Mortgage Connect Document v. Green Industrial Development Group, LLC

• Court: Superior Court of Delaware
• Decided: January 20, 2026
• Docket: N23C-01-178 MAA CCLD
• Status: Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

MORTGAGE CONNECT ) DOCUMENT SOLUTIONS, LLC, ) ) Plaintiff, ) ) v. ) C.A. No. N23C-01-178 MAA CCLD ) GREEN INDUSTRIAL ) DEVELOPMENT GROUP, LLC, ) ) Defendant. )

Submitted: October 20, 2025 Decided: January 20, 2026

POST-TRIAL MEMORANDUM OPINION

Andrew D. Cordo, Esquire (Argued), Jacqueline G. Connor, Esquire, of WILSON SONSINI GOODRICH & ROSATI, P.C., Wilmington, Delaware; Michael S. Sommer, Esquire (Argued), of WILSON SONSINI GOODRICH & ROSATI, P.C., New York, New York, Attorneys for Plaintiff.

Katherine L. Mowery, Esquire, Gabriela Z. Monasterio, Esquire, of RICHARDS, LAYRON & FINGER, P.A., Wilmington, Delaware; Mark T. Josephs, Esquire (Argued), Lauren Z. Williams, Esquire, Brian H. Oates, Esquire, Matt M. Johnson, Esquire, of JACKSON WALKER LLP, Dallas, Texas, Attorneys for Defendant.

Adams, J. INTRODUCTION

This post-trial opinion resolves disputes regarding a commercial lease

between the landlord, Green Industrial Development Group, LLC (“Green”), and the

tenant, Mortgage Connect Document Solutions, LLC (“MCDS”). MCDS contends

Green wrongfully terminated the lease. Green contends MCDS repudiated the lease

while the parties budgeted for a buildout of the space and failed to cooperate during

that budgeting process—justifying Green’s termination.

For the reasons discussed herein, the Court finds MCDS repudiated the lease,

justifying Green’s immediate termination of the lease. MCDS’s claims therefore

fail. Green’s claim regarding MCDS’s noncooperation is dismissed as moot. Green

is entitled to damages and attorneys’ fees, costs, and expenses for MCDS’s breach.

Judgment will be entered accordingly.

FACTS AND PROCEDURAL HISTORY

A. The Parties

MCDS is a Delaware LLC providing “mortgage loan services, including

document generation, scanning, printing and processing.”1 MCDS conducts a

printing operation in Denver, Colorado.2

1 Pretrial Stip. ¶¶ 9–10. 2 Tr. 2/3 at 150:14–19. Citations to the bench trial transcript are in the form of “Tr. 2/X at __.” For the third day of trial, February 5, 2025, the Court references the instant trial transcript uploaded to the docket. D.I. 172. 1 Green is a Delaware LLC.3 Green is a real estate development company that

serves as developer, general contractor, and manager of warehouse properties.4 One

of Green’s properties is the JAG Logistics Center @ DEN (“JAG Logistics Center”),

a business and industrial warehouse park adjacent to Denver International Airport.5

B. Key Individuals

Jeff Coury (“Coury”) is the CEO of MCDS and its parent company, Mortgage

Connect LP.6 Steve Wilson (“Wilson”) managed MCDS’s printing operation in

Denver at all relevant times for this dispute.7 Dan Green is the CEO of Green.8

William James served as Green’s real estate appraisal expert in this case.9

Donald Lochabay was Green’s damages expert.10 James Farrell was MCDS’s

rebuttal expert.11

C. The Parties Negotiate the Lease

In the second half of 2021, MCDS decided to lease a new space for its printing

operation in Denver.12 MCDS had been operating at a space on Denver’s Argonne

3 Pretrial Stip. ¶ 12. 4 Pretrial Stip. ¶ 13. 5 Pretrial Stip. ¶ 14. 6 Pretrial Stip. ¶ 11. 7 Tr. 2/3 at 15:13–16; 150:20–151:7; JX 1at MCDS001042. 8 Pretrial Stip. ¶ 15. To avoid confusing Dan Green with Green the entity, the Court will refer to Dan Green by his full name. 9 Tr. 2/4 at 225:2–13. 10 Tr. 2/5 at 7:8–10. 11 Tr. 2/5 at 91:8–17. 12 Tr. 2/3 at 12:6–14. 2 Street (the “Argonne Street Facility”).13 MCDS sought a space near the Denver

International Airport.14 Through brokers, Green and MCDS began negotiating a

lease for space at the JAG Logistics Center.15

On April 27, 2022, the Parties executed a lease (the “Lease”) governed by

Colorado law.16 The Lease concerned 46,280 square feet of warehouse space at the

JAG Logistics Center (the “Premises”).17 On May 26, 2022, MCDS paid Green

$127,674.86, constituting a deposit and first month’s rent for the Lease (the

“Deposit”).18

The Lease incorporated a “Work Letter,” which provided terms for Green to

implement improvements so the Premises would meet MCDS’s operational needs.19

The Work Letter provided for a $30.00 per square foot “Tenant Allowance.”20 The

Tenant Allowance was to be used as a credit towards any costs incurred by Green in

implementing improvements pursuant to the Work Letter—MCDS only paid for

Premises improvements above the value of the Tenant Allowance.21 If MCDS did

13 Tr. 2/3 at 150:14–19. 14 Tr. 2/3 at 12:15–21. 15 JX 11. 16 Pretrial Stip. ¶ 16; JX 1. Wilson is listed as the Tenant’s Representative in the Work Letter. JX 1 at MCDS001042. The Work Letter further states that “Authorization made by Tenant’s Representative shall be binding and Tenant shall be responsible for all cost authorized by Tenant’s Representative.” JX 1 at MCDS001042. 17 Pretrial Stip. ¶¶ 17–18; JX1 at MCDS001014. 18 Pretrial Stip. ¶ 21. 19 Pretrial Stip. ¶ 20; JX 1 at MCDS001039–MCDS001044. 20 JX 1 at MCDS001040. 21 JX 1 at MCDS001040–MCDS001041. 3 not use the Tenant Allowance within twelve months of signing of the Lease, the

Tenant Allowance was forfeited.22

The Work Letter also provided that, should the cost of the build-out to the

Premises exceed the Tenant Allowance, Green must notify MCDS.23 MCDS could

then either have authorized Green to proceed with the buildout, or elected to work

with Green to revise the “Working Drawings” (documents that specify the scope of

the build-out) so as to reduce the “Excess Cost” (the difference between the actual

cost of the build-out and the Tenant Allowance).24

The Lease specified that, in the event of a breach, MCDS must be given notice

of the breach and thirty days to cure.25

D. The Parties Wrestle with the Budget for the Build-out.

In March 2022, MCDS worked with Green to formulate a budget for the build-

out of the Premises.26 Wilson worked with Brian Patterson, a consultant MCDS

hired as project manager for the build-out, to determine the project scope.27 MCDS

22 JX 1 at MCDS001040. 23 JX 1 at MCDS001040. 24 JX 1 at MCDS001041. 25 JX 1 at MCDS001029. 26 JX 25. Notably, MCDS never requested a budget upfront for the project. Tr. 2/4 at 28:21–23. MCDS was likewise aware that there would be no budget proposed “until we have final plans” so that they could “properly budget and make alterations to the plans as needed to remove things.” JX 55. See also Tr. 2/3 at 167:2–7 (Coury testifying that Wilson requested the budget and was told the budget would not be available until after the final plans were finished). 27 Tr. 2/3 at 167:12–16; Tr. 2/4 at 28:9–12. Patterson met with Green weekly to discuss the “what they wanted in the space.” Tr. 2/4 at 14:11–16. Patterson further “provided meaningful input into the creation of those plan[]s.” Tr. 2/4 at 35:20–36:7. After the first budget, Patterson was 4 ultimately approved Working Drawings outlining an extensive build-out in the

warehouse.28

On September 13, 2022, Green sent Wilson the first budget for the

implementation of the Working Drawings (the “First Budget’).29 The total budget

was $7,605,410—$164.33 per square foot—with $134.33 per square foot of Excess

Cost.30 In messages with Wilson, Coury expressed his surprise at the magnitude of

the First Budget and declared it needed to be dramatically reduced if MCDS were to

proceed.31 MCDS rejected the First Budget on September 20, 2022.32

On September 23, 2022, Green sent an updated budget (the “Second

Budget”).33 The Second Budget total was $6,761,647—$146.10 per square foot—

for the build-out.34 MCDS rejected the Second Budget on September 27, 2022.35

On September 29, 2022, Green sent another revised budget (the “Third

Budget”). The Third Budget reflected a total budget of $6,609,900—$142.82 per

taken off the project and was no longer part of the discussions on how to re-design the space or have cost-saving ideas. Tr. 2/4 at 36:8–23. 28 JX 92. 29 JX 107; Pretrial Stip. ¶ 24. 30 JX 107; Pretrial Stip. ¶ 24. 31 JX 116 at MCDS001223; JX 117 at MCDS011490; JX 114 at MCDS001226. Wilson was also aware that the HVAC alone would cost over $1.5 million, and told Dan Green to “go ahead” and approve the HVAC unit so that a price increase could be avoided. JX 99 at GREEN006017; Tr. 2/4 at 46:9–21. Wilson responded to a text from Dan Green that stated “Just sent you the revised budget. I think you and Jeff will be happy. Also we did release the HVAC contractor to secure the equipment so please keep in mind” with a thumbs up. JX 122 at MCDS011487. 32 Pretrial Stip. ¶ 25. 33 Pretrial Stip. ¶ 26. 34 Pretrial Stip. ¶ 26. 35 Pretrial Stip. ¶ 27. 5 square foot—for the project.36 On September 30, 2022, MCDS rejected the Third

