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Filing # 101790352 E-Filed 01/16/2020 03:28:52 PM
IN THE CIRCUIT COURT OF THE NINTH
JUDICIAL CIRCUIT IN AND FOR ORANGE
COUNTY, FLORIDA
CASE NO. 2017-CA-004308-O
UP FIELDGATE US INVESTMENTS EAST
COLONIAL LLC,
Plaintiff,
vs.
DICK’S SPORTING GOODS, INC., a
Delaware corporation,
Defendant,
/
DEFENDANT’S MOTION TO DISMISS SECOND AMENDED COMPLAINT
COMES NOW Defendant, DICK’S SPORTING GOODS, INC., by and through its
undersigned attorneys, and hereby move this Court to dismiss the Second Amended Complaint
filed herein by Plaintiff, and as grounds therefore would state as follows:
I Introduction
This Motion, and the Second Amended Complaint it addresses, follow from this Court’s
Final Order of Dismissal (“Order”) on the First Amended Complaint previously filed by Plaintiff
UP Fieldgate US Investments-East Colonial, LLC (“Landlord”). That Order was wholly
affirmed by the Court of Appeal but for one issue—leave to amend. (The decision of the Court
of Appeal is attached as Exhibit A.) Among other things, the Court concluded (and the Court of
not now
Appeal affirmed) that Landlord freely assumed certain risks under the Lease, and could
rewrite its obligations because those risks came to pass. Despite this, the Second Amended
Complaint is yet another attempt to rewrite the agreement of the parties.
The action concerns a Lease, dated May 14, 2014 (the “Lease”), negotiated between
Defendant Dick’s Sporting Goods, Inc. (“DSG”) and the Landlord for a Dick’s Sporting Goods
store adjacent to the Fashion Square Mall in Orlando (the “Mall”). From the inception of this
action, Landlord has sought to ignore and rewrite the bargained-for terms of the Lease.
Specifically, in entering into the Lease, the parties negotiated what is known in the retail leasing
world as a “co-tenancy” provision. A co-tenancy provision is a provision in a retail lease for the
benefit of the tenant. Such 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. Among other things, co-tenancy provisions often provide that if a
“critical mass” of these types of tenant are not open and operating in all or substantially all their
premises, the lessee can pay a lower, negotiated rent, reflecting the reduced value of the Lease.
See 1 Retail Leasing: Drafting and Negotiating the Lease (Cont.Ed.Bar 2014) ch. 7, pp. 7-1 to 7-
29 (rev. 11/14). “Initial” co-tenancy provisions address co-tenancy at the beginning of a lease,
while “ongoing” co-tenancy provisions address co-tenancy during the lease term. Jd.
Among other things, the “Ongoing Co-Tenancy Requirement” set forth in Section 1.7(a)
of the parties’ Lease establishes a contractual condition to payment of full rent under the Lease—
a certain percentage of the Mall would be occupied by operating “Required Tenants,” which are
limited to certain types of high-quality national and regional retailers. The Lease further
provides for a tiered rent structure: if the Ongoing Co-Tenancy Requirement condition is not met
for an extended period, the Lease provides that DSG shall pay a “Substitute Rent” in lieu of the
rent rate it would otherwise pay. (FAC Ex. 1 [“Lease”)] at §§1.5(c)(i), 1.7.)
Through three complaints, Landlord has not alleged that DSG in any way deviated from
these provisions as written. Instead, Landlord asked the trial court to rewrite the Lease because
Landlord’s affiliate no longer controlled the Mall—a risk Landlord expressly acknowledged and
assumed in Section 1.7(d) of the Lease. This Court already adjudicated this issue in its Order, as
affirmed by the Court of Appeal. This Court found that Landlord expressly assumed the risk that
it would have no control over the Mall or its occupancy, writing that “[iJn particular, the parties
specifically considered the possibility that Landlord and its affiliates would have no control over
the Mall, and Landlord expressly assumed that risk, including in Section 1.7(d) of the Lease.”
(Order at 7.) As adjudicated by the Court, the language of the Lease, including Section 1.7, is
unambiguous and enforceable.
Now, the Second Amended Complaint filed by Landlord reads as if it exists in a vacuum,
ignoring everything that came before it. Landlord tries to get around the Court’s prior ruling by
opting for a “throw everything at the wall and see what sticks” approach, asserting claims for
declaratory relief, breach of the implied covenant of good faith and fair dealing, and promissory
estoppel.! It rehashes arguments already conclusively determined by this Court and the Court of
Appeal, while also introducing new, made-for-litigation arguments that have no support in the
language of the Lease (and in many instances flatly contradict Landlord’s own prior admissions).
Having now had three opportunities to plead a claim, and failing each time, the Court should, for
many reasons, dismiss Landlord’s SAC without leave to amend:
1 Landlord’s prolix, 45-page Second Amended Complaint violates Rule 1.110(b)(2),
with a “short and
Florida Rules of Civil Procedure, which requires that claims for relief be pled
“It is a
plain statement of the ultimate facts showing that the pleader is entitled to relief.”
