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Seven Z Enterprises, Inc. v. Giant Eagle, Inc.

United States District Court, W.D. Pennsylvania

December 23, 2019

SEVEN Z ENTERPRISES, INC., et al., Plaintiffs
GIANT EAGLE, INC., Defendant


          Christopher C. Conner, Chief Judge

         This case primarily involves contractual disputes between a group of independent supermarket owners and the corporation with whom they are affiliated. Earlier this year, defendant Giant Eagle, Inc. (“Giant Eagle”) filed an answer to plaintiffs' first supplemental complaint. That answer included a counterclaim against plaintiff Mon Valley Foods, Inc. (“Mon Valley”). Giant Eagle supplemented its single counterclaim with four counterclaims, and now moves for judgment on the pleadings as to those counts. (See Doc. 179). We will grant in part and deny in part Giant Eagle's motion.

         I. Factual Background & Procedural History

         A thorough recitation of the background and numerous claims in this case appears in our November 6, 2018 memorandum addressing Giant Eagle's motions to dismiss, familiarity with which is presumed. (See Doc. 118 at 1-5). The instant motion for partial judgment on the pleadings involves Giant Eagle's counterclaims set forth in Counts 7 through 10. (See Doc. 150 ¶¶ 166-208).

         Mon Valley currently operates three Giant Eagle supermarkets: the “Fisher Heights, ” “Finleyville, ” and “Uniontown” stores.[1] (See Doc. 79 ¶ 31; Doc. 150 ¶¶ 129, 130(a), 131(a); Doc. 161 ¶¶ 129, 130(a), 131(a)). Mon Valley and Giant Eagle executed “Retailer's Agreements” for these stores, which generally govern the licensing and business relationship between the parties. (Doc. 128 ¶ 13(a); Doc. 151 ¶¶ 130(a), 131(a); Doc. 161 ¶¶ 13(a), 130(a), 131(a)). Undisputed copies of the Retailer's Agreements have been attached to the pleadings. (Doc. 79-5 (Fisher Heights and Finleyville Retailer's Agreement); Doc. 150-2 (Uniontown Retailer's Agreement)). Additionally, Mon Valley and Giant Eagle have separate sublease contracts for each store. (See Doc. 128 ¶ 13(b); Doc. 151 ¶¶ 130(b), 131(b); Doc. 161 ¶¶ 13(b), 130(b), 131(b)). The parties have also provided these sublease contracts. (Doc. 79-36 (Fisher Heights sublease); Doc. 150-1 (Finleyville sublease); Doc. 150-3 at 2-14, 60-61 (Uniontown sublease)).

         This is not the first time we have addressed Mon Valley's various contracts with Giant Eagle. We previously dismissed, under Federal Rule of Civil Procedure 12(b)(6), a breach of contract claim asserted by Mon Valley regarding the Fisher Height's sublease and Giant Eagle's notice of termination thereof. (See Doc. 118 at 15-16 & n.7). We revisited that dismissal several months later when we denied Giant Eagle's motion to enjoin state-court litigation. (See generally Doc. 154). Specifically, we determined that Mon Valley was attempting to relitigate, in state court, “the effect of [Mon Valley's] January 31, 2018 notice to extend the Fisher Heights sublease and the concomitant propriety of Giant Eagle's termination notice” of that sublease. (Id. at 7-8). Nevertheless, we denied Giant Eagle's motion to enjoin the state-court proceedings because Giant Eagle had not demonstrated that it would suffer irreparable harm if denied the “heavy artillery” of a federal injunction. (Id. at 9-10 (quoting Smith v. Bayer Corp., 564 U.S. 299, 307 (2011))). Giant Eagle now moves for judgment on the pleadings on counterclaims involving its agreements with Mon Valley. Giant Eagle seeks specific performance as well as declaratory and injunctive relief. The motion is fully briefed and ripe for disposition.

         II. Legal Standard

         A motion for judgment on the pleadings is the procedural hybrid of a motion to dismiss and a motion for summary judgment. Westport Ins. Corp. v. Black, Davis & Shue Agency, Inc., 513 F.Supp.2d 157, 162 (M.D. Pa. 2007). Rule 12(c) of the Federal Rules of Civil Procedure provides: “After the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). To succeed on a Rule 12(c) motion, the movant must clearly establish that no material issue of fact remains to be resolved and that the movant “is entitled to judgment as a matter of law.” Sikirica v. Nationwide Ins. Co., 416 F.3d 214, 220 (3d Cir. 2005); see 5C Charles Alan Wright et al., Federal Practice and Procedure § 1368 (3d ed. 2015). A Rule 12(c) motion for judgment on the pleadings is decided under a standard similar to a Rule 12(b)(6) motion to dismiss. See Zimmerman v. Corbett, 873 F.3d 414, 417 (3d Cir. 2017). That is, judgment on the pleadings should be granted only when, accepting as true the facts alleged by the nonmovant and drawing “all reasonable inferences” in that party's favor, the movant is entitled to judgment as a matter of law. See id. (citation omitted).

         III. Discussion

         At the outset, we observe that the bulk of Giant Eagle's counterclaims against Mon Valley contain no material factual disputes. The “new facts” and different “factual allegations” referenced by Mon Valley, (see Doc. 236 at 2, 4-6), are either undisputed by Giant Eagle or simply constitute legal argument. Accordingly, the only remaining question is whether, under the facts as alleged by Mon Valley, Giant Eagle is entitled to judgment as a matter of law.

