Petco Animal Supplies Stores, Inc.

Filing 133

MEMORANDUM AND ORDER that the Motion for Summary Judgment 83 filed by Plaintiff Petco Animal Supplies Stores, Inc., is granted. The Motion for Summary Judgment 84 filed by Defendant The Five Fifty Two Corporation, is denied. This case is dismissed with prejudice. All motions that remain pending in this case are denied as moot. A separate judgment will be entered. Ordered by Chief Judge Laurie Smith Camp. (JSF)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
PETCO ANIMAL SUPPLIES STORES,
INC.,
8:14CV280
Plaintiff,
vs.

MEMORANDUM
AND ORDER

THE FIVE FIFTY TWO CORPORATION, a
Nebraska corporation;
Defendant.

This matter is before the Court on the Motion for Summary Judgment (Filing No.
83) filed by Plaintiff Petco Animal Supplies Stores, Inc. (“Petco”). Also before the Court
is the Motion in Limine (Filing No. 76), Motion for Summary Judgment (Filing No. 84),
Motion to Strike (Filing No. 98), and Motion in Limine (Filing No. 120) filed by Defendant
The Five Fifty Two Corporation (“The 552”).
FACTUAL BACKGROUND
The following facts are those stated in the parties’ briefs and supported by
pinpoint citations to evidence in the record, and admitted or not properly resisted by the
opposing party as required by NECivR 56.11 and Federal Rule of Civil Procedure 56.

1

See NECivR 56.1(b)(1) (effective December 1, 2014):

The party opposing a summary judgment motion should include in its brief a concise
response to the moving party’s statement of material facts. The response should
address each numbered paragraph in the movant’s statement and, in the case of any
disagreement, contain pinpoint references to affidavits, pleadings, discovery responses,
deposition testimony (by page and line), or other materials upon which the opposing party
relies. Properly referenced material facts in the movant’s statement are considered
admitted unless controverted in the opposing party’s response.
The parties have filed competing Motions for Summary Judgment and have substantially
complied with NECivR 56.1(b) with respect to the presentation of their own facts and evidence.

The 552 is the owner of a commercial building, real property, and improvements
commonly known as 7110 Dodge Street, Omaha, Nebraska (the “Leased Premises”).
On or about August 21, 1997, Petco and The 552 entered into a commercial lease (the
“Lease”), with The 552 as landlord and Petco as tenant of the Leased Premises. Under
the terms of the Lease, Petco was granted three separate five-year renewal options, the
first of which Petco exercised on or about September 25, 2012; thus, extending the term
of the Lease to January 31, 2018. The 552 alleges that Petco defaulted under the terms
of the Lease by failing to comply with maintenance and repair obligations, and failing to
timely cure those defaults after receiving notice.
Petco seeks a declaratory judgment that it is not in default of the Lease. (Filing
No. 1 (“Complaint”).) The 552 filed a counterclaim seeking a declaratory judgment
confirming Petco’s default and upholding The 552’s termination of the Lease. (Filing
No. 11 (“Answer and Counterclaim”).) On November 17, 2014, the Court preliminarily
enjoined The 552 from instituting eviction proceedings against Petco and from
otherwise attempting to regain possession of the Leased Premises during the pendency
of this case. (Filing No. 32.) Pursuant to the Order, Petco was required to post a
$250,000 bond with the Court. (Filing No. 32.)
I.

Maintenance Obligations and Alleged Default
The Lease required Petco to “maintain and replace, as necessary” the Leased

Premises and its systems, in “good condition and repair.” (Filing No. 27-4 at ECF 10, ¶
13(a).) Paragraph 24 of the Lease provided the conditions under which a “Tenant Event
of Default” (“TED”) justifying termination of the Lease could occur, stating that a TED
could occur when Petco defaulted in the performance of any covenant under the Lease
2

(other than the payment of rent), and failed to cure or commence curing its default
within 30 days of notice of the default. (Filing No. 27-4 at ECF 18, ¶ 24(b).) Petco took
possession of the Leased Premises in 1997 in an “as is” condition. Petco presently
remains in possession of the Leased Premises. (Filing No. 27-4 at ECF 8, ¶ 6; Filing No.
32.)
Prior to January 2014, The 552 notified Petco of an alleged failure to comply with
maintenance obligations under the Lease. On June 9, 2011, counsel for The 552 sent a
notice to Petco (the “2011 Notice”) citing several examples of deferred maintenance at
the Leased Premises, including ceiling and roof repairs, and said the examples were not
all-inclusive. (Filing No. 28-2.) The 2011 Notice informed Petco that it would be in
default of the Lease if the defects were not cured “within 30 days of the date of this
Notice or as otherwise provided in the Lease.” (Filing No. 28-2.) On July 16, 2012,
counsel for The 552 sent another notice to Petco (the “2012 Notice”) citing more
examples of deferred maintenance at the Leased Premises, and telling Petco the
examples were not all-inclusive. (Filing No. 28-6.) Both the 2011 and 2012 Notices said
Petco had a legal obligation to “continue to maintain the [Leased] Premises as and
when necessary,” and to “immediately inspect the [Leased] Premises for any additional
maintenance or repairs that need to be completed.” (Filing Nos. 28-2 and 28-6.) The
2011 and 2012 Notices also informed Petco that its “obligation to maintain and repair
the [Leased] Premises is a continuing one” and explained that “if [The 552] observes
any continued or future signs of deferred maintenance or repair, such signs will be
evidence that [Petco] has failed to cure its breach of the obligation to maintain the
[Leased] Premises within 30 days of this Notice,” and that Petco could be considered in
3

default without further notice. (Filing Nos. 28-2 and 28-6.) On April 11, 2013, counsel
for The 552 sent a notice of default to Petco (the “2013 Notice”) concerning Petco’s
failure to pay real estate taxes due for the Leased Premises and restated to Petco that it
had a contractual obligation to cure the default within 10 days. (Filing No. 28-7.)
In the fall of 2013, CNA Financial Corporation (“CNA”) issued real property
casualty and general liability insurance coverage for the Leased Premises to be
effective on January 1, 2014. As part of its underwriting process, CNA engaged a thirdparty inspection service, Alexander & Schmidt, which in turn hired William Zersen
(“Zersen”), to inspect and evaluate the condition of the Leased Premises. As part of his
inspection, Zersen completed a report describing the general condition and specific
problem areas of the Leased Premises (the “Zersen Report”) noting that the “overall
maintenance and building condition was fair to poor.” (Filing No. 90-8 at ECF 33.) He
found that “[t]here is a substantial crack in the exterior load bearing wall,” and “[c]eiling
stains on drop tile ceilings in various locations [which] may be due to roof leaks though
no active leaks were seen at the time of the survey.” (Filing No. 90-8 at ECF 33.)
“Poor” is the lowest rating that Zersen gave to any building, with the other possible
ratings being fair, above average, and good, in order of increasing quality. (Zersen
Deposition, Filing No. 90-8, 78:25–79:21.) Zersen also checked the box indicating “poor
building condition,” primarily on the basis of “a crack of [a] magnitude” not often seen “in
the exterior wall of a building” and the possible roof leaks. (Zersen Deposition 34:22–
35:9; 78:8–19; Filing No. 90-8 at ECF 33.) Zersen also noted that maintenance of the
Leased Premises was not being performed on a preventive basis and recommended
that such a program be put in place. (Filing No. 90-8 at ECF 48.)
4

