DN Reynoldsburg, LLC, Plaintiff-Appellant, v. Maurices Incorporated, Defendant-Appellee.
No. 20AP-57 (C.P.C. No. 18CV-7616)
IN THE COURT OF APPEALS OF OHIO TENTH APPELLATE DISTRICT
March 24, 2022
[Cite as DN Reynoldsburg, L.L.C. v. Maurices Inc., 2022-Ohio-949.]
MENTEL, J.
(REGULAR CALENDAR)
Rendered on March 24, 2022
On brief: Carpenter, Lipps & Leland LLP, David A. Wallace, and Karen M. Cadieux, for appellant. Argued: David A. Wallace.
On brief: Perez & Morris LLC, Kevin L. Murch, and Juan Jose Perez, for appellee. Argued: Kevin L. Murch.
APPEAL from the Franklin County Court of Common Pleas
MENTEL, J.
{¶ 1} Plaintiff-appellant, DN Reynoldsburg, LLC, appeals from the January 7, 2020 decision and entry by the Franklin County Court of Common Pleas granting the motion for summary judgment of defendant-appellee, Maurices Incorporated, and the trial court‘s September 16, 2020 entry granting appellee‘s motion for attorney fees. For the reasons that follow, we reverse.
I. FACTS AND PROCEDURAL HISTORY
{¶ 2} Appellant is the landlord of Shoppes at East Broad Street (“Shopping Center“), a shopping center located in Reynoldsburg, Ohio. Appellee is a women‘s clothing store that operates three1 locations within the central Ohio area.
Opening Requirements: Notwithstanding anything set forth in this Lease to the contrary * * * Tenant will not be required to * * * pay Annual Minimum Rent, Percentage Rent and Additional Charges and any other charges to be paid by Tenant until such time as all of the Inducement Tenants are opened and operating in the Shopping Center (the ”Opening Co-Tenancy Requirement“). * * * If the Opening Co-Tenancy Requirement is not met as of the Commencement Date, then, if Tenant nevertheless elects to take possession of the Premises and open, during the period from the Commencement Date until the fulfillment of the Opening Co-Tenancy Requirement (the ”Interim Period“), Tenant shall have the right to pay to Landlord Substitute Rent during the Interim Period.
{¶ 4} The term “Substitute Rent” was defined as “[f]ive percent (5%) of Tenant‘s Gross Sales (as defined in Section 4.02(b) herein) from the Premises, in arrears on a monthly basis, in lieu of Annual Minimum Rent, Percentage Rent, and Additional Charges.” (Section 1.01(v).) The lease also provided that appellee could terminate the lease agreement and be repaid out-of-pocket expenses incurred in preparation for taking possession and completing tenant‘s work, if the co-tenancy requirements were not met within 18 months after possession of the premises was tendered. (Section 8.03(b).)
{¶ 5} Section 8.03(c) sets forth the ongoing co-tenancy requirements stating:
An “Ongoing Co-Tenancy Violation” shall exist if * * * there is less than both of the Anchor Tenants3 (or a Comparable Replacement for each Anchor Tenant as defined herein) open and operating in the Shopping Center * * *. In the event of an Ongoing Co-Tenancy Violation, Tenant shall have the right,
retroactive to the first day that the Ongoing Co-Tenancy Violation exists, to pay Substitute Rent.
Id.4
{¶ 6} The lease provided for replacement of Anchor Tenants in Section 8.03(c), defining “comparable replacement” as “a national or regional retail tenant with a use comparable to the Anchor Tenant being replaced and operating in not less than seventy-five percent (75%) of the same leasable space utilized by the replaced Anchor Tenant.” As set forth in Section 8.03(d) of the lease agreement, the parties acknowledged that the co-tenancy conditions are an express inducement for appellee to enter into the lease agreement at the Shopping Center.5 The lease agreement also stated that if “either party shall file any proceeding against the other party for breach or default under this Lease * * * the party prevailing shall be entitled to receive reimbursement from the other party for its reasonable attorneys’ fees and court costs.” (Section 18.03.)