. The
cardinal rule of pleading that a complaint be stated simply, in short and plain language. . .
the court and the
complaint must set out the elements and the facts that su pport them so that
opinions,
defendant can clearly determine what is being alleged. . . . It is insufficient to plead
are to be stated simply and
theories, legal conclusions or argument. Furthermore, the assertions
succinctly. » Barrett v. City of Margate, 743 So. 2d 1160, 1162-63 (Fla. 4th DCA 1999).
in every possible
Moreover, having taken the opportunity in its third pleading to attempt to throw
additional opportunities
allegation, Landlord cannot be heard to complain that is entitled to any
to amend.
First, with regard to both Count I (declaratory relief) and Count II (breach of the covenant
of good faith and fair dealing), many of Landlord’s rehashed claims are preclusively barred by
the prior rulings of this Court, as affirmed by the Court of Appeal. Strazzulla v. Hendrick, 177
So.2d 1 (Fla.1965) (points of law adjudicated on prior appeal are binding on remand); Bueno v.
Khawly, 677 So.2d 3 (Fla. 34 DCA 1996) (issues decided by trial court and affirmed in prior
appeal are law of the case). Many of the allegations and arguments in the Second Amended
Complaint were already asserted in the First Amended Complaint, and were rejected in this
Court’s Order, as affirmed by the Court of Appeal. For example, Landlord again pleads that
payment of Substitute Rent constitutes a penalty, when the Court has already ruled that it is
nothing more than a tiered rent structure.
Second, with regard to Counts I and II, many of Landlord’s sham allegations should be
ignored because they are contrary to express admissions in Landlord’s prior pleadings. Parties
“are bound by the allegations of their pleadings and admissions contained in the pleadings as
between the parties themselves are accepted as facts without the necessity of supporting
evidence.” Carvell v. Kinsey, 87 So. 2d 577 (Fla. 1956). For example, Landlord now alleges
that the term “LFA of the Mall” is ambiguous, while in previous pleadings it admitted that “LFA
of the Mall” referred to leasable floor area of the Fashion Square Mall.
Third, with regard to Counts I and II, to the extent Landlord has raised new allegations
and arguments, those arguments are contrary to the plain and unambiguous language of the
Lease. For example, Landlord’s new arguments about the meaning of “LFA of the Mall,”
“Inducement Tenants,” and “Rent” are conclusively rebutted by the words of the Lease.
DSG
Fourth, with regard to Counts I, II and III, Landlord now incorrectly argues that
1.6 so that it
wrongfully waived rights under the “tnitial Co-Tenancy Requirement” in Section
can now pay reduced Substitute Rent indefinitely under Section 1.7, the Ongoing Co-Tenancy
Requirement. This new litigation position ignores the actual language of Section 1.6, which also
provides for DSG to pay Substitute Rent indefinitely until the Initial Co-Tenancy Requirement is
met. In other words, the plain language of the Lease establishes that DSG could not have had a
nefarious plan to pay Substitute Rent, because even if Landlord were correct, DSG was already
entitled to do so. If anything, this argument would simply mean that Landlord was obligated to
pay DSG back rent as well.
Fifth, with regard to Count I, Landlord utterly fails to allege facts demonstrating that the
parties made a mistake about the language of the Lease, let alone the type of mistake that would
entitle Landlord to reformation of the Lease. This argument is directly contradictory to the
language of the Lease, and Landlord asserts no other facts that would demonstrate either a
mutual mistake by the parties, or a unilateral mistake that was induced by anything DSG did.
Sixth, with regard to Count II, Landlord does not, and cannot, state a claim for breach of
the implied covenant of good faith and fair dealing because all Landlord alleges is that DSG
invoked its explicit rights under the Lease. See, e.g., Ins. Concepts & Design, Inc. v. Healthplan
Servs., Inc., 785 So.2d 1232, 1234 (Fla. 4th DCA 2001) (no claim for breach of the covenant of
good faith and fair dealing exists absent an allegation of breach of a particular contract
provision).
Seventh, Landlord does not, and cannot, state a claim for promissory estoppel because it
alleges neither a promise by DSG, nor reasonable reliance by Landlord. At best, Landlord
Landlord
alleges that DSG did not raise certain objections, and makes no attempt to allege that
changed its position in reliance.
Il. Statement of Facts and Procedural History
A The Lease Between the Parties
Pursuant to the Lease, DSG operates a Dick’s Sporting Goods store on a parcel directly
adjacent to the Mall.
1 The Unambiguous Language of Section 1.7(a) Sets Forth the
“Ongoing Co-Tenancy Requirement.”
