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Laskin Road Associates, L.P. v. Capitol Industries

June 5, 2007

LASKIN ROAD ASSOCIATES, L.P., PLAINTIFF,
v.
CAPITOL INDUSTRIES, INC., DEFENDANT.



The opinion of the court was delivered by: Raymond A. Jackson United States District Judge

MEMORANDUM OPINION AND ORDER

This matter is before the Court on Laskin Road Associates, L.P.'s ("Plaintiff") motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Having carefully reviewed the parties' pleadings and after holding a hearing on this matter on June 4, 2007, the Court finds this matter ripe for judicial determination. For the reasons below, Plaintiff's motion for summary judgment is GRANTED.

I. FACTUAL AND PROCEDURAL HISTORY

Plaintiff is a limited partnership whose general and limited partners are citizens of Virginia, Washington, Massachusetts, Connecticut, and Florida. Capitol Industries, Inc. ("Defendant") is a Maryland corporation with its principal place of business in Maryland. On September 10, 1990, Plaintiff and Defendant entered into a written lease agreement for the Surf & Sand Movie Theater (the "Property"), located in Virginia Beach, Virginia. The lease is for a twenty-year term commencing on May 24, 1991 and terminating on September 30, 2011. The lease requires Defendant to pay Plaintiff monthly rent of $40,763.07. The lease also requires Defendant to pay all the real estate taxes associated with the Property. Finally, the lease provides that should Defendant breach or default on the lease, Defendant is liable to Plaintiff for reasonable costs, expenses, and attorney's fees incurred as a result of the breach or default.

The lease includes four addendums. The fourth and final addendum (the "Fourth Addendum"), dated June 19, 2003, arose after Regal Cinema, Inc. ("Regal Cinema"), to whom Defendant had assigned the lease, declared bankruptcy and defaulted on the lease. The Fourth Addendum states that Defendant assumed Regal Cinema's obligations under the lease and was obligated to pay Plaintiff the past due rent, taxes, and utilities. The Fourth Addendum recites that Regal Cinema paid a sum to Plaintiff that accounted for the amounts past due plus a balance of $260,000 that was to be retained by Plaintiff as security for Defendant's performance under the lease. This balance was to be credited to Defendant's account in the amount of $2,626.26 per month, provided that Defendant was not in monetary default.

On December 21, 2006, Plaintiff provided Defendant with a receipt for the real estate taxes for the Property in the amount of $14,096.11 and a request that Defendant reimburse Plaintiff for the taxes by January 12, 2007. Defendant never responded and admits it has never reimbursed Plaintiff for the taxes. On January 10, 2007, Defendant sent a letter to Plaintiff stating that Defendant could no longer pay the rent and enclosing a partial payment of $3,985.52. On January 25, 2007, Plaintiff sent Defendant a written notice of default. Defendant admits that it has not made the full required rent payments and that it has never cured the default. In addition to its partial January 2007 payment, Defendant made partial rent payments of $4,176.50 for February 2007, $4,297.39 for March 2007, and $4,585.53 for April 2007.

On February 9, 2007, Plaintiff filed a complaint for unlawful detainer in the General District Court of the City of Virginia Beach, Virginia. On March 5, 2007, Defendant removed this action to this Court pursuant to 28 U.S.C. § 1441 (2000). Defendant filed an answer on March 12, 2007. Plaintiff filed the instant motion for summary judgment on March 21, 2007. Defendant responded on April 6, 2007. Plaintiff filed a reply on April 11, 2007.

II. LEGAL STANDARD

Rule 56(c) provides for summary judgment if the Court, viewing the record as a whole, determines "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); Haulbrook v. Michelin N. Am., Inc., 252 F.3d 696, 700 (4th Cir. 2001) (citing McKinney v. Bd of Trustees of Mayland Cmty. Coll., 955 F.2d 924, 928 (4th Cir. 1992) (stating that "[S]ummary judgments should be granted in those cases where it is perfectly clear that no issue of fact is involved and inquiry into the facts is not necessary to clarify the application of the law.")). In deciding a motion for summary judgment, the Court must view the facts, and inferences to be drawn from the facts, in the light most favorable to the nonmoving party. Anderson v. Liberty Lobby, Inc.,477 U.S. 242, 255 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986). To defeat summary judgment, the nonmoving party must go beyond the pleadings with affidavits, depositions, interrogatories, or other evidence to show that there is in fact a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). Summary judgment will be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322.

III. DISCUSSION

Plaintiff's sole claim is for breach of a lease agreement. Under Virginia law, "The elements of a breach of contract action are (1) a legally enforceable obligation of a defendant to a plaintiff; (2) the defendant's violation or breach of that obligation; and (3) injury or damage to the plaintiff caused by the breach of obligation." Filak v. George, 267 Va. 612, 619, 594 S.E.2d 610, 614 (2004). Defendant does not dispute that it had a legally enforceable obligation to Plaintiff arising from the lease agreement. Defendant also does not dispute that it has failed to pay the full amount of rent and taxes due under the lease. In its defense, however, Defendant argues that: (1) Plaintiff in fact committed the first material breach under the lease by failing to give Defendant the required credit under the Fourth Addendum, (2) that the Fourth Addendum is ambiguous and parol evidence should be admissible to resolve the ambiguity, (3) that Plaintiff now seeks to obtain an impermissible forfeiture of Defendant's security deposit, and (4) that damages are unclear because Plaintiff has not attempted to mitigate its damages.

A. First Material Breach

Defendant's first argument is that on January 1, 2007, before Defendant was in monetary default, Plaintiff was required under the Fourth Addendum to apply $2,626.26 to the rent due, and that Plaintiff breached the agreement first by spending the deposit that gave rise to the credit. It is true that if the first party to breach a contract commits a material breach, "that party cannot enforce the contract." Horton v. Horton, 254 Va. 111, 115, 487 S.E.2d 200, 204 (1997).

Defendant attempts to construe Plaintiff's alleged failure to apply the $2,626.26 credit to the rent as a failure, in effect, of the landlord to pay rent to the tenant. Defendant then cites El Jalapeno Mexican Food, L.L.C. v. Rodgers, 68 Va. Cir. 178, 179 (2005) for the ...


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