United States District Court, N.D. Alabama, Western Division
MEMORANDUM OF OPINION
L.
Scott Coogler United States District Judge
Before
the Court is Defendants University House Tuscaloosa, LLC
(“UHT”) and Scion Group, LLC's
(“Scion”) (collectively “Defendants”)
motion for summary judgment. (Doc. 67.) The motion has been
briefed and is ripe for review. For the reasons stated below,
Defendants' motion for summary judgment (doc. 67) is due
to be GRANTED in PART and DENIED in PART.
I.
Background[1]
This
case arises from an agreement between Plaintiff SCP
Tuscaloosa, LLC (“SCP”) and University House
Communities Acquisitions, LLC (“UHC”) for the
sale of a student housing apartment community known as
“South 10” in Tuscaloosa, Alabama. On July 2,
2015, pursuant to a Purchase Sale Agreement (the
“PSA”), UHC acquired South 10 from SCP for $56,
625, 000.00. Approximately two months later, UHC assigned its
rights and obligations under the PSA to Defendant UHT.
The PSA
provided that “[i]n addition to the Purchase Price
[SCP] shall have the right to earn additional
compensation” for finding tenants that executed leases
for South 10's vacant retail spaces. (See Doc.
69-2 at 10.) According to the terms of the PSA, this
agreement was to be memorialized in a separate Earn-Out
Agreement. SCP and UHT executed the Earn-Out Agreement on
October 1, 2015. Under the Earn-Out Agreement, SCP was
entitled to receive compensation for any leases executed with
retail tenants at the time of closing as well as for any
leases with tenants that were signed within eighteen months
of the time of closing (the “Earn-Out Period”).
SCP could also receive compensation if, within ninety days
after the Earn-Out Period expired, UHT entered into a lease
with a tenant that SCP had been actively negotiating with
during the Earn-Out Period. Specifically, the Earn-Out
Agreement stated:
During the Earn-Out Period, SCP on [UHT's] behalf, shall
have the non-exclusive right together with [UHT], its agents
and brokers, to market the Vacant Retail Space, and to
negotiate and reach preliminary agreement with prospective
retail tenants as to the definitive lease terms for new
Retail Leases for the Vacant Retail Space . . ., which
definitive lease terms must comply [with] the requirements of
this Agreement, including, but not limited to, the retail
leasing criteria set forth on Exhibit B attached hereto . . .
except as approved by [UHT]
(See Doc. 69-4 at 3.) It also required UHT to
execute all compliant retail space leases: “[UHT] shall
be obligated to enter all Vacant Space Leases that shall
comply with the provisions of this Agreement, including, but
not limited to, the Retail Leasing Criteria.” (See
id.) While the Earn-Out Agreement specified deadlines
for certain matters, such as delivery of payment, and stated
that “time is of the essence, ” it did not
provide a deadline by which UHT had to execute a complying
lease forwarded by SCP.
Any
costs of improvement of the retail space, including leasing
commissions and locator fees, fell upon SCP up to a certain
amount per square-foot. During the Earn-Out Period, SCP
incurred approximately $430, 000 in improvement costs after
it contracted with Genoa Construction to complete build-out
work at South 10.
In
December 2015, a prospective tenant, BOBA, contacted Joe
Strauss (“Strauss”), a real estate agent working
on behalf of SCP, and expressed interest in leasing space at
South 10. BOBA's representatives, two college students,
wanted to use the retail space as a small coffee shop. On
April 12, 2016, BOBA executed a letter of intent, which
stated that it contained the basic terms and conditions upon
which UHT would be willing to enter a formal lease with BOBA.
The letter of intent included two contingencies: (1)
UHT's approval of BOBA and its guarantor's financial
statement; and (2) the mutual execution of a lease document.
A few days after the execution of the letter of intent, BOBA
sent Strauss its financial statement, which consisted of the
students' “parents' partial saving deposits
from three major banks in China.” (See Doc.
