Motion-Secondary: UP FIELDGATE US INVESTMENTS EAST COLONIAL LLC vs. DICKS SPORTING GOODS INC

On May 10, 2017 a Motion-Secondary was filed involving a dispute between Up Fieldgate Us Investments East Colonial Llc, and Dicks Sporting Goods Inc, for 3 in the District Court of Orange County.

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Filing # 103874713 E-Filed 02/25/2020 02:41:34 PM

IN THE CIRCUIT COURT OF THE NINTH JUDICIAL CIRCUIT
IN AND FOR ORANGE COUNTY, FLORIDA

UP FIELDGATE US INVESTMENTS -
EAST COLONIAL, LLC,

Plaintiff,
Case No.: 2017-CA-4308-O
v.
Division: 43
Complex Business Court
DICKS SPORTING GOODS, INC.
a Delaware corporation,

Defendant.

PLAINTIFF’S MEMORANDUM IN OPPOSITION TO DEFENDANT’S
MOTION TO DISMISS SECOND AMENDED COMPLAINT
AND MOTION TO STRIKE DEFENDANT’S ARGUMENTS
THAT ARE OUTSIDE THE FOUR CORNERS
OF THE SECOND AMENDED COMPLAINT

Plaintiff, UP Fieldgate US Investments - East Colonial, LLC. (“Landlord”),

hereby files its response to Defendant’s Motion to Dismiss Second Amended

Complaint (“Motion”) and Memorandum of Law in Support of Defendant’s

Motion to Dismiss Second Amended Complaint (“Memo”), moves to strike

Defendant’s arguments that are outside the four corners of the Second Amended

Complaint and states as follows:
INTRODUCTION

The crux of Dick’s Sporting Goods, Inc.’s (“DSG”) argument for seeking

dismissal is that Judge Weiss has already “adjudicated” the merits of any claim

regarding the long-term Lease, declared that the “language” in the 50-page lease

is “unambiguous and enforceable,” and, because the court previously “agree[d]

with and adopt[ed] DSG’s interpretation of the Lease” on a motion to dismiss,

Landlord’s claims are foreclosed. By taking this conclusory position, DSG largely

ignores the claims as pled in the Second Amended Complaint (“SAC”)—the

operative complaint—and instead relies on rulings directed to an earlier, now

superseded version of the complaint.

DSG’s attempt to broaden and misapply the doctrine of “law of the case”

underscores the reason why Landlord sought appellate review of Judge Weiss’s

dismissal of the Amended Complaint with prejudice. DSG is improperly

attempting to use Judge Weiss’s rulings—which DSG drafted—regarding a

superseded complaint as both a sword and a shield by contending that essentially

any disputes regarding the Lease have already been “adjudicated.” To the

contrary, the Fifth District Court of Appeal’s reversal of Judge Weiss’s dismissal

with prejudice and directive that Landlord be permitted to amend its complaint

wiped the slate clean. The Court must consider the claims as pled in the SAC

anew and limit its inquiry to the four corners of the SAC. In the SAC, Landlord

2
adequately pled claims for declaratory judgment (Count I), breach of the implied

duty of good faith and fair dealing (Count II), equitable reformation (Count III),

and promissory estoppel (Count IV). DSG’s Motion should be denied.

ARGUMENT

A. DSG Misconstrues the “Law of the Case”

Landlord is not precluded from asserting any of the claims pled in the SAC

as a result of the Fifth District’s Opinion. Specifically, the Fifth District simply

affirmed Judge Weiss’s “finding that the amended complaint did not sufficiently

state a cause of action,” citing Jordan v. Nienhuis, 203 So. 3d 974, 976 (Fla. 5th

DCA 2016), for the general proposition that “general, vague and conclusory

statements are insufficient. . .” Thus, the Fifth District affirmed Judge Weiss’s

dismissal of the amended complaint because of pleading deficiencies.

