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Coin Automatic Laundry Equipment Co. v. Hampton Plaza, LLLP

United States District Court, D. Maryland

February 16, 2017

COIN AUTOMATIC LAUNDRY EQUIPMENT COMPANY, Plaintiff,
v.
HAMPTON PLAZA, LLLP, Defendant.

          MEMORANDUM OPINION

          GEORGE L. RUSSELL, III UNITED STATES DISTRICT JUDGE.

         THIS MATTER is before the Court on Hampton Plaza, LLLP's (“Hampton Plaza”) Motion to Dismiss or, in the Alternative, for Summary Judgment (ECF No. 8). The Motion is ripe for disposition, and no hearing is necessary. See Local Rule 105.6 (D.Md. 2016). For the reasons outlined below, the Court will grant in part and deny in part the Motion.

         I. BACKGROUND[1]

         Plaintiff Coin Automatic Laundry Equipment Company (“CALECO”) entered into a commercial lease agreement with Hampton Plaza (“CALECO Lease”) on April 13, 2009 to lease space to allow CALECO to install and service laundry equipment at Hampton Plaza. (Compl. ¶ 7, ECF No. 1). The CALECO Lease began on May 13, 2009 for a six-year term. (Compl. Ex. A ¶ 1, ECF No. 1-1). The CALECO Lease automatically renews with the same terms and conditions unless a party terminates the lease with ninety days written notice. (Id. ¶ 7). The CALECO Lease required a monthly rent of sixty-percent of CALECO's revenue collected during the month and required the laundry equipment to remain CALECO property. (Id. ¶¶ 2, 4). The CALECO Lease also contained a right of first refusal (“ROFR”) provision: [CALECO] “shall have a right of refusal to continue to lease space to provide laundry services on the same terms as any bona fide bid received by [Hampton Plaza], if this [CALECO] Lease is not renewed.” (Id. ¶ 8).

         On April 15, 2015, Hampton Plaza provided CALECO written notice of its termination of the CALECO Lease. (Compl. Ex. B, ECF No. 1-2). Two days later, CALECO advised Hampton Plaza, in writing, that it intended to exercise the ROFR provision. (Compl. Ex. C, ECF No. 1-3). CALECO requested that Hampton Plaza provide copies of any bona fide bids for laundry services or commercial laundry equipment purchases Hampton Plaza received. (Id.). CALECO alleges Hampton Plaza never provided any bids, contracts, or other documents in April, May, or June 2015. (See Compl. ¶ 14). Instead, on July 16, 2016 Hampton Plaza allegedly executed a new lease (“C&G Lease”) with Caldwell & Gregory (“C&G”), CALECO's competitor, to provide laundry services. (Pl.'s Opp. Def.'s Mot. Dismiss Alt. Summ. J. [“Pl.'s Opp.”] Ex. A, ECF No. 13-1).[2] In the C&G Lease, Hampton Plaza leased “all current and future laundry areas within the premises” to C&G for the purpose of installing and maintaining washers and dryers. (Id.). C&G allegedly signed the C&G Lease a day later, on July 17, 2015. (Id.).

         On July 21, 2015, Rachel Smith, building manager with Hampton Plaza, advised CALECO that she never received a new proposal for laundry services from CALECO, Hampton Plaza “signed a contract with another vendor, ” and the CALECO Lease will continue on a month-to-month basis. (Compl. Ex. E, ECF No. 1-5). On July 22, 2015, CALECO again informed Hampton Plaza that it intended on exercising its rights under the ROFR provision. (Compl. Ex. F, ECF No. 1-6). Hampton Plaza failed to provide any bids, contracts, or other documents to CALECO in July, August, or September 2015, despite continuing requests. (See Compl. ¶ 14). On October 2, 2015, Hampton Plaza, in writing, terminated the CALECO Lease. (Compl. Ex. I, ECF No. 1-9). Hampton Plaza's letter advised CALECO that Hampton Plaza decided to purchase its own laundry equipment and as a result, “there are no lease terms to match” under the ROFR provision. (Id.).

         On October 22, 2015, Hampton Plaza and C&G allegedly executed an “Addendum” to the C&G Lease that terminated the original C&G Lease (“Termination Addendum”). (Pl.'s Opp. Ex B, ECF No. 13-1). That same day, Hampton Plaza and C&G executed a Sales Order Form and Service and Collection Contract (collectively, the “C&G Purchase Agreement”). (Def.'s Mot. Dismiss Alt. Summ. J. (hereinafter “Def.'s Mot. Dismiss”) Ex. 3, ECF No. 8-5).[3] Under the Sales Order Form, Hampton Plaza purchased washers, dryers, and other laundry equipment from C&G. (Id.). Under the Service and Collection Contract, Hampton Plaza agreed to pay C&G a monthly fee to service and maintain the laundry equipment Hampton Plaza purchased. (Id.). On November 11, 2015, Hampton Plaza disconnected CALECO's laundry equipment and removed it from Hampton Plaza's property. (Compl. ¶ 28).