Section 1.7(a) of the Lease sets forth an “Ongoing Co-Tenancy Requirement,” which
provides minimum standards for both (1) occupancy levels at the Mall and (2) the type and
quality of tenants operating at the Mall. In relevant part, the Ongoing Co-Tenancy Requirement
provides that:
(i) at least two of the three Inducement Tenants shall be open, fully
staffed, stocked and operated in substantially all of their respective
premises, for the operation of a retail business (the “Anchor
Tenant Inducement”), and (ii) at least eighty percent (80%) of the
remaining LFA of the Mall? as shown on Exhibit A, excluding all
of the Inducement Tenants, the Demised Premises and any
Outparcels (as so designated on Exhibit A), shall be open, fully
staffed, stocked and operated by an Occupant in substantially all of
its premises, for the operation of a retail business by a Required
Tenant (the “Shop Space Inducement”).
(Lease at § 1.7(a) (emphasis in original).)
2. Section 1.7(b) Provides that if the Ongoing Co-Tenancy Requirement
Is Not Met for a Certain Period of Time, DSG Is Entitled to Pay
“Substitute Rent” In Lieu of All Other “Rent,” Which Is Expressly
Defined to Include Both “Minimum Rent” and “Additional Rent.”
Pursuant to Section 1.7(b) of the Lease, if the Ongoing Co-Tenancy Requirement is not
met for a certain period, “Tenant shall then pay to Landlord monthly, in lieu of Rent, in arrears,
no later than the thirtieth (30th) day of the following month, Substitute Rent (defined in Section
1.5), during the period which extends from the beginning of the first full calendar month
following the Ongoing Co-Tenancy Violation and continuing until the end of the calendar month
as
2] FA” is defined as “leasable floor area.” (Lease at § 1.1.) The “Mall” is defined
the Fashion Square Mall. (/d.)
in which both components of the Ongoing Co-Tenancy Requirement are satisfied.” (Emphasis
added.) “Rent” is defined in Section 4.1(c) of the Lease as both “Minimum Rent and Additional
993
Rent. . . collectively.
Section 1.5(c)(i) of the Lease defines “Substitute Rent.” That language states that if
Landlord is in default under Section 1.5, DSG is entitled to pay “in lieu of Rent (as defined in
Section 4.1(c)), two percent (2%) of Gross Sales (as defined in Section 6.2), but never more than
the Minimum Rent for that month that would have otherwise been payable for such calendar
month (“Substitute Rent”) . . .” (Emphasis in original.) Substitute Rent is based on a
percentage of DSG’s Gross Sales. (Lease at § 1.5(¢)@).)
3. Landlord Freely Assumed the Risk that It Would Have No Control
Over the Mall or Its Occupancy.
At the time the parties entered into the Lease, Landlord’s affiliate, UP Fieldgate US
Investments—Fashion Square, LLC, leased the entirety of the Mall. (FAC at J 20; Lease at
§1.1.) Landlord asserts that the affiliate no longer leases or controls the Mall. (FAC at § 21.)
In Section 1.7(d) of the Lease, Landlord expressly assumed the risk that it would lack
control over the adjoining Mall:
Landlord acknowledges and agrees that the provisions of this
Section 1.7 are material covenants and were instrumental in
inducing Tenant to enter into this Lease and that Landlord shall be
subject to this Section 1.7 even if Landlord (or an affiliate of
Landlord) no longer owns or leases any interest in the Mall
and even if Landlord no longer otherwise has any control over the
Mall.
3 Section 4.1(a) sets forth the Minimum Rent due under the Lease, and Section 4(c)
in
describes Additional Rent, stating: “In addition to the payment of Minimum Rent as provided
pay to Landlord
this Article IV and Substitute Rent (as defined in Section 1.5) and Tenant shall
to be paid by Tenant to
as ‘Additional Rent’ all other sums of money and charges required
Rent, including but
Landlord under this Lease whether or not the same are designated Additional
Portion of
not limited to Tenant's CAM Contribution as provided in Section 14.3 and Tenant's
real estate taxes as provided in Section 5.1.”
Landlord’s attorney signed the Lease as a witness on behalf of Landlord. (Lease at pp. 1,
43, 50.) Both Landlord and the affiliate that previously leased the Mall executed the Lease. (/d.)
4. Section 1.6 Sets Forth an “Initial Co-Tenancy Requirement” and,
Similar to Section 1.7, Provides for DSG to Pay Substitute Rent
Indefinitely While the Initial Co-Tenancy Requirement Is Not Met.
Section 1.64 of the Lease sets forth an “Initial Co-Tenancy Requirement that applies at
the beginning of the Lease term. Section 1.6(b) provides that if the Initial Co-Tenancy
Requirement is not met and DSG elects to open its store, DSG is entitled to pay Substitute Rent
“in lieu of? Rent indefinitely until the Initial Co-Tenancy Requirement is met, stating: “Tenant
shall be entitled to pay Substitute Rent (as defined in Section 1.5) in lieu of Rent, in arrears, no
later than the thirtieth (30th) day of the following month until the end of the month in which the
Initial Co-Tenancy Requirement is satisfied. . . .”
B. Procedural History
1 Landlord Has Made Two Previous Unsuccessful Attempts to State a
Claim.
