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Mercantile Place v. Renal Treatment Centers-Mid Atlantic, Inc.

United States District Court, D. Maryland

November 8, 2017

MERCANTILE PLACE #1 LIMITED PARTNERSHIP Plaintiff,
v.
RENAL TREATMENT CENTERS-MID ATLANTIC, INC. Defendant.

          MEMORANDUM OPINION

          Paula Xinis United States District Judge

         Pending before the Court are cross-motions for summary judgment filed by Mercantile Place #1 Limited Partnership (“Plaintiff”) and Renal Treatment Centers - Mid Atlantic, Inc. (“Defendant”). ECF Nos. 4 & 24. Plaintiff initially filed its Complaint on March 10, 2017 with the Circuit Court for Prince George's County. On April 10, 2017, Plaintiff moved for summary judgment, ECF No. 4, and on May 8, 2017, Defendant removed the case to this Court, and later entered a cross-motion for partial summary judgment. ECF No. 24. On July 3, 2017, Plaintiff moved to extend the time by which it could seek leave to amend the Complaint until after the resolution of the dispositive motions, ECF No. 27. Defendant also requested, and the Court granted, that discovery be stayed pending resolution of the cross-motions for summary judgment. ECF No. 38. The issues are now fully briefed and a hearing was held on November 3, 2017. For the reasons stated below, Defendant's Motion for Partial Summary Judgment on Damages, ECF No. 24, is GRANTED and Plaintiff's Motion for Summary Judgment, ECF No. 4, is DENIED. Plaintiff's Motion for Extension of Time to Request Leave to Amend Complaint, ECF No. 27, is GRANTED.

         I. BACKGROUND

         The following facts are undisputed. Plaintiff Mercantile Place #1 Limited Partnership (“Plaintiff” or “Lessor”) is a Maryland Limited Partnership that manages and leases real property throughout the state of Maryland, including 1300 Mercantile Lane, Largo, Maryland 20774 (“Property”). ECF No. 2. Defendant Renal Treatment Centers (“Defendant” or “Lessee”) is a renal treatment facility incorporated in Delaware and licensed to do business in Maryland. Id. On November 22, 2000, Plaintiff and another dialysis treatment facility entered into a Lease (“Original Lease”). ECF No. 21-2. Defendant replaced the original treatment facility as tenants of the Property in 2004. The parties executed an amendment to the Original Lease dated December 21, 2004 (“2004 Amendment”). ECF No. 28-1. The parties then executed a new Lease Agreement on November 20, 2009 (“2009 Lease”). ECF No. 24-1. The parties agree that the 2009 Lease is the operative agreement for purposes of resolving the pending motions. Id.; see also ECF Nos. 2 & 19.

         Under the 2009 Lease, utilities are considered “rent” payable to Plaintiff Lessor and are separately metered by Defendant Lessee. See 2009 Lease, ECF No. 24-1 at ¶¶ 3, 4, 20. To determine the Defendant's monthly water and sewer usage, Plaintiff formally requests that an agent from Defendant's property management company, Knollwood Development, enter the leased premises and read the Lessee's water meter (“sub-meter”). Based on these sub-meter readings, Plaintiff determines the amount of “rent” charges against individual Lessees. ECF No. 26 ¶ 10; see also Complaint, ECF No. 2 at ¶ 6; Cohen Affidavit, ECF No. 21-1 at ¶¶ 43-48. Failure to pay water and sewer expenses is a material breach of the Lease. See 2009 Lease, ECF No. 24-1; see also Complaint, ECF No. 2.

         In 2004, Defendant initiated a significant construction project to remodel the Property. ECF Nos. 21 & 21-4. In the construction plans, Defendant represented that new plumbing would include a new sub-meter, water meter bypass valve, and meter shut-off valves. ECF Nos. 21-4 & 26-5. Plaintiff was provided with all project and design plans and, pursuant to the terms of the 2004 Lease Amendment, possessed the right to oversee construction and receive compensation for any time spent reviewing the Lessee's changes to the Property. See 2004 Amendment, ECF No. 28-1 at ¶ 8 (“Lessee acknowledges that Lessor has incurred, and will continue to incur, costs related to its review of the plans for the improvement of the Space and ultimately, monitoring the installation of said improvements . . . Lessee [will compensate] for the costs of associates of Lessor reviewing plans and monitoring progress of the construction of improvements over time.”).

