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  • SAVE MART SUPERMARKETS vs ALBERTSONS LLCBreach of Contract/Warranty: Unlimited document preview
  • SAVE MART SUPERMARKETS vs ALBERTSONS LLCBreach of Contract/Warranty: Unlimited document preview
  • SAVE MART SUPERMARKETS vs ALBERTSONS LLCBreach of Contract/Warranty: Unlimited document preview
  • SAVE MART SUPERMARKETS vs ALBERTSONS LLCBreach of Contract/Warranty: Unlimited document preview
  • SAVE MART SUPERMARKETS vs ALBERTSONS LLCBreach of Contract/Warranty: Unlimited document preview
  • SAVE MART SUPERMARKETS vs ALBERTSONS LLCBreach of Contract/Warranty: Unlimited document preview
  • SAVE MART SUPERMARKETS vs ALBERTSONS LLCBreach of Contract/Warranty: Unlimited document preview
  • SAVE MART SUPERMARKETS vs ALBERTSONS LLCBreach of Contract/Warranty: Unlimited document preview
						
                                

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1 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP Electronically Filed A Limited Liability Partnership 7/22/2020 12:03 PM 2 Including Professional Corporations Superior Court of California JEFFREY J. PARKER, Cal. Bar No. 155377 County of Stanislaus 3 ANDREA FEATHERS, Cal. Bar No. 287188 Clerk of the Court 333 South Hope Street, 43rd Floor 4 Los Angeles, California 90071-1422 By: Sabrina Bouldt, Deputy Telephone: 213.620.1780 5 Facsimile: 213.620.1398 E mail jparker@sheppardmullin.com 6 afeathers@sheppardmullin.com 7 Attorneys for Save Mart Supermarkets, a California corporation 8 9 SUPERIOR COURT OF THE STATE OF CALIFORNIA 10 COUNTY OF STANISLAUS 11 12 SAVE MART SUPERMARKETS, a Case No. CV-20-000721 California corporation, 13 Assigned to: Hon. Sonny S. Sandhu, Plaintiff, Dept. 24 14 v. SAVE MART SUPERMARKETS’ 15 FIRST AMENDED COMPLAINT ALBERTSON’S LLC, a Delaware limited FOR: 16 liability company; and DOES 1 through 10, inclusive, (1) BREACH OF CONTRACT; 17 Defendants. (2) REFORMATION BASED ON 18 MUTUAL MISTAKE - CAL. CIV. CODE § 3399; 19 (3) SPECIFIC PERFORMANCE TO 20 COMPEL INDEMNIFICATION AND PAYMENT OF DAMAGES; 21 (4) BREACH OF THE REFORMED 22 CONTRACT; AND 23 (5) PROMISSORY ESTOPPEL 24 Action Filed: January 30, 2020 Trial Date: None Set 25 26 27 28 -1- SMRH:4836-1971-8082.1 SAVE MART SUPERMARKETS’ FIRST AMENDED COMPLAINT 1 Plaintiff Save Mart Supermarkets (“Save Mart”), for its first amended complaint 2 (“Complaint”) against Defendant Albertson’s LLC (“Albertson’s”), complains and alleges 3 as follows: 4 THE PARTIES 5 1. Plaintiff Save Mart is a California corporation. Save Mart has offices in 6 Modesto, California, in Stanislaus County. 7 2. Defendant Albertson’s is a Delaware limited liability company. Save Mart 8 is informed and believes that Albertson’s conducts business in California, including 9 operating more than 100 grocery stores, business offices, and many distribution centers. 10 3. The fictitious defendants named as Does 1 through 10 are sued pursuant to 11 the provisions of California Code of Civil Procedure section 474. Save Mart is ignorant of 12 the true names and capacities, whether individual, corporate, associate or otherwise, of 13 such defendants. Save Mart is informed and believes, and thereon alleges, that each 14 fictitious defendant was in some way responsible for, participated in, or contributed to the 15 matters and things of which Save Mart complains herein. When the true names of such 16 fictitious defendants and, as appropriate, their responsibility for, participation in and/or 17 contribution to the matters and things herein alleged are ascertained, Save Mart will seek 18 leave to amend this Complaint to insert the same. 19 JURISDICTION AND VENUE 20 4. This Court has jurisdiction over this Complaint pursuant to California Code 21 of Civil Procedure § 410.10. 