Kmart Corporation v. The Kroger Co. et al

Filing 369

MEMORANDUM OPINION re 368]Order on Motion for Summary Judgment. Signed by Glen H. Davidson on 1/28/2014. (dlh)

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF MISSISSIPPI

ABERDEEN DIVISION

KMART CORPORATION

v.

PLAINTIFF
CIVIL ACTION NO. 1:II-CV-00103-GHD-DAS

THE KROGER CO.

DEFENDANT

MEMORANDUM OPINION GRANTING DEFENDANT THE KROGER CO.'S
MOTION FOR SUMMARY JUDGMENT
Presently before the Court is Defendant The Kroger Co.' s motion for summary judgment
[269]. 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 20 10, 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 Defendant The Kroger Co.
("Kroger") to recover for the flood damage sustained by the Corinth Kmart store allegedly caused
by Kroger's actions and omissions. 1 Kmart alleges that the neighboring building occupied by the

1 Although Kmart also initially brought this action against the Federal Emergency Management Agency
("FEMA"), the City of Corinth, Fulton Improvements, LLC, Kansas City Southern Railway Company, and E & A
Southeast Limited Partnership, those parties have been dismissed from the case. The Court dismissed FEMA and the
City of Corinth 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. In addition, the Court granted summary
judgment to Fulton Improvements, LLC, Kansas City Southern Railway Company, and E & A Southeast Limited
Partnership. See Ct.'s Order [354] & Mem. Op. [355] Granting Fulton's MSJ; Ct.'s Order [358] & Mem. Op. [359]

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Corinth Kroger store was initially constructed halfway in the floodplain and halfway in the
floodway. Kmart's CompL [1] ~ 15. Kmart further alleges that "[t]he Kroger store should have
been leveled, but in 2005, the Kroger store was permitted to remain in the floodway" by a Letter of
Map Revision ("LOMR") issued by the Federal Emergency Management Agency ("FEMA") and
secured with the involvement of Kroger, among others. Id. Kmart avers that "Kroger's presence
in the floodway caused a displacement ofwater and a rise in the water level, resulting in the flood
damage" sustained by Kmart. Id.

~

16.

After answering the complaint, Kroger filed a motion for judgment on the pleadings [66]
on September 26, 2012. The Court subsequently entered an Order [207] and memorandum
opinion [208] granting the motion insofar as it pertained to Kmart's specific allegations that the
LOMR was "improperly granted" and "improperly allowed the Kroger store to remain in the
floodway," finding that those allegations could only be tenable against FEMA, which issued the
LOMR but had been dismissed from the suit on immunity grounds. Thus, the Court found that
Kmart was not entitled to offer evidence to prove those allegations. However, the Court denied
the motion insofar as it pertained to Kmart's common-law negligence claim, finding that those
allegations survived the early challenge under Rule 12(c) of the Federal Rules of Civil Procedure
and that Kmart was entitled to offer evidence to prove its allegations of negligence. 2
On July 25, 2013, Kmart filed a motion for leave to file a proposed amended report of its

retained expert, John R. Krewson, to recalculate the estimated water level to correct prior

Granting KCSR's MSJ; Ct.'s Order [360] & Mem. Op. [361] Granting E & A's MSJ.
2 A Rule 12(c) motion is governed by the same standards as a Rule 12(b)(6) motion-that is, that the Court
must determine upon a review of the pleadings whether the plaintiff has stated a valid claim for relief. See Brown v.
CitiMortgage, Inc., 472 F. App'x 302, 303 (5th Cir. 2012) (per curiam) (citing St. Paul Mercury Ins. Co. v.
Williamson, 224 F.3d 425,440 n.8 (5th Cir. 2000».

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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 motion for
leave [271] to file a newly proposed amended Krewson report and attached the same for the
Court's consideration. After careful consideration of the 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 10, 2013, Kroger filed the present motion for summary judgment [269].
Kmart has filed a response, and Kroger has filed a reply. The matter is now ripe for review. The
present motion for summary judgment concerns Kmart's negligence claim against Kroger, the sole
remaining claim in the case sub judice.

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.

