United States District Court, E.D. Kentucky, Central Division, Lexington
FAYETTE MIDDLE ANCHOR, LLC, agent of CBL & ASSOCIATES MANAGEMENT, INC., Plaintiff,
KINNUCAN ENTERPRISES, INC., Defendant.
MEMORANDUM OPINION AND ORDER
M. Hood, Senior U.S. District Judge.
matter comes before the Court on Plaintiff Fayette Middle
Anchor, LLC's (“Middle Anchor”) Motion for
Summary Judgment [DE 11]. Having considered the matter fully,
and being otherwise sufficiently advised, Middle Anchor's
Motion for Summary Judgment [DE 11] will be granted in part,
insofar as it pertains to Kinnucan Enterprises, Inc.
(“Kinnucan”) breaching the Shopping Center Lease
Agreement (“Lease”), Middle Anchor's request
for damages pertaining to unpaid rent and related charges for
rental payments that have become due, and Middle Anchor's
request for attorneys' fees. However, Middle Anchor's
Motion [DE 11] will be denied in part, insofar as it requests
damages for unpaid rental payments that have yet to become
due and costs and expenses related to Kinnucan's breach.
Furthermore, the Court will direct the Parties to provide
further briefing pertaining to the damages in this matter.
FACTUAL AND PROCEDURAL BACKGROUND
facts in this case are undisputed. On November 10, 2015,
Kinnucan agreed to lease certain premises in Fayette Mall
from Middle Anchor, the landlord, for a period of ten (10)
years. [DE 1-1, 2; DE 11-1]. Kinnucan failed to pay rent and
the associated late charges and interest under the terms of
the Lease for the month of December 2018. [DE 1-1, at 4; DE
11, at 3]. On December 21, 2018, Middle Anchor sent Kinnucan
a Notice of Default NonPayment (“December
Notice”) [DE 11-3] informing Kinnucan of its failure to
pay rent for the month of December 2018. Id. On
January 8, 2019, Kinnucan abandoned the leased premises.
Id. On January 10, 2019, Middle Anchor sent Kinnucan
another Notice of Default Non-Payment (“January
Notice”) [DE 11-4] detailing Kinnucan's missed
rental payments for both December 2018 and January 2019 and
the associated late charges and interest. Id.
Kinnucan failed to cure its defaults under the Lease.
August 23, 2019, Middle Anchor moved for summary judgment,
requesting the Court find Kinnucan breached the lease and
award Middle Anchor damages of $3, 211, 547.43 for rent and
$5, 967.50 in attorneys' fees and costs associated with
this action. [DE 11]. In response, Kinnucan does not dispute
that the Lease is a binding enforceable contract or that it
breached the Lease. [DE 14]. However, Kinnucan contends that
a genuine issue of material fact exists regarding the amount
of damages. Id.
STANDARD OF REVIEW
court shall grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). “A genuine dispute exists on a
material fact, and thus summary judgment is improper, if the
evidence shows ‘that a reasonable jury could return a
verdict for the nonmoving party.'” Olinger v.
Corporation of the President of the Church, 521
F.Supp.2d 577, 582 (E.D. Ky. 2007) (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)). Stated
another way, “[t]he mere existence of a scintilla of
evidence in support of the plaintiff's position will be
insufficient; there must be evidence on which the jury could
reasonably find for the plaintiff.” Anderson,
477 U.S. at 252. “The central issue is ‘whether
the evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one
party must prevail as a matter of law.'"
Pennington, 553 F.3d at 450 (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986).
moving party has the initial burden of demonstrating the
basis for its motion and identifying those parts of the
record that establish the absence of a genuine issue of
material fact. Chao v. Hall Holding Co., Inc., 285
F.3d 415, 424 (6th Cir. 2002). The movant may satisfy its
burden by showing “that there is an absence of evidence
to support the non-moving party's case.”
