United States District Court, E.D. Kentucky, Central Division, Lexington
MEMORANDUM OPINION AND ORDER
C. Reeves United States District Judge.
action arises from a dispute over a commercial lease
agreement for space in the Georgetown Center. Defendant ML
Georgetown Paris, LLC (“ML Georgetown”) filed a
motion to dismiss the Complaint for failure to state a claim
and failure to meet the minimum amount in controversy under
28 U.S.C. § 1');">1332. Additionally, it argues that the Court
should decline to exercise jurisdiction under the Declaratory
Judgment Act. [Record No. 1');">14] The motion will be denied
because the plaintiff has alleged facts sufficient to state a
claim for relief and the amount in controversy exceeds $75,
000.00, exclusive of interest and costs. Additionally, the
Court will not decline to exercise jurisdiction under the
Declaratory Judgment Act.
Hibbett Sporting Goods, Inc. (“Hibbett”) and
Georgetown Centre Partners, Ltd., the predecessor-in-interest
of ML Georgetown entered into a lease agreement to lease
approximately 5, 370 gross square feet in the Georgetown
Center (“the Lease”). [Record No. 1');">1, p. 2] The
Lease includes a main term of five years and two five-year
optional renewal terms. Id. The Lease is current
through January 30, 2020, under the first optional renewal
term. Id. at 3. Hibbett and Georgetown Centre
Partners, Ltd., amended the Lease in May 2009 to require
continuing co-tenancy and to provide an option to terminate
it or continue to pay alternative rent if the requirement was
violated. Id. One of the continuing co-tenants
(K-Mart) closed in April 201');">17, and Hibbett wrote to
Georgetown Centre, LLC, for a rent credit of $33, 557.33 to
be used as a tenant's payment of alternative rent. After
the rent credit was exhausted, Hibbett would commence
alternative rent of four percent of its monthly gross sales.
Id. at 4. Hibbett also completed an Estoppel
Certificate and forwarded it to ML Georgetown highlighting
the right to a credit against future payments that would
otherwise be due under the lease. Id.
received a Notice of Default for nonpayment on August 1');">10,
201');">18. Id. at 5. And it received another letter on
August 21');">1, 201');">18, stating that the Landlord elected to
terminate the Lease and required that it vacate the premises
prior to September 1');">10, 201');">18, because of the alleged
non-payment of rent due under the Lease. Id. at 7.
Hibbett responded to the letter and contended that:
(1');">1) notice of default was not sufficient, (2) Hibbett was
entitled to a rent credit due to the failure of the
Continuing Co-Tenancy Requirement as set forth in the Fifth
Amendment to Lease Agreement, (3) in the Estoppel Certificate
Hibbett disclosed the rent credit to ML Georgetown prior to
its purchase of the Center, and (4) the prior Landlord,
Georgetown Centre, LLC, had recognized Hibbett's right to
a credit against amounts otherwise due to be paid pursuant to
Id. ML Georgetown then replied that it would not
withdraw the Notice of Default because it asserted that
Hibbett did not have the right to only pay a percentage of
the rent. Id.
now seeks a declaratory judgment stating that it is not in
default of its obligations under the Lease and that ML
Georgetown has not provided a “written default
notice” in accordance with Paragrap. 25 and 32.2 of the
Lease. Id. at 8-9. Hibbett also asserts an
anticipatory breach of the Lease. Id. at 9-1');">10.
The Plaintiff Has Pled Sufficient Facts To State A Claim For
Anticipatory Breach Of Contract.
evaluating a motion to dismiss for failure to state a claim
under Federal Rule 1');">12(b)(6), the court must decide whether
the complaint alleges “sufficient factual matter,
accepted as true, to ‘state a claim to relief that is
plausible on its face.'” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The
plausibility standard is met “when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Id. (quoting Twombly, 550
U.S. at 556). While a complaint does not need to contain
detailed factual allegations, a plaintiff must provide more
than mere labels and conclusions, and “a formulaic
recitation of the elements of a cause of action will not
do.” Twombly, 550 U.S. at 555. And while
plaintiffs are not required to plead facts showing that the
defendant is likely to be responsible for the harm alleged,
plaintiffs must demonstrate “more than a sheer
possibility that a defendant has acted unlawfully.”
Iqbal, 556 U.S. at 678.
alleges that ML Georgetown's Notice of Default indicating
its decision to terminate the Lease is an anticipatory breach
of the Lease. [Record No. 1');">1, p. 9] It contends that it will
suffer irreparable harm if the defendant terminates the Lease
and takes action to re-enter or dispossess Hibbett from the
leased premises. Id.
Georgetown argues that Hibbett has failed to state a claim
for anticipatory breach of the Lease. [Record No. 1');">14, p. 7');">p. 7]
Instead, it contends that Hibbett's allegations regarding
failure to grant rent credits and improper issuance of the
Notice of Default constitute past or present breaches.
Id. The defendant explains that its issuance of the
Notice of Default seeking to terminating the Lease for
non-payment of rent did not illustrate an intention not to
perform some future obligation. Id. It also argues
that the Notice of Default stated that termination was to
happen immediately. Thus, if there was a breach it was a
present one. Id.
breach of contract is “an unequivocal repudiation or
renunciation of an executory contract in advance of the time
of performance.” Jordon v. Nickell, 253 S.W.2d
237, 230 (Ky. 1');">1952). Such a breach may, “at the
election of the injured party, be regarded as an anticipatory
breach and support an immediate action of damages without
waiting for the time of performance.” Id. The
Restatement (Second) of Contracts § 253 states that
“[w]here an obligor repudiates a duty before he has
committed a breach by non-performance and before he has
received all of the agreed exchange for it, his repudiation
alone gives rise to a claim for damages for total
breach.” “Courts determine ...