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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 of material 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
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. Dist., 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 of evidence." 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 [269], Kroger argues that Kmart's negligence claim
against it should be dismissed on the following grounds: (1) Kmart can prove no act or omission of
Kroger that will support a negligence claim; (2) Kmart cannot prove that Kroger had notice that its
Corinth store was previously located in a floodway; (3) Kmart cannot show "but-for" causation as
to Kroger; (4) Kmart's negligence claim against Kroger fails, because the terms of Kroger's lease
prevented Kroger from "leveling" the building leased by it; (5) Kmart has no competent evidence

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that the Kroger store caused flood damage to Kmart; and (6) Kroger cannot be held liable for the
location of the building, because Kmart approved the building's location and the site development
plans. For the reasons stated below, the Court finds that Kroger's arguments for dismissal are
well taken.
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 (Miss. ct. App. Dec. 6, 2013) (citing Ladner v. Holland, 90
So. 3d 655, 659 (~ 13) (Miss. Ct. App. 2012) (in turn citing Price v. Park Mgmt. Inc., 831 So. 2d
550,

551(~

5) (Miss. 2002»). Kmart alleges that Kroger's actions or omissions constituted

negligence and that this negligence proximately caused Kmart's flood damage.

The Court

addresses Kmart's specific allegations as follows.

1. Duty
As the Court stated in its prior opinion ruling on Kroger's motion for judgment on the
pleadings [66], Kroger's status as a tenant of the building does not absolve it from liability.3
Under general negligence principles, it is conceivable that Kroger and Kmart were neighboring
store tenants with a duty of reasonable care to prevent harm to each other. See, e.g., Rhaly v.

Waste Mgmt. ofMiss., Inc., 43 So. 3d 509, 511-12 (Miss. Ct. App. 2010) (waste management
company serving store had duty of reasonable care to prevent damage to neighboring landowners'
property from placing garbage receptacle too close to drainage ditch). However, it is well settled
in Mississippi that a lessee does not have the right to alter his leased premises unless he has

3 The Corinth Kroger store apparently has been a tenant of the building since September 11, 1998. See
Kmart's Compl. [1] 1MI29, 52; E & A's Answer [21] ~ 29; Fulton's Answer [16] at 2; Kmart's Resp. to Kroger's Rule
12(c) Mot. [78] at 8. The Corinth Kmart store apparently has been a tenant of the building it occupies since
December 17, 1991. See Mem. of Lease [66-3] at 1.

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authority from his landlord to do so. See Yazoo & M V.R. Co. v. Sultan, 63 So. 672, 674 (Miss.
1913) ("Without the authority from his landlord, we do not see that [the lessee] had the right to
construct a new ditch through the land.").

When this Court ruled on Kroger's motion for

judgment on the pleadings, it could not determine based on the face of the pleadings whether
Kroger was authorized to alter the leased premises under the terms ofthe leasehold agreements for
the time periods in question. However, on summary judgment, these documents are before the
Court.
Apparently, the grocery tenant in the building before Kroger, Bruno's, Inc., sold Kroger
the assets and property used in its retail supermarket operation on or about April 28, 1994. See
Asset Purchase Agreement [269-6] at 5-16. The asset purchase agreement provides in pertinent
part: "To the best of [Bruno's, Inco's] knowledge, [Bruno's, Inc.] has complied in all respects with
all federal, state, and local laws, rules[,] and regulations applicable to the Store and the Property,
including but not limited to all environmental laws, rules[,] and regulations."

[d. at 4.

Subsequently, Kroger and Bruno's, Inc. apparently entered into an assignment of lease whereby
Bruno's, Inc. assigned all its interest in the lease it had with its landlord to Kroger.

See

Assignment of Lease [269-6] at 20-24. Thus, Kroger and the landlord were in privity of contract
with respect to the grocery tenant's lease agreement. Under the terms of that lease agreement,
Kroger was not authorized to alter the leased premises in the manner suggested by Kmart (Le.
leveling the building or taking other flood-prevention measures). The lease agreement provides
that matters regarding drainage and the approval of the construction of the building by all
regulating authorities are the responsibility ofthe landlord; thus, Kroger was not authorized to take
any such measures and would have been in breach of its lease with the landlord if it had done so.

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See Lease Agreement [269-6] at 36 ("The Landlord shall provide proper and adequate water

drainage ... and shall operate and maintain the same in good repair and useable condition ...
during the term ofthis lease."). Further, any acts such as leveling the building would have b~n in
violation of the lease agreement, which provides in pertinent part that "[Kroger] shall not perform
any acts or carry on any practices which may injure the building." See id. at 29. Thus, it is clear
from the language ofthe lease agreement that Kroger was not authorized to make alterations to the
leased premises that would have affected drainage. As such, the Court finds that Kmart has failed
to show that Kroger had a duty to Kmart to level the building or otherwise take specific measures
to protect the neighboring Kmart from flood damage. However, even assuming, arguendo, that
Kmart had shown that Kroger had such a duty, Kmart has failed to show either that Kroger
breached the duty or that any such breach proximately caused Kmart's flood damages.