Based on the maintenance issues in the Zersen Report, counsel for The 552
sent a letter to Petco dated January 29, 2014, informing Petco that it continued to be in
default of its maintenance obligations under the Lease (the “January 2014 Notice”).
(Filing No. 28-9.) The January 2014 Notice identified Petco’s maintenance defaults
specifically, stating that Petco failed to repair a crack in the outside wall, the waterdamaged ceiling tiles, the damaged floor tiles, and the possible roof leaks. (Filing No.
28-9 at ECF 1.) The 552 requested that repairs be made immediately, and that Petco
have the roof inspected and repaired, if needed. (Filing No. 28-9 at ECF 1–2.) The
January 2014 Notice stated that Petco would be in default of the Lease if it failed to cure
the defects identified. (Filing No. 28-9 at ECF 2.) It also stated that the “list is not
intended to be all-inclusive and [Petco] should immediately inspect the [Leased]
Premises for any additional maintenance or repairs that need to be completed and
report them to [The 552].” (Filing No. 28-9 at ECF 2.) It also directed Petco to inspect
the electrical system. (Filing No. 28-9 at ECF 2.) The Notice stated that “if [The 552]
observes any continued or future signs of deferred maintenance or repair, such signs
will be evidence that [Petco] has failed to cure its breach of the obligation to maintain
the [Leased] Premises within 30 days of this Notice, and [Petco] will be in default of the
Lease without any further notice from [The 552].” (Filing No. 28-9 at ECF 2.)
On April 30, 2014, because The 552 had received no response from Petco, The
552 sent a letter to Petco entitled Notice of Default and Termination of Lease (the
“Termination Notice”).

The Termination Notice stated that Petco defaulted on its

maintenance obligations, and The 552 elected to terminate the Lease. (Filing No. 27-1.)
The Termination Notice provided Petco until June 15, 2014, to vacate the Leased
5

Premises. (Filing No. 27-1.) The Termination Notice also stated that Petco knew of the
issues specifically listed in the Notice of Default, and provided examples of previous
maintenance issues. The Termination Notice stated that the default and termination of
the Lease were based on the failure to cure after the January 2014 Notice, as well as
previous maintenance issues.
II.

Response to 2014 Notices
Mark Warren (“Warren”) was employed as Petco’s Director of Maintenance,

Waste, and Recycling for seven years and oversaw repair and maintenance functions
for 1,400 Petco stores. Warren’s office was located in Texas, and he did not personally
go the Leased Premises until July of 2014. Elizabeth Lindahl (“Lindahl”) was a District
Manager for Petco. Lindahl managed eighteen Petco stores in Nebraska, Iowa, South
Dakota, and Illinois, including the store at issue in this case. Lindahl stated that she did
not have any responsibility with respect to the negotiation of or compliance with
commercial leases or any day-to-day maintenance obligations at the Petco locations
under her supervision. Tammy Fitzgerald (“Fitzgerald”) was the General Manager of
the Petco store located on the Leased Premises during the relevant time and reported
directly to Lindahl. Fitzgerald was responsible for the daily operations of the store.
After receiving a legal notice from a local store manager, Petco’s property
management division was responsible for lease interpretation and compliance. Petco’s
maintenance department was tasked with execution of maintenance or repair work in
response to such notices when it was directed to do so by Petco’s property
management division. Fitzgerald and any other manager could report maintenance
concerns by phone or computer. Generally, maintenance requests and concerns were
6

submitted through a computer system called Service Channel and Petco’s maintenance
department would respond to the request. Fitzgerald stated that she was not aware of
the crack in the north wall, but that she looked at it after receiving the January 2014
Notice. She did not look for other cracks or notice any other cracks. Fitzgerald faxed the
January 2014 Notice to Lindahl and assumed Lindahl would take care of everything. On
January 31, 2014, Fitzgerald made a computer entry through Service Channel
regarding some of the issues identified in the January 2014 Notice, and stated that the
repairs needed to be completed “asap”. (Filing No. 21-2 at ECF 7; see also Filing No.
90-1, Fitzgerald Dep. 88:1–89:1, 108:19–109:9, 112:17–113:10; Filing No. 90-1 at ECF
101.) This entry became Work Order 44540881.
Work Order 44540881 was received by Petco contractor PVC Facility
Management, Inc. (“PVC”) on or about January 31, 2014; PVC contacted Fitzgerald the
same day to discuss the requested work and to schedule an on-site visit to commence
work. On or about February 4, 2014, PVC assessed the work necessary to respond to
Work Order 44540881 at the Leased Premises. On that same day, ceiling tiles were
replaced and plans were made for PVC to return.

PVC returned to the Leased

Premises on February 12, 2014, as part of its response to Work Order 44540881 to
investigate additional necessary work. At that time, PVC observed a crack in the wall
and confirmed there were no floor tile issues.2 (Matt Aff., Filing No. 87-5 ¶ 11.) Based on
this visit PVC requested repair bids from three different masons to identify a solution for
the crack. On or about February 25, 2014, PVC submitted a proposal to Petco to repair
2

Petco had commissioned a remodel of the aquatics area of the Leased Premises in December
2013, to include the installation of VCT (vinyl composition tile). This remodel had been completed on
January 21, 2014. (Filing No. 21-2, QSI Invoice, at ECF 11.)

