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Cold Stone Creamery Leasing Company, Inc. v. FW OR-Greenway Town Center, LLC

United States District Court, D. Oregon, Portland Division

July 8, 2019

COLD STONE CREAMERY LEASING COMPANY, INC., an Arizona Corporation, Plaintiff,
v.
FW OR-GREENWAY TOWN CENTER, LLC, a Delaware Limited Liability Company, Defendant.

          FINDINGS AND RECOMMENDATIONS

          YOULEE YIM YOU UNITED STATES MAGISTRATE JUDGE

         Plaintiff Cold Stone Creamery Leasing Company, Inc. (“Cold Stone”) has filed a complaint against FW OR-Greenway Town Center, LLC (“Greenway”) seeking declaratory judgment/specific performance, damages for anticipatory breach of contract, and attorney's fees. This court has diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(1).

         The parties have filed cross motions for summary judgment (ECF #16, ECF #18).[1] For the reasons discussed below, Cold Stone's motion should be DENIED and Greenway's motion should be GRANTED.

         BACKGROUND

         On July 2, 2004, Cold Stone and U.S. Retail entered into a lease agreement (“Lease Agreement”) through which Cold Stone leased a retail space at the Greenway Town Center for a period of ten years. ECF #15-1. The Lease Agreement also references a First Addendum, which was signed on the same date. ECF #15-2. The First Addendum contains an option for Cold Stone to renew the lease for two consecutive five-year periods. Id. at 1 (¶ 1. (a)). Greenway is the successor to U.S. Retail's interest under the Lease Agreement. Jt. Stip. of Facts ¶ 4, ECF #15.

         On December 16, 2013, Greenway and Cold Stone executed a Second Addendum to the Lease agreement, through which Cold Stone exercised its first five-year renewal option. ECF #15-3; ECF #15-9.

         On April 13, 2018, Cold Stone provided written notice to Greenway that it would be subletting the premises to a franchisee, Twin Scoop, LLC (“Twin Scoop”). ECF #15-4; ECF #15-7. Thereafter, the leasing agents for Cold Stone and Greenway exchanged emails about “historic/ongoing issues” with the current operator, such as the store's appearance and cleanliness. ECF #15-6, at 3. Greenway's leasing agent also noted that store sales did not support market rent, and that the current rent was 15-20% below market.[2] Id. In response, Cold Stone's leasing agent recognized “how much the landlord has put into the center, ” and assured that with the “new operator, things will be 100% different” and “it will turn things around completely.” Id. at 2. In response to Cold Stone's suggestion that the parties put a fair market value option in the lease renewal, Greenway's leasing agent replied, “[A]s discussed, we'll be exploring other options here. Let's pick this back up closer to the expiration date.” Id. Cold Stone then sent two emails to Greenway's leasing agent on May 2 and 3, 2018, asking to exercise its five-year renewal option early:

Would the landlord be agreeable to allowing us to exercise the current renewal option early? I know the window doesn't open until August, but in order for our new franchisee to secure his SBA loan, they wanted to get your thoughts.

ECF #15-6, at 1 (May 2, 2018 email).[3]

Just following up on this . . . any objection to us exercising the renewal option early?

Id. (May 3, 2018 email). Greenway's leasing agent responded, “[W]e are sticking with the lease terms here.” Id.

         On July 25, 2018, Cold Stone executed a sublease agreement, effective August 23, 2018, with franchisee Twin Scoop. ECF #15-9. An exhibit to the sublease makes clear that the underlying lease expires on July 31, 2019. Id. at 12.

         On September 7, 2018, Greenway notified Cold Stone that it was declaring Cold Stone's second option to renew “null and void, ” citing to Section 9.1 of the Lease Agreement. ECF #15-10. Section 9.1 provides in pertinent part:

If [Cold Stone] assigns or otherwise transfers this Lease, or sublets all or any portion of the Premises, with or without [Greenway's] consent, then [Greenway] shall have the right, at its sole option, to thereafter terminate all renewal and expansion options granted to Tenant pursuant to this Lease.

ECF #15-1, at 8.

         LEGAL STANDARD

         Under FRCP 56(a), “[t]he court shall grant 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.” The party moving for summary judgment bears the initial responsibility of informing the court of the basis for the motion and identifying portions of the pleadings, depositions, answers to interrogatories, admissions, or affidavits that demonstrate the absence of a triable issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party does so, the nonmoving party must “go beyond the pleadings” and “designate ‘specific facts showing that there is a genuine issue for trial.'” Id. at 324 (citing FRCP 56(e)).

         In determining what facts are material, the court considers the underlying substantive law regarding the claims. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986). Otherwise stated, only disputes over facts that might affect the outcome of the suit preclude the entry of summary judgment. Id. A dispute about a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party. Id. at 248-49. A “scintilla of evidence” or “evidence that is merely colorable or not significantly probative” is insufficient to create a genuine issue of material fact. Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000). The court “does not weigh the evidence or determine the truth of the matter, but only determines whether there is a genuine issue for trial.” Balint v. Carson City, Nev., 180 F.3d 1047, 1054 (9th Cir. ...


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