Prologis Industrial Properties II, LLC v. Agfa Corporation

Filing 49

ORDER granting 31 Motion for Summary Judgment; denying 41 Motion for Summary Judgment; finding as moot 45 Motion to Strike. Signed by Judge Michael R. Barrett on 9/30/14. (ba1)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION

Prologis Industrial
Properties II, LLC,

Case No. 1:12cv849

Plaintiff,

Judge Michael R. Barrett

v.
Agfa Corporation,
Defendant.
OPINION & ORDER
This matter is before the Court upon Defendant Agfa Corporation’s Motion for
Summary Judgment (Doc. 31); Plaintiff Prologis Industrial Properties II, LLC’s (“Prologis”)
Motion for Summary Judgment (Doc. 41); and Prologis’ Motion to Strike (Doc. 45).
These motions have been fully briefed according to the parties’ briefing schedule.
(Docs. 38, 44, 46).
I.

BACKGROUND
Prologis claims that Agfa breached a commercial lease which Agfa assumed from

the Harold M. Pitman Company (“Pitman”). Prologis entered into the lease with Pitman
in October of 2005 (“the Lease”). (Doc. 31-1, PAGEID # 310). The property which was
the subject of the Lease was a warehouse in West Chester, Ohio (“the West Chester
warehouse”).
In June of 2010, Pitman entered into an Asset Purchase Agreement (“APA”) with
Agfa to sell substantially all of its assets to Agfa. (Doc. 37). The APA provided that,
upon closing, Agfa would acquire Pitman’s ongoing business operations, including the

West Chester warehouse. The APA contemplated that Pitman would transfer the Lease
to Agfa in addition to similar leases for other warehouses. The APA provides that
Pittman “shall, or shall cause one or more of its Affiliates to, sell, convey, transfer, assign
and deliver to [Agfa], and [Agfa] shall purchase from [Pitman] or any of its Affiliates, . . .
all of such right, title and interest in . . . the Leased Real Property under the Assumed
Leases listed on Schedule 2.1(f).” The APA defines “Assumed Leases” as “those leases
and subleases governing real property owned by Persons other than [Pitman] which are
listed on Schedule 2.1(f).” The West Chester warehouse was included on the list in
Schedule 2.1(f). The APA also provides that Agfa “shall assume and discharge or
perform when due the following Liabilities . . . (c) all Liabilities, commitments and other
obligations of [Pitman] under the Assumed Leases relating to events occurring or
performance required after the Closing.”
Agfa explains that under the APA, the transfer of the Lease was dependent upon
delivery at closing of an assignment and assumption agreement acceptable to both
Pitman and Agfa. Agfa also explains that the transfer of the Lease was necessarily
subject to the terms of the Lease itself, which required written approval by Prologis for the
assignment to be effective.
On July 14, 2010, after execution of the APA but prior to closing, Agfa and Pitman
agreed via a “Side Letter to Asset Purchase Agreement” to transfer responsibility for
procuring the lease assignments to Agfa. The Side Letter provided that Agfa and Pitman
waived:
. . . the non-fulfillment of the following conditions precedent and other
obligations of [Pitman] set forth in the Asset Purchase Agreement:
1.2

[Pitman’s] delivery of Seller Required Approvals with respect
2

to the Assumed Leases for the leased properties located in:
(g) West Chester, Ohio; . . .
While the parties were able to negotiate assignments of the other warehouse
leases, they were unable to reach an agreement regarding the assignment and
assumption of the Lease for the West Chester warehouse. (Doc. 31-1, Andrew Zezas
Dep. at 28-29; Christopher Santomassimo Dep. at 118).
Beginning on the closing date, Agfa operated the West Chester warehouse and
began paying monthly rent and related expenses to Prologis. While Prologis and Agfa
attempted to negotiate a new lease, the parties were unsuccessful. (See Doc. 31-1, Ex.
M, PAGEID # 420; Doc. 31-1, Ex. N, PAGEID # 425). On September 30, 2011, Agfa
vacated the West Chester warehouse. Prologis claims Agfa breached the Lease, which
was in effect until June 2013. Agfa responds that it never assumed the Lease, and at
most, it was a month-to-month tenant and fulfilled any obligations it may have had to
Prologis.
Prologis brings claims of breach of contract, unjust enrichment and promissory
estoppel.
II.

ANALYSIS
A. Standard of Review
Federal Rule of Civil Procedure 56(a) provides that summary judgment is proper “if

the movant shows that there is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.” The moving party has the burden of showing
an absence of evidence to support the non-moving party’s case.
Catrett, 477 U.S. 317, 325 (1986).

Celotex Corp. v.

Once the moving party has met its burden of

3

production, the non-moving party cannot rest on his pleadings, but must present
significant probative evidence in support of his complaint to defeat the motion for
summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986).
Where the parties have filed cross-motions for summary judgment, a court “must
evaluate each motion on its own merits and view all facts and inferences in the light most
favorable to the nonmoving party.” Westfield Ins. Co. v. Tech Dry, Inc., 336 F.3d 503,
506 (6th Cir. 2003). “[T]he standards upon which the court evaluates the motions for
summary judgment do not change simply because the parties present cross-motions.”
Taft Broad. Co. v. United States, 929 F.2d 240, 248 (6th Cir. 1991) (citing Home for
Crippled Children v. Prudential Ins. Co., 590 F.Supp. 1490, 1495 (W.D.Pa.1984)).
B. Breach of Contract
The parties agree that Ohio law applies to Prologis’ breach of contract claim.
Under Ohio law, to establish a breach of contract, a plaintiff must show: (1) the existence
of a valid contract; (2) performance by the plaintiff; (3) breach by the defendant; and (4)
resulting damages. Pavlovich v. National City Bank, 435 F.3d 560, 565 (6th Cir. 2006)
(citing Wauseon Plaza Ltd. Partnership v. Wauseon Hardware Co., 807 N.E.2d 953, 957
(Ohio Ct. App. 2004)).
Prologis argues that under the APA, Pitman agreed to assign the Lease to Agfa,
and Agfa agreed to “assume and discharge or perform” the Lease. Prologis argues
further that in the Side Letter, Agfa and Pitman agreed to waive the requirement that
Pitman provide an assignment and assumption of the Lease.
Agfa responds that Prologis was not a party to the APA or the Side Letter, and
therefore Prologis has no contractual rights under the APA or the Side Letter. Agfa also