{¶ 7} Approximately six months after the parties entered into the lease agreement, Sports Authority, identified in the lease agreement as both an Anchor and Inducement Tenant, filed for bankruptcy prior to occupying the premises at the Shopping Center. Appellee opened its location at the Shopping Center in August 2016.
{¶ 8} Appellant and Rooms for Less, a furniture store, entered into a contract to occupy the premises previously intended for Sports Authority. On or about September 29, 2017, Rooms for Less opened at the Shopping Center. Appellant notified appellee that the co-tenancy provision of the lease was satisfied with the opening of Rooms for Less, and appellee should begin to pay the Annual Minimum Rent of $85,000 or $7,083.33 per month with the pro rata share of real estate taxes, common area maintenance costs, and insurance premiums as of November 2017. (Sections 1.01(g), (j) and Article IV.) Appellee
{¶ 9} On September 9, 2018, appellant filed its initial complaint asserting a cause of action for breach of contract alleging appellee breached the lease agreement by failing to pay full rent on the premises. On October 10, 2018, appellee filed its answer denying it had breached the lease agreement asserting as a defense that it was entitled to continue to pay Substitute Rent because Sports Authority, an Inducement Tenant, did not open at the Shopping Center, therefore, appellant never satisfied its obligations under the lease. On May 7, 2019, appellant filed a motion for leave to file an amended complaint to add a declaratory judgment claim asking the court to declare whether the provision of the lease agreement operates as a penalty as it would allow appellee to pay reduced rent for the remaining term of the lease. The trial court granted the motion, and an amended complaint was filed on June 5, 2019. Appellee filed an amended answer on June 18, 2019.
{¶ 10} On October 3, 2019, appellant filed a motion for partial summary judgment arguing the trial court should strike “the opening co-tenancy provision in Section 8.03(b) from the Lease, and declar[e] that Section 8.03(c) and its replacement provisions are in effect.” (Oct. 3, 2019 Appellant‘s Mot. for Summ. Jgmt. at 1.) Appellee filed a memorandum in opposition on October 24, 2019, arguing that the provision at issue was a condition precedent that if certain tenants are not in the location at the time of opening it was entitled to pay Substitute Rent. A reply brief was filed on October 30, 2019.
{¶ 11} Also on October 3, 2019, appellee filed a motion for summary judgment on the breach of contract and declaratory judgment claims. Appellee argued that under Section 8.03(b), it is entitled to reduced rent throughout the course of the lease agreement as Sports Authority never opened and, therefore, Section 8.03(b) of the lease was never satisfied. Appellee provided the alternative argument that, even if appellant could replace Sports Authority as a tenant, Rooms for Less did not constitute a comparable replacement as it was not a regional store selling a comparable product under the lease. On October 24, 2019, appellant filed a memorandum in opposition restating a similar argument presented in its motion for summary judgment and argued that there was a dispute of material fact as to whether Rooms for Less constituted a comparable replacement under the lease agreement. A reply brief was filed on October 30, 2019.
{¶ 13} On January 20, 2020, appellee filed a motion for attorney fees and a motion for recovery of costs. On January 28, 2020, appellant filed a notice of appeal of the January 7, 2020 decision and entry. On February 27, 2020, appellant filed a motion to remand the case for a decision on the outstanding motions, which was granted by this court. (Mar. 2, 2020 Journal Entry.) On March 24, 2020, appellant filed memoranda in opposition to appellee‘s motion for attorney fees and motion for costs. Appellee filed its reply briefs on March 31, 2020. The trial court held oral arguments on the outstanding motions. On September 16, 2020, the trial court granted the motion for attorney fees but denied the motion for costs citing the Supreme Court of Ohio‘s decision in Vossman v. AirNet Sys., Inc., 159 Ohio St.3d 529, 2020-Ohio-872. On October 16, 2020, appellant filed a motion to amend the previous notice of appeal to include the trial court‘s September 16, 2020 entry granting appellee‘s motion for attorney fees and to reactivate the appeal. On October 27, 2020, this court granted appellant‘s motion.