Budget.37

On October 4, 2022, MCDS asked Green if the build-out cost could be

amortized over the term of the Lease.38 In his response, Dan Green characterized

Green’s financial investment into the build-out as “as far as we can go”—Green

could not amortize the cost.39

E. MCDS Commences “Plan B”

On October 4, 2022, Coury received an internal budget estimate for the move

to the Premises.40 The move budget incorporated the build-out budget from the

Third Budget, as well as additional costs, totaling nearly $9 million.41 Coury

explained, “[t]his is too big of an investment.”42 Coury asked Wilson for a “plan b

asap.”43 Wilson responded, “Plan B, kill the deal [and] put the new equipment in

Argonne. Maybe able to get some sqft [sic] from [the Argonne Street Facility

36 Pretrial Stip. ¶ 28. 37 Pretrial Stip. ¶ 29. 38 JX 134 at MCDS009036. 39 JX 134 at MCDS009036. 40 JX 138 at MCDS000455. 41 JX 138 at MCDS000456. 42 JX 138 at MCDS000454. 43 JX 138 at MCDS000453. 6 landlord] if we need it.”44 Coury replied, “Steve start working on Plan B.”45 Coury

never told Dan Green about “Plan B.”46

On October 7, 2022, Coury texted a colleague, Chris Staub, regarding the

Lease.47 Referencing the build-out, Coury remarked “no way am I doing this.”48

Coury continued, “[t]he Lease is signed and we may have a fight with the

landlord.”49 The following day, Coury texted Staub to ask if he had real estate

counsel and noted that Coury “need[ed] to be able to understand what litigation looks

like.”50

On October 7, 2022, a Xerox employee emailed Wilson to ask where to move

one of MCDS’s printers.51 Wilson responded “We are reevaluating our plans. We

will not be moving plant locations but may be moving the location on the current

plant floor.”52

44 JX 138 at MCDS000451. 45 JX 138 at MCDS000450. Wilson, in response, told Coury that the “equipment is in line with what we expected,” and the “HVAC/Electrical is the biggest component and supply chain cost have pushed that up probably 15%.” JX 138 at MCDS000453. 46 Tr. 2/3 at 189:1–2. 47 JX 141 at MCDS011497. Staub is Coury’s main contact at Archwell Solutions, a family office owned by one of the families that owned Mortgage Connect. Tr. 2/3 at 179:15–180:3. 48 JX 141 at MCDS011497. Coury also texted that “[w]e signed the lease back in March I don’t think our team did the right budget.” JX 141 at MCDS011497. Coury later texted Staub, “Need to start finding a tent ant [sic]. It will cost us but not doing that build out.” JX 141 at MCDS011497. 49 JX 141 at MCDS011497. 50 JX 145 at MCDS011498. 51 JX 143 at MCDS009249. 52 JX 143 at MCDS009249 (emphasis added). During this time, Coury was also speaking with Jordan Glick, and had discussions with Glick about how it would “take some where between 1,5 7 On November 7, 2022, Wilson wrote to the landlord representative for the

Argonne Street Facility that MCDS would move forward on an extra 10,500 square

feet in the Argonne Street Facility.53

F. Discussions Between MCDS and Green Break Down.

On October 11, 2022, Dan Green, Coury, and other personnel for MCDS and

Green joined a conference call to discuss the path forward.54 MCDS broached the

subject of subleasing the Premises.55 Dan Green was disappointed, especially

because Dan Green and MCDS’s broker agreed that subleasing was not a viable

prospect for the unfinished space.56

That same day, Dan Green messaged his staff and told them to show the

Premises to another prospective tenant.57 Dan Green decided to show the space

because “[i]t was pretty clear to [him] that [MCDS] was seriously considering not

moving forward with the facility and therefore [Green] would have vacant space on

[their] hands.”58 Dan Green also understood that, if the MCDS deal fell apart, Green

had a duty to mitigate damages.59 Green did not tell MCDS it was showing the

[sic] or 2 mill for a buyout.” JX 150 at MCDS011548. Jordan Glick is another employee of Archwell Solutions. Tr. 2/3 at 210:11–12. 53 JX 174 at MCDS011482. 54 JX 146 at GREEN001923; Tr. 2/4 at 67:14–68:18. 55 Tr. 2/4 at 68:19–69:3. 56 Tr. 2/4 at 69:14–70:2. 57 JX 147 at GREEN010368. 58 Tr. 2/4 at 72:1–4. 59 Tr. 2/4 at 73:3–10. 8 space.60 Dan Green explained he decided not to tell MCDS because he wanted the

Parties focused on “finding a path forward.”61 Simultaneously, MCDS was

considering a buyout of the Lease.62

On October 19, 2022, Green sent MCDS a Notice of Default and Tenant Delay

(the “First Notice”).63 The First Notice contended MCDS failed to “approve” the

Second Budget by September 28, 2022, and that this action violated the Lease and

Work Letter.64

The First Notice also set the “Commencement Date” of the Lease, pursuant to

Section 4 of the Work Letter, as no later than March 1, 2023. 65 The Lease did not

have a set Commencement Date, instead leaving that date for resolution later in the

build-out process.66 Section 4 of the Work Letter provided for the setting of the

Commencement Date based on the completion of the build-out, and further

provided, if MCDS delayed the build-out in violation of the Work Letter and Lease,

Green could set the date of completion of the build-out based on its reasonable

estimate of when the project should have been done.67 That completion date would

60 JX 147 at GREEN010367. 61 Tr. 2/4 at 73:11–21. 62 JX 150 at MCDS011548. 63 JX 164 at MCDS001006–MCDS001007. 64 JX 164 at MCDS001006. 65 JX 164 at MCDS001006. 66 JX 1 at MCDS001014. 67 JX 1 at MCDS001040. 9 thereby form the Commencement Date for the Lease.68 Green put MCDS on the

clock.

Despite the First Notice, Green continued to work to reduce the Excess Cost.

Dan Green set up a call with Wilson in which he presented alternatives to certain

elements of the Working Drawings.69 The result was a “back of the napkin”

proposed budget (the “Fourth Budget”).70 MCDS rejected the Fourth Budget.71 That

same day, November 7, 2022, Wilson contacted the Argonne Street Facility landlord

regarding extra space at the Argonne Street Facility.

On November 9, Coury emailed Dan Green regarding the Fourth Budget.72

Coury asked Green, “is it your position that it is impossible to meet [MCDS’s] needs

at or near the [Tenant Allowance]? If that is your position, what do you suggest we

do next?”73

68 JX 1 at MCDS001014; MCDS001040. 69 JX 170 at MCDS007829. 70 JX 171 at MCDS007880. 71 JX173 at MCDS007888. 72 JX 175 at MCDS000010. 73 JX 175 at MCDS000010. 10 G. The Smaller Space Proposal, December 28 Text, and the End of All Budget Negotiations

On December 5, 2022, Dan Green wrote Coury to offer that MCDS take a

smaller space at the JAG Logistics Center (the “Smaller Space Proposal”).74 Coury

responded that he would review the Smaller Space Proposal.75

On December 12, Dan Green texted Coury to ask for his thoughts on the

Smaller Space Proposal.76 On December 28, 2022, Coury sent Dan Green the

following text message (the “December 28 Text”):

Dan hope all is well and you are enjoying your vacation. I worked with my team and your latest proposal does not work. We cannot take the space. I wanted to get to you sooner than later so you can continue to market the space to others. This process, unfortunately has caused my business a lot of issues with operations with delays of equipment, capacity, and client boarding. We have no choice but to look at the other alternatives. Wish you the best. Jeff77

That text is the nexus of this lawsuit.

