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Bird Realty Limited Partnership v. Jiffy Lube International, Inc.

United States District Court, Fourth Circuit

August 23, 2013




This case arose out of the termination of a multi-tiered real estate lease involving Bird Realty Limited Partnership (“Bird Realty” or “Bird”) and Jiffy Lube International (“JLI” or “Jiffy Lube”), under which JLI, as a successor-in-interest, served as both the lessor to Bird of real property located in Anne Arundel County, and the sublessee of that property from Bird. Bird filed a Complaint in State court against JLI (ECF 2), which JLI removed to this Court (ECF 1). The suit contained four counts: breach of contract by JLI, in its capacities as tenant (Count I) and as lessor (Count II); tortious interference with prospective economic advantage (Count III); and breach of fiduciary duties (Count IV).[1] In a Memorandum Opinion (“Mem. Op., ” ECF 21) and Order (ECF 22) entered on December 14, 2012, I granted a motion to dismiss filed by JLI, pursuant to Fed.R.Civ.P. 12(b)(6), dismissing Counts I and III with prejudice, and Counts II and IV without prejudice and with leave to amend. No amended complaint was filed, however.

Thereafter, JLI filed a “Notice of Motion for Counsel Fees and Costs” (ECF 23), followed by a “Notice of Motion for Final Judgment Pursuant to Federal Rule of Civil Procedure 58 and For Counsel Fees and Costs” (“Motion”) (ECF 26), and a supporting memorandum (“Memo, ” ECF 26-1).[2] Bird Realty opposes the request for fees (“Opposition or “Opp., ” ECF 27), and JLI has replied (“Reply, ” ECF 28).

In its Motion, JLI seeks an entry of final judgment under Fed.R.Civ.P. 54(c) and 58(d), “dismissing with prejudice and in its entirety the Complaint filed by Plaintiff Bird Realty.” Motion at 1. JLI also seeks $59, 277.98 in attorneys’ fees and costs pursuant to a prevailing party provision in a “Land and Building Sublease, ”[3] which, as discussed more fully, infra, governed JLI’s sublease of the subject property from Bird Realty. See id.; Reply at 9.

The issues have been fully briefed, and no hearing is necessary to resolve the matter. See Local Rule 105.6. For the reasons that follow, I will grant JLI’s Motion, but not in the requested amount. Instead, I will award $30, 635.48 in attorney’s fees and costs.

Factual Background

On March 28, 1988, Jiffy Lube International of Maryland (“JLIM”), as tenant, entered into a lease agreement (the “Prime Lease”) with Northway Limited Partnership (“Northway”), as owner, for a 22, 575 square foot property located near the intersection of former Maryland Route 3, now Veterans Highway, and Old Mill Road in Anne Arundel County, Maryland (the “Property”). Compl. ¶ 5; see Prime Lease, Compl. Exh. A (ECF 2-1). The Prime Lease provided for a twenty-year term, beginning on “the first month following the date Tenant opens for business, ” and terminating “twenty (20) years after the Rent Commencement Date unless sooner terminated in accordance with the provisions hereof.” See Prime Lease ¶ 4.A. The “Rent Commencement Date” was defined in the Prime Lease as “the earlier to occur of (i) the date Tenant commences business operations at the Premises, or (ii) July 1, 1988.” See Prime Lease ¶ 1.F. The Prime Lease further provided for two five-year extensions unless, at least six months prior to expiration of the Prime Lease, Jiffy Lube provided Northway with written notice of termination. Id. ¶ 4.B.

JLIM subleased the Property to Bird (the “Prime Sublease”) on December 1, 1989. Compl. ¶ 9; see Prime Sublease, Compl. Exh. B (ECF 2-1). In many respects, the provisions of the Prime Sublease mirrored those of the Prime Lease, a copy of which was attached to the sublease agreement. See Prime Sublease ¶ 1(d). The Prime Sublease was to begin on December 1, 1989, and extend until “midnight on the day before the last day of the term of the Prime Lease or the earlier termination of the Prime Lease.” Id. ¶ 2. Further, the Prime Sublease provided that, if “the Prime Lease contains one or more renewal options, ” JLIM would exercise its option to renew “if requested in writing to do so by Tenant at least 30 days before the last day on which such renewal option may be exercised.” Id. ¶ 11. The Complaint did not allege that such notice was provided, written or otherwise.

Also on December 1, 1989, Bird subleased the Property to J&R Lube (“J&R”), a Jiffy Lube franchisee, so that J&R could operate a “Jiffy Lube Service Center” on the premises. See Land & Building Sublease, Compl. Exh. C (ECF 2-1). The term of the Land and Building Sublease was for “a period of twenty (20) years from the Lease Commencement Date, unless sooner terminated as herein provided or permitted.” Id. ¶ 4. The “Lease Commencement Date” was defined as “the date on which the Leased Premises are ready for occupancy, ” id. ¶ 4, which Bird alleged was during the month of December 1989. In addition, the Land and Building Sublease provided for two five-year extensions, unless J&R otherwise notified Bird at least 180 days prior to the expiration of the term. Id. ¶ 6.