Had Landlord simply refiled the same complaint, then perhaps DSG’s

position would have merit.1 Cf. Warner Cable Commc’ns, Inc. v. City of Niceville,

581 So. 2d 1352, 1358 (Fla. 1st DCA 1991) (“The law of the case does apply to a

situation in which a plaintiff does not opt to amend, and an appellate court is

presented with the same complaint that it previously concluded had failed to state

a cause of action. Therefore, although the law of the case would warrant

1
DSG inappropriately relies on matters outside the four corners of the SAC, such
as statements made during the appellate oral argument. Memo at 12. Landlord
moves to strike DSG’s arguments that are outside the four corners of the SAC.

3
affirmance of Warner’s unamended Count XV, on remand, Warren should be

given leave to amend. . .”) (Emphasis in original). But Landlord did not simply

refile the same complaint. The “law of the case” doctrine is inapplicable here.

In Wells Fargo Armored Servs. Corp. v. Sunshine Sec. and Detective

Agency, Inc. 575 So. 2d 179 (Fla. 1991), the Florida Supreme Court considered

the Third District Court of Appeal’s affirmance of the trial court’s dismissal of an

amended complaint on the basis of the law of the case doctrine, as the Third

District had previously affirmed the dismissal of the original complaint on the

grounds that the original complaint had failed to state a cause of action. The

Florida Supreme Court expressly “reject[ed]” the Third District’s “conclusion”

that the law of the case precluded reopening the case and filing an amended

complaint on remand, holding that the “law-of-the-case doctrine was meant to

apply to matters litigated to finality, not to matters that remain essentially

unresolved due to the erroneous ruling of a lower court.” 2 Id. at 180 (emphasis

added). The Florida Supreme Court quashed the decision of the district court and

remanded to the trial court for a determination of the sufficiency of the amended

complaint, holding:

The court below erred in saying that ‘plaintiff is precluded
by the doctrine of law of the case and filing an amended
2
There, the appellate court had not specifically ordered that the plaintiff should
have an opportunity to amend. Here, the Fifth District specifically ordered that “[o]n
remand, Landlord shall have an opportunity to amend.”

4
complaint upon remand containing the same causes of action
ruled upon in the prior appeal and adding new, different
theories of recovery not previously asserted.’ The plaintiff
would be so precluded by the law of the case only if it opted
not to amend and endeavored to proceed on the same
theories asserted in the original complaint. However, a
plaintiff should be permitted to assert a new theory of
recovery. Of course, the sufficiency of such a new theory can
be tested by a motion to dismiss.

Id. (internal citations omitted). Likewise, in Dot (SR), Inc. v. Telesur, 136 So. 3d

1239, 1240-1242 (Fla. 2d DCA 2014), the Second District held that its dismissal

of a prior complaint because of deficient jurisdictional allegations did not preclude

the filing of an amended complaint against the same defendant.

Here, the Fifth District only determined the “amended complaint did not

sufficiently state a cause of action.” Memo at Ex. A. Thus, the “effect of the prior

appeal was not to decide the case, but rather to restore it to the pleading stage.”

Fitchner v. LifeSouth Cmpty. Blood Centers, Inc., 88 So. 3d 269, 276 (Fla. 1st

DCA 2012).3 What’s more, the Fifth District specifically held that the “trial court

erred when it refused to permit Landlord to amend and dismissed the case with

3
In Fitchner, the court noted that while the doctrine of law of the case requires that
questions of law decided in an appeal must govern the case through all subsequent
stages of the proceeding, the doctrine of the law of the case can be applied only to
a point of law that was actually decided on appeal. Id. at 275; see also Betts v.
Fastfunding the Co., Inc., 60 So. 3d 1079, 1081 (Fla. 5th DCA 2011) (determining
that law of the case was “inapplicable” to consideration of the appointment of a
substitute arbitrator because that specific issue had “never been considered and
decided in a prior appeal involving this case” even though other appeals concerned
arbitrability). An appellate court has not considered and ruled upon the SAC.

