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RKF Retail Holdings, LLC v. Tropicana Las Vegas, Inc.

United States District Court, D. Nevada

July 6, 2017

RKF RETAIL HOLDINGS, LLC, Plaintiff,
v.
TROPICANA LAS VEGAS, INC., Defendant. RKF RETAIL HOLDINGS, LLC, Plaintiff,
v.
EASTERN REAL ESTATE LLC, Defendant.

          ORDER RE: MOTION TO COMPEL (ECF NO. 101)

          GEORGE FOLEY, JR. United States Magistrate Judge.

         This matter is before the Court on Plaintiff's Motion to Compel (ECF No. 101) filed on May 1, 2017. Defendant Eastern filed its Opposition (ECF No. 106) on May 4, 2017. Plaintiff filed its Reply (ECF No. 120) to Eastern's Opposition on May 22, 2017. Defendant Tropicana filed its Opposition (ECF No. 113) and Countermotion for Protective Order (ECF No. 114) on May 15, 2017. Plaintiff filed its Reply (ECF No. 122) and Opposition (ECF No. 123) to Tropicana's opposition/countermotion on May 26, 2017. Defendant Tropicana filed its Reply (ECF No. 129) on June 2, 2017. The Court conducted a hearing in this matter on June 8, 2017.

         BACKGROUND

         Plaintiff RKF Retail Holdings, LLC (“RKF”) and Defendant Tropicana Las Vegas, Inc. (“Tropicana”) entered into an Exclusive Agency Agreement (“Agreement”) on August 29, 2012 relating to a planned retail shopping center to be constructed on the grounds of Tropicana's hotel/casino property in Las Vegas, Nevada. Motion to Compel (ECF No. 101), Exhibit 1, Agreement. Pursuant to the Agreement, Tropicana granted RKF the exclusive right as broker to lease space to prospective tenants in the shopping center “Premises” which was in the design development stage. Id. at ¶ 1. RKF was to use its best efforts to market the shopping center to prospective tenants consistent with a first class retail shopping mall. Id. at ¶ 2. The initial term of the agreement was one year, commencing on September 15, 2012. Id. at ¶ 1. The Agreement provided that RKF would be paid commissions on tenant leases as follows: 50% upon execution of a lease or the first construction draw whichever occurred later, and 50% upon the tenant opening for business at the shopping center premises. Id. at ¶ 6. If no lease was executed, then no commission would be deemed earned by RKF, and it would not be entitled to any payment from the Owner other than for preparing marketing materials. Id. at ¶ 7.

         The Agreement provided four methods by which it could be terminated. First, the Agreement could be terminated after one year by either party on thirty days written notice. Id. at ¶ 1. Second, it could be immediately terminated if the Owner decided to cease its efforts in designing and developing the shopping center project. The Agreement would be automatically re-instated for a six (6) month period, however, if the Owner elected to start the project again within six (6) months after ceasing its efforts. Id. Third, the Owner could terminate the agreement if it entered into any sale, merger, acquisition, assignment or other disposition involving the Owner or the Premises. Upon termination for this reason, neither the Owner or its successor would have any further liability to RKF except to the extent that (i) commissions had been earned but not yet paid and (ii) the prospective tenant list pursuant to Section 18 was assumed by the successor in writing. If the prospective tenant list was not assumed by the successor, then the Owner would remain responsible for payment of commissions to RKF in accordance with Section 18. Id. at ¶ 8. Fourth, the Agreement could be terminated upon a default by RKF that was not cured within thirty 30 days following notice by the Owner. In the event of termination for default, RKF would not be entitled to any commissions, except to the extent that any commissions had been earned prior to termination in connection with any lease that has been fully executed and delivered by the parties. Id. at ¶ 11.