On May 24, 1991, Jiffy Lube International of Tennessee (“JLIT”) assumed the obligations of J&R under the Land and Building Sublease. Compl. ¶ 13; see Compl. Exh. D (ECF 2-1). JLIT then merged with JLI, making JLI the successor-in-interest to the Land and Building Sublease. Compl. ¶ 13. JLIM also merged with JLI, making JLI the successor-in-interest to the Prime Lease and the Prime Sublease. Compl. ¶ 4; Memo at 2-3. As a result of the various leases, subleases, and mergers, the interest in the Property ran from Northway to JLI (pursuant to the Prime Lease), from JLI to Bird Realty (pursuant to the Prime Sublease), and from Bird Realty back to JLI (pursuant to the Land and Building Sublease).

In a letter dated June 24, 2008, JLI notified Northway (now AG/Spectrum Northway, L.L.C.) of its decision not to extend the Prime Lease beyond December 31, 2008. Compl. ¶ 20; Compl. Exh. E (ECF 2-1). For reasons not entirely clear from the record, notwithstanding JLI’s written termination of the Prime Lease, it continued to make rent payments to Bird through August 2009. See Compl. ¶ 6. Payments ceased in September 2009, and Bird subsequently filed suit.

Procedural History

As indicated, Bird Realty’s Complaint contained four counts.

In Count I, Bird alleged that JLI, as tenant, wrongfully breached the Land and Building Sublease by failing to pay rent through the end of the term, December 2009, and that, under the automatic renewal provision, JLI was is obligated to pay rent on the Property until December 31, 2014. See Compl. ¶¶ 14-16. Pursuant to Fed.R.Civ.P. 12(b)(6), I dismissed Count I because “Bird’s interest in the property under [the Prime Sublease] expired with the termination of the Prime Lease, leaving Bird no legal basis through which to enforce rent payments against Jiffy Lube.” Mem. Op. at 8. More specifically, “the termination of the Prime Lease on December 31, 2008, extinguished Bird’s interest in the Property under [the Prime Sublease], ” which, in turn, “ended Bird’s legal right to collect rent under [the Land and Building Sublease], long before Jiffy Lube ceased paying.” Id. at 10. Therefore, “Bird no longer had a legally cognizable interest in the Property to enforce rent payments against Jiffy Lube” as to the post-August 2009 time period, for which it claimed rent was owed. Id.

In Count II, Bird alleged that, as lessor, JLI breached the terms of the Prime Sublease when it terminated the Prime Lease with Northway, thereby “prematurely” ending Bird’s interest in the Property. Compl. ¶¶ 20-21. I dismissed this claim because “Jiffy Lube was not obligated to extend the Prime Lease for Bird’s benefit.” Mem. Op. at 13. In particular, I determined that the Prime Sublease required a written request from Bird to JLI to renew the Prime Lease, as a condition precedent to JLI’s obligation to do so. See Id . at 11-12. Because JLI had not alleged that it provided the requisite written notice, I concluded that Bird had failed to state a claim for breach of the Prime Sublease. Id. at 12-13. As noted, although I granted leave to amend, Bird did not amend the Complaint.

In Count III, Bird alleged that Jiffy Lube’s termination of the Prime Lease precluded Bird from subleasing the Property to other parties, and therefore Jiffy Lube was liable for tortious interference with prospective economic advantage. Compl. ¶¶ 24-25. Again, I found that Bird failed to state a claim. As I explained, “Bird did not properly notify Jiffy Lube of its intention to extend the Prime Lease, ” and therefore “Jiffy Lube was well within in its right to terminate the Prime Lease.” Mem. Op. at 15. Additionally, Bird “failed to allege facts suggesting that Jiffy Lube’s decision to terminate the Prime Lease was in any sense intended to interfere with or destroy Bird’s business relationship with a future tenant, inexistent at that juncture.” Id. at 15. Therefore, I dismissed Count III, with prejudice.

Finally, in Count IV, Bird alleged that Jiffy Lube’s termination of the Prime Lease was in breach of a fiduciary duty it owed to Bird to extend the Prime Lease. Compl. ¶ 28. I found that Count IV failed to state a claim because “Jiffy Lube was not Bird’s agent in regard to an extension of the Prime Lease, and thus there is no basis to find a fiduciary duty.” Mem. Op. at 15. In particular, I stated: “[A]bsent Bird’s written request, Bird failed to manifest consent for Jiffy Lube to act on its behalf in renewing the Prime Lease and Sublease I.” Id. at 17. Therefore, I dismissed Count IV, with leave to amend. Again, no amendment was filed.


I. Dismissal with Prejudice

Plaintiff’s Complaint was dismissed in mid December 2012, with leave to amend as to Counts II and IV. Plaintiff had until January 18, 2013, to amend. See ECF 25. As no amended complaint was ever filed, plaintiff’s Complaint is dismissed in its entirety, with prejudice.

II. Attorneys’ Fees

According to JLI, the Land and Building Sublease contractually entitles JLI to attorneys’ fees and expenses incurred in defending against Bird Realty’s Complaint. Paragraph 17(d) of the ...

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