5
prejudice.” Memo at Ex. A. Thus, there is no “law of the case.” Rather, the case

has returned to the pleadings stage for consideration of the SAC anew. 4 Cf. Edgar

v. Cape Coral Med. Ctr., Inc., 664 So. 2d 1068, 1069 (Fla. 2d DCA 1995)

(determining that the trial court did not err in dismissing certain counts but the

dismissal must be without prejudice “to avoid the possibility of establishing the

law of the case. . . ”).

The SAC contains additional factual allegations and causes of action and is

neither vague nor conclusory. 5 Nor is the declaratory relief sought by Landlord

the same. Landlord does not allege that the Lease is unconscionable, nor does it

allege that the Lease should not be enforced because it does not have control over

the neighboring Mall—both focal points of Judge Weiss’s prior ruling. 6 And, the

4
The two cases DSG relies upon in its attempt to foreclose Landlord’s claims are
entirely inapposite to the procedural posture here. In Bueno v. Bueno de Khawly,
677 So. 2d 3, n. 1 (Fla. 3d DCA 1996), the court held that a widow was foreclosed
from claiming an interest in property in a second suit because the trial court had
entered a final judgment in an earlier proceeding, affirmed by the appellate court,
finding that the widow was estopped from any and all claims to the subject property.
See also Bueno v. Bueno de Khawley, 643 So. 2d 1174 (Fla. 2d DCA 1994). And,
in Strazzulla v. Hendrick, 177 So. 2d 1, 2 (Fla. 1965), there had been two trials, two
verdicts, two judgments and two appeals. Nonetheless, the Florida Supreme Court
specifically determined that appellate courts have the power to reconsider and
correct erroneous rulings that had become the law of the case. Id. at 5.
5
It is interesting that DSG now contends the SAC is “prolix.” Motion at 4, n. 1.
6
DSG argues repeatedly that “Landlord freely assumed the risk that it would have
no control over the Mall or its Occupancy,” focusing on Section 1.7(d) of the Lease.
Memo at 2-3, 9, 12. This argument has no bearing on the SAC; none of Landlord’s

6
SAC does not “contradict” any “prior admissions.” 7 There are no prior

“admissions” and a plaintiff is “not bound by the allegations in [a] prior unsworn

complaint.” Lewis v. Morgan, 79 So.3d 926, 930 (Fla. 1st DCA 2012). 8

Rather, Landlord sets forth numerous ambiguities, conflicting provisions,

and errors in the Lease, SAC at ⁋⁋ 96-114, and seeks a declaration based on these

issues, as they affect the Parties’ rights and obligations. SAC at ⁋⁋ 126-129.

Further, Landlord seeks a declaration regarding the applicability of the Ongoing

Co-Tenancy Requirement—asserting that this requirement was not triggered (⁋⁋

130-133), the Anchor Tenant Inducement (⁋⁋ 150-155), and DSG’s refusal to pay

Additional Rent due under the Lease (⁋⁋ 134-141). These issues were not raised

in the earlier complaint. Notably, although DSG tries to sweep issues regarding

its refusal to pay its share of common maintenance assessments (“CAM”) and real

estate taxes within Judge Weiss’s broad prior order, this dispute was not ripe at

claims are focused on a contention that it does not own or control the Mall.
Landlord simply sets forth this fact in the “Background Facts” of the SAC at ⁋10.
7
DSG attempts to manufacture a “contradiction” where none exists, asserting that
Landlord previously “admitted” that “LFA of the Mall” means leasable floor area
of the Mall. Memo at 5. Landlord is not asserting that “LFA” pertains to any other
property. Rather, the “LFA of the Mall” at what point in time? See SAC at ⁋⁋102-
111. Similarly, Landlord did not previously allege that the Mall was “first class” at
the time the Lease was executed, Memo at 6. Rather, redevelopment of the Mall
was always expected. Original Complaint at ⁋10.
8
Carvell v. Kinsey, 87 So. 2d 577 (Fla. 1956), Memo at 6, concerned the allegations
and admissions in an operative complaint and answer, not superseded pleadings.

