United States District Court, D. Oregon
Gregory D. Call and Tracy E. Reichmuth, Crowell & Moring
LLP, Joel A. Parker, Rebecca A. Boyette, and Jessica Schuh,
Schwabe Williamson & Wyatt pc, Of Attorneys for
Jeffrey M. Edelson, Molly K. Honoré, Dallas DeLuca,
Paul S. Bierly, and Vivek A. Kothari, Markowitz Herbold pc,
Of Attorneys for Defendant.
OPINION AND ORDER
Michael H. Simon, United States District Judge
Ross Dress for Less, Inc. (“Ross”) has moved for
partial summary judgment against the first two supplemental
counterclaims asserted by Defendant Makarios-Oregon, LLC
(“Makarios”). These counterclaims relate to
Ross' lease of commercial space in the Richmond Building
in downtown Portland, Oregon. Under a 1956 lease and its
amendments (collectively, the “Richmond Lease”)
(ECF 61-1), Ross was the successor-in-interest to the
original lessee, and Makarios was the successor-in-interest
to the original lessor. The lease expired on September 30,
2016. Ross vacated the Richmond Building on or about that
date. Makarios' first and second supplemental
counterclaims allege that Ross failed to return the Richmond
Building in the condition required under Section 16 of the
Richmond Lease. As a result, Makarios alleges, Ross has
both breached an express term of the lease (first
supplemental counterclaim) and breached the implied covenant
of good faith relating to the lease (second supplemental
asserts that it first learned in 2017 that Makarios is not,
and never has been, the owner of the Richmond Building.
Instead, from June 30, 2011, through September 2017, the
legal owners of the Richmond Building have been Charles W.
Calomiris, Katherine Calomiris Tompros, and Jenifer Calomiris
(collectively, the “Calomiris Siblings”), as
tenants in common. Among other things, Ross argues that only
the actual landowners, the Calomiris Siblings, may assert the
claims at issue in the pending motion because the covenants
on which those claims are based “run with the
land” and the Calomiris Siblings never transferred
ownership of the Richmond Building to Makarios. In response,
Makarios argues that after a covenant that runs with the land
is breached, the cause of action arising from that breach may
freely be assigned separate from the land itself and that
Makarios received at least one and possibly two valid
assignments from the Calomiris Siblings. The first assignment
was in 2011 (before the alleged breach), and the second
assignment was in 2018 (after the alleged breach). Thus,
according to Makarios, it may properly assert its
supplemental counterclaims against Ross. Because under modern
real property law, causes of action arising from a breach of
a covenant that runs with the land are freely assignable
post-breach, the Court agrees with Makarios.
is entitled to summary judgment if the “movant shows
that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). The moving party has the burden of
establishing the absence of a genuine dispute of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). The court must view the evidence in the light most
favorable to the non-movant and draw all reasonable
inferences in the non-movant's favor. Clicks
Billiards Inc. v. Sixshooters Inc., 251 F.3d 1252, 1257
(9th Cir. 2001). Although “[c]redibility
determinations, the weighing of the evidence, and the drawing
of legitimate inferences from the facts are jury functions,
not those of a judge . . . ruling on a motion for summary
judgment, ” the “mere existence of a scintilla of
evidence in support of the plaintiff's position [is]
insufficient . . . .” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 252, 255 (1986). “Where the
record taken as a whole could not lead a rational trier of
fact to find for the non-moving party, there is no genuine
issue for trial.” Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation
and quotation marks omitted).
case originally involved a dispute over a lessee's
obligations upon the expiration of two leases, negotiated in
1956, with two separate landlords for two conjoined buildings
in downtown Portland. One building is known as the
“Richmond Building.” The other is known as the
“Failing Building.” The Richmond Building is
located at 600 SW Fifth Avenue, Portland, Oregon; the Failing
Building is located at 620 SW Fifth Avenue.
leases, as amended and extended, spanned more than 50 years.
They ultimately expired on September 30, 2016. The original
lessee of both buildings was J.J. Newberry Co.
(“Newberry”). In 1996, Ross became the
successor-in-interest to Newberry for both leases. After
various assignments, Makarios and Walker Place, LLC
(“Walker Place”) became the
successors-in-interest to the original lessors of the
Richmond and Failing Buildings, respectively.
December 2014, Ross filed this lawsuit, seeking a judicial
declaration that Ross' proposed plans upon the expiration
of the leases would satisfy Ross' obligations under the
leases, including Section 16 of the Richmond Lease. Makarios
and Walker Place asserted counterclaims, seeking both a
judicial declaration clarifying the extent of Ross'
end-of-lease obligations and money damages for breach of
contract. All three parties moved for partial summary
judgment, which the Court granted in part and denied in part
on March 25, 2016. Ross Dress For Less, Inc. v.
Makarios-Oregon, LLC, 180 F.Supp.3d 745 (D. Or. 2016).
The parties then agreed to bifurcate this lawsuit. In Phase
I, the Court held a bench trial to determine the extent of
Ross' end-of-lease obligations, resulting in the
Court's written Findings of Fact and Conclusions of Law,
issued on June 10, 2016. Ross Dress for Less, Inc. v.