22 5. Venue is proper in Stanislaus County Superior Court because: (1) the 23 contract that is the subject of this dispute—the November 20, 2006 Securities Purchase 24 Agreement between Save Mart and Albertson’s (the “SPA”)—designates the state and 25 federal courts in California as the appropriate venue for any legal proceeding regarding the 26 agreement; (2) the SPA was entered into in Stanislaus County, California; (3) Save Mart is 27 domiciled in Stanislaus County; (4) most of the grocery stores transferred to Save Mart 28 -2- SMRH:4836-1971-8082.1 SAVE MART SUPERMARKETS’ FIRST AMENDED COMPLAINT 1 under the SPA were in Northern California; and (5) Albertson’s conducts business in 2 California. 3 GENERAL ALLEGATIONS 4 Save Mart and Albertson’s Own and Operate Grocery Store Chains 5 6. Save Mart is a California corporation that owns and operates a chain of 6 grocery stores operating under the name Save Mart. 7 7. Albertson’s is a Delaware limited liability company that owns the 8 Albertson’s grocery stores, which have locations in several states. Albertson’s also owned 9 the grocery stores that were previously operated under the name Lucky’s. Those stores 10 were owned by Lucky Stores, Inc., a Delaware corporation that was owned by Albertson’s. 11 Save Mart Buys the Northern California and Nevada Lucky’s Stores from Albertson’s via 12 the Securities Purchase Agreement 13 8. In or about 2006, Save Mart began discussions with Albertson’s about 14 purchasing some of the Lucky’s stores from Albertson’s. Save Mart and Albertson’s 15 eventually agreed that Save Mart would purchase the open Lucky’s stores in Northern 16 California and Nevada, but no other open stores and no closed stores. Save Mart and 17 Albertson’s further agreed that all Lucky’s stores other than the ones being purchased by 18 Save Mart, and all associated real property, leases, subleases, assets, liabilities, obligations, 19 and contracts would be transferred to and assumed by Albertson’s or one of its 20 subsidiaries. Save Mart and Albertson’s structured the transaction as a stock purchase, in 21 which Save Mart would purchase Lucky Stores, Inc. (“Lucky’s” or “LSI”), but only after 22 all other stores (i.e., those located outside Northern California and Nevada) were 23 transferred away to Albertson’s or one of its subsidiaries. The transaction was 24 memorialized in the Securities Purchase Agreement executed on November 20, 2006 (the 25 “SPA”), as well as the accompanying disclosure schedules. 26 9. The SPA expressly provided that Save Mart’s purchase of Lucky’s would 27 include only the open Lucky’s stores in Northern California and Nevada (which were 28 described in the SPA as the “Northern CA Operations”). Save Mart’s purchase of these -3- SMRH:4836-1971-8082.1 SAVE MART SUPERMARKETS’ FIRST AMENDED COMPLAINT 1 Northern California and Nevada Lucky’s stores was the central purpose of the transaction. 2 The recitals summarized this as follows: 3 WHEREAS, Seller [Albertson’s] and its Subsidiaries are engaged in, among other things, the business of owning and 4 operating retail grocery stores and distribution centers under the “Albertson’s” and “Lucky” banners in northern California 5 and Nevada (the ownership and operation of such stores and distribution centers in northern California and Nevada, the 6 “Northern CA Operations”); . . . 7 WHEREAS, on the terms and subject to the conditions set forth herein, Seller desires to sell to Purchaser [Save Mart], and 8 Purchaser desires to purchase from Seller, the Northern CA Operations other than the ABS Property (as hereinafter 9 defined) through the sale, assignment, transfer and delivery to Purchaser of all of the issued and outstanding shares of capital 10 stock of LSI [Lucky Stores, Inc.]; 11 (SPA, Recitals, p. 1 (explanatory notes in brackets added).) 12 10. In the SPA, Albertsons’ undertook to identify and list all stores that were 13 being sold to Save Mart. Section 5.2(b) provided that the Northern California and Nevada 14 stores not already owned or leased by Lucky’s, which were listed in Schedule 5.2(b)(i), 15 and all related leases and property, would be transferred to Lucky’s before closing so that 16 they would be part of Save Mart’s purchase: 17 Prior to the Closing Date, Seller [Albertson’s] (x) will cause 18 (i) the stores set forth on Schedule 5.2(b)(i), all owned real property and leases of real property and all tangible personal 19 property associated with such stores, all employees associated with such stores, all corporate employees associated with the 20 Northern CA Operations and any Business Contract utilized solely in the Northern CA Operations and (ii) all other assets 21 and liabilities relating to the Northern CA Operations other than those assets and liabilities required to be retained or 22 assumed by Seller or its Affiliates pursuant to Section 5.2(a), to be transferred to or assumed by LSI . . . . 