Celotex Corp. v. Catrett, 477 U.S. 317, 325
(1986). Once the movant has satisfied this burden, the
non-moving party must go beyond the pleadings and come
forward with specific facts demonstrating the existence of a
genuine issue for trial. Fed.R.Civ.P. 56; Hall
Holding, 285 F.3d at 424 (citing Celotex, 477
U.S. at 324). Moreover, “the nonmoving party must do
more than show there is some metaphysical doubt as to the
material fact. It must present significant probative evidence
in support of its opposition to the motion for summary
judgment.” Hall Holding, 285 F.3d at 424
(internal citations omitted).
Court “must construe the evidence and draw all
reasonable inferences in favor of the nonmoving party.”
Pennington v. State Farm Mut. Automobile Ins. Co.,
553 F.3d 447, 450 (6th Cir. 2009) (citing Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986)). However, the Court is under no duty to
“search the entire record to establish that it is
bereft of a genuine issue of material fact.” In re
Morris, 260 F.3d 654, 655 (6th Cir. 2001). Rather,
“the nonmoving party has an affirmative duty to direct
the court's attention to those specific portions of the
record upon which it seeks to rely to create a genuine issue
of material fact.” Id.
does not dispute that it breached the Lease, so the Court
will find Middle Anchor is entitled to summary judgment on
this issue without further discussion. On the other hand, the
issues involving damages are not so easily determined.
DAMAGES FOR RENT
of solely seeking Kinnucan's missed rental payments and
related charges, Middle Anchor also wishes to be compensated
for accelerated rent and related charges from the time of the
default, December 2018, to the end of the lease term, April
30, 2026. [DE 11, at 6; DE 11-5]. While the Court agrees
Middle Anchor is entitled to damages for unpaid rent and
related charges, for the reasons stated below, the Court is
not persuaded to grant Middle Anchor the full $3, 211, 547.43
Kentucky, “the measure of damages for breach of
contract is ‘that sum which will put the injured party
into the same position he would have been in had the contract
been performed.'” Hogan v. Long, 922
S.W.2d 368, 371 (Ky. 1995) (quoting Perkins Motors, Inc.
v. Autotruck Federal Credit Union, 607 S.W.2d 429, 430
(Ky. Ct. App. 1980)).
Middle Anchor claims it “is entitled to recover [$3,
211, 547.43], as it will place Middle Anchor in the position
in which it would have been had Kinnucan not breached the
Lease.” [DE 11, at 6]. Kinnucan correctly asserts the
Lease requires Middle Anchor to “‘use reasonable
efforts to relet the Leased Premises . . ., '” [DE
14, at 2 (emphasis omitted) (quoting [DE 11-1])], and
“[t]his is consistent with Kentucky law which requires
a landlord to mitigate damages when a tenant breaches a
lease, ” [DE 14, at 2 (citing Dulworth v.
Hyman, 246 S.W.2d 993, 996 (Ky. 1952); Deskins v.
Estep, 314 S.W.3d 300, 305 (Ky. Ct. App. 2010);
Morgan v. Scott, 291 S.W.3d 622, 640 (Ky. 2009))];
see also Fifth Third Bank v. Waxman, 726 F.Supp.2d
742, 750 (E.D. Ky. 2010) (citing Smith v. Ward, 256
S.W.2d 385, 388 (Ky. 1953); Davis v. Fischer Single
Family Homes, Ltd., 231 S.W.3d 767, 780 (Ky. Ct. App.
2007) (“Under Kentucky law, non-breaching parties are
required to take reasonable efforts to mitigate their
damages.”)). “[I]t is well established that the
‘duty to mitigate is not absolute; recovery is
diminished only to the extent that the plaintiff fails to
mitigate the damages as they would be mitigated by an
ordinary, reasonable person under similar
circumstances.'” Waxman, 726 F.Supp.2d at
750-51 (quoting Morgan, 291 S.W.3d at 641 n.49).
“It is well-settled that the party claiming a failure
to mitigate has the burden of proof on that issue.”
