Apple Glen Investors, L.P. v. Express Scripts, Inc.

Filing 55

ORDER denying 42 Motion for Summary Judgment. See Order for details. Signed by Judge Virginia M. Hernandez Covington on 7/27/2015. (KAK)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
APPLE GLEN INVESTORS, L.P.,
Plaintiff,
v.

Case No. 8:14-cv-1527-T-33EAJ

EXPRESS SCRIPTS, INC.,
Defendant.
_____________________________/
ORDER
This cause comes before the Court pursuant to Defendant
Express Scripts, Inc.’s (“ESI”) Motion for Summary Judgment
(Doc. # 42), which was filed on April 6, 2015. Plaintiff Apple
Glen Investors, L.P. (“Apple Glen”) filed a response in
opposition

to

the

Motion

on

May

6,

2015.

(Doc.

#

47).

Thereafter, ESI filed its reply on May 20, 2015. (Doc. # 50).
For the reasons that follow, the Court denies ESI’s Motion in
this breach of contract case, which is set for a bench trial
during the Court’s September, 2015, trial term.
I.

Background
Pursuant to an agreement (“the Lease”) dated December 6,

1999, Apple Glen leased commercial property and equipment to
ESI. (Doc. # 2 at 2). Both parties at bar are successors in
interest

to

the

original

parties

of

the

Lease,

which

terminated on March 31, 2014. (Id.). ESI took assignment of

the Lease in November of 2001. (Doc. # 42 at 2).

In 2014,

ESI and Apple Glen litigated a separate dispute as to whether
ESI was a hold-over tenant from 2010 to 2014. (Doc. # 47 at
4-5). The state court entered judgment in favor of Apple Glen.
(Id.).
The

leased

premises

include

a

139,000

square

foot,

three-story commercial office building in north Hillsborough
County situated on approximately twenty acres, together with
various mechanical equipment. (Doc. # 42 at 2). The premises
are unique “because they were developed as a ‘Mission Critical
Facility,’ which means [it was] designed and constructed with
extraordinary

levels

of

redundancy

and

reliability

of

critical systems," particularly “in the power service, water
service, emergency power, HVAC, and communications necessary
to keep the facility fully operational at all times.” (Doc.
# 47 at 2).
The

Lease

contains

language

putting

the

burden

of

maintaining and repairing the property and equipment on the
Tenant, ESI, as follows:
Tenant shall at all times, at the Tenant’s sole
cost and expense, put, keep and maintain the Leased
Premises (including, without limitation, the
parking
areas,
roof,
footings,
foundations,
interior
and
exterior
walls
and
structural
components of the Leased Premises) and the
Equipment in a first class condition and order of

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repair, except for ordinary wear and tear, and
shall promptly make all repairs and replacements of
every kind and nature, whether foreseen or
unforeseen. . . .
(Doc. # 4-3 at ¶ 12(a)). The Lease further specifies that the
Tenant, “shall from time to time replace with other operation
equipment or parts any of the equipment which shall have
become worn out or unusable for the purpose for which it is
intended, or been lost, stolen, damaged or destroyed. . . .”
(Id. at ¶ 12(d)).
Pursuant to the Lease, in the event of “failure by Tenant
to perform and observe, or a violation of breach of, any . .
. provision in this Lease and such default shall continue for
a period of thirty (30) days after written notice thereof is
given,” the Landlord “may exercise any . . . right or remedy
now or hereafter existing by law or in equity.” (Id. at ¶¶
20(a)(ii)-(v)).

In addition, the Lease contains a provision

for “Trade Fixtures,” specifying that “all telecommunications
facilities and other personal property of Tenant that are
Trade Fixtures shall be and remain the property of the
Tenant,” thus waiving any claim by Apple Glen to Trade
Fixtures of ESI. (Id. at ¶ 20(f)).
Although

ESI

tendered

monthly

rental

payments

of

$145,782.00, pursuant to the Lease, Apple Glen’s Corporate

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Representative, Andrew Dubuque, testified that the parties
did not enjoy “a very friendly relationship” and that Apple
Glen was concerned that the leased premises were not being
properly maintained. (Dubuque Dep. Doc. # 47-20 at 6).
On July 15, 2009, Apple Glen sent a letter to ESI
regarding certain equipment that was allegedly missing from
the

premises.

(Doc.

#

47-17).