         A. Mon Valley's Shifting Contractual Arguments

         As a threshold matter, we note that Mon Valley's position regarding the Fisher Heights sublease and extension thereof is a moving target. In its first supplemental complaint, Mon Valley explicitly alleged that the initial term of the sublease ran concurrently with the term of the overlease, [2] and the overlease's initial term expired on December 31, 2018. (See Doc. 79 ¶¶ 612-13). Under the plain language of the sublease, Mon Valley's notice to exercise the extension option was due no later than 12 months before the end of the then-current lease term, i.e., by December 31, 2017. (See id. ¶¶ 613-14; Doc. 98 at 16; Doc. 118 at 15-16). According to Mon Valley, Giant Eagle's notice declaring that the sublease would terminate as of December 31, 2018-provided a month after the deadline to extend the sublease came and went without action by Mon Valley-was a retaliatory “tactic to intimidate and pressure Mon Valley to drop [the instant] litigation” rather than “for any legitimate business purpose.” (Doc. 79 ¶¶ 288-99, 615-16).

         Giant Eagle responded, in its Rule 12(b)(6) motion, that it was well within its contractual rights to provide notice of termination based on Mon Valley's failure to timely extend the sublease. Thereafter, Mon Valley's position abruptly changed course. In its responsive briefing, Mon Valley asserted that the “Agreement Setting Lease Term” (Doc. 79-48) clarifying the term of the overlease did not set the initial sublease term; it contended that the initial sublease term actually ended on December 31, 2017. (See Doc. 98 at 15-18; Doc. 154 at 6). Mon Valley's notice to extend the sublease, therefore, was due no later than December 31, 2016, and Giant Eagle had implicitly “waived the enforceability of the timeliness requirement under the Sublease” by taking no action until 2018. (See Doc. 154 at 6 (quoting Doc. 98 at 18)). We rejected this argument because it contradicted Mon Valley's pleadings. (See Doc. 118 at 16 n.7 (explaining that a party cannot amend its pleadings through an opposition brief (citing Frederico v. Home Depot, 507 F.3d 188, 201-02 (3d Cir. 2007); Commonwealth of Pa. ex rel. Zimmerman v. PepsiCo, Inc., 836 F.2d 173, 181 (3d Cir. 1988)))).

         Mon Valley pivots yet again in its answer to Giant Eagle's counterclaims. Mon Valley abandons its prior theories and raises three new arguments as to why its extension notice was timely and effective and Giant Eagle's notice of termination was improper. Putting aside concerns that Mon Valley's vacillating position implicates judicial estoppel, [3] we will explain why Mon Valley's newest arguments are unpersuasive.

         1. Paragraph 46.2 of the Overlease

         Mon Valley claims that Giant Eagle was contractually obligated to (1) provide notice of Mon Valley's failure to timely exercise its extension option for the sublease, and (2) permit Mon Valley 30 days in which to exercise that option prior to declaring the sublease terminated (“notice and grace period”). For this proposition, Mon Valley primarily relies on paragraph 46.2 of the Fisher Heights overlease between the Bartolottas and Giant Eagle. That paragraph states:

Notwithstanding the foregoing [lease renewal options provided in paragraph 46.1], if Tenant does not notify Landlord of the exercise of any renewal option hereunder prior to the notice date set forth herein, Tenant's option to renew shall nevertheless remain in full force and effect for a period of thirty (30) days after Tenant's receipt of notice from Landlord setting forth the expiration date of the Lease and advising Tenant that notice of renewal has not been received. Landlord shall be obligated to provide such a notice to Tenant prior to leasing the Premises to another tenant or declaring that the Term has ended.

(Doc. 79-47 ¶ 46.2).

         Mon Valley's argument goes like this. Paragraph 46.2 of the Fisher Heights overlease requires the Bartolottas to provide notice to Giant Eagle regarding Giant Eagle's failure to timely exercise the lease-extension option and to give it 30 days to exercise that option before declaring the overlease terminated. The Fisher Heights sublease identifies the overlease in the preamble “as attached hereto as Exhibit A and made a part hereof, ” (see Doc. 79-36 at 1), and also incorporates the term provided in paragraph 1.12 of the overlease so the contracts run concurrently, (id. ¶ 2). Paragraph 1.12 of the overlease, in turn, sets an initial 20-year term and states that the term “shall continue for any extensions thereof pursuant to Section 46 hereof[.]” (Doc. 79-47 ¶ 1.12). Mon Valley contends that the notice and grace period set out in paragraph 46.2 of the overlease is incorporated into the sublease and applies equally to Giant Eagle (sublessor) and Mon Valley (sublessee). Giant Eagle never provided such notice and opportunity to cure, and Mon Valley informed Giant Eagle in January 2018 that it was exercising its renewal option. According to Mon Valley, its extension notice was thus effective and Giant Eagle “cannot declare that the [sub]lease term expired on December 31, 2018.” (See Doc. 236 at 4-5).

         Well-settled contract interpretation principles doom Mon Valley's argument.[4]The fact that the overlease is attached to and made a part of the sublease does not mean that the sublease incorporates all rights and obligations in the overlease and applies them to the respective parties to the sublease.[5] Simply because the sublease refers at times to the overlease and made the overlease a part of the sublease does not render the express terms of the sublease nugatory or overridden. They are two distinct contracts between different entities. If Giant Eagle and Mon Valley intended to incorporate the overlease's notice and grace period into the sublease, they easily could have done so through incorporation by reference or by adding a similarly worded provision. But they did ...

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