7

the crack, which proposal was approved by Petco on February 27, 2014. The solution
PVC identified for the crack was to seal it using a product call Sonolastic NP 2. Due to
the chemical properties of the product PVC believed it was necessary to wait until
March 17, 2014, to ensure the masonry was in a suitable condition for a proper seal.
On April 10, 2014, a Petco assistant manager resubmitted to PVC the same
computer entry previously submitted by Fitzgerald on January 31, 2014. Petco’s first
contact with The 552 regarding the maintenance issues identified in the January 2014
Notice was an email sent on April 11, 2014, in which Petco stated it had fixed several of
the maintenance issues. PVC responded to the re-sent computer entry and requested
contact information for The 552 to discuss the damaged foundation; but, on April 17,
2014, Petco ordered all work to be stopped, noting that Petco had hired another
contractor.
Fitzgerald also entered Work Order No. 46571150 on April 10, 2014, indicating
that the roof needed to be checked for a possible leak. Petco’s roofing contractor,
Simon Roofing and Sheet Metal (“Simon”), received Work Order No. 46571150 on or
about April 11, 2014, via Service Channel.

Simon responded to Work Order No.

46571150 at the Leased Premises on April 18, 2014. At that time temporary repairs
were made to a disconnected pipe and open curb flashing. On or about May 8, 2014,
Simon quoted Petco a price for permanent repairs needed to address the issues
identified on April 18, 2014. Petco approved the proposed permanent repairs by issuing
a purchase order on or about May 13, 2014. Simon came to the Leased Premises to
complete the quoted permanent repairs on May 21, 2014.

8

Following discussions between the parties after Petco’s receipt of the Notice of
Termination, Petco learned that The 552 was not satisfied with Petco’s cure of the crack
in the exterior wall, although The 552 did not serve Petco with an additional notice to
cure. (Badley Dep., Filing No. 87-1 at ECF 77:2-78:5.)

Petco contacted a general

contractor—W.D.S. Construction (“W.D.S.”)—on May 23, 2014. Through W.D.S., Petco
engaged Excel Engineering, Inc. (“Excel”) to complete a full site assessment of the
Leased Premises on May 30, 2014. Excel’s qualified structural engineers issued a
detailed report on June 2, 2014 (the “Excel Report”). The Excel Report referenced floor
tile distress, identified four cracks including “Crack A” which extended from the exterior
to the interior of a wall, and noted the presence of other cracks in the foundation wall in
the basement. Petco prepared and submitted to The 552 a “scope of work” on July 24,
2014, to address structural issues, and advised of its intention to proceed with repairs.
(Filing No. 87-2 at ECF 3.) On July 25, 2014, The 552 asked Petco to refrain from
beginning work until The 552 could complete its review of Excel’s engineering reports
and consult its own engineers. (Filling No. 87-2 at ECF 4-5.) Petco did not receive
permission to complete any structural repairs. The 552 argues that it did not give
permission because Petco should have moved forward on the work regardless; The 552
had not received architectural plans; and the Notice of Termination already had been
given.
Warren visited the Leased Premises in July 2014 and noted that “[t]here was a
number of things that needed to be addressed” and that the building “was not up to our
brand standard.” In light of his observation, Warren drafted a list of remodeling and
cosmetic items he thought should be addressed. Petco sent Warren’s list to W.D.S.
9

Construction, Inc. (“W.D.S.”) on July 18, 2014. The appearance and condition of the
Leased Premises were the same when W.D.S. and Excel visited in late July 2014 as
when Excel conducted its full site assessment and took pictures of the Leased Premises
on May 30, 2014. The focus of the July 2014 visit to the Leased Premises, and the
work eventually performed based on the visit, was cosmetic, such as infilling of a truck
dock and construction of a new trash enclosure.
STANDARD OF REVIEW
“Summary judgment is appropriate when, construing the evidence most favorably
to the nonmoving party, there is no genuine issue of material fact and the moving party
is entitled to judgment as a matter of law.” Crozier v. Wint, 736 F.3d 1134, 1136 (8th
Cir. 2013) (citing Fed. R. Civ. P. 56(c)). “Summary Judgment is not disfavored and is
designed for every action.” Briscoe v. Cnty. of St. Louis, 690 F.3d 1004, 1011 n.2 (8th
Cir. 2012) (quoting Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011)
(en banc) cert. denied, 132 S. Ct. 513 (2011)) (internal quotation marks omitted). In
reviewing a motion for summary judgment, the Court will view “all facts and mak[e] all
reasonable inferences favorable to the nonmovant.” Gen. Mills Operations, LLC v. Five
Star Custom Foods, Ltd., 703 F.3d 1104, 1107 (8th Cir. 2013). “[W]here the nonmoving
party will bear the burden of proof at trial on a dispositive issue . . . Rule 56(e) permits a
proper summary judgment motion to be opposed by any of the kinds of evidentiary
materials listed in Rule 56(c), except the mere pleadings themselves.” Celotex Corp. v.
Catrett, 477 U.S. 317, 324 (1986). The moving party need not negate the nonmoving
party’s claims by showing “the absence of a genuine issue of material fact.” Id. at 325.

10

Instead, “the burden on the moving party may be discharged by ‘showing’ . . . that there
is an absence of evidence to support the nonmoving party’s case.” Id.
In response to the movant’s showing, the nonmoving party’s burden is to produce
specific facts demonstrating “‘a genuine issue of material fact’ such that [its] claim
should proceed to trial.” Nitro Distrib., Inc. v. Alticor, Inc., 565 F.3d 417, 422 (8th Cir.
2009) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986)). The nonmoving party “must do more than simply show that there is some
metaphysical doubt as to the material facts, and must come forward with specific facts
showing that there is a genuine issue for trial.” Briscoe, 690 F.3d at 1011 (quoting
Torgerson, 643 F.3d at 1042) (internal quotation marks omitted). “‘[T]he mere existence
of some alleged factual dispute between the parties’” will not defeat an otherwise
properly supported motion for summary judgment. Quinn v. St. Louis Cty., 653 F.3d
745, 751 (8th Cir. 2011) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48
(1986)).
In other words, in deciding “a motion for summary judgment, facts must be
viewed in the light most favorable to the nonmoving party only if there is a genuine
dispute as to those facts.” Guimaraes v. SuperValu, Inc., 674 F.3d 962, 972 (8th Cir.
2012) (quoting Torgerson, 643 F.3d at 1042) (internal quotation marks omitted).
Otherwise, where the Court finds that “the record taken as a whole could not lead a
rational trier of fact to find for the non-moving party,” there is no “genuine issue for trial”
and summary judgment is appropriate. Torgerson, 643 F.3d at 1042 (quoting Ricci v.
DeStefano, 557 U.S. 557, 586 (2009)) (internal quotation marks omitted).