7
the time Landlord filed the earlier complaint. Landlord maintains that the payment

of Substitute Rent in lieu of Minimum Rent constitutes an impermissible penalty

“[u]nder the circumstances” (⁋⁋ 167-168), and clearly sets forth these

circumstances in the SAC. Id. at ⁋⁋ 156-169. Further, Landlord establishes in the

SAC that Substitute Rent is employed throughout the Lease upon a violation,

default, or failure of Landlord. Id. at ⁋ 41.

The declaratory relief sought in the SAC has not been considered and ruled

upon by the Fifth District. And Landlord’s claims for breach of the implied

covenant of good faith and fair dealing are premised on specific actions of bad

faith not previously addressed. Id. at ⁋⁋ 177-191. DSG should not be permitted

to hide behind Judge Weiss’s prior, overbroad statement that the Court “agree[s]

with and adopt[s] DSG’s interpretation of the Lease,” to preclude any claim for

declaratory relief or cause of action for breach of the implied duty of good faith

and fair dealing. To do so renders the Fifth District’s directive that Landlord be

permitted leave to amend meaningless.

“Law of the case” does not warrant dismissal of any of the causes of action

in the SAC. Rather, the Court must consider the allegations and claims pled in the

SAC anew. Rulings regarding the superseded complaint are irrelevant. See

Rudloe v. Karl, 899 So. 2d 1161, 1164 (Fla. 1st DCA 2005) (“‘For purposes of

ruling on the motion to dismiss, the trial court was obliged to treat as true all of

8
the [second] amended complaint’s well-pleaded allegations . . . and to look no

further than the [second] amended complaint and its attachments’”).9

B. Landlord Has Pled Legally Sufficient Claims

A motion to dismiss merely tests the legal sufficiency of a complaint, it

cannot be used to resolve factual disputes. See Minor v. Brunetti, 43 So. 3d 178,

179 (Fla. 3d 2010). Accordingly, when ruling on such a motion, a trial court must

accept all factual allegations as true and must construe all reasonable inferences

in favor of the pleader. See id. “[T]he trial court is not free to speculate as to what

may indeed be true or ultimately proven.” Cintron v. Osmose Wood Preserving,

Inc., 681 So. 2d 859, 861 (Fla. 5th DCA 1996) “The question for the trial court to

decide is simply whether, assuming all the allegations in the complaint to be true,

the plaintiff would be entitled to the relief requested.” Id. And, a complaint should

not be dismissed “unless the movant can establish beyond any doubt that claimant

could prove no set of facts whatsoever in support of his claim.” Charles v. Fla.

Foreclosure Placement Ctr., LLC, 988 So.2d 1157, 1158 (Fla. 3d DCA 2008). It

is precisely because of this heavy burden that motions to dismiss are disfavored

9
See also Metro. Bank & Trust Co., 400 So. 2d 184, 184 (Fla. 2d DCA 1981)
(“Moreover, the allegations of the initial complaint were irrelevant because they
were superseded by subsequent complaints. . .”); Steele v Lannon, 355 So. 2d 190,
n. 1 (Fla. 2d DCA 1978) (“It is generally true that where an amended complaint
(as opposed to an amendment to the complaint) is filed and does not refer to or in
any way adopt the original complaint, the latter supersedes the former and the
former ceases to be a part of the record”).

9
and granted sparingly. See Oguz v. Oguz, 478 So. 2d 437, 440, n. 9 (Fla. 5th DCA

1985) (Sharp, J. concurring). Here, DSG has not met its burden.

a. Landlord Has Stated a Claim for Declaratory Relief

Florida’s declaratory judgment statute is “to be liberally administered and

construed.” Lutz v. Protective Life Ins. Co., 951 So.2d 884, 888 (Fla. 4th DCA

2007) (quoting Hialeah Race Course, Inc. v. Gulfstream Park Racing Ass’n., 210

So. 2d 750, 752-53 (Fla. 4th DCA 1968)). Upon a motion to dismiss a claim for

declaratory relief, the “test of sufficiency of a complaint” is “not whether the

complaint shows that the plaintiff will succeed in getting a declaration of rights in

accordance with this theory and contention, but whether he is entitled to a

declaration of rights at all.” Id. at 888-89.

