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Best Buy Stores, L.P. v. Manteca Lifestyle Center

May 12, 2010

BEST BUY STORES, L.P., PLAINTIFF,
v.
MANTECA LIFESTYLE CENTER, LLC, DEFENDANT.



MEMORANDUM AND ORDER RE: MOTION TO DISMISS

Plaintiff Best Buy Stores, L.P. brought this action against defendant Manteca Lifestyle Center, LLC alleging various claims arising out of plaintiff's lease with defendant. Presently before the court is defendant's motion to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).

I. Factual and Procedural Background

On July 10, 2007, defendant entered into a written lease whereby it agreed to lease plaintiff 30,038 square feet of space at a retail development known as the Promenade Shops at Orchard Valley ("Promenade") in Manteca, California. (Compl. ¶¶ 1, 8.) Article 8 of the lease agreement contains a Co-Tenancy provision, which was subsequently modified by amendment of the parties on January 19, 2009. (Id. ¶¶ 8, 10.) The amended version of the provision states:

As used herein, the "Opening Co-Tenancy Condition" shall mean that, as of the Commencement Date, Tenant shall not be required to open for business unless sixty percent (60%) (not including Best Buy) of the gross leasable area of the Shopping Center are open and operating at the Shopping Center, or are to open concurrently with Tenant, including at least two (2) or more of the following tenants: (i) J.C. Penney; (ii) Bass Pro; (iii) a cinema. Should the Opening Co-Tenancy Condition not be satisfied, Tenant may either (i) delay opening for business until the Opening Co-Tenancy Condition is satisfied . . . or (ii) open for business and, if the Opening Co-Tenancy Condition remains unsatisfied on the Rent Commencement Date, then beginning on the Rent Commencement Date, pay fifty percent (50%) of the monthly Rent (and any additional other costs without reduction) payable pursuant to the terms of this Lease until such time as the Opening Co-Tenancy Condition has been satisfied. (Id. ¶ 10.)

A proposed site plan ("Site Plan") for the Promenade was attached to the lease as Exhibit B. (Id. ¶¶ 8, 13(c), Ex. B.) The Site Plan shows plaintiff's location in relation to other proposed buildings in the Promenade, details the square footage of each building, and the space allocated for parking. (Id. ¶ 9, Ex. B.) The Site Plan also includes a table that summarizes the amount of space allocated for different uses of buildings in the Promenade, such as the amount of space for small shops, a health club, a cinema, large shops, and restaurants. (Id.) This table lists the "total gross leasable area" as 743,908 square feet. (Id. ¶ 13(c).)

Plaintiff opted to open its store at the Promenade concurrently with J.C. Penny, Bass Pro, and the cinema. At the time plaintiff opened its store, 320,000 square feet of the Promenade was allegedly open and operating. (Id. ¶ 13(e).) Plaintiff began making monthly rent payments to defendant for fifty percent of the amount of agreed upon rent, contending that defendant had failed to meet the Co-Tenancy Condition in the lease because less than sixty percent of the gross leasable area was open and operating. (Id. ¶ 15.) Defendant threatened to evict plaintiff and demanded plaintiff pay one-hundred percent of the monthly rent. (Id. ¶ 16.) Defendant argued that the CoTenancy Condition was satisfied because buildings not fully constructed are not included in the "Shopping Center" for purposes of the condition, and that more than sixty percent of buildings that had been fully constructed were open and operating at the time plaintiff opened for business. (Id. ¶ 17.) Plaintiff subsequently paid the amount of rent demanded by defendant under protest. (Id. ¶ 18.)

On February 12, 2010, plaintiff filed this action against defendant, containing causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing, and requesting a declaration of its rights and obligations under the lease. (Docket No. 1.) On March 12, 2010, defendant filed a Rule 12(b)(6) motion to dismiss the Complaint for failure to state a claim on which relief can be granted.

II. Discussion

On a motion to dismiss, the court must accept the allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). To survive a motion to dismiss, a plaintiff needs to plead "only enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This "plausibility standard," however, "asks for more than a sheer possibility that a defendant has acted unlawfully," and where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 556-57).

In general a court may not consider items outside the pleadings upon deciding a motion to dismiss, but may consider items of which it can take judicial notice. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). A court may take judicial notice of facts "not subject to reasonable dispute" because they are either "(1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201.

Defendant filed a request for judicial notice that requests the court take notice of four documents: (1) a copy of the lease between plaintiff and defendant; (2) a definition of "gross leasable area" from the International Council of Shopping Centers's ("ICSC") Dictionary of Shopping Center Terms; (3) a computer printout of the "About ICSC" page from the ICSC website; and (4) a computer printout from the ICSC website showing that plaintiff is a member. (Docket No. 9.) The court will take notice of the lease because "documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss." Fecht v. The Price Co., 70 F.3d 1078, 1080 n.1 (9th Cir. 1995); see In re Stac Elec. Sec. Litig., 89 F.3d 1399, 1405 n.4. The court declines to take notice of defendants' remaining three exhibits because they do not satisfy Federal Rule of Evidence 201(b).*fn1

A. Declaratory Relief and Breach of Contract Claims

The parties' dispute on plaintiff's first four causes of action for declaratory relief, money paid, money had and received, and breach of contract focuses on their differing interpretations of the phrase "gross leaseable area of the Shopping Center" in the lease's Co-Tenancy Condition. The CoTenancy Condition in Article 8 of the lease is satisfied and plaintiff must pay monthly full rent if, "as of the Commencement Date . . . sixty percent (60%) (not including Best Buy) of the gross leasable area of the Shopping Center are open and operating at the Shopping Center . . . ." (Def.'s Req. ...


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