Abq Uptown, LLC v. Davide Enters., LLC

ABQ UPTOWN, LLC, a Delaware Limited Liability Company, Plaintiff, v. DAVIDE ENTERPRISES, LLC,a New Mexico Limited Liability Company; DAWN DAVIDE;and CHRISTOPHER LUTTRELL, Defendants.

No. CIV 13-0416 JB/KK

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO

October 19, 2015

MEMORANDUM OPINION¹

THIS MATTER comes before the Court on Plaintiff ABQ Uptown, LLC's Motion for Partial Summary Judgment on Counts I, II, and IV of Plaintiff's Complaint, filed February 5, 2015 (Doc. 60)("MSJ"). The Court held a hearing on the MSJ on April 22, 2015 and an evidentiary Mark V² hearing on May 29, 2015. The primary issues are: (i) whether Section 19.1 of the Shopping Center Lease by and Between Hunt Uptown, LLC, a New Mexico limited liability company, Landlord, and Davide Enterprises, LLC, Tenant (dated March 17, 2010), filed May 3, 2013 (Doc. 1-2)(the "Second Lease"), is ambiguous; (ii) if Section 19.1 is not ambiguous, what its meaning as a matter of law is; (iii) whether the Court should grant the MSJon Plaintiff ABQ Uptown LLC's breach-of-contract claim (Count I) against the Defendants for Davide Enterprises' removal of various permanent improvements, improvements, and/or fixtures from the Premises in violation of Section 19.1 of the Second Lease; (iv) whether the Court should grant the MSJ on ABQ Uptown's implied covenant of good-faith-and-fair-dealing claim (Count II) against Defendants Davide Enterprises, Dawn Davide, and Christopher Luttrell for Davide Enterprises' denial of ABQ Uptown's right to receive the benefits provided under the Second Lease; and (v) whether the Court should grant the MSJ on ABQ Uptown's unjust enrichment claim (Count IV) against the Defendants for Davide Enterprises' unjust and wrongful acts, including their breach of the Second Lease, which benefited them at ABQ Uptown's expense. The Court will grant in part and deny in part the MSJ. The Court concludes that Section 19.1 of the Second Lease is not ambiguous as a matter of law, because the provision is not reasonably and fairly susceptible of different constructions. Because Section 19.1's language, viewed in light of the extrinsic evidence that the parties presented at the Mark V hearing, is not fairly susceptible to conflicting inferences, the Court can determine the meaning of the Second Lease as a matter of law, and grants ABQ Uptown's MSJ on their breach-of-contract claim (Count I) against the Defendants³ as to some of the articles or items that DavideEnterprises removed from the Premises in violation of Section 19.1 of the Second Lease. The Court denies, however, the MSJ on ABQ Uptown's implied covenant of good-faith-and-fair-dealing claim (Count II) against the Defendants, because ABQ Uptown has not sufficiently shown that the Defendants breached the Second Lease in bad faith. Further, the Court will deny the MSJ on ABQ Uptown's unjust enrichment claim (Count IV) against the Defendants, forwhere a contractual relationship exists, New Mexico law bars such claims. The Court should not grant ABQ Uptown equitable relief when it has adequate remedy at law for its claims.

FACTUAL BACKGROUND

The Court will provide two factual sections, which are set forth below. The Court will first present its findings of fact based on the Mark V hearing it held on May 29, 2015. See Transcript of Hearing at 2-58 (taken May 29, 2015)("May 29 Tr.").⁴ Second, the Court will set forth the undisputed material facts for purposes of deciding the MSJ.

1. The Court's Findings of Fact Based on the Mark V Hearing.⁵

Pursuant to the Supreme Court of New Mexico's decision in Mark V. Inc. v. Mellekas, 1993-NMSC-001, 845 P.2d 1232, the Court makes the following findings of fact:

1. Defendant Davide Enterprises, LLC ("Davide Enterprises") entered into two lease agreements with Hunt Uptown, LLC for real property located in Building 12 of the ABQ Uptown Shopping Center at 2201 Uptown Loop, Albuquerque, New Mexico, 87110 ("Premises").⁶ May 29 Tr. at 37:6-18; Amended Complaint ¶ 6, at 2, filed May 13, 2014 (Doc.43)("Complaint"); Answer to Amended Complaint ¶ 2, at 1, filed June 16, 2014 (Doc. 45)("Answer").⁷

2. The first lease entered into between Davide Enterprises and Hunt Uptown was executed in 2006 (the "First Lease"), and Davide Enterprises thereafter operated a retail salon and spa at the Premises under the trade name of "La Bella" or "La Bella Spa Uptown." May 29 Tr. at 37:13-18; Complaint ¶¶ 6-7, at 2; Answer ¶ 2, at 1; Affidavit of Dawn Davide ¶¶ 11-12, at 2 (dated February 18, 2015), filed February 19, 2015 (Doc. 61-2)(the "Davide Aff.").

