Opinion
Case No. 3:02CV7466
November 19, 2003
ORDER
This is a diversity case, initially filed in Seneca County, Ohio, Court of Common Pleas and removed to this court. Pending are cross-motions for summary judgment. For the reasons that follow, both motions shall be denied.
The plaintiff, QSI Fostoria DC, LLC (QSI) owns a 588,000 square foot commercial building in Fostoria, Ohio. Sometime prior to December 20, 2000, QSI leased the building to Quality Stores, for use as a distribution center.
On December 28, 2000, Quality Stores leased material handling equipment from the defendant General Electric Capital Business Asset Funding Corporation (GE Capital).
QSI, as the landlord of Quality Stores, entered into a "Landlord's Waiver and Agreement," likewise on December 20, 2000, with GE Capital. Pursuant to that agreement, QSI agreed to:
waive and relinquish to GE Capital . . . all rights, claims and demands of every kind against the Equipment [i.e., the material handling equipment leased by GE Capital to QSI's tenant, Quality Stores] . . . including but not limited to the right of foreclosure, levy, execution, sale and distraint for unpaid rent or other rights arising under real property law or by contract which [QSI] now has or may acquire on any of the Equipment presently or hereafter financed or leased by GE Capital.
Doc. 41, Exh. 2.
In addition, pursuant to the agreement between QSI and GE Capital, QSI agreed that it would give "GE Capital not less than sixty (60) days written notice if GE Capital shall be required to remove the Equipment;. . . ." Id.
On October 20, 2001, an involuntary bankruptcy petition was filed against Quality Stores. Quality Stores consented to the petition on November 1, 2001. In conjunction with these proceedings, Quality Stores rejected its leases with QSI for the building and GE Capital for the equipment, respectively.
In February, 2002, property belonging to Quality Stores was auctioned. Prior to the auction, a representative of QSI, expressing the hope that the premises could be leased to another tenant for continued use as a distribution center, asked GE Capital not to include the equipment in the auction. GE Capital asserts that, but for this request, it would have removed the equipment from the premises.
On March 22, 2002, counsel for QSI wrote to GE Capital, demanding that GE Capital remove the equipment immediately. That letter also stated that QSI would "allow GE Capital thirty (30) days from March 22, 2002 to remove the equipment from the Premises." Counsel for Quality Stores repeated the demand for immediate removal on March 27, 2002, and again stated that thirty days would be allowed for such removal. Thereafter, according to the correspondence from QSI, the equipment would be deemed abandoned, and GE Capital would be obligated for monthly storage charges of $126,041.67.
That was the amount of rent due under QSI's lease with Quality Stores.
In response to the letters from QSI's counsel, GE Capital did not remove the equipment and refused to pay storage costs. The equipment remained on the premises until after this suit was filed, and QSI moved for injunctive relief to procure the equipment's removal. Sometime before June 15, 200, GE Capital removed the equipment rather than contesting QSI's injunction motion.
In this suit, QSI seeks to recover amounts that it claims are due and owing due to GE Capital's failure to remove the equipment on being asked to do so. Such amount, QSI claims, should be calculated on the basis of the rent that Quality Stores was obligated to pay under its lease for the premises. According to QSI it sought, but was unable to lease the premises while the equipment remained in place.
GE Capital claims that QSI breached its obligations under the agreement between GE Capital and QSI by demanding removal within thirty days, rather than sixty days, as allowed under the agreement between the parties. In addition, GE Capital asserts that it left the equipment on the premises in response to QSI's February, 2002, request that it do so. It also contends that QSI's claim is barred by QSI's waiver of recourse against the equipment. GE Capital further argues that QSI's claim is barred by its assertion of entitlement to rent from Quality Stores in a proof of claim filed in bankruptcy court against Quality Stores.
In any event, according to GE Capital, any obligation that might arise from its leaving the equipment at the premises is to be calculated on storage charges, rather than on the basis of the rent due from Quality Stores.
Most of GE Capital's arguments have no merit, and deserve summary rejection.
To the extent that QSI sought improperly to limit the period of removal to thirty, rather than sixty days, such mistake did not relieve GE Capital of its duty to remove its equipment within a sixty day period. I note that the present record does not contain a protest by GE Capital that it had sixty, rather than thirty days, in which to remove the equipment. Instead, GE Capital simply left the equipment there, even though it clearly was on notice that QSI wanted it out.
Any contention that GE Capital was entitled, as a result of QSI's purported limitation of the removal period, to leave the equipment in QSI' s building indefinitely without becoming obligated to pay fair compensation to QSI is not reasonable. At most, QSI's mistake constitutes an immaterial and inconsequential breach of its obligations under the agreement between it and GE Capital.
GE Capital's contention that it left the equipment there because it was asked to do so in February, 2002, is has even less merit. Certainly that request did not obligate GE Capital to comply; that it did so does not defeat QSI's subsequent demands for removal. Any purported reliance on the earlier, informal request became unjustified once GE Capital received the demands for the immediate removal of the equipment.
QSFs waiver of recourse against the equipment does not bar its present claim for compensation for GE Capital's breach of its obligation to remove the equipment within sixty days. QSI seeks no recourse against the equipment. It seeks to recover under its contract or otherwise for GE Capital's use of its premises.
The fact that QSI filed a proof of claim for rent under its lease with Quality Stores in the bankruptcy proceeding does not bar QSI's right to recover from GE Capital. If QSI recovered anything on that claim, such recovery will be offset against any recovery from GE Capital. Though QSI could not recover twice for the same obligation, it is entitled to recover the full amount it is owed from whoever is liable, including GE Capital.
I agree, though, that QSI has failed to show that it is entitled to summary judgment with regard to the amount of its recovery. QSI claims compensatory damages calculated on the basis of the rent it was to have received under its lease with Quality Stores, but it has not shown that there are no genuine disputes of material fact with regard to the amount to which it is entitled.
The parties have filed cross-motions to strike affidavits (Docs. 48, 60). To the extent that I have relied on those affidavits in this opinion, those motions are denied, without prejudice to renew objections to the admissibility of portions of the affiants' anticipated testimony by way of motion in limine or at trial.
I conclude, accordingly, that there is no merit to GE Capital's contention that it owes nothing to QSI. I also conclude that the amount of what it owes is for the trier of fact to determine.
In light of the foregoing, it is
ORDERED THAT
1. The parties' motions for summary judgment (Docs. 39, 46) be, and the same hereby are denied;and
2. The parties' motions to strike (Docs. 48, 60) be, and the same hereby are denied, without prejudice.
A scheduling conference is set for December 8, 2003 at 2:15 P.M.