On January 5, 2023, Coury and Dan Green spoke on the phone.78 Coury

explained the Smaller Space Proposal was not adequate and, when Dan Green

brought up the full Premises in the Lease, explained that MCDS needed the Excess

74 JX 180 at MCDS000769–MCDS000770. 75 JX 180 at MCDS000769. 76 JX 186 at GREEN010784; Tr. 2/4 at 189:12–190:16. 77 JX 189 at GREEN010788. 78 Tr. 2/3 at 124:3–125:4. 11 Costs to be reduced before MCDS could agree to the budget.79 Dan Green explained

that was not workable.80 Coury asked Dan Green to return MCDS’s Deposit.81

On January 11, 2023, Wilson cancelled a contract for the installation of a vault

at the Lease Premises.82

On January 12, 2023, Counsel for Green sent MCDS a Notice of Default,

Tenant Delay, and Termination of Lease.83 In the Notice, Green outlined its

understanding that MCDS was refusing to proceed with the Lease—that it had

repudiated.84 Counsel for MCDS responded via a letter on January 13, 2023,

rejecting Green’s contention that MCDS was in default under the Lease.85 In that

January 13, 2023 letter, MCDS asked Green to return the Deposit.86

Green never secured a long-term replacement tenant for the Premises.87 Green

leased the Premises on a short-term basis to two different replacement tenants.88

79 Tr. 2/3 at 124:3–125:4. 80 Tr. 2/3 at 124:3–125:4. 81 Tr. 2/4 at 84:8–85:13. 82 JX 194 at MCDS007597. 83 JX 195 at MCDS000358–MCDS000359. 84 JX 195 at MCDS000359. 85 JX 197 at MCDS011411. 86 JX 197 at MCDS011412. 87 Tr. 2/4 at 87:4–11. 88 Tr. 2/4 at 86:15–87:3 12 H. Procedural History

MCDS filed this action on January 19, 2023, seeking a declaration that Green

breached the Lease and the return of MCDS’s Deposit.89 On August 27, 2024, the

Parties filed cross-motions for summary judgment.90 The Court denied the motions

for summary judgment in a bench ruling on November 4, 2024. 91 On January 24

and 31, 2024, the Court resolved various pretrial motions filed by the Parties.92

The Court held a three-day bench trial from February 3–5, 2025.93 On

February 26, 2025, MCDS filed their Opening Post-Trial Brief.94 On March 19,

2025, Green filed their Opening Post-Trial Brief.95 On April 9, 2025, MCDS filed

their Reply Brief.96 Green filed their Reply Brief, on April 23, 2025.97 The Court

heard post-trial oral argument on July 10, 2025.98

89 D.I. 1. 90 D.Is. 80–83. 91 D.I. 108. 92 D.Is. 134, 148. 93 D.I. 150. 94 D.I. 156 [“MCDS Opening”]. 95 D.I. 163 [“Green Opening”]. 96 D.I. 167 [ “MCDS Reply”]. 97 D.I. 169 [“Green Reply”]. 98 D.I. 173. The transcript from the post-trial argument, which is integral to the Court’s decision, became available on October 19, 2025. 13 STANDARD OF REVIEW

In a bench trial, the judge, as fact-finder,99 “must assess the credibility of each

witness and determine the weight given to the testimony.”100 To reach a verdict on

the issues, the court considers admitted exhibits, the testimony of witnesses, the

parties’ arguments, and Delaware law.101 The court can consider “each witness’s

means of knowledge; strength of memory; opportunity to observe; how reasonable

or unreasonable the testimony is; whether it is consistent or inconsistent; whether it

has been contradicted; the witnesses’ biases, prejudices, or interests; the witnesses’

manner or demeanor on the witness stand; and all circumstances that according to

the evidence, could affect the credibility of the testimony.”102 After reviewing the

evidence presented, the court is “free to accept or reject any and or all sworn

testimony.”103

A party bears the burden of proving its claims by a preponderance of the

evidence.104 Proof by a preponderance of the evidence means “proof that something

99 See, e.g., Shallcross Mortg. Co. v. Ewing, 2024 WL 3738713 at *1 (Del. Super. Aug. 9, 2024) (citing Torres v. Bishop, 2021 WL 6053870, at *4 (Del. Super. Dec. 21, 2021)). 100 Williams v. Bay City, Inc., 2009 WL 5852851, at *1 (Del. Super. Dec. 23, 2009) (internal citations omitted). 101 Outbox Sys., Inc. v. Trimble, Inc., 2024 WL 1886089, at *7 (Del. Super. Apr. 30, 2024). 102 Zenith Energy Terminals Joliet Hldgs. LLC v. CenterPoint Props. Tr., 2024 WL 3570165, at *3 (Del. Super. July 29, 2024) (citing Super. Ct. Civ. Pattern Jury Instruction 23.9). 103 Pardo v. State, 160 A.3d 1136, 1150 (Del. 2017). 104 See, e.g., Navient Sols., LLC v. BPG Off. P’rs XIII Iron Hill LLC, 2023 WL 3120644, at *10 (Del. Super. Apr. 27, 2023). 14 is more likely than not.”105 If the evidence presented by the parties “is inconsistent,

and the opposing weight of the evidence is evenly balanced, then ‘the party seeking

to present a preponderance of the evidence has failed to meet its burden.’”106 “All

elements of a claim must be proven by a preponderance of the evidence, including

the plaintiff’s damages.”107

ANALYSIS

A. MCDS Repudiated the Lease.

In this case, the question of liability for breach of the Lease turns on whether

Coury’s December 28 Text constitutes a repudiation of the Lease. If Coury

repudiated, Green properly terminated the Lease, regardless of the Lease’s

requirements regarding notice and an opportunity to cure.108 If Coury did not

repudiate, the Court must investigate whether Green’s termination was appropriate.

MCDS contends the December 28 Text did not repudiate the Lease.109

According to MCDS, the December 28 Text instead rejected the Smaller Space

Proposal, as taking the full Premises of the Lease was no longer an option on the

105 Feenix Payment Sys., LLC v. Blum, 2024 WL 2768386, at *10 (Del. Super. May 29, 2024). 106 Interim Healthcare, Inc. v. Spherion Corp., 884 A.2d 513, 545 (Del. Super. 2005) (quoting Eskridge v. Voshell, 593 A.2d 589 (TABLE), 1991 WL 78471, at *3 (Del. 1991)). 107 Buck v. Viking Holding Mgmt. Co. LLC, 2024 WL 4352368, at *21 (Del. Super. Sept. 30, 2024) (citation omitted). 108 Highlands Ranch Univ. Park, LLC v. Uno of Highlands Ranch, Inc., 129 P.3d 1020, 1024 (Colo. App. 2005) (“Here, tenant clearly communicated its intent not to perform under the lease, and thus landlord’s compliance with the lease provisions requiring notice and opportunity to cure would have been futile acts.”). 109 MCDS Opening at 32–41. 15 table, having been “committed” to another tenant.110 MCDS further contends the

December 28 Text was not a repudiation as a matter of law, as it did not constitute a

“definite and unequivocal manifestation”111 of MCDS’s intent not to perform the

Lease.112 Green contends the December 28 Text repudiated the entire Lease.113

As a preliminary matter, the Court is not persuaded that Green took part of the

Premises off the table before the December 28 Text. Dan Green denied telling Coury

he had committed part of the Premises to another tenant.114 No documentary

evidence presented at trial shows Green committed any part of the Premises to

another tenant before the December 28 Text. MCDS bases its contention part of the

Premises were committed to another tenant on Coury’s unsupported testimony.115

Further, Green has never had a long-term tenant in the Premises since April 7,

2022.116 While Green did show the Premises to another prospective tenant,117 the

Court does not believe Green committed part of the Premises to another tenant.