23 (SPA § 5.2(b) (explanatory notes in brackets added).) Schedule 11.8(u), in turn, listed all 24 stores being purchased by Save Mart. 25 11. Save Mart and Albertson’s agreed that Save Mart was not taking on any 26 liability with respect to any stores other than the open Lucky’s stores in Northern 27 California and Nevada listed in Schedule 11.8(u). Thus, there was no consideration 28 -4- SMRH:4836-1971-8082.1 SAVE MART SUPERMARKETS’ FIRST AMENDED COMPLAINT 1 provided to Save Mart in exchange for it taking on such non-California/Nevada store 2 liabilities. To accomplish this, Section 5.2(a) provided that all stores not located in 3 Northern California and Nevada and all related leases, property, assets, liabilities, and 4 obligations would be transferred to and assumed by Albertson’s or an Albertson’s 5 subsidiary before closing so that they would not be part of Save Mart’s purchase and so 6 that Save Mart would not incur any related liabilities for those non-purchased stores: 7 Prior to the Closing Date, Seller [Albertson’s] will (1) cause (i) all cash (other than Store Cash) and marketable securities 8 and similar investments, and all intercompany accounts held by LSI and owing by or to Seller or a Subsidiary other than LSI, 9 (ii) all capital stock of the Transferred Subsidiaries, (iii) accounts receivable relating to all stores other than the 10 Purchased Stores, and (iv) all owned real property other than the Real Property and all leases relating to the stores listed on 11 Schedule 3.19 and all subleases relating to such real property, to be transferred to or assumed by Seller or one of its 12 Subsidiaries (other than LSI, LSII or any Retained Subsidiary) and (2) cause LSII to merge with and into LSI. Prior to the 13 Closing Date, Seller will assume, or will cause one of more of its Subsidiaries (other than LSI, LSII or any Retained 14 Subsidiary) to assume all assets, liabilities and obligations transferred pursuant to clause (iv) of the preceding sentence, 15 including without limitation any environmental liabilities arising out of events or conditions occurring prior to the 16 Closing Date attributable to real property owned or leased by LSI or any Retained Subsidiary prior to the Closing Date and 17 set forth on Schedule 3.19(a). 18 (SPA, § 5.2 (explanatory notes in brackets added).) In order to identify all stores being 19 sold to Save Mart and all stores to be transferred to or assumed by Albertson’s or its 20 subsidiary, Albertson’s had to identify all stores owned or leased by Lucky’s. 21 12. Section 3.7(b) provided that all leases and subleases for all leased or 22 subleased stores other than those in Northern California and Nevada listed on 23 Schedule 3.7(b) would be assumed by either Albertson’s or an Albertson’s subsidiary prior 24 to the closing of the transactions, so that they would not be part of Save Mart’s purchase: 25 After giving effect to the transactions contemplated by Section 5.2, Schedule 3.7(b) sets forth a true and correct list 26 (including addresses) of all real property leased or subleased to LSI or a Retained Subsidiary and used in the Northern CA 27 Operations (other than the ABS Properties) and any other real property interests appurtenant thereto (the “Leased Real 28 Property”, and together with the Owned Real Property (the -5- SMRH:4836-1971-8082.1 SAVE MART SUPERMARKETS’ FIRST AMENDED COMPLAINT 1 “Real Property”). Subject to Section 2.3 of this Agreement, all other real property leases or subleases of LSI will, as of the 2 Closing Date, be assumed by Seller or one of its Subsidiaries (other than LSI, LSII or the Retained Subsidiaries). 