70-3 at 4.)
On
April 22, 2016, SCP sent UHT an email attaching: (1) a
standard form lease modified for the South 10 project; (2)
the BOBA letter of intent; and (3) a form lease modified to
the BOBA letter of intent. (See Doc. 70-4.) Sometime
prior to April 27, 2016, Jeff Lohmann, a UHT employee, told
SCP's Vice President Charles Welch (“Welch”)
that Defendant Scion would need to review these
documents.[2] In a May 3rd email with Welch, Lohmann
stated that “the lease form you sent is fine.”
(See Doc. 70-6 at 2.) On June 21, 2016, Scion
entered into a Property Management Agreement with UHT, with
respect to South 10. Among Scion's duties under the
Property Management Agreement is to “take . . . actions
in the name of and on behalf of [UHT] that are customarily
within the scope of property management and leasing services
for properties of a similar type, size and quality to the
Property . . . .” (See Doc. 69-6 at 11.)
After
Lohmann's May 3rd email, SCP continued to negotiate the
terms of the lease with BOBA. On June 6, 2016, SCP sent a
revised lease to BOBA, which BOBA executed by June 10th. On
June 13, 2016, Welch forwarded the revised lease to UHT along
with a “redline[] against the original form
lease.” (See Doc. 72-1 at 3.) Mitchell Smith
(“Smith”), Scion's Chief Operating Officer,
contacted Welch on July 15, 2016 and asked that he forward
him the BOBA lease so that Scion's counsel could review
it. Once it reviewed the BOBA lease, Scion provided SCP with
a redlined version of the lease, which included
Defendants' revisions and comments, and requested a copy
of BOBA's guarantor's financial statements. After
some back and forth between Welch and Scion regarding the
need to continue to negotiate the terms of the lease, Welch
sent Scion's revisions to Strauss and BOBA on August 4,
2016. That same day, Welch provided UHT with U.S. bank
statements from BOBA, which indicated that BOBA's owners
had around $40, 000 in funds within their personal bank
accounts.
SCP
received the revised executed lease from BOBA on August 26,
2016. Welch then mailed the lease to Scion. The lease arrived
at Scion on September 9, 2016, but was not discovered by
Scion until September 21st because Welch sent the lease in a
non-descript white plan tube and FedEx delivered the lease to
Smith's office while he was out of town. Once Scion
located the revised lease, it contacted SCP and requested a
summary of Tuscaloosa's retail market so that it could
show its investors how BOBA's lease terms compared to
other retail spaces in Tuscaloosa. On October 6, Scion asked
for clearer copies of BOBA's financial statements. On
October 13, 2016, one of BOBA's founders emailed Strauss
to inform him that it was no longer interested in leasing
space at South 10. Later that day, Strauss forwarded the
email to Welch stating that “[t]his deal took way too
long to get any responses.” (See Doc. 73-8 at
2.) Welch, however, did not inform Defendants that BOBA had
withdrawn its interest in the lease, and Scion eventually
executed the BOBA lease on November 4, 2016.
During
the time SCP and Scion were negotiating the BOBA lease,
another SCP real estate agent, Tracy Gatewood
(“Gatewood”), was actively searching for
potential retail tenants for South 10. On December 2, 2016,
Waitr, an online restaurant delivery service, contacted
Gatewood about its interest in a potential lease. Welch sent
a Waitr letter of intent to Scion on February 17, 2017. On
February 22, 2017, Scion emailed Waitr a reply to the letter
of intent, which included a cover letter, signed letter of
intent, and signed addendum to the letter of intent. One way
in which the addendum differed from the letter of intent was
that it stated that a general contractor would “perform
all Tenant improvements, under a contract between Tenant and
the contractor” (See Doc. 74-3 at 7.).
