504 Redevelopment LLC v. Sba Site Mgmt., LLC
504 Redevelopment LLC v. Sba Site Mgmt., LLC
Opinion of the Court
*909This matter comes before the Court on two motions for summary judgment [ECF Nos. 35, 39]. On April 1, 2015, the Plaintiff 504 Redevelopment LLC filed the instant action in state court [ECF No. 4] against SBA Communications Corporation and Prime Investment Management Corporation ("Prime"). The case was removed to federal court and the Plaintiff voluntarily dismissed its claims against Prime [ECF No. 10]. On June 20, 2018, the Court granted the parties' stipulated motion to substitute the Defendant SBA Site Management, LLC, for SBA Communications Corporation [ECF No. 47].
The Plaintiff alleges that the Defendant breached an antenna roof top management agreement relating to property owned by the Plaintiff (Count II), and seeks a declaratory judgment that the agreement is not enforceable against the Plaintiff (Count I), and ejectment of the Defendant from the property (Count III). On February 15, 2018, the Defendant filed a motion for summary judgment [ECF No. 35]. On April 3, 2018, the Plaintiff filed its response to the Defendant's motion for summary judgment, which contained a cross-motion for summary judgment [ECF No. 39 (Pl. Resp.) ].
BACKGROUND
In 2010, nonparty EFN Gary Property, LLC ("EFN") owned the commercial building located at 504 Broadway, Gary, Indiana ("Property"). On June 10, 2010, EFN entered into an Antenna Site Roof Top Management Agreement ("Agreement") with Prime pursuant to which EFN allowed Prime to rent roof top and certain interior space of the Property ("Premises") to tenants for purposes of placing equipment that transmits and receives radio communications signals in exchange for the upfront payment of $600,000.
Section 8 of the Agreement includes an easement provision:
[A]s consideration for the fee paid under this Agreement, Building Owner [EFN] hereby grants Manager [Prime] an easement *910in, under and across the Building for ingress, egress, utilities and access to the Premises adequate to install and maintain utilities, which include, but are not limited to, the installation of power, telephone service cable and emergency power generators, to service the Premises and the Communication Facilities at all times during the term of this Agreement (collectively "Easement"). The Easement provided hereunder shall have the same term as this Agreement....
(Id. , § 8(d).)
Section 9 of the Agreement requires the Manager to maintain the Premises:
Manager hereby agrees (a) to keep the Premises in good working order and condition and promptly repair all damage to the Premises or to the personal property of the Building Owner's occupants caused by Manager, its tenants, agents, employees, contractors, invitees or guests and [ ] (b) not to materially disrupt, adversely affect or interfere with other providers of services in the Building or with any occupants['] use and enjoyment of the Building. In the event Manager does not repair damage to the Premises cause by Manager or its tenants, agents, employees, contractors, invitees or guests as provided in (a) above within twenty (20) days following the receipt of written notice from Building Owner, then Building Owner may make any such repairs it deems necessary and Manager shall reimburse Building Owner within ten (10) days after an invoice for its costs resulting from any such repairs. If Manager fails to reimburse Building Owner as hereinabove stated, then Building Owner shall have the right to terminate (in addition to other rights) this Agreement in accordance with Section 11 below.
(Id. , § 9.) Section 11 provides that "[t]he following events shall be deemed to be Events of Default by Manager":
Manager shall fail to comply in any material respect with any provision of this Agreement not requiring the payment of money, and such failure shall continue for a period of thirty (30) days after written notice of such default is given to Manager, provided, however, if such condition cannot be reasonably be cured within such thirty (30) day period, it instead shall be an Event of Default if Manager shall fail to commence to cure such condition within such thirty (30) day period and shall thereafter fail to prosecute such case diligently and continuously to completion within one hundred eighty (180) days after the date of Building Owner's notice of default....
(Id. , § 11(1).) Upon an Event of Default, the Building Owner has the option to terminate the Agreement, in which event the Manager shall immediately surrender all spaces used by the Manager in the building, including but not limited to, the Premises. (Id. , § 11(2)(i).) Other available remedies include invoking any remedy allowed at law or in equity, including injunctive relief. (Id. , § 11(2)(iii).) "Neither party shall be deemed to have waived any obligations by the other party unless such waiver expressly is set forth in a written instrument signed by the other party." (Id. , § 19.)