3 13. Schedule 11.8(u) listed all stores being purchased by Save Mart. All other 4 stores owned, leased, or operated by Lucky’s prior to the transaction were required to be 5 transferred to Albertson’s or one of its subsidiaries, along with all associated assets, 6 liabilities, and obligations. 7 Indemnification and Limitation of Liability Provisions in the SPA 8 14. Section 8.2(a) of the SPA provided that Albertson’s would indemnify 9 Save Mart for, among other things, any Damages arising from the assets, liabilities, 10 obligations, and contracts transferred to or assumed by Albertson’s or one of its 11 subsidiaries or required to be so transferred or assumed. Section 8.2(a) provided in 12 pertinent part that: 13 (a) Subject to the limitations set forth in Section 8.4, Seller [Albertson’s] will 14 indemnify Purchaser [Save Mart], its Subsidiaries and their respective officers, directors, employees and agents (the “Purchaser Indemnified 15 Parties”) against, and hold them harmless from, any Damages arising from: 16 (i) Subject to Section 8.1, any breach by Seller of any of its representations or warranties contained herein (other than with 17 respect to Taxes); 18 (ii) Any breach of any covenant or agreement by Seller [Albertson’s] set forth in this Agreement that shall survive after 19 the Closing (other than with respect to Taxes); 20 (iii) The assets, liabilities, obligations and contracts transferred from LSI or assumed by Seller [Albertson’s] or one or more of 21 its Subsidiaries (other than LSI or LSII) or terminated on behalf of LSI, or required to be so transferred, assumed or 22 terminated, pursuant to Section 5.2(a). . . . 23 (SPA, § 8.2(a) (explanatory notes in brackets added).) The SPA defined “Damages” to 24 mean “any loss, liability, assessment, Tax fine, penalty, claim, damage, expense or cost of 25 mitigation actually suffered or paid (including reasonable legal fees and expenses).” (SPA, 26 § 11.8(g).) 27 15. In Section 8.4, the SPA partially limited Albertson’s indemnification 28 obligations by setting a floor of $1.5 million before the indemnity was triggered, but only -6- SMRH:4836-1971-8082.1 SAVE MART SUPERMARKETS’ FIRST AMENDED COMPLAINT 1 with respect to indemnification claims under Section 8.2(a)(i) or (ii) and Section 8.3(a)(i) 2 or (ii), not indemnification claims under Section 8.2(a)(iii). Section 8.4(a) stated: 3 (a) Neither Seller [Albertson’s] nor Purchaser [Save Mart] will be required to indemnify any Purchaser Indemnified Party or 4 Seller Indemnified Party, respectively, pursuant to Section 8.2(a)(i) or (ii) (other than for breaches of Sections 3.1. 3.2, 5 3.3, 3.13 or 3.19(d)) or Section 8.3(a)(i) or (ii) (other than for breaches of Sections 4.1 or 4.2), respectively, (i) unless and 6 until the aggregate of all Damages (as defined in the applicable agreement) suffered by the Purchaser Indemnified Parties or 7 the Seller Indemnified Parties, respectively, under this Agreement and the Real Estate Agreement exceeds $1,500,000 8 and then only for such excess amount . . . . 9 (SPA, § 8.4(a) (emphasis added; explanatory notes in brackets added).) Thus, Albertson’s 10 obligation to indemnify Save Mart pursuant to Section 8.2(a)(iii) for any Damages arising 11 from the assets, liabilities, obligations, and contracts transferred to or assumed by 12 Albertson’s or one of its subsidiaries or required to be so transferred or assumed by them 13 was not limited and not subject to any “floor” or threshold. 14 16. Section 8.4(f) of the SPA obligated each Indemnified Party “to use 15 commercially reasonable efforts to mitigate Damages upon and after becoming aware of 16 any event which could reasonably be expected to give rise to such Damages.” 17 17. Section 8.8 of the SPA provides that (other than certain tax matters) the 18 indemnification remedy in Sections 8.2 and 8.3 is the “sole remedy” for either party’s 19 breaches of any representations, warranties, agreements or covenants in the SPA: 20 Other than the remedies set forth in Section 5.9 and with 21 respect to indemnification for Taxes, which are subject to Article IX, the indemnification provided for in this Article VIII 22 will constitute the sole remedy of any party to the Agreement with respect to breaches by any other party to the Agreement of 23 any of the representations, warranties, agreements or covenants contained in the Agreement. 