On
March 7, 2017, Waitr informed its retail broker that it had
decided to move on from South 10 and look elsewhere for
retail space. The reason given for Waitr's withdrawal was
that “[w]e don't want to have to hire our own
contractors etc.” (See Doc. 74-4 at 3.)
However, on March 21, 2017, Waitr sent its retail broker
final architectural drawings of the South 10 space, which led
Gatewood to believe that negotiations with Waitr were back on
track. Moreover, when the Earn-Out Period expired on April 1,
2017, SCP listed Waitr as one of the potential tenants with
which it was actively negotiating. But by May 2017 it was
apparent to Gatewood and SCP that Waitr would not be leasing
space at South 10. Waitr eventually moved its business to
Birmingham, Alabama, and as of January 2019, no retail tenant
had leased space at South 10.
II.
Standard
Summary
judgment is appropriate “if the movant shows that there
is no genuine dispute as to any material fact[3] and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). A dispute is genuine if “the record taken as a
whole could lead a rational trier of fact to find for the
nonmoving party.” Hickson Corp. v. N. Crossarm Co.,
Inc., 357 F.3d 1256, 1260 (11th Cir. 2004). A genuine
dispute as to a material fact exists “if the nonmoving
party has produced evidence such that a reasonable factfinder
could return a verdict in its favor.” Greenberg v.
BellSouth Telecomms., Inc., 498 F.3d 1258, 1263 (11th
Cir. 2007) (quoting Waddell v. Valley Forge Dental
Assocs., 276 F.3d 1275, 1279 (11th Cir. 2001)). The
trial judge should not weigh the evidence, but determine
whether there are any genuine issues of fact that should be
resolved at trial. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 249 (1986).
In
considering a motion for summary judgment, trial courts must
give deference to the non-moving party by “view[ing]
the materials presented and all factual inferences in the
light most favorable to the nonmoving party.”
Animal Legal Def. Fund v. U.S. Dep't of Agric.,
789 F.3d 1206, 1213-14 (11th Cir. 2015) (citing Adickes
v. S.H. Kress & Co., 398 U.S. 144, 157 (1970)).
However, “unsubstantiated assertions alone are not
enough to withstand a motion for summary judgment.”
Rollins v. TechSouth, Inc., 833 F.2d 1525, 1529
(11th Cir. 1987). Conclusory allegations and “mere
scintilla of evidence in support of the nonmoving party will
not suffice to overcome a motion for summary judgment.”
Melton v. Abston, 841 F.3d 1207, 1219 (11th Cir.
2016) (per curiam) (quoting Young v. City of Palm Bay,
Fla., 358 F.3d 859, 860 (11th Cir. 2004)). In making a
motion for summary judgment, “the moving party has the
burden of either negating an essential element of the
nonmoving party's case or showing that there is no
evidence to prove a fact necessary to the nonmoving
party's case.” McGee v. Sentinel Offender
Servs., LLC, 719 F.3d 1236, 1242 (11th Cir. 2013).
Although the trial courts must use caution when granting
motions for summary judgment, “[s]ummary judgment
procedure is properly regarded not as a disfavored procedural
shortcut, but rather as an integral part of the Federal Rules
as a whole.” Celotex Corp. v. Catrett, 477
U.S. 317, 327 (1986).
III.
Discussion
As an
initial matter, the Court will address Defendants'
request that all of SCP's asserted facts be stricken.
Rather than respond to Defendants' statement of
undisputed material facts, SCP admitted Defendants' facts
and supplemented those facts with its own statement of facts.
Moreover, SCP has dispersed various factual assertions
throughout its brief opposing summary judgment that are not
contained within its supplemental statement of facts.
SCP's failure to include these factual assertions within
a discrete section of its brief does not comply with the
Uniform Initial Order entered in this case. (See
Doc. 13 at 16-17.) Because SCP has stated that it accepts
Defendants' statement of undisputed facts, the Court
considers these facts to be true. However, the Court still
must view this evidence in the light most favorable to SCP.
Regarding the ...