Kmart Corporation v. The Kroger Co. et al
Filing
355
MEMORANDUM OPINION re 354 Order on Motion for Summary Judgment. Signed by Glen H. Davidson on 1/21/2014. (dlh)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF MISSISSIPPI
ABERDEEN DIVISION
PLAINTIFF
KMART CORPORATION
v.
CIVIL ACTION NO. 1:11-CV-00103-GHD-DAS
THE KROGER CO.; E & A SOUTHEAST
LIMITED PARTNERSHIP; FULTON IMPROVEMENTS, LLC;
and KANSAS CITY SOUTHERN RAILWAY COMPANY
DEFENDANTS
MEMORANDUM OPINION GRANTING DEFENDANT FULTON IMPROVEMENTS,
LLC'S MOTION FOR SUMMARY JUDGMENT
Presently before the Court is Defendant Fulton Improvements, LLC's motion for summary
judgment [248] concerning the claims against it. Upon due consideration, the Court finds the
motion should be granted.
A. Factual and Procedural Background
The Corinth, Mississippi Kroger store and Kmart store are neighboring tenants in the
Fulton Crossing Shopping Center. In May of 2010, heavy rain pelted the Corinth area, causing
nearby Elam Creek to flood. The Corinth Kmart store sustained extensive flood damage and was
closed for repairs from the time of the May 2010 flood until February 2011, when the store
reopened for business. The Corinth Kmart store then incurred further additional costs to prevent
subsequent damage from another anticipated flood event.
Kmart Corporation ("Kmart") brings this action against Defendants The Kroger Co.; E &
A Southeast Limited Partnership; Fulton Improvements, LLC ("Fulton"); and Kansas City
Southern Railway Company to recover for the flood damage sustained by the Corinth Kmart store
1
which it alleges was caused by actions and omissions of Defendants. 1 Kmart alleges, inter alia,
that the neighboring building occupied by the Corinth Kroger store was initially constructed
halfway in the floodplain and halfway in the floodway, and that in 2005, thirteen years after the
Kroger store building was constructed, the Federal Emergency Management Agency ("FEMA")
issued a Letter of Map Revision ("LOMR") that removed the Kroger store from the regulatory
floodway after finding it was inadvertently included in the floodway.
As the present motion for summary judgment [248] concerns Kmart's claims against
Fulton, the Court will focus its attention on those claims. Fulton is the landlord of the Fulton
Crossing Shopping Center where the Corinth Kmart and Kroger stores are located, and was the
landlord at the time of the alleged incidents giving rise to this suit. Kmart alleges that Fulton is
responsible for the flood damages sustained by the Kmart store because of Fulton's obligations as
landlord of the building. Kmart's Compl. [1] ~ 14.2.
On July 25,2013, Kmart filed a motion for leave to file a proposed amended report of its
retained engineering expert, John R. Krewson, to recalculate the estimated water level to correct
prior inaccuracies in Krewson's initial report, and in so doing, to change Kmart's theory of the
case. On September 27, 2013, the Court entered an Order [243] stating that it would consider a
limited amendment of only mathematical errors to the Krewson report. Kmart filed another
I Although Kmart also initially brought this action against the Federal Emergency Management Agency
("FEMA") and the City of Corinth, both have since been dismissed from the case on immunity grounds. See Ct.'s
Order [50] & Mem. Op. [51] Granting FEMA's Mot. Dismiss; Ct.'s Order [209] & Mem. Op. [210] Granting City of
Corinth's Mot. Dismiss.
2 E & A Southeast Limited Partnership was the landlord of both the building occupied by Kroger and the
building occupied by Kmart from September 11, 1998 through December 14, 2007. See Kmart's CompI. []] ~ 29; E
& A's Answer [21] 4, ~ 29. Fulton Improvements, LLC apparently is now the landlord of both the building occupied
by Kroger and the building occupied by Kmart, and was as ofthe date of subject flooding. See Kmart's Comp\. [l] ~
52; Fulton's Answer [21] 2, ~ II.
2
motion for leave [271] to file a newly proposed amended Krewson report and attached the same for
the Court's consideration. After careful consideration ofthe newly proposed amended report, the
Court denied Kmart's request to amend the Krewson report.
Accordingly, when this
memorandum opinion references the Krewson report, the opinion refers to Krewson's initial
report, unless otherwise indicated.
