SDP Kyrene LLC v. Kyrene Shopping Ctr.

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SDP Kyrene LLC, Plaintiff, v. Kyrene Shopping Center LLC, et al., Defendants.

No. CV-22-00987-PHX-MTL

United States District Court, D. Arizona

November 7, 2023

ORDER

MICHAEL T. LIBURDI, UNITED STATES DISTRICT JUDGE

Plaintiff SDP Kyrene LLC's (“SDP”) predecessor-in-interest^[1] and Defendant Kyrene Shopping Center LLC (“Kyrene”) entered into an Agreement for the Purchase and Sale of Property (the “PSA”). Kyrene agreed to sell commercial property located on West Chandler Boulevard in Chandler, Arizona (the “Property”) to SDP. One of the Property's commercial tenants is Defendant LA Laser Center PC (“LA Laser”). The parties, all of whom are sophisticated entities and were represented by counsel, negotiated and agreed to the terms the conditions, and the remedies outlined in the twenty-six-page PSA.

Prior to closing, the deal soured and fell apart. SDP sued alleging that Kyrene breached the PSA when it refused to close the transaction. It now seeks both specific performance and damages. SDP says that Kyrene used every opportunity it could to obstruct the deal because it received a better offer. Kyrene's main defenses are that SDP materially breached the PSA, which discharged Kyrene of its obligations under the agreement. Kyrene also argues that SDP fraudulently induced it to enter the PSA.

Now pending before the Court are SDP's Motion for Partial Summary Judgment (Doc. 225) and Kyrene and LA Laser's (the “Defendants”) Motion for Partial Summary Judgment (Doc. 228). For the reasons listed below, the Court will grant in part, and deny in part, both motions.

I. BACKGROUND

Many of the key facts have been previously detailed in prior Orders and are largely undisputed. (Doc. 132.) Rather than repeat them, the Court will briefly discuss some facts below, and will fully detail the key PSA provisions, allegations, and facts in its discussion regarding each claim.

Pursuant to the PSA, the parties agreed to a “Purchase Price” of $18 million, an “Effective Date” of November 17, 2021, and a “Closing Date” of May 16, 2022. (Doc. 228-4 at 2-3.) The parties also agreed to a “Feasibility Study Period” to range from November 17, 2021, to March 17, 2022. (Id. at 3.) The parties also defined “Purchaser Default” and “Seller Default.” (Id. at 14-15.) Article 10.2 of the PSA identifies specific default events that could be triggered by Kyrene:

The occurrence of any of the following prior or subsequent to Close of Escrow, shall be a ‘[Kyrene] Default' . . . (a) [t]he failure by [Kyrene] to deliver . . . the documents required to close Escrow . . . or (b) [t]he failure of [Kyrene] to perform any material act to be performed by it, to refrain from performing any material prohibited act or to fulfill any material condition to be fulfilleel by it under this [PSA].

(Doc. 237-4 at 15.)

If Kyrene defaulted “prior to the Close of Escrow,” SDP's “sole remedy shall be to pursue one, and only one, of the following remedies,” (1) to waive the default, (2) to extend “the time for performance,” (3) to terminate the PSA; or (4) to seek specific performance. (Id. at 16.)

After the closing fell through, SDP pursued specific performance as described in Article 10.4 of the PSA by filing suit in Arizona Superior Court. (Doc. 1-2.) Kyrene timely removed to this Court. (Doc. 1.) The next day, SDP moved for a temporary restraining order and preliminary injunction. (Doc. 16.) The parties agreed to a temporary standstill. (Doc. 28.) The Court then held an evidentiary hearing on SDP's motion for preliminary injunction. The Court entered a preliminary injunction and ordered that “with respect to the Property, [Kyrene] shall not (a) enter any new lease agreements; (b) renew or extend any existing lease agreements; or (c) modify any existing lease agreements, until the matter has been resolved by summary judgment or trial, or otherwise ordered by the Court.” (Doc. 132 at 13.)