Section 15 of the Agreement addresses assignment and subletting: "Manager may assign, sublet or otherwise transfer all or any part of its interest in this Agreement or in the Premises subject to the assignee assuming all of Manager's obligations herein...." (Id. , § 15.) Section 18 provides that "[t]he provisions of this Agreement, except as herein otherwise specifically provided, shall extend to, bind and inure to the benefit of the parties hereto *911and their respective personal representatives, heirs, successors and permitted assigns." (Id. , § 18). The Agreement is governed by the laws of the State of Indiana. (Id. , § 22.)
EFN and Prime also executed a Memorandum of Roof Top Lease Agreement ("Memorandum") [ECF No. 36-3 (Mem.) ]. The Memorandum was recorded in the Lake County Recorder's Office on June 25, 2010. The Memorandum states that EFN and Prime entered into the Agreement for a term of 99 years, and attaches Exhibit A to the Agreement, which describes the Premises and the easement:
The Premises shall consist of any and all rooftop areas of the [Property] including the penthouse structure located on the roof (Exhibit A-5), all of Suites indicated on Exhibits A-1 through A-4, and the right to utilize an additional 2,500 sq. ft. of reserved space as defined in Exhibit A-4. Building Owner further grants Manager a non-exclusive easement over and through the Building for the placement of transmission lines, utility lines, cable bridges and utilities from the Roof Top to its Equipment Shelter or to existing utility services necessary for the operation of Manager's or Manager's tenant's Communication Facilities.
(Mem. at SBA000061.) It also includes the highlighted floor plans of the building.
On or about September 22, 2010, Prime assigned all of its rights, title, claim and interest in the Agreement to the Defendant via an Assignment and Assumption of Roof Top Lease ("Assignment Agreement").
In early 2014, the Plaintiff purchased the Property from EFN. [ECF No. 39-10 (Kenney Aff.), ¶ 2.] The Plaintiff was aware of the Agreement when it purchased the Property. ( Id. ) The Plaintiff reviewed the Agreement as part of its due diligence in acquiring the Property, and was aware that the Agreement's fee had been prepaid.
On March 19, 2015, the Plaintiff sent the Defendant a Notice of Demand for Information, Site Repairs, and Cure of Material Breaches ("Demand Letter"). [ECF No. 36-7 (Demand Letter).] The Demand Letter asserts that the Defendant was in default of the Agreement for failing to maintain portions of the Premises in a safe, clean, and orderly fashion. It attaches two written assessments of the Premises. The assessment dated April 11, 2013, suggests maintenance to the lattice towers on the Premises ("2013 Assessment"). The assessment dated February 18, 2015, suggests repairs and maintenance to several areas on the Premises ("2015 Assessment").
*912The Defendant hired a contractor who conducted the repairs and cleanup work on the Premises. On April 1, 2015, the Plaintiff signed an acknowledgement of the contractor's site clean-up activities and failed to note any new conditions found as a result of the site clean-up activities. [ECF No. 36-9 (Acknowledgement).] On that same day, the Plaintiff commenced this action in state court [ECF No. 4 (Compl.) ].
The Plaintiff's managing partner Vance R. Kenney ("Kenney") testified that all needed repairs had been remedied at the point of his deposition in September 2017. [ECF No. 36-6 (Kenney Dep.) at 53.] His affidavit states that "[w]hile [the Defendant] commenced some remedial action within the given time period, a substantial majority of necessary repairs and maintenance were completed long after the thirty day period allowed by the Lease." (Kenney Aff., ¶ 3.)
LEGAL STANDARD
Summary judgment is warranted when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The nonmoving party must marshal and present the court with evidence on which a reasonable jury could rely to find in his favor. Goodman v. Nat'l Sec. Agency, Inc. ,
ANALYSIS
A. Validity of the Express Easement
Count I of the Complaint seeks a declaration that the Agreement is invalid and unenforceable because it lacks sufficient detail regarding "certain easements, rental space, rents, assignments, access and maintenance, among other terms, that relate to the use of the Property by [the Defendant] and/or the Subtenants." (Compl., ¶¶ 10--11.) The Defendant asserts that the terms of the Agreement are valid, certain and enforceable, and sets forth the specific terms of the Agreement. [ECF No. 36 (Def. Br.) at 6-9.] In its cross-motion *913for summary judgment, the Plaintiff argues that one term of the Agreement is invalid and unenforceable: the express easement.