Therein,

Apple

Glen

also

reminded ESI of its contractual obligation to maintain the
premises in a “first class condition,” contending that the
building was “aged” and the equipment was “obsolete.” (Id. at
3). According to Dubuque, ESI did not respond to the July 15,
2009, letter. (Dubuque Aff. Doc. # 47-19 at ¶ 4).
Thereafter, Apple Glen retained Marcos Ibarguen of CMK
Design Studio to inspect the property and prepare a report
regarding

its

condition.

(Id.

at

¶

7).

When

Ibarguen

conducted his inspection of the property, ESI was operating
the business and limited the amount of time Ibarguen could
spend at the premises. (Id. at ¶ 8).

Nevertheless, Ibarguen

was able to inspect the premises and prepared a report (the
“CMK

Report”),

property

that

which

identified

Ibarguen

several

determined

aspects

were

not

of

the

being

appropriately maintained. (Id. at ¶ 9). On January 13, 2014,
with the Lease approaching its end, Apple Glen sent ESI a

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letter and a copy of the CMK report requesting that ESI
contact Apple Glen to discuss problems identified in the CMK
report. (Id. at ¶ 9).

Once again, ESI did not respond to the

letter. (Id.).
ESI vacated the property in April of 2014. (Id. at ¶
10).

Thereafter, Apple Glen was able to conduct a more

thorough evaluation of the premises. (Id.).

After carefully

inspecting its property, Apple Glen sent ESI a videotape as
well as a detailed list of issues “it could readily identify
as being in breach of the Lease terms.” (Id.).
respond. (Id.).

ESI did not

Shortly thereafter, on May 27, 2014, Apple Glen filed a
state court Complaint alleging that ESI breached the Lease by
failing to maintain the entire leased premises, including
leased equipment, in “first class condition and order of
repair.” (Doc. # 2 at ¶ 9). Specifically, the Complaint
enumerated the following deficiencies, among others:
a.
Building exterior and landscaping:
The
landscaping around the building and parking lots
has not been maintained, sidewalks and parking lots
require repair and/or replacement, and exterior
water hydrants are not functioning. The building
curtain walls show evidence of water damage and
inadequate repairs throughout;
b.
Roof: Skylight metal framing and seals have
not been installed properly and flashing sealants
on roof perimeter have failed sealants;

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c.
Interior: Interior walls and ceilings of the
second and third floors have stained ceiling tiles
and require repair due to leaks and water
intrusion, commercial grade kitchen equipment has
been removed and remaining kitchen equipment
requires repair or replacement; and,
d.
Equipment and systems: Various state-of-theart equipment and systems require repair or
replacement due to the failure to maintain or
upgrade the systems, including, but not limited to,
the damaged or inoperable security system, HVAC
system, Uninterruptable Power System, elevator
units, cooling towers, fire sprinkler system, and
the generator system.
(Id. at ¶ 12).
On June 25, 2014, ESI removed the case to this Court
based on diversity jurisdiction.1 (Doc. # 1). Thereafter, on
February 19, 2015, Apple Glen secured a new lease for the
premises with Citigroup Technology, Inc. (Doc. # 42 at 15).
In contrast with its lease with ESI, Apple Glen assumed
responsibility for all repair and maintenance of the property
in its lease with Citigroup. (Doc. # 47 at 18).
At this juncture, ESI seeks summary judgment, arguing
(1) that it expended millions of dollars to repair and

1 According to the Notice of Removal, Apple Glen is an Indiana
Limited Partnership with its principal place of business in
the state of Indiana, whereas ESI is a Delaware corporation
with its principal place of business in St. Louis, Missouri.
(See Doc. # 1 at ¶ 3). The amount in controversy exceeds the
$75,000.00 threshold. (Id. at ¶ 4).

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maintain the premises and that it did not breach the Lease;
(2) that Apple Glen failed to provide adequate notice of the
alleged breach as required by the Lease; (3) that Apple Glen
is not entitled to compensation for lost rent or excessive
power bills; (4) that Apple Glen cannot establish its claim
for missing equipment; and (5) that ESI was entitled to remove
certain items from the property as Trade Fixtures. (See Doc.
# 42). Conversely, Apple Glen contends that genuine issues of
material fact preclude entry of judgment in favor of ESI.
(See Doc. # 47). The Motion is ripe for the Court’s review.
II. Legal Standard
Summary judgment is appropriate “if 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). A factual dispute alone is not enough to
defeat a properly pled motion for summary judgment; only the
existence of a genuine issue of material fact will preclude
a grant of summary judgment. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 247-48 (1986).
An issue is genuine if the evidence is such that a
reasonable jury could return a verdict for the nonmoving
party. Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742
(11th Cir. 1996)(citing Hairston v. Gainesville Sun Pub. Co.,

