Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Nco Financial Systems, Inc. v. Montgomery Park, LLC

United States District Court, Fourth Circuit

December 20, 2013

NCO FINANCIAL SYSTEMS, INC., Plaintiff,
v.
MONTGOMERY PARK, LLC, Defendant.

MEMORANDUM OPINION

GEORGE L. RUSSELL, III, District Judge.

THIS MATTER is before the Court on three pending motions, including Plaintiff NCO Financial Systems, Inc.'s ("NCO") Motion for Partial Summary Judgment (ECF No. 51); and Montgomery Park, LLC's ("Montgomery Park") Cross-Motion for Partial Summary Judgment (ECF No. 52) and Motion for Leave to File Sur-Reply in Further Opposition to NCO's Motion for Partial Summary Judgment (ECF No. 55).

The issues have been fully briefed and no hearing is necessary. See Local Rule 105.6 (D.Md. 2011). For the reasons that follow, NCO's Motion for Partial Summary Judgment will be granted in part and denied in part, Montgomery Park's Motion for Leave to File Sur-Reply in Further Opposition to NCO's Motion for Partial Summary Judgment will be granted in part and denied in part, and Montgomery Park's Motion for Partial Summary Judgment will be denied.

I. BACKGROUND[1]

NCO provides clients with business process outsourcing solutions. Montgomery Park provides leasable office space to tenants and other services attendant to its property leasing business. Effective March 15, 2003, NCO and Montgomery Park entered into an Office Lease Agreement ("Lease") at the Montgomery Park Business Center located at 1800 Washington Park Boulevard, Baltimore, Maryland (the "Building").

The Lease states that NCO "leases from [Montgomery Park]... approximately 106, 267 rentable square feet of floor area" (the "Premises"). (Pl.'s Mem. Supp. Mot. Partial Summ. J. Ex. 2, Attach. 2 ("Office Lease Agreement"), at 9, ECF No. 51-1). The Lease is for a term of twelve years, expiring in March 2015. It is undisputed that an area known to the parties as the "Bridge" is reflected in the approximate rentable square footage stated on the Lease. There is a dispute, however, as to whether the Bridge should have been included.

The Lease also requires NCO to pay rent to Montgomery Park in two components, "Base Rent" plus "Additional Rent, " which includes "Real Estate Taxes" and "Operating Expenses." (Id. §§ 2.02, 2.03). The amount of Base Rent plus Additional Rent is based upon the number of "rentable square feet" of NCO's Premises. (Id. §§ 2.01, 2.02, 2.03).

Under the Lease, the total "rentable square feet" of space is calculated by multiplying the usable square feet of the Premises by 1.12. (Id. § 2.08). Using this formula, the amount of Base Rent Montgomery Park charged NCO was based upon Montgomery Park's representation that the Premises incorporates 94, 881 square feet of usable space equaling 106, 267 square feet of rentable space.[2] The amount of Additional Rent NCO is obligated to pay under the Lease is based upon its proportionate share of certain expenses for the entire Building. This ratio was determined by the total rentable square footage of the NCO Premises as compared to the total rentable square footage of the entire Building. All of the costs and credits that resulted in the amount of the monthly payment due to Montgomery Park are defined by the Lease as "Rent." (Id. § 2.04(A)) (defining "Rent" as Base Rent plus "[a]ll rental obligations set forth in the foregoing provisions [Real Estate Taxes and Operating Expenses] and elsewhere in this Lease").

In 2010, Montgomery Park, at NCO's request, provided NCO with computer generated design drawings of the Building. Using the industry measurement standards published by the Building Managers and Owners Association ("BOMA"), NCO now contends the Premises actually contained only 100, 800 square feet of rentable space, as opposed to the "approximately 106, 267 rentable square feet of floor space" claimed by Montgomery Park.

Additionally, the Lease provides NCO the option of accepting janitorial services procured by Montgomery Park or procuring its own janitorial services at its own cost and accepting a "Janitorial Allowance." The "Janitorial Allowance, " as defined in the lease, equals "$1.00 per usable square foot per annum towards the costs incurred in obtaining janitorial services." (Id. § 6.01). NCO is responsible for any janitorial cost that exceeds the Janitorial Allowance. (Id.) Beginning in April 2008, NCO exercised its right to provide its own janitorial services.

Finally, the Lease includes a provision that gives NCO a "Limited Right of Early Termination" ("Early Termination Provision"). (Id. § 1.05). Pursuant to this provision, NCO maintained the right to terminate the Lease after eight years, provided that NCO gave written notice to Montgomery Park ten months in advance and paid Montgomery Park a "termination fee, " in two fifty-percent installments (at ten months in advance of the early termination and at three months in advance of the early termination) and calculated by ten times the amount of the monthly Rent that would be owed as of the last month of the Lease. (Id.) The text of the Early Termination Provision states, in pertinent part:

