Julian Depot Miami, LLC v. Home Depot U.S.A., Inc.

Filing 19

OPINION AND ORDER denying 10 Motion to Expedite; granting in part and denying in part 13 Motion to Dismiss. Signed by Judge Robert N. Scola, Jr on 12/7/2017. (yha)

United States District Court
for the
Southern District of Florida
Julian Depot Miami, LLC, Plaintiff,

)
)
)
v.
) Civil Action No. 17-22475-Civ-Scola
Home Depot U.S.A., Inc.,
)
Defendant.
)
Order Granting in Part and Denying in Part Motion to Dismiss
Julian Depot Miami, LLC’s allegations center on Home Depot U.S.A.,
Inc.’s failure, as Julian Depot’s tenant, to rebuild its home-improvement store
after it was damaged by a fire. Alleging that Home Depot is required by the
parties’ lease to reconstruct its building, which has been completely razed,
Julian Depot seeks both declaratory relief and damages for Home Depot’s
alleged breach of the lease. Home Depot, on the other hand, argues that both
counts should be dismissed. According to Home Depot, (1) the Court lacks
subject matter jurisdiction because the controversy between the parties is not
yet ripe; and (2) both counts should be dismissed for failing to state a claim.
After careful review, the Court finds Home Depot’s argument regarding the
breach of contract claim well taken but disagrees with Home Depot as to the
declaratory judgment count. The Court thus grants in part and denies in part
Home Depot’s motion to dismiss (ECF No. 13) as more fully explained below.
1. Factual Background and the Complaint
Home Depot, in December 2006, entered into a twenty-year land lease
with Julian Depot’s predecessor-in-interest, Tallahassee LLC. (Compl. ¶¶ 5,
11, ECF No. 1-2, 3.) In addition to its initial twenty-year term, expiring in 2026,
the lease also provides for four five-year renewal options. (Id. at ¶ 11.) The lease
with Home Depot was part of Tallahassee LLC’s bigger-picture plan to develop
the Home Depot parcel, and several adjacent parcels, into a shopping center in
Homestead, Florida with Home Depot as a potential anchor tenant. (Id. at
¶ 10.) According to Julian Depot, Home Depot had the option of constructing a
retail building on the leased, but then as-yet-undeveloped, land but was not, at
least initially, required to do so. (Id. at ¶ 15.) Instead, the terms of the lease
simply encouraged Home Depot to construct the retail building by subjecting it
to increased rents, in the form of penalties, should Home Depot opt not to do
so. (Id. at ¶ 28.) In any event, Home Depot chose to build a store on the parcel.
(Id. at ¶ 18.) Construction was completed in March 2008 and Home Depot
thereafter began operating the new store. (Id. at ¶¶ 18, 29.)

