Three RP Limited Partnership v. Dick's Sporting Goods, Inc.

Filing 35

OPINION AND ORDER by District Judge James H. Payne: granting 7 Motion to Dismiss; denying 12 Motion for Summary Judgment; finding as moot 17 Motion for Relief (cjt, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF OKLAHOMA
THREE RP LIMITED
PARTNERSHIP, an Oklahoma
Limited Partnership,
Plaintiff,
vs.
DICK’S SPORTING GOODS,
INC., a Delaware corporation,
Defendant.

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Case No. 17-CV-36-JHP

OPINION AND ORDER
Before the Court are Defendant’s Motion to Dismiss (Doc. No. 7), Plaintiff’s
Motion for Summary Judgment (Doc. No. 12), Defendant’s Objections to the
Affidavit of James W. Dill (Doc. No. 16), and Defendant’s Motion (In the
Alternative) for Relief Pursuant to Rule 56(d) of the Federal Rules of Civil
Procedure (Doc. No. 17). After consideration of the briefs, and for the reasons
stated below, Defendant’s Motion to Dismiss is GRANTED, Plaintiff’s Motion for
Summary Judgment is DENIED, and Defendant’s Objections and Motion for Rule
56(d) Relief are MOOT.
BACKGROUND
According to the Petition (Doc. No. 2-1), on September 15, 2014, Defendant
Dick’s Sporting Goods, Inc. (“DSG”) entered into a written lease agreement

(“Lease”)

with

landlord

Vector

Securities

Corporation

(“Vector”)

for

approximately 40,000 square feet of space in a shopping center known as the Three
Rivers Plaza (the “Shopping Center’) in Muskogee, Oklahoma. (Doc. No. 2-1, ¶ 3;
Doc. No. 7-2 (Lease)). On March 2, 2015, Vector assigned all rights, title, and
interest in and to the Lease to Plaintiff Three RP Limited Partnership (“Plaintiff”).
(Doc. No. 2-1, ¶ 3). Section 1.6 of the Lease sets forth an “Initial Co-Tenancy
Requirement,” which requires that certain key stores be open at the Shopping
Center, and that a certain portion of the remaining Shopping Center space be
occupied by certain types of retailers. (See id. ¶¶ 5-13). Plaintiff alleges that, once
the Initial Co-Tenancy Requirement is met, Dick’s is obligated to commence
paying “full rent” under the Lease. (Id. ¶ 13).
Section 1.6(a) of the Lease provides in relevant part:
The “Initial Co-Tenancy Requirement” shall mean that: (i)(A) TJ
Maxx and (B) one additional retailer satisfying prong (i) of the
definition of Required Tenant (set forth below) and operating at least
ten thousand (10,000) square feet of LFA in the Shopping Center (the
“Additional Inducement Tenant”), shall each be open or will
simultaneously open with Tenant, fully staffed, stocked and operated
as a retail business in substantially all of their respective premises;
and (ii) at least seventy percent (70%) of the remaining LFA of the
Shopping Center, excluding the LFA of the Demised Premises and
any out-parcels, shall be open or will simultaneously be open with
Tenant, fully staffed, stocked and operated by an Occupant in
substantially all of its premises for the operation of a retail business by
a Required Tenant.
(Doc. No. 7-2, at 8). “LFA” is defined in Section 1.2(d) of the Lease as:
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the number of gross square feet of leasable floor area (whether
occupied or unoccupied) of the Shopping Center Buildings intended
for the exclusive use by any tenant, subtenant, assignee, licensee,
concessionaire or other occupant of the Shopping Center (‘Occupant’)
thereof, including mezzanines or other levels if used for retail sales . .
..
(Doc. No. 7-2, at 3).
As stated above, Section 1.6(a) sets forth two tests to determine whether the
Initial Co-Tenancy Requirement is met. The parties agree that the requirements of
Section 1.6(a)(i) are satisfied by the tenancies of TJ Maxx, with 21,858 square feet
of leased space, and ULTA Salon and Cosmetics (“ULTA”), with 10,061 square
feet of leased space. (Id. ¶¶ 7, 10). The parties’ dispute centers on the proper
construction of Section 1.6(a)(ii), in particular, the meaning of the phrase “at least
seventy percent (70%) of the remaining LFA of the Shopping Center.” Plaintiff
alleges “remaining LFA” describes the total leasable floor area of 111,050 square
feet, from which the 40,000 square feet leased to DSG is then deducted. (Doc. No.
2-1, ¶¶ 8, 10). By contrast, DSG asserts “remaining LFA” refers to the total
leasable floor area remaining after deducting the space leased to the two
Inducement Tenants described in Section 1.6(a)(i), from which the space leased to
DSG is then deducted. (Id. ¶¶ 9, 12).
Plaintiff filed this action against DSG in the District Court of Muskogee
County, Oklahoma, seeking a declaratory judgment that Plaintiff’s construction of
the Initial Co-Tenancy Requirement is correct. (See Doc. No. 2-1). DSG then
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removed the case to this Court based on diversity jurisdiction. (Doc. No. 2). DSG
has now moved to dismiss the Petition pursuant to Federal Rule of Civil Procedure
12(b)(6). (Doc. No. 7). Plaintiff filed a Response in opposition (Doc. No. 11), and
DSG filed a Reply (Doc. No. 14). Plaintiff has also filed a Motion for Summary
Judgment (Doc. Nos. 12, 13). DSG filed a Response in opposition to Plaintiff’s
Motion for Summary Judgment (Doc. No. 15), and Plaintiff filed a Reply (Doc.
No. 20). With respect to the Motion for Summary Judgment, DSG has filed
Objections to the Affidavit of James W. Dill filed by Plaintiff (Doc. No. 16) and a
Motion for Relief pursuant to Rule 56(d) of the Federal Rules of Civil Procedure
(Doc. No. 17). Plaintiff filed Responses to DSG’s Objections and Motion for Rule
56(d) Relief (Doc. Nos. 19, 22). The pending motions are fully briefed and ripe for
review.
DISCUSSION
I.