Section 8(d) of the Agreement describes the easement as follows:
[A]s consideration for the fee paid under this Agreement, Building Owner hereby grants Manager an easement in, under and across the Building for ingress, egress, utilities and access to the Premises adequate to install and maintain utilities, which include, but are not limited to, the installation of power, telephone service cable and emergency power generators, to service the Premises and the Communication Facilities at all times during the term of this Agreement (collectively "Easement"). The Easement provided hereunder shall have the same term as this Agreement [99 years].
(Agreement, § 8(d).)
Indiana courts have recognized that the purpose of a description of dominant and servient estates "is not to identify the land but to furnish the means of identification." Kopetsky v. Crews,
Citing the Agreement as a whole, the Defendant maintains that it contains a legal description that identifies the dominant and servient estates. The easement provision states, "Building Owner hereby grants Manager an easement in, under and across the Building for ingress, egress, utilities and access to the Premises adequate to and maintain utilities...." (Agreement, § 8(d).) This language clearly *914evidences the parties' intent to grant an easement.
The Plaintiff contends that no dominant estate exists because the Defendant owns no real estate adjoining the Plaintiff's property. However, Indiana courts have considered leased property to be a dominant estate. See, e.g. , Shadeland Hills Dev. Co. v. Westel-Indianapolis Co., No. IP 00 1758-C-T/K,
The Premises shall consist of any and all rooftop areas of the Building including the penthouse structure located on the roof (Exhibit A-5), all of Suites indicated on Exhibits A-1 through A-4, and the right to utilize an additional 2,500 sq. ft. of reserved space as defined in Exhibit A-4. Building Owner further grants Manager a non-exclusive easement over and through the Building for the placement of transmission lines, utility lines, cable bridges and utilities from the Roof Top to its Equipment Shelter or to existing utility services necessary for the operation of Manager's or Manager's tenant's Communication Facilities.
(Mem. at SBA000061.) The descriptions of the Premises in the Agreement and Memorandum may not be artfully drafted, but they do provide a means of identifying the dominant tenement. See Kopetsky,
Turning to the legal description of the easement, "[a]n instrument creating an express easement should describe with reasonable certainty the easement created...." Oakes ,
B. The Assignability of the Agreement
The Plaintiff argues that the leasehold interest in the Agreement cannot be assigned to the grantees of EFN because it is a personal contract with EFN to lease the Premises, enforceable only by the original parties to the Agreement. In other words, the Plaintiff contends that the leasehold interest is not a land use covenant that runs with the land. Cf. Weisheit ,
1. The parties to the Agreement intended the covenant to run with the land.
The parties' intent that their covenant should run with the land "must be determined from the specific language used and from the situation of the parties when the covenant was made." Weisheit ,
Under the terms of the Agreement, the Manager (Prime) leased the Premises located on EFN's Property. Section 8(d) grants the Manager an express - albeit invalid - easement in, under and across the building "for ingress, egress, utilities and access to the Premises adequate to install and maintain utilities...." for 99 years. (Agreement, § 8(d).) Section 15 contemplates the assignment of the Manager's obligations, and section 18 provides that the Agreement's provisions "shall extend to, bind and inure to the benefit of the parties hereto and their respective personal representatives, heirs, successors and permitted assigns." (Id. , §§ 15, 18.) Moreover, the Memorandum of the Agreement was recorded with Lake County Recorder soon after the parties executed the Agreement.
2. The Agreement touches and concerns the land.
"[T]he 'touch and concern' requirement ensures that one purchasing land will be bound by his grantor's contract only where the contract has some logical connection to his use and enjoyment of the land." Columbia Club ,
3. There is privity of estate between the subsequent grantees and the original parties to the Agreement.
"[I]n order for benefits and burdens of a covenant to devolve upon successors in interest there must be privity of estate between the parties." Columbia Club ,
The Plaintiff maintains that the Agreement's assignment provision prevents privity of estate between subsequent grantees of the original covenantor and covenantee. Under the Agreement, the original covenantor EFN was landlord to covenantee *917Prime. Section 15 of the Agreement provides: "Manager [Prime] may assign, sublet or otherwise transfer all or any part of its interest in this Agreement or in the Premises subject to the assignee assuming all of Manager's obligations herein...." (Agreement, § 15.) This provision expressly permits Prime to assign the Agreement. No similar assignment right was expressly provided to EFN. Citing no supporting legal authority, the Plaintiff maintains that EFN could not assign the Agreement, and thus, the Agreement allegedly prohibits EFN from creating privity as a landlord to subsequent title holders. In other words, the Plaintiff contends that because EFN could not assign the Agreement, the Plaintiff does not have the same landlord-tenant relationship with the Defendant that EFN had with Prime. But section 18 of the Agreement states that "[t]he provisions of this Agreement, except as herein otherwise specifically provided, shall extend to, bind and inure to the benefit of the parties hereto and their respective personal representatives, heirs, successors and permitted assigns." (Id. , § 18 (emphasis added).) The Plaintiff ignores the term "successors" in this provision, and focuses on the "permitted assigns" as those permitted only by Prime.