2. Breach
Kmart alleges that Kroger breached its duty of reasonable care to Kmart by improperly
locating its store in a floodway or flood-prone area and improperly seeking the LOMR that
removed the Kroger store from the regulatory floodway. The Court addresses these allegations as
follows.
First, Kmart alleges that "Kroger improperly located its store in a floodway that existed at
the time the store was constructed." Kmart' s CompI. [1] ~ 23 (emphasis added). 4 This allegation
is not tenable against Kroger, because the LOMR issued by FEMA removed the Kroger store from
the floodway due to "Inadvertent Inclusion in Floodway." See LOMR from FEMA [259-1] at 1.
As the Court has stated, Kmart's allegation that the Kroger store was in the floodway falls squarely
.. Kmart has clarified that "[it] has not sued Kroger for the construction of the Kroger store in a floodway,"
but for improperly locating its store in the floodway. See Kmart's Resp. Opp'n to Kroger's R. 12(c) Mot. [78] at 8
(emphasis added).

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within the ambit of the National Flood Insurance Act of 1968 (the "NFIA"), 42 U.S.C. § 4001 et

seq., and would only be tenable against FEMA, which has the primary responsibility for issuing
LOMRs as part of the 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.D. Cal. 2011). FEMA has already been dismissed from the case
on immunity grounds. This allegation cannot survive against Kroger.

It is also notable that Kmart approved the location of the Kroger store and the site
development plans, as set forth in some detail in the Court's prior Order and memorandum opinion
ruling on Defendant Fulton Improvements, LLC's motion for summary judgment. Although
Kmart contends that the Kroger building location and site plans were based on flawed site plans,
Kmart has not presented evidence to raise a fact question. The clear language ofSection 12 of the
lease agreement between Kmart and the landlord ofthe property indicates that Kmart was aware of
and agreed to (1) the landlord's intention to erect the part ofthe building where Kroger would later
be located (the "grocery tenant" part of the building), (2) the location of the grocery tenant part of
the building with respect to Kmart's location in the building, and (3) the size of the grocery tenant
part ofthe building, as well as Kmart's agreement to lease the premises from the landlord with this
understanding. See Lease Agreement [284-4] at 10, 'i[12. This language precludes 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.

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In its response to Kroger's motion for summary judgment, Kmart maintains that Kroger

can be liable for negligence if it knew that the building was in a flood-prone area yet took
inadequate measures to protect Kmart against the risk of flooding. Kmart's Mem. Br. SUpp.
Resp. Opp'n to Kroger's MSJ [308] at 1. Kmart further maintains that "[e]ven if Kroger is not
required by law to demolish its own store due to its presence in the floodway, if Kroger keeps its
store there, it is obligated to maintain it in such a way that it is flood-neutral to its neighbor,
Kmart." ld. at 1 (emphasis in original). As stated above, Kmart's allegation that the Kroger
store was in a floodway is not tenable against Kroger. Thus, the Court turns to Kmart's allegation
that Kroger had notice that the Kroger store was in a flood-prone area. As support for this
contention, Kmart cites 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. However, "[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 o/Shreveport, La.,

397 F.3d 287, 295 (5th Cir. 2005)). Also, the reprinted newspaper article published in the
newsletter is inadmissible hearsay within hearsay. Kmart further cites to several communications
that allegedly demonstrate that Kroger had notice that the building was in a flood-prone area,
including a February 10,2002 letter from a real estate specialist writing on behalf of Kroger to the
Mayor of the City of Corinth, discussing two specific flooding events, referencing the "flooding
problems experienced in the Corinth area," and noting that "the [Corinth] Kroger store ... was

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adversely affected by flooding." See Letter [307-6]. However, even if the Court found that
Kmart had raised a fact issue that Kroger had notice that its store was in a flood-prone area, this
would not sustain the negligence claim past summary judgment, because, as already discussed
above, Kroger was not authorized to make any changes to the building to enhance Kmart's
protection from flood damage.
Kmart further alleges that Kroger "improperly sought and received a [LOMR] from
[FEMA] in 2005, thirteen years after its store was constructed" and that that LOMR "improperly
permitted the Kroger store to remain in the floodway," Kmart's Compl. [1]

~

25; alternatively,

Kmart alleges that Kroger was aware of the LOMR and knowingly and improperly allowed its
store to remain in the floodway, id.

