City of Avon v. Avon Baseball LLC

Filing 13

Memorandum of Opinion and Order: Defendant's Motion to Dismiss Plaintiff's Complaint without Prejudice is granted. Judge Patricia A. Gaughan on 4/15/15. (LC,S) re 6

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

City of Avon,
Plaintiff,
vs.
Avon Baseball L.L.C.,
Defendant.

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CASE NO. 1:15 CV 155
JUDGE PATRICIA A. GAUGHAN

Memorandum of Opinion and Order

Introduction
This matter is before the Court upon Defendant’s Motion to Dismiss Plaintiff’s
Complaint without Prejudice (Doc. 6). This case arises out of a dispute between the parties to
a Stadium Lease. The issue is whether a dispute resolution clause in the subject lease is
mandatory. For the following reasons, the motion is GRANTED.
Facts
Plaintiff City of Avon (Avon or the City) filed this Complaint against defendant Avon
Baseball L.L.C. (Avon Baseball) in the Lorain County Court of Common Pleas. Defendant
removed the case to this Court on the basis of diversity of citizenship. The Complaint alleges
the following.
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Avon and Avon Baseball entered into a lease on June 16, 2008 for a stadium (the
Stadium Lease) which has been the home field for the Lake Erie Crushers since 2009. Article
VI, Section 6.1 of the Stadium Lease governs advertising rights. Article VI, Section 6.1(e) of
the Stadium Lease provides for a marquee sign to be located adjacent to the stadium and
Interstate 90. Under that section, Avon agreed to bear the expense of the marquee while
Avon Baseball held the exclusive right to sell advertising on it. Avon Baseball agreed to
remit to Avon 100% of the net marquee revenues which were to help Avon pay for
improvements to the stadium and premises. Avon Baseball has failed to remit to Avon the net
marquee revenues for the years 2011, 2012, 2013, and 2014.
On November 11, 2014, Avon sent Avon Baseball a letter declaring Avon Baseball in
default of the Stadium Lease and demanding that it cure the default. Although Avon sent the
letter to the address identified in the notice provision of the Stadium Lease, it came back
undeliverable. On November 21, 2014, Avon re-sent the letter to Avon Baseball’s office in
Avon, Ohio. On December 3, 2014, representatives of Avon met with representatives of
Avon Baseball to discuss the default. The 15 day cure period provided for in the Stadium
Lease has expired and Avon Baseball has failed to cure the default.
Evidence presented to this Court shows the following.1 Article XI , Section 11.4 of the

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Defendant’s motion is made pursuant to Rules 12(b)(1) and (6). “In reviewing a
12(b)(1) motion, the court may consider evidence outside the pleadings to resolve
factual disputes concerning jurisdiction, and both parties are free to supplement
the record by affidavits.” Autumn Health Care of Zanesville, Inc. v. Centers for
Medicare and Medicaid Services, 2015 WL 1046271 (S.D.Ohio 2015) (quoting
Nichols v. Muskingum College, 318 F.3d 674, 677 (6th Cir.2003)).

