Opinion
Case No. 02-23169-CIV-GOLD/SIMONTON
January 31, 2003
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
THIS CAUSE is before the court upon defendant's motion to dismiss [DE #3], filed on November 1, 2002. Plaintiff filed its response to defendant's motion on December 13, 2002, and defendant filed a reply to the response on January 6, 2003. On October 25, 2002, defendant filed a notice of removal to this court from the Eleventh Judicial Circuit in Miami-Dade County, Florida. Plaintiff Sarria Holdings has filed a four-count complaint for: count one, breach of contract; count two, breach of implied covenant of good faith and fair dealing; count three, declaratory relief of exclusivity provision; and count four, injunctive relief. The complaint concerns a dispute over a lease agreement between plaintiff and defendant for a Walgreen drugstore in plaintiff's shopping center.
This court has diversity jurisdiction pursuant to 28 U.S.C. § 1332 insofar as parties to this cause are of diverse citizenship and the amount in controversy exceeds $75,000.
Plaintiff is a Florida corporation, and Walgreen is an Illinois corporation.
Defendant argues that pursuant to Fed.R.Civ.P. 12(b)(6), plaintiff has failed to state a claim upon which relief may be granted because the plain language of the lease agreement between the parties indicates that no breach of contract has occurred. Plaintiff asserts that defendant's actions have contradicted the intent of the parties as encompassed in the lease agreement. The court has reviewed the parties' arguments, the pleadings filed in this case, and the applicable case law and has determined that defendant's motion to dismiss should be granted.
Factual Background
These facts are derived from the allegations contained in the complaint that has been filed in this case.
In August 1988, defendant Walgreen Company leased a store in Hialeah city, which is now owned by plaintiff Sarria Holdings. (Compl. ¶ 5). The lease for the store runs from December 1, 1988, through November 30, 2028. (Compl. ¶ 6). According to the lease, defendant is required to pay a fixed rent plus an amount based on gross monthly sales. (Compl. ¶ 6). in addition, plaintiff is prevented from leasing another store in the same location to another company also selling prescriptions, health and beauty products, or alcoholic beverages to be consumed off the premises. (Compl. ¶ 6).
In or about March 2002, Walgreen decided to move from defendant's location and re-open its store across the street. (Compl. ¶ 8). Despite moving to a freestanding store across the street, Walgreen continued to pay plaintiff the fixed monthly rent for the original leased store. (Compl. ¶ 9). Walgreen has not paid any portion from its gross monthly sales from its freestanding store across the street, however, because it asserts that the leased store for which it continues to pay rent no longer accrues income as that store is now empty. (Compl. ¶ 10). Sarria asserts that Walgreen's calculations are improper and it has been underpaid. (Compl. ¶ 11, 13).
Standard for Motion to Dismiss
To warrant dismissal of a complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure, it must be "clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Blackston v. Alabama, 30 F.3d 117, 120 (11th Cir. 1994) (quoting Hishon v. King Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232 (1984)). Determining the propriety of granting a motion to dismiss requires courts to accept all the factual allegations in the complaint as true and to evaluate all inferences derived from those facts in the light most favorable to the plaintiff. See Hunnings v. Texaco, Inc., 29 F.3d 1480, 1483 (11th Cir. 1994). The threshold of sufficiency that a complaint must meet to survive a motion to dismiss is exceedingly low. See Ancata v. Prison Health Servs., Inc., 769 F.2d 700, 703 (11th Cir. 1985) (citation omitted); Jackam v. Hospital Corp. of Am. Mideast, Ltd., 800 F.2d 1577, 1579 (11th Cir. 1983). "[U]nless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," the complaint should not be dismissed on grounds that it fails to state a claim upon which relief can be granted. M/V Sea Lion V v. Reyes, 23 F.3d 345, 347 (11th Cir. 1994) (citation omitted). Nevertheless, to survive a motion to dismiss, a plaintiff must do more than merely "label" his claims. Blumel v. Mylander, 919 F. Supp. 423, 425 (M.D. Fla. 1996). Moreover, when on the basis of a dispositive issue of law no construction of the factual allegations will support the cause of action, dismissal of the complaint is appropriate. Marshall County Bd. of Educ. v. Marshall County Gas Dist., 992 F.2d 1171, 1174 (11th Cir. 1993).