On October 2,2013, Fulton filed the present motion for summary judgment [248]. Kmart
has filed a response, and Fulton has filed a reply. The matter is now ripe for review.
B. Summary Judgment Standard
Summary judgment "should be rendered if the pleadings, the discovery and disclosure
materials on file, and any affidavits show that there is no genuine dispute as to any material fact
and that the movant is entitled to judgment as a matter oflaw." Celotex Corp. v. Catrett, 477 U.S.
317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). See FED. R. CIV. P. 56(a); Weaver v. CCA
Indus., Inc., 529 F.3d 335, 339 (5th Cir. 2008). The rule "mandates the entry of summary
judgment, after adequate time for discovery and upon motion, against a party who fails to make a
sufficient showing to establish the existence of an element essential to that party's case, and on
which that party will bear the burden ofproof at trial." Celotex Corp., 477 U.S. at 322, 106 S. Ct.
2548.
The party moving for summary judgment bears the initial responsibility of informing the
court ofthe basis for its motion and identifying those portions ofthe record it believes demonstrate
the absence of a genuine dispute ofmaterial fact. Id. at 323, 106 S. Ct. 2548. Under Rule 56(a),
the burden then shifts to the nonmovant to "go beyond the pleadings and by ... affidavits, or by the
depositions, answers to interrogatories, and admissions on file, designate specific facts showing
3
that there is a genuine issue for trial." Id. at 324, 106 S. Ct. 2548 (internal quotation marks
omitted). Accord Littlefield v. Forney Indep. Sch. Disl., 268 F.3d 275,282 (5th Cir. 2001); Willis
v. Roche Biomedical Labs., Inc., 61 F.3d 313,315 (5th Cir. 1995).
Where, as here, the parties dispute the facts, the Court must view the facts and draw
reasonable inferences in the light most favorable to the nonmovant. Scott v. Harris, 550 U.S. 372,
378, 127 S. Ct. 1769, 167 L. Ed. 2d 686 (2007) (internal citations omitted). "However, a
nonmovant may not overcome the summary judgment standard with conclusional allegations,
unsupported assertions, or presentation of only a scintilla ofevidence." McClure v. Boles, 490 F.
App'x 666,667 (5th Cir. 2012) (per curiam) {citing Hathaway v. Bazany, 507 F.3d 312,319 (5th
Cir. 2007».
C Analysis and Discussion
In its motion for summary judgment [248], Fulton argues that Kmart's breach-of-contract
and negligence claims against it should be dismissed, and presents several arguments in support.
1. Breach-or-Contract Claim
First, Kmart alleges a breach-of-contract claim against Fulton as landlord of the building
with respect to the lease agreement between Kmart and Fulton.
A plaintiff asserting a
breach-of-contract claim under Mississippi law must ultimately prove (a) the existence of a valid
and binding contract, (b) that the defendant has broken or breached it, and (c) that the plaintiff has
been thereby damaged monetarily. Bus. Commc'ns, Inc. v. Banks, 90 So. 3d 1221, 1124-1225
(Miss. 2012) (citing Warwickv. Matheney, 603 So. 2d 330,336 (Miss. 1992».
It is undisputed that Kmart and Fulton entered into a lease agreement, and that the lease
agreement contemplated both that Fulton would construct a building in Corinth and that Kmart
4
would be a tenant of the building.
The parties apparently agree that the lease agreement
constitutes a valid and binding contract between Kmart and Fulton. Thus, the pertinent issues on
the breach-of-contract claim are whether Fulton broke or breached the terms of the lease
agreement, and whether Kmart was thereby damaged monetarily.
In Mississippi, the lessee of a commercial lease takes the leased premises as the lessee
finds them. Cappaert v. Junker, 413 So. 2d 378, 379 (Miss. 1982) (citing Jones v. Millsaps, 14
So. 440 (Miss. 1893)). Thus, "[i]f [the lessee] wishes to protect himself against the hazards of
subsequently occurring accidents or defects requiring repairs, he must do so by proper covenants
in his contract of lease." Id. (quoting Jones, 14 So. at 441). As in this case, a lessor and lessee
may agree among themselves regarding particularities of the leasehold and may reflect their
wishes in a formal lease agreement. See Simmons v. Bank of Miss., 593 So. 2d 40, 42 (Miss.