11

DISCUSSION
Although both parties seek to have their rights under the Lease declared, the
essential question before the Court is whether The 552 was entitled to terminate the
Lease. This question depends on whether Petco has breached the terms of the Lease
in such a way to trigger the Lease’s termination clause. In Nebraska,3 a lease is to be
construed as any other contract. Newman v. Hinky Dinky Omaha-Lincoln, Inc., 427
N.W.2d 50, 53 (Neb. 1988) (citing Chadd v. Midwest Franchise Corp., 412 N.W.2d 453,
457 (Neb. 1987)). As such, the meaning of a lease and whether it is ambiguous are
questions of law. Timberlake v. Douglas County, 291 Neb. 387, 392, --- N.W.2d --(2015). “When the terms of a contract are clear, a court may not resort to rules of
construction, and the terms are to be accorded their plain and ordinary meaning as an
ordinary or reasonable person would understand them.” Kercher v. Board of Regents of
University of Nebraska, 436, 860 N.W.2d 398, 405 (Neb. 2015). The parties agree that
the terms of the Lease are unambiguous and the Court may afford the terms their plain
and ordinary meaning. Relevant to this case, in order to terminate the Lease, The 552
must demonstrate that Petco defaulted on its obligations and failed to cure its default
after notice.

For the reasons stated, the evidence does not establish that Petco’s

breach, if any, was sufficient to terminate the Lease. Further, even if any breach by
Petco was sufficient to trigger the Lease’s termination clause, Petco cured the default or
commenced and diligently pursued to cure the default after receiving notice.

3

The parties agree that Nebraska substantive law applies in this case.

12

I.

Forfeiture Under the Lease
The 552 asserts that Petco repeatedly defaulted on its obligations and The 552 is

entitled to terminate the Lease. The Court recognizes that in Nebraska, “[f]orfeitures of
estates under leases are not favored in law and the right to forfeit must be clearly
stipulated.” Olson v. Pedersen, 231 N.W.2d 310, 314 (Neb. 1975); see also 52 C.J.S.
Landlord & Tenant § 175 (2015) (“Generally, forfeiture of a leasehold for the breaking of
a condition is looked upon with disfavor, and leases are strictly construed against party
claiming forfeiture.”). Thus, “[i]n the absence of a statute or an express and distinct
contract provision requiring otherwise, a forfeiture of a lease may be declared only
where a breach is so material and substantial as to defeat the objects of the parties in
making the contract.” Caeli Associates, Inc. v. Firestone Tire & Rubber Co., 415 N.W.2d
116, 121 (Neb. 1987) (citing Olson, 231 N.W.2d at 314). “If a forfeiture has not been
stipulated for, a covenant or condition which is merely implied, or an express [covenant
not] clearly within the forfeiture clause, will not sustain a claim of forfeiture for breach.”
Olson, 231 N.W.2d at 314; see also 52 C.J.S. Landlord & Tenant § 188 (2015) (“Where
grounds of forfeiture are expressly designated in the lease, a forfeiture will not be
permitted on other grounds. Covenants will not be extended by implication to sustain a
claim of forfeiture.”)
Paragraph 25 of the Lease states that “[u]pon the occurrence of any Tenant
Event of Default Landlord . . . may . . . [e]lect to terminate this Lease.” (Filing No. 27-4
at ECF 19, ¶ 25(a).) Paragraph 24(b) of the Lease defines a TED with respect to the
breach of non-monetary covenants:
There shall not be held to be a Tenant “Event of Default” unless there is:
13

....
(b) default by Tenant in the performance or observance of any covenant or
agreement of this Lease (other than a default involving the payment of
money), which default is not cured within thirty (30) days after the giving of
Notice thereof by Landlord, provided, however, that Tenant shall not be
deemed to be in default if Tenant has commenced curing the default
within the thirty (30) day period and thereafter diligently pursues the
completion of such cure[.]
(Filing No. 27-4 at ECF 18, ¶ 24(b).)
The 552 claims that Petco was in violation of Paragraph 13(a), which requires
Petco to “maintain and replace, as necessary” the Leased Premises and keep its
systems in “good condition and repair.” (Filing No. 27-4 at ECF 10, ¶ 13(a).) As a result,
The 552 argues, Petco’s violation of Paragraph 13(a) and subsequent failure to cure
resulted in a TED, entitling The 552 to terminate the Lease under the Lease’s forfeiture
clause.

The Court must first consider whether Petco violated its obligation under

Paragraph 13(a). If so, the Court must determine whether Petco failed to cure, or
commence and diligently pursue a cure, within 30 days of notice.
II.

Burden of Proof
As a threshold matter, the Court addresses who bears the burden of proof. The

parties have not identified any Nebraska case directly addressing which party has the
burden of proof in an action to terminate a lease. 4 However, courts in other jurisdictions

4

The 552 argues that because Petco is the plaintiff in this declaratory judgment action, Petco
bears the burden of demonstrating that it is entitled to judgment as a matter of law. The 552 cites Am.
Eagle Ins. Co. v. Thompson, 85 F.3d 327, 330 (8th Cir. 1996), for the proposition that the plaintiff in a
declaratory judgment action seeking affirmative relief has the burden of proof. The Court first notes that
The 552 has brought a counterclaim seeking a declaration of its rights under the Lease (Filing No. 11 at
12) and is likewise a plaintiff seeking summary judgment in this case. Further, the holding in Am. Eagle
Ins. does not generally place the burden of proof on a party seeking declaratory rights. The court in Am.
Eagle Ins. Co. held that the burden of proof in a diversity action is typically a matter of state law. Id.
Under the facts of that case, the Eighth Circuit noted that “[u]nder Arkansas law, a party who files suit

14

consistently have held that the party seeking to terminate a lease bears the burden of
proof.5 Further, in forcible detainer cases in Nebraska, when a tenant denies that it
breached a lease, the burden of proof is on the landlord, and requires the landlord “to
establish every material fact on which his right to recover depends.” Boehler v. Kraay,
264 N.W. 745, 746 (Neb. 1936); see also 49 Am. Jur. 2d Landlord and Tenant § 651
(stating that where a tenant denies allegations of default, “the landlord has the burden of
establishing every element of his or her cause of action.”). The 552 argues that the
burden of proof in forcible detainer cases is inapplicable because Petco chose this
forum to determine its rights rather than await a forcible detainer action from The 552.
However, The 552 has not identified any authority that places the burden on Petco to
disprove that The 552 is entitled to terminate the Lease. The Court concludes that under
Nebraska law, The 552 bears the burden of proving that it is entitled to forfeiture due to
Petco’s default.
III.