110 Id. at 32–37. 111 Highlands., 129 P.3d at 1023. 112 MCDS Opening at 37–41. 113 Green Opening at 34–37. 114 Tr. 2/4 at 16:7–11, 87:4–11, 186:2–13. 115 Tr. 2/3 at 217:17–23. 116 Tr. 2/4 at 16:12–15, 87:4–11. 117 JX 147 at GREEN010367. 16 Under Colorado law, a repudiation occurs “upon a party’s definite and

unequivocal manifestation of its intention that it will not perform as required by the

contract.”118

A repudiation of a contract must consist of a party’s present, positive, unequivocal refusal to perform the contract, not a mere threat to abandon its obligations under the contract. A mere expression of doubt as to a party’s willingness or ability to perform is not enough to constitute a repudiation. A repudiation must be apparent in the objective sense.119

While the text of an alleged repudiation message itself serves as the focus of the

Court’s inquiry, the Court may look to the alleged repudiator’s post-message

conduct to determine whether that party has repudiated.120

The December 28 Text supports Green’s position:

Dan hope all is well and you are enjoying your vacation. I worked with my team and your latest proposal does not work. We cannot take the space. I wanted to get to you sooner than later so you can continue to market the space to others. This process, unfortunately has caused my business a lot of issues with operations with delays of equipment, capacity, and client boarding. We have no choice but to look at the other alternatives. Wish you the best. Jeff121

118 Highlands, 129 P.3d at 1023 (citation omitted). 119 Quinn v. City of Evans Police Dep’t, 2009 WL 2241955, at *5 (D. Colo. July 24, 2009) (citation modified). 120 See Lawry v. Palm, 192 P.3d 550, 559 (Colo. App. 2008) (“Even if these e-mails, standing alone, were not sufficiently positive to establish that defendant intended to repudiate the employment portion of the agreement by resigning from FPA, they were accompanied by defendant’s breach by nonperformance and, thus, they amounted to a repudiation. For example, the evidence demonstrates that defendant ceased performing his employment obligations under the agreement after November 23, and there was no discussion between the parties or between their attorneys that defendant wanted to continue working for FPA.”). 121 JX 189 at GREEN101788. 17 MCDS contends the “space” referenced in the December 28 Text, and the “latest

proposal,” both refer to the Smaller Space Proposal.122 Dan Green admitted on cross

examination that the terms “space” and “latest proposal” reference the Smaller Space

Proposal.123 The context surrounding the message supports such a reading, as the

December 28 Text answered a December 12 Text from Dan Green to Coury asking

for Coury’s thoughts on the Smaller Space Proposal.124

Even accepting that the “space” and “latest proposal” refer to the Smaller

Space Proposal, the second half of the text conveys MCDS’s repudiation. Starting

with the ending, the phrase “wish you the best” concludes the December 28 Text

with a statement of finality—that MCDS was done negotiating budgets and wanted

to terminate the relationship. The December 28 Text concludes with a farewell

sendoff, connoting the end of a dialogue.

In the third-to-last sentence, Coury refers to “this process” as having caused

disruptions to MCDS’s normal business activities. Coury is clearly referring to the

entire build-out budget approval process. He cannot be referencing only the Smaller

Space Proposal, as that Proposal was on the table for less than a month.125

122 MCDS Opening at 34–5. 123 Tr. 2/4 at 191:2–7. 124 JX 186; Tr. 2/4 at 189:12–190:16. 125 Tr. 2/4 at 185:5–12. 18 Investigating the Smaller Space Proposal was not occurring for enough time to be

the “process” that caused disruption to MCDS’s business.

Within the context of the message, the second-to-last sentence is inextricably

tied to the third-to-last sentence. The third-to-last sentence describes MCDS’s

problem: the budgeting process is causing disruption to the business (with no end in

sight). The second-to-last sentence provides the solution to that problem: MCDS

will seek alternative options for a lease. Thus, because the third-to-last sentence

refers to the entire budgeting process, the following sentence does the same. That

second-to-last sentence’s declaration that MCDS would pursue other options

provides the most damaging evidence supporting repudiation.

The Court acknowledges that, under Colorado law, a mere threat to abandon

one’s obligations does not constitute a repudiation.126 Were the December 28 Text

followed up by MCDS’s continued efforts to negotiate a budget, perhaps the Court

would not find a repudiation. Instead, as in Lawry v. Palm, an “inartful” repudiating

message was paired with a subsequent failure to walk back the repudiation.127

On January 5, 2023, Coury and Dan Green had a phone call to follow up on

the December 28 Text.128 Coury reiterated the inadequacy of the Smaller Space

Proposal and, when Dan Green brought up the full Premises in the Lease, explained

126 Quinn, 2009 WL 2241955, at *5 (citation omitted). 127 Lawry, 192 P.3d at 556. 128 Tr. 2/3 at 124:3–125:4. 19 that MCDS needed the Excess Costs to be reduced before MCDS could agree to the

budget.129 Dan Green explained that was not workable.130 Coury asked Dan Green

to return MCDS’s Deposit, clearly signaling intent not to proceed with the Lease.131

On January 11, 2023, Wilson cancelled a contract for the installation of a vault

at the Lease Premises.132 MCDS’s decision to cancel a third-party contract, which

formed part of the buildout, further evidences their intent not to move into the Lease

Premises.133

On January 12, 2023, Counsel for Green sent MCDS a Notice of Default,

Tenant Delay, and Termination of Lease.134 In the Notice, Green explains its

understanding that MCDS was refusing to proceed with the Lease—that it had

repudiated.135 Counsel for MCDS responded via a letter on January 13, 2023.136

MCDS did not walk back the repudiation, or ask Green to resume Budget

negotiations. Instead, MCDS again asked Green to return the Deposit.137

129 Tr. 2/3 at 124:3–125:4. 130 Tr. 2/3 at 124:3–125:4. 131 Tr. 2/4 at 84:8–85:13. 132 JX 194 at MCDS007597. 133 The Court also notes the timing of the repudiation: under the Agreement, rent was due in March 2023, with forfeiture of the Tenant Allowance in April 2023. JX 1 at MCDS001039– MCDS001041. 134 JX 195 at MCDS000358–MCDS000359. 135 JX 195 at MCDS000359. 136 JX 197 at MCDS011411–MCDS011412. 137 JX 197 at MCDS011412. 20 Between the December 28 Text, MCDS’s January 13 Letter, the testimony

regarding the January 5 phone call between Dan Green and Coury, and Wilson’s

cancellation of the Vault Contract (which occurred before Green’s January 12 Letter

terminating the Lease), the Court is convinced MCDS intended to repudiate the

Lease via the December 28 Text and maintained its intention of nonperformance

after sending the text.

The weight of the evidence at trial reveals MCDS’s months-old intention not

to perform the Lease. MCDS was implementing its “Plan B”—a plan to “kill the

deal.”138 As soon as Coury received the First Budget, he expressed his shock and

disapproval of the figure. In a text message regarding the size of the First Budget,

he declared “I am not putting that into this building.”139 Coury sent a subsequent

message to Wilson explaining that the cost of the build-out needed to be reduced

dramatically, including a foreshadowing threat: “If we move forward.”140

Having received an overall relocation budget on October 4, 2022, Coury

emailed Wilson, explaining the budget was unacceptable and MCDS needed a “plan

b asap.”141 Wilson responded, “Plan B, kill the deal put the new equipment in

138 JX 138 at MCDS000451. While not determinative of the Court’s decision, the Court also notes MCDS’s financials between 2021 and 2022. In 2021, MCDS had a net income of $5,922,179.41. JX 12 at MCDS011521. In 2022, MCDS had a net loss of $3,162,916.58. JX 192 at MCDS011518. This dramatic change in MCDS’s financials provides additional context regarding MCDS’s repudiation. 139 JX 117 at MCDS011490. 140 JX 114 at MCDS001226 (emphasis added). 141 JX 138 at MCDS000453. 21 Argonne.”142 Coury replied, “Steve start working in plan B.”143 MCDS was

planning to “kill the deal”—repudiate the Lease—almost three months before the

December 28 Text.

A few days later, on October 7, 2022, Coury texted Staub about his problems

with the Lease.144 Regarding the build-out for the Lease, Coury remarked “no way

am I doing this.”145 Coury continued, “[t]he Lease is signed and we may have a fight

with the landlord.”146 The following day, Coury texted the same colleague to ask if

he had real estate counsel and noting that Coury “need[s] to be able to understand

what litigation looks like.”147

On October 7, 2022, a Xerox employee emailed Wilson to ask where to move

one of MCDS’s printers.148 Wilson responded “We are reevaluating our plans. We

will not be moving plant locations but may be moving the location on the current

plant floor.”149 This declaration that MCDS was not moving was delivered to Xerox

months before the December 28 Text.

