United States District Court, D. Oregon, Portland Division
WORKSHOPS PORTLAND CARSON, L.L.C., a Washington limited liability company, Plaintiff,
CARSON OIL CO., INC., an Oregon corporation, Defendant.
OPINION AND ORDER
ACOSTA, United States Magistrate Judge.
Workshops Portland Carson, L.L.C. ("Workshops"),
brings a claim for breach of commercial lease against
Defendant Carson Oil Co., Inc. ("Carson"), to
recover damages related to holdover rent and environmental
remediation. Carson brings counterclaims for breach of the
implied covenant of good faith and fair dealing, and
promissory estoppel. Workshops moves for partial summary
judgment as to both counterclaims.
court held oral argument on February 28, 2017. For the
following reasons, Workshops' motion for partial summary
judgment as to breach of the implied covenant of good faith
and fair dealing (ECF No. 30) is denied, and Workshops'
motion for partial summary judgment as to promissory estoppel
(ECF No. 35) is granted.
is a Washington limited liability company managed by
ActivSpace, LLC. Compl. (ECF No. 1) ¶ 3; Zahniser Dec.
(ECF No. 31), Ex. 1, p. 11, 91:5-7. ActivSpace runs
facilities that artisans, small builders, and contractors may
rent work space to conduct business activities. Zahniser Dec,
Ex. 1, p. 3, 7:10-16. Carson is an Oregon corporation that
operates a petroleum distribution business in the Portland
area. Compl. ¶ 4; Zahniser Dec, Ex. 2, p. 6, 61:3-20.
The property at issue ("the Premises") encompasses
the entire city block located at SE Eighth Avenue and SE Main
Street in Portland. Zahniser Dec, Ex. 1, p. 3, 8:12-17.
in 1980, Carson operated a cardlock station on the Premises
and dispensed petroleum products to customers and employees.
Am. Answer to Compl. (ECF No. 29) ¶ 23;. Zahniser Dec,
Ex. 2, p. 6, 61:3-20. In February 1998, Workshops purchased
the Premises. Am. Answer to Compl. ¶ 25. As a part of
the sale, Workshops leased back to Carson approximately 12,
000 square feet of the property to retain existing petroleum
products storage and dispensing facilities. Zahniser Dec, Ex.
2, p. 8, 67:3-9. The remaining portion of the Premises was
developed into an ActivSpace facility. Zahniser Dec, Ex, 1,
pp. 8-9, 53:16-54:9.
rent payment under the 1998 lease started at $3, 500 per
month, and annual increases were tied to the consumer price
index. Zahniser Dec, Ex. 3, p. 1. The lease was for a
ten-year term and granted two five-year options for Carson to
extend the initial term. Zahniser Dec, Ex. 3, pp. 1, 8. In
late 2007, Carson elected to exercise the first five-year
option, extending the term to 2013. Zahniser Deck, Ex. 2, p.
9, 70:7-71:5. In 2013, however, Carson did not timely notify
Workshops of its intent to exercise the second five-year
option, and the lease terminated. Zahniser Dec, Ex. 2,
71:20-72:20. By March 31, 2013, Carson had become a holdover
tenant on a month-to-month lease term. Zahniser Dec, Ex. 3,
p. 4. Carson wanted to remain an occupant at the facility for
a longer period of time, and after unsuccessfully trying to
exercise the second five-year option, the parties entered
into negotiations that resulted in the lease at issue in this
case. Sramek Dec (ECF No. 34), Ex. A, pp. 8-10; Zahniser Dec,
Ex. 2, p. 9, 73:1-23.
10, 2013, Workshops sent Carson a draft lease, effective
April 1, 2013, for a one-year term that would expire March
31, 2014, Sramek Dec, Ex. B. The lease included a rental rate
of $4, 750.43 per month. Sramek Dec, Ex. B, p. 3. The draft
did not contain an option for Carson to extend the lease
beyond the one-year term, and on May 15, 2013, Carson
requested that two five-year options be included in the
lease. Sramek Dec, Ex. C. In September 2013, Workshops added
one five-year option ("the Option") as
"Exhibit C" to the draft lease, which reads:
To Commercial Lease Between Workshops Portland Carson, LLC
("Landlord") and Carson Oil Company, Inc.
Option to Extend:
Provided that Tenant is not in default of the Lease, Tenant
shall have one (1) option to extend the Term of the lease for
one (1) period of five (5) years (the "Option
Period") commencing at the end of the initial one (1)
year term. All terms and conditions of the original Lease
shall remain unchanged with the exception of rent.
Tenant may exercise this option by notifying Landlord of its
intent in writing no later than 90 days prior to the
expiration of the initial one (1) year term. Within thirty
(30) days after Landlord receives Tenant's written notice
of intent, Landlord shall provide Tenant with the rental
structure for the Option Period. If Landlord and Tenant are
unable to agree upon the rental structure by the
60th day after Landlord receives Tenant's
written notice of intent, this option shall expire and will
then be deemed null and void.
Zahniser Decl., Ex. 4, p. 22.
October 3, 2013, after reviewing the Option, Carson emailed
Workshops and asked how rent would be determined. Zahniser