DSG’s Motion to Dismiss
In considering a Rule 12(b)(6) motion, the court must accept all well-

pleaded allegations of the complaint as true, and must construe them in the light
most favorable to the plaintiff. See Anderson v. Merrill Lynch Pierce Fenner &
Smith, Inc., 521 F.3d 1278, 1284 (10th Cir. 2008). To withstand a motion to
dismiss, a complaint must contain enough allegations of fact “to state a claim to
relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
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570 (2007). The plaintiff bears the burden to frame “a complaint with enough
factual matter (taken as true) to suggest” that he or she is entitled to relief.
Twombly, 550 U.S. at 556. “A pleading that offers ‘labels and conclusions’ or a
formulaic recitation of the elements of a cause of action will not do.’” Nor does a
complaint suffice if it tenders ‘naked assertion[s]’ devoid of further factual
enhancement.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly,
550 U.S. at 555, 557).
In considering a motion to dismiss, the Court is limited to consideration of
specific allegations of the complaint, documents attached to the complaint or
incorporated by reference, and documents “central to the plaintiff’s claim and
referred to into the complaint,” at least “where the document’s authenticity is not
in dispute.” Pace v. Swerdlow, 519 F.3d 1067, 1072 (10th Cir. 2008) (quoting
Utah Gospel Mission v. Salt Lake City Corp., 425 F.3d 1249, 1253-54 (10th Cir.
2005)) (quotation marks omitted). Here, the Lease is referred to in the Petition and
is central to Plaintiff’s claim. Therefore, the Court may consider the indisputably
authentic copy of the Lease submitted by DSG in support of its motion to dismiss
(Doc. No. 7-2). See GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d
1381, 1384-85 (10th Cir. 1997) (citing cases).
As explained above, the parties’ dispute centers on the proper construction
of the Initial Co-Tenancy Requirement of the Lease. In its Motion to Dismiss,
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DSG asserts Plaintiff’s case rests on an illogical interpretation of the Initial CoTenancy Requirement, which is contrary to the language of the Lease and canons
of construction in contract interpretation. DSG urges the Court to reject Plaintiff’s
construction of Section 1.6(a). DSG further argues its own interpretation of the
Initial Co-Tenancy Requirement is logical and gives meaning to the entirety of
Section 1.6(a).
Section 1.6(a) sets forth two requirements in order to meet the Initial CoTenancy Requirement.

