United States District Court, D. Maryland
L. RUSSELL, III UNITED STATES DISTRICT JUDGE.
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.
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.
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). 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,
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.).
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). 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).
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).
Standards of Review
Conversion to Summary Judgment
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.)).
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
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 ...