DN Reynoldsburg, L.L.C. v. Maurices Inc.

2022 Ohio 949
CourtOhio Court of Appeals
DecidedMarch 24, 2022
Docket20AP-57
StatusPublished
Cited by8 cases

This text of 2022 Ohio 949 (DN Reynoldsburg, L.L.C. v. Maurices Inc.) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
DN Reynoldsburg, L.L.C. v. Maurices Inc., 2022 Ohio 949 (Ohio Ct. App. 2022).

Opinion

[Cite as DN Reynoldsburg, L.L.C. v. Maurices Inc., 2022-Ohio-949.]

IN THE COURT OF APPEALS OF OHIO

TENTH APPELLATE DISTRICT

DN Reynoldsburg, LLC, :

Plaintiff-Appellant, : No. 20AP-57 v. : (C.P.C. No. 18CV-7616)

Maurices Incorporated, : (REGULAR CALENDAR)

Defendant-Appellee. :

D E C I S I O N

Rendered on March 24, 2022

On brief: Carpenter, Lipps & Leland LLP, David A. Wallace, and Karen M. Cadieux, for appellant. Argued: David A. Wallace.

On brief: Perez & Morris LLC, Kevin L. Murch, and Juan Jose Perez, for appellee. Argued: Kevin L. Murch.

APPEAL from the Franklin County Court of Common Pleas MENTEL, J. {¶ 1} Plaintiff-appellant, DN Reynoldsburg, LLC, appeals from the January 7, 2020 decision and entry by the Franklin County Court of Common Pleas granting the motion for summary judgment of defendant-appellee, Maurices Incorporated, and the trial court's September 16, 2020 entry granting appellee's motion for attorney fees. For the reasons that follow, we reverse. I. FACTS AND PROCEDURAL HISTORY {¶ 2} Appellant is the landlord of Shoppes at East Broad Street ("Shopping Center"), a shopping center located in Reynoldsburg, Ohio. Appellee is a women's clothing store that operates three1 locations within the central Ohio area.

1 This figure excludes the store at issue in this case. No. 20AP-57 2

{¶ 3} In July 2015, the parties entered into a commercial lease agreement in which appellant leased appellee space for the purposes of operating a retail store at the Shopping Center. In exchange, appellee was to pay "Annual Minimum Rent" of $7,083.33 per month, plus the pro rata share of real estate taxes, common area maintenance costs, and insurance premiums. Relevant to the instant case, Section 8.03 of the lease agreement sets forth the rights and obligations of the parties as they relate to the co-tenancy of the Shopping Center. These provisions set forth the rights of appellee if "Inducement Tenants"2 were not operating at the Shopping Center when appellee opened for business. Section 8.03(b) addresses the opening requirements for the parties: Opening Requirements: Notwithstanding anything set forth in this Lease to the contrary * * * Tenant will not be required to * * * pay Annual Minimum Rent, Percentage Rent and Additional Charges and any other charges to be paid by Tenant until such time as all of the Inducement Tenants are opened and operating in the Shopping Center (the "Opening Co- Tenancy Requirement"). * * * If the Opening Co-Tenancy Requirement is not met as of the Commencement Date, then, if Tenant nevertheless elects to take possession of the Premises and open, during the period from the Commencement Date until the fulfillment of the Opening Co-Tenancy Requirement (the "Interim Period"), Tenant shall have the right to pay to Landlord Substitute Rent during the Interim Period.

{¶ 4} The term "Substitute Rent" was defined as "[f]ive percent (5%) of Tenant's Gross Sales (as defined in Section 4.02(b) herein) from the Premises, in arrears on a monthly basis, in lieu of Annual Minimum Rent, Percentage Rent, and Additional Charges." (Section 1.01(v).) The lease also provided that appellee could terminate the lease agreement and be repaid out-of-pocket expenses incurred in preparation for taking possession and completing tenant's work, if the co-tenancy requirements were not met within 18 months after possession of the premises was tendered. (Section 8.03(b).) {¶ 5} Section 8.03(c) sets forth the ongoing co-tenancy requirements stating: An "Ongoing Co-Tenancy Violation" shall exist if * * * there is less than both of the Anchor Tenants3 (or a Comparable Replacement for each Anchor Tenant as defined herein) open and operating in the Shopping Center * * *. In the event of an Ongoing Co-Tenancy Violation, Tenant shall have the right,