Violation of Paragraph 13(a)
To meet its burden, The 552 first must demonstrate that Petco violated its

obligation to keep and maintain the Leased Premises in good repair. Petco contends
seeking to benefit from insurance coverage generally bears the burden of proving coverage.” Am. Eagle
Ins. Co. v. Thompson, 85 F.3d 327, 330 (8th Cir. 1996). Thus, the Court looks to Nebraska law to
determine who carries the burden of proof.
5

See e.g. Serna v. Gutierrez, 2013-NMCA-026, 297 P.3d 1238, 1242 (N.M. 2013) (“The burden
was on Landlord to present evidence to establish his basis to terminate the Lease.”); Heasley v. KSM
Energy, Inc., 52 A.3d 341, 344 (Penn. 2012) (“The party seeking to terminate the lease bears the burden
of proof.”); 1500 Mineral Spring Associates, LP v. Gencarelli, 353 B.R. 771, 786 (D.R.I. 2006) (“[T]he
party asserting surrender has the burden of proving it.”); Sorum v. Schwartz, 411 N.W.2d 652, 654 (N.D.
1987) (“Forfeitures are not favored, and the burden of proof is on the party claiming forfeiture of the
lease.”) (internal citations omitted); 202 Marketplace v. Evans Products Co., 824 F.2d 1363, 1366 (3d Cir.
1987) (stating that landlord bears burden of proving forfeiture); In re Fifth Ave. Originals, 32 B.R. 648, 655
(Bankr. S.D.N.Y. 1983) (“The burden of proof is on the landlord to prove a forfeiture by a preponderance
of the evidence.”); 52 C.J.S. Landlord & Tenant § 188 (2015) (“[T]he burden of proof is on the party
claiming forfeiture of the lease.”).

15

The 552 cannot prove a TED because The 552 has not shown that the condition of the
Leased Premises in January of 2014 was any different than at the beginning of the
Lease. Petco cites to Paragraph 13(b) of the Lease which states:
(b) Upon termination of the Lease, Tenant agrees to leave the Premises in
no worse condition than the Premises were received by Tenant, allowance
being made for ordinary wear and tear. Tenant agrees that at the end of
the Term of this Lease, any improvements made by Tenant and not
removed by Tenant within ten (10) days of the date this Lease terminates,
shall become the property of Landlord and remain upon the Premises,
subject to the terms of Exhibit “D” attached hereto.
(Filing No. 27-4 at ECF 10, ¶ 13(b).) Petco argues that the phrase “no worse condition
than the Premises were received” Paragraph 13(b) implies that Petco’s maintenance
obligation under Paragraph 13(a) is limited to maintaining the Leased Premises in the
condition in which they were received. The 552 argues that the obligations set forth in
Paragraphs 13(a) and 13(b) are separate covenants. Specifically, The 552 contends
that the covenant contained in Paragraph 13(a) creates a continuing duty that may be
enforced at any time during the term of Lease, while the duty created by Paragraph
13(b) does not arise until the Lease terminates and Petco vacates the Leased
Premises. The 552 cites Ed Miller & Sons, Inc. v. Earl, 502 N.W.2d 444, 450 (1993), in
which the Nebraska Supreme Court held that a lessor is entitled to maintain an action
for breach of a covenant to repair as soon as the lessee fails to repair the premises and
need not wait until the term of the lease expires.
The Court recognizes, and Petco does not dispute, that The 552 can enforce the
covenant to repair prior to the end of the lease. However, this question is not before the
Court. The 552 is not seeking damages for Petco’s breach, but termination of the
Lease. The Lease does not provide express guidance as to the standard of repair and
16

good condition to which Petco is held during the term of the Lease. In Quist v. Duda, 67
N.W.2d 481, 485 (Neb. 1954), a lease required the landlord to keep certain equipment
in good repair, though, as in this case, the lease did not expressly define what was
required to fulfill this covenant. Id. The court therefore asked “[w]hat then, is included in
defendants' covenant to ‘keep in repair’?” To answer this question the court first noted
the difference between the terms “repair” and “improvement,” noting that a covenant in
a lease to keep premises in good repair does not impose a requirement to make
improvements or betterments. Id. at 486. The court also noted that courts in other
jurisdictions had held that covenants to keep in repair impose “an obligation merely to
keep the premises in as good repair as they were when the agreement was made.” Id.
(citing Taylor v. Gunn, 227 S.W.2d 52, 56 (Tenn. 1950); St. Joseph & St. L.R. Co. v. St.
Louis, I.M. & S. Ry. Co., 36 S.W. 602, 608 (Mo. 1896)).6 Based on this reasoning, the
Nebraska Supreme Court concluded: “Covenants to keep premises in repair and to
keep in as good repair as they now are amount to the same thing in law.” Id.
Following the Nebraska Supreme Court’s reasoning in Quist, the covenant in
Paragraph 13(a) requires only that Petco keep the Leased Premises in as good
condition and repair as they were at the outset of the Lease.

This conclusion is

supported by, but not dependent on, the requirement in Paragraph 13(b) that Petco

6

See also Razorbacks v. Graphic Packaging Int'l, Inc., No. 4:12-CV-00158-KGB, 2014 WL
911944, at *3 (E.D. Ark. Mar. 7, 2014) (noting that “where the lease contract specifically requires the
tenant to keep the premises in good repair the only obligation is to return the property in substantially the
same condition as it was at the beginning of the tenancy.”); Holt v. State, 290 S.W.3d 21, 27 (Ark. Ct.
App. 2008) (quoting Webster's II Dictionary to define “keep” as “to remain in a given state: stay” and
“maintain” as “to keep an existing state”), rev'd in part on other grounds, 348 S.W.3d 562 (Ark. 2009).

17

“leave the Premises in no worse condition than the Premises were received by
Tenant[.]” The Lease does not require Petco to make improvements or betterments.
The Court cannot determine whether Petco breached Paragraph 13(a) because
there is insufficient evidence of the condition of the Leased Premises when Petco
received them. The Court has thoroughly reviewed the extensive evidence submitted,
and there are no specific references to the condition of the Leased Premises at the
inception of the Lease. The 552 cites to portions of the Deposition of Ron Badley to
demonstrate that the Leased Premises were generally in good condition at the
commencement of the Lease. However, the cited portions of the Deposition do not
provide any specific information about the condition of the Leased Premises, much less
the defects now at issue.7 The parties agree that Petco took possession of the Leased
Premises “as-is” at the commencement of the Lease. Even The 552’s expert, Brett
Cook, was unable to testify whether the Leased Premises in January 2014 were in the
same condition, better condition, or worse condition than when the Lease commenced.
(Cook Dep., Filing No. 87-1 at 32:21-33:10.)
The 552 suggests that Paragraph 13(a)’s requirement to “keep, maintain and
replace, as necessary” the Leased Premises and its systems “in good condition and
repair” exists without reference to the condition of the Leased premises at the time
Petco took possession. However, this leaves the Court with no objective standard by

7

See Badley Deposition, Filing No. 107-2 at 28:10-29:3 (describing the tenants prior to Petco as
“good tenants” and paid their rent on time); 33:4-16 (stating that Badley had no photographs or
documentation as to the condition of the building at the time Petco took possession of the Leased
premises); 35:23-36:9 (noting that Badley was not aware of any structural changes required before Petco
took possession of the Leased Premises); 84:7-9 (stating that Badley was not aware of concerns or
issues relating to settlement of the foundation).