24 25 18. It was the intent of the parties that the indemnification provisions in 26 Section 8.2, the limitation of indemnification provision in Section 8.4, and the sole remedy 27 provision in Section 8.8 would only waive or limit Save Mart’s rights as to liabilities 28 associated with the Northern California and Nevada Lucky’s stores it was purchasing, and -7- SMRH:4836-1971-8082.1 SAVE MART SUPERMARKETS’ FIRST AMENDED COMPLAINT 1 would not waive or limit Save Mart’s rights as to liabilities associated with any other 2 Lucky’s store outside of Northern California and Nevada, all of which were being retained 3 by Albertson’s and were never intended by either party to be transferred to Save Mart. 4 The Former Lucky’s Store in St. Petersburg. Florida, was Supposed to Be Retained by 5 Albertson’s 6 19. Albertson’s mistakenly failed to discover the existence of or identify a 7 former Lucky’s store in St. Petersburg, Florida (the “Florida Lucky’s Store”) at the time it 8 disclosed in the SPA the stores being sold to Save Mart and failed to comply with its 9 express obligation under the SPA to transfer the Florida Lucky’s Store to Albertson’s or an 10 Albertson’s subsidiary before the transaction with Save Mart closed. As a result, the 11 Florida Lucky’s Store mistakenly, and unbeknownst to Albertson’s and Save Mart, was not 12 identified by Albertson’s and was not excluded from Save Mart’s purchase. 13 20. In March 27, 2018, the current tenant in the Florida Lucky’s Store—Kash n’ 14 Karry Food Stores and its parent Southeastern Grocers, LLC—filed for bankruptcy. 15 Thereafter, the landlord—Brixmor Skyway Plaza, LLC (“Brixmor”)—sued Lucky’s to 16 recover amounts due under the lease and for specific performance in a lawsuit styled as 17 Brixmor Skyway Plaza, LLC, v. Lucky Stores, Inc., a Florida corporation, and Lucky 18 Stores, Inc., a foreign corporation, Pinellas County Circuit Court, Case No. 18-003462-CI 19 (the “Brixmor lawsuit”). 20 The Indemnification Dispute Between Save Mart and Albertson’s 21 21. In mid-2018, Save Mart tendered to Albertson’s a claim for Damages that it 22 had incurred, and that it would incur in the future, as a result of the Brixmor lawsuit 23 concerning the Florida Lucky’s Store, which Save Mart was forced to defend only as a 24 result of Albertson’s failure to discover the existence of and identify the Florida Lucky’s 25 Store at the time of the SPA and transfer it to Albertson’s or its subsidiary before the 26 closing of the transaction. 27 28 -8- SMRH:4836-1971-8082.1 SAVE MART SUPERMARKETS’ FIRST AMENDED COMPLAINT 1 22. Albertson’s improperly denied the claim, relying on the indemnification 2 provisions in the SPA, particularly the inapplicable limitation in Section 8.4 to claims 3 exceeding $1.5 million in damages. 4 Settlement of the Lawsuit Regarding the Non-Transferred Florida Lucky’s Store 5 23. Save Mart litigated the lawsuit related to the Florida Lucky’s Store through 6 August 9, 2019, when it was dismissed pursuant to the parties’ settlement. 7 24. Because Albertson’s refused to indemnify Save Mart or pay for Save Mart’s 8 defense, Save Mart was forced to hire its own attorneys to defend itself in the Brixmor 9 lawsuit regarding the Florida Lucky’s Store in accordance with Section 8.4(f) of the SPA 10 and/or the doctrine of mitigation of damages. During the pendency of the case, Save Mart 11 incurred approximately $210,000 in attorneys’ fees related to the defense of the Brixmor 12 lawsuit. 