Carr Gottstein Properties, L.P. v. Seritage Growth Properties, L.P. et al

Filing 27

AMENDED ORDER Granting Motion to Dismiss at Docket 8 . (CC: DQA) (Jan, Chambers Staff)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
CARR GOTTSTEIN PROPERTIES, L.P.,
an Alaska limited partnership

Case No. 3:15-cv-00100 RRB
*** AMENDED ***
ORDER GRANTING
DEFENDANTS’ MOTION TO
DISMISS AT DOCKET 8

Plaintiff,
v.
SERITAGE GROWTH PROPERTIES, L.P.,
a Delaware limited partnership,
SERITAGE GROWTH PROPERTIES,
a Maryland investment trust,
SEARS, ROEBUCK and CO.,
a New York corporation, and
SEARS HOLDING CORPORATION,
a Delaware corporation,
Defendants.

I.

INTRODUCTION

This suit before the Court is a declaratory judgment action to determine the rights of the
parties to a commercial lease. Defendants Sears, Roebuck and Co. ("Sears"), Sears Holding
Corporation, Seritage Growth Properties , L.P., and Seritage Growth Properties (the Seritage
entities collectively "Seritage"), filed a Motion to Dismiss at Docket 8. Plaintiff Carr-Gottstein
Properties, L.P. ("CGP") filed an opposition to the motion at Docket 13, to which Defendants
replied at Docket 15. Plaintiff has also moved for a hearing at Docket 16.

AMENDED ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS - 1
3:15-cv-00100-RRB

II. BACKGROUND
The property at issue in this matter is known as The Mall at Sears ("the Mall"). The Mall
is designed with a Sears store as an anchor on the east side of the shopping center, a Safeway store
as an anchor on the west side, and an enclosed mall with a number of smaller establishments
between the two. The real property was originally leased by Sears to developers for development
of the Mall in 1966. 1 The plans for the development and improvement of the Mall were
memorialized in the Declaration and Establishment of Restrictions and Covenants Affecting Land
("the Declaration"). 2 The Declaration applies to the entire parcel that comprises the Mall and sets
forth the parties' agreement for the development, use, and maintenance of common areas. Not only
does the Declaration define common areas, but it also makes provisions for protecting these and
establishes non-exclusive easement for incidental uses of them as well. 3
On October 30, 2013, Sears sent correspondence to CGP seeking further amendment of the
Declaration that would allow for Sears to sublease portions of its store premises for use by other
retail outlets, such as the Nordstrom Rack. 4 CGP declined to allow such an amendment or any
actions that would affect the common areas in violation of the Declaration. 5 Despite a lack of
agreement between the parties, Sears proceeded with the Nordstrom Rack expansion. 6
On April 1, 2015, Sears Holdings Corporation ("SHC"), announced plans to sell several of
its properties to Seritage, a real estate investment trust formed by SHC. 7 SHC would in turn enter
into a master lease agreement, granting the ability to lease some of the properties back from

1

Docket 13 at 4.
Id. at 5.
3
Id. at 5-7.
4
Id. at 10.
5
Id. at 11.
6
Id.
7
Id. at 4.
2

AMENDED ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS - 2
3:15-cv-00100-RRB

Seritage and continue to operate its retail stores in those locations. 8 Additionally, Sears' plan
contemplates that Seritage would subdivide some of the acquired Sears' store spaces and sublease
it to other, smaller tenants. 9
CGP asserts that the terms of the master lease violate the Declaration by eliminating the
existing connection between the Sears store space and the existing mall, allowing conversion of
common area protected by the Declaration into commercial use, allowing changes to exterior
building surfaces, parking and common areas, and allowing uses other than those specified in the
Declaration. 10 In other words, CGP asserts that the master lease improperly gives Seritage the
perceived right to violate the Declaration by subleasing the Sears space, exactly as Sears allegedly
did in recently creating the Nordstrom Rack space. CGP filed the present suit seeking declaratory
judgment and injunctive relief requiring Sears to obtain CGP's consent and amendment to the
Declaration before entering into the agreement with Seritage.
III. STANDARD OF REVIEW
The Declaratory Judgment Act provides that “[i]n an actual case or controversy within its
jurisdiction . . . any Court of the United States . . . may declare the rights and other legal relations
of any interested party facing such declaration.” 11 As such, “the Declaratory Judgment Act requires
an actual case or controversy between the parties before a federal court can constitutionally assume
jurisdiction.” 12 The phrase “actual case or controversy” as used in the Act “refers to the same