1992); Bondafoam, Inc. v. Cook Constr. Co., 529 So. 2d 655, 658 (Miss. 1988); Richardson v.
Borden, 42 Miss. 71, 1868 WL 2222 (Miss. 1868); see also THOMPSON, COMMENTARIES ON THE
LAW OF REAL PROPERTY § 80 (Rep. Vol. 1959).
In the case sub judice, Kmart alleges that under the terms of the lease agreement Fulton
was obligated to maintain Kmart's leased premises in a safe, dry, and tenantable condition, but
breached these terms by failing to take flood-protection measures, "such as surrounding the
building with a protective membrane" and caulking the exterior, and that these failures caused
Kmart to suffer monetary damages when its store premises were flooded. Kmart' s Compi. [1] ~
59-62; Kmart R. 30(b)(6) Dep. [338-1] at 248.
Fulton argues that its conduct was consistent with the terms of the lease agreement and
maintains in support that Kmart approved its own building design and specifications, and did so
5
several years before the lease was assigned to Fulton. Fulton further maintains that Kmart never
gave notice to Fulton that the building should be water-proofed or that a protective membrane
should be added to the building exterior to prevent flood damage. Thus, Fulton argues that Kmart
cannot show that Fulton breached the lease agreement. Fulton further argues that any monetary
damage Kmart suffered was the result of the flood itself and not due to any breach of Fulton's
contractual obligations under the lease agreement.
The Court notes that it is undisputed that Fulton did not take the flood-protection measures
Kmart suggests in its complaint and Rule 30(b)(6) deposition, such as surrounding the building
with a protective membrane and caulking the exterior. Thus, the issue on the breach element of
the claim is whether Fulton's failure to take those particular flood-protection measures constitutes
a breach of the lease agreement. To examine this issue, the Court must examine the terms of the
lease agreement itself.
Courts are obligated to enforce a contract that is executed by legally competent parties
containing clear and unambiguous terms, and parties are bound by the contract's provisions.
lvison v. lvison, 762 So. 2d 329, 335 (Miss. 2000). "The mere fact that the parties disagree about
the meaning ofa provision ofa contract does not make the contract ambiguous as a matter oflaw."
ld. The Court "is not concerned with what the parties may have meant or intended but rather what
they said, for the language employed in a contract is the surest guide to what was intended." ld. at
336. The meaning of a contract is determined using an objective standard, rather than taking into
consideration a subjective intent or a party's belief that may conflict therewith. Palmere v.
Curtis, 789 So. 2d 126, 131 (Miss. Ct. App. 2001) (citation omitted).
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The Mississippi Supreme Court has established a three-tiered process for contract
interpretation:
First, we look to the "four comers" of the agreement and review the
actual language the parties used in their agreement. [Pursue Energy
Corp. v. Perkins, 558 So. 2d 349,] 352 [(Miss. 1990)]. When the
language of the contract is clear or unambiguous, we must
effectuate the parties' intent. Id. However, if the language of the
contract is not so clear, we will, if possible, "hannonize the
provisions in accord with the parties' apparent intent." Id. Next,
if the parties' intent remains uncertain, we may discretionarily
employ canons of contract construction. Id. at 352-53 (citing
numerous cases delineating various canons of contract construction
employed in Mississippi). Finally, we may also consider parol or
extrinsic evidence if necessary. Id. at 353.
West v. West, 891 So.2d 203, 210-11 (Miss. 2004).
Under Mississippi law, "[a]s a general rule, a party to a contract may break it by
renouncing his liabilities under it; by rendering perfonnance impossible; or by totally or partially
failing to perfonn his agreement or undertaking." Matheney v. McClain, 161 So. 2d 516, 519
(Miss. 1964). "When either party to a contract fails to perfonn any of his tenns, the contract has
been broken." Id. at 519-20 (citation omitted).
In arguing their competing positions on the breach-of-contract claim, Kmart and Fulton
each point to different provisions of the lease agreement. Kmart points to Section 15(a) and
claims that Fulton's failure to take the particular flood-protection measures was a breach of its
tenns. Section 15(a) provides as follows:
[Kmart] shall make and pay for all maintenance, replacement[,] and
repair necessary to keep the demised premises in a good state of
repair and tenantable condition, except for the following
maintenance, replacement[,] or repair which shall remain [Fulton's]
sole responsibility:
7
(a)
all maintenance, replacement[,] and repair to the
roof, outer walls[,] and structural portion of the buildings which
shall be necessary to maintain the buildings in a safe, dry[,] and
tenantable condition and in good order and repair ....