18

which to measure Petco’s alleged breach. Other jurisdictions have noted that “when a
tenant covenants to keep the premises in ‘good order’ or ‘good repair’, and the covenant
does not specifically indicate the quality and nature of the repairs to be made, then the
extent of the obligation is limited by the age and class of the premises involved.” In re
Royal Yarn Dyeing Corp., 114 B.R. 852, 857 (Bankr. E.D.N.Y. 1990). The building on
the Leased Premises was built in the 1950s and had many years of use before the term
of the Lease began. Given Nebraska law’s aversion to forfeiture and The 552’s burden
to prove each and every fact establishing forfeiture, combined with the undisputed age
and use of the building on the Leased Premises, the Court is not willing to infer a default
under the Lease sufficient to justify forfeiture based on Petco’s alleged failure to repair,
without objective evidence of the condition of the Leased Premises at the time the
Lease commenced.
IV.

Tenant Event of Default
Even if The 552 had demonstrated a default based on Petco’s failure to make

certain repairs, The 552 has not demonstrated a TED occurrence justifying termination
of the Lease because Petco attempted to cure the alleged defects after receiving notice.
As noted above, The 552 cannot demonstrate a TED occurrence if (1) Petco cured a
default within 30 days after The 552 gave notice of default, or (2) Petco commenced
curing the default within 30 days of a notice of default and thereafter diligently pursued
the completion of a cure. (Filing No. 27-4 at ECF 18, ¶ 24(b).)
The Court first notes that the parties disagree about when Petco received notice
of default. The 552 argues that the January 2014 Notice (Filing No. 28-9.) was notice of
default under the Lease. Petco argues that the letter of January 29, 2014, was merely a
19

notice to cure. Petco notes that the letter stated “[y]ou are advised that you will be in
default of the Lease if you do not cure the aforementioned defects within 30 days of the
date of this Notice, and continue to maintain the Premises as and when necessary.”
(Filing No. 28-9 at ECF 2 (emphasis added).) According to Petco, it was not notified of
its default until April 30, 2014, when The 552 notified Petco that it had defaulted on its
maintenance obligations and The 552 was electing to terminate the Lease. (Filing No.
27-1.) For purposes of the pending Motions, even if the January 2014 Notice was
sufficient to trigger Paragraph 24(b), The 552 has not proven that Petco’s efforts to cure
were so lacking as to permit forfeiture.
A.

Scope of the Notice of Default

The January 2014 Notice informed Petco that it continued to default in the
performance of its maintenance obligations under the Lease.

(Filing No. 28-9.) It

specifically identified four maintenance defaults, and stated that Petco was required to
repair and/or maintain the following:
i. “crack in outside wall;”
ii. “water damaged ceiling tiles;”
iii. “damaged and/or missing floor tiles; and”
iv. “possible roof damage or leaks, as evidenced by the water damaged
ceiling tiles.”
The Landlord requests that the Tenant make the listed repairs immediately
and have the roof inspected and repaired if damaged. Given that the
Tenant was previously advised of its default in its maintenance
responsibilities, and that the above noted items are a continued default of
Tenant's maintenance responsibilities, Landlord is not obligated to give the
Tenant an additional cure period. However, in this instance, Landlord will
give the Tenant 30 days from the date of this Notice to cure the defects.
You are advised that you will be in default of the Lease if you do not cure
20

the aforementioned defects within 30 days of the date of this Notice, and
continue to maintain the Premises as and when necessary.
(Filing No. 28-9 at ECF 1–2.)
The Notice further stated that the “list is not intended to be all-inclusive and
[Petco] should immediately inspect the [Leased] Premises for any additional
maintenance or repairs that need to be completed and report them to [The 552].” (Filing
No. 28-9 at ECF ECF 2.)

The Notice also directed Petco to inspect the electrical

system. (Filing No. 28-9 at ECF 2.)
The parties disagree about the scope of the January 2014 Notice. The 552
asserts that the Notice was broad based on its catch-all statement that the four
enumerated items were “not intended to be all-inclusive.” However, “the purpose of a
notice to cure is to specifically apprise the tenant of claimed defaults in its obligations
under the lease and of the forfeiture and termination of the lease if the claimed default is
not cured within a set period of time.” NL Indus., Inc. v. PaineWebber Inc., 720 F. Supp.
293, 300 (S.D.N.Y. 1989) (citations omitted). While The 552 was free to remind Petco
of its maintenance obligation under the Lease, The 552’s broad assertion that any
failure to uphold Petco’s maintenance obligation would constitute default did not give
sufficient notice to permit Petco to cure such a default. Under the terms of the Lease,
The 552 must, at least, apprised Petco of the nature of its breach and provide some
direction as to how to cure the default. Cf. Gilroy v. Ryberg, 667 N.W.2d 544, 556 (Neb.
2003); see also Hooton v. Nacarato GMC Truck, Inc., 772 S.W.2d 41, 45 (Tenn. Ct.
App. 1989) (“Conditions not included in the notice of default cannot properly serve as a

