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LLC v. Kobe Kansas, LLC

United States District Court, D. Maryland

September 26, 2017

KANSAS CITY LIVE BLOCK 124 RETAIL, LLC, Plaintiff and Counter-Defendant,
KOBE KANSAS, LLC, et al., Defendants and Counter-Plaintiffs.



         THIS MATTER is before the Court on Plaintiff/Counter-Defendant's, Kansas City Live Block 124 Retail, LLC (“KC Live”), Motion for Partial Summary Judgment on (1) its Second Amended Complaint and (2) Count I of Defendants/Counter-Plaintiffs', Kobe Kansas, LLC, Young W. Bae, and Chan H. Bae (the “Baes”), Counterclaims. (ECF No. 73). The Motion is ripe for disposition. No hearing is necessary. See Local Rule 105.6 (D.Md. 2016). For the reasons that follow, the Court will grant in part and deny in part the Motion.

         I. BACKGROUND[1]

         This case involves a dispute over a commercial lease between the Baes and KC Live and alleged misrepresentations KC Live's representatives made to induce them to lease space in a KC Live-owned mixed-use development. The Lease, [2] executed on September 24, 2009, became effective for a ten-year term on September 15, 2008. (Second Am. Compl. Ex. 1 [the “Lease”] §§ 101, 201(b), ECF No. 34-1). In September 2009, the Baes executed a personal guaranty of their obligations under the Lease. (Second Am. Compl. ¶ 18, ECF No. 34).

         Before signing the Lease, on December 3, 2008, KC Live sent the Baes a Notice of Possession, which triggered the Fixturing Period-a 150-day period during which the Baes were to install equipment and fixtures necessary to operate their restaurant. (See Lease § 307). Under the Lease, parties subsequently agreed that the Fixturing Period began on December 9, 2008. (Id. Explanatory Statement). The Rent Commencement date was February 6, 2009.[3](Fowler Aff. 10, ECF No. 72-1; see also Kansas City Live Block 124 Retail, LLC v. Kobe Kansas, LLC, et al., WDQ-11-2171, Compl. ¶ 7, ECF No. 1). The Baes opened their restaurant on October 17, 2009-eight months after the Rent Commencement Date. (Fowler Aff. ¶ 10). After the Baes opened their restaurant, they failed to pay Rent. (See Second Am. Compl. Ex. 2, ECF No. 34-2; see also Kansas City Live, WDQ-11-2171, Compl. ¶ 8, ECF No. 1).

         In August 2011, KC Live sued the Baes in this Court, alleging various breaches of the Lease and Guaranty. (Second Am. Compl. ¶ 22). In November 2011, without the Baes answering KC Live's Complaint, the parties executed an Amendment to the Lease to settle the 2011 Suit. (Id. ¶ 23). In the 2011 Amendment, the parties stipulated that as of July 31, 2011, the Baes owed KC Live $2, 122, 430.88 under the Lease. (Id. ¶ 24). The Stipulated Amount Owed included liquidated damages under Section 402 of the Lease for the late opening of the Baes' restaurant and late charges on the liquidated damages under Section 2605 of the Lease. (Id.). The parties also agreed that if the Baes paid $350, 446.93 of the Stipulated Amount Owed and complied strictly with the Lease and the 2011 Amendment through the end of their terms, KC Live would waive the balance of the Stipulated Amount Owed. (Id. ¶¶ 27, 28). The Baes paid the $350, 446.93 to settle the 2011 Suit. (Fowler Aff. ¶ 37).

         In October 2014, KC Live brought the current action against the Baes for breaches of the Lease, Guaranty, and 2011 Amendment. (Compl., ECF No. 1). According to KC Live, after the parties settled the 2011 Suit, the Baes failed to pay Rent on time between November 1, 2011 and October 31, 2013, and after November 2013, stopped paying Rent entirely. (Second Am. Compl. ¶ 36; Fowler Aff. ¶ 36).

