Mackjo, Inc. v. 7-Eleven, Inc.

Filing 25

MEMORANDUM OPINION AND ORDER denying defendant 7-Eleven, Inc.'s 9 MOTION to Dismiss; the stay in this action is lifted; Mackjo, Inc., is given leave to amend its complaint by 11/8/2013; and the parties are directed to meet and confer respecting scheduling by 11/5/2013 and to file a Rule 26(f) report by 11/8/2013. Signed by Judge John T. Copenhaver, Jr. on 10/28/2013. (cc: attys; any unrepresented parties) (taq)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
MACKJO, INC.,
a West Virginia
corporation,
Plaintiff,
v.

Civil Action No. 2:13-5833

7-ELEVEN, INC.,
a Texas corporation,
Defendant.
MEMORANDUM OPINION AND ORDER
Pending is the motion to dismiss of defendant 7-Eleven,
Inc. (“7-Eleven”), filed May 24, 2013.

I.

Mackjo, Inc., is a West Virginia citizen.
Texas citizen.

7-Eleven is a

A non-party, Prima Marketing, LLC, (“Prima”) is a

Colorado citizen.

The amount in controversy exceeds the

jurisdictional minimum.
On June 11, 2010, Mackjo, as Lessor, and Prima, as
Lessee, entered into a lease agreement for a parcel of property
located at the intersection of Childress Road and Corridor G in
Kanawha County.

On July 12, 2011, the parties entered into a

First Amendment to the lease agreement, dealing with a matter of
rent, both of which accords will collectively be referred to
as the “Lease.”
Paragraph 22 of the Lease addresses the matter of
purchase options:
22. Certain Rights of Lessee
(a) If at any time during the term of this Lease, Lessor
receives from a ready, willing and able purchaser an
acceptable bona fide offer to purchase, or makes a bona
fide offer to sell to such a purchaser, all or any
portion of the Leased Premises or any property which
includes all or any portion of the Leased Premises, then
Lessor promptly shall give Lessee notice, specifying the
name and address of the proposed purchaser and the price
and terms of the offer, accompanied by Lessor's
affidavit that the proposed sale is in good faith.
Lessee shall thereupon have the prior option (the
"Purchase Option") to purchase the Leased Premises or
the portion thereof or the entire property covered by
such offer, at the price and on the same terms as such
offer. Lessee may exercise the Purchase Option by giving
Lessor written notice within thirty days after Lessee's
receipt of Lessor's notice of the offer. Lessee's
failure at any time to exercise the Purchase Option
shall not affect this Lease or the continuation of
Lessee's rights and options under this paragraph or any
other provision of this Lease.
{b) Lessee shall have the right and option (the "Special
Purchase Option"), exercisable at any time on or after
the fifth anniversary until the fifteenth anniversary of
the Commencement Date during the term of this Lease, to
purchase the Leased Premises free and clear of all liens
and encumbrances other than Permitted Encumbrances, for
a purchase price (the "Special Purchase Option Price")
of $1,600,000.00, if exercised during the fifth Lease
Year. Said purchase price shall decrease at the rate of
$10,000.00 per year, each year through the fifteenth
year. If Lessee exercises the Special Purchase Option,
closing of the Special Purchase Option shall take place
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within thirty days after the date of the Exercise
Notice, at a mutually determined time and place. At
Closing (i) Lessee shall pay the Special Purchase Option
Price in cash, and (ii) Lessor shall convey the Leased
Premises to Lessee by general warranty deed, subject
only to the Permitted Encumbrances. Lessor shall pay
the costs of preparing such deed and all applicable real
property transfer taxes; Lessee shall bear all costs of
recording the deed, all title insurance premiums and
expenses of closing fees charged by the title insurance
company.
(Ex. A, Compl. ¶ 22).

A Memorandum of Lease is recorded in the

office of the Clerk of the Kanawha County Commission.

It quotes

the Purchase Option and the Special Purchase Option provisions
found in paragraph 22 above.
On September 18, 2012, Prima assigned to 7-Eleven “all
right, title and interest of [Prima] under the Lease.”
(“Assignment”).

(Ex. B, Compl. ¶ 2).

On September 12 and 13,

2012, Mackjo and 7-Eleven entered into a Subordination, NonDisturbance and Attornment Agreement (“SNDA”), which provides as
follows:
10. Joinder of Landlord. The Landlord hereby agrees to
the subordination and attornment effected hereunder upon
the terms herein stated. The Landlord and Tenant have a
dispute with respect to the Landlord’s claims and/or
interpretation pertaining to the provisions of Sections
22(a) and 22(b) of the Lease relating to, among other
things, a right of first refusal and option to purchase,
and the Landlord and the Tenant agree that Landlord does
not, by executing this Agreement, or any related
agreement or instrument, or otherwise, waive, release or
discharge any claim, cause of action, action or right,
including, but not limited to, the right to bring a
declaratory judgment or other legal proceeding relating
to or arising under the . . . dispute.
3

(Compl. at ¶ 7; Def.’s Memo. in Supp. at 3).

The SNDA was

executed by Mackjo on September 12, 2012, and by 7-Eleven the next
day.
Mackjo recently learned that potential purchasers wish
to acquire the leased property for $2,000,000.

While the details

are a bit sketchy in the record, this offer has exacerbated
Mackjo’s and 7-Eleven’s dispute respecting the meaning of
paragraph 22 of the Lease.
Mackjo asserts that it and Prima, the original lessor
and lessee, “agree they intended that if the Purchase Option was
not exercised by the lessee and a bona fide purchaser buys the
property, the Special Purchase Option expires.”
1).