3. Davide Enterprises subsequently terminated the First Lease after Davide gave birth to twins, one of whom had health challenges. See May 29 Tr. at 31:21-25; Complaint ¶ 7, at 2; Answer ¶ 2, at 1.

4. After Davide terminated the First Lease, she was preoccupied with her child's health and did not focus on the removal of her fixtures and other things from the Premises. See May 29 Tr. at 32:20-33:3.

5. Hunt Uptown was understanding of Davide's family situation and permitted her to keep some of her fixtures and other things at the Premises, while one of Davide's family members kept a key to the space. See May 29 Tr. at 32:22-33:11.

6. Some items, including rolled-up carpet, were never removed from the Premises. See May 29 Tr. at 32:20-33:11.

7. After Davide Enterprises' departure, Hunt Uptown had difficulty leasing the Premises to a new tenant and subsequently invited Davide Enterprises to return. See May 29 Tr. at 31:25-32:8.

8. On March 17, 2010, Davide Enterprises entered into a second lease with Hunt Uptown in connection with the operation of its retail salon and spa at the Premises (the "Second Lease") on the second floor. See Complaint ¶ 6, at 2; May 29 Tr. at 32:3-8.

9. Davide did not read the Second Lease line by line before signing it, trusting her attorney to look over it. See May 29 Tr. at 31:25-32:8.

10. Section 19.1 of the Second Lease provides as follows:

19.1 Surrender. Upon the expiration or termination of this Lease or of Tenant's right to possession, Tenant shall surrender the Premises in a clean undamaged condition. Tenant shall not remove permanent improvements that were provided by Landlord at the commencement of this Lease and shall not remove permanent improvements later installed by Tenant unless directed to do so by Landlord. All fixtures or improvements constructed or installed by Tenant at the Premises except Tenant's trade fixtures and equipment shall be the property of the Landlord. All light fixtures and HVAC equipment,⁸ plumbing fixtures, hot water heaters, fire suppression and sprinkler systems, wall coverings, carpeting and drapes and other fixtures located in or serving the Premises, except Tenant's trade fixtures and equipment whether installed by Tenant or Landlord, shall remain at the Premises, at the expiration or termination of this Lease without compensation, allowance or credit to Tenant. Tenant shall promptly remove Tenant's trade fixtures and equipment and repair any damage to the Premises caused by such removal. If Tenant fails to perform any repairs or restoration or fails to remove any items from the Premises as required hereunder, Landlord may do so, and Tenant shall pay Landlord the cost thereof upon demand. All property removed from the Premises by Landlord hereunder may be handled, discarded or stored by Landlord at Tenant's expense, and Landlord shall in no event be responsible for the value, preservation or safekeeping thereof. All such property, at Landlord's option, shall be conclusively deemed to have been conveyed by Tenant to Landlord as if by bill of sale without payment by Landlord. If Landlord arrangesfor storage of any such property, Landlord shall have a lien against such property for costs incurred in removing and storing the same.

Second Lease ¶ 19.1, at 15.

11. Before signing the Second Lease with Hunt Uptown, Davide did not have any discussions with Hunt Uptown about what items would be considered the landlord's property and what items would be considered the tenant's property in the event that the Second Lease was terminated. See May 29 Tr. at 32:9-13.

12. Before signing the Second Lease, Davide did not inquire whether Hunt Uptown would enforce Section 19.1. See May 29 Tr. at 39:9-41:13.

13. Upon entering into the Second Lease with Hunt Uptown in 2010, Davide Enterprises re-occupied the Premises, and resumed operating its retail spa and salon business. See Complaint ¶ 8, at 3; Answer ¶ 2, at 1.

14. While under the First Lease, Davide Enterprises occupied the first floor of the Premises; under the Second Lease, they moved to the second floor. See May 29 Tr. at 32:15-23.

15. The items that Davide put into the Premises the second time were primarily the same items that she had removed the first time. See May 29 Tr. at 32:14-17.

16. Because the space on the Premises' second floor was smaller, however, there was no room for some of the items that Davide had removed following the First Lease's termination. See May 29 Tr. at 33:24-34:5.

17. When Davide did not bring some of the items that she had removed the first time around into the Premises to begin operating under the Second Lease, Hunt Uptown did not make an issue about the items belonging to them. See May 29 Tr. at 333:24-34:5.

18. During the course of the Second Lease, on July 15, 2011, ABQ Uptown purchased the shopping center, and succeeded in interest to Hunt Uptown as the landlord and owner of the premises. See Complaint ¶ 11, at 3; May 29 Tr. at 37:19-23.

19. On September 25, 2012, Davide received a letter from ABQ Uptown providing notice of termination of the Second Lease, see Letter Re: Le Bella Day Spa, Suite 12F, ABQ Uptown, Albuquerque, New Mexico (dated September 25, 2012), filed May 3, 2013 (Doc. 1-3)("September 25, 2012, Letter"). See May 29 Tr. at 41:13-42:6.

20. The September 25, 2012, Letter provided that the tenant must vacate the premises and surrender possession thereof to the landlord in the...