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Boca Park Marketplace Syndications Group, LLC v. Ross Dress for Less, Inc.

United States District Court, D. Nevada

March 28, 2018

BOCA PARK MARKETPLACE SYNDICATIONS GROUP, LLC, Plaintiff,
v.
ROSS DRESS FOR LESS, INC., Defendants.

          ORDER

          RICHARD F. BOULWARE, II UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Before this Court comes Plaintiff Boca Park Marketplace Syndications Group, LLC (“Boca Park”)'s Motion for Summary Judgment (ECF Nos. 69, 84) and Defendant Ross Dress for Less, Inc. (“Ross”)'s Motion for Summary Judgment (ECF No. 72). For the reasons stated below, the Court denies these motions. Boca Park additionally filed a Motion to Strike [73] Appendix (ECF No. 86), and a Motion to Strike [73] Declaration, (ECF No. 87), and both Plaintiff and Defendant filed motions to seal (ECF Nos. 71, 75, 83), which the Court grants as discussed below.

         II. PROCEDURAL HISTORY

         On April 18, 2016, Boca Park filed a Complaint against Ross in the Eighth Judicial District Court in Clark County, Nevada. (ECF No. 1-2). Boca Park asserts the following causes of action: (1) declaratory judgment, declaring that the co-tenancy provisions in the commercial lease at issue constitute the imposition of a penalty and are unenforceable, and (2) breach of contract. Ross filed a Notice of Removal on the grounds of diversity jurisdiction on May 27, 2016. (ECF No. 1).

         On June 13, 2016, Ross filed an Answer and Counterclaim to the Complaint. (ECF No. 6). Ross brings its counterclaim seeking a declaratory judgment, declaring that the co-tenancy provisions in the lease and lease amendment, together with the Substitute Rent provision contained therein, were negotiated at arm's length between the parties of equal standing and are enforceable. Boca Park filed an Answer to the Counterclaim on June 20, 2016. (ECF No. 9).

         On May 11, 2017, Boca Park filed a redacted version of its Motion for Summary Judgment. (ECF No. 69).[1] The same day, Boca Park filed a Motion to Seal the Motion for Summary Judgment and certain attached exhibits. (ECF No. 71). Ross filed its Motion for Summary Judgment on May 12, 2017. (ECF No. 72). Ross additionally filed a Motion to Seal an attachment to its Motion for Summary Judgment the same day. (ECF No. 75). On June 1, 2017, Ross filed a Response to Boca Park's Motion (ECF No. 80) and an additional Motion to Seal (ECF No. 83). Boca Park filed its Response to Ross' dispositive motion on June 2, 2017. (ECF No. 85). Also on June 2, 2017, Boca Park filed two Motions to Strike attachments to Ross' Motion for Summary Judgment. (ECF Nos. 86, 87). On June 15, 2017, Boca Park filed a Reply to its dispositive Motion. (ECF No. 89). The following day, Ross filed its Reply. (ECF No. 90). Ross filed Responses to the Motions to Strike on June 16, 2017. (ECF Nos. 91, 92). Boca Park filed its Replies on June 23, 2017. (ECF Nos. 94, 95).

         III. UNDISPUTED FACTS

         The Court finds that the following facts are undisputed. Plaintiff Boca Park owns and operates the Boca Park Marketplace Shopping Center (“the Shopping Center”) constructed between 2000 and 2003 and located at the intersection of West Charleston and South Rampart Boulevards. Boca Park is owned by an entity called Triple Five Group (“Triple Five”). The major tenants in the Shopping Center include Target, Office Max and Ross. Defendant Ross is the nation's largest retailer of “off-price” apparel and home fashion. Ross Store #522 (Store 522) is a 30, 000-sq. ft. store which opened in the Shopping Center in 2001.

         The parties entered a 71 page lease for Store 522 on November 1, 2000 (“the Lease”). The Lease provides Ross a 10-year initial term with four additional five-year options, for a potential 30-year total term. Ross's relevant monetary obligation to Boca Park is comprised of two components, what the Lease refers to as “Minimum Rent” and “Reimbursements.” At the commencement of the Lease, Ross's “Minimum Rent” obligation started at $37, 733.75 monthly, or $452, 805.00 annually, and then increased at five-year intervals. Between Year 11 and Year 15 of the Lease (February 2012 to January 2017), Minimum Rent was $42, 764 monthly, not including common area maintenance (“CAM”) charges, insurance, or taxes. In February 2017, Minimum Rent rose to $42, 280.50 monthly, not including CAM charges, insurance, and taxes.

         As part of the Lease, Ross also agreed to pay Boca Park three categories of “Reimbursements” defined at § 2 of the Lease and further as:

i. § 7.4.1, Ross's “Pro Rata Share of the Common Area Charges, ” or 10% (§ 1.8), payable annually;
ii. § 8.2.1, Ross's “Pro Rata Share of the Tax Bill, ” payable annually, and
iii. § 9.1.3, Ross's “pro rata share of the premium for the casualty insurance described in Section 9.1.1” of the Lease, also payable annually.

         Pursuant to a provision of the lease with the heading “Guaranteed Co-Tenancy, ” Ross's obligation to Boca Park to pay Minimum Rent and Reimbursements was conditioned on the existence of designated “co-tenants” which were to occupy specific store locations of required sizes in the shopping center - Target, Vons, and Office Max. Also pursuant to the Lease, if any of the aforementioned three co-tenants quit their respective premises in the Shopping Center, then “Substitute Rent” applied, which was defined in the Lease as “the lesser of (a) Minimum Rent, or (b) two percent (2%) of Tenant's Gross Sales during the preceding month. Substitute rent, where applicable in this Lease, shall be paid in lieu of Minimum Rent, Percentage Rent, and Reimbursements.”

         The Lease obligated Ross to pay monthly Minimum Rent, not subject to a right of off-set or deduction, unless a “Reduced Occupancy Period” or other contracted circumstance occurred. In a section of the Lease titled “Co-Tenancy Requirements, ” the Lease provided that a Reduced Occupancy Period would occur unless all of the following requirements were met:

(i) all the co-tenants specified in Section 1.7.1 [Target, Vons, and Office Max] (the “Co-Tenants”) shall be open in the Shopping Center every day (except for nationally recognized holidays) for business to the public, during such Co-Tenant's designated hours; (ii) all the Co-Tenants are operating in at least the Leasable Floor Area specified in Section 1.7.1; and (iii) retail occupants of the Inline Buildings are open and operating under bona fide leases of a minimum of two (2) years' duration or occupancy agreements (except for the Co- Tenants, in which case the existence of a lease or occupancy agreement is not required) in at least the percentage of the Leasable Floor Area of the Inline Buildings indicated in Section 1.7.1 ...

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