Lease Agreement [248-4] at 11,
~
15(a} (emphasis added). Kmart contends that this provision
constitutes Fulton's affirmative covenant to take certain measures to protect Kmart from flood
damage, including the flood-protection measures outlined by Kmart.
Fulton points to provisions of the lease agreement concerning the site construction and
design, and argues that any requested flood-protection measures would have been taken during the
construction and design phase of the building, a phase which took place approximately sixteen
years prior to Fulton's ownership of the property in 2007, not during the maintenance and repair
phase. Fulton maintains that it had nothing to do with the initial site plan or the construction of
the subject property. Fulton further maintains that Kmart had full control over the design and
construction, but despite this, never requested that the prior landlords surround the building with a
protective membrane or otherwise flood-proof the building. Fulton further maintains that even
after Fulton acquired ownership of the property Kmart never requested that Fulton take such
flood-protection measures. Fulton directs the Court's attention to several provisions of the lease
agreement, including the following:
[Kmart's] said building and site improvements shall be constructed
by Landlord, at its sole cost and expense, in accordance with
working drawings and specifications prepared by Landlord which
shall, with respect to standards of construction and division of
responsibility for supplying materials and equipment, substantially
satisfy the provisions of [Kmart's] typical store drawings and
specifications ....
Said typical plans and specifications are subject to the following
exceptions and other deviations ....:
8
(a)
Such modifications of arrangement of space,
location of entrances, exits, and columns and other structural
members as shall be indicated on store layout drawings which shall
be prepared by [Kmart] and be delivered to Landlord within thirty
(30) days after receipt of Landlord's written request therefore,
which request shall be accompanied by preliminary building
outlines, together with any available elevations and sections;
(b)
Changes oftype and standards ofconstruction and of
arrangement to the extent as shall be required by applicable laws,
codes[,] and ordinances.
Said working drawings and specifications shall be submitted to
[Kmart] in time to permit a review and approval by [Kmart] prior to
commencement of construction. .. In the event [Kmart] shall not
inform Landlord of such desired revisions or corrections within
sixty (60) days, said working drawings and specifications shall be
deemed approved and accepted for the purposes hereof.
Said typical drawings and specifications, and working drawings and
specifications as approved by [Kmart] shall constitute a part of this
lease ....
Lease Agreement [248-4] at 7-8, § 7. Fulton further points to Exhibit C of the lease agreement,
which Fulton maintains is an indication that the Kmart store was built to Kmart's specifications.
Exhibit C to the lease agreement contains a memo from Kmart's construction department
indicating that Kmart was providing Fulton with exterior elevation and signage drawings for the
proposed store, and indicates that Kmart was a party to the construction process to ensure its
compatability with the development decisions and building design and to "have a meaningful input
in these major decisions."
Ex. C, Lease Agreement [248-4] at 28-32.
Exhibit C further
provides:
The site development design shall encompass all aspects of the
proposed Kmart operation[,] i.e.[,] access, site drainage[,] and the
relationship ofthe Kmart floor elevation to adjacent grades, roads[,]
and buildings. Land balance shall be consideration but shall not be
the overriding factor in the ultimate site design.
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Preparation of final engineering drawings or commitments affecting
site improvements and development shall not be made by the
Developer until approval has been granted by [Kmart].
The design package shall indicate the proposed building location,
floor elevation, site-drainage pattern and utilities. . .. The survey
shall also include the site description, measurements[,] and all
existing utilities ....
[Kmart] will review all submitted data and if necessary, visit the
site. If in the judgment of [Kmart] the proposed site development
design would be detrimental to the Kmart operation, the design will
be returned to the Developer for re-study. Upon approval of the
Site Development Design by [Kmart], the Developer may proceed
with final engineering drawing.
ld. at 30-31. According to Fulton's argument, this precise language indicates a clear intent of the
parties that Kmart was at all times involved in the construction process and had the final say on the
construction and design of the building site and specifications, and that because Kmart never
provided notice that any such protective measures should be taken, Fulton had no duty to take the
particular flood-protection measures suggested by Kmart.
