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Hibbett Sporting Goods Inc. v. ML Georgetown Paris, LLC

United States District Court, E.D. Kentucky, Central Division, Lexington

February 6, 2019

HIBBETT SPORTING GOODS, INC., Plaintiff,
v.
ML GEORGETOWN PARIS, LLC, Defendant.

          MEMORANDUM OPINION AND ORDER

          Danny C. Reeves United States District Judge.

         This 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.

         I.

         Plaintiff 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.

         Hibbett 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 the Lease.

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.

         Hibbett 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.

         II.

         a. The Plaintiff Has Pled Sufficient Facts To State A Claim For Anticipatory Breach Of Contract.

         When 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.

         Hibbett 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.

         ML 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.

         Anticipatory 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 ...


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