II. ASSIGNMENTS OF ERROR
{¶ 14} Appellant assigns the following as trial court error:
- The trial court erred in granting summary judgment in favor of Maurices Incorporated because there was conflicting evidence on whether Rooms for Less qualified as a Comparable Replacement tenant under the Lease.
- The trial court erred in awarding attorney fees to Maurices Incorporated because Maurices did not prevail on the main issue in the case and was not the prevailing party.
III. LEGAL ANALYSIS
A. Appellant‘s First Assignment of Error
{¶ 15} In its first assignment of error, appellant argues the trial court erred in granting appellee‘s motion for summary judgment.
{¶ 17} When ruling on a motion for summary judgment, the court must resolve all questions and construe the evidence in favor of the nonmoving party. 2454 Cleveland, LLC at ¶ 8, citing Pilz v. Ohio Dept. of Rehab. & Corr., 10th Dist. No. 04AP-240, 2004-Ohio-4040, ¶ 8. As set forth in
{¶ 18} In order to demonstrate a claim for breach of contract, a plaintiff must establish: “(1) the existence of a contract, (2) performance by the plaintiff, (3) breach by the defendant, and (4) damages or loss resulting from the breach.” Claris, Ltd. v. Hotel Dev. Servs., LLC, 10th Dist. No. 16AP-685, 2018-Ohio-2602, ¶ 28, citing Lucarell v. Nationwide
{¶ 19} When reviewing the terms of a contract, a court‘s central objective is to determine the intent of the parties. Jezerinac v. Dioun, 10th Dist. No. 18AP-479, 2020-Ohio-587, ¶ 33, citing Hamilton Ins. Servs., Inc. v. Nationwide Ins. Cos., 86 Ohio St.3d 270, 273 (1999); see also Keybank Natl. Assn. v. Columbus Campus, LLC, 10th Dist. No. 11AP-920, 2013-Ohio-1243, ¶ 26, citing Skivolocki v. E. Ohio Gas Co., 38 Ohio St.2d 244, 247 (1974). When discerning the intent of the parties, a court must start with the language in the four corners of the document. Min You v. Northeast Ohio Med. Univ., 10th Dist. No. 19AP-733, 2020-Ohio-4661, ¶ 15, citing Drs. Kristal & Forche, D.D.S., Inc. v. Erkis, 10th Dist. No. 09AP-06, 2009-Ohio-5671, ¶ 21, citing Buckeye Corrugated, Inc. v. DeRycke, 9th Dist. No. 21459, 2003-Ohio-6321. When ” ‘the terms in a contract are unambiguous, courts will not in effect create a new contract by finding an intent not expressed in the clear language employed by the parties.’ ” Holdeman v. Epperson, 111 Ohio St.3d 551, 2006-Ohio-6209, ¶ 12, quoting Shifrin v. Forest City Ents., Inc., 64 Ohio St.3d 635, 638 (1992). “Common words are given their typical meaning ’ “unless another meaning is clearly evident from the face or overall content of the contract, or unless the result is manifestly absurd.” ’ ” You at ¶ 15, citing Guaranteed Constr. Servs. v. Grand Communities, Ltd., 10th Dist. No. 17AP-213, 2017-Ohio-9288, ¶ 24, quoting Hope Academy Broadway Campus v. White Hat Mgt., L.L.C., 145 Ohio St.3d 29, 2015-Ohio-3716, ¶ 36. When the language of the contract is clear the courts need not look further than the language utilized in the agreement. You at ¶ 15, citing Altercare of Canal Winchester Post-Acute Rehab. Ctr., Inc. v. Turner, 10th Dist. No. 18AP-466, 2019-Ohio-1011, ¶ 19, quoting Donini v. Fraternal Order of Police, 4th Dist. No. 08CA325, 2009-Ohio-5810, ¶ 16.