Whereas the provisions cited by Fulton, including Section 7 and Exhibit C, refer generally
to the building site and specifications, Section 15(a) cited by Kmart refers to the landlord's
continuing responsibility to maintain and repair the roof, exterior walls, and foundation. Section
15(a) plainly shifts maintenance and repair responsibility to Fulton, the landlord of the property.
The language of Section 15(a), and of the lease agreement as a whole, is unclear as to whether the
flood-protection measures suggested by Kmart are included in the definition of "necessary
maintenance, replacement, and repairs." The flood-protection measures could be interpreted as
repair and maintenance issues, rather than construction and design issues. Regardless, however,
Kmart's breach-of-contract claim fails on other grounds.
10
Assuming, arguendo, Fulton had the affirmative duty to take such flood-protection
measures under the lease agreement, Kmart has failed to raise a fact issue that Fulton had notice
that such measures were necessary. Although obligations may be required by a lease agreement,
Mississippi law is well settled that to be liable, the landlord must have had actual or constructive
knowledge of a maintenance issue or defect, as well as a reasonable opportunity to make repairs.
Turnipseed v. McGee, 109 So. 2d 551, 554 (Miss. 1959); see also Dulin v. Sowell, 919 So. 2d
1010, 1012-1013 (Miss. Ct. App. 2005). The reasoning behind the law is apparent. The tenant,
who inhabits the leased premises, is likely to know any defects in the premises. The absentee
landlord is in no position to know of defects to the premises unless he is informed. Thus, it
follows that the lessee must notify the landlord of any discovered defects, and the landlord must
make the necessary repairs or face liability for its failure to do so.
Fulton argues that it was unaware of any need for a protective membrane, caulking, or
other flood-prevention measure. Kmart does not argue that it provided any notice to Fulton that
such measures should be taken; instead, Kmart seems to argue that Fulton had constructive notice
that such measures were necessary due to its "knowledge of Kroger's presence in a flood-prone
area." See Kmart's Mem. Br. SUpp. Resp. Opp'n to Fulton's MSJ [296] at 1. Although Kmart
presents no argument on notice specifically pertaining to the breach-of-contract claim, in relation
to its negligence claim, Kmart cites to a 2010 Elam Draining District News newsletter article,
which it contends includes language from a reprint of a December 1, 2001 Northeast Mississippi
Daily Journal article concerning a flooding event that year; Kmart maintains that these articles
indicate that the 2010 flood giving rise to this suit was not an "unprecedented flooding event for
Corinth, Mississippi." See id. at 14-15. However, it is undisputed that FEMA issued the LOMR
11
in 2005 removing th~ building from the floodway due to "Inadvertent Inclusion in Floodway," see
LOMR from FEMA [259-1] at 1, and apparently Fulton was not assigned the lease agreement until
2007. See Fulton's Mem. Br. Supp. MSJ [249] at 5. Further, "[n]ewspaper articles ... are not
proper summary judgment evidence to prove the truth of the facts that they report because they are
inadmissible hearsay." James v. Texas Collin County, 535 F.3d 365, 374 (5th Cir. 2008) (citing
Roberts v. City of Shreveport, La., 397 F.3d 287, 295 (5th Cir. 2005)). Also, the reprinted
newspaper article published in the newsletter is hearsay within hearsay. However, even if the
Court had considered the newsletter article and reprinted newsletter article as admissible evidence
concerning the general nature of flooding in the Corinth and greater Alcorn County area, this
evidence is not sufficient to raise a fact issue with respect to constructive notice. See Dodson v.
Hillcrest Sees., Corp., 95 F.3d 52, 1996 WL 459770, at *8 (5th Cir. 1996) ("Appellees point to no
case ... in which a single newspaper article was considered significantly widespread to constitute
constructive notice, and we find none."); see also 58 AM. JUR. 2D NOTICE § 22. For all these
reasons, the Court finds that Kmart has failed to raise a genuine dispute of fact that Fulton had
actual or constructive notice that such flood-protection measures were necessary to protect the
premises from flood damage.
Finally, Kmart has not raised a fact issue on the last element of the breach-of-contract
claim concerning whether Kmart sustained monetary damages thereto. Fulton maintains that
Kmart has offered no proof that any breach of maintenance or repair obligation was a proximate
cause of the flooding, as it is undisputed that this was a 100-year-plus flood and the flooding
damage to the Kmart store was caused by landscaping timbers pushing open the back doors of the
building. See Fulton's Reply Supp. MSJ [338] at 15. Fulton argues that no maintenance or
12
repair on its part could have prevented the timbers from entering the rear of the Kmart store.