         On January 9, 2015, KC Live filed an Amended Complaint, (ECF No. 11), to which the Baes filed an Answer and Counterclaim for fraudulent inducement, (ECF No. 17). On February 16, 2016, KC Live filed a Second Amended Complaint, which added allegations that the Baes failed to operate their restaurant during Minimum Store Hours required under the Lease. (Second Am. Compl. ¶¶ 10, 17, 38). On June 29, 2016, the Baes filed an Answer and Amended Counterclaim. (ECF No. 58). That same day, the Baes filed a Supplemental Counterclaim, adding a declaratory judgment count. (ECF No. 60). In their Supplemental Counterclaim, the Baes allege that KC Live wrongfully retook the Premises on May 11, 2016. (Suppl. Countercl. ¶ 154, ECF No. 60).

         According to the Baes' Amended Counterclaim, prior to executing the Lease, representatives associated with KC Live made representations that the District, as a whole, was going to be filled with businesses. (Am. Countercl. ¶¶ 19, 21, 29-30, ECF No. 58). In early September 2005, Michael Morris, the Director of Leasing and Development for KC Live's parent company, told the Baes that many nationally-operated businesses were starting to fill available lots in the District. (Id. ¶ 21). Specifically, Mr. Morris stated that P.F. Chang's and The Cheesecake Factory had “already leased” space in the District. (Id. ¶ 22). At some unspecified time before execution of the Lease, Mr. Morris told the Baes that condominiums would be built above the Baes' restaurant. (Id. ¶ 25). Mr. Morris further represented that “given its location, the other major tenants already committed to the District, and the housing that would be built above the [P]remises, the Baes could easily achieve $3, 000, 000.00 per year” with their restaurant. (Id. ¶ 26). In January 2007, KC Live's parent company issued a press release in which Blake Cordish, Vice President of KC Live's parent company, stated that they had “commitments” for 85% of the space in the District. (Id. ¶ 30; see also Am. Countercl. Ex. 3, ECF No. 17-3).

         The Court has already resolved multiple motions in this case. (See ECF No. 26) (denying KC Live's Motion to Dismiss Counterclaim); (ECF No. 57) (granting KC Live's Motion for Leave to File Second Amended Complaint, granting the Baes' Motion for Leave to File Amended Counterclaim, and denying without prejudice KC Live's Motion for Summary Judgment); (ECF No. 82) (denying the Baes' Motion for Partial Summary Judgment). On February 3, 2017, KC Live filed the pending Motion for Partial Summary Judgment. (ECF No. 73). The Baes filed their Opposition on March 10, 2017. (ECF No. 76). KC Live filed its Reply on April 24, 2017. (ECF No. 81).


         A. Standard of Review

         In reviewing a motion for summary judgment, the Court views the facts in a light most favorable to the nonmovant, drawing all justifiable inferences in that party's favor. Ricci v. DeStefano, 557 U.S. 557, 586 (2009); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59 (1970)). Summary judgment is proper when the movant demonstrates, through “particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . . admissions, interrogatory answers, or other materials, ” that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a), (c)(1)(A).

         A “material fact” is one that might affect the outcome of a party's case. Anderson, 477 U.S. at 248; see also JKC Holding Co. v. Wash. Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir. 2001) (citing Hooven-Lewis v. Caldera, 249 F.3d 259, 265 (4th Cir. 2001)). Whether a fact is considered to be “material” is determined by the substantive law, and “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson, 477 U.S. at 248; accord Hooven-Lewis, 249 F.3d at 265. A “genuine” dispute concerning a “material” fact arises when the evidence is sufficient to allow a reasonable jury to return a verdict in the nonmoving party's favor. Anderson, 477 U.S. at 248. If the nonmovant has failed to make a sufficient showing on an essential element of her case where she has the burden of proof, “there can be ‘no genuine [dispute] as to any material fact, ' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

         B. Analysis

         KC Live argues that the Baes cannot satisfy the elements of their fraudulent inducement claim with sufficient evidence. KC Live also contends that no dispute exists over whether the Baes breached the Lease, Guaranty, and 2011 Amendment; only portions of the damages amount are disputed. KC Live therefore asserts that it is entitled to summary judgment on the Baes' fraudulent inducement claim and partial summary judgment on its breach of contract claim. The Court addresses KC Live's arguments in turn.

         1.Fraudulent Inducement Counterclaim

         Under Missouri law, [4] a claim for fraudulent ...

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