~ 25.

The Court need not address Kmart's allegations that the

LOMR was improperly granted and "improperly permitted the Kroger store to remain in the
floodway," as the Court has already found in its opinion and Order ruling on Kroger's motion for
judgment on the pleadings that any such allegations fall squarely within the ambit ofthe NFIA and
could only be tenable against FEMA, which was already dismissed from the case on immunity
grounds. See Order Granting in Part & Denying in Part Kroger's R. 12(c) Mot. [207] at 1; Mem.
Op. Granting in Part & Denying in Part Kroger's R. 12(c) Mot. [208] at 7. Further, Kmart has

failed to present evidence supporting that Kroger improperly sought the LOMR. Thus, the Court
finds that Kmart has failed to show that Kroger breached any duty to Kmart. However, even
assuming, arguendo, that Kmart had shown that Kroger breached a duty to Kmart, Kmart has
failed to show that any such breach proximately caused Kmart's flood damages.

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3. Proximate Cause
Kmart alleges that Kroger's presence in the floodway caused a displacement of water and
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]

mJ

26-28.

However, Kmart has failed to present evidence to satisfy causation.
Kroger contends that Krewson testifies in his deposition that none of his opinions depend
in any way on the identity of the actual tenant at the time of the subject flood. Kroger points to
specific testimony by Krewson that he did not take into account any of the operations in the
building and that his modeling does not depend on which tenant is operating inside the building.
See Krewson Dep. [269-5] at 236-37. Kroger further points to Krewson's testimony that he was

not aware of anything that Kroger did that would have increased a risk of flooding at the Kmart
store. See id. at 237. Kroger also cites to the following deposition testimony of Menendez,
Kmart's Rule 30(b)(6) representative:
Q. All right. What did Kroger do in the building that raised
the risk of flooding at the Kmart location?

A. Continued to occupy it.
Q. Anything else?
A. Not at this time.

Kmart R. 30(b)(6) Dep. [269-2] at 192-93.
Finally, Kroger contends that Kmart 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,
because Kmart has offered no reliable expert proof that 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
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Kmart's retained engineering expert, John R. Krewson. Kroger refers to Krewson's admission
during his deposition that he had made a mistake in flow data when modeling the effect of the
Kroger store on the Kmart store; Kmart's subsequent statement that if it 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. Kroger maintains that without an accurate Krewson report, Kmart has
no basis for its allegations against Kroger.
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, but 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 ofonly 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 Krewson report, it is relying in part on the flow data contained in the initial
Krewson report, which both Kmart and Kroger agree is flawed. Kmart does not present any other
evidence in support of its theory that the Kroger store's presence affected Kmart's flood damages.

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The Court finds that Kmart's evidence on causation-specifically, Krewson's opinions in the
flawed report-is insufficient to raise a fact issue for trial on causation on Kmart's claims against
Kroger. Accordingly, the Court finds that Kroger is entitled to summary judgment on the sole
remaining negligence claim.
D. Conclusion
In sum, Defendant The Kroger Co.'s motion for summary judgment [269] is GRANTED

in its entirety; all claims against Defendant The Kroger Co. are DISMISSED; Defendant The
Kroger Co. is DISMISSED as a party to the case; and the case is CLOSED. 5
An order in accordance with this opinion shall issue this day.

£P

THIS, the

d g day of January, 2014.

5 The following motions are DENIED AS MOOT: Defendant Kansas City Southern Railway Company's
motion to exclude the testimony of John R. Krewson [240]; Defendant Fulton Improvement's LLC's motion to
exclude the opinions of Plaintiff's Expert John Krewson [246]; PlaintiffKmart Corporation's motion to exclude or
limit the anticipated trial testimony of Robert H. Alexander [255]; PlaintiffKmart Corporation's motion to exclude or
limit the anticipated trial testimony of Robert Eley [257]; Defendant The Kroger Co. 's motion to exclude testimony of
John R. Krewson [259]; PlaintiffKmart Corporation's motion to exclude testimony of Kelly Blake Mendrop [261];
Plaintiff Kmart Corporation's motion to exclude testimony of James Monohan [263]; Defendant E & A Southeast
Limited Partnership's motion to exclude opinions of John R. Krewson [265]; Defendant Kansas City Southern
Railway Company's motion in limine [351]; PlaintiffKmart Corporation's motion in limine [352]; and Defendants E
& A Southeast Limited Partnership and The Kroger Co.'sjoint motion in limine [356].

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