The Defendant responds that EFN was allowed to assign the Agreement because the Agreement is silent on the issue, and cites authorities addressing a lessee's ability to assign a lease in the absence of a limiting language. See 18 Ind. Law Encyc. Landlord and Tenant § 46 ("Generally, in the absence of a contractual restriction or prohibition, a lessee may, without the lessor's consent or an express provision in the lease, assign the lease."); Shadeland Hills ,
Because all three requirements are satisfied, the Agreement is a land use covenant that runs with the land. Therefore, the Court denies the Plaintiff's motion for summary judgment on this issue, and grants the Defendant's motion for summary judgment on Count I.
C. Breach of Contract Claim
Count II of the Complaint asserts a breach of contract claim. (Compl. ¶¶ 12--14.) To recover for breach of contract under Indiana law, a plaintiff must prove that "(1) a contract existed, (2) the defendant breached the contract, and (3)
*918the plaintiff suffered damage as a result of the defendant's breach." Duncan v. Greater Brownsburg Chamber of Commerce, Inc. ,
The Defendant contends that there is no actionable breach of the Agreement because the Plaintiff commenced this action within two weeks of notifying the Defendant of the breaches in the Demand Letter, instead of waiting until the Agreement's thirty day cure period had passed. In Shadeland Hills Development Co. v. Westel-Indianapolis Co. , the court found no actionable breach of an agreement provision where the plaintiff failed to give a defendant proper notice of default.
Here, the Plaintiff provided the Defendant with the Demand Letter on March 19, 2015, asserting that the Defendant was in default for failing to maintain portions of the Premises, and attaching the 2013 and 2015 Assessments. The Defendant hired a contractor who conducted repairs approximately two weeks later, on April 1, 2015. On that same day, the Plaintiff commenced this action. The Plaintiff cites the 2013 Assessment as evidence that the Defendant had been in breach of the Agreement for almost two years prior to filing the lawsuit, and insists that it would be illogical to bar it from asserting breaches of the Agreement that had remained unresolved for years [ECF No. 45 (Pl. Reply) at 4]. The Defendant explains that the 2013 Assessment was prepared at its request before the Plaintiff acquired the Property, and relates to the conditions of lattice towers located on the roof of the building which are not part of the Premises or other occupant's personal property, and therefore, their condition could not constitute a breach of the Agreement.
Regardless of existence of the 2013 Assessment, the Plaintiff did not trigger the notice of default provision (and the remedies available under section 11(2) ) until it provided the Defendant with written notice of the alleged breaches of the Agreement on March 19, 2015. Per the terms of the Agreement, an Event of Default does not occur until the Defendant's failure to comply with the Agreement "continue[s] for a *919period of thirty (30) days after written notice of such default is given." (Agreement, § 11(1).) When the Plaintiff commenced this action on April 1, 2015, the thirty day cure period had not passed, and thus, no Event of Default had occurred. Because the Agreement requires notice and an opportunity to remedy before an Event of Default occurs, they are conditions precedent to commencing an action based on an alleged Event of Default. See Shadeland Hills Dev. Co. ,
Moreover, the Plaintiff fails to raise a genuine issue of material fact as to whether the Defendant cured the alleged breaches of the Agreement identified in the Demand Letter within the thirty day period. The Defendant relies on the Acknowledgment dated April 1, 2015, to assert that its contractor had completed all maintenance and repairs by that date, and that the improved condition of the building was acknowledged by the Plaintiff. The Acknowledgement states that "Griff EE, Inc. contracted to remove abandoned telecommunications equipment" on the Property. [ECF No. 36-9 at 2.] The Plaintiff signed it, "acknowledge[ing] that the photos taken ... AFTER performing the contracted site clean-up activities accurately reflect the condition of the [Property]" on April 1, 2015. (
Kenney, the Plaintiff's managing partner, conceded that "anything pertaining to the damage of the property ... ha[d] been remedied" by the time of his deposition in September 2017. (Kenney Dep. at 53.) In his affidavit, Kenney states that the Defendant "commenced some remedial action within the given time period," and that "a substantial majority of necessary repairs and maintenance were completed long after the thirty day period allowed by the [Agreement]." (Kenney Aff., ¶ 3.) Aside from this general statement, the Plaintiff fails to identify or offer any evidence of repairs or maintenance that were completed after the thirty day time period. "It is well established that in order to withstand summary judgment, the non-movant must allege specific facts creating a genuine issue for trial and may not rely on vague, conclusory allegations." Gabrielle M. v. Park Forest-Chicago Heights, IL. Sch. Dist. 163 ,
Finally, citing the Plaintiff's request for "damages resulting from the inability to develop the Building due to Defendant's breach(es) of the Agreement" the Defendant argues that the Plaintiff cannot show that it sustained monetary damages. [ECF No. 36 at 12 (quoting Pl. Interrog. Resp. No. 9).] The Plaintiff responds that it "does not seek to recapture monetary damages in this lawsuit," but rather, requests ejectment based on the Defendant's default and termination of the Agreement. (Pl. Resp. at 7 n.2.) Accordingly, the Court deems the Plaintiff's claim for damages abandoned. Palmer. , 327 F.3d at 597.
