Cabela's Retail Inc v. Hawks Prairie Investment LLC

Filing 160

ORDER DENYING 104 Hawks Prairie's Motion for Summary Judgment; STRIKING 131 Hawks Prairie's Motion for Summary Judgment without prejudice as premature; Signed by Judge Ronald B. Leighton.(DN)

HONORABLE RONALD B. LEIGHTON

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT TACOMA

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No. 11-cv-5973-RBL
CABELA’S RETAIL, INC.,
(Dkt. #104, 131)

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Plaintiff,
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v.
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HAWKS PRAIRIE INVESTMENT, LLC,
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Defendant.
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In its previous order, the Court concluded that Cabela’s had breached ¶ 8 of the

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Memorandum of Agreements, the radius restriction, by opening the Tulalip store within 5 years

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of the Lacey store. (Order, Dkt. #138.) The Order requested additional briefing on the issues of

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standing and remedies, issues which were heard in oral argument. Before the Court are these

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two issues (remaining from Hawks Prairie’s Motion for Summary Judgment (Dkt. #104)).

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At oral argument, an issue underlying standing and remedies came to the forefront. In its

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bankruptcy settlement, Hawks Prairie transferred the Lacey property to Homestreet, which then

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sold the property to a new developer, Wig Properties. The question of what rights were

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transferred to Wig underlies all others.

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Cabela’s argues that the Memorandum of Agreements and all rights and obligations

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accompanying that document now lie with Wig. The bill of sale from Homestreet to Wig

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provides that “Seller does hereby [convey] . . . the agreements recorded in the real property

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records of Thurston County, Washington as follows: (i) Memorandum of Agreements . . . .”

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(Hepburn Decl., Ex. A at 1–2, Dkt. #151.) If Cabela’s is correct, and all rights and obligations

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belong to Wig, then Hawks Prairie has no standing to bring their counterclaims. Indeed,

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allowing such claims would expose Cabela’s to multiple claims for breach of the same

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contract—one from Hawks Prairie and one from Wig. This cannot be the case.
In contrast, Hawks Prairie argues that it continues to hold the rights and obligations

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outlined in the Memorandum of Agreements. In the bill of sale to Homestreet, Hawks Prairie

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transferred the Memorandum of Agreements, “EXCEPT the Cabela’s Contract and the Cabela’s

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Contract Addendum as referenced in the Settlement and Sale Agreement which is part of the

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Cabela’s litigation retained by the Seller.” (Bill of Sale ¶ (i), Dkt. #147-2 (emphasis in

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original)). Similarly, the settlement agreement between Hawks Prairie and Homestreet carves

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out the “Cabela’s Litigation.” (Settlement Agreement at 6, Dkt. #147-1.) The settlement states

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that “Hawks Prairie and Homestreet are defending the Cabela’s Litigation, and if they prevail

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Cabela’s may be required to pay Hawks Prairie up to $5 million (the ‘Cabela’s Contract

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Payment’) pursuant to Paragraph 8 of the Addendum to Real Estate Purchase and Sale

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Agreement . . . among other remedies . . . .” Id. Homestreet retained a “perfected security

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interest in all of Hawks Prairie’s rights to payment . . . .” Id. The agreement also states that

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following the litigation, “Hawks Prairie will quit claim . . . all remaining rights, title and interest

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in the Cabela’s Contract” to Homestreet “if any.” Id.
But even assuming standing, Hawks Prairie fails to establish as a matter of law that they

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are entitled to recovery. Hawks Prairie argues that once Cabela’s breached the radius restriction,

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all Hawks Prairie’s duties dissolved.1 Cabela’s asserts that Hawks Prairie anticipatorily breached

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the agreement by declaring bankruptcy and selling the property, spoiling any possibility that it

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might construct the additional commercial space that it agreed to construct.

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See Tr. of Oral Arg., July 11, 2013, Dkt. #158 at 21 (“It doesn’t mean that you still have to perform, it means no
party has to perform, every party is then now to look to the remedies as dictated by the contracts.”).
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Under ¶ 7 of the agreement:

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(Kelsey Decl., Ex. 4, Dkt. #112-1.) Paragraph 7 contemplates the situation where Hawks Prairie
has failed to construct the planned development and Cabela’s has breached the agreement (either
by closing the Lacey store early or opening a competing store early). In the case of such a
mutual breach, “whichever remedy [Hawks Prairie] may elect under Section 6” is offset onesixth each year that it fails to meet its construction obligation.
An anticipatory breach “occurs when one of the parties to a bilateral contract either

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expressly or impliedly repudiates the contract prior to the time of performance.” Wallace Real
Estate Inv., Inc. v. Groves, 124 Wash. 2d 881, 898 (1994). It requires a “positive statement or
action by the promisor indicating distinctly and unequivocally that he either will not or cannot
substantially perform any of his contractual obligations.” Id. (quoting Olsen Media v. Energy
Sciences, Inc., 32 Wash. App. 579, 585 (1982); Lovric v. Dunatov, 18 Wash. App. 274, 282
(1977)).

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Although Cabela’s has not affirmatively moved on the issue, there is at least an issue of
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fact as to whether Hawks Prairie anticipatorily breached the agreement by selling the property in
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bankruptcy.2 Plaintiff’s counsel argues that “no one has a crystal ball” and Hawks Prairie could
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In its previous order, before ordering supplemental briefing, the Court concluded that Hawks Prairie had not
anticipatorily breached the agreement by failing its construction obligations. (Order at 16, Dkt. #138.) Hawks
Prairie had argued that it was entitled to $5 million and the fair market value of the land; Cabela’s asserted that
Hawks Prairie had anticipatorily breached the agreement. The contract makes clear that Cabela’s “sole remedy” was
an “increase in the credits to be given [Cabela’s] in the event [it] does not operate its store for the full (12) year
period.” Id. The proper conclusion should have been that Hawks Prairie may have anticipatorily breached, but its
breach was irrelevant—Cabela’s had only one remedy: close its store early. But in supplemental briefing, the parties
highlighted (for the first time) the off-set damages provision of paragraph 7. This provision changes the analysis as
outlined above.

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potentially partner with Wig Properties (the current owner of the property) to construct the space,

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but a reasonable factfinder could conclude that selling the property displays Hawks Prairie’s

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“intent not to perform.” Id. (citing Lovric, 18 Wash. App. at 282).

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In sum, if the Memorandum of Agreements was transferred to Wig, Hawks Prairie has no

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standing. If the Memorandum was not transferred, Hawks Prairie’s recovery is off-set by

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paragraph 7. In either case, the recovery is nothing.

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These are sophisticated parties. They drafted a sophisticated, if imperfect, contract. This

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Court will not read exceptions into that contract or inject its own ideas of equity. Upon a simple,

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straightforward reading, the contract contemplates mutual breach, and the remedy to be applied.

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At this time, Cabela’s has breached radius restriction, but Hawks Prairie has not established its

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right to judgment as a matter of law. Fed. R. Civ. P. 56. Hawks Prairie’s Motion for Summary

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Judgment (Dkt. #104) is therefore DENIED.

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Because Cabela’s has not yet moved for summary judgment on the issue, the Court

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cannot, however, reach the issue of whether Hawks Prairie anticipatorily breached the

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agreement.

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Hawks Prairie’s Second Motion for Summary Judgment (Dkt. #131) is STRICKEN
without prejudice as premature.

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Dated this 30th day of July, 2013.

A
RONALD B. LEIGHTON
UNITED STATES DISTRICT JUDGE

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