         Paragraph 18 of the Agreement stated as follows:

Prospective Tenant List. Within fifteen (15) days after the expiration or effective date of termination of this Agreement, RKF shall submit to Owner a Prospective Tenant List (hereinafter the “List”), which shall be limited to prospective tenants that have either (i) visited the property where the Premises will be located with intent to lease space therein and expressed interest in writing (email included) in leasing space therein, or (ii) submitted or received a bona fide offer, bona fide letter of intent or bona fide written lease proposal during the term hereof. If, within six (6) months after the expiration or effective date of termination of this Agreement, Owner enters into a transaction with any Tenant included on the List, Owner agrees to pay RKF the Commission as outlined herein (plus any Option Commissions or Expansion Commissions if applicable), in accordance with the terms hereof.
Notwithstanding the foregoing, if at the end of such six (6) month period, Owner and a Tenant on the List are negotiating in good faith, then such six (6) month period shall be extended to the earlier of (a) the date on which the transaction is executed and (b) the date on which such good faith negotiations end without the transaction having been executed. This paragraph shall survive the expiration or termination of this Agreement, including as it may relate to any Transfer. In the event the Owner enters into a Transfer Agreement, Owner shall use commercially reasonable efforts to enter into an Assumption Agreement, a copy of which shall be sent to RKF within five (5) days of the effective date of the Transfer. Any Transfer shall not release Owner of the obligation under this paragraph unless the Transferee enters into an Assumption Agreement.

Agreement, (ECF No. 101), Exhibit 1, ¶ 18.

         On March 26, 2014, Tropicana sent a letter to RKF terminating the Agreement, effective immediately. Tropicana's Opposition (ECF No. 113), Exhibit A. Tropicana stated that it was terminating the Agreement, under Section 1. It also stated that it was terminating the Agreement under Section 11 due to the numerous defaults by RKF, some of which it identified in the letter. Tropicana stated that it was making the termination effective immediately to avoid exposing it to further harm and additional damages resulting from RKF's numerous defaults. Id. On April 8, 2014, RKF sent a letter to Tropicana reiterating its position that Tropicana had improperly and unlawfully terminated the Agreement. With its letter, RKF provided “a list of prospective tenants for the Premises that are the subject of the agency agreement.” Motion to Compel (ECF No. 101), Exhibit 2.

         RKF filed its complaint against Tropicana on July 28, 2014. RKF alleged that it performed substantial work to market the project and obtain letters of intent from prospective tenants, and performed other services outside the scope of the Agreement to assist Tropicana in developing the project. It alleged that Tropicana “had no intention of immediate development of the Premises, but rather procured RKF's services in marketing and cultivating interest in its potential development by means of fraudulent misrepresentations of fact.” RKF alleges causes of action against Tropicana for fraudulent inducement, [1] fraudulent concealment, breach of contract, contractual and tortious breach of the covenant of good faith and fair dealing, and unjust enrichment/quasi-contract. Tropicana filed a counterclaim on September 4, 2014, alleging that RKF misrepresented its ability to secure tenants for the proposed shopping center, and that had it known the true extent of RKF's experience and contacts, it would not have hired it. Tropicana alleges claims against RKF for fraudulent inducement, breach of contract, breach of the implied covenant of good faith and fair dealing, intentional and negligent interference with prospective economic advantage, and negligence.

         On July 29, 2015, RKF filed a separate lawsuit against Eastern Real Estate, LLC, (“Eastern”) which alleged that Eastern induced and conspired with Tropicana to terminate RKF's exclusive agency contract so that Tropicana and Eastern could then proceed with the development. RKF alleges claims against Eastern for tortious interference with contractual relations and prospective business relations, and aiding and abetting breach of fiduciary duty.[2]

         The Tropicana was acquired by Penn National Gaming, Inc. on August 25, 2015. On September 16, 2015, Tropicana sent a letter to RKF stating: “Based on our telephone discussions last month, I know you are aware that Penn National Gaming, Inc. (“Penn”) agreed to buy the Tropicana. That transaction has now closed, and Penn is now the owner of the Tropicana.” Tropicana's Opposition (ECF No. 113), Exhibit D. Tropicana quoted paragraph 8 of the Agreement regarding termination upon a transfer or sell of the Owner or the Premises and asserted that provision as an additional ground for terminating the Agreement. Tropicana, however, stood by its earlier termination of the Agreement on March 26, 2014.