Fulton maintains that a statement by Kmart's designated expert, John R. Krewson, confirming that
the source of the floodwaters in the Kmart store was the timbers that entered the rear doors of the
store absolves Fulton of any liability for breach of contract for lack of maintenance. Kmart
argues that flood-protection measures could have prevented the timbers from entering the rear of
the store and cites in support the deposition testimony of its Rule 30(b)(6) corporate representative
wherein he opines that flood-protection measures would have prevented the flood damage. See
generally Kmart R. 30(b)(6) Dep. [338-1] at 1-16. Because Kmart's Rule 30(b)(6) representative
is not designated as an expert, he may only testify as to his own personal knowledge in a lay
opinion. The Court finds that only an expert witness could testify about whether flood-protection
measures would have prevented flood damage.
Thus, this testimony is likely inadmissible.
However, even ifthe Court considered the testimony, it would be insufficient to raise a fact issue.
Thus, the Court finds that Kmart has failed to raise a fact issue that the timber would not have
entered the rear doors of the Kmart store if Fulton had taken the flood protection measures
suggested by Kmart.
For all of these reasons, the Court finds that no genuine dispute ofmaterial fact exists with
respect to Kmart's breach-of-contract claim against Fulton, and thus that summary judgment is
proper on this claim. The Court now turns to the negligence claim.
2. Negligence Claim
Next, Kmart alleges a negligence claim against Fulton. A plaintiff asserting a negligence
claim must ultimately prove the essential elements of duty, breach of duty, proximate causation;
and damages. Cascio v. Alfa Mut. Ins. Co., No. 2012-CA-0130O-COA, 2013 WL 6383041
13
(Miss. Ct. App. Dec. 6, 2013) (citing Ladner v. Holland, 90 So. 3d 655, 659 (~13) (Miss. Ct. App.
2012) (in tum citing Price v. Park Mgmt. Inc., 831 So. 2d 550, 551(~ 5) (Miss. 2002))).
Kmart asserts three theories ofrecovery on its negligence claim. First, Kmart alleges, as it
did with respect to the breach-of-contract claim, that "Fulton did not and has not taken the
necessary action to ensure that Kmart's premises and its contents are protected from possible flood
waters, such as surrounding the building with a protective membrane and taking other protective
measures," and that this alleged failure to take necessary measures caused Kmart to suffer flood
damages. Kmart's Compl. [1] W55,60-62. Second, Kmart alleges that Fulton was aware ofthe
LOMR that allowed the Corinth Kroger store to remain in a regulatory floodway and "knowingly
and improperly allowed its building to remain in the floodway." ld.
~
54. Third, Kmart alleges
that "Kroger's presence in the floodway caused a displacement of water and a rise in the water
level" resulting in flood damage to the Kmart store and causing Kmart to incur expenses to prevent
further water from entering the store. ld.
~
56-58. The Court looks to each theory ofrecovery in
tum.
First, Kmart alleges that Fulton had a duty to take necessary flood-protection measures,
that Fulton breached this duty by failing to take such measures, and that Fulton's failure to take
these measures proximately caused the Kmart store to sustain flood damage. Based on the
reasoning above in the breach-of-contract claim section, the Court finds that no genuine dispute of
material fact exists with respect to whether, even if Fulton had such a duty, Fulton's failure to take
such measures proximately caused Kmart's flood damage. Accordingly, summary judgment is
warranted on this negligence theory.
14
Second, Kmart alleges that Fulton had a duty to prevent Kroger from being located in a
floodway, breached this duty, and that Fulton's breach was a proximate cause of Kmart's flood
damage. Fulton argues that it is not liable for constructing the Kroger store in a floodway,
because the Kroger store is not located in a floodway, Kmart was not in a floodway at the time of
the flood, and Kroger was incorrectly included in the floodway in previous FIRM maps. As the
Court has already stated, in 2005, FEMA issued a LOMR removing the Kroger store from the
floodway due to "Inadvertent Inclusion in Floodway." See LOMR from FEMA [259-1] at 1.