On November 7, 2022, Wilson wrote to the landlord representative for the

Argonne Street Facility that MCDS would move forward on getting 10,500 extra

142 JX 138 at MCDS000451. 143 JX 138 at MCDS000450. 144 JX 141 at MCDS011497. 145 JX 141 at MCDS011497. 146 JX 141 at MCDS011497. 147 JX 145 at MCDS011498. 148 JX 143 at MCDS009249. 149 JX 143 at MCDS009249 (emphasis added). 22 square feet in the Argonne Street Facility.150 Getting extra space at the Argonne

Street Facility was part of “Plan B” as outlined on October 4, 2022.151 Wilson’s

message to the Argonne Street Facility landlord confirms MCDS’s intent to stay at

their then-current facility rather than comply with the Lease.

“Plan B” was in the works starting in October, and MCDS’s communications

show the decision to repudiate was already made. MCDS conveyed this intent via

the December 28 Text and never attempted to walk it back.

MCDS contends it was illogical for it to repudiate the Lease, so Green’s

position on repudiation is not believable.152 As explained in Lawry, economic logic

is not dispositive in a contractual repudiation analysis.153 The court may find a

repudiation where the evidence supports repudiation, even if repudiation was not an

efficient breach.154 Here, the evidence shows MCDS intended to repudiate the Lease

and did so via the December 28 Text.

This case is distinct from Quinn v. City of Evans Police Dept., where the court

rejected an alleged repudiation as “at worst a mere threat to abandon” the contract.155

The allegedly repudiating message was equivocal: the speaker explained that a

particular nondisparagement agreement needed to be part of the agreement between

150 JX 174 at MCDS011482. 151 JX 138 at MCDS000451. 152 MCDS Opening at 36. 153 Lawry, 192 P.3d at 559–560. 154 Id. 155 Quinn, 2009 WL 2241955, at *7. 23 the parties, otherwise their deal was unworkable, so the speaker was unsure where

that left the parties.156

In Quinn, the court emphasized the use of uncertain terms in the message,

which supported a finding against repudiation.157 The alleged-repudiation message

in Quinn was far more ambiguous than Coury’s December 28 Text, containing

statements like “I’m not sure where that leaves us.”158 Of particular importance to

the court was the conditionality of the message—if certain conditions were not met,

that would kill the deal.159 The court explained that a contingent intention not to be

bound cannot constitute a repudiation.160 Coury’s December 28 Text contains no

conditional language. Finally, the alleged repudiation in Quinn ended with a request

that the recipient call back, not a final farewell such Coury’s closing line in the

December 28 Text.161

As a policy matter, a finding against repudiation is unsavory. Coury

commenced a three-month plan to “kill the deal” with Green, climaxing in the

December 28 Text, and concluding with the filing of the instant lawsuit. To find

156 Id. at *5. 157 Id. at *7. 158 Id. at *5. 159 Id. at *8. The Court notes that during trial, Coury testified that he was not instructing Wilson to kill the deal, but was rather “instructing him to focus on Plan B.” Tr. 2/3 198:11–18. This contradicts the contemporaneous instructions of Coury to “kill the deal,” and the Court will credit the contemporaneous evidence over litigation-based testimony. JX 138 at MCDS000451. 160 Quinn, 2009 WL 2241955, at *9. 161 Id. at *5. 24 farewell messages such as Coury’s December 28 Text to be anything other than

contractual repudiation would encourage games of chicken. Contractual parties,

knowing a deal is on the ropes and intending to kill the deal themselves, would be

encouraged to send farewell messages, such as the December 28 Text, and then stare

down their counterparty, waiting to see if they blinked first. If the counterparty read

the farewell as a repudiation and terminated the contract, the message-delivering

party would escape the undesired deal and then sue the counterparty for breach.

Such gamesmanship is unacceptable. Coury’s December 28 Text repudiated the

Lease.

Because MCDS repudiated the Lease, Green was not required to follow the

notice and opportunity to cure provisions of the Lease—it was entitled to terminate

via the January 12, 2023, letter.162 MCDS breached the Lease.

B. Green’s Claim that MCDS Failed to Cooperate During the Budgeting Process Is Moot.

Green contends MCDS breached the Work Letter by failing to properly

cooperate with Green during the budgeting process.163 MCDS counters that it

complied with its obligations regarding cooperation.164 Because the Court found

162 Highlands, 129 P.3d at 1024 (“Here, tenant clearly communicated its intent not to perform under the lease, and thus landlord’s compliance with the lease provisions requiring notice and opportunity to cure would have been futile acts.”). 163 Green Opening at 48–52. 164 MCDS Opening at 30–32. 25 MCDS repudiated the Lease, Green’s noncooperation claim—a separate breach

claim concerning the same contracts MCDS repudiated—is moot.

C. Green Is Entitled to Damages for MCDS’s Breach.

Green’s claims for damages fall into three categories: (1) the outstanding

balance of unpaid rent due at the time of termination under Section 23.1(b)–(c); (2)

lost Operating Expenses Rent; and (3) actual out-of-pocket and consequential

costs.165 Green argues it is entitled to nearly $3 million including a 12 percent

prejudgment interest rate, with the principal damages (before interest) calculated by

Lochabay at approximately $2.68 million.166

MCDS argues Green’s actual recoverable damages — after offsets of $2.2

million — cannot be higher than about $396,013, even if all of Green’s other claims

were accepted.167 Green disputes ever waiving any offsets, though MCDS contends

only three of eight identified offsets were contested by Green, leaving five as

waived.168

165 Green Opening at 55. 166 Tr. 2/5 30:15–31:20; Green Opening at 56–57. 167 Post Tr. 51:17–52:1, 52:4–17, 53:18–54:11. Lochabay calculated total damages of $2,995,921, which includes $2,000,303 in lost rent damages, $499,291 in lost operating expenses rent damages, and $456,327 in out-of-pocket costs. Feb. 5 Tr. 31:14–20; Green Opening at 56– 57. 168 Post Tr. 125:12–21. 26 1. Contractual Damages Under Colorado Law

Colorado courts treat a “landlord’s claim against a tenant for breach of a

commercial lease like a breach of contract claim that requires nothing more than

application of established principles of contract law.”169 The proper measure of

damages in such an action is “the amount it takes to place the landlord in the position

it would have occupied had the breach not occurred, taking into account the

landlords duty to mitigate.”170

A plaintiff is required to prove damages “with reasonable certainty by a

preponderance of evidence.”171 “It is sufficient if the plaintiff establishes by a

preponderance of the evidence that he has in fact suffered damage or that his rights

have been infringed and that his evidence in this regard provides a reasonable basis

169 Tremitek, LLC v. Resilience Code, LLC, 535 P.3d 1005, 1010 (Colo. App. 2023) (cleaned up). In Colorado, a “court’s primary obligation is to effectuate the intent of the contracting parties according to the plain language and meaning of the contract. A trial court takes evidence regarding the intent and meaning of a contract only in the event of a material term’s ambiguity, whereas ‘[w]ritten contracts that are complete and free from ambiguity will be found to express the intention of the parties and will be enforced according to their plain language.’” Albright v. McDermond, 14 P.3d 318, 322 (Colo. 2000) (citation omitted). “In determining whether a provision in a contract is ambiguous, the instrument’s language must be examined and construed in harmony with the plain and generally accepted meaning of the words used, and reference must be made to all the agreement’s provisions.” Fibreglas Fabricators, Inc. v. Kylberg, 799 P.2d 371, 374 (Colo. 1990). Colorado courts aim to “not allow a hyper-technical reading of the language in a contract to defeat the intentions of the parties.” Ad Two, Inc. v. City & Cty. of Denver ex rel. Manager of Aviation, 9 P.3d 373, 377 (Colo. 2000). Rather, Colorado courts “adopt a construction of the agreement that will give effect to all of its provisions.” Union Rural Elec. Ass’n, Inc. v. Pub. Util. Comm’n, 661 P.2d 247, 252 (Colo. 1983). 170 Tremitek, 535 P.3d at 1010. 171 Pomeranz v. McDonald’s Corp., 843 P.2d 1378, 1381 (Colo. 1993) (citations omitted) (emphasis removed). 27 for a computation of the damage so sustained. Difficulty in proof of damages does

not in and of itself destroy the right of recovery.”172 Pursuant to Colorado law, a

“nonbreaching party is entitled to recover prejudgment interest from the time of the

breach.”173

Colorado landowners have a duty to mitigate, meaning

a landlord must not sit by idly and suffer avoidable economic loss. Nor must an aggrieved party mitigate damages ‘by giving up its rights under the contract. Rather, a landlord fulfills its duty to mitigate if it makes reasonable efforts to reduce the damages sustained. Ordinarily, this means the landlord must exercise reasonable efforts to procure a substitute tenant—including by taking “some affirmative steps to do so.”174