Thus, to sustain a claim for declaratory relief, the inquiry is not whether

plaintiff will ultimately prevail; rather the “test recognized in this state” is

whether: (1) the party seeking the declaration shows that he is uncertain as to the

existence or non-existence of some right, status, immunity, power or privilege; (2)

there is an actual, practical and present need for a declaration; (3) there is a bona

fide, justiciable controversy; and (4) the parties have adverse interest with respect

to the matters upon which the declaration is sought. Id. at 889. Here, Landlord

has adequately pled it is entitled to a declaration of rights. SAC at ⁋⁋ 124-175.

Despite DSG’s assertions, Landlord is not attempting to “ignore” or

10
“rewrite” the Lease. Motion at 2. Rather, in the SAC, Landlord has clearly set

forth specific ambiguities, inconsistencies, and errors in the Lease and the

resulting confusion and disagreement necessitating declaratory relief. SAC at ⁋⁋

129. Landlord seeks declaratory relief regarding the applicability of the Ongoing

Co-Tenancy Requirement, whether additional rent (such as CAM and taxes) is due

under the Lease even if Substitute Rent is appropriate, the proper LFA in

calculating the Shop Space Inducement, whether the Anchor Tenant Inducement

allows for a replacement anchor, and whether the Ongoing Co-Tenancy

Requirement is an impermissible penalty and constitutes liquidated damages. 10

At issue is a long-term Lease between DSG and Landlord for DSG’s

operation of a Dick’s Sporting Goods on Colonial Drive in Orlando on property

that is adjacent to Fashion Square Mall. SAC at ⁋⁋ 6-12. The Lease contains an

Initial Co-Tenancy Requirement and an Ongoing Co-Tenancy Requirement tied

to the occupancy at the separate Mall; the requirements of both (the “Co-Tenancy

Requirements”) are the same. Id. at ⁋⁋ 35-36. Specifically, both require that two

of three anchor tenants at the Mall remain open and fully operational (“Anchor

Tenant Inducement”) and that “at least [80%] of the remaining LFA of the Mall

as shown on Exhibit A,” be occupied by an Occupant “for the operation of a retail

10
The latter three declarations are sought to the extent the Court finds the Ongoing
Co-Tenancy Requirement has been triggered and is applicable. SAC at pp. 35-36.

11
business required by a Required Tenant” (“Shop Space Inducement”). Id. A

“Required Tenant” is a “(i) national Occupant operating a minimum of fifty (50)

high quality retail stores of the types typically found in first-class regional

shopping centers; or (ii) regional Occupant satisfactory to Tenant.” Id. at ⁋ 38.

Thus, DSG can deem a regional tenant an acceptable “Required Tenant.” 11

In July 2016, DSG claimed a violation of the Ongoing Co-Tenancy

Requirement, claiming that certain tenants did not qualify as “Required Tenants”

to satisfy the Shop Space Inducement and began paying Substitute Rent in lieu of

Minimum Rent in December 2016. SAC at ⁋⁋ 60, 65. However, as alleged in the

SAC, each of these same tenants were included in occupancy reports provided in

February 2015. Id. at ⁋⁋ 50, 60-64, 66-70. DSG never asserted that any of the

tenants in these occupancy reports did not qualify as “Required Tenants.” Much

to the contrary, in response to these occupancy reports, DSG began paying Rent.

Id. at ⁋⁋ 54-56. Landlord asserts that these tenants should not be permitted to

count as “Required Tenants” for purposes of the Initial Co-Tenancy Requirement,

11
DSG explains that co-tenancy provisions “typically provide for other spaces in
the shopping center to be open and operating either by specific retail occupants or
by retail occupants of a certain quality and prominence.” Motion at 2. (Emphasis
added). Here, the Dick’s Sporting Goods Store is not in the same shopping center
as, or connected to, the Mall; rather the Mall is on separate and distinct property
with its own ingress and egress and its own parking lots. SAC at ⁋⁋ 9, 11-12.