II. STANDARD OF REVIEW

“The court shall grant summary judgment if [a] movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A fact is ‘material' only if it might affect the outcome of the case, and a dispute is ‘genuine' only if a reasonable trier of fact could resolve the issue in the non-movant's favor.” Fresno Motors, LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014). The Court “must view the evidence in the light most favorable to the nonmoving party and draw all reasonable inference[s] in the nonmoving party's favor.” Rookaird v. BNSF Ry. Co., 908 F.3d 451, 459 (9th Cir. 2018). “Summary judgment is improper ‘where divergent ultimate inferences may reasonably be drawn from the undisputed facts.'” Fresno Motors, 771 F.3d at 1125 (quoting Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 988 (9th Cir. 2006)).

A party moving for summary judgment “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “In order to carry its burden of production, the moving party must either produce evidence negating an essential element of the nonmoving party's claim or defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial.” Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000). “If . . . [the] moving party carries its burden of production, the nonmoving party must produce evidence to support its claim or defense.” Id. at 1103. “If the nonmoving party fails to produce enough evidence to create a genuine issue of material fact, the moving party wins the motion for summary judgment.” Id. There is no issue for trial unless enough evidence favors the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). “If the evidence is merely colorable or is not significantly probative, summary judgment may be granted.” Id. at 249-50 (internal citations omitted). At the same time, the evidence of the non-movant is “to be believed, and all justifiable inferences are to be drawn in his favor.” Id. at 255. “[I]n ruling on a motion for summary judgment, the judge must view the evidence presented through the prism of the substantive evidentiary burden.” Id. at 254. Thus, “the trial judge's summary judgment inquiry as to whether a genuine issue exists will be whether the evidence presented is such that a jury applying that evidentiary standard could reasonably find for either the plaintiff or the defendant.” Id. at 255.

“[W]hen parties submit cross-motions for summary judgment, [e]ach motion must be considered on its own merits,” but the Court must consider all evidence submitted in support of both motions when separately reviewing the merits of each. Fair Hous. Council of Riverside Cnty., Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001) (internal citation and quotations omitted). For “the party with the burden of persuasion at trial” to succeed in obtaining summary judgment, it “must establish beyond controversy every essential element” of each claim on which summary judgment is sought. S. Cal. Gas Co. v. City of Santa Ana, 336 F.3d 885, 888 (9th Cir. 2003) (internal citation and quotations omitted). The party without the burden of persuasion at trial is entitled to summary judgment where it establishes that the party with the burden of persuasion will be unable to prove at least one element of its claim in light of the undisputed facts. Celotex Corp., 477 U.S. at 322-23. This distinction reflects that the burden is ultimately on the proponent of each claim to prove it. Id. (“Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be ‘no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.”).

III. DISCUSSION

SDP alleges the following claims for relief: (1) Breach of Contract against Kyrene, (2) Breach of the Implied Covenant of Good Faith and Fair Dealing against Kyrene, and (3) Promissory Estoppel against Kyrene and LA Laser. (Doc. 221 ¶¶ 11-71.) Kyrene counterclaims for a declaration that “if SDP acquires the Property under the PSA, the LA Laser Lease will survive, SDP will not have the right to either terminate the LA Laser Lease or lock LA Laser out.” (Doc. 223 ¶ B.)

A. Breach of Contract

SDP moves for summary judgment solely on its claim that Kyrene breached the PSA. (Doc. 225 at 8.) “It is well established that, in an action based on breach of contract the plaintiff has the burden of proving the existence of a contract, breach of the contract, and resulting damages.” Chartone, Inc. v. Bernini, 83 P.3d 1103, 1111 (Ariz.Ct.App. 2004). There is no dispute that the PSA is a contract or that SDP has suffered damages by not acquiring the Property. (Docs. 225, 237.) SDP argues that Kyrene breached the PSA by refusing to provide adequate assurances and close the transaction. (Doc. 225 at 8-12; Doc. 225-6 at 26-28.) Kyrene, in turn, argues that it was under no obligation to provide adequate assurances and that, while it breached the PSA by not closing the sale, SDP's conduct excuses the breach. (Doc. 237 at 18-20.) Kyrene further argues that SDP fraudulently induced it to enter the PSA, which precludes summary judgment for SDP. (Id. at...