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McDonald's Corporation v. East Liberty Station Associates

United States District Court, W.D. Pennsylvania

December 10, 2014

MCDONALD'S CORPORATION, Plaintiff,
v.
EAST LIBERTY STATION ASSOCIATES, Defendant.

MEMORANDUM ORDER

CATHY BISSOON, District Judge.

I. MEMORANDUM

For the reasons that follow, Defendant's Motion to Dismiss the Complaint Pursuant to Rule 12(b)(7), or Alternatively, Motion for a More Definite Statement Pursuant to Rule 12(e) (Doc. 7) will be denied.

BACKGROUND

On July 23, 1986, a Ground Lease and Addendum ("the Lease") were executed between McDonald's Corporation ("Plaintiff" or "Lessee") and the predecessor in interest to East Liberty Station Associates ("Defendant" or "Lessor"). Compl. (Doc. 1) at ¶ 24, Ex. A at § 1. The Lease pertains to the rental of a property in the Village of Eastside Shopping Center on Penn Avenue in Pittsburgh, Pennsylvania ("the Premises"), for a term of 20 years with the option to extend for five successive periods of five years each. Id. at Ex. A, §§ 2, 13. The Lease provides Lessee with the option to purchase the rented property; it also lays out Lessor's right of reentry in the event of Lessee's default, defined therein. Id. at Ex. A, §§ 10, 15. Lessor's right of reentry provides Lessee with a 30-day period, after notice from Lessor, to cure the default. Id . Plaintiff and Defendant are the only two parties to the Lease. Id. at Ex. A. At all times relevant to the current dispute, the McDonald's restaurant on the Premises has been operated by an independent contractor franchisee, and not the McDonald's Corporation. Id. at ¶ 22.

On June 7, 2012, Plaintiff informed Defendant that it was exercising its option to purchase the Premises pursuant to the terms of the Lease. Id. at ¶ 45, Ex. B. Plaintiff alleges that since that date, Defendant has "repeatedly refused to acknowledge McDonald's exercise of the purchase option and has failed to take the necessary steps to convey the Demised Premises to McDonald's...." Id. at ¶ 48. Plaintiff has continued to pay monthly "rent" since June, 2012.[1]

Pittsburgh Police have alleged that on January 29, 2014, an employee of the franchisee made a drug sale on the Premises. Id. at ¶¶ 57-8, Ex. C. In a letter dated February 14, 2014, Defendant informed Plaintiff that a material breach of the Lease had occurred by virtue of the operation of "a serious and elaborate drug trafficking scheme" on the Premises. Id. at ¶ 60, Ex. C. Defendant stated that Plaintiff had thus defaulted on the Lease, and that the lessor was not obligated to provide a cure period - as set forth in Lease - "given the grave and illicit nature of the activities." Id. at Ex. C. Defendant requested a surrender of the Premises. Id.

In March, 2014, Plaintiff filed a three-count complaint against Defendant: 1) requesting a declaratory judgment that, inter alia, Plaintiff properly exercised its purchase option; Defendant is in breach of the lease for refusing to honor the option to purchase; Plaintiff is entitled to a 30-day cure period after notice of an alleged default on the Lease; and Plaintiff is not in default of the Lease; 2) alleging that Defendant materially breached the Lease by refusing to honor Plaintiff's exercise of the purchase option and by denying Plaintiff an option to cure the alleged default, causing monetary injury; and 3) alleging that Defendant materially breached the Lease by ignoring Plaintiff's exercise of the purchase option and by denying Plaintiff an option to cure the alleged default, meriting a remedy of specific performance. Compl. at ¶¶ 83-102.

Defendant filed a Motion to Dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(7) or, in the alternative, a Motion for a More Definite Statement pursuant to Federal Rule of Civil Procedure 12(e). Def.'s Mot. (Doc. 7). Defendant argues that the franchisee is an indispensable party under Federal Rule of Civil Procedure 19, as the franchisee is in possession of the Premises. According to Defendant, if the Lease is found to be terminated in this action, complete relief cannot be accorded to Defendant in the event of nonjoinder of the franchisee. Defendant also moves, in the alternative, that the Court order Plaintiff to plead more definitely its allegations relating to the franchisee, including the franchisee's identity and domicile. Def.'s Br. (Doc. 8) at 7.

ANALYSIS

A. Motion to Dismiss

With respect to a Federal Rule of Civil Procedure 12(b)(7) motion, the Court must accept all factual allegations in the complaint as true and draw all reasonable inferences therefrom in the light most favorable to the non-moving party. Jurimex Kommerz Transit G.M.B.H. v. Case Corp., 65 Fed.Appx. 803, 805 (3d Cir. 2003). Rule 12(b)(7) permits a defendant to move for the dismissal of a complaint due to the plaintiff's failure to join a party deemed necessary and indispensable under Rule 19. Fed.R.Civ.P. 12(b)(7), 19.

The Court's inquiry begins with an analysis under Rule 19. Pittsburgh Logistics Systems, Inc. v. C.R. England, Inc., 669 F.Supp.2d 613 (W.D. Pa. 2009). The Court:

first must determine whether the absent [parties] should be joined as "necessary" parties under Rule 19(a). If they should be joined, but their joinder is not feasible inasmuch as it would defeat diversity of citizenship... we next must determine whether the absent parties are "indispensable" under Rule 19(b). ...

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