Tenant shall have a one-time, conditional right to terminate this Lease (the "Termination Right"), effective on that date which is eight years after the Commencement Date (the "Termination Effective Date"), upon Tenant's strict compliance with all of the following requirements:
(a) Tenant shall deliver to Landlord (not later than ten (10) months prior to the Termination Effective Date (such notice deadline, the "Termination Notice Deadline")) a written notice (the "Termination Notice") stating that Tenant elects to exercise this Termination Right; and
(b) Tenant shall pay to Landlord (50% simultaneously with delivery of the Termination Notice and the remaining 50% balance at least three (3) months prior to the Termination Effective Date), a termination fee (the "Termination Fee") equal to ten (10) times the monthly installment (which will be in effect as of the Termination Effective Date) of Rent (including, without limitation, all Additional Rent on account of Taxes or Operating Expenses).
If (and only if) Tenant both timely delivers the Termination Notice and timely pays the Termination Fee as required above, then the Lease will be terminated effective on the Termination Effective Date.
Tenant shall not have the right to terminate this Lease if it fails either timely to deliver the Termination Notice or timely to pay the Termination Fee. Tenant shall not have the right to exercise its Termination Right if, at the time of exercise, Tenant is in default hereunder in the payment of Base Rent and if such default continues uncured beyond the applicable period of grace....

(Id.)

On March 11, 2010, NCO sent a letter to Montgomery Park notifying Montgomery Park of its election to terminate the Lease pursuant to its Limited Right of Early Termination. On May 12, 2010, NCO sent another letter to Montgomery Park confirming its earlier communication concerning the same. On that same day, NCO paid Montgomery Park $779, 964.15, representing fifty-percent of the Termination Fee as calculated by the Base Rent as well as an estimate of the increase in Additional Rent. On or before December 15, 2010, NCO paid Montgomery Park an additional $697, 100.55, representing what it claimed to be the second fifty-percent of the Termination Fee after deducting $79, 067.70 as a janitorial credit, to which it claims it is entitled.

Montgomery Park notified NCO, by letter dated February 9, 2011, that its attempt to exercise the Limited Right of Early Termination under the Lease was ineffective. Montgomery Park stated that its year-end accounting review concluded that the second amount NCO paid to terminate the lease in connection with the Early Termination Provision was incorrect because the Janitorial Allowance should not have been deducted. Pursuant to its position that it properly terminated the Lease, NCO vacated the Premises on May 31, 2011 and has not paid Rent since. By letter dated July 13, 2011, Montgomery Park gave NCO notice that it considered NCO in default for failure to pay Rent.

NCO filed its Complaint (ECF No. 1) on February 28, 2011, alleging breach of contract (Count I), unjust enrichment (Count II), and fraud (Count III) (collectively, the "Overcharge Claims"), [3] and seeks a declaratory judgment regarding its purported exercise of rights under the early termination clause of its lease (Count IV). In its counterclaim, Montgomery Park seeks a declaratory judgment that the Lease was not terminated early and remains in full force and effect. Montgomery Park also seeks contract damages for NCO's default under the Lease for failure to pay Rent.

Pursuant to Local Rule 105.2(c), the parties proposed, and this Court adopted, a briefing schedule for the parties to submit motions for partial summary judgment. (ECF No. 50). On May 16 2013, NCO filed the instant Motion seeking summary judgment on the following facts and legal issues in this case: (1) the Premises, as defined by the Lease, does not include the area known to the parties as the "Bridge, " (2) upon rendering the second fifty-percent of the Termination Fee, less the Janitorial Allowance before December 15, 2011, NCO properly terminated the Lease under the Early Termination Provision, and (3) the Parties agreed that the number of rentable square feet to be included in the Lease would be determined by using the then existing office measurement standard of BOMA.

On June 17, 2013 Montgomery Park filed its Opposition to NCO's Motion and Cross-Motion for Partial Summary Judgment. (ECF No. 52). In its Cross-Motion for Partial Summary Judgment, Montgomery Park seeks judgment barring NCO's Overcharge Claims pursuant to the statute of limitations. NCO filed a Reply and Response in Opposition to Montgomery Park's Cross-Motion for Partial Summary Judgment (ECF No. 53). Montgomery Park filed a Reply. (ECF No. 54).

Montgomery Park then moved for Leave to File a Sur-Reply seeking to address an "operating expenses" argument it contends was untimely advanced by NCO for the first time in NCO's Reply in Support of its Motion for Partial Summary Judgment, and seeking to address several misstatements of the record. (ECF No. 55). NCO opposed Montgomery Park's Motion arguing the "operating expenses" theory was implicit in its opening Memorandum concerning the Janitorial Allowance at issue in this case. (ECF No. 56). Montgomery Park filed a Reply to NCO's opposition. The Motion for Leave to File a Sur-Reply is now ripe for disposition.

II. DISCUSSION

A. Standards of Review

1. The Summary Judgment Standard

Under Federal Rule of Civil Procedure 56, the Court must grant summary judgment if the moving party demonstrates that there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a).

In reviewing a motion for summary judgment, the Court views the facts in a light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 255 (1986) (citing Adickes v. S. H. Kress & Co. , 398 U.S. 144, 157 (1970)). Once a motion for summary judgment is properly made and supported, the opposing party has the burden of showing that a genuine dispute exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586-87 (1986). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.