4

argues that Prologis was not an intended third-party beneficiary of these agreements
between Agfa and Pitman. Moreover, Agfa contends that the Lease itself provides that
Prologis must provide prior written consent to any assignment of the Lease. 1
Only a party to a contract or an intended third-party beneficiary of a contract may
bring an action on a contract in Ohio. Grant Thornton v. Windsor House, Inc., 566
N.E.2d 1220, 1223 (Ohio 1991) (citing Visintine & Co. v. New York, Chicago, & St. Louis
RR. Co., 160 N.E.2d 311 (Ohio 1959). Prologis was not a party to the APA or the Side
Letter.

Prologis was only a party to the Lease between Prologis and Pitman.

Furthermore, Prologis is not a third-party beneficiary of the APA or the Side Letter.
Accord Homfeld II, L.L.C. v. Comair Holdings, Inc., 53 F. App'x 731 (6th Cir. 2002) (under
Ohio law, companies that leased airplanes to airline were not third-party beneficiaries to
airline's agreement to sell airline's assets and liabilities to purchaser; therefore leasing
companies could not bring contract claims against purchaser after purchaser backed out
of the acquisition agreement).
Moreover, the Court concludes that the language of the APA and the Side Letter
cannot be read as constituting an assignment of the Lease from Pitman to Agfa. In the
APA, Pitman agreed to assign the Lease to Agfa “at the Closing.” Agfa agreed to
“assume and discharge or perform” the Lease “when due.” However, neither of these
events ever took place.

Because no agreement had been reached regarding the

assignment of the Lease, in the Side Letter, Agfa and Pitman agreed to waive the
requirement in the APA that Pitman assign and deliver the Lease to Agfa at the Closing.

1

However, Prologis explains that it waived any right it had under the Lease to require
written consent to the assignment of the Lease from Pitman to Agfa. Prologis points out that it
accepted rent from Agfa for many months.
5

However, a waiver of this condition precedent is not the equivalent of an assignment of
the Lease. Instead, it was a transfer of the responsibility from Pitman to Agfa to reach an
agreement with Prologis regarding the assignment of the Lease.

Because no

agreement was ever reached, the Lease was not assigned to Agfa. As a consequence,
Agfa’s duty to perform the Lease never became “due.”
Therefore, the Court concludes that Prologis is not entitled to summary judgment
on its breach of contract claim, and instead, Agfa is entitled to summary judgment in its
favor.
C. Unjust Enrichment
In order to recover under a theory of unjust enrichment under Ohio law, a plaintiff
must demonstrate: (1) a benefit conferred by the plaintiff upon the defendant; (2)
knowledge by the defendant of such benefit; and (3) retention of the benefit by the
defendant under circumstances where it would be unjust to do so without payment.
Hambleton v. R.G. Barry Corp., 465 N.E.2d 1298, 1302 (1984) (citing Hummel v.
Hummel, 14 N.E.2d 923 (Ohio 1938)). Prologis argues that the benefit it conferred upon
Agfa was the benefit of the leased space between September 2012—when Agfa vacated
the premises—and June 2013—when the Lease terminated. However, because the
Court has concluded that the Lease was never assigned to Agfa, Agfa had no contractual
right to remain on the premises until the expiration of the Lease. Accordingly, Plaintiff is
not entitled to summary judgment on this claim, and Agfa is entitled to summary judgment
in its favor.
D. Promissory Estoppel
Prologis does not respond to Agfa’s arguments that it is entitled to summary

6

judgment on Prologis’ claim of promissory estoppel. Therefore, the Court considers this
claim abandoned. See Clark v. City of Dublin, 178 F. App'x 522, 524–25 (6th Cir. 2006)
(affirming trial court's finding that party's failure to properly respond to the arguments
raised in a motion for summary judgment constituted an abandonment of those claims).
Accordingly, Agfa is entitled to summary judgment on Prologis’ promissory estoppel
claim.
E. Motion to Strike
Prologis moves to strike certain evidence submitted by Agfa on the basis that it
would be in admissible at trial: (1) Agfa’s “Proposed Undisputed Facts;” (2) references to
Prologis’ website; and (3) a July 11, 2011 email from an agent of Prologis which states
that “Prologis is of the opinion that Agfa is illegally occupying the space formerly leased to
H. Pitman.” Because the Court did not rely on any of this evidence in reaching its legal
conclusion regarding the interpretation of the APA and the Side Letter, Prologis’ Motion to
Strike (Doc. 45) is DENIED as MOOT.
III.

CONCLUSION
Based on the foregoing, it is hereby ORDERED as follows:
1. Defendant Agfa Corporation’s Motion for Summary Judgment (Doc. 31) is
GRANTED;
2. Plaintiff Prologis Industrial Properties II, LLC’s Motion for Summary
Judgment (Doc. 41) is DENIED ; and
3. Prologis’ Motion to Strike (Doc. 45) is DENIED as MOOT;

7

4. This matter shall be CLOSED and TERMINATED from the docket of this
Court.
IT IS SO ORDERED.
/s/ Michael R. Barrett
Michael R. Barrett
United States District Judge

8