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Stadium Lease states:
Section 11.4 Dispute Resolution.
(a) Except as otherwise provided herein, any dispute, controversy or claim
(individually and collectively, a “Dispute”) arising under this Lease shall be resolved
in accordance with the procedures set forth in this Section 11.4.
(b) In the event of a Dispute between the Parties relating to this Lease and upon the
written request of either Party within five (5) business days after receipt of the written
request, each of the Parties shall appoint a designated representative who has authority
to settle the Dispute. The designated representatives shall meet as often as they
reasonably deem necessary in order to discuss the Dispute and negotiate in good faith
in an effort to resolve such Dispute. The specific format for such discussions will be
left to the discretion of the designated representatives; provided, however, all
reasonable requests for relevant information made by one Party to the other Party shall
be honored.
(c) If the Parties are unable to resolve issues related to a Dispute within ten (10) days
after the Parties’ appointment of designated representatives as set forth above, the
Parties may pursue the assistance of a mediator at a mutually agreeable location. Fees
and expenses of the mediator shall be split evenly between the Parties.
(d) Any Dispute that the Parties are unable to resolve through the dispute resolution
mechanism within thirty (30) days after the Parties[’] appointment of representatives
may be submitted by a Party to arbitration in accordance with the following
procedures:
(1) Either party may demand binding arbitration by filing a written notice
thereof in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (‘AAA’). Absent an agreement among the Parties to
the contrary, with respect to any Dispute related to the Premises Construction...
(2) All arbitration proceedings under this Lease shall be conducted in the City
of Elyria, Ohio. All decisions and awards issued in any arbitration
proceedings under this Lease shall be final...
(3) Nothing in this Section 11.4 shall preclude a Party from pursuing any
equitable relief either prior to or during the pending of any Dispute.
(Compl. Ex. A)
According to Avon’s Finance Director William Logan, he sent an email on September

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30, 2014 to Kathleen Hudson of the Lake Erie Crushers requesting a meeting to discuss the
net marquee revenues issue. On October 23, 2014, Ms. Hudson responded that she was
working with I. Steven Edelson, the principal of Avon Baseball, on firming up a date for the
meeting. (William Logan aff.)
Avon’s Law Director John Gaisor avers that he sent the November 11, 2014 letter to
Edelson via overnight Unites States Express Mail. The letter stated that Avon Baseball had
failed to remit the net marquee revenues for the years 2011, 2012, 2013, and 2014, which
contractual breach rendered Avon Baseball in default of the Stadium Lease. The letter was resent on November 21. According to Gaisor, USPS tracking showed that the letter was
delivered successfully. On December 3, 2014, representatives of Avon (which included
Mayor Brian Jensen as Avon’s designated representative, Logan, Gaisor, and others) and
representatives of Avon Baseball (which included Edelson and Hudson) met at Avon City
Hall to discuss the net marquee revenues issue. (John Gaisor aff.; Compl. Ex. B) According
to Gaisor, Logan, and Mayor Jensen, Edelson promised at that time that Avon Baseball would
be providing Avon with documentation relating to the marquee sign revenues. The
documentation was never provided and default has not been cured. (Logan, Gaisor, and
Jensen affs.)
According to Hudson (Avon Baseball’s Controller) and Edelson, in late November
2014, Edelson called Jenson to schedule an informal meeting to discuss revenue initiatives
and any net marquee revenues due. At that point, Avon Baseball had not received any letters
from Avon claiming default. The meeting was scheduled for December 3. Edelson did not
request the meeting pursuant to § 11.4(b) of the Stadium Lease and did not understand it to be