Some four years later, in December 2012, Julian Depot took title to the
land from Tallahassee LLC and assumed the lease. (Id. at ¶ 30.) Less than a
year after that, in November 2013, a fire damaged the store. (Id. at 31.)
According to the complaint, although the fire was severe enough to force Home
Depot to close the store for repairs, the integrity of the structure itself had not
been irreparably compromised. (Id. at 34.) Nonetheless, a month after the fire,
Miami-Dade County’s Regulatory and Economic Resources Department issued
a violation, deeming the premises to be unsafe and ordering that the building
either be repaired or demolished. (Id. at ¶¶ 40–41.) Home Depot then applied
for a demolition permit, which was issued on February 11, 2014. (Id. at ¶ 43.)
Julian Depot claims it did not become aware that the building had been razed
until July 2014 and then began discussions with Home Depot regarding
reconstructing the demolished improvements. (Id. at ¶¶ 46–47.)
Julian Depot’s complaint centers on Home Depot’s alleged refusal to
rebuild its home-improvement store following the post-fire demolition and
includes two counts: one seeking a declaratory judgment and the other for
breach of contract. In asking for a declaratory judgment, Julian Depot submits
that it is uncertain regarding its rights and obligations under two sections of its
lease with Home Depot. According to Julian Depot, these two sections, 8.9(a)(i)
and 10.1, require Home Depot to reconstruct any improvements that have been
razed. Julian Depot also submits that if Home Depot has not completed
construction of the replacement improvements by 180 days prior to the end of
the twenty-year term, the lease will automatically extend and Home Depot
must continue to pay 115% of the annual base rent until construction is
completed. As reported in the complaint, however, Home Depot contends that
another provision of the lease, section 7.3, releases it from any obligation set
forth under either 8.9 or 10.1 to construct any improvements on the leased
parcel. Julian Depot also alleges that Home Depot’s position is that the lease
does not require it to remain in possession of the land or to pay rent while the
lot is vacant once the initial twenty-year term expires. Ultimately, Julian Depot
asks the Court to, first, declare that Home Depot is required, under the lease,
to reconstruct any improvements, of equal or greater value, upon their
demolition. And, second, Julian Depot requests that the Court declare that the
lease requires Home Depot to remain in possession and to continue its rent
payments through the conclusion of all four five-year renewal terms, and
beyond, upon the expiration of the initial term should Home Depot opt not to
reconstruct the improvements.
In its breach-of-contract claim, Julian Depot alleges that Home Depot
has breached the lease by refusing to reconstruct the improvements that were
demolished after the fire. Rather than seeking specific performance however,

Julian Depot instead seeks a monetary award, claiming it “has been damaged
in an amount equal to or greater than the value of the Improvements” before
the fire in November 2013 plus “an amount based on 115% of the Annual Rent
that Home Depot would owe [Julian Depot] through . . . 2046.” (Id. at ¶ 90.)
2. Legal Standard
In challenging a Court’s jurisdiction under Federal Rules of Civil
Procedure 12(b)(1), based on ripeness, a court must determine whether it has
been presented with a true case or controversy to adjudicate. Moynihan v. W.
Coast Life Ins., Co., 607 F. Supp. 2d 1336, 1338 (S.D. Fla. 2009) (Zloch, J.).
“Article III of the United States Constitution limits the jurisdiction of the federal
courts to cases and controversies of sufficient concreteness to evidence a
ripeness for review.” Digital Properties, Inc. v. City of Plantation, 121 F.3d 586,
589 (11th Cir. 1997) (citing U.S. Const. art. III, § 2, cl. 1). In evaluating
ripeness, a court must consider: “(1) the fitness of the issues for judicial
decision, and (2) the hardship to the parties of withholding court
consideration.” Digital Properties, 121 F.3d at 589. Ultimately, the resolution
depends on “whether there is sufficient injury to meet Article III’s requirement
of a case or controversy and, if so, whether the claim is sufficiently mature, and
the issues sufficiently defined and concrete, to permit effective decisionmaking
by the court.” Cheffer v. Reno, 55 F.3d 1517, 1524 (11th Cir. 1995).
A court considering a motion to dismiss, filed under Rule 12(b)(6), must
accept all of the complaint’s allegations as true, construing them in the light
most favorable to the plaintiff. Pielage v. McConnell, 516 F.3d 1282, 1284 (11th
Cir. 2008). Although a pleading need only contain a short and plain statement
of the claim showing that the pleader is entitled to relief, a plaintiff must
nevertheless articulate “enough facts to state a claim to relief that is plausible
on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “But where
the well-pleaded facts do not permit the court to infer more than the mere
possibility of misconduct, the complaint has alleged—but it has not shown—
that the pleader is entitled to relief.” Ashcroft v. Iqubal, 556 U.S. 662, 679
(2009) (quoting Fed. R. Civ. P. 8(a)(2)) (internal punctuation omitted). A court
must dismiss a plaintiff’s claims if she fails to nudge her “claims across the line
from conceivable to plausible.” Twombly, 550 U.S. at 570.
3. Declaratory Judgment Count
Home Depot submits that Julian Depot’s declaratory-judgment count
should be dismissed because Julian Depot has not presented an Article III case
or controversy and instead merely seeks an advisory opinion. “At an irreducible
minimum, the party who invokes the court’s authority under Article III must