12
but not the Ongoing Co-Tenancy Requirement.12 Id. at ⁋⁋ 86-87, 130-133. And,

if the Initial Co-Tenancy Requirement was not satisfied during the Initial Co-

Tenancy Requirement Period of two years from the Rental Commencement Date,

the Ongoing Co-Tenancy Requirement was never triggered. 13 Id. at ⁋⁋ 45, 77, 85.

DSG’s response is essentially that this is a distinction without a difference

because under both Co-Tenancy Requirements DSG can pay Substitute Rent

“indefinitely.” Motion at 6. DSG states five times that the Initial Co-Tenancy

Requirement “provides” that DSG can pay Substitute Rent “indefinitely” and

asserts there is “no expiration date for DSG’s right to pay Substitute Rent in the

event of a violation of the Initial Co-Tenancy Requirement that continues through

DSG’s tenancy.” See e.g. Motion at 6, 9, 10; Memo at 4, 6. This is not accurate.

Nowhere does the Initial Co-Tenancy Requirement provide that DSG can

pay Substitute Rent “indefinitely.” DSG wholly ignores the fact that there is an

“Initial Co-Tenancy Requirement Period.” SAC at ⁋ 43. And, the only option

12
Landlord has sufficiently alleged that DSG, by its conduct, has implicitly
consented to, or is estopped from taking issue with, the tenants set forth in the 2015
Occupancy Reports. SAC at ⁋⁋ 88-87, 133. Landlord’s argument regarding waiver,
Memo at 7-9, is a red herring.
13
DSG’s argument that Landlord did not allege that the Initial Co-Tenancy
Requirement was not satisfied as of the date DSG elected to open for business or
on the Rental Commencement Date, Memo at 7, misses the point. The point is DSG
never advised that the non-national tenants did not qualify as Required Tenants, but
then took issue with the same tenants or caliber of tenants in declaring a violation
of the Ongoing Co-Tenancy Requirement.

13
provided in the Lease if Initial Co-Tenancy Requirement is not satisfied during

the Initial Co-Tenancy Requirement Period is to terminate the Lease. 14 Id.

This is in sharp contrast to the Ongoing Co-Tenancy Requirement which

specifically provides, twice, that DSG has the option to terminate the Lease or

continue paying Substitute Rent if a violation continues for a specified period. Id.

at ⁋⁋ 45-46. There would be no reason for two separate Co-Tenancy Requirement

provisions if the Initial Co-Tenancy Requirement “continue[d] through DSG’s

tenancy,” Memo at 4, or if DSG could continue to pay Substitute Rent if the Co-

Tenancy Requirement was not satisfied during the Initial Co-Tenancy

Requirement Period. Instead, there would be just one Co-Tenancy Requirement.

See Inter-Active Servs., Inc. v. Heathrow Master Ass’n, Inc., 721 So. 2d 433, 435

(Fla. 5th DCA 1998) (“[C]ourts should give effect to each provision of a written

instrument in order to ascertain the true meaning of the instrument.”).

At a minimum, the stark difference between the remedies explicitly set forth

in these two provisions creates an ambiguity. Landlord should be entitled to

present evidence as to the Parties’ intentions, SAC at ⁋⁋ 71-77, regarding these

provisions. See Lemon v. Aspen Emerald Lakes Assocs., Ltd., 446 So. 2d 177, 180

(Fla. 5th DCA 1984) (“It is a well-established legal principle that if a written

14
DSG states: “‘Initial’ co-tenancy provisions address co-tenancy at the beginning
of a lease.” Here, the Lease explicitly set an Initial Co-Tenancy Requirement Period
of two years from the Rental Commencement Date. SAC at ⁋ 43.