         On March 8, 2016, CALECO sued Hampton Plaza, raising one claim for breach of contract. (Compl. ¶¶ 32-36). Specifically, CALECO alleges Hampton Plaza violated the ROFR provision when it signed the C&G Lease because Hampton Plaza never provided CALECO with C&G's bona fide bid. (See Compl. ¶ 30). CALECO further alleges Hampton Plaza violated the CALECO Lease when it signed the C&G Purchase Agreement because the agreement was “meant to circumvent CALECO's [ROFR provision].” (Compl. ¶ 34(c)). CALECO asserts Hampton Plaza withheld bona fide offers from CALECO and executed the C&G Purchase Agreement in bad faith. (Compl. ¶ 34(g)). Finally, CALECO alleges Hampton Plaza disconnected and removed CALECO's laundry equipment in violation of the CALECO Lease. (Compl. ¶ 34(e)). On May 9, 2016, Hampton Plaza filed a Motion to Dismiss, or in the Alternative, for Summary Judgment. (ECF No. 8). CALECO filed a Response on June 10, 2016, (ECF No. 13), and Hampton Plaza filed a Reply on July 8, 2016 (ECF No. 16).

         II. DISCUSSION

         A. Standards of Review

         1. Conversion to Summary Judgment

         As a threshold matter, the Court must determine how to construe the Motion. Hampton Plaza styles its Motion as a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) or, in the alternative, for summary judgment under Rule 56. A motion styled in this manner implicates the Court's discretion under Rule 12(d). See Kensington Vol. Fire Dept., Inc. v. Montgomery Cty., 788 F.Supp.2d 431, 436-37 (D.Md. 2011), aff'd sub nom., Kensington Volunteer Fire Dep't, Inc. v. Montgomery Cty., 684 F.3d 462 (4th Cir. 2012). This Rule provides that when “matters outside the pleadings are presented to and not excluded by the court, the [Rule 12(b)(6)] motion must be treated as one for summary judgment under Rule 56.” Fed.R.Civ.P. 12(d). The Court “has ‘complete discretion to determine whether or not to accept the submission of any material beyond the pleadings that is offered in conjunction with a Rule 12(b)(6) motion and rely on it, thereby converting the motion, or to reject it or simply not consider it.'” Wells-Bey v. Kopp, No. ELH-12-2319, 2013 WL 1700927, at *5 (D.Md. Apr. 16, 2013) (quoting 5C Wright & Miller, Federal Practice & Procedure § 1366, at 159 (3d ed. 2004, 2012 Supp.)).

         The United States Court of Appeals for the Fourth Circuit has articulated two requirements for proper conversion of a Rule 12(b)(6) motion to a Rule 56 motion: notice and a reasonable opportunity for discovery. See Greater Balt. Ctr. for Pregnancy Concerns, Inc. v. Mayor of Balt., 721 F.3d 264, 281 (4th Cir. 2013). When the movant expressly captions its motion “in the alternative” as one for summary judgment and submits matters outside the pleadings for the court's consideration, the parties are deemed to be on notice that conversion under Rule 12(d) may occur. See Moret v. Harvey, 381 F.Supp.2d 458, 464 (D.Md. 2005). Here, Hampton Plaza captions its Motion as one for summary judgment “in the alternative, ” and submitted an affidavit and other materials outside the pleadings for the court's consideration. (Def.'s Mot. Dismiss Exs. 1, 2, 4-6, ECF Nos. 8-2, 8-3, 8-5 through 8-8). Thus, the Court concludes that Hampton met the notice requirement.

         Ordinarily, summary judgment is inappropriate when “the parties have not had an opportunity for reasonable discovery.” E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc.,637 F.3d 435, 448 (4th Cir. 2011). To sufficiently establish that more discovery is needed, the non-movant must typically file an affidavit or declaration under Rule 56(d) explaining the “specified reasons” why “it cannot present facts essential to justify its opposition.” Importantly, “Rule 56(d) affidavits may not demand discovery for discovery's sake; a Rule 56(d) request is properly denied ‘where the additional evidence sought . . . would not have by itself created a genuine issue of material fact sufficient to ...


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