13 25. Under the terms of the settlement, Save Mart agreed to pay $290,000 and the 14 lease of the Florida store was terminated. Counsel for Save Mart negotiated for and 15 obtained a mutual release by Brixmor that protects Save Mart, as well as Albertson’s. 16 26. Since the settlement, counsel for Save Mart has contacted counsel for 17 Albertson’s repeatedly in an exhaustive attempt to resolve the dispute between them about 18 Albertson’s responsibility for the settlement payment and the fees incurred as a result of 19 Albertson’s failure to transfer the Florida Lucky’s Store, but Albertson’s has refused to 20 indemnify Save Mart or compensate Save Mart for the amounts paid to settle and defend 21 the lawsuit. 22 FIRST CAUSE OF ACTION 23 (Breach of Contract) 24 27. Save Mart incorporates by reference the allegations in paragraphs 1-26 as 25 though set forth in full herein. 26 28. On November 20, 2006, Save Mart and Albertson’s executed the SPA, 27 pursuant to which Save Mart purchased Lucky’s. The SPA is a binding and enforceable 28 -9- SMRH:4836-1971-8082.1 SAVE MART SUPERMARKETS’ FIRST AMENDED COMPLAINT 1 written agreement. Albertson’s has received adequate consideration for agreeing to the 2 SPA and Save Mart has performed all material obligations required of it under the SPA. 3 29. The SPA expressly provided that Save Mart’s purchase of Lucky’s would 4 include only the open Lucky’s stores in Northern California and Nevada. The SPA 5 specifically excluded from Save Mart’s purchase all Lucky’s stores outside of Northern 6 California and Nevada. Accordingly, the SPA expressly and unambiguously required 7 Albertson’s to transfer all Lucky’s stores not located in Northern California or Nevada to 8 Albertson’s or one of its subsidiaries before the closing date. The SPA also expressly 9 provided that Albertson’s or one of its subsidiaries would assume all real property leases 10 and subleases of all Lucky’s stores not located in Northern California or Nevada, along 11 with all associated assets, liabilities, and obligations. 12 30. Section 8.2 of the SPA obligated Albertson’s to indemnify Save Mart for any 13 Damages arising from the five enumerated categories of claims, and Section 8.4(a), in turn, 14 limited that obligation with respect to certain—but not all—claims, setting a $1.5 million 15 floor applicable only to claims pursuant to Section 8.2(a)(i) or (2) or Section 8.3(a)(i) or 16 (ii). 17 31. The SPA did not create such a limitation, or any floor, on claims for 18 indemnity under Section 8.2(a)(iii), which required Albertson’s to indemnify Save Mart 19 for any Damages arising from the assets, liabilities, obligations, and contracts transferred 20 to or assumed by Albertson’s or one of its subsidiaries or required to be so transferred or 21 assumed by them (i.e., the Lucky’s stores outside of Northern California and Nevada). 22 Thus, Albertson’s was and is obligated to indemnify Save Mart for all Damages it incurred 23 in connection with the Brixmor lawsuit, which arose out of the Florida Lucky’s Store that 24 Albertson’s was required to transfer or assume. 25 32. Save Mart notified Albertson’s of the Brixmor lawsuit and tendered the 26 claim to Albertson’s for indemnity and defense, but Albertson’s denied the tender. 27 28 -10- SMRH:4836-1971-8082.1 SAVE MART SUPERMARKETS’ FIRST AMENDED COMPLAINT 1 33. Albertson’s failure to indemnify Save Mart or pay for Save Mart’s defense 2 was a material breach of the SPA, which caused Damages to Save Mart. Save Mart 3 defended and settled the Brixmor lawsuit, mitigating its damages. 4 SECOND CAUSE OF ACTION 5 (Reformation Based on Mutual Mistake, Cal. Civ. Code § 3399) 6 34. Save Mart incorporates by reference the allegations in paragraphs 1-33 as 7 though set forth in full herein. 8 35. In the alternative, Save Mart seeks reformation based on mutual mistake. 