14
contract is ambiguous so that the intent of the parties cannot be understood from an

inspection of the instrument, extrinsic or parol evidence of the subject matter of the

contract, of the relation of the parties, and of the circumstances surrounding them

when they entered into the contract may be received in order to properly interpret

the instrument.”). Landlord has properly sought declaratory relief.15

Likewise, Landlord has sufficiently alleged the need for a declaration

regarding whether Additional Rent is due even if DSG were entitled to pay

Substitute Rent (SAC at ⁋⁋ 93-96, 129(c), 134-141, 175(b))—an issue now ripe as

DSG has not made its annual tax payment of $119,379.84 since 2016 and is paying

CAM only under protest. SAC at ⁋⁋ 93, 116-117. The provisions regarding

amounts due under the Lease are neither “explicit” nor “unambiguous.” Memo at

13. Section 4.1 of the Lease plainly provides that Additional Rent, including CAM

and real estate taxes, is due “in addition to the payment of Minimum Rent as

provided in this Article IV and Substitute Rent.” Id. at ¶ 42.

DSG is latching on to errors and inconsistencies in the Lease (SAC at ⁋⁋ 98-

100, 134-141) to contend that it does not have to pay its share of CAM and real

estate taxes if it is permitted to pay Substitute Rent. However, the only plausible

way to reconcile these inconsistencies with the clear language that Additional Rent

15
Landlord further directs the Court to its allegations and grounds for declaratory
relief clearly set forth in its SAC.

15
is due “in addition” to Minimum Rent or Substitute Rent is a determination that

Substitute Rent is due in lieu of Minimum Rent. See U.S. Fid. & Guar. Co. v. Rood

Invs., Inc., 410 So. 2d 1373, 1374 (Fla. 5th DCA 1982) (“Every provision in a

contract should be given meaning and effect and apparent inconsistencies

reconciled if possible.”). It does not make sense that DSG is relieved of its share

of CAM and real estate taxes if occupancy in a neighboring mall is not met. 16 DSG

should not be entitled to benefit—to the severe detriment of Landlord—from

sloppiness in the Lease it drafted.

As a secondary basis for declaratory relief, 17 Landlord sufficiently alleges

why and how the Ongoing Co-Tenancy Requirement is an impermissible penalty

and constitutes liquidated damages under the specific circumstances set forth in

the SAC. SAC at ⁋⁋ 11-12, 120-121, 156-169. And, Landlord also establishes that

Substitute Rent is employed throughout the Lease as the response to a violation,

16
Substitute Rent is used throughout the Lease as a penalty for such things as failing
to provide subordination, non-disturbance and attornment agreements and failing to
deliver a fully executed and recorded memorandum of Lease within a specified time
period. SAC at ⁋ 41. It is inconceivable that DSG would be relieved of its obligation
to pay CAM and real estate taxes for these types of “failures.”
17
Landlord also sufficiently states claims for the secondary declaratory relief
sought regarding the LFA of the Mall and the Anchor Tenant Inducement, part of
the justiciable dispute regarding the Ongoing Co-Tenancy Requirement. SAC at ⁋⁋
29-32, 37, 101-114, 142-149, 150-155. DSG’s position that the 18 months to satisfy
the Anchor Tenant Inducement was meant to allow for a department store to close
for a period and the same store to reopen, Memo at 16, is nonsensical.

16
default or failure of Landlord, including for an “Ongoing Co-Tenancy Violation.”

SAC at ⁋⁋ 41, 45, 157. DSG argues that “the Court has already ruled that

[Substitute Rent] is nothing more than a tiered rent structure” and law of the case

bars this claim. Motion at 5; Memo at 11. This prior determination, improperly

made on a motion to dismiss concerning facts alleged in a different complaint, is

not the law of the case.