Analysis
It is well-settled that if the terms of a contract, here the lease agreement, are clear and unambiguous, the contracting parties are bound to those terms and may not rewrite the contract to suit their favor. See Ernie Haire Ford, Inc. v. Ford Motor Co., 260 F.3d 1285, 1290-91 (11th Cir. 2001) (quoting Emergency Assocs. of Tampa, PA. v. Sassano, 664 So.2d 1000, 1003 (Fla. 2d DCA. 1995)). Under Florida law, whether a contract is ambiguous is a question of law for the court. Arriaga v. Florida Pacific Farms, L.L.C., 305 F.3d 1228, 1246 (11th Cir. 2002) (citing Strama v. Union Fid. Life Ins. Co., 793 So.2d 1129, 1132 (Fla. 1St DCA 2001)). In its complaint, plaintiff does not allege that the contract is ambiguous, but argues nonetheless that a claim for relief is stated because there existed a certain "understanding" between the parties based on the parties' intent. Upon the court's independent review of the lease agreement, the contractual terms of the lease, attached to the complaint as exhibit A, are clear and unambiguous about the parties' responsibilities, rights, and obligations.
A. Basis of Complaint
In count one of the complaint, plaintiff alleges that Walgreen has breached the lease agreement by under-reporting certain net sales, allegedly from the new store across the street, and by failing to pay the additional percentage rent as required by the agreement. in addition, in count two, Sarria Holdings claims that Walgreen is obligated, based on an implied covenant of good faith and fair dealing, to continue the operation of its store on the plaintiff's premises. Plaintiff specifically claims in count two, "Walgreen is impliedly obligated to continue operation of its business on the Premises because the amount of rent to be paid is materially dependent on such operation: Walgreen is required to reach the full intent of the parties." (Compl. ¶ 17) (emphasis added). Plaintiff argues in its response to the motion to dismiss that plaintiff, as well as other tenants in the shopping center, were relying on Walgreen's presence in the location to attract customers and Walgreen's departure has caused harm in violation of the lease agreement and the parties' true intent.
Counts one and two indicate plaintiff's belief that defendant did not conform to the terms of the contract as well as plaintiff's understanding of the parties' obligations when defendant decided to move its store across the street. Plaintiff does not allege that the lease agreement specifically states that Walgreen is not allowed to move its store. Plaintiff merely contends that based on the behavior of the parties and the agreement as a whole, it is clear that Walgreen should continue to operate its business on plaintiffs premises. But as noted above, plaintiff did not allege that the lease agreement is ambiguous. As such, this court is therefore not required to interpret any disputed terms and then apply Florida law. Instead, this court can look to the contract itself and determine if it speaks to the issues in dispute. If the contract covers plaintiff's claims in clear and unambiguous language, then plaintiff's ability to state a claim upon which relief may be granted, thus surviving this motion to dismiss, depends on the specific terms of the contract, which the court analyzes as a matter of law. See Cascella v. Canaveral Port Authority, 827 So.2d 308 (Fla. 4th DCA 2002) (noting in review of a lower court decision de novo that interpretation of a contract is a question of law under Florida law) (quoting Kaplan v. Bayer, 782 So.2d 417, 419 (Fla. 2d DCA 2001)). A close reading of the lease agreement reveals that plaintiff's claims conflict with the express language of the lease agreement.