21

basis for forfeiture.”). Thus, the Notice’s catch-all statements did not trigger the 30-day
cure period with respect to all possible maintenance concerns.
Similarly, the Notice to Cure’s references to a “continued default of Tenant’s
maintenance responsibilities” did not trigger the cure period with respect to all possible
maintenance concerns. While there is evidence of several past maintenance issues,
the Lease does not contain a “chronic default” or “continuing default” provision, nor is
“chronic default” or “continuing default” included as one of the three definitions of a
TED. With respect to any previous defaults, The 552’s corporate representative stated
“substantially all, if not all” were addressed prior to the January 29, 2014, letter. (Badley
Dep., Filing No. 87-1, at ECF 86:24-89:10.)
Petco was not required, upon penalty of a TED, to perform requests contained in
the January 2014 Notice that were not based on express covenants in the Lease. The
Lease does not affirmatively require inspections of the roof or the electrical system.
Although the January 2014 Notice requested that Petco inspect the electrical system,
there was no corresponding problem to be cured. With respect to the roof, the Notice
requested that an inspection take place and repairs be made if necessary. Because
The 552’s request for repairs was conditional, there was no indication that Petco was
required to cure any default through a roof inspection. The Notice gave Petco the ability
to first determine whether the stains on the ceiling tiles were a result of a roof leak
before Petco commissioned any roof repairs. Finally, the Lease does not require that
Petco report its cure efforts to The 552. The Lease instead provides The 552 with a
right to inspect the premises upon notice to Petco. (Filing No. 27-4 at ECF 16 ¶ 20.) As
noted above, the Court will not infer covenants when determining whether a party may
22

obtain forfeiture under a lease. Accordingly, The 552 was not entitled to terminate the
Lease based upon requests in the January 2014 Notice that did not correspond with
tenant duties mandated in the Lease.
The specifically listed maintenance issues were the only issues in the January
2014 Notice that apprised Petco of the nature of its alleged breach. With respect to
those issues, the Notice stated that Petco would be in default if it “failed to cure the
aforementioned defects within 30 days of the date of this Notice.” (Filing No. 28-9 at
ECF 2.)

Accordingly, to avoid default, Petco needed to cure, or commence and

diligently pursue a cure, of the four enumerated items within 30 days of January 29,
2015.
B.

Cure of the Alleged Defaults

Petco claims that it commenced curing the alleged defaults on January 31, 2014,
when it entered Work Order 44540881. Work Order 44540881 stated:
Sales Floor/ Wall Repair/ Wall Repair/ Misc. Repair/ I could not find this in
any of the descriptions but we have several ceiling tiles that are water
damaged and need to be replaced. The ceiling are to [sic] high for us to
reach to do it ourselves. Also there is a crack in the exterior wall as well as
some broken floor tiles that need repair. We were served a letter from our
landlord that this repair needs to be completed asap.
(Filing No. 21-2 at ECF 7.) The Court notes that the Lease provided no guidance as to
the methods for curing defaults and the Court cannot infer requirements for the purpose
of determining whether The 552 is entitled to terminate the Lease. See Olson, 231
N.W.2d at 314 (stating that breach of an implied covenant will not sustain a claim of
forfeiture for breach). For example, there was no requirement that Petco hire a thirdparty property manager or perform quarterly inspections with engineers or contractors.

23

(Cook Dep. 21:7-16; 51:8-20.) Nor was there any requirement that Petco only use
specific contractors to perform repair or maintenance, or implement a specific schedule
or maintenance calendar. (Cook Dep. 50:6-10.) The only requirement under the Lease
was that Petco cure the defect or commence and diligently pursue a cure. (Filing No.
27-4 at ECF 18, ¶ 24(b).)
1. “crack in outside wall”
The evidence demonstrates that Petco commenced curing the crack 8 in the
exterior wall and diligently pursued its cure. Work Order 44540881, entered three days
after the Notice of Default was sent, specifically referenced a crack in the exterior wall.
(Filing No. 21-2 at ECF 7.) On or about February 12, 2014, Petco’s contractor, PVC,
returned to the Leased Premises to inspect the crack. (Filing No. 87-5, Matt Aff. ¶ 11.)
PVC then obtained bids from three different masons to identify a remedy for the crack.
(Id. ¶ 12). On or about February 25, 2014, PVC submitted a proposal to Petco for repair
of the crack, which Petco approved on February 27, 2014. (Id. ¶ 14.) PVC proposed
sealing the crack using a product called Sonolastic NP 2.

(Id.

¶ 15.) Due to the

chemical properties of the product, PVC believed it was necessary to wait until March
17, 2014, to ensure the masonry was amenable to a such a seal. (Id. ¶ 15.) This
evidence demonstrates that between receiving Work Order No. 44540881 on January
31, 2014, until the crack was sealed on March 17, 2014, PVC worked as diligently as
circumstances allowed.

8

The 552 noted that although the Notice referenced a “crack” in an exterior wall, there was no
dispute that there were several cracks present. Thus, to the extent The 552 implies that Petco was
required to cure each of the cracks instead of just “a crack” to avoid default, the Notice was insufficient.

24

Following discussions between the parties after Petco’s receipt of the April 4,
2014, Notice of Default and Termination of Lease, Petco learned that The 552 was not
satisfied with Petco’s cure of the crack, although The 552 did not serve Petco with
another notice to cure with respect to that issue. (Badley Dep., Filing No. 87-1 at ECF
77:2-78:5.)

Petco responded to The 552’s concerns, however, by retaining a

construction general contractor—W.D.S.—on May 23, 2014, which in turn retained an
engineering consultant—Excel—to assess the crack and identify a permanent
improvement solution. (Warren Aff., Filing No. 87-3 ¶¶ 14-23.) Petco then prepared a
“scope of work” that included extensive structural improvements to the premises in the
area of the crack. (Id.) Petco submitted this scope of work to The 552 through counsel
on July 24, 2014, and advised The 552 of Petco’s intention to proceed. (Filing No. 87-2
at ECF 3.) On July 25, 2014, The 552 asked Petco to refrain from commencing work
until The 552 could complete its review of Excel’s engineering reports and consult with
its own engineers. (Filling No. 87-2 at ECF 4-5.) Petco filed this action on September
17, 2014. (Filing No. 1.)
This evidence demonstrates that although Petco may not have cured the crack in
the exterior wall, it commenced an attempt to cure within 30 days and diligently pursued
the cure until it filed this action. Although The 552 did not approve Petco’s initial course
of action, Petco was not required to gain approval under the Lease.9 Further, after

9

The 552 asserts that Petco’s efforts were wholly inadequate because the caulk was an
insufficient solution and that Petco’s repairs and instructions to its contractors were only temporary until
September 2014. However, the Lease does not require a specific method for repair, nor does it require
The 552’s approval to avoid forfeiture. Thus, adopting The 552’s arguments would require the Court to
infer covenants not contained within the Lease’s forfeiture provision. See Olson, 231 N.W.2d at 314. The
552 has failed to demonstrate that these efforts were unreasonable under the circumstances so as to
justify forfeiture.

25

becoming aware of The 552’s concerns, Petco attempted to pursue an alternative cure.
It continued to pursue the alternative cure until The 552 instructed Petco to refrain from
commencing work while The 552 reviewed the engineering reports. Under the terms of
the Lease, Petco could not commence any structural alteration to the Leased Premises
without The 552’s consent. (Filing No. 27-4 at ECF 12, ¶ 16(a).)