(Pl.’s Resp. at

Mackjo attaches email correspondence and proposed, but

unexecuted, affidavits authored in 2013 supporting that view as
reflecting the understanding of the parties to the lease as of the
date of the lease on June 11, 2010.

Those materials were

exchanged between Mackjo’s president, Ralph Hoyer, and certain
Prima principals, namely, chief financial officer and manager,
Hamish Fordwood, and managing member Jeff Kramer.

Mr. Hoyer

asserts that while Messrs. Fordwood and Kramer would not sign the
affidavits presented, which reflected that the failure to exercise

4

the Purchase Option would invalidate the Special Purchase Option,
they are willing to so testify under subpoena to that effect.
7-Eleven relies, inter alia, upon the explicit language
found in Lease respecting the effect of the lessee’s failure to
exercise the Purchase Option: “Lessee's failure at any time to
exercise the Purchase Option shall not affect this Lease or the
continuation of Lessee's rights and options under this paragraph
or any other provision of this Lease.”

(Lease ¶ 22(a)).

It

contends this language unambiguously authorizes it to exercise the
Special Purchase Option even if it declines at an earlier point to
avail itself of the Purchase Option.

7-Eleven asserts that the

Lease is so clear on the point that peremptory dismissal is
required.

II.

A.

Governing Standard

Federal Rule of Civil Procedure 8(a)(2) requires that a
pleader provide “a short and plain statement of the claim showing
. . . entitle[ment] to relief.”

Fed. R. Civ. P. 8(a)(2); Erickson

v. Pardus, 127 S. Ct. 2197, 2200 (2007).

Rule 12(b)(6)

correspondingly permits a defendant to challenge a complaint when
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it “fail[s] to state a claim upon which relief can be granted . .
. .”

Fed. R. Civ. P. 12(b)(6).
The required “short and plain statement” must provide

“‘fair notice of what the . . . claim is and the grounds upon
which it rests.’”

Bell Atlantic Corp. v. Twombly, 550 U.S. 544,

545 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957),
overruled on other grounds, Twombly, 550 U.S. at 563); see also
Anderson v. Sara Lee Corp., 508 F.3d 181, 188 (4th Cir. 2007).

In

order to survive a motion to dismiss, “a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’”

Ashcroft v. Iqbal, 129 S.

Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570); see also
Monroe v. City of Charlottesville, 579 F.3d 380, 386 (4th Cir.
2009).
Application of the Rule 12(b)(6) standard requires that
the court “‘accept as true all of the factual allegations
contained in the complaint . . . .’”

Erickson, 127 S. Ct. at 2200

(quoting Twombly, 127 S. Ct. at 1965); see also South Carolina
Dept. Of Health And Environmental Control v. Commerce and Industry
Ins. Co., 372 F.3d 245, 255 (4th Cir. 2004) (quoting Franks v.
Ross, 313 F.3d 184, 192 (4th Cir. 2002)).

The court must also

“draw[] all reasonable . . . inferences from th[e] facts in the

6

plaintiff's favor . . . .”

Edwards v. City of Goldsboro, 178 F.3d

231, 244 (4th Cir. 1999).
Without reaching the parties’ competing assertions
concerning the Lease language, Mackjo has raised the doctrine of
mutual mistake.

Mackjo asserts that it and Prima erred to the

extent that they did not make clear in the Lease their mutual
intentions respecting paragraph 22, namely, that the Special
Purchase Option would expire in the event the Purchase Option was
not exercised.1
In syllabus points 2 and 3 of First American Title Ins.
Co. v. Firriolo

225 W. Va. 688, 690, 695 S.E.2d 918, 920 (2010) ,

the Supreme Court of Appeals of West Virginia observed as follows:
2. “The jurisdiction of equity to reform written
instruments, where there is a mutual mistake, or mistake
on one side and fraud or inequitable conduct on the
other, if the evidence be sufficiently cogent to
thoroughly satisfy the mind of the court, is fully
established and undoubted.” Syllabus Point 2, Nutter v.
Brown, 51 W.Va. 598, 42 S.E. 661 (1902).
3. “Such equitable remedy [of a court to reform a
written instrument] is not absolute, but depends upon
whether the reformation sought is essential to the ends
of justice.” Syllabus Point 2, Buford v. Chichester, 69
W.Va. 213, 71 S.E. 120 (1911).
Id. at 690, 695 S.E.2d at 920 (alteration in original).
1

7-Eleven notes in its reply brief that Mackjo failed to
seek equitable reformation in its complaint. That is a matter
best addressed by Mackjo timely seeking leave to amend the
complaint.
7

In view of the principles governing mutual mistake, and
the unresolved evidentiary matters respecting, inter alia, Mr.
Fordwood and Mr. Kramer, 7-Eleven has not satisfied its burden
under Rule 12(b)(6).

It is, accordingly, ORDERED as follows:

1.

That the motion to dismiss be, and hereby is, denied;

2.

That the stay in this action previously entered on July
15, 2013, be, and hereby is, lifted today;

3.

That Mackjo be, and hereby is, given leave to amend its
complaint on or before November 8, 2013; and

4.

That the parties be, and hereby are, directed to meet and
confer respecting scheduling on or before November 5,
2013, and to thereafter file on or before November 8,
2013, a Rule 26(f) report setting forth their agreed or
respective views concerning the timing of necessary case
events.
The Clerk is directed to transmit copies of this written

opinion and order to all counsel of record and any unrepresented
parties.
ENTER: October 28, 2013

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John T. Copenhaver, Jr.
United States District Judge