9 36. The SPA provided that, with the exception of certain tax-related matters, the 10 indemnification rights are the “sole remedy” for either party’s breaches of any 11 representations, warranties, agreements or covenants in the SPA. 12 37. Save Mart and Albertson’s both believed and intended that the 13 indemnification provisions in Section 8.2, the limitation on indemnification in Section 8.4, 14 and the sole remedy provision in Section 8.8 would only waive or limit Save Mart’s rights 15 as to liabilities associated with the Northern California and Nevada Lucky’s stores it was 16 purchasing, and would not waive or limit Save Mart’s rights as to liabilities associated 17 with any other Lucky’s store outside of Northern California and Nevada (which were 18 being retained by Albertson’s) or any other matter or dispute between them. 19 38. Furthermore, Save Mart and Albertson’s both mistakenly believed that, in 20 fact, Albertson’s had discovered the existence of and identified all Lucky’s stores outside 21 Northern California and Nevada at the time of the SPA and had transferred all such stores 22 to Albertson’s or an Albertson’s subsidiary prior to the closing of the transaction so that 23 they would not be a part of Save Mart’s purchase pursuant to the SPA. 24 39. Albertson’s, however, mistakenly failed to discover the existence of or 25 identify the Florida Lucky’s Store as of the time of the SPA and failed to comply with its 26 express obligation under the SPA to transfer the Florida Lucky’s Store to Albertson’s or an 27 Albertson’s subsidiary. As a result, the Florida Lucky’s Store mistakenly, and 28 unbeknownst to Albertson’s and Save Mart, was not identified in the SPA or transferred -11- SMRH:4836-1971-8082.1 SAVE MART SUPERMARKETS’ FIRST AMENDED COMPLAINT 1 out of Lucky’s before Save Mart’s purchase. Save Mart and Albertson’s did not intend 2 that the indemnification provision in Section 8.2, the limitation of indemnification 3 provision in Section 8.4, or the sole remedy provision in Section 8.8 would waive or limit 4 Save Mart’s rights as to liabilities associated the Florida Lucky’s Store, which was 5 expressly excluded from Save Mart’s purchase. 6 40. If, as claimed by Albertson’s, this intent is not already reflected in 7 Sections 8.2(a)(iii) and 8.4(a), the SPA should be reformed to reflect the mutual intentions 8 of Save Mart and Albertson’s, which was that the limitation of indemnification provision 9 in Section 8.4 and the sole remedy provision in Section 8.8 would only waive or limit Save 10 Mart’s rights as to liabilities associated with the Northern California and Nevada Lucky’s 11 stores it was purchasing, and not liabilities associated with the Florida Lucky’s Store or 12 any other Lucky’s stores outside of Northern California and Nevada. Reformation based 13 on mutual mistake is available to Save Mart as a remedy because the mutual mistake was 14 not caused by the neglect of a legal duty on the part of Save Mart, but rather, by the 15 neglect of Albertson’s. 16 41. Save Mart has suffered harm as a result of these mutual mistakes because 17 Save Mart was sued for damages and specific performance by the landlord of the Florida 18 Lucky’s Store due to Albertson’s failure to transfer it prior to the closing of the SPA and 19 due to the parties’ mutual mistake regarding the existence of the Florida Lucky’s Store and 20 the indemnification provisions and other rights and waivers in the SPA. As a result of the 21 Brixmor lawsuit, Save Mart incurred approximately $210,000 in legal fees related to that 22 matter and paid a settlement amount of $290,000, for which Albertson’s is obligated to 23 provide indemnity. 24 THIRD CAUSE OF ACTION 25 (Specific Performance to Compel Indemnification and Payment of Damages) 26 42. Save Mart incorporates by reference the allegations in paragraphs 1-41 as 27 though set forth in full herein. 28 -12- SMRH:4836-1971-8082.1 SAVE MART SUPERMARKETS’ FIRST AMENDED COMPLAINT 1 43. Pursuant to the express terms of the SPA, Save Mart agreed to purchase only 2 the open Lucky’s stores in Northern California and Nevada. The SPA expressly provides 3 that Save Mart will not have ownership of or liabilities arising from any current or former 4 Lucky’s stores not in Northern California or Nevada. Accordingly, the SPA expressly and 5 unambiguously required Albertson’s to transfer all Lucky’s stores not located in Northern 6 California or Nevada to Albertson’s or one of its subsidiaries. The SPA also expressly 7 provided that Albertson’s or one of its subsidiaries would assume all real property leases 8 and subleases of all Lucky’s stores not in Northern California or Nevada, as well as all 9 associated assets, liabilities, and obligations. In breach of the agreement, Albertson’s 10 failed to transfer the Florida Lucky’s store to Albertson’s or one of its subsidiaries. As a 11 result of Albertson’s failure to transfer the Florida Lucky’s Store, Save Mart was sued by 12 the landlord of the store and incurred approximately $210,000 in legal fees to defend the 13 action, as well as a $290,000 settlement payment. 