“The tenant bears the burden of proving the landlord failed to mitigate damages.”175

2. Green Is Entitled to Lost Rent Damages, Minus Certain Offsets.

Green claims $2,000,303 in lost rent damages, including (1) “rate variance”

lost rent of $890,479, the difference between the lease rent and the fair market value

rent appraised by Bill James; and (2) actual lost rent of $1,554,993 for the period

without a full replacement tenant.176

The primary dispute centers on the methodology for calculating lost rent

pursuant to Section 23.1(b) of the Lease, which specifies “the present value of the

172 Riggs v. McMurtry, 400 P.2d 916, 919 (Colo. 1965) (citations omitted). 173 Butler v. Lembeck, 182 P.3d 1185, 1194 (Colo. App. 2007) (citation omitted). 174 Tremitek, LLC, 535 P.3d at 1010 (cleaned up). 175 Id. 176 Green Opening at 57–59, 61–62. 28 balance of the Rent for the remainder of the Term after termination less the present

value of the fair market value rental of the Premises for said period (both determined

by applying a discount rate of the Wall Street Journal Prime Rate)[.]” Put simply,

Section 23.1(b) involves subtracting the present market value from the remaining

lease rent.177

a. Green Properly Calculates Rate Variance Lost Rent.

For the rate variance calculation, Lochabay (Green’s expert) utilized the

calculation in Lease paragraph 23.1(b) and calculated the “rent that was

contemplated in the MCDS lease;” Lochabay then “scheduled that out throughout

the entire term of the [L]ease, and then . . . discounted that value back to the date of

trial.”178 For the first part of this calculation, Lochabay used $12.50—the rent

contemplated in the MCDS lease.179 For the second part of the 23.1(b) calculation,

Lochabay utilized a fair market value rental rate calculated by Bill James (Green’s

177 Landlord is entitled to recover from Tenant. JX1 at MCDS001030. 178 Tr. 2/5 11:11–15. 179 Tr. 2/5 11:16–19. 29 other expert)—$9.52 per square foot.”180 In total, Lochabay opined that rate

variance lost rent totaled $890,479.181

MCDS disputes Green’s methodology for calculating damages, asserting

Section 23.1(b) specifies a narrow formula for lost rent damages, which Green

ignored.182 As to the first part of the calculation, MCDS contends that although

Green used $12.50 per square foot as the base rent, Green failed to account for rent

abatement.183 MCDS also challenges the Lochabay’s use of James’s comparables

analysis, advocating for a market approach.184

MCDS further contends Green has not proven the comparability of properties,

particularly regarding locations and lease terms.185 According to MCDS, James’s

appraisal methodology is flawed as it relies on properties that are not truly

comparable to the Premises. 186 MCDS argues the most reliable comparables should

be from the same location, park, or developer, as these factors are crucial in

180 Tr. 2/5 34:20–35:2. James, a licensed and certified real estate appraiser prepared an appraisal report of the Premises both with and without tenant improvements. Feb. 4 Tr. 222:2–11, 224:6– 8, 225:2–6. After inspecting the Property, performing market research and analyzing rental rates of comparable properties, James identified “potential rental transactions that would be sufficiently reliable and sufficiently comparable to provide an adequate indicator of the market rent of the [Premises].” Tr. 2/4 228:11–229:2. James used eight properties in the vicinity of the Denver Airport, called the “aerotropolis,” upon which he based his market rent appraisal. Tr. 2/4 228:6– 10, 233:14–18. 181 Tr. 2/5 13:9–14. 182 Post Tr. 55:14–56:14. 183 MCDS Reply at 29. 184 Id. at 29–31. 185 Post Tr. 57:23–58:12, 63:3–64:1; 62:19–64:6. 186 MCDS Reply at 31–35. 30 determining the value of a property.187 MCDS highlights that Green’s appraisal

included only one property from the same location, while the others were up to 14

miles away, undermining the reliability of the valuation.188

MCDS also argues Green’s appraisal failed to consider other leases within the

same park that were available and more comparable.189 MCDS points out that

Green’s expert, James, did not personally select the comparables and was unaware

of other leases in the same location, which were crucial for a reliable appraisal.190

MCDS asserts that including these more relevant comparables would have resulted

in a fair market value of $12.97 per square foot, which aligns with the negotiated

rent in the Lease, thereby resulting in no damages under Section 23.1(b).191

Finally, MCDS challenges Landlord’s use of $9.52 per square foot as the fair

market value.192 MCDS claims the appraisal provided two estimates, with and

without tenant improvements, but neither was substantiated as the better estimate for

damages calculation.193 MCDS argues the lease contemplated extensive tenant

improvements, which should have been factored into the fair market value, and that

Lochabay failed to account for these improvements in their valuation.194 MCDS

187 Id. at 32. 188 Id. at 33. 189 Id. 190 Id. 191 Id. at 35. 192 Id. at 35–40. 193 Id. at 36. 194 Id. at 36–37. 31 insists because the contract rent equals the fair market value, as shown by the arm’s-

length transaction, the formula results in “zero,” meaning no loss to Green and no

recoverable damages.195

The Court finds Green’s reading of Section 23.1(b) to be the correct one. For

the first part of the Section 23.1(b) analysis, the use of $12.50/square foot is proper,

as no abatement is necessary given MCDS’s repudiation.196

As to the second part of the Section 23.1(b) analysis, the Court agrees with

Green that the fair market value rental rate of $9.52/square foot, as calculated by

James, is correct. James is a licensed and certified Denver real estate appraiser who

has been appraising the Denver market since 1976.197 Although Farrell (MCDS’s

rebuttal expert) criticizes James’s comparables for not using locations closer to the

Premises, the Court credits James, who actually has experience in the Denver

market, over Farrell, a Chicago resident who is not an appraiser and has no

experience evaluating properties in Denver.198 The Court also finds that it would not

195 Post Tr. 56:8–14, 58:4–59:9. 196 See JX 1 at MCDS001018–MCDS001019, MCDS001029. The repudiation properly falls within the category of “Abandonment/Vacation” pursuant to Section 22.1 and is therefore an “Event of Default” as defined by Section 22. Although MCDS claims Green waived the right to challenge this, the Court disagrees. Green addressed the abatement issue in its post-trial Answering Brief. Green Reply at 30 n.5. 197 Tr. 2/4 222:2–11, 224:6–10, 225:2–8. 198 Tr. 2/5 98:8–14, 104:22–105:2. As James credibly testified, his comparables are within “the vicinity of Denver International Airport,” called the “aerotropolis,” and included locations a hypothetical tenant would consider rather than only looking at the subject property. Tr. 2/4 236:6– 12. For similar reasons, the Court finds that James’ reviewal and subsequent approval of, rather than personally selecting, comparables was an acceptable practice for his methodology. 32 be appropriate to use leases from the same location as the Premises, as the definition

of Fair Market Rental value explicitly states that the comparables should be

“comparable in size and use to, and in the general vicinity of, the Building,” not the

Building itself.199

By contrast, MCDS’s reading of the Lease that would result in Green

receiving $0 in damages would render Section 23.1(b) superfluous.200 The presence

of Section 23.1(b) reveals the economic reality that, under the Lease, MCDS was

going to pay a higher rate than fair market value.201 MCDS’s reading is also contrary

to the definition of Fair Market Rental Value in the Lease: “For all purposes hereof,

the ‘Fair Market Rental Value’ of the Premises will be the rental rate based upon the

then prevailing rent for premises comparable in size and use to the Premises. . . .”202