For the reasons set forth above, the Court grants the Defendant's motion for summary judgment on the Plaintiff's breach of contract claim.
D. Ejectment Claim
Count III of the Complaint asserts a claim for ejectment based on material breaches of the Agreement as stated in Count II. (Compl. ¶¶ 15--17.) The Defendant argues that because there is no breach of the Agreement, the Plaintiff has no basis for its ejectment claim. The Court agrees. Because the Court grants summary judgment on the breach of contract claim, the ejectment claim similarly fails.
CONCLUSION
For the foregoing reasons, the Court GRANTS the Defendant's Motion for Summary Judgment [ECF No. 35], and DENIES the Plaintiff's Cross-Motion for Summary Judgment [ECF No. 39]. The Clerk is DIRECTED to enter judgment in favor of the Defendant.
SO ORDERED on September 18, 2018.
By burying its cross-motion for summary judgment in its response to the Defendant's motion for summary judgment, the Plaintiff failed to comply with Local Rule 7-1(a), which requires that motions be filed separately. N.D. Ind. L.R. 7-1(a); see Petty v. City of Chi. ,
Also on June 10, 2010, EFN and Prime entered into an Assignment and Assumption of Contracts, which assigned EFN's communication tenant leases to Prime. [ECF No. 39-3.] Thus, Prime owned all of the current communication tenant leases for the Property.
Prime entered into the Assignment Agreement with AAT Communication, LLC. AAT changed its name to SBA Site Management, LLC, soon thereafter. [ECF No. 36-5.]
At the time of the Demand Letter and thereafter, the Defendant's power lines, condensers, communications cabling, and equipment occupied space from the building's basement to the rooftops. (Kenney Aff., ¶ 4.) Its communication cabling covered the rooftops and ran from the rooftops on the exterior of the building into windows and doors throughout the upper floors. Its power wires traveled down the core of the building into the basement, and its condensers rested on the fourth floor roof.
By failing to respond to the Defendant's argument that other terms of the Agreement are definite and enforceable, the Plaintiff has abandoned those claims. See Palmer v. Marion County,
The Plaintiff does not deny that it had constructive and actual notice of the Agreement prior to acquiring the Property. See In re Canaday,
Horizontal privity is generally established by evidence that the original parties to the covenant had some mutual or successive interest either in the land burdened by the covenant or the land benefitted by it. The requirement of horizontal privity may be met by proof that the covenantee has a leasehold and the covenantor has the reversion in the affected land. Columbia Club ,
The Event of Default provision also addresses the situation where a condition cannot be reasonably be cured within the thirty day period, but may be commenced within the thirty day period and cured within 180 days. (Agreement, § 11(1).) Because the Defendant does not assert that it remedied the alleged breaches within the 180 day period, the Court will not address this issue.
In its reply brief, the Plaintiff mentions in passing that the Defendant's theory (1) appears to be grounded in equitable estoppel and cannot be raised as an affirmative defense in response to a summary judgment motion, and (2) fails to acknowledge the difference between a common law breach of contract and the default provisions of the Agreement. (Pl. Reply at 4.) Because the Plaintiff has not developed any argument on either of these points, they have been waived. See Crespo v. Colvin ,
Reference
- Full Case Name
- 504 REDEVELOPMENT LLC v. SBA SITE MANAGEMENT, LLC
- Cited By
- 2 cases
- Status
- Published