Summary
The United States District Court for the Western District of Virginia denied Starbucks Corporation’s motion to dismiss or strike the landlord’s damages claim. Starbucks argued that the commercial lease unambiguously limited its liability for lost base rent to two years, but the court concluded that this interpretation conflicted with other remedial provisions, including provisions allowing specific performance and cumulative remedies. The court declined to resolve any potential ambiguity at the motion-to-dismiss stage.
Topics
Practice areas
Questions Presented
- Whether the lease unambiguously limited Starbucks's liability for lost base rent to two years, such that the landlord's claim for additional damages should be dismissed or stricken at the pleading stage.
- Whether the lease's remedial provisions must be read together so that the landlord may pursue remedies in addition to the remedy described in Paragraph 14.2(a).
- Whether any ambiguity created by the lease's limitation language could be resolved on a Rule 12(b)(6) motion.
Holdings
- The lease does not unambiguously limit the landlord's available damages and remedies to two years of base rent. Starbucks's interpretation of Paragraph 14.2(a) is inconsistent with the lease's text and structure because it disregards other remedial provisions, including provisions authorizing specific performance and cumulative remedies.
- The court need not definitively construe the lease to deny the motion to dismiss, and any ambiguity in the lease cannot be resolved at the Rule 12(b)(6) stage.
Key quotations
“Contract interpretation is a pure question of law for the Court to decide.”
“In sum, the Court need not offer a definitive construction of the lease to deny Starbucks’ motion to dismiss.”
“Because Starbucks’ interpretation renders other provisions of the lease meaningless and is generally discordant with the text and structure of the lease, the Court must reject Starbucks’ argument that the second-to-last sentence in sub-paragraph 14.2(a) unambiguously limits its liability to two years of base rent.”
Factual background
Plaintiff agreed with Starbucks to construct a customized Starbucks location in Danville, Virginia and lease it to Starbucks for an initial ten-year term with anticipated base rent of $1,985,684.10. Plaintiff purchased the land, constructed the required improvements, satisfied the delivery conditions, and tendered possession. Starbucks refused to execute the delivery form, returned the keys, and stated that it would not proceed with the lease; after Starbucks failed to cure following a notice of default, Plaintiff filed a breach-of-contract action.
Procedural history
The landlord alleged that it constructed and tendered a customized Starbucks facility, but Starbucks refused to execute the delivery-of-possession form, returned the keys, and declared that it would not proceed with the lease. After Starbucks failed to cure the alleged default following notice, Plaintiff filed suit. The district court denied Starbucks's motion to dismiss or strike and cancelled the scheduled hearing.