show: (1) that they personally have suffered some actual or threatened injury
as a result of the alleged conduct of the defendant; (2) that the injury fairly can
be traced to the challenged action; and (3) that it is likely to be redressed by a
favorable decision.” U.S. Fire Ins. Co. v. Caulkins Indiantown Citrus Co., 931
F.2d 744, 747 (11th Cir. 1991). Under 28 U.S.C. § 2201, a declaratory
judgment may only be issued in the case of an “actual controversy.” To survive
a motion to dismiss, the complaint must allege: (1) a substantial continuing
controversy; (2) between parties having adverse legal interests. Emory v. Peeler,
756 F.2d 1547, 1552 (11th Cir. 1985). In order to establish that the
controversy is continuing, “[t]he plaintiff must allege facts from which the
continuation of the dispute may be reasonably inferred” which “may not be
conjectural, hypothetical, or contingent.” Id. The controversy “must be real and
immediate, and create a definite, rather than speculative threat of future
injury.” Id. “The remote possibility that a future injury may happen is not
sufficient to satisfy the ‘actual controversy’ requirement for declaratory
judgments.” Id.
Julian Depot insists that Home Depot must reconstruct the razed
improvements at issue in this case. And it alleges in the complaint that Home
Depot, in opposition, maintains that it is not required to do so. (Compl. at ¶ 68
(“Home Depot has indicated that it does not intend to reconstruct the
Improvements, notwithstanding [Julian Depot’s] demands that it do so.”); ¶ 79
(“Home Depot contends that because Section 7.3 provides it has ‘no obligation
to construct any improvements on the Premises,’ [Julian Depot] cannot require
it to reconstruct the Improvements, pursuant to Sections 8.9(a)(i) and 10.1.”);
Letter from David E. Gurley to Marc Birnbaum (Jan. 23, 2017), Compl. Ex. G,
ECF No. 1-2, 201 (Home Depot’s counsel noting that “there is no obligation
under the Lease for Home Depot” to reconstruct the improvements).) Further,
Julian Depot asserts that, according to the lease, in the event Home Depot
refuses to rebuild, Home Depot is required to continue paying Julian Depot
rent, apparently forever. (Id. at ¶82.C. (asking that the Court declare that Home
Depot is required to “continue to pay rent through all Option Terms and
beyond them, in the event that it opts not to reconstruct the Improvements”).)
Conversely, the complaint alleges, Home Depot claims it need only pay rent
until 2026, when the initial term of the lease expires. (Id. at ¶ 80.)
From these facts, the Court reasonably infers that there is indeed a
substantial continuing controversy between the parties and that their legal
interests are certainly adverse. Further, the threat of future injury to Julian
Depot does not appear, based on Julian Depot’s allegations, to be speculative.
Julian Depot claims entitlement to possession of the improvements, at the
termination of the lease, or a rent payment that is owed to it in perpetuity