Landlord filed its original complaint in the Ninth Judicial Circuit Court on May 24, 2017.
After DSG filed a motion to dismiss, Landlord voluntarily amended its original complaint, filing
its first Amended Complaint (“FAC”) on September 7, 2017.
The FAC purported to set forth five causes of action. In Count I of the Amended
Complaint, Landlord sought a declaration that (1) DSG is in default of the Lease; (2) the
penalty
Ongoing Co-Tenancy Requirement and Substitute Rent provisions constitute an unlawful
4 Section 1.6(a) also defines “Inducement Tenants” as used in the Lease as three
that: (i) two of
particular named tenants: “The ‘Initial Co-Tenancy Requirement’ shall mean
fully
the following anchor tenants: Macy’s, J.C. Penney’s and Sears (the, shall each be open,
all of their respecti ve premises
staffed, stocked and operated as a retail business in substantially
Tenants’). . . .”
at the Mall (the three named tenants being collectively, the ‘Inducement
(Emphasis in original.)
or liquidated damages; (3) DSG is obligated to pay the full amount of arrearage rent and full rent
under the Lease for every month thereafter until the Lease is terminated or terminates; (4) to the
extent the Ongoing Co-Tenancy Requirement and Substitute Rent provisions are lawful, Section
1.7 of the Lease should be “rectified” to allow the Landlord the “mutual” right to terminate; and
(5) Section 1.7 of the Lease is invalid and unenforceable. (FAC at pp. 11-13.)
The FAC also contained claims for Unjust Enrichment, Quantum Meruit, Rescission, and
Breach of the Implied Covenant of Good Faith and Fair Dealing. (Jd. at 14-19.) These causes of
action were based on allegations and arguments similar to those raised in the initial claim for
declaratory relief and the claims raised in the SAC — that the provisions of the Lease were
unenforceable, that performance was impossible, that the parties made a mutual mistake, and that
DSG was obligated to pay the full amount of rent instead of the negotiated Substitute Rent. (d.)
2. The Trial Court Dismissed the FAC, Ruling that It Failed to State a
Claim, as Established by the Unambiguous Language of the Lease.
DSG moved to dismiss the Amended Complaint on September 28, 2017. (Mot. to
Dismiss and Incorporated Memorandum of Law.) The trial court granted that motion to dismiss
on March 12, 2018, with prejudice. The Court entered its final Order on April 3, 2018, ruling:
“The court agrees with and adopts DSG’s interpretation of the Lease. Based on the express
language of the Lease, which was expressly agreed to and bargained for by the parties, the
Amended Complaint should be dismissed with prejudice.” (Order at § 6.) Among other things,
the trial court also ruled:
e “In particular, the parties specifically considered the possibility that Landlord and
its affiliates would have no control over the Mall, and Landlord expressly
assumed that risk, including in Section 1.7(d) of the Lease.” (Order at { 7.)
“Moreover, Section 1.7 is not unconscionable, nor does it set forth an
impermissible penalty. Instead, it sets forth one rent to be paid if the Ongoing
if it
Co-Tenancy Requirement is met, and a different “Substitute Rent” to be paid
does not.” (Order at § 8.)
The Court denied Landlord’s motions for reconsideration and rehearing.
Cc The Court of Appeals Affirmed the Court’s Order Dismissing the FAC on
All Grounds But for Denial of Leave to Amend.
Landlord appealed the Court’s Order to the Fifth District Court of Appeal, which
affirmed dismissal of the FAC in its entirety, holding that Landlord failed to state a claim.
However, it remanded to allow Landlord another opportunity to amend. In doing so, the Court
of Appeal noted that even if granted an opportunity to amend, Landlord faced “a steep uphill
climb.” (https://www.5dca.org/ Oral-Arguments/Archived-Video-Oral-Argument-Sessions, App.
No. 18-1525 at 21:01.)
Til. Legal Argument
A Landlord’s Claims Are Barred to the Extent that They Are Contrary to the
Final Order as Affirmed by the Court of Appeal, or Inconsistent with Prior
Admissions.
As a preliminary and foundational matter, Landlord’s claims are preclusively barred by
the prior rulings of this Court, as affirmed by the Court of Appeal. Strazzulla v. Hendrick, 177
So.2d 1 (Fla.1965) (points of law adjudicated on prior appeal are binding on remand). The
ruling of the Court and the Court of Appeal has become law of the case, and Landlord’s recycled
claims are barred. See Bueno v. Khawly, 677 So.2d 3 (Fla. 3d DCA 1996) (issues decided by
trial court and affirmed in prior appeal are law of the case). As discussed further in connection
of
with Counts I and II, the law of the case establishes, among other things, that (1) the language
Section 1.7 is unambiguous; (2) Landlord assumed the risk it would have no control over the
Mall; (3) “Substitute Rent” does not constitute a penalty; and (4) DSG did not breach the
covenant of good faith and fair dealing by simply enforcing its contractual rights.
ns in
Similarly, Landlord cannot rely on sham allegations inconsistent with its admissio
prior pleadings. Parties “are bound by the allegations of their pleadings and [ ] admissions
10
——
contained in the pleadings as between the parties themselves are accepted as facts without the
necessity of supporting evidence.” Carvel v. Kinsey, 87 So. 2d 577 (Fla. 1956). In particular, as
discussed below, allegations made in Count I regarding satisfaction of the Initial Co-Tenancy
Requirement and the meaning of terms of the Lease such as “LFA of the Mall” and “Additional
Rent are inconsistent with Landlord’s previous complaints.