Alliant Tax Credit Fund 31-A, Ltd. V. Murphy, 494
Fed.Appx. 561, 572-73 (6th Cir. 2012) (citing
Waxman, 726 F.Supp.2d at 751).
present case, Middle Anchor insists, “Despite its
diligent efforts to do so, Middle Anchor has been unable to
successfully locate a new tenant for the Premises, and
therefore, is not receiving any rental payments.” [DE
11, at 6]. Kinnucan contends, “Whether Middle Anchor
has used ‘reasonable efforts' to relet the
premises, and thereby mitigated its damages, is a question of
fact, not law.” [DE 14, at 3 (citing Nohr v.
Hall's Rentals, LLC, No. 2011-CA-000646-MR, 2013 WL
462004 (Ky. Ct. App. Feb. 8, 2013))]. While the question of
whether a plaintiff has used reasonable efforts to mitigate
their damages can, and often does, present factual issues,
Kinnucan has failed to satisfy its burden of proof by
presenting evidence of reasonable efforts Middle Anchor
should have used to mitigate its damages. See
Waxman, 726 F.Supp.2d at 751 (finding that since the
defendants failed to present evidence of reasonable efforts
the plaintiff should have taken to mitigate damages, a jury
could not reasonably determine the plaintiff failed to use
reasonable efforts to mitigate); see also Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 257 (1986)
(“[T]he [nonmoving party] must present affirmative
evidence in order to defeat a properly supported motion for
of presenting evidence of Middle Anchor's alleged failure
to use reasonable efforts to mitigate its damages, Kinnucan
asserts, “Testimony from factual witnesses and expert
real estate agents on the leasing opportunities for the
premises, the anticipated period of time for re-leasing the
premises and the expected rent amount to be received are all
factual issues that need to be presented and resolved . . .
.” [DE 14, at 3]. Not only has Kinnucan failed to
present any evidence to support this conclusory statement,
Kinnucan did not respond to Middle Anchor's Interrogatory
No. 9 asking Kinnucan to describe the factual basis for its
assertion that Middle Anchor failed to mitigate its damages.
[DE 15, at 4 n.3 (citing [DE 15-1, at 10])]. Also, when the
Parties submitted their March 27, 2019 Joint Rule 26 Report
[DE 8], they stated that they did not “anticipate that
the use of experts will be necessary in this case.” [DE
8, at 3]. A conclusory statement, such as Kinnucan's
assertion, without some supporting evidence, cannot create a
genuine issue of material fact sufficient to defeat summary
judgment. Alexander v. CareSource, 576 F.3d 551, 560
(6th Cir. 2009) (citing Lewis v. Philip Morris Inc.,
355 F.3d 515, 533 (6th Cir. 2004); Doren v. Battle Creek
Health System, 187 F.3d 595, 598-599 (6th Cir. 1999)
(“Conclusory statements unadorned with supporting facts
are insufficient to establish a factual dispute that will
defeat summary judgment.”)).
Middle Anchor is entitled to summary judgment on damages for
rent, and Middle Anchor's alleged failure to use
reasonable efforts to mitigate does not create a genuine
issue of material fact, Middle Anchor is not entitled to the
$3, 211, 547.43 it seeks. Since Kinnucan failed to support
its mitigation of damages argument with facts, the Court will
grant Middle Anchor's Motion for Summary Judgment [DE
11], insofar as it pertains to Middle Anchor's request
for damages for unpaid rent from the time of default in
December 2018 to the date of this order. However, as Kinnucan
correctly asserts, “Middle Anchor is seeking not only
past due rent and related charges, but also accelerated rent
and related charges through the remainder of the lease term
which does not end until April 30, 2026.” [DE 14, at
2]. In relevant part, Section 11.2 of the Lease states the
The exercise by Landlord of any right granted in this Section
shall not relieve Tenant from the obligation to make all
rental payments, and to fulfill all other covenants required
by this Lease, at the time and in the manner provided herein,
and, if Landlord so desires, all current and that portion
of future rent and other monetary obligations due
hereunder which exceeds the fair market value of such
rent and charges shall become immediately due and
payable. Tenant throughout the remaining Term hereof shall
pay Landlord, no later than the last day of each month during
the Term, the then current excess, if any, of the sum of the
unpaid rentals and costs to Landlord ...