Other than “law of the case,” DSG offers no grounds for dismissal

warranting a response from Landlord. Nonetheless, Landlord states that it has

sufficiently alleged that allowing DSG to pay Substitute Rent for an “Ongoing Co-

Tenancy Violation”—a defined term in the Lease (SAC at ⁋⁋ 45, 157)—is an

impermissible penalty. A determination as to whether a co-tenancy provision with

a “dual-rent” or “tiered rent” structure operates as liquidated damages and is an

unenforceable penalty cannot be made on a motion to dismiss. In fact, the

determination is so fact dependent that the issue often even precludes entry of

summary judgment. In Boca Park Marketplace Syndications Group, LLC v. Ross

Dress for Less, Inc., 2018 WL 1524432, *5 (D. Nev. Mar. 28, 2018), the court

determined that it could not find on summary judgment whether a co-tenancy

provision providing for minimum rent if the co-tenancy requirements were met

and substitute rent if the requirements were not met was liquidated damages or an

unenforceable penalty. The court stated:

17
The case will proceed to trial so that the Court, sitting in
equity, can review the facts in the context of how the
cotenancy provisions function as well as their impact upon
the parties- to Ross’ sales and to Boca Park’s rent based upon
those sales . . .. The Court finds that, before it can decide as
a matter of law whether the co-tenancy provision is
reasonable and enforceable, it must engage in factfinding
which is not permitted at this stage. That factfinding may
relate to and encompass the evidence already submitted by
the parties, but the Court cannot grant summary judgment
without further inquiry into the underlying facts.

Id. Even in Old Navy, LLC v. Ctr. Dev. Oregon, LLC, 2012 WL 2192284 (D. Or.

June 13, 2012), Memo at 11, the determination that the tiered rent structure was

not liquidated damages was made on summary judgment.

Landlord has sufficiently pled entitlement to a declaration of rights. 18 Lutz,

951 So. 2d at 888-89. The Court should not dismiss Count I of the SAC.

b. Landlord’s Claims of Breach of the Implied Duty of Good Faith
and Fair Dealing are Tied to Express Provisions of the Lease

DSG contends that Landlord “cannot state a claim for breach of the implied

duty of good faith and fair dealing because all Landlord alleges is that DSG

invoked its explicit rights under the Lease.” Motion at 6. This is not what

Landlord alleges and not what DSG has done. Landlord is not claiming DSG

breached this duty by “simply exercising its right[s].” Memo at 18. Nor is

Landlord seeking to “vary the terms of a contract.” Memo at 17.

18
Despite DSG’s statement otherwise, Motion at 6, Landlord is not seeking
reformation of the Lease as part of the declaratory relief.

18
In the Lease, DSG has the “sole power” to deem a tenant “satisfactory” to

constitute a “Required Tenant” for purposes of satisfying the Co-Tenancy

Requirements. SAC at ⁋⁋ 38, 53, 181. DSG began paying Rent after receiving the

occupancy reports in February 2015, never taking issue with any of the tenants

included therein. Then, almost two years later, DSG took issue with many of the

same tenants, declared a violation of the Ongoing Co-Tenancy Requirement and

started paying Substitute Rent. Id. at ⁋⁋60-69.

Landlord alleges that the Mall was in the process of being re-tenanted and

it was never the Parties’ intention to allow for DSG to continue paying Substitute

Rent indefinitely if the Co-Tenancy Requirement could not be met to the

satisfaction of DSG during the Initial Co-Tenancy Requirement Period. SAC at

⁋⁋ 74-77. Thus, DSG engaged in a scheme to lead Landlord to believe that the

tenants in the 2015 Occupancy Reports were satisfactory to DSG as “Required

Tenants” and then later declare a violation

Case Info

Judge

John E Jordan Track Judge’s New Case

Case No.

(Subscribe to View)

Document Filed Date

February 25, 2020

Case Filing Date

May 10, 2017

County

Parties

DICKS SPORTING GOODS INC Defendant
JAMES WALSON Attorney for the Defendant
NICOLETTE VILMOS Attorney for the Plaintiff
UP FIELDGATE US INVESTMENTS EAST COLONIAL LLC Plaintiff
Ronald Edwards Attorneys for Defendants
Michael Krekstein Attorney
GEORGE SCOTT Attorney
Linda White Attorneys for Plaintiffs
Ronald Dusek Attorney
Lacey Corona Attorneys for Plaintiffs
James Engel Attorneys for Plaintiffs
Charles Valente Attorney

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