B Landlord’s Count I for Declaratory Relief Should Be Dismissed Because It
Fails to State a Claim.
1 Landlord’s Argument that DSG Cannot Pay Substitute Rent Under
Section 1.7 Because DSG Never Asserted a Violation of Section 1.6 Is
Barred by This Court’s Prior Rulings and Is Otherwise Nonsensical.
In its SAC, Landlord manufactures a brand-new argument that (i) satisfaction of the
ncy
Initial Co-Tenancy Requirement was a “condition precedent to the Ongoing Co-Tena
Requirement being triggered” (SAC 4 85) and (ii) DSG “schemed” to mislead Landlord by
failing to declare a violation of the Initial Co-Tenancy Requirement before declaring that
Landlord had not met the Ongoing Co-Tenancy Requirement. (SAC at 4 76-78, 86.)
reasons.
Landlord’s claim for declaratory relief on this basis fails as a matter of law for several
First, this Court has already determined that the language of the Ongoing Co-Tenancy
Requirement in Section 1.7 is unambiguous. Section 1.7(b) of the Lease provides that if the
pay to
Ongoing Co-Tenancy Requirement is not met for a certain period, “Tenant shall then
the
Landlord monthly, in lieu of Rent, in arrears, no later than the thirtieth (30th) day of
extends from
following month, Substitute Rent (defined in Section 1.5), during the period which
ancy Violation and
the beginning of the first full calendar month following the Ongoing Co-Ten
Ongoing Co-
continuing until the end of the calendar month in which both components of the
to dismiss the FAC,
Tenancy Requirement are satisfied.” (Emphasis added.) After DSG moved
nt to the unambiguous
this Court found that DSG was allowed to pay Substitute Rent pursua
ll
terms of Section 1.7. (Order at § 6) (“The court agrees with and adopts DSG’s interpretation of
the Lease. Based on the express language of the Lease, which was expressly agreed to and
bargained for by the parties, the Amended Complaint should be dismissed with prejudice.”)
Landlord appealed the Court’s Order to the Fifth District Court of Appeal, which affirmed
dismissal of the FAC in its entirety, holding that Landlord failed to state a claim. In sum, the
Court has already determined that Landlord has failed to state a claim based on the unambiguous
language of Section 1.7 of the Lease.
Further, Landlord’s new argument makes no sense, because 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. Section 1.6(b) provides that if the Initial
Co-Tenancy Requirement is not met and DSG elects to open its store, DSG is entitled to pay
Substitute Rent “in lieu of” Rent indefinitely until the Initial Co-Tenancy Requirement is met,
stating: “Tenant shall be entitled to pay Substitute Rent (as defined in Section 1.5) in lieu of
Rent, in arrears, no later than the thirtieth (30th) day of the following month until the end of the
> This unambiguous
onth in which the Initial Co-Tenancy Requirement is satisfied. . .
language directly contradicts Landlord’s unsupported allegation that the parties intended for
DSG’s right to pay Substitute Rent pursuant to Section 1.6(b) to expire after a set period of time.
(See SAC 4 74,).
Landlord’s new argument also confuses the difference between DSG’s right to pay
Substitute Rent under Section 1.6 (which has no expiration date) and DSG’s right to terminate
under Section 1.6. In contrast to DSG’s unambiguous right to pay Substitute Rent pursuant to
terminate the
Section 1.6(b) until the Initial Co-Tenancy Requirement is cured, DSG’s right to
Section
Lease pursuant to a violation of Section 1.6 does expire after a set amount of time.
12
1.6(c)(i) states, “In the event Tenant does not elect to delay its opening and the Initial Co-
Tenancy Requirement has not been satisfied within two (2) years following the Rental
Commencement Date (the ‘Initial Co-Tenancy Requirement Period’), Tenant shall have the right
to terminate this Lease upon written notice to Landlord given within sixty (60) days following
the expiration of the Initial Co-Tenancy Requirement Period.” (Emphasis added.) Nevertheless,
the difference between Substitute Rent and termination rights under Section 1.6 is immaterial to
this dispute, as Landlord’s Second Amended Complaint addresses only DSG’s right to pay
Substitute Rent.
Based on the unambiguous language of Section 1.6(b) of the Lease, DSG could not gain
any advantage by “misleading” Landlord into believing the Initial Co-Tenancy Requirement was
met in order to allege a violation of the Ongoing Co-Tenancy Requirement because both
requirements permit DSG to pay Substitute Rent indefinitely until the violation is cured. In fact,
under Landlord’s new argument, the end result would be that DSG is entitled to additional relief
it is not seeking—that is, Substitute Rent pursuant to Section 1.6(b) on a retroactive basis.