         RKF claims that but for Tropicana's and Eastern's wrongful conduct, it would have earned six million dollars ($6, 000, 000.00) in commissions once the shopping center was completed and tenants began operating their businesses. Tropicana has asserted throughout this litigation that it ceased development of the shopping center, and RKF therefore cannot prove any alleged loss of commissions. The evidence shows that on July 7, 2014, Eastern notified Tropicana that it had decided to withdraw from the project. Opposition to Motion for Summary Judgment (ECF No. 137), Exhibit 84. Brian Kelly of Eastern testified, however, that Onex (Tropicana's parent) “asked us to come back to the project and we came back to the project and started again, but we never completed any sort of venture.” Tropicana's Opposition to Motion to Compel (ECF No. 113), Exhibit E, Kelly deposition, pg. 125. Mr. Kelly stated that Eastern finally withdrew from the project in June 2015. Raymond Murphy of Eastern testified that Eastern's involvement in the project ended when the Tropicana was sold to Penn Gaming which may have been in or about June 2015. Opposition (ECF No. 113), Exhibit F. He further testified that Eastern “[was] working under a predevelopment agreement to see if there was a way to make this project viable, financially/physically, and then we were notified that Penn Gaming was buying Tropicana, the project was no longer there for us to work on.” Id. at Murphy deposition, pgs. 47-48.

         Jim Reuter, an employee of Atlantic Retail which worked as the leasing agent for Eastern on the project, testified that “the deal had been on and off a couple of times, so I think there was a feeling that there was a possibility that the deal may be resurrected.” Opposition (ECF No. 113), Exhibit G, Reuter deposition, pg. 226. He could not recall the exact date that Atlantic completely stopped working on the project, but believed it was prior to November 1, 2015. Id. at pgs 226-27. He further stated “I don't know if it was June or July of 2015.” Id. at pg. 227. Mr. Reuter was not aware at the time of his April 4, 2017 deposition of any ongoing plans to develop a shopping center on the property. Id. at pg. 208. Bryan Anderson of Atlantic testified that Atlantic's involvement ended “[w]henever Eastern's involvement ended.” Opposition (ECF No. 113), Exhibit H, Anderson deposition, pg. 46. He stated that Atlantic stopped working on the project when it was announced that Penn Gaming had purchased the property. Id. at pg. 147. He testified that Eastern reached out to Penn National Gaming to see if it could continue as a joint venture partner with it on the project. Id. at pg.154. Mr. Anderson was also unaware, at the time of his April 5, 2017 deposition whether there are current plans to develop a shopping center on the property. Id. at pgs 77-78.

         Tropicana's general counsel Joanne Beckett testified that she did not know “if Penn Gaming in connection with its acquisition of Tropicana ever contemplated pursuing the development.” Opposition (ECF No. 113), Exhibit I, Beckett deposition, pg. 136. She was not privy to any conversations that Tropicana's former president, Alex Yemenidjian, may have had with Penn Gaming regarding the continued pursuit of the shopping center project after the acquisition. She did not hear of any such plans. Id. at pgs 306-07.

         RKF states that on March 31, 2017, it learned of the existence of “Penn Gaming/Tropicana documents showing that they fully intended to develop the Premises and had simply hid the continuing development plans from discovery.” Motion to Compel (ECF No. 101), at pg. 2. RKF states that it received an email from a Las Vegas broker inquiring about RKF's interest in providing prospective tenants for a shopping center development on the Tropicana property. The broker attached a “‘Master Plan and renderings for the Tropicana retail expansion' reflecting ongoing efforts to develop the Premises as a retail shopping center.” Id. at pg. 7. See Declaration of RKF's Counsel, Ross Bagley (ECF no. 103), Exhibit D. The drawings or renderings prepared by Marnell Architecture are dated November 2016. Id. In light of this information, RKF moves to compel Tropicana to supplement its previous responses to requests for production of documents. Specifically, RKF argues that Tropicana should be ordered to supplement its responses to the following requests for production in RKF's first set of requests:

Request No. 2: All documents concerning the Premises, including but not limited to development of ...

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