The “prevailing rent for premises comparable” thus excludes, by definition, the

Premises and instead requires a comparables analysis.203 This definition also

199 JX 1 at MCDS001056 (emphasis added). 200 The Supreme Court of Colorado rejected the practice of interpreting contracts in ways that render contractual provisions superfluous. Copper Mountain, Inc. v. Indus. Sys., Inc., 208 P.3d 692, 700 (“We choose a construction of the contract that harmonizes provisions instead of rendering them superfluous.”) 201 MCDS’s position is essentially that the agreed upon rent under the Lease is synonymous with fair market value rent. Post. Tr. 56:8–14. MCDS therefore suggests it is impossible to pay a higher rate than fair market value. Such a position is unsupported by the language of the Lease, which clearly differentiates agreed upon Rent from fair market value rent. JX 1 at MCDS001030. 202 JX 1 at MCDS001056. 203 This reading also synthesizes with Colorado law, which states when performing a fair market value analysis, the subject property should be excluded. See Matthews v. Jefferson Cnty. Bd. of Equalization, 2024 WL 3978449, at *2 (Colo. App. May 16, 2024), cert. denied, 2024 WL 4611594 (Colo. Oct. 28, 2024) (“[T]he market approach involves analyzing sales of comparable properties in the market.”) (citation omitted); Home Fed. Sav. Bank v. Larimer Cnty. Bd. of 33 supports James’s (and subsequently Lochabay’s) decision to use the appraised value

without tenant improvements, as that is the way the Premises are defined in the

Lease.204 Any other reading of Section 23.1(b) would always result in a zero dollar

damages calculation, which does not comport with Colorado law regarding

damages.205

Lochabay calculated lost rent at $890,479.206 This number, however,

improperly includes the 12 percent simple interest rate included in Section 23.1(a)

of the Lease, which both parties agree is inapplicable here.207 The Court orders the

Parties to jointly determine the amount of lost rent once interest is removed. The

Parties are then to submit this revised number to the Court for final approval of

damages.208

Equalization, 857 P.2d 562, 563–64 (Colo. App. 1993) (holding it is appropriate to “consider[] what other properties comparable to the subject actual sold for in the market place at or about the date for which a value is sought for the subject property”). 204 JX 1 MCDS001014. 205 See Tremitek, 535 P.3d at 1010 (the proper measure of damages under a lease is “the amount it takes to place the landlord in the position it would have occupied had the breach not occurred”); Schneiker, 732 P.2d at 612 (“Usually this will be the difference between the rent reserved in the lease and the reasonable rental value of the premises for the duration of the term of the lease, plus any other consequential damages caused by the breach.”). 206 Tr. 2/5 13:9–14. 207 Green Opening at 37; MCDS Reply at 28. 208 The Court notes that a successful plaintiff is entitled to prejudgment interest on money damages as a matter of right, computed from the date liability accrues. See Fortis Advisors, LLC v. Dematic Corp., 2023 WL 2967781, at *1 (Del. Super. Apr. 13, 2023) (citing Brandywine Smyrna, Inc. v. Millennium Builders, LLC, 34 A.3d 482, 486 (Del. 2011). Plaintiff is also entitled to post- judgment interest. NGL Energy P’rs LP v. LCT Cap., 319 A.3d 335, 343 (Del. 2024). Thus, when the parties submit their form of order, they should also calculate the appropriate amount of interest. 34 b. Green Is Entitled to Actual Lost Rent.

For the actual lost rent, Lochabay calculated the period of lost rent under the

Lease from March 1, 2023 to the date that a hypothetical new tenant would begin

paying rent.209 “To be conservative in his overall loss opinions, Lochabay assumed

that a hypothetical full-time replacement tenant would sign a lease on the date of

trial.”210 Lochabay opined that Green’s total actual lost rent amounted to

$1,554,993.211

Green contends Section 23.1(c) acts as a catch-all provision, arguing it is

broad enough to capture lost rent and any other consequences needed to “make the

landlord whole,” including consequential damages and all losses proximately caused

by default.212

Section 23.1(c)’s language is broad:

any consequential damages or other amount necessary to fully compensate Landlord for all loss or injury proximately caused by Tenant’s default or which in the ordinary course of business would be likely to result therefrom, including, without limitation, the unamortized portions of the Tenant Allowance and leasing commissions paid by Landlord in connection with this Lease, amortized on a straight-line basis over the Term of the Lease, the cost of recovering the Premises from Tenant, the cost of removing and storing Tenant’s furniture, trade fixtures, equipment, inventory or other property, repairing and/or demolishing the

209 Tr. 2/5 15:14–21. This calculation “represented the period of time where Green doesn’t have a full replacement tenant in the space.” Tr. 2/5 13:22–14:12. 210 Green Opening at 61–62 (citing Tr. 2/5 at 18:7–9). 211 Tr. 2/5 19:13–18. 212 Post Tr. 111:16–112:14, 115:15–20. 35 Premises, removing and/or replacing Tenant’s signage and other fixtures, excluding the following: the costs of making the Premises ready for a new tenant, the costs of any leasehold improvements, and any allowances and/or concessions provided by Landlord to any such new tenant.213

Green argues the Lease allows for damages to make the landlord whole,

including lost rent.214 Lochabay, in his lost rent analysis, calculated the period of

lost rent under the Lease from the deemed commencement date of March 1, 2023 to

the date a hypothetical new tenant would begin paying rent.215 “To be conservative”

with his opinion, Lochabay assumed that a hypothetical full time replacement tenant

would sign a lease on the first day of trial in February 2025.216 The hypothetical new

tenant would begin paying full rent in June 2026 because of the need for a build out

and the typical rent abatement Green offers.217

MCDS argues the Lease does not support recovering rent-based damages

pursuant to Section 23.1(c).218 MCDS contends Green’s calculation of lost rent

damages is flawed due to the use of a hypothetical tenant and failure to account for

necessary offsets.219 MCDS argues that pursuant to the canons of contract

interpretation, Sections 23.1(a) and (b) already cover all backward and forward-

213 JX 1 at MCDS001030. 214 Post Tr. 111:16–112:14. 215 Tr. 2/5 15:14–19. 216 Tr. 2/5 18:7–9. 217 Green Opening at 61–62 (citing Tr. 2/5 15:22–16:21). 218 Tr. 2/5 13:22–14:12; MCDS Reply at 37. 219 MCDS Reply at 42–43. 36 looking rent.220 By contrast, Section (c) (which omits any reference to rent) was

intended to cover only ancillary or consequential losses (e.g., cleanup, removal of

signage), with any other reading rendering sections of the contract surplusage.221

Accordingly, MCDS asserts that Green is not entitled to “lost rent” under Section

23.1(c), and that any claim for out-of-pocket costs must be strictly limited to

amounts causally and temporally linked to the breach.222

The Court agrees that Section 23.1(c) enables Green to recover for lost rent

damages. The Court also notes that the language from Section 23.1(c), which

requires any damages “to fully compensate Landlord for all loss or injury

proximately caused by Tenant’s default” comports with Colorado law on expectation

damages, where a plaintiff is entitled “recover the amount of damages that are

required to place him in the same position he would have occupied had the breach

not occurred.”223 Because Green did not ever sign a lease with a replacement tenant,

under an expectation damages theory, Green is entitled to the value of a full cover

tenant, less mitigation, as damages pursuant to Section 23.1(c) and Colorado law.

The Court also notes that MCDS improperly reads Section 23.1(c). MCDS’s

reading of Section 23.1(c) ignores the connector “or.” While true that Section

220 Id. at 38–40. 221 Post Tr. 68:4–20, 69:8–70:1. 222 Post Tr. 72:1–9. 223 Pomeranz v. McDonald’s Corp., 843 P.2d 1378, 1381 (Colo. 1993) (citations omitted) (emphasis removed). 37 23.1(c) does not include the term “rent,” this is because the list of items included in

Section 23.1(c) that follow the term “or”—are those which “in the ordinary course

of business would be less likely to result therefrom. . . .” Because the first part of

Section 23.1(c) already accounts for damages to fully compensate Landlord

(including lost rent), it is unnecessary to include “rent” in the list of items that would

result “in the ordinary course of business.”

The Court also finds that Lochabay’s hypothetical tenant analysis is a reliable

measure of damages. MCDS is correct that Lochabay’s calculation does not fully

consider the mitigation Green experienced through TK Elevators, a cover tenant.224

This analytical deficiency, however, is minor and remedied through Lochabay’s

conservative assumptions. Green was only able to rent a small portion of the

Premises on a month-to-month basis.225 Any mitigation stemming from cover

tenants under these circumstances would be more than accounted for by Lochabay

cutting off damages as of the date of trial.226

224 MCDS Reply at 41–42. 225 Green Reply at 39. 226 Id. at 38–39. As Green notes, both the Parties and the Court now know a full-time replacement tenant did not sign a lease by the date of trial. Id. at 39. Lochabay’s conservative estimate therefore is a benefit to MCDS, as damages are much larger than even Lochabay’s conservative approach anticipated. 38 The Court further finds that MCDS has failed to meet its burden of proving

Green did not mitigate damages.227 As MCDS points out, Green did in fact mitigate

damages by leasing portions of the Premises to cover tenants.228 While the

remaining portions of the Premises remained vacant, it was not for the inadequacy

of Green’s efforts. Green continued to market the space to potential customers, an

adequate mitigation effort recognized under Colorado law.229

The Court will now address MCDS’s remaining arguments that Green’s lost

rent damages fail to account for necessary offsets, including (a) the amount Green

saved by not having to pay for the Tenant Allowance ($1,232,864); (b) lease

commissions ($137,198); Rent abatement ($301,302); (c) prejudgment interest

($105,624); and (d) MCDS’s deposit ($127,674).230 The Court finds on each of these

issues as follows:

• The Tenant Allowance should be deducted from Green’s damages. By

not having to pay for MCDS’s buildout, Green is saving $1,232,864.