7

9 F.3d 913, 918 (11th Cir. 1993)). A fact is material if it
may affect the outcome of the suit under the governing law.
Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir.
1997). The moving party bears the initial burden of showing
the court, by reference to materials on file, that there are
no genuine issues of material fact that should be decided at
trial. Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1260
(11th Cir. 2004)(citing Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986)). “When a moving party has discharged its
burden,

the

non-moving

party

must

then

‘go

beyond

the

pleadings,’ and by its own affidavits, or by ‘depositions,
answers

to

interrogatories,

and

admissions

on

file,’

designate specific facts showing that there is a genuine issue
for trial.” Jeffery v. Sarasota White Sox, Inc., 64 F.3d 590,
593 (11th Cir. 1995)(citing Celotex, 477 U.S. at 324).
If there is a conflict between the parties' allegations
or evidence, the non-moving party's evidence is presumed to
be true and all reasonable inferences must be drawn in the
non-moving party's favor. Shotz v. City of Plantation, Fla.,
344 F.3d 1161, 1164 (11th Cir. 2003). If a reasonable fact
finder evaluating the evidence could draw more than one
inference from the facts, and if that inference introduces a
genuine issue of material fact, the court should not grant

8

summary judgment. Samples on Behalf of Samples v. City of
Atlanta, 846 F.2d 1328, 1330 (11th Cir. 1988)(citing Augusta
Iron & Steel Works, Inc. v. Employers Ins. of Wausau, 835
F.2d 855, 856 (11th Cir. 1988)). However, if the non-movant's
response consists of nothing “more than a repetition of his
conclusional

allegations,”

summary

judgment

is

not

only

proper, but required. Morris v. Ross, 663 F.2d 1032, 1034
(11th Cir. 1981).
III. Analysis
A. Maintaining the Premises and Equipment
Apple Glen contends that ESI breached the Lease by
failing to appropriately maintain the leased premises and
equipment.

The elements of a breach of contract are: “(1) a

valid contract; (2) a material breach; and (3) damages.”
Abbott Labs., Inc. v. Gen. Elec. Capital, 765 So. 2d 737, 740
(Fla. 5th DCA 2000). ESI admits to the existence and validity
of the Lease with Apple Glen. (Doc. # 42; Doc. # 47). However,
ESI argues that it did not breach the Lease. (Doc. # 42).
Specifically, ESI indicates that it “paid monthly rental
of $145,782 and spent millions maintaining the [p]remises.”
(Doc. # 42 at 2; Doc. # 4-3 at ¶ 4).

ESI’s Corporate

Representative and full time facilities manager, Hilda Reyes,
testified that in 2013 alone, ESI expended $5 million on

9

maintenance and expenses for the premises. (Reyes Dep. Doc.
# 41-2 at 38). In addition, Reyes testified that during ESI’s
occupancy

of

the

property,

ESI

employed

two

maintenance

technicians for the property. (Id. at 29). She also testified
that, when ESI vacated the property, the premises were “in
good condition and everything was working.” (Id. at 19).
In contrast, Apple Glen has employed various inspectors
and

experts

and

has

compiled

multiple

reports

detailing

various maintenance problems. (Doc. # 42-1; Doc. # 42-2). For
instance, Apple Glen argues for replacement of the HVAC system
at a total cost in excess of $1.9 million and replacement of
the uninterruptable power system at a cost of nearly $1.4
million. (Doc. # 42-1 at 11, 14). Apple Glen contends that
such repair is ESI’s responsibility under the Lease. (Doc. #
2).
In this Court’s view, the parties’ clashing contentions
regarding

the

condition

of

the

property

and

equipment

constitute a genuine issue of material fact that must be
resolved at trial.

If Apple Glen can first show that ESI

failed to relinquish the premises or equipment in a first
class condition and order of repair, a genuine issue of
material fact also exists as to whether such condition was
caused by ESI’s failure to properly maintain or, in the

10

alternative, ordinary wear and tear. Therefore, the Court
denies the Motion for Summary Judgment as to the issue of
ESI’s maintenance and repair responsibility.
B. Notice
ESI also argues that it is entitled to summary judgment
because Apple Glen failed to provide it with the requisite
notice of breach, pursuant to Paragraph 20(a)(ii) of the
Lease, which provides that:
failure by Tenant to perform and observe, or a violation
or breach of, any other provision in this Lease and such
default shall continue for a period of thirty (30) days
after written notice thereof is given by Landlord to
Tenant or if such default is of such a nature that it
cannot reasonably be cured within such period of thirty
(30) days. . . .
(Doc.