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such. Nor did Avon advise that it intended the meeting to be pursuant to that section. Prior to
the meeting, neither party sent a written request to appoint designated representatives with
settlement authority, Avon Baseball did not appoint such a representative, and Avon never
advised Avon Baseball that it appointed a designated representative. (Hudson aff.; Edelson
aff.)
By letter dated December 12, 2014 from Edelson to Mayor Jensen, Edelson
acknowledged the earlier meeting and stated that Avon Baseball was “currently putting the
appropriate information together so we can meet again to resolve these issues in the very near
future.” Edelson additionally stated,
In the spirit of meeting to work out a resolution and pursuant to Section 11.4(b) of the
Lease, we request that the City of Avon appoint a designated representative who has
the authority to settle any disputes under the Lease, including any current dispute
regarding Net Marquee Revenues due. I will serve as the designated representative
for Avon Baseball L.L.C.
We propose that the parties’ designated representatives schedule a meeting to discuss
any issues regarding the Net Marquee Revenue. Given the upcoming holidays, and
the fact that Avon Baseball, L.L.C. cannot calculate Net Marquee Revenue for 2014
until after the end of the calendar year, we suggest that this meeting be arranged
during the latter part of January. We are certainly amenable to coming to an
agreement regarding any Net Marquee Revenue due under the Lease with a goal of
resolving any issues by the end of January 2015.
(Doc. 6 Ex. B)
Edelson addressed a second letter to Mayor Jensen, dated December 19, 2014.
Therein, Edelson stated that Avon Baseball had just received Avon’s November 11 letter on
December 17, 2014. Edelson further stated,
In the November 11 Letter, the City contends that Avon Baseball, L.L.C. owes the
City certain payments for Net Marquee Revenues due under the Lease from 2011
through 2014. Based on our prior correspondence, we understand that the City desired
to meet with us to discuss the amount of such payments. To that end, in my recent
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letter to you dated December 12, 2014, (the ‘December 12 Letter’), I indicated that I
would be happy to meet pursuant to Section 11.4(b) of the Lease to have that
discussion and reach an agreement as to any amounts due. We believe that this is the
dispute resolution mechanism provided for and required by the Lease, as well as the
best mechanism to resolve this dispute efficiently. Accordingly, please let us know if
you are agreeable to such a meeting to take place on January 21, 2015, between the
parties’ designated representatives. At this meeting, we are prepared to provide the
City with the backup documentation for all Net Marquee Revenues from 2011 through
2014, and tender a check to the City related to the same.
Additionally, the City’s November 11 Letter purports to serve as a Notice of Default
under the Lease; however, we are not satisfied that the November 11 Letter comports
will all of the notice requirements set forth in Section 12.13 of the Lease. In any
event, the timing of the fifteen (15) days to cure any purported breaches, referenced in
Section 11.2(a) of the Lease, begins to run from receipt of a Notice of Default. As
you know, we did not receive the November 11 Letter until yesterday. Therefore,
even if the November 11 Letter constituted a proper notice of Default under the Lease,
our cure period would continue to run until January 1, 2014 [sic].
Edelson concluded that Avon Baseball could not finalize the 2014 calculations until the end
of the year, reiterating the need for the January 21, 2015 meeting. (Doc. 6 Ex. C)
According to Edelson, Avon did not respond to either of Edelson’s letters and never
designated a representative as requested in the December 12 letter. (Edelson aff.) Avon filed
this Complaint in state court on January 12, 2015. Two claims are asserted. Count One
alleges breach of contract. Count Two demands an accounting.
This matter is now before the Court upon Defendant’s Motion to Dismiss Plaintiff’s
Complaint without Prejudice.
Discussion
Defendant contends that the Complaint must be dismissed because plaintiff failed to
follow the mandatory dispute resolution process set forth in the Stadium Lease prior to filing
the Complaint. Plaintiff does not dispute that dismissal without prejudice is appropriate where
a mandatory dispute resolution clause is involved but asserts that it has complied with the
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dispute resolution process contained in the Stadium Lease and the arbitration and mediation
provisions are discretionary, not mandatory. For the following reasons, the Court agrees with
Avon Baseball that the Stadium Lease provides a mandatory dispute resolution process and
that Avon failed to follow it. Consequently, this matter must be dismissed without prejudice
so that the parties may engage in that process.2
Avon argues that the dispute resolution process is discretionary given language in the
lease that the dispute may be submitted to mediation or arbitration once a dispute is not
resolved. However, § 11.4(a) states that a dispute “shall be resolved in accordance with the
procedures set forth in this Section 11.4.” Therefore, the plain language of the Stadium Lease
indicates that the dispute resolution process is mandatory.
Avon further contends that it complied with the dispute resolution process because it
understood the December 3 meeting to satisfy that process. According to Jensen, he was the
City’s designated representative and Edelson was Avon Baseball’s designated representative.
Once resolution was not achieved at that meeting, Avon was free to file the lawsuit. This
Court agrees with Avon Baseball that the December 3 meeting did not satisfy the
requirements of § 11.4.
As referenced above, § 11.4(b) states in part:
In the event of a Dispute between the Parties relating to this Lease and upon the
written request of either Party within five (5) business days after receipt of the written
request, each of the Parties shall appoint a designated representative who has authority
to settle the Dispute.