14 44. Pursuant to Section 8.2(a)(iii) of the SPA discussed above, Albertson’s 15 agreed to indemnify Save Mart for any Damages arising from the assets, liabilities, 16 obligations, and contracts transferred to or assumed by Albertson’s or one of its 17 subsidiaries or required to be so transferred or assumed by them. Therefore, Albertson’s 18 was and is obligated to indemnify Save Mart for all Damages it incurred in connection 19 with the Brixmor lawsuit, which arose out of the Florida Lucky’s Store that Albertson’s 20 was required to transfer to itself or its subsidiary or assume. However, Albertson’s has 21 refused to do so, improperly invoking the $1.5 million floor created by Section 8.4(a)(i), 22 which does not apply to claims under Section 8.2(a)(iii). 23 45. Under the terms of the contract, or alternatively the terms of the contract as 24 reformed above, Save Mart is entitled to an order directing Albertson’s to indemnify Save 25 Mart for its attorneys’ fees of $210,000 and the settlement amount of $290,000, both of 26 which were incurred in defending the Brixmor lawsuit that resulted from Albertson’s 27 failure to transfer the Florida Lucky’s Store. 28 -13- SMRH:4836-1971-8082.1 SAVE MART SUPERMARKETS’ FIRST AMENDED COMPLAINT 1 46. Enforcing the obligation that Albertson’s indemnify Save Mart and fully 2 reimburse it for its attorneys’ fees and the settlement amount it paid is just and reasonable 3 because the express purpose of the SPA was to eliminate all liability for Save Mart for all 4 Lucky’s stores outside of Northern California and Nevada, leaving Save Mart responsible 5 only for the Lucky’s stores that it was actually purchasing in Northern California and 6 Nevada. 7 FOURTH CAUSE OF ACTION 8 (Breach of Reformed Contract) 9 47. Save Mart incorporates by reference the allegations in paragraphs 1-46 as 10 though set forth in full herein. 11 48. On November 20, 2006, Save Mart and Albertson’s executed the SPA, 12 pursuant to which Save Mart purchased Lucky’s. The SPA is a binding and enforceable 13 agreement between Save Mart and Albertson’s. 14 49. Albertson’s has received adequate consideration for agreeing to the SPA and 15 Save Mart has performed all material obligations required of it under the SPA. 16 50. As discussed above in the Second Cause of Action, if not already provided 17 by the contract as alleged by Albertson’s, the contract should be reformed to require 18 Albertson’s to indemnify Save Mart, without any floor, for the Damages suffered by Save 19 Mart arising from the stores the parties agreed Save Mart was not acquiring. 20 51. Albertson’s has breached the reformed SPA described above by doing the 21 following: 22 (a) Failing to transfer the Florida Lucky’s store to Albertson’s or one of 23 its subsidiaries and assume all associated assets, liabilities, contracts, and obligations; and 24 (b) Refusing to indemnify Save Mart for its attorneys’ fees of $210,000 25 and the settlement amount of $290,000, both of which were incurred in defending the 26 Brixmor lawsuit that resulted from Albertson’s failure to transfer the Florida Lucky’s 27 Store. 28 -14- SMRH:4836-1971-8082.1 SAVE MART SUPERMARKETS’ FIRST AMENDED COMPLAINT 1 52. As a result of Albertson’s failure to transfer the Florida Lucky’s Store and 2 Albertson’s refusal to indemnify Save Mart, Save Mart was sued by the landlord of the 3 store and incurred approximately $210,000 in legal fees to defend the action, as well as a 4 $290,000 settlement payment. 5 53. Save Mart is entitled to compensatory and consequential damages of at least 6 $500,000, according to proof at trial. 7 FIFTH CAUSE OF ACTION 8 (Promissory Estoppel) 9 54. Save Mart incorporates by reference the al