#

42

at

12;

Doc.

#

4-3

at

22)(emphasis

added).

Specifically, ESI contends that default only occurs if the
breach continues for thirty days after written notice. (Doc.
# 42 at 12). According to ESI, Apple Glen only sent notice of
the

alleged

breach

of

the

Lease

after

the

Lease

had

terminated, which did not provide ESI with an opportunity to
cure the purported deficiency. (Id.)
The Court generally agrees with ESI’s interpretation of
the

notice

clause

found

in

Paragraph

20(a)(ii).

Before

entering default, the Lease necessitates that the Tenant be
given an opportunity to cure the breach in the form of written

11

notice provided by the Landlord. After notice is given and
breach has continued for thirty days, the “Landlord may
exercise any . . . right or remedy now or hereafter existing
by law or in equity.” (Doc. # 4-3 at 24). See, e.g., Coin
Laundry Equip. Co. Inc. v. Gilbert, 597 So. 2d 926, 927 (Fla.
1st DCA 1992)(reversing judgment for breach of lease after
finding that the lease required, as a condition precedent to
default, that notice be furnished to the tenant, and that
such notice was not furnished); Richards v. Dodge, 150 So. 2d
477, 483 (Fla. 2d DCA 1963)(“a landlord cannot declare a
forfeiture

for

non-payment

of

rent

prior

to

demanding

payment.”).
However, the Court rejects Apple Glen’s argument that if
notice was required, it was excused by prior material breaches
and concealment of the premises. (Doc. # 47 at 15). First,
the Lease does not indicate that lack of notice can be excused
in the event of a material breach. (Doc. # 4-3). In addition,
the Court has not been presented with sufficient evidence at
this juncture to find, as a matter of law, that ESI concealed
the premises.
Nevertheless,

the

Court

finds

that

Apple

Glen

did

provide written notice to ESI that the leased premises and
equipment were not being properly maintained. In fact, on two

12

separate occasions before the termination of the Lease, Apple
Glen

provided

written

notice

to

ESI

asserting

that

the

premises and equipment were in an unsatisfactory condition.
(Doc. # 47 at 14). First, on July 15, 2009, Apple Glen sent
a letter to ESI stating that the condition of both the
premises and equipment were “inconsistent with the Tenant’s
obligation to maintain both in a ‘first class condition.’”
(Doc. # 47-17 at 3). That letter also remarked that the
premises were being maintained as “Class B building,” as
opposed

to

wrongfully

Class

A,

removed

and

repeatedly

equipment

from

remarked

the

Leased

that

ESI

premises.

(Id.).
Second,

on

January

31,

2014,

months

before

the

termination of the Lease, Apple Glen sent a letter to ESI
containing

an

extensive

condition

survey

report

of

the

premises and equipment prepared by CMK Design Studio, LLC.
(Doc. # 42-2). The CMK Report graded the property on a 4score scale, where score 1 was given to property “currently
in first class condition” and score 4 given to property
“currently in unacceptable condition, requiring extensive
repair

and/or

full

replacement

to

attain

first

class

condition.” (See Id.). A number of items were alleged to be
in less than first class condition, including the asphalt

13

pavement, metal railings, hot water heaters, the HVAC System,
and Uninterruptible Power Systems. (See Id.).
The Court accordingly denies ESI’s Motion for Summary
Judgment to the extent ESI claims that it was not on notice
of maintenance deficiencies.
C. Lost Rent
ESI argues that “Apple Glen is not entitled to recover
lost rent or excess electric bills because of its failure to
re-let the Premises,” namely because the premises were relet to Citigroup in an ordinary period of time. (Doc. # 42 at
15). In response, Apple Glen has clarified that it only seeks
lost rent for the amount of time it would take to restore the
premises to a first-class condition, which it believes is a
period of six months. (Doc. # 47 at 17-18). The Court is not
required to address that question here, as a genuine issue of
material fact exists not only as to whether ESI is liable at
all, but also whether potential restoration would require the
premises to be vacant and unleased. Those matters must be
further explored at trial.
D. Missing Equipment
ESI seeks summary judgment on Apple Glen’s claim for
missing equipment, arguing that the record is devoid of any
evidence that the allegedly missing equipment was located on