First, as stated in Section 1.6(a)(i), TJ Maxx and an

“Additional Inducement Tenant” (i.e., ULTA) must be open or must
simultaneously open with DSG. Second, as stated in Section 1.6(a)(ii), “at least
seventy percent (70%) of the remaining LFA of the Shopping Center, excluding
the LFA of the Demised Premises and any out-parcels, shall be open or will
simultaneously be open with Tenant, fully staffed, stocked and operated by an
Occupant in substantially all of its premises for the operation of a retail business by
a Required Tenant.” “Required Tenant” is defined in Section 1.6(a) to include a
national Occupant operating a minimum of fifty high quality retail stores, or a
regional Occupant satisfactory to DSG in its sole discretion.
Plaintiff alleges the phrase “at least seventy percent (70%) of the remaining
LFA of the Shopping Center” refers to 70% of the total LFA of the Shopping
Center—111,050 square feet. (See Doc. No. 2-1, ¶ 10). Under this interpretation,
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only 70% of the total LFA of the Shopping Center, including TJ Maxx (21,858
square feet) and the Additional Inducement Tenant (i.e., ULTA) (10,061 square
feet), and excluding only DSG’s “Demised Premises” and any “out-parcels”
(40,000 square feet) must be occupied by a Required Tenant in order to satisfy the
second requirement of the Initial Co-Tenancy Requirement. As a result, only
17,816 square feet of the LFA in the Shopping Center, in addition to 31,919 square
feet of space occupied by TJ Maxx and ULTA, must be open and operated by a
Required Tenant to meet the second part of the Initial Co-Tenancy Requirement.1
DSG, on the other hand, contends the phrase “remaining LFA” refers to the
LFA remaining in the Shopping Center after the LFA occupied by TJ Maxx and
ULTA is deducted. Under this interpretation, 70% of the total LFA remaining
after deducting 31,919 square feet of space occupied by TJ Maxx and ULTA, less
the 40,000 square feet occupied by DSG’s “Demised Premises” and any “outparcels,” must be open or simultaneously open with DSG to satisfy the second
prong. This calculation results in a requirement of 27,392 square feet of LFA to be
open and operated by Required Tenants, in addition to the 31,919 square feet of
LFA occupied by TJ Maxx and ULTA, in order to satisfy the second part of the

1

Plaintiff’s calculation is as follows: 111,050 (Total LFA) - 40,000 (DSG LFA) = 71,050 x 70%
= 49,735 - 31,919 (TJ Maxx and ULTA LFA) = 17,816.

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Initial Co-Tenancy Requirement.2

(See Doc. No. 2-1, ¶ 12).

According to

Plaintiff, the difference of interpretation is significant, because DSG “is obligated
to commence paying full rent under the Lease once the Initial Co-Tenancy
Requirement is met.” (Id. ¶ 13).
In Oklahoma, “[i]f the terms of a contract are unambiguous, clear and
consistent, they are accepted in their plain and ordinary sense and the contract will
be enforced to carry out the intention of the parties as it existed at the time it was
negotiated.” S. Corr. Sys., Inc. v. Union City Pub. Sch., 64 P.3d 1083, 1088 (Okla.
2002) (citations omitted). “If a contract is complete in itself and viewed in its
entirety is unambiguous, its language is the only legitimate evidence of what the
parties intended.” Id. at 1089 (citations omitted). In determining the interpretation
of a contract, the Court must not “create an ambiguity by using a forced or strained
construction, by taking a provision out of context, or by narrowly focusing on the
provision.” Id. (citations omitted).
Applying these principles, the Court concludes Section 1.6(a) of the Lease is
clear, consistent, and unambiguous, and a plain reading of the provision supports
DSG’s interpretation. By contrast, Plaintiff’s reading of Section 1.6(a) is strained
and gives no meaning to the critical word “remaining.” Accordingly, the Court
concludes that dismissal of Plaintiff’s Petition is appropriate.

2

DSG’s calculation is as follows: 111,050 (Total LFA) - 31,919 (TJ Maxx and ULTA LFA) 40,000 (DSG LFA) = 39,131 x 70% = 27,392.

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According to a plain reading, the word “remaining” in Section 1.6(a)(ii)
refers to the LFA of the Shopping Center “remaining” after removing the LFA
occupied by TJ Maxx and ULTA, which is described in Section 1.6(a)(i). As DSG
points out, it is logical to read “remaining” as referencing what precedes it, in order
to distinguish what “remains.” Here, the word “remaining” in Section 1.6(a)(ii)
immediately follows the description of TJ Maxx and the Additional Inducement
Tenant (i.e., ULTA). Accordingly, the word “remaining” can refer only to the
LFA “remaining” after removing the LFA occupied by TJ Maxx and ULTA. From
the “remaining LFA of the Shopping Center,” DSG’s 40,000 square feet of space is
excluded, leaving 70% occupancy of 39,131 square feet of LFA, or 27,392 square
feet, which must be occupied by Required Tenants.
Plaintiff’s differing interpretation of Section 1.6(a) simply ignores the word
“remaining” in “remaining LFA,” which renders it an improper interpretation
under Oklahoma law. “It is well settled that effect should be given, if possible, to
every word, phrase, clause, and sentence of a contract.” Cities Serv. Gas Co. v.
Kelly-Dempsey & Co., Inc., 111 F.2d 247, 249 (10th Cir. 1940) (citation omitted).
See Scrivner v. Sonat Expl. Co., 242 F.3d 1288, 1291 (10th Cir. 2001); 15 Okla.
Stat. § 157 (“The whole of a contract is to be taken together, so as to give effect to
every part, if reasonably practicable, each clause helping to interpret the others.).