227 MCDS argued in the post-trial argument that Green waived the right to assert mitigation, but the Court disagrees. Green discussed mitigation in its post-trial Answering Brief. Green Reply at 38–39. 228 MCDS Reply at 41. 229 Green Reply at 39; See CMCB Enter., Inc. v. Ferguson, 114 P.3d 90, 96 (Colo. App. 2005) (finding a plaintiff adequately attempted to mitigate damages where the plaintiff “contacted existing restaurant owners, advertised the property to the brokerage community that represents other restaurant users, sent out broadcast e-mails, placed ads in the paper, distributed a brochure regarding the premises to potential tenants and restaurant operators, and posted a “for lease” sign for the premises.”) 230 MCDS Reply at 42–43. The Court notes that neither side provides the Court much guidance on these issues. 39 Under Green’s own expectation damages theory, to put Green back in

the same position without a breach, including this amount would

amount to double recovery.231

• The lease commissions are explicitly recoverable under Section 23.1(c)

and, as MCDS admits,232 were expenses Green expected (and did) incur

in connection with the Lease;

• The Court has previously discussed how rent abatement is unnecessary

given MCDS’s repudiation.233

• Lochabay improperly uses the 12 percent interest rate from Section

23.1(a) for his 23.1(c) damage award, and this figure should be

removed from the damages figure;

• MCDS’s security deposit should be deducted from Green’s damages

award, as Green’s own expert Lochabay admits.234 The $127,674.00

MCDS characterizes as a deposit, however, represents more than

MCDS’s security deposit.235 MCDS is only entitled to offset for its

security deposit—$63,836.93—not pre-paid rent.

231 The Court notes that while Section 23.1(c) includes the Tenant Allowance as recoverable, this appears to be the case only if MCDS defaulted mid- /post-buildout, instead of pre-buildout. In any event, Green did not dispute this deduction in either its Reply Brief or oral argument. 232 MCDS Reply at 42. 233 See supra note 200 and accompanying text. 234 Tr. 2/5 at 141:1–142:4. 235 As the pretrial stipulation states, the $127,674.00 figure represented MCDS’s deposit and first month’s rent under the Lease. Pretrial Stip. ¶ 21. 40 The Court orders the parties to submit a revised number for lost rent,

accounting for the offsets described above. The damages figure should not include

the 12 percent simple interest rate from Section 23.1(a) of the Lease, which the Court

finds was improperly included. The parties shall then submit this revised number to

the Court for final approval of damages.

3. Green Is Entitled to Operating Expenses Rent.

Green claims $499,291 in lost operating expenses rent damages, which

MCDS was obligated to pay pursuant to Section 5.2(a) of the Lease. This calculation

considers “the primary drivers of Operating Expenses Rent,” including “property

taxes, property insurance, and repairs and maintenance for common areas.”236

Lochabay calculated his damages figure by utilizing Green’s actual Operating

Expenses calculation for 2023, Green’s estimate of the Operating Expenses for 2024,

and Green’s estimate of Operating Expenses for January 2025. 237 Lochabay then

reduced the Operating Expense Rent calculations by the amounts received by Green

from its partial replacement tenant.238

MCDS does not dispute Green’s figure for Operating Expense Rent. Rather,

MCDS’s sole argument in response to Operating Expense Rent is that “operating

expenses rent” is not recoverable pursuant to Section 23.1(c). For the same reasons

236 Green Opening at 63. 237 JX 209 at GREEN013973; Tr. 2/5 22:5–23.22. 238 Tr. 2/5 23:23–24:3. 41 Green is entitled to lost rent to put it back in the same position if MCDS did not

repudiate, Operating Expenses Rent is recoverable by Green.

Lochabay’s calculation for Green Operating Expenses Rent, like lost rent,

similarly includes the 12 percent simple interest rate included in Section 23.1(a) of

the Lease. The Court orders the Parties to jointly determine what Lochabay’s

calculation for Operating Expenses Rent should be once interest is removed. The

Parties are then to submit this revised number to the Court for final approval of

damages.

4. Green Is Not Entitled to Out-of-Pocket Damages.

Green seeks $456,327 for out-of-pocket expenses incurred due to MCDS’s

breach under Section 23.1(c).239 These expenses are supported by invoices and proof

of payment, covering costs from vendors like Major Heating & Air Conditioning

and Cushman & Wakefield. MCDS argues Green has not demonstrated any of the

out-of-pocket costs meet the definition of consequential damages or “other amounts

necessary to fully compensate [Green] for all loss or injury proximately caused by

[MCDS]’s default of which in the ordinary course of business would likely to result

therefrom” pursuant to Section 23.1(c).240 The Court agrees with MCDS.

239 Green Opening at 64–65. 240 MCDS Reply at 43–44 (citing JX 1 at MCDS001030). 42 Each of the “out-of-pocket” damages claimed by Green incurred because of

the negotiation process with MCDS. Because each of these damages predate the

breach, the damages are not within the scope of Section 23.1(c). In this instance,

Green is conflating theories of damages. Green’s attempt to recover “out-of-pocket”

damages does not comport with expectation damages pursuant to Colorado law,

which “place the landlord in the position it would have occupied had the breach not

occurred.”241 Rather, “out-of-pocket” damages are backward looking, rescissory

damages that put the injured party back in the position they occupied prior to

entering the contract.242 Green is therefore not entitled to “out-of-pocket” damages.

5. Green Is Entitled to Attorneys’ Fees as the Prevailing Party.

The parties agree that Section 27 of the Lease provides that the prevailing

party in this action is entitled to attorneys’ fees:243

In the event there is any legal action or proceeding between Landlord and Tenant to enforce any provision of this Lease or to protect or establish any right or remedy of either Landlord or Tenant hereunder, the prevailing party (as such issue is determined by the fact finder in such legal action or proceeding) to such action or proceeding will be entitled to recover all costs and expenses, including reasonable attorneys’ fees (including allocated costs of Landlord’s in-house attorney), incurred by such prevailing party in such action or proceeding and in any appearance in connection therewith. If such prevailing party recovers a judgment in any such action, proceeding or 241 Tremitek, 535 P.3d at 1010. (citation omitted). 242 See Rice v. Hilty, 559 P.2d 725, 727 (Colo. App. 1976) (“In suits involving rescission, the parties must be placed in the status quo.”). 243 Green Opening at 65; MCDS Opening at 45. See also Klein v. Tiberon Dev. LLC, 405 P.3d 470, 475 (Colo. App. 2017) (“Contractual fee-shifting provisions are generally valued under Colorado law.”) (cleaned up). 43 appeal, such costs, expenses and attorneys’ fees will be determined by the court handling the proceeding and will be included in and as a part of such judgment.

Here, Green is the prevailing party in terms of both liability and damages.

Although Green did not recover all the fees it believed it was entitled to, nothing in

the Lease prevents Green from being the prevailing party. Green is entitled to its

costs, expenses, and attorneys’ fees. Green shall submit an affidavit to the Court

regarding its costs, expenses, and attorneys’ fees within fourteen days.

CONCLUSION

The Court finds as follows:

1. MCDS repudiated the Lease, thereby breaching its contractual

obligations;

2. Green’s noncooperation claim is moot;

3. Green is entitled to damages for the plaintiff’s breach by repudiation,

less any improperly applied 23.1(a) interest, as described herein, plus

pre- and post- judgment interest;

4. Attorneys’ fees, costs, and expenses shall be shifted to MCDS. Green

shall provide an affidavit regarding its attorneys’ fees, costs, and

expenses to the Court within fourteen days; and

5. Judgment is entered in Green’s favor.

44 If there are any open issues not addressed or mooted by this post-trial opinion,

the parties shall notify the Court by letter within five days. Otherwise, after Green

submits its affidavit on attorneys’ fees, the parties are directly to jointly prepare a

final order to the Court for its approval.

IT IS SO ORDERED.