8

Id.
Id.
10
Id. at 12.
11
28 U.S.C. § 2201(a).
12
Goodyear Tire & Rubber Co. v. Releasomers, Inc., 824 F.2d 953, 955 (1987) (citing
Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239–41, 57 S. Ct. 461 (1937)).
9

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MOTION TO DISMISS - 3
3:15-cv-00100-RRB

‘Cases' and ‘Controversies' that are justiciable under Article III” of the Constitution, and the
Court's jurisdiction is likewise constrained by the doctrines of standing and ripeness. 13
In the context of a declaratory judgment suit, whether the matter is constitutionally ripe
“depends upon whether the facts alleged, under all the circumstances, show that there is a
substantial controversy, between parties having adverse legal interests, of sufficient immediacy
and reality to warrant the issuance of a declaratory judgment.” 14 If a claim is not ripe for review,
the federal courts lack subject matter jurisdiction and must dismiss the claim. 15
IV. DISCUSSION
CGP's complaint and response to the motion to dismiss characterizes a future violation of
the Declaration by Seritage as an almost certainty. However, Sears and Seritage have not disputed
the validity of the Declaration, clearly stating that "[t]here is no question the property conveyed in
the sale/leaseback transaction is subject to the recorded Declaration." 16 Sears and Seritage also
acknowledge that "[a]ny action by Seritage to recapture space in the Sears store . . . and reconfigure
and re-lease such space, would have to be taken in conformance with the Declaration.” 17 CGP has
not refuted the applicability of the Declaration to Seritage, nor identified specific plans by Seritage
to violate the Declaration. While CGP would like the master lease to reiterate the obligations of
the Declaration, they have provided no support that such an inclusion is required. Neither has CGP

13

MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127, 127 S. Ct. 764 (2007).
Montana Envtl. Info. Ctr. v. Stone-Manning, 766 F.3d 1184, 1188 (9th Cir. 2014)
(quoting United States v. Braren, 338 F.3d 971, 975 (9th Cir. 2003)).
15
Broughton Lumber Co. v. Columbia River Gorge Comm'n, 975 F.2d 616, 621 (9th Cir.
1992) (citing Southern Pac. Transp. Co. v. Los Angeles, 922 F.2d 498, 502 (9th Cir. 1990), cert.
denied, 502 U.S. 943, 112 S. Ct. 382 (1991)).
16
Docket 8 at 5.
17
Id.
14

AMENDED ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS - 4
3:15-cv-00100-RRB

pointed to any facts that indicate specific actions or plans by Seritage that would violate the
Declaration beyond a single previous alleged violation by Sears.
Where the supposed injury has not materialized and may never materialize, the dispute is
more an abstraction than an actual case. 18 Moreover, the Ninth Circuit has found it necessary to
dismiss claims that are based solely on harms stemming from events that have not yet occurred,
and may never occur, "because the plaintiffs raising such claims have not suffered an injury that
is concrete and particularized enough to survive the standing/ripeness inquiry.” 19 Although a
violation of the Declaration would not be an unprecedented occurrence at the Mall, that does not
establish sufficient immediacy and reality to warrant the issuance of a declaratory judgment
without further factual support. Because CGP has not alleged any facts to support its conclusory
allegations, CGP has failed to demonstrate a substantial controversy of sufficient immediacy
between the parties and this matter must therefore be dismissed.
V. CONCLUSION
For the reasons set forth above, Defendants' Motion to Dismiss at Docket 8 is GRANTED.
Plaintiff's Request for Oral Argument at Docket 16 is therefore DENIED as moot.
IT IS SO ORDERED this 15th day of December, 2015.
S/RALPH R. BEISTLINE
UNITED STATES DISTRICT JUDGE

18
19

Montana Envtl. Info. Ctr., 766 F.3d at 1190.
Alcoa, Inc. v. Bonneville Power Admin., 698 F.3d 774, 793 (9th Cir. 2012).

AMENDED ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS - 5
3:15-cv-00100-RRB