and leased premises to Gunther Toody’s (NGT) under a 1998 lease containing an exclusivity clause: so long as NGT is not in default, Melody Lane "shall not permit any other portions of the Shopping Center to be leased or sold for usage as a diner similar in concept to the operation conducted from the Leased Premises by [NGT]."
- In 2016 Melody Lane leased an adjacent vacant unit to an IHOP franchisee; IHOP qualifies as a "diner" and serves breakfast all day plus typical American fare.
- NGT claimed the IHOP breached the lease’s limited exclusivity clause and also asserted claims for breach of the implied covenant and breach of warranty (via an estoppel certificate Melody Lane signed stating no defaults existed).
- NGT sought a TRO and preliminary injunction to block the IHOP; the district court denied injunctive relief after briefing and without an evidentiary hearing, concluding the restrictive phrase "similar in concept" modifies "diner" and the IHOP is not similar in concept to NGT’s 1950s-themed diner.
- NGT appealed, arguing the district court abused its discretion by deciding without a hearing and by misapplying the injunction standard and contract interpretation rules; the Tenth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court abused discretion by deciding the preliminary-injunction motion without an evidentiary hearing or oral argument | NGT: court deprived it of a fair opportunity to present its case and weigh competing affidavits; hearing necessary if ambiguity existed | Melody Lane: parties had ample written opportunity; court repeatedly told parties it might not hold a hearing | Court: No abuse of discretion; parties had full written opportunity and any assumption by NGT was unfounded |
| Whether NGT was likely to succeed on the merits under the Lease exclusivity clause | NGT: IHOP is "similar in concept" because menus, pricing, and emphasis on breakfast overlap with Gunther Toody’s | Melody Lane: "similar in concept" limits "diner" to the specific 1950s-style concept of Gunther Toody’s; IHOP is not that concept | Court: Affirmed denial of preliminary injunction — NGT not likely to succeed; phrase "similar in concept" must be given independent effect and was read to cover a 1950s-style diner |
| Whether the district court applied the correct preliminary-injunction standard (ordinary vs. heightened) | NGT: district court improperly treated the injunction as mandatory/disfavored and applied a heightened standard | Melody Lane: even under ordinary standard NGT failed to show likelihood of success | Court: Declined to decide error in standard because NGT fails under even the ordinary standard |
| Whether the Estoppel Agreement claim supports injunctive relief | NGT: estoppel certificate and warranty support separate claim and entitlement to relief | Melody Lane: district court not shown NGT raised likelihood of success on estoppel claim below | Court: Waived on appeal — NGT did not adequately brief likelihood of success on estoppel claim in district court; argument forfeited |
Key Cases Cited
- Davoll v. Webb, 194 F.3d 1116 (10th Cir. 1999) (abuse of discretion review of decision to resolve injunction motion without evidentiary hearing)
- Warner v. Gross, 776 F.3d 721 (10th Cir. 2015) (standard of review for preliminary injunction decisions)
- Level 3 Commc’ns, LLC v. Liebert Corp., 535 F.3d 1146 (10th Cir. 2008) (contract interpretation requires examining entire instrument and giving effect to all provisions)
- Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008) (movant must show likelihood of success, irreparable harm, balance of equities, and public interest for preliminary injunction)
- Diné Citizens Against Ruining Our Env’t v. Jewell, 839 F.3d 1276 (10th Cir. 2016) (abuse-of-discretion standard and limits on modified preliminary-injunction tests)
- N.M. Dep’t of Game & Fish v. U.S. Dep’t of Interior, 854 F.3d 1236 (10th Cir. 2017) (discussing disfavored injunctions and heightened showing)
- McKissick v. Yuen, 618 F.3d 1177 (10th Cir. 2010) (forfeiture/waiver principles for appellate review)