Ross Dress for Less, Inc. v. Makarios-Oregon, LLC
210 F. Supp. 3d 1259
D. Or.2016Background
- Ross Dress for Less leased two conjoined downtown Portland buildings (the Failing Building from Walker Place and the Richmond Building from Makarios) under separate 1956 leases that expire on September 30, 2016.
- The leases require the tenant, at its sole cost, to perform specified end-of-lease "building separation" work to make each building independent and to surrender premises in "good order, condition, and repair."
- Ross sued for declaratory relief asking that its proposed end-of-lease plans satisfy lease obligations; defendants counterclaimed and contested required work and timing.
- The court previously construed lease obligations in a Phase I decision and held, among other things, that gypsum walls did not satisfy the leases and identified specific items Ross must return in good repair.
- Ross moved for partial summary judgment 24 days before lease expiration, seeking a ruling that it may enter or remain on the premises after September 30, 2016, over landlords’ objections to complete separation work; defendants opposed and said they would deny post-expiration access.
- The court found the relevant lease language ambiguous about whether "termination" includes ordinary "expiration," applied Oregon contract rules, and denied Ross’s motion, holding Ross cannot enter or remain over landlords’ objections after lease expiration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether "termination" includes ordinary lease "expiration," allowing tenant to perform required separation work "promptly after such termination" (i.e., after expiration) | "Termination" encompasses expiration; phrases like "other termination" and "earlier termination" show expiration is a type of termination, so tenant may complete work after expiration | Reading termination to include expiration renders the phrase "prior to the expiration of this lease" and other uses of "expiration" meaningless; the clauses require work prior to expiration unless lease is terminated early | The court found "expiration" vs. "termination" ambiguous and, applying Oregon canons, adopted the construction favorable to the party for whom the provision was made (landlords). Held: tenant may not enter or remain over landlords' objections after expiration to complete work |
| Whether "promptly after such termination" would allow months-long post-expiration work schedule (e.g., until Dec 2016/2017) | Ross contended the court previously interpreted obligations and that practical delays justified post-expiration completion | Defendants asserted they will deny access after expiration and that "prior to expiration" controls | Court declined to decide the temporal scope of "promptly" because it resolved the primary threshold: no post-expiration access over landlords' objections; denied Ross’s summary judgment request |
| Proper rule for resolving ambiguous lease language under Oregon law | Ross urged textual avoidance of omitting words (ORS § 42.230) to support its reading | Defendants urged same maxim to support their opposing reading; both sides pointed to different text fragments | Court concluded ambiguity existed, no extrinsic evidence was offered, moved to Yogman step three, and applied ORS § 42.260 (constructions favoring party for whom provision was made) in landlords’ favor |
| Remedy sought (declaratory relief / permission to access premises post-expiration) | Ross sought declaratory relief and summary judgment authorizing post-expiration access to finish work | Defendants sought denial of such access and reserved damages claims | Court denied Ross’s partial summary judgment; Walker Place’s special master request denied as moot |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard and movant burden)
- Anderson v. Liberty Lobby, 477 U.S. 242 (weight of evidence and summary judgment principles)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (no genuine issue when record cannot lead a rational trier of fact to find for nonmoving party)
- Yogman v. Parrott, 937 P.2d 1019 (Or. 1997) (three-step contract interpretation under Oregon law)
- Stark St. Props., Inc. v. Teufel, 562 P.2d 531 (Or. 1977) (lease interpretation focuses on parties' intent at execution)
- Copeland Sand & Gravel, Inc. v. Estate of Dillard, 341 P.3d 187 (Or. Ct. App. 2014) (applying ORS § 42.260 to resolve ambiguity in favor of party for whom provision was made)
- Conrad v. Ace Prop. & Cas. Ins. Co., 532 F.3d 1000 (diversity cases apply state substantive law)