should the improvements never be constructed. According to the complaint,
Home Depot says that it refuses to build the improvements and will not pay
rent beyond its initial term. While, in the end, Julian Depot’s interpretation of
the contract may prove to be in error, such an analysis is not properly before
the Court at this stage of the litigation.
Home Depot’s arguments to the contrary are unavailing. First, Home
Depot argues that Julian Depot is not entitled to a declaratory judgment
because Julian Depot has not alleged any conduct that could result in
“imminent and inevitable” litigation unless these issues are resolved. Home
Depot puts too fine a point on the word “imminent.” According to the
complaint, Home Depot maintains that it will not reconstruct the
improvements and will cease paying rent in nine years, at the expiration of the
lease’s initial term. While it is true that the repercussions of Home Depot’s
ceasing to pay rent in nine years are not themselves imminent at this moment,
the resulting litigation such a course of conduct will lead to is imminent in
relation to the anticipated conduct. That is, should Home Depot act according
to the factual allegations lodged in the complaint, the Court expects that
litigation, at that point, will be both imminent and inevitable. See Kelley v. E.I.
DuPont de Nemours & Co., 17 F.3d 836, 845 (6th Cir. 1994) (noting that “it is
not essential that the threatened injury be absolutely immediate and real” but
rather “[t]he potential for injury need only be sufficiently immediate and real.”)
(quotations marks and alterations from original omitted) (emphasis added).
Based on the complaint, the parties’ controversy is, at this time, sufficiently
definite and real that requiring Julian Depot to wait several more years before
bringing its action would be arbitrary and merely delaying what appears to be
inevitable litigation. C.f. id. at 844 (finding declaratory judgment properly
entered even when future cleanup costs of toxic land site are acknowledged to
be speculative). Ultimately then, Home Depot’s motion to dismiss the
declaratory judgment count under either Rule 12(b)(1) or 12(b)(6) is denied.
4. Breach-of-Contract Count
Home Depot argues that Julian Depot’s breach of contract claim fails
because it “alleges only a hypothetical future breach and speculative damages.”
(Def.’s Mot., ECF No. 13, 5.) To be sure, in order to properly plead a claim for
breach of contract, a plaintiff must allege: (1) a valid contract; (2) a material
breach; and (3) damages resulting from the breach. Laterza v. JPMorgan Chase
Bank, N.A., 221 F. Supp. 3d 1347, 1352 (S.D. Fla. 2016) (Rosenberg, J.)
(quoting Sulkin v. All Fla. Pain Mgmt., Inc., 932 So. 2d 485, 486 (Fla. 4th DCA
2006)).

With respect to damages, Julian Depot contends it has been damaged in
an amount that is equal or greater than the value of the improvements that it
says Home Depot is refusing to construct and in an amount based on 115% of
the annual rent that Home Depot would owe through 2046. (Compl. at ¶ 90.)
Regarding the value of the building, however, even if Home Depot is
required to construct such improvements, Julian Depot itself concedes, in its
complaint, that the value of the improvements would not “ultimately pass to
the Landlord” until “the end of the Lease.” (Id. at 21.) That is, Julian Depot’s
own allegations admit that, based on the terms of the lease, title to any
improvements will not “become vested in Landlord” until “the expiration or
sooner termination” of the lease. (Id. at ¶ 23.) Since there is no allegation that
the lease has either expired or terminated, the Court finds Julian Depot has
not sufficiently pleaded its entitlement to an amount equal to the value of the
improvements. Similarly, Julian Depot has not alleged that Home Depot has
missed any rent payments and in fact acknowledges that, as of the filing of its
complaint, Home Depot continues to comply with its payment obligations
under the lease.
Because Julian Depot has not sufficiently alleged any damages, its
breach-of-contract claim is dismissed. Further, because of the dismissal on
this basis, the Court declines to evaluate whether Julian Depot has succeeded
in asserting any actual breach or anticipatory breach.
5. Conclusion
In accordance with the above, the Court grants in part and denies in
part Home Depot’s motion to dismiss (ECF No. 13). The motion is denied with
respect to count 1, for declaratory relief, and granted with respect to count 2,
for breach of the ground lease. The Court also denies Julian Depot’s motion to
bifurcate and for expedited proceedings (ECF No. 10): because Julian Depot’s
breach of contract claim is dismissed, the Court denies Julian Depot’s request
for bifurcation as moot; further the Court finds fully expedited proceedings in
this case unwarranted. However, the Court will enter a scheduling order that is
a slightly abbreviated version of the Court’s standard scheduling track since
the issues in this case have been substantially narrowed.
Done and ordered, at Miami, Florida, on December 7, 2017.
________________________________
Robert N. Scola, Jr.
United States District Judge