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Walmart Real Estate Business Trust v. Quarterfield Partners LLC

United States District Court, D. Maryland

April 12, 2019

WALMART REAL ESTATE BUSINESS TRUST, et al.,
v.
QUARTERFIELD PARTNERS, LLC, et al.

          MEMORANDUM OPINION

          Stephanie A. Gallagher United States Magistrate Judge.

         This case has been referred to me for all proceedings by consent of the parties. ECF 19, 26, 27. On February 14, 2019, Plaintiffs Walmart Real Estate Business Trust (“Walmart”) and Sam's Real Estate Business Trust (“Sam's”) (collectively, “Plaintiffs”) filed an Amended Complaint against Defendants Quarterfield Partners LLC, BL Quarterfield Associates LLC, Q.O.P. Properties LLC, and Quarterfield Office Park LLC (“Defendants”) for claims arising out of ground leases between Plaintiffs and Defendants. ECF 34. Defendants have filed a pre-discovery Motion to Dismiss the Amended Complaint or, in the Alternative, Motion for Judgment on the Pleadings, supported by a memorandum of law. ECF 39. Plaintiffs filed an opposition to the motion, and Defendants have replied. ECF 40, 41. No. hearing is necessary to resolve the motion. See Local Rule 105(6) (D. Md. 2018). For the reasons that follow, I shall deny Defendants' Motion.

         I. Factual Background [1]

         This dispute arises from two ground leases, one executed between Defendants and Walmart (“Walmart Lease”), and the other executed between Defendants and Sam's (“Sam's Lease”). ECF 34 ¶¶ 10, 30.

         A. Walmart Lease

         On or about April 6, 2005, Walmart executed a ground lease with Defendants to build and operate a Walmart Super Center Store on a parcel of real property in Anne Arundel County, Maryland, owned by Defendants and consisting of approximately 20.919 acres (the “Walmart Parcel”). ECF 34 ¶¶ 10, 11; ECF 34-2. The Walmart Lease also provided Walmart with an option to purchase the Walmart Parcel (“Walmart Option”). ECF 34 ¶ 12; ECF 34-2. The Walmart Option provides, in relevant part:

From the end of the tenth (10th) year of this Lease until the end of the eleventh (11th) year of this Lease (the “Option Term”), Lessor [Defendants] hereby grants to Lessee [Walmart] an option to purchase the Premises from Lessor on the terms and conditions set forth herein (the “Option”). Notwithstanding the foregoing, the Option Term shall not commence until Lessor sends to Lessee two (2) thirty (30) day notices of the commencement of the Option (the “Option Notice”). In the event Lessor fails to send such notice at the end of the ninth (9th) year of this Lease, then the Option Term shall be moved such that it is for a one year period commencing thirty (30) days after the Second Option Notice has been received by Lessee. Lessee may exercise the option to purchase the Premises by providing thirty (30) days notice to Lessor of its election to exercise the Option (the “Option Notice”).

ECF 34-2 at 18; ECF 34 ¶ 12. The Walmart Lease also provides that the “initial term of this Lease shall be for a period commencing on the Effective Date and terminating on the date that is twenty (20) years after the Rent Commencement Date, unless sooner terminated or extended (the ‘Initial Term').” ECF 34-2 at 4; ECF 34 ¶ 19.

         On or about December 15, 2006, Walmart and Defendants executed a Short Form Lease and the Walmart Memorandum of Option, confirming Walmart's purchase option. ECF 34-3; ECF 34 ¶¶ 14, 15. Over time, Walmart and Defendants also executed various amendments to the Walmart Lease. ECF 34 ¶ 16. On or about June 23, 2008, Walmart and Defendants executed the fourteenth amendment to the Walmart Lease, providing that “Lessee opened for business on March 5, 2008, ” and the “Rent Commencement Date is March 5, 2008.” Id. ¶¶ 17, 18; ECF 34-4. The fourteenth amendment also provided that “the initial term of the Lease shall expire on March 4, 2028.” ECF 34-4; ECF 34 ¶ 20.

         Walmart alleges that the initial term of the Walmart Lease is 20 years from the Rent Commencement Date of March 5, 2008, and, consequently, that the pertinent years for Walmart's Option are: March 5, 2017 to March 4, 2018 for Year 10; and March 5, 2018 to March 4, 2019 for Year 11. ECF 34 ¶¶ 21, 22. Accordingly, Walmart alleges that the Walmart Lease is now in its eleventh year, and that Walmart properly exercised its option to purchase, which Defendants have refused to honor. Id. ¶¶ 24-28. Walmart seeks relief in the form of monetary damages, specific performance, and declaratory relief. Id. at 10, 12, 13.

         B. Sam's Lease

         On or about April 6, 2005, Sam's executed a ground lease with Defendants to build and operate a Sam's Club Store on a parcel of real property located in Anne Arundel County, Maryland, owned by Defendants and consisting of approximately 16.055 acres (the “Sam's Parcel”). ECF 34 ¶¶ 10, 11; ECF 34-6. The Sam's Lease also provided Sam's with an option to purchase the Sam's Parcel (“Sam's Option”). ECF 34 ¶ 32; ECF 34-6. The Sam's Option provides, in relevant part:

From the end of the tenth (10th) year of this Lease until the end of the eleventh (11th) year of this Lease (the “Option Term”), Lessor [Defendants] hereby grants to Lessee [Sam's] an option to purchase the Premises from Lessor on the terms and conditions set forth herein (the “Option”). Notwithstanding the foregoing, the Option Term shall not commence until Lessor sends to Lessee two (2) thirty (30) day notices of the commencement of the Option (the “Option Notice”). In the event Lessor fails to send such notice at the end of the ninth (9th) year of this Lease, then the Option Term shall be moved such that it is for a one year period commencing thirty (30) days after the Second Option Notice has been received by Lessee. Lessee may exercise the option to purchase the Premises by providing thirty (30) days notice to Lessor of its election to exercise the Option (the “Option Notice”).

ECF 34-6 at 17-18; ECF 34 ¶ 32. The Sam's Lease also provides that the “initial term of this Lease shall be for a period commencing on the Effective Date and terminating on the date that is twenty (20) years after the Rent Commencement Date, unless sooner terminated or extended (the ...


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