         In June 2005, Defendant installed a new water sub-meter at the Property. ECF No. 21 at ¶ 17. Thereafter, from July 26, 2005 to September 2016, Plaintiff was given monthly access to the Defendant's Property to record the sub-meter reading without incident. Each month, Defendant paid Plaintiff for the amount of water as reflected in the sub-meter reading. See ECF No. 21 at ¶ 17.

         On September 26, 2016, one of Plaintiff's partners, Seth Cohen (“Mr. Cohen”) had occasion to inspect the Property with plumber Mike Mallick. Cohen Affidavit, ECF No. 21-1 at ¶ 22. During the inspection, Mr. Cohen and Mr. Mallick observed that the plumbing did not include water meter shut-off valves. The gentlemen also discovered that the water meter bypass valve was open to Defendant's water supply, allowing water to be used by Defendant that was unmetered and thus unrecorded. ECF Nos. 19-2 & 21.

         Defendant immediately informed Plaintiff that the meter bypass valve was open and that once the valve was closed, Plaintiff would “closely monitor the meter.” ECF No. 19-2. Plaintiff proceeded to take daily readings of the sub-meter for the first week, followed by weekly readings until the next regularly scheduled monthly reading. ECF No. 19-2. The purpose of these readings was to ascertain Defendant's average monthly water usage when properly metered and compare this data to Defendant's historic monthly usage. Id. Plaintiff would use these readings to perform an analysis “over the next couple of months” to approximate the Defendant's correct monthly usage, determine when the bypass valve was first opened, and “initiate revised billing so that the unmetered water can be paid for.” Id. Upon receipt of Plaintiff's email, Defendant immediately closed the bypass valve. ECF No. 19.

         From September 27, 2016 until October 27, 2016, Plaintiff recorded sub-meter readings averaging 8, 817 gallons per day. Complaint, ECF No. 2 at ¶ 32. Previous monthly readings from the installation of the new sub-meter in July 2005 to Plaintiff's discovery of the open valve in 2016 averaged around 4, 089 gallons per day. Id. at ¶ 12. Based upon this data, the Plaintiff invoiced the Defendant on October 28, 2016, for unpaid water totaling $326, 754.28 and citing Paragraph 5 of the 2009 Lease which states:

Lessee does hereby covenant and agree to take and to hold, and does hereby take and hold, the Premises for the said term at the said rental, payable as aforesaid and under the conditions, covenants and agreements contained therein, and agrees to pay all bills for electricity, water and sewer service chargeable against the Premises as same shall become due and payable.

2009 Lease, ECF No. 24-1 at ¶ 5. Plaintiff created the October 28, 2016 billing statement by applying the newly recorded daily average of 8, 817 gallons per day to the prior eleven years and adjusting each monthly water bill for historical water and sewer costs that had not already been paid. ECF No. 21; see also ECF Nos. 4-2, 4-3, & 4-4. Defendant refused to pay this invoice, pleading ignorance of the open water bypass valve, pointing to Plaintiff's “failure to mitigate damages, ” challenging Plaintiff's methodology to calculate the unpaid rent, and asserting that the statute of limitations has run on a lion's share of Plaintiff's claimed damages. ECF No. 19. At an impasse, Plaintiff filed suit, alleging breach of contract and seeking $326, 754.28 in damages, plus interest of at least $16, 337.72. See Complaint, ECF No. 2 at ¶¶ 16 -18; see also 2009 Lease, ECF No. 24-1. The viability of this claim thus gives rise to the pending motions.

         II. STANDARD OF REVIEW

         “The court shall grant summary judgment if the movant shows 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); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing predecessor to current Rule 56(a)). The party moving for summary judgment bears the burden of demonstrating the absence of any genuine dispute of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). If sufficient evidence exists for a reasonable jury to render a verdict in favor of the non-moving party, summary judgment must be denied. See Anderson v. Liberty Lobby, Inc.,477 U.S. 242, 248 (1986). The facts, and all inferences drawn from the facts, must be viewed in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378 (2007); Iko v. Shreve, 535 F.3d 225, 230 (4th Cir. 2008). The opposing party cannot rest on the mere allegations or denials of his pleading but instead must, by affidavit or other evidentiary showing, point to facts that give rise to a genuine dispute that is material to the claims. Fed.R.Civ.P. ...


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