Makarios-Oregon, LLC, 191 F.Supp.3d 1189 (D. Or. 2016).
September 6, 2016, Ross moved for an order determining
whether Ross, over the objections of Makarios and Walker
Place, could remain on the premises of the two buildings
after the leases expired to complete any work still needed to
surrender the premises in the condition required under the
leases. On September 27, 2016, the Court ruled that after the
leases expire on September 30, 2016, neither Ross nor its
agents could enter or remain on the premises of the Richmond
or Failing Buildings over the objection of Makarios or Walker
Place, respectively. Ross Dress for Less, Inc. v.
Makarios-Oregon, LLC, 210 F.Supp. 3D 1259 (D. Or. 2016).
On April 3, 2017, both Makarios and Walker Place filed
supplemental counterclaims against Ross, to be resolved in
Phase II. Several months later, Ross and Walker Place settled
their dispute, and Walker Place is no longer a party in this
action. On December 26, 2018, Makarios filed its Second
Supplemental Counterclaims for Phase II, restating its three
supplemental counterclaims. ECF 306.
first supplemental counterclaim, Makarios alleges that the
Richmond Lease expired on September 30, 2016, and that Ross
vacated the Richmond Building on or about that date but
failed to return the premises in the condition required under
Section 16 of the Richmond Lease. Makarios seeks money
damages for, among other things, “costs of the required
work and repairs, architectural, engineering, and other
professional fees, legal fees, permit fees, inspection fees,
and fees and costs associated with bringing the Richmond
Building to the condition required by the Richmond
Lease.” ECF 242, ¶¶ 11-12; ECF 306, ¶
13. As its second supplemental counterclaim, Makarios alleges
breach of the implied covenant of good faith and fair dealing
and seeks “damages in an amount to be proved at
trial.” ECF 242, ¶ 19; ECF 306, ¶
As its third supplemental counterclaim, Makarios alleges that
Ross breached the rental payment obligations contained in the
Richmond Lease and owes Makarios $48, 166.61 in unpaid rent
through the end of the lease period. ECF 242, ¶¶
22-25; ECF 306, ¶33.
The Ownership of the Richmond Building, the Lease, and the
Building Ownership from 1956 Through 2017
September 24, 1956, New York Life Insurance Company
(“NYLI”), as owner and landlord of the Richmond
Building, leased a portion of that building to Newberry for a
term of 30 years, with rights of renewal. ECF 276-1. On
September 23, 1986, NYLI sold the Richmond Building to
William Calomiris. ECF 261-5, at p. 36. In approximately
2000, William Calomiris passed away. Under the terms of his
will, the Richmond Building was bequeathed to his wife, Mary
Calomiris, in fee simple absolute. ECF 261-5, at p. 30. On
September 5, 2001, Mary Calomiris disclaimed one-half of her
interest in the Richmond Building to the William Calomiris
Marital Trust Under the Will of William Calomiris.
Id. On December 1, 2001, the Estate of William
Calomiris, as grantor, deeded its interest in the Richmond
Building in fee simple to the William Calomiris Marital Trust
and to Mary Calomiris individually. Id.; see
also Id. at 34 (correcting personal representatives'
deed as of August 15, 2002).
17, 2011, the William Calomiris Marital Trust granted its
remaining interest in the Richmond Building to Mary
Calomiris. ECF 261-5, at p. 21. Thus, at that point, Mary
Calomiris owned the Richmond Building in fee simple as sole
owner. Less than two weeks later, on June 30, 2011, Mary
Calomiris, as grantor, deeded the Richmond Building in fee
simple to Katherine Calomiris Tompros, Jennifer Calomiris,
and Charles W. Calomiris (i.e., the Calomiris
Siblings), as tenants in common, each with a one-third
interest. ECF 261-5, at p. 14. From June 30, 2011, until
September 22, 2017, the Richmond Building was owned in fee
simple by the Calomiris Siblings.
September 22, 2017, the Calomiris Siblings sold the Richmond
Building to MDI Alder Street, LLC for $4.5 million. ECF
261-5, at 8. On that same day, September 22, 2017, MDI Alder
Street, LLC deeded to the Richmond Building to an entity
known as “Richmond Building, LLC.” ECF 261-5, at
1. Based on this record of ownership, Makarios-Oregon, LLC
never owned the Richmond Building, including on September 30,
2016, when Ross vacated that building. At that time, the
Richmond Building was owned by the Calomiris Siblings.
The 2011 Assignment of the Lease and Related Security
only interest related to the Richmond Building held by
Makarios-Oregon, LLC before the expiration of the Richmond
Lease arose under an Assignment and Assumption Agreement
dated July 27, 2011 (the “2011 Assignment”). ECF
261-6. This document was entered into among Mary Calomiris,
Charles W. Calomiris, Katherine Calomiris Tompros, and
Jenifer Calomiris (collectively described in the 2011
Assignment as ...