{¶ 20} A provision of a contract is ambiguous if its meaning cannot be discerned from reading the entire contract or is susceptible to more than one reasonable interpretation. Moody v. Ohio Rehab. Servs. Comm., 10th Dist. No. 02AP-596, 2002-Ohio-6965, ¶ 7, citing United States Fid. & Guar. Co. v. St. Elizabeth Med. Ctr., 129 Ohio App.3d 45, 55 (2d Dist.1998). ” ‘Only when the language of a contract is unclear or ambiguous, or when the circumstances surrounding the agreement invest the language of the contract
{¶ 21} Appellee opened for business at the Shopping Center in August 2016. Rooms for Less opened for business on September 29, 2017. There is no dispute that appellee was entitled to pay Substitute Rent between the period it opened at the Shopping Center to when Rooms for Less opened for business. The question before this court is whether the trial court erred in finding there is no dispute of material fact that Rooms for Less does not constitute a “comparable replacement” tenant under the lease agreement.
{¶ 22} Upon review, drawing all reasonable inferences in favor of appellant, there exists specific evidence from which the trial court should have concluded there is a genuine issue of material fact as to whether Rooms for Less constituted a “comparable replacement” under Section 8.03(c) of the lease. The term “comparable replacement” is defined as “a national or regional retail tenant with a use comparable to the Anchor Tenant being replaced and operating in not less than seventy-five percent (75%) of the same leasable space utilized by the replaced Anchor Tenant.” (Section 8.03(c).) The contract, however, failed to define key terms such as “national,” “regional,” and “comparable” in the agreement. It is unclear from the four corners of the contract what the parties intended as to the type of company that would constitute a comparable replacement in this context. While appellant concedes that Rooms for Less is not a national retail tenant, the meaning of remaining terms in the lease agreement are ambiguous. Accordingly, we next look at the
{¶ 23} After a review of the extrinsic evidence, the terms “regional” and “comparable” are susceptible to multiple reasonable interpretations. Grant Giltz, appellant‘s corporate representative, testified Rooms for Less satisfies the ongoing co-tenancy requirements stating Rooms for Less met the definition of a “regional” store as it had three locations in the central Ohio region. (Giltz Dep. at 139-40.) Giltz considered “regional” to include a company with multiple stores that occupy an area of a state. (Giltz Dep. at 138.) Moreover, Giltz noted that “regional” may also refer to where customers travel from to the store, not just their physical locations. Giltz testified that “comparable” in this context referred to a retail tenant. “[T]hey wanted another retail tenant in there * * * it‘s not a wholesaler * * * it sells its goods, you know, small quantities at a time, it‘s -- a lot of times, it‘s an impulse buy, more discretionary spending for these types of stores.” (Giltz Dep. at 145.)