Also, as the Court stated in its earlier memorandum opinion [208] ruling on Kroger's motion for
judgment on the pleadings [66], Kmart's allegations challenging the issuance of the LOMR and
whether the Kroger store was actually in a floodway fall squarely within the ambit ofthe NFIA and
would only be tenable against FEMA, which has the primary responsibility for issuing LOMRs as
part ofthe National Flood Insurance Program. See, e.g., Great Rivers Habitat Alliance v. FEMA,
615 F.3d 985, 987-89 (8th Cir. 2010); Coal. for a Sustainable Delta v. FEMA, 812 F. Supp. 2d
1089, 1102 (E.n. Cal. 2011). As the Court has already dismissed FEMA from the case sub judice
on immunity grounds, Kmart is not entitled to offer evidence to prove its allegations concerning
whether the issuance of the LOMR was proper. Thus, in viewing Kmart's allegations against
Fulton for the location of the Kroger store in the context ofsummary judgment, the Court assumes
that FEMA's determination was correct and that Kroger was not actually located in the floodway.
The Court also assumes that FEMA's determination that the remainder ofthe building was not in a
floodway was correct, as well. In light of this, it is the opinion of the Court that Kmart cannot
prove that Fulton "knowingly and improperly allowed its building to remain in the floodway," as
FEMA has determined that neither the Kroger store nor the building as a whole were at any time
15
located in the floodway. Therefore, no genuine dispute of material fact exists with respect to this
negligence theory. Accordingly, summary judgment is warranted on this negligence theory.
Third, Kmart alleges that "Kroger's presence in the floodway caused a displacement of
water and a rise in the water level" resulting in flood damage to the Kmart store and causing Kmart
to incur expenses to prevent further water from entering the store. Kmart's Compl. [1]
~
56--58.
As stated above, it is the opinion of this Court that Kmart cannot prove that Kroger was located in
a floodway at the time ofthe flood, given FEMA's determination to the contrary. Fulton contends
that Kmart similarly cannot prove that the presence of the Kroger store caused a displacement of
water or rise in the water level resulting in Kmart's flood damage. Fulton makes the following
arguments in support of this contention.
First, Fulton argues that Kmart has offered no reliable expert proofthat the presence of the
Kroger store in the building caused any damage to Kmart during the flood, given the flawed data in
the report of Kmart's retained engineering expert, John R. Krewson. Fulton refers to Krewson's
admission during his deposition that he had made a mistake in flow data when modeling the effect
ofthe Kroger store on the Kmart store; Kmart's subsequent statement that ifit were not allowed to
amend Krewson's report to reflect the correct flow data, Kmart "[would] be forced to prosecute its
case with Mr. Krewson's flawed Initial Report," see Kmart's Mem. Br. Supp. Mot. Appeal Mag.
Decision [228] at 9 (emphasis added); and the Court's subsequent denial of Kmart's request to
amend Krewson's report. 3 Fulton maintains that without an accurate Krewson report, Kmart has
3 Fulton further maintains that because Krewson admitted he did not include the actual physical conditions
present on the ground during the flood in his HEC-RAS studies and only used hypothetical flood conditions, his
opinions are irrelevant and unreliable; Fulton cites to an affidavit of its expert, Jamie Monohan, stating the same.
However, because the parties agree that the flow data in Krewson's report was inaccurate, the Court need not address
this argument.
16
no valid expert testimony to prove the effect of the Kroger store's location on the flood damage
sustained by the Kmart store.
Kmart agrees in its response that its proof on the effect of the Kroger store's presence on
Kmart's flooding is through Krewson's report. Kmart contends that it has explained through
Krewson's testimony why the Kroger store contributed to Kmart's flooding. Kmart maintains
that the Court entered an Order allowing Krewson to amend his report to correct the errors present
in his initial report. This statement is incorrect. On September 27, 2013, the Court entered an
Order [243] stating that it would consider a limited amendment of only mathematical errors to the
Krewson report and requesting that Kmart submit the same for the Court's consideration.