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Accordingly, a court cannot simply disregard words or phrases in a contract, which
Plaintiff’s interpretation of Section 1.6(a) would require.
Plaintiff’s arguments in its Response brief are unpersuasive. First, Plaintiff
relies on the “doctrine of the last antecedent” in support of its interpretation of
Section 1.6(a)(ii). This doctrine provides that a limiting word or clause is to be
applied to the immediately preceding word or phrase, and is “not to be construed as
extending to or including others more remote.” Bd. of Trustees of Firemen’s Relief
& Pension Fund of City of Muskogee v. Templeton, 86 P.2d 1000, 1003 (Okla.
1939) (quotation omitted). “This rule is, however, “merely an aid to construction”
and is not to be applied where “the subject matter requires a different
construction.”

Id. at 1003-04 (quotation omitted).

Plaintiff argues that, by

applying this doctrine, the phrase “excluding the LFA of the Demised Premises”
must refer to the immediate antecedent phrase, “at least seventy percent (70%) of
the remaining LFA of the Shopping Center.” Plaintiff argues DSG’s interpretation
would defy this doctrine, because DSG would have the phrase “excluding the LFA
of the Demised Premises” refer back to the “more remote” Section 1.6(a)(i). (Doc.
No. 11, at 3).
The Court agrees with Plaintiff’s reading of the cited phrases, in that the
phrase “excluding the LFA of the Demised Premises” refers back to the antecedent
phrase “at least seventy percent (70%) of the remaining LFA of the Shopping
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Center.” Nonetheless, Plaintiff’s reading is incomplete, as it still fails to account
for the word “remaining.” And it is natural to read the word “remaining” to refer
to its own immediate antecedent, Section 1.6(a)(i). Further, according to DSG’s
Reply brief, DSG does not argue that the phrase “excluding the LFA of the
Demised Premises” refers to Section 1.6(a)(i), but rather to the immediately
preceding phrase, “at least seventy percent (70%) of the remaining LFA of the
Shopping Center.” (See Doc. No. 14, at 4). Therefore, the “doctrine of the last
antecedent” in fact supports DSG’s interpretation of Section 1.6(a).
Second, Plaintiff asserts the semicolon that separates the two subsections of
Section 1.6(a) indicates the two clauses are independent clauses that are related but
internally complete. While the Court agrees that a semicolon indicates a separation
of two independent clauses, the Court disagrees that the presence of the semicolon
means that the two clauses cannot reference each other and must be read
completely separately. The Court must consider the whole of the contract in
determining its proper construction and cannot narrowly focus on one provision.
As DSG points out, the Initial Co-Tenancy Requirement consists of two separate
tests, which are connected by the word “and.” Because of the presence of the
connecting word, it is clear that both requirements in Sections 1.6(a)(i) and
1.6(a)(ii) must be satisfied to meet the Initial Co-Tenancy Requirement.

See

Chessin v. Keystone Resort Mgmt., Inc., 184 F.3d 1188, 1195 (10th Cir. 1999)
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(holding that statutory provision consisting of two conditions joined by word “and”
meant that employer had to “satisfy both conditions”). Plaintiff’s argument is
without merit.
Third, Plaintiff argues that DSG’s interpretation of Section 1.6(a) would
redundantly count DSG twice in both Sections 1.6(a)(i) and (ii). Plaintiff contends
DSG “would have the Court construe 1.6(a)(i) to include DSG, TJ Maxx and
ULTA to determine who must be open, and then include DSG twice in 1.6(a)(ii) by
construing ‘remaining’ to include all three (DSG, TJ Maxx and ULTA), plus DSG
a second time under “[]excluding the LFA of the Demised Premises.” (Doc. No.
11, at 4-5).