Second, Landlord’s new argument is inconsistent with Landlord’s previous pleadings.
Landlord has filed two prior complaints—neither of which alleged that the Initial Co-Tenancy
Requirement was a condition precedent to the Ongoing Co-Tenancy Requirement being
triggered, or that DSG had schemed to mislead Landlord into believing that the Initial Co-
Tenancy Requirement had been met. Instead, Landlord alleged that the Shopping Center stopped
being “first-class” after the time of the Lease. (Original Compl. at 12, 17.) Landlord is bound
s here.
by the admissions in its previous pleadings, and cannot manufacture wholly new argument
ons of their
See Carvell v. Kinsey, 87 So. 2d 577 (Fla. 1956) (parties “are bound by the allegati
13
pleadings and [ ] admissions contained in the pleadings as between the parties themselves are
accepted as facts without the necessity of supporting evidence”).
Third, even if there was support in the Lease for Landlord’s new argument (and there is
not), the argument lacks any legal significance because Landlord fails to allege that the Initial
Co-Tenancy Requirement was not satisfied as of October 24, 2014—the date DSG elected to
open for business under Section 1.6(b) of the Lease. (See SAC 48.) Landlord alleges only that
as of May 2014, when the Lease was executed, the “Shop Space Inducement of the Initial Co-
Tenancy Requirement was not satisfied, although the revitalization of the Mall was underway.”
(SAC 47.) But Landlord tellingly does not allege that the Initial Co-Tenancy Requirement was
not satisfied on the Rental Commencement date pursuant to Section 1.6 of the Lease.
Fourth and finally, Landlord’s new argument also fails because Landlord acknowledges
in its Second Amended Complaint that the facts regarding occupancy have changed over time.
Indeed, Landlord admits that occupancy in the Mall for purposes of Section 1.7 is worse now
than it was at the inception of the Lease. For example, Landlord alleges that as of June 8, 2016,
when DSG sent its “Ongoing Co-Tenancy Requirement Request” to Landlord, “a large portion of
the Mall’s leasable floor area had been demolished and was not leasable space.” (SAC {ff 57-
58.)
2. Landlord Fails to Allege Facts to Support that DSG Waived Any
Rights Under the Lease.
There is no support in the Second Amended Complaint for Landlord’s assertion that DSG
nts in
waived any right to object to tenancy in the mall on the basis of the co-tenancy requireme
the Lease. (See SAC ff 129(b), 133.) “The elements of waiver are: (1) the existence at the time
the actual or
of the waiver of a right, privilege, advantage, or benefit which may be waived; (2)
14
constructive knowledge of the right; and (3) the intention to relinquish the right.” Leonardo v.
State Farm Fire & Cas. Co., 675 So.2d 176, 179 (Fla. 4th DCA 1996).
Landlord fails to allege both the necessary elements for waiver and what DSG’s
purported “waiver” here is. Landlord pleads no facts regarding the existence of a right that was
waived by DSG. With respect to the Initial Co-Tenancy Requirement, Landlord fails to explain
what “right” DSG purportedly waived, as Landlord never alleges that there was a violation of the
Initial Co-Tenancy Requirement. Nor does Landlord allege that DSG had knowledge of any
right to waive a violation of the Initial Co-Tenant Requirement, or that DSG had any intent to do
so. With respect to the Ongoing Co-Tenancy Requirement, Landlord similarly fails to allege
that DSG had any intent to waive its rights under Section 1.7 of the Lease.
Further, Landlord ignores that the Lease contains an anti-waiver provision in Section
17.5. Section 17.5 states, in part, “Failure of either Party to complain of any act or omission on
the part of the other Party, no matter how long the same may continue, shall not be deemed to be
a waiver by such Party of any of its rights hereunder. No waiver by either Party at any time,
express or implied, of any breach of any provision of this Lease shall be deemed a waiver of a
breach of any other provision of this Lease or a consent to any subsequent breach of the same or
any other provision.” Thus, even if Landlord had alleged facts to support an argument that DSG
waived a right to object to a co-tenancy requirement under Sections 1.6 or 1.7 (which Landlord
did not), the unambiguous language of Section 17.5 precludes Landlord’s waiver argument.
Finally, there is no merit to Landlord’s allegation that DSG waived a right to “object to
those rights.
tenants in the Mall,” (SAC ff 129(b), 133), because the Lease does not give DSG
have a right
Under the Lease, DSG has rights to certain remedies for use provisions, but does not
15
to exclude other tenants (also, Landlord would be in possession of superior information about the
tenants and whether they were “Required Tenants”).
3 Landlord Also Fails to Allege Facts to Support Its New Theory that
“LFA of the Mall” Is Ambiguous as Used in Section 1.7(a).
