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Whitemak Associates and v. Ocb Restaurant Company

February 28, 2013

WHITEMAK ASSOCIATES AND PENNSYLVANIA REAL ESTATE INVESTMENT TRUST,
PLAINTIFFS,
v.
OCB RESTAURANT COMPANY, LLC., DEFENDANT.



The opinion of the court was delivered by: Stengel, J.

MEMORANDUM

This case arises out of a commercial lease dispute between Defendant/Tenant OCB Restaurant Company, LLC (OCB) and Plaintiffs/Landlords Whitemak Associates and Pennsylvania Real Estate Investment Trust (Whitemak). Before me is OCB's motion to dismiss, which has been fully briefed and is ripe for disposition. For the following reasons, I will deny the motion.

I. BACKGROUND

Whitemak sets forth the following facts in its complaint, which I accept as true for the purpose of OCB's motion. OCB operates an Old Country Buffet restaurant in the Whitehall Mall shopping center in Whitehall, Pennsylvania. OCB leases the premises from Whitemak. In August 2011, Whitemak sought OCB's consent to expand Whitehall Mall by constructing a Buffalo Wild Wings restaurant adjacent to Old Country Buffet. OCB refused, arguing that construction of the proposed Buffalo Wild Wings would breach § 7.01 of the parties' lease, which prohibits Whitemak from taking "any action that would unreasonably materially interfere with access to, visibility of the premises or signage therefore or the conduct of [OCB's] business in the" premises. The parties discussed the matter via letter correspondence for roughly nine months. When Whitemak suggested in May 2012 that it would proceed without OCB's consent, OCB declared Whitemak in default under the lease and indicated that it may seek legal action. Whitemak responded by filing this lawsuit roughly two and a half months later; it seeks a declaratory judgment "that it is not in default under the Lease, that [its] proposed expansion of the Whitehall Mall does not violate the lease, and that [it] has the legal right to proceed with the proposed expansion." Whitemak has not begun construction of the Buffalo Wild Wings expansion and indicates that it will not do so until this dispute is resolved.

OCB moved to dismiss. II. DISCUSSION

A. Amount in Controversy

Diversity jurisdiction is appropriate where the parties are citizens of different states and the amount in controversy is in excess of $75,000. 28 U.S.C. § 1332(a). OCB contends that Whitemak's action fails, in fact,*fn1 to meet the $75,000 amount-in-controversy requirement. Doc. No. 11 at 1-4. OCB's argument is without merit.

"In actions seeking declaratory or injunctive relief, it is well established that the amount in controversy is measured by the value of the object of the litigation." Hunt v. Washington State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977). The Third Circuit has instructed courts to make this assessment from the plaintiff's viewpoint. Columbia Gas Transmission Corp. v. Tarbuck, 62 F.3d 538, 539 (3d Cir. 1995). The parties agree that the object of the litigation is the right to build and lease a restaurant in Whitehall Mall. I therefore must determine whether the value of the lease exceeds $75,000. Miller v. Cabot Oil & Gas Corp., 3:08CV665, 2008 WL 2367293, at *2 (M.D. Pa. June 5, 2008). Whitemak, as the party asserting jurisdiction, bears the burden of making this showing. Coregis Ins. Co. v. Schuster, 127 F. Supp. 2d 683, 686 (E.D. Pa. 2001).

Whitemak has met its burden. Attached to its briefing, Whitemak included an affidavit from Dawn Lindquist, vice president of Simon Property Group, Inc., a Whitemak affiliate. Ms. Lindquist attests that she has been "directly involved in the proposed expansion at [Whitehall] Mall which is the subject of this litigation, including specifically the negotiation and execution of the lease" for the proposed Buffalo Wild Wings. Doc. No. 14-1 at 2. According to Ms. Lindquist, the lease for the proposed Buffalo Wild Wings sets the rent at $110,000 per year for an initial ten-year term. An affidavit from a knowledgeable person is competent evidence of the amount in controversy. Miller, 2008 WL 2367293, at *3. Whitemak's action easily satisfies the amount-in-controversy requirement of § 1332(a), and I therefore move the merits of OCB's motion to dismiss.*fn2

B. Propriety of Declaratory Relief

Whitemak seeks a declaration pursuant to the federal Declaratory Judgment Act (the Act), which provides in relevant part that "[i]n a case of actual controversy within its jurisdiction, . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration." 28 U.S.C. § 2201(a). "Jurisdiction conferred by this act is discretionary and district courts are 'under no compulsion to exercise it.'" Atl. Mut. Ins. Co. v. Gula, 84 F. App'x 173, 174 (3d Cir. 2003) (quoting State Auto Ins. Cos. v. Summy, 234 F.3d 131, 133 (3d Cir. 2000)); see also Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995); Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494 (1942). OCB urges me to exercise this discretion in its favor and to dismiss Whitemak's complaint with prejudice. OCB contends (1) that Whitemak filed this action preemptively to foreclose OCB's choice of a state court forum and (2) that Whitemak's action is improper because an action at law is available. Doc. No. 5 at 1. I address each argument in turn.

The Third Circuit has cautioned that "federal courts should not permit a declaratory judgment action to be used as a 'method of procedural fencing, or as a means to provide another forum in a race for res judicata.'" Brethren Mut. Ins. Co. v. Head's Up, Inc., CIV. 1:09-CV-1544, 2010 WL 411715, at *2 (M.D. Pa. Jan. 28, 2010) (quoting Terra Nova Ins. Co. v. 900 Bar, Inc., 887 F.2d 1213, 1225 (3d Cir. 1989)). OCB relies primarily on two cases in support of its argument that Whitemak has engaged in procedural fencing.

In Crown Cork & Seal Co., Inc. v. Borden, Inc., 779 F. Supp. 33 (E.D. Pa. 1991), the plaintiff sold defective aerosol cans to the defendant. The defendant recalled the cans, and the parties negotiated for two years over who would bear the costs. Eventually, the defendant threatened suit in the U.S. District Court for the Western District of Oklahoma if the plaintiff didn't pay. The plaintiff responded by immediately filing suit in the U.S. District Court for the Eastern District of Pennsylvania, its preferred forum, seeking a declaratory judgment that the cans weren't defective and that it did not breach its contract with the defendant. Id. at 34-35. The court dismissed the action, holding that its only purpose was to preempt the defendant's choice of forum. Id. at 35-36. Furthermore, the action would not serve the Act's purposes because the parties' contract dealings were over and there was "no 'present behavior' to affect[] regarding the rights or future conduct of either" party. Id. at 36 n.3 (quoting ACandS v. Aetna Cas. & Sur. Co., 666 F.2d 819, 823 (3d Cir. 1981)).

OCB also relies on U.S. Surgical Corp. v. Litvack, CIV.A. 99-88-GMS, 1999 WL 33220034 (D. Del. Dec. 30, 1999). There, the plaintiff corporation shut down an affiliate with which it had recently merged, allegedly in breach of the merger agreement. The defendant shareholder threatened suit. The plaintiff filed first, seeking a declaration pursuant to the Act that it had not breached the merger agreement in shutting down its affiliate and that it owed no consideration to the defendant. Id. at *1-2. The court dismissed the action, holding that the plaintiff "clearly filed th[e] lawsuit as a preemptive strike against the one contemplated by" the defendant ...


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