{¶ 24} Conversely, Robert Matias testified that he did not consider Rooms for Less a regional retail tenant.6 While Matias focused his definition of “regional” on companies with stores across multiple states located in a single area of the country, e.g., the Midwest region, he acknowledged that “regional” could also refer to stores that are located in a single state. (Matias Dep. at 71; 84.)7 When asked “if you have a certain region of a state, you‘re not saying that that absolutely means it can‘t be regional?“, Matias responded, “Correct.” (Matias Dep. at 85.) In response to whether Matias thought this definition of “regional” was in keeping with the International Council of Shopping Center‘s definition, Matias responded “I don‘t know * * * everybody‘s got sort of their own definition.” (Matias Dep. at
{¶ 25} Matias‘s deposition testimony hits on the central problem of this case: “everybody‘s got sort of their own definition.” (Matias Dep. at 71.) A look at the variation in several traditional definitions of these terms underscores this point.8 Merriam-Webster defines “region” as “(1) an administrative area, division, or district * * *; (2) (a) an indefinite area of the world or universe; (b) a broad geographic area distinguished by similar features.” Merriam-Webster Dictionary, “region,” https://www.merriam-webster.com/dictionary/region (accessed March 4, 2022).9 Cambridge Dictionary defines “regional” as “relating to or coming from a particular part of a country.” Cambridge Dictionary, “regional,” https://dictionary.cambridge.org/us/dictionary/english/regional (accessed March 4, 2022). Similarly, the definition of “comparable” provides little assistance on this issue. Merriam-Webster defines “comparable” as “(1) capable of or suitable for comparison * * * [;] (2) similar, like.” Merriam-Webster Dictionary, “comparable,” https://www.merriam-webster.com/dictionary/comparable (accessed March 4, 2022). Cambridge Dictionary defines “comparable” as “similar in size, amount, or quality to something else.” Cambridge Dictionary, “comparable,” https://dictionary.cambridge.org/us/dictionary/english/comparable (accessed March 4, 2022).
{¶ 26} Accordingly, considering the evidence most in favor of the nonmoving party, there is a dispute of material fact as to whether Rooms for Less constitutes a “comparable replacement” under Section 8.03(c) of the lease as a regional retail tenant with a use comparable to the tenant being replaced, i.e., Sports Authority.
{¶ 27} Appellee argues that its motion for summary judgment should still have been granted because “there was no dispute that [appellee] is only obligated to pay Substitute Rent due to the fact that not all of the Inducement Tenants opened in the Shopping Center.
{¶ 28} Appellant‘s first assignment of error is sustained.
B. Appellant‘s Second Assignment of Error
{¶ 29} In appellant‘s second assignment of error, it alleges the trial court erred in awarding attorney fees to appellee as the prevailing party because it did not succeed on the main issue in its case. An issue is considered moot when “they are or have become fictitious, colorable, hypothetical, academic or dead. The distinguishing characteristic of such issues is that they involve no actual genuine, live controversy, the decision of which can definitely affect existing legal relations.” (Internal quotations omitted.) Doran v. Heartland Bank, 10th Dist. No. 16AP-586, 2018-Ohio-1811, ¶ 12. Because we find that there is a dispute of material fact as to whether Rooms for Less constitutes a “comparable replacement” under Section 8.03(c) of the lease, a review of whether the trial court erred in awarding attorney fees to appellee as the prevailing party is premature. Accordingly, appellant‘s second assignment of error is moot.
IV. CONCLUSION
{¶ 30} Having sustained appellant‘s first assignment of error, and finding appellant‘s second assignment of error moot, we reverse the judgment of the Franklin County Court of Common Pleas. This case is remanded to the Franklin County Court of Common Pleas to consider the other grounds in appellee‘s motion for summary judgment
Judgment reversed; cause remanded with instructions.
SADLER and JAMISON, JJ., concur.
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Notes
The co-tenancy requirements set forth in Sections 8.03(b) and (c) are referred to herein as the ”Co-Tenancy Conditions.” Landlord acknowledges and agrees that the Co-Tenancy Conditions are an express inducement for Tenant to enter into this Lease and to operate its business in the Shopping Center, and that Tenant would not otherwise enter into this Lease without the Co-Tenancy Conditions.
(Wecker Aff. at ¶ 24-26.)The term “regional” refers to a business operating in a geographic region such as the Midwest, Southeast, or Northeast. “Regional” also generally requires the business operate in several states. Although the phrase “regional” may be used to describe a business that operates stores throughout an entire state, operating in one city or metropolitan area in a single state is not considered regional. * * * Rooms for Less, with only four (4) stores in the Columbus, Ohio area, is not a “national” retail tenant. * * * Rooms for Less is also not a “regional” retail tenant as it only operates business covering a small metropolitan area of one state.