Under the

circumstances and express terms of the Lease, and in light of the law disfavoring
forfeiture, the Court concludes that Petco began to cure, and diligently pursued a cure,
for the crack in the exterior wall within 30 days of the Notice of Default.
2. “water damaged ceiling tiles”
With respect to the ceiling tiles, the evidence demonstrates that Petco cured, or
attempted to cure, the issue identified in the January 2014 Notice. PVC contacted the
Petco manager at the Leased Premises the same day it received Work Order No.
44540881 to discuss the work order and to schedule an onsite visit for February 3,
2014. (Filing No. 87-5, Aff. of A. Matt, ¶ 9.) PVC personnel were on site by February 4,
2014, to assess the work necessary to respond to Work Order No. 44540881. At that
time, PVC replaced stained ceiling tiles. (Id. ¶ 10.) Accordingly, there is evidence that
the ceiling tile issue identified in the Notice to Cure was cured within 30 days of the
Notice.
The 552 argues that this cure was insufficient because PVC did not inspect the
Leased Premises and relied on the manager to point out which ceiling tiles to replace.
The Notice did not specify the ceiling tiles to be replaced, however, and there is no
evidence that PVC ignored some stained ceiling tiles while replacing others. Thus,
based on the evidence, the ceiling tile issue was specifically addressed within days of
26

the Notice. The 552 further argues that there were stained ceiling tiles as late as August
2014. There is no evidence, however, that the stained ceiling tiles were the same ones
contemplated by the Notice. Further, as discussed more fully below, there is evidence
that Petco began to address the stained ceiling tiles through repairs to the roof.
Accordingly, The 552 has not demonstrated that Petco’s response to the stained ceiling
tiles justifies forfeiture under the Lease.
3. “possible roof damage or leaks, as evidenced by the water
damaged ceiling tiles”
With respect to the possible roof damage or leaks, Petco suspected the water
staining might not be from a roof leak and could be the result of HVAC condensation.
(Filing No. 87-1 at ECF 144.) Petco suspected this to be true, because the Leased
Premises had no problems with leaking during rain or periods of melting snow. (Id.)
When it became apparent there might be an issue beyond condensation from HVAC
ductwork, on April 10, 2014, the Petco assistant manager, Amy Moffat, submitted Work
Order. No. 46571150. (Filing No. 88-3 at ECF 12.) On April 11, 2014, PVC noted that
Petco had reported “additional” damaged ceiling tiles. (Filing No. 88-3 at ECF 12.)
Accordingly, Work Order. No. 46571150 was received by Simon Roofing and Sheet
Metal Corp. (“Simon”) on April 11, 2015. (Filing No. 87-6, Morris Aff., ¶ 8.) Simon
responded to Work Order No. 46571150 on April 18, 2015, and determined the cause of
the water staining above the aquatics area was a disconnected pipe and open curb
flashing. (Id. ¶ 9.) At that time temporary repairs were made until Simon could submit a
quote for permanent repairs, which it did on May 13, 2014. (Id. ¶ 10.) Petco approved
the quote for permanent repairs and those were completed on May 21, 2014.

27

This evidence demonstrates that Petco commenced a cure within thirty days of
the Notice and thereafter was diligent in pursuing a cure to completion. The January
2014 Notice did not identify damage to the roof, but advised Petco to repair the roof “if
necessary.” (Filing No. 28-9 at ECF 2.) Therefore, it was not unreasonable for Petco
first to replace the ceiling tiles and then monitor the issue to determine whether the
water stains were the result of roof damage or some other problem. The sales manager
for Simon testified that it was not uncommon in Simon’s practice to troubleshoot a
suspected leak in a roof before locating a problem. (Filing No. 87-6, Morris Aff., ¶ 18.)
Petco’s actions were consistent with Simon’s practice and the Notice. As stated in the
Notice itself, the evidence of possible roof leaks was the water damage on ceiling tiles.
Based on the lack of evidence of leakage during wet weather, Petco replaced ceiling
tiles within 30 days of the Notice to determine whether the stains persisted. When
additional stains were observed in April 2014, Petco immediately contacted a roofing
contractor and arranged for an inspection and repair. Accordingly, the Court cannot
conclude that Petco’s actions with respect to the roof justified forfeiture under the
Lease.
4. “damaged and/or missing floor tiles”
The floor tiles referenced in the Notice of Default were addressed by a remodel in
the aquatics department completed between December 18, 2013, and January 21,
2014. (Filing No. 21-2, QSI Invoice, at ECF 11.) On or about February 12, 2014, PVC
was on site and confirmed there were no floor tile issues. (Filing No. 87-5, Matt Aff., ¶
11; Filing No. 91-6 at ECF 2.) Accordingly, the floor tile issue identified in the Notice of
Default was cured within 30 days of the January 2014 Notice.
28

The 552 argues that Petco failed to address the floor tiles in a timely manner
because it did not conduct an inspection of the floor until May 30, 2014, when Excel
engineers noted several cracked floor tiles. (Filing No. 88-2 at ECF 217.) However, in
addition to PVC and Petco’s evidence that no floor tile issues existed in February 2014,
The 552 has not shown that later floor tile defects were the same as those identified in
the Notice. Accordingly, the Court cannot conclude based on the evidence that Petco
failed to cure the floor tile issues identified in the Notice.
CONCLUSION
The 552 has not proved that it was entitled to terminate the Lease. It failed to
demonstrate that the condition of the Leased Premises was any worse at the time of the
Notice of Termination than when Petco took possession. Even if Petco was required to
address the issues enumerated in the January 2014 Notice, Petco cured or commenced
to cure those issues within 30 days of the Notice. Accordingly, under the terms of the
Lease and in light of the law’s disfavor of forfeiture unless clearly warranted, Petco’s
Motion for Summary Judgment will be granted, and The 552’s Motion for Summary
Judgment will be denied. The Court has not considered any evidence that was the
subject of any pending motions in limine or motions to strike.

Accordingly, those

motions will be denied as moot.
IT IS ORDERED:
1.

The Motion for Summary Judgment (Filing No. 83) filed by Plaintiff Petco
Animal Supplies Stores, Inc., is granted;.

2.

The Motion for Summary Judgment (Filing No. 84) filed by Defendant The
Five Fifty Two Corporation, is denied;
29

3.

This case is dismissed with prejudice;

4.

All motions that remain pending in this case are denied as moot; and

5.

A separate judgment will be entered.

Dated this 6th day of January, 2016
BY THE COURT:
s/Laurie Smith Camp
Chief United States District Judge

30