Landlord also manufactures a new argument (clearly made for litigation) that the “LFA
of the Mall” to be considered in connection with the Ongoing Co-Tenancy Requirement is
ambiguous, because Section 1.7(a) references Exhibit A of the Lease, and the owner of the Mall
did not redevelop the Mall shown in Exhibit A. (SAC at {{] 36-37.) (It is undisputed that “Mall”
is defined in the Lease as the Fashion Square Mall.) Landlord’s claim for declaratory relief on
this basis fails as a matter of law for a number of reasons.
First, this new argument is wholly inconsistent with Landlord’s original Complaint, and
its First Amended Complaint. As reflected in those pleadings, Landlord had no problem
understanding that the “LFA of the Mall” referred to the leasable floor area of the Fashion
Square Mall. (See Complaint at J 14, stating that Ongoing Co-Tenancy Requirement is “tied to
occupancy at the Mall”; FAC at 4 35, stating that the “[t]he Ongoing Co-Tenancy Requirement
required that at least two out of three named anchor tenants occupy the Mall and that 80% of the
rest of the Mall be occupied by “high quality retail stores of the types typically found in first-
class regional shopping centers.”)
Second, to the extent Landlord had no control over what the owner of the Mall did with
regard to redevelopment, that was precisely the risk assumed by Landlord in Section 1.7(d). As
set forth in this Court’s previous Order: “Under Section 1.7(d), the parties agreed that “Landlord
shall be subject to this Section 1.7 even if Landlord (or an affiliate of Landlord) no longer owns
or leases any interest in the Mall and even if Landlord no longer otherwise has any control over
the Mall.’” (Final Order, at § 4.) Thus, “the parties specifically considered the possibility that
16
Landlord and its affiliates would have no control over the Mall, and Landlord expressly assumed
that risk, including in Section 1.7(d) of the Lease.” (Jd. at J 7, citing Rawson v. UMLIC VP,
L.L.C.,933 $o.2d 1206, 1210 (Fla. 1st DCA 2006); 1700 Rinehart, LLC v. Advance Am., Cash
Advance Ctrs., 51 So.3d 535, 537-38 (Fla. Sth DCA 2010).)
Third, Landlord has not alleged facts to support the existence of a justiciable controversy
because it has not alleged any alternate interpretation of the Lease language, let alone a definition
of “LFA of the Mall,” that would mean occupancy at the Mall satisfied the Ongoing Co-Tenancy
Requirement. In order for the Court to have jurisdiction over a claim for declaratory judgment,
there must exist “a bona fide dispute between the contending parties as to a present justiciable
question.” Bryant v. Gray, 70 So.2d 581 (Fla.1954). This means that a party to a contract cannot
bring a claim for declaratory relief as to a contract unless and until there is a ripe dispute
regarding that provision. See, e.g., Clearwater Land Co. v. Koepp, 778 So0.2d 1022, 1025 (Fla.
2d DCA 2000) (claim for declaratory judgment regarding meaning of contractual provision not
ripe where party had not attempted to apply it).
4 Landlord’s Claim for a Declaration that Substitute Rent is a
“Penalty” Is Barred by the Law of the Case.
Landlord also argues, once again, that the Substitute Rent provision constitutes a penalty.
of
This argument is barred because it was already rejected by this Court and by the Court
Appeal. See Strazzulla v. Hendrick, 177 So.2d 1 (Fla.1965). As this Court ruled, and as the
Court of Appeal affirmed, “Section 1.7 is not unconscionable, nor does it set forth an
impermissible penalty. Instead, it sets forth one rent to be paid if the Ongoing Co-Tenancy
at { 8; see
Requirement is met, and a different “Substitute Rent’ to be paid if it does not.” (Order
11 (June 13, 2012
Old Navy, LLC y. Center Developments Oregon, LLC, 2012 WL 2192284, at*
17
D. Or.) (ruling that such provisions do not set forth a penalty, or even liquidated damages, but
rather a “tiered rent structure”).)
Although reworded, Landlord’s allegations in the SAC are substantively identical to its
previously rejected allegations. (See SAC at 156-169.) Landlord argues that (1) the Ongoing
Co-Tenancy Requirement is tied to occupancy at the adjoining Mall; and (2) that DSG’s sales
have not been affected. (Jd.) These are precisely the same arguments raised in the FAC—and
rejected by this Court and the Court of Appeal. (See FAC at {ff 47-70.) Landlord has alleged no
new facts in the SAC supporting its claim; therefore the ruling of this Court and the Court of
Appeal has become law of the case, and Landlord’s recycled claim is barred.> See Bueno v.
Khawly, 677 So.2d 3 (Fla. 3d DCA 1996) (issues decided by trial court and affirmed in prior
appeal are law of the case).
5. Landlord’s Argument that DSG Is Obligated to Pay “Additional
Rent” Even If the Ongoing Co-Tenancy Requirement Is Not Satisfied
Fails Because It Is Contrary to the Unambiguous Language of the
Lease.