2 The Inducement Tenants identified in the lease agreement were Sports Authority, TJ Maxx, and PetCo. Section 101(l). 3 The Anchor Tenants identified in the lease agreement were Sports Authority and TJ Maxx. (Section 101(n).) No. 20AP-57 3

retroactive to the first day that the Ongoing Co-Tenancy Violation exists, to pay Substitute Rent.

Id.4 {¶ 6} The lease provided for replacement of Anchor Tenants in Section 8.03(c), defining "comparable replacement" as "a national or regional retail tenant with a use comparable to the Anchor Tenant being replaced and operating in not less than seventy- five percent (75%) of the same leasable space utilized by the replaced Anchor Tenant." As set forth in Section 8.03(d) of the lease agreement, the parties acknowledged that the co- tenancy conditions are an express inducement for appellee to enter into the lease agreement at the Shopping Center.5 The lease agreement also stated that if "either party shall file any proceeding against the other party for breach or default under this Lease * * * the party prevailing shall be entitled to receive reimbursement from the other party for its reasonable attorneys' fees and court costs." (Section 18.03.) {¶ 7} Approximately six months after the parties entered into the lease agreement, ports Authority, identified in the lease agreement as both an Anchor and Inducement Tenant, filed for bankruptcy prior to occupying the premises at the Shopping Center. Appellee opened its location at the Shopping Center in August 2016. {¶ 8} Appellant and Rooms for Less, a furniture store, entered into a contract to occupy the premises previously intended for Sports Authority. On or about September 29, 2017, Rooms for Less opened at the Shopping Center. Appellant notified appellee that the co-tenancy provision of the lease was satisfied with the opening of Rooms for Less, and appellee should begin to pay the Annual Minimum Rent of $85,000 or $7,083.33 per month with the pro rata share of real estate taxes, common area maintenance costs, and insurance premiums as of November 2017. (Sections 1.01(g), (j) and Article IV.) Appellee

4 Appellee could again terminate the lease for an ongoing co-tenancy violation after 30 consecutive months

after the first day that the ongoing co-tenancy violation existed. (Section 8.03(c).) "If Tenant does not terminate this Lease pursuant to the immediately preceding sentence, then Tenant shall have no further right to terminate this Lease as a result of that particular Ongoing Co-Tenancy Violation, and Tenant shall resume paying Annual Minimum Rent, Percentage Rent and Additional Charges as required by this Lease effective as of the day after such 60-day period." Id. 5 Section 8.03(d) provides:

The co-tenancy requirements set forth in Sections 8.03(b) and (c) are referred to herein as the "Co-Tenancy Conditions." Landlord acknowledges and agrees that the Co-Tenancy Conditions are an express inducement for Tenant to enter into this Lease and to operate its business in the Shopping Center, and that Tenant would not otherwise enter into this Lease without the Co-Tenancy Conditions. No. 20AP-57 4

informed appellant that under its interpretation of the lease, appellee was entitled to continue to pay Substitute Rent as it had the option of paying Substitute Rent during the period when less than all of the Inducement Tenants were open and operating in the Shopping Center. {¶ 9} On September 9, 2018, appellant filed its initial complaint asserting a cause of action for breach of contract alleging appellee breached the lease agreement by failing to pay full rent on the premises. On October 10, 2018, appellee filed its answer denying it had breached the lease agreement asserting as a defense that it was entitled to continue to pay Substitute Rent because Sports Authority, an Inducement Tenant, did not open at the Shopping Center, therefore, appellant never satisfied its obligations under the lease.

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Cite This Page — Counsel Stack

Bluebook (online)
2022 Ohio 949, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dn-reynoldsburg-llc-v-maurices-inc-ohioctapp-2022.