B. Lease Agreement's Express Language
As noted above, plaintiff in its response to defendant's motion to dismiss claims that there is an implied understanding that Walgreen would continue its operation on plaintiff's premises and because it has not done so, and therefore failed to pay percentage rent, Walgreen has breached its contract as well as the implied covenant of good faith and fair dealing. Defendant correctly contends that the contract speaks directly to the scenarios outlined in plaintiff's complaint and outlines in detail the rights and obligations of the parties in the event of Walgreen's departure from the shopping center. First, in the "Assignment and Subletting" portion of the lease agreement, Paragraph 15(c) states that "At any time and from time to time, Tenant may discontinue the operation of its store in the Leased Premises." (Exh. A to Compl.) The lease agreement further states in paragraph 15(d): "If Tenant shall cease the conduct of business on the Leased Premises for a continuous period in excess of eighteen months (except by reason of strikes, fires, casualty or other causes beyond reasonable control of Tenant, except by reason of repairs or remodeling and except by reason of assignment or subletting as provided above) and the Leased Premises remain continuously vacant during such period, Landlord shall have the right and option to terminate this lease upon notice to Tenant. . . ." These portions of the lease agreement address directly and clearly plaintiffs concerns in the complaint.
According to the lease, Walgreen is not in breach of the lease if it decides to leave the shopping center because the lease clearly authorizes such an action. And if such action occurs, the lease provides recourse to the plaintiff, namely to terminate the lease and consequently be able to rent the space to another drugstore if it so desires after an eighteen month period. Plaintiffs concern about the exclusivity portion of the lease (count three), which presently prevents it from allowing another drugstore to open in the shopping center, would be alleviated because the termination of the lease agreement pursuant to paragraph 15(d), frees plaintiff to lease the space to whomever it chooses. The lease agreement also allows plaintiff to terminate the lease if Walgreen decides to sublet the store and plaintiff objects to the sublessee within 30 days. See Paragraph 15(c) of the Lease Agreement.
Under Florida law, every contract includes an implied covenant of good faith. See Ernie Haire, 260 F.3d at 1291 (citing Burgher King Corp. v. Weaver, 169 F.3d 1310, 1315 (11th Cir. 1999)). But the Eleventh Circuit went on to note that this "implied covenant cannot override an express contractual term." Id. (citing Ins. Concepts and Design, Inc. v. Health Plan Servs., Inc., 785 So.2d 1232, 1234 (Fla. 4th DCA 2001) (citing Weaver, 169 F.3d at 1317-18)). In this case, the lease agreement outlines the various obligations, rights, and responsibilities of the contracting parities. Plaintiff has alleged no facts on which to rest a claim indicating that Walgreen has violated the provisions of the lease agreement. As described above, the lease agreement addresses directly the plaintiffs claims, but plaintiff has failed to present an argument in its responsive pleading concerning these express areas of the lease agreement, which undermines decisively the complaint in its entirety.
Accordingly, the above analysis shows that plaintiff has failed to state a claim upon which relief may be granted for breach of contract and breach of the implied covenant of good faith and fair dealing. The terms of the lease agreement covers fully the claims of the plaintiff and compels this court, without ambiguity, to conclude that no claim has been stated for relief, and pursuant to Rule 12(b)(6), counts two and three must be dismissed. Additionally, because plaintiff has failed to state a claim upon which relief may be granted for counts one and two, count three for declaratory relief and count four for injunctive relief must also dismissed.
Based on the foregoing analysis, it is hereby:
ORDERED AND ADJUDGED THAT:
1. Defendant's motion to dismiss is GRANTED [DE #3].
2. The complaint is DISMISSED WITH PREJUDICE.
3. All pending motions are DENIED AS MOOT.
4. This case is CLOSED.
DONE AND ORDERED in Chambers at Miami, Florida, this 31 day of January, 2003.
ENTRY OF FINAL JUDGMENT DISMISSING CASE
On January 3, 2003, the court granted defendant's motion to dismiss in its entirety dismissing all of plaintiffs claims against the defendant. In accordance with Federal Rule of Civil Procedure 58 and the court's order granting defendant's motion to dismiss, it is the judgment of the court that plaintiff shall take nothing in this case. This case is hereby dismissed and closed. The court reserves to consider fees and costs.
DONE AND ORDERED in Chambers at Miami, Florida, this 31 day of January, 2003.