Although at the time of the parties' briefing on this motion for summary judgment the Court had
not yet ruled on Kmart's request to allow the newly proposed amended report reflecting
mathematical calculations, on December 18, 2013, the Court entered an Order [346] and
memorandum opinion [347] denying Kmart's request. Thus, when Kmart states its proof on this
issue is based .on the KrewsDn repDrt, it is relying in part .on the flDW data contained in the initial
Krewson repDrt, which bDth Kmart and FultDn agree is flawed. Kmart contends that the effect .of
the KrDger store's presence on the flDod damages sustained by Kmart is a questiDn .of fact for the
jury. But this cDuld only be a questiDn .of fact fDr the jury if Kmart raised a fact questiDn fDr trial
on this issue. Kmart dDes nDt present any other evidence in support of its theory that the Kroger
store's presence affected Kmart's flDDd damages except Krewson's .opinions cDntained in his
initial flawed repDrt. In SD dDing, Kmart has failed tD raise a fact issue, and thus, FultDn is entitled
to summary judgment .on this negligence theDry. HDwever, this negligence theory alsD fails on at
least .one other ground, as well.
17
As Fulton argues in its motion for summary judgment, an additional ground for dismissal
ofthis negligence theory is that Kmart approved ofthe Kroger location in the lease agreement and
is bound by the terms of its contract. Specifically, Fulton directs the Court's attention to Section
12 ofthe lease agreement which provides as follows:
Landlord represents, warrants[,] and covenants that it shall, prior to
commencement of the lease term, complete the buildings and site
improvements substantially in accordance with the site plan
depicted on said Exhibit "B," including completion of said common
areas in accordance with the provisions of Article 10 hereof.
Landlord further covenants that it will not erect any buildings or
other structures on the land described in Exhibit "A" except as
shown on said Exhibit "B."
Landlord also represents, warrants, and covenants that a grocery
Tenant ... shall be located within a shopping center premises as
depicted on Exhibit "B" and shall open for business or [be] ready to
open for business concurrently with [Kmart's] opening.
Lease Agreement [284-4] at 10, § 12. Exhibit "B" depicts Kmart adjacent to shops and a
neighboring grocery store tenant.
Kmart maintains that it did not expressly approve the Kroger store location in the lease
agreement, stating that Kmart "had the opportunity, not the obligation" to comment regarding the
location ofKroger and cites Kmart's Rule 30(b)(6) deposition testimony to this effect. See Kmart
Rule 30(b)(6) Dep. [295-6] at 127. Kmart further maintains that the language of the lease reveals
that the requirement of a grocery store tenant (Kroger) was a covenant of the landlord: "Landlord
represents, warrants[,] and covenants that a grocery Tenant ... shall be located within a shopping
center premises." Lease Agreement [284-4] at 10, ~ 12. Finally, Kmart maintains in this respect
that both Fulton and Kmart would benefit from such a provision. Kmart maintains that it "simply
signed a lease in which the landlord provided for a grocery store [Kroger] to be in the shopping
18
center as well," but "did not sign its rights away to complain of damage to it caused by that store.
" Kmart's Mem. Br. Supp. Resp. to Fulton's MSJ [296] at 9.
However, the Court finds that the clear language of Section 12 indicates that Kmart was
aware of and agreed to (1) Fulton's intention to erect the part of the building where Kroger would
later be located (the "grocery tenant" part of the building), (2) the location of the grocery tenant
part ofthe building with respect to Kmart's location in the building, and (3) the size of the grocery
tenant part of the building, as well as Kmart's agreement to lease the premises from Fulton with
this understanding. Although none of this precludes Kmart from presenting proof at trial on a
negligence claim against Fulton, it does preclude Kmart from presenting proof at trial on a
negligence claim premised on the theory that Kroger should not have been located in the grocery
tenant portion of the building, when Kmart has already indicated its agreement to such an
arrangement, and according to the record, never indicated otherwise until after the flood damage it
sustained.
Based on all the foregoing, the Court finds that Kmart has failed to raise a genuine dispute
of material fact that would preclude summary judgment on its three theories ofnegligence against
Fulton, and thus that Kmart's negligence claim against Fulton cannot survive summary judgment. 4
D. Conclusion
In sum, Defendant Fulton Improvements, LLC's motion for summary judgment [248] is
GRANTED in its entirety; all claims against Defendant Fulton Improvements, LLC are
DISMISSED; and Defendant Fulton Improvements, LLC is DISMISSED as a party to the case.
4 Because the Court fmds that Kmart's negligence claim against Fulton fails to survive summary judgment,
the Court need not reach Fulton's alternative arguments that Kmart's claim fails under principles of estoppel or that
the flood was an Act of God which allowed no preparation for flood protection.
19
An order in acc9Tdance with this opinion shall issue this day.
THIS,
j} ~/daYOfJanuary, 2014.
SENIOR JUDGE
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