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Accordingly, defendant’s alternative request that the Court stay this matter until
the parties have exhausted the dispute resolution process is moot. Further, the
Court declines to award attorney’s fees and costs to Avon Baseball incurred in
connection with the filing of this motion.
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Avon asserts in its brief that it “understood” the December 3 meeting to satisfy the
dispute resolution process. But, there is no evidence of such or that the City issued a “written
request” invoking § 11.4(b). Avon’s November 11 “Notice of Default” letter (which the
evidence shows Avon Baseball did not receive until December 17) merely indicates that the
dispute had arisen but did not request a meeting of designated representatives. Additionally,
the affidavit of Avon Finance Director Logan states that he sent an email to Kathleen Hudson
requesting a meeting to discuss the net marquee revenues issue, and on October 23 she
responded that she was working with Edelson on firming up a date for the meeting. The
affidavit further states that the representatives met on December 3. However, Edelson’s
affidavit specifically states that in late November 2014, he called Mayor Jensen to schedule
an informal meeting to discuss, inter alia, the revenues issue. The meeting was scheduled for
December 3.
Notwithstanding who actually requested the December 3 meeting, there is no evidence
that designated representatives were appointed prior thereto. Although Mayor Jensen avers
that he was the City’s designated representative and Edelson was Avon Baseball’s designated
representative, there is no evidence that the representatives were appointed “upon the written
request of either Party.” Rather, the evidence shows that it was not until the letter of
December 12, that Avon Baseball’s Edelson expressly requested, pursuant to § 11.4(b), that
Avon appoint a designated representative with authority to settle the dispute. Edelson stated
that he would serve as the designated representative. The letter further proposed that the
designated representatives schedule a meeting and that it be arranged for the latter part of
January 2015. Avon did not respond to the letter.

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Additionally, the evidence shows that the December 3 meeting did not satisfy the
further requirement of § 11.4(b):
The designated representatives shall meet as often as they reasonably deem necessary
in order to discuss the Dispute and negotiate in good faith in an effort to resolve such
Dispute. The specific format for such discussions will be left to the discretion of the
designated representatives; provided, however, all reasonable requests for relevant
information made by one Party to the other Party shall be honored.

The affidavits of Logan and Jensen merely state that during the December 3 meeting, Edelson
promised to provide documentation relating to the net marquee revenues which was never
provided. However, Hudson’s and Edelson’s affidavits make clear that the parties agreed that
any calculation of the revenues would not be available until January 2015. Edelson’s
December 12 letter indicated that Avon Baseball could not calculate the revenues for 2014
until after the calendar year and, consequently, he suggested that the meeting be scheduled in
late January. Likewise, Edelson’s December 19 letter reiterated that the 2014 calculations
could not be finalized until the end of the year which justified the proposed meeting date of
January 21. Avon did not respond to either of the letters requesting that the meeting be
scheduled. Therefore, there is no evidence that the parties met “as often as they reasonably
deem necessary” to resolve the dispute. The December 3 meeting was the sole meeting. The
only evidence shows that the parties agree to schedule a follow-up meeting which Avon
refused to do. Thus, the Court cannot conclude that Avon “negotiated in good faith in an
effort to resolve” the dispute over the revenues. Accordingly, Avon did not follow the
mandatory dispute resolution process.
Conclusion
For the foregoing reasons, Defendant’s Motion to Dismiss Plaintiff’s Complaint
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without Prejudice is granted.
IT IS SO ORDERED.

/s/ Patricia A. Gaughan
PATRICIA A. GAUGHAN
United States District Judge
Dated: 4/15/15

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