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the premises when ESI took possession in 2001. (Doc. # 42 at
17). In response, Apple Glen asserts that ESI is liable not
only for equipment present when it took possession of the
premises in 2001, but, as the successor in interest to the
original lessee, ESI is also liable for “any property now
missing that was located in the building when the original
tenant entered the Lease in 1999.” (Doc. # 47 at 18-19 (citing
Hollywood Shopping Plaza, Inc. v. Schuyler, 179 So. 2d 573,
574 (Fla. 2d DCA 1965)(holding enforceable a lease assignment
which stipulated that it operated “with the full force and
effect as if the Assignee had executed the lease originally
as Tenant named therein”)).
While an assignment, rather than a sublease, may place
“the assignee in the same position as if it had executed the
original
assignment

lease

as

states

the
that

original
the

tenant,”

“Landlord

the

hereby

operative

represents,

warrants, covenants and agrees that . . . no event has
occurred or condition exists which, with the passage of time
or the giving of notice, or both, would constitute a default
under the Lease.” Schuyler, 179 So. 2d at 574; (Doc. # 4-3 at
52).

Because

missing

equipment

would

have

constituted

a

default, and given that Apple Glen represented that no default
existed at the time of assignment, ESI is not responsible for

15

equipment that may have been missing before it accepted the
obligations of the Lease.
Notwithstanding, a genuine issue of material fact exists
regarding equipment that may have been present on the premises
in

2001,

when

ESI

took

assignment

of

the

Lease,

which

precludes summary judgment on this issue. Omar Cruz, who
worked as the facilities manager of the premises during the
relevant periods, testified that certain equipment, systems,
and components were present “when ESI took the lease and were
missing when ESI vacated the Premises,” specifically, the
security and monitoring system, building automation computer
systems, food area and kitchen equipment, redundancy of UPS
systems, landscaping, light bulbs and ballasts. (Cruz Aff.
Doc. # 47-26 at ¶ 4).
the

Lease

ESI, on the other hand, asserts that

expressly

permitted

it

to

remove

all

“telecommunications facilities and personal property that are
Trade Fixtures” and that some, if not all, of the disputed
“missing equipment” was removed by ESI in accordance with the
Lease. (Doc. # 42 at 16).

As such, genuine disputes of

material

the

fact

exist

as

to

missing

equipment,

which

requires further proceedings at trial to determine the issue.
ESI’s Motion for Summary Judgment is therefore denied on this
ground.

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E. Trade Fixtures
In addition to damages for the purportedly deficient
status of the premises and equipment, Apple Glen claims
damages for “increased electrical costs because ESI removed
the automated computer system and software to control the
HVAC system, and Apple Glen was unable to control the air
conditioning system resulting in astronomical electricity
bills

for

the

empty

building.”

(Doc.

#

47

at

19).

Specifically, Dubuque testified that, without the automated
computer system to regulate the HVAC system, the electric
bills exceeded $50,000.00 monthly. (Dubuque Dep. Doc. # 4720 at 20).
ESI contends that it had every right to remove the
automated computer system for the HVAC, citing Paragraph
20(f) of the Lease, which states that “all telecommunications
facilities and other personal property of the Tenant that are
Trade Fixtures shall be and remain the property of the Tenant
. . . .” (Doc. # 42 at 18; Doc. # 4-3 at 25). Thus, according
to ESI, “the Lease expressly permits ESI to remove all
telecommunications facilities and personal property that are
Trade Fixtures.” (Doc. # 42 at 18).
While the Court finds the Lease to be unambiguous as to
the

right

of

the

Tenant

to

17

remove

“telecommunications

facilities and other personal property,” ESI has, at this
stage, failed to prove that the automated computer system is
either (1) a telecommunication facility or (2) its personal
property. (Doc. 4-3 at ¶ 20(f))(emphasis added). The phrase
“other

personal

property”

used

in

conjunction

with

“telecommunications facilities” naturally implies that the
telecommunications facilities permitted to be removed are
those that belong to the Tenant.

The Lease does not permit

ESI to remove all telecommunications facilities, but only
those telecommunications facilities which belong to it. As
such, a genuine dispute as to material fact exists with regard
to the ownership of the automated computer system and its
classification as a telecommunications facility. Therefore,
ESI’s Motion for Summary Judgment is denied on this issue.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
Defendant Express Scripts, Inc.’s Motion for Summary
Judgment (Doc. # 42) is DENIED.
DONE and ORDERED in Chambers, in Tampa, Florida, this
27th day of July, 2015.

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Copies to:

All Counsel of Record

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