However, as DSG notes in its Reply brief, Plaintiff appears to

misunderstand DSG’s interpretation of the relevant language. DSG argues that
Section 1.6(a)(i) describes only when TJ Maxx and ULTA must be open, not DSG.
It provides that TJ Maxx and ULTA “shall each be open or will simultaneously be
open” with DSG. Then, in the second prong, the phrase “remaining LFA” refers to
the LFA remaining after removing TJ Maxx and ULTA, and the subsequent phrase
“excluding the LFA of the Demised Premises and any out-parcels” removes DSG’s
LFA from the 70% test. As DSG explains in its Reply brief, its construction is as
follows:
(1)

The first prong deals with TJ Maxx and ULTA, leaving out DSG and
the rest of the Shopping Center; then
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(2)

The second prong identifies the “remaining LFA” as the total LFA
except TJ Maxx and ULTA; then

(3)

The modifier “excluding the LFA of the Demised Premises and any
out-parcels” applies to the “remaining LFA” and carves out DSG and
the out-parcels from that definition.

(Doc. No. 14, at 4). Therefore, DSG’s interpretation contains no redundancy and
Plaintiff’s argument on this point fails.
Fourth, Plaintiff argues the term “remaining LFA” does have meaning
within Plaintiff’s interpretation of the Lease, because the Lease does not define the
LFA occupied by TJ Maxx. However, as DSG points out, Exhibit A of the Lease
does identify the proposed space to be occupied by TJ Maxx—21,858 square feet.
(See Doc. No. 7-2, at 60). More importantly, even if the Lease did not identify TJ
Maxx’s LFA, it would not follow that TJ Maxx’s LFA would become part of the
“remaining LFA.” The Court does not find Plaintiff’s argument compelling.
Finally, Plaintiff asserts that, contrary to DSG’s argument, its construction
gives meaning to both prongs of Section 1.6(a). Plaintiff argues Section 1.6(a)(i)
speaks to who must be a tenant, while Section 1.6(a)(ii) speaks to how much of the
LFA must be under lease.

However, as DSG points out in its Reply brief,

Plaintiff’s argument is irrelevant to the question of what the term “remaining LFA”
describes. Moreover, it is clear from a reading of Section 1.6(a) that both prongs
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address the “who” and the “how much.” The first prong identifies TJ Maxx and
the Additional Inducement Tenant (the “who”) and specifies the Additional
Inducement Tenant must operate in at least 10,000 square feet of LFA (the “how
much”). The second prong requires that at least 70% of the remaining LFA of the
Shopping Center must be open or must simultaneously be open with DSG (i.e., the
remainder after excluding TJ Maxx and the Additional Inducement Tenant) but
excluding DSG and any out-parcels (the “how much”), and that the space must be
occupied by retail businesses operated by “Required Tenants” (the “who”).
Therefore, Plaintiff’s argument is not only irrelevant but also incorrect.
Plaintiff’s construction of the Initial Co-Tenancy Requirement is strained
and inconsistent with the plain, unambiguous language of the Lease. By contrast,
DSG’s construction of the Initial Co-Tenancy Requirement is logical and gives
meaning to each word of Section 1.6(a). Accordingly, the Court finds Plaintiff’s
sole claim for declaratory judgment is subject to dismissal as a matter of law.
II.

Plaintiff’s Motion for Summary Judgment
For the reasons explained above, the Court finds Plaintiff’s sole claim for

declaratory judgment should be dismissed pursuant to Fed. R. Civ. P. 12(b)(6).
Plaintiff’s Motion for Summary Judgment and Brief in Support (Doc. Nos. 12, 13)
address the same issues as the Motion to Dismiss. After reviewing Plaintiff’s
arguments in its Motion for Summary Judgment, the Court identifies no reason to
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depart from its decision to dismiss Plaintiff’s sole claim. Accordingly, Plaintiff’s
Motion for Summary Judgment is denied. Because it is not necessary to the
disposition of this case, the Court declines to address either DSG’s objections to
the affidavit of James W. Dill (Doc. No. 16) or DSG’s motion for relief pursuant to
Federal Rule of Civil Procedure 56(d) (Doc. No. 17).
CONCLUSION
For the reasons detailed above, Defendant’s Motion to Dismiss Plaintiff’s
Petition for Failure to State a Claim (Doc. No. 7) is GRANTED and Plaintiff’s
Motion for Summary Judgment (Doc. No. 12) is DENIED.

Defendant’s

Objections to the Affidavit of James W. Dill (Doc. No. 16) and Defendant’s
Motion (In the Alternative) for Relief Pursuant to Rule 56(d) of the Federal Rules
of Civil Procedure (Doc. No. 17) are MOOT.
IT IS SO ORDERED this 27th day of September, 2017.

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