Weiss-Jenkins IV LLC v. Utrecht Manufacturing Corporation

Filing 83

ORDER by Judge Robert S. Lasnik granting in part plaintiff's 72 Motion for final judgment. Plaintiff to file an amended proposed judgment within 7 days of this Order. (PM)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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WEISS-JENKINS IV LLC,

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Plaintiff,
Case No. C14-0954RSL

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v.
UTRECHT MANUFACTURING
CORPORATION, et al.,

ORDER GRANTING IN PART
PLAINTIFF’S MOTION FOR
FINAL JUDGMENT

Defendants.

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This matter comes before the Court on plaintiff’s “Motion for Summary and Final

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Judgment Against Defendants.” Dkt. # 72.1 The parties agree that defendant Utrecht

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Manufacturing Corporation prematurely vacated premises it leased from plaintiff and that

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both defendants are liable for damages under the terms of the amended lease. The lease

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agreement provided that, upon the lessee’s failure to pay rent, the landlord may cancel the

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lease and take possession of the property.

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Notwithstanding such retaking of possession by Landlord, Tenant’s liability
for the rent provided herein shall not be extinguished for the balance of the
term of this Lease. Upon such default, cancellation or re-entry, Landlord

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This matter can be decided on the memoranda, declarations, and exhibits submitted by
the parties. Defendants’ request for oral argument is therefore DENIED.
ORDER GRANTING IN PART PLAINTIFF’S
MOTION FOR FINAL JUDGMENT - 1

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may elect either (i) to terminate this Lease; or (ii) without terminating this
Lease, to relet or attempt to relet all or any part of the Premise . . . . In either
event, the liability of Tenant for the full rental provided for herein shall not
be extinguished for the balance of the term of this Lease, and the Tenant
covenants and agrees to make good to the Landlord any deficiency arising
from a re-entry and good faith effort of reletting of the Premises at a lesser
rental than the rental herein agreed to, and Landlord may bring an action
therefor as such monthly deficiency shall arise.

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Dkt. # 27-1 at 7-8. The Court has already determined that plaintiff may “recover lost rents

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between July 2013 and the time the premises was relet, plus any shortfall in the rental

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amount received between the reletting and February 2018.” Dkt. # 56 at 5. There is no

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dispute regarding the monthly “rent” that was due under the amended lease or the

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“deficiency” that arose between July 2013 and the time the premises was relet.

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The parties disagree, however, regarding the calculation of the monthly “rent” paid

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by Starbucks after it leased the property on September 13, 2013. Plaintiff argues that the

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only “rent” that can be used to decrease the amount defendants owe is the price per square

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foot specified in paragraph 1(d) of its lease agreement with Starbucks. Dkt. # 76-3 at 2-5.

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The concept of “rent” in this context is not necessarily limited to the cash payments

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designated as “rent” by the lessor and the new lessee, however. Rent has historically

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encompassed any money, chattel, services, or other compensation received by the owner

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as consideration for the lease. See Black’s Law Dictionary (9th ed.); Webster’s Third

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New International Dictionary. Seizing on the fact that rent can be anything provided to

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the landlord in consideration for a lease, defendants point out that Starbucks expended

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millions of dollars improving the property and argue that a jury must determine what, if

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any, deficiency remains. Defendants maintain that, as a result of Starbucks’ renovations,

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plaintiff is currently in a far better financial position than it would have been in had the

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ORDER GRANTING IN PART PLAINTIFF’S
MOTION FOR FINAL JUDGMENT - 2

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original lease expired by its own terms and that Washington law precludes plaintiff from

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obtaining a windfall or a punitive award of damages. Ford v. Trendwest Resorts, Inc., 146

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Wn.2d 146, 155 (2002); Family Med. Bldg., Inc. v. State, Dep’t of Soc. & Health Servs.,

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104 Wn.2d 105, 114 (1985).

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Defendants’ underlying assumptions are faulty. There is no evidence that

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Starbucks was contractually obligated to improve the property. The lease gave Starbucks

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the right to install Tenant Improvements (Dkt. # 76-3 at 7 and 13), but there was no

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obligation to do so. The improvements were not, therefore, consideration for plaintiff’s

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promise to lease the property and cannot, factually or legally, be considered “rent.”2 Nor

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is there any indication that plaintiff will receive the value of the improvements Starbucks

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made during the remaining term of the original lease. If the upgrades have any value

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when Starbucks’ lease expires, that value will not enure to plaintiff’s benefit until, at the

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earliest, October 1, 2024. Defendants promised “to make good to the Landlord” any loss

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of rent caused by their breach, and “the lessor is entitled to recover the rent reserved to

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the end of the term less the amount actually received from subsequent tenants during the

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remainder of the term . . . .” Exeter Co. v. Samuel Martin, Ltd., 5 Wn.2d 244, 249-50

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(1940). Thus, while defendants are correct that rent can be paid in forms other than

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money, they have failed to raise a genuine issue of material fact regarding the amounts

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actually received from Starbucks during the remaining term of their lease. Thus summary

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judgment in plaintiff’s favor is appropriate. Celotex Corp. v. Catrett, 477 U.S. 317, 323-

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The fact that Starbucks was willing to lease the premises “as is” was clearly important
to plaintiff, which had unexpectedly lost a significant income stream when defendants breached
the lease. The fact that plaintiff did not have to incur remodeling costs or other expenditures to
relet the property does not constitute “rent” from Starbucks, however, and does not lessen
defendants’ obligation to satisfy any deficiency.
ORDER GRANTING IN PART PLAINTIFF’S
MOTION FOR FINAL JUDGMENT - 3

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24 (1986).
Defendants also object to plaintiff’s request for an award of pre-judgment interest,

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arguing that such an award would be duplicative since the lease provides for a 10% late

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charge on all payments that are more than ten days delinquent. The 10% late fee is more

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punitive and coercive than compensatory. Even if the Court assumes that it was intended

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to serve as rough compensation for an untimely payment, the compensation covers only

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the first few days of the delinquency. Delinquencies lasting years, as in this case, are

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wholly uncompensated by the late fee provision. The Court finds that an award of pre-

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judgment interest at 12% per annum is consistent with Washington law (RCW 19.52.010)

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and is not duplicative.
Finally, defendants object to plaintiff’s request for reimbursement of expenses

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related to anti-graffiti protection and certain architectural services. These objections have

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merit. The architectural services were obtained prior to defendants’ breach, and the anti-

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graffiti protection was installed after Starbucks had relet the property. Neither can

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properly be characterized as consequential damages that is causally related to the breach.

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For all of the foregoing reasons, plaintiff’s motion for final judgment is

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GRANTED in part. Plaintiff shall, within seven days of the date of this Order, file an

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amended proposed judgment that deletes the charges for anti-graffiti protection (reflected

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as $20,150.63 in re-leasing costs and expenses (Dkt. # 73-7 at 1) and ($15,941.01 in

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operating expenses (Dkt. # 7402 at 5)) and for pre-breach architectural services. Plaintiff

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may file a request for reasonable attorney’s fees pursuant to Fed. R. Civ. P. 54(d)(2)(B).

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ORDER GRANTING IN PART PLAINTIFF’S
MOTION FOR FINAL JUDGMENT - 4

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Dated this 24th day of May, 2016.

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A

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Robert S. Lasnik
United States District Judge

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ORDER GRANTING IN PART PLAINTIFF’S
MOTION FOR FINAL JUDGMENT - 5