Landlord also incorrectly asserts that if the Ongoing Co-Tenancy Requirement in Section
1.7 is not met, DSG may pay Substitute Rent in lieu of Minimum Rent, but it must also pay
“Additional Rent,” including CAM and tax costs. (SAC at pp. 29-30; 35-36.) This is contrary to
the unambiguous language of the Lease, which provides that Substitute Rent is to be paid in lieu
of both Minimum Rent and Additional Rent.
Pursuant to Section 1.7(b) of the Lease, if the Ongoing Co-Tenancy Requirement is not
arrears,
met for a certain period, “Tenant shall then pay to Landlord monthly, in lieu of Rent, in
in Section
no later than the thirtieth (30th) day of the following month, Substitute Rent (defined
previous
5 Accordingly, DSG will not rehash the extensive legal arguments made in its
Motion to Dismiss. (See pp. 11-14.)
18
1.5), during the period which extends from the beginning of the first full calendar month
following the Ongoing Co-Tenancy Violation and continuing until the end of the calendar month
in which both components of the Ongoing Co-Tenancy Requirement are satisfied.” (Emphasis
added.) “Rent” is defined in Section 4.1(c) of the Lease as both “Minimum Rent” and
“Additional Rent,” as those terms are defined in the Lease. Accordingly, by the explicit and
unambiguous language of Section 1.7(b), in the event the Ongoing Co-Tenancy Requirement is
not met, Substitute Rent replaces both Minimum Rent and Additional Rent.
Landlord’s counterargument would strain the language of the Lease to its breaking point.
See American Med. Int’l, Inc. v. Scheller, 462 So. 2d 1, 7 (Fla. Ist DCA 1984) (“A true
ambiguity does not exist merely because a contract can possibly be interpreted in more than one
manner. Indeed, fanciful, inconsistent, and absurd interpretations of plain language are always
possible. It is the duty of the trial court to prevent such interpretations”). Landlord relies solely
on the first sentence of Section 4.1(c), which states: “In addition to the payment of Minimum
Rent as provided in this Article IV and Substitute Rent (as defined in Section 1.5) and Tenant
shall pay to Landlord as ‘Additional Rent’ all other sums of money and charges required to be
paid by Tenant to Landlord under this Lease whether or not the same are designated Additional
Rent, including but not limited to Tenant's CAM Contribution as provided in Section 14.3 and
Tenant's Portion of real estate taxes as provided in Section 5.1.” Landlord takes the absurd
position that despite the language in Section 1.7(b) to the contrary (and Section 1.5 and 1.6, for
that matter), DSG must always pay Additional Rent, even when it is entitled to pay Substitute
Rent “in lieu of Rent.”
This argument ignores the very next sentence in Section 4.1(c), which defines Rent as
“Minimum Rent and Additional Rent . . collectively.” The interpretation also improperly
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overturns the parties’ choice to state that Substitute Rent shall be paid “in lieu of Rent.” If the
parties intended for Additional Rent to be due, they could and would have stated “in lieu of
Minimum Rent.”
The construction urged by Plaintiff is perhaps most absurd in the context of Section
1.5(c)(i), which defines “Substitute Rent.” That language states that if Landlord is in default
under Section 1.5, “in lieu of Rent (as defined in Section 4.1(c)), two percent (2%) of Gross
Sales (as defined in Section 6.2), but never more than the Minimum Rent for that month that
would have otherwise been payable for such calendar month (“Substitute Rent”) . .” Thus, the
parties specifically referenced the definition of Rent as both Minimum Rent and Additional Rent,
and stated that Substitute Rent was to be paid in lieu of Rent. Moreover, in that same sentence,
the parties referred to Minimum Rent as a different metric. Landlord’s argument would render
all of this language meaningless. See University of Miami v. Frank, 920 So.2d 81, 87 (Fla. 3d
DCA 2006) (A contract is not to be read so as to make one section superfluous, and so “[a]ll the
various provisions of a contract must be so construed ... as to give effect to each”).
At most, the cited provision of Section 4.1(c) identifies “Additional Rent” as another type
of Rent. Moreover, that Section defines Additional Rent as other rent “required to be paid”
under the Lease. This language is completely consistent with Section 1.7(b)—f the Ongoing
Co-Tenancy Requirement is not met, CAM and taxes are not “required to be paid.”
Landlord’s argument is also inconsistent with this Court’s Order, as affirmed by the
Court of Appeal. As set forth in the Order: “Assuming that the Ongoing Co-Tenancy
which is
Requirement and other Landlord obligations are met, DSG is obligated to pay ‘Rent,’
defined in § 4.1 and includes a ‘Minimum Rent’ rate plus ‘Additional Rent’ such as a share of
common area maintenance costs and real estate taxes.” (Order, at {{ 3.) The Court went on to
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rule that “if the Ongoing Co-Tenancy Requirement is not met for an extended period of time, as
set forth in § 1.7(b) (an ‘Ongoing Co-Tenancy Viola