Opinion
Case No. C-3-99-108.
July 7, 1999.
Rosemary D. Welsh, Attorney for Plaintiff.
Stephen D. Brandt, Attorney for Defendant.
DECISION AND ENTRY OVERRULING DEFENDANT'S MOTION TO COMPEL JOINDER (DOC. #7)
This litigation involves a dispute over the proposed construction of a "Joe Muggs" newsstand in the Town Country shopping center in Kettering, Ohio. The Plaintiff plans to construct and operate the newsstand within its "Books and Company" bookstore. The Defendant operates "Truffle's Café," a full-service restaurant and catering service, in the Town Country shopping center, and it opposes construction of the newsstand. The Plaintiff filed its Complaint (Doc. #1) on March 10, 1999, seeking a declaratory judgment regarding its right to open the newsstand.
Pending before the Court is the Defendant's Motion to Compel Joinder, pursuant to Fed.R.Civ.P. 19. (Doc. #7). In its Motion, the Defendant seeks to join Dayton Town Country, d/b/a/ Town Country of Kettering ("Town Country"), as a party-defendant to this action. The Defendant reasons that Town Country is a "necessary party" under Fed.R.Civ.P. 19(a), and that joinder would not divest the Court of its diversity jurisdiction. In support of its Motion, the Defendant relies primarily upon the existence of two leases: (1) a lease between Town Country and the Plaintiff; and (2) a sublease between the Plaintiff and the Defendant. Although the present declaratory judgment action only addresses the sublease, the Defendant argues that the Court must construe the original lease as well. Consequently, the Defendant argues that Town and Country should be joined as a party-defendant to this litigation.
The record reflects that Town Country owns the shopping center property where the Plaintiff currently operates its bookstore, and where the Defendant operates its restaurant and catering service. On May 1, 1990, an entity known as Brooklyn Books, Inc., leased space in the shopping center from Town Country. The Plaintiff obtained Brooklyn Books' interest in this lease, through assignment, in February, 1994. In relevant part, the lease authorizes the Plaintiff to engage in "the retail sale of books, magazines, newspapers, video cassettes, tapes, compact discs, records and items related to such sale, with a `café' selling coffee and bakery items."
On August 20, 1990, the Defendant entered into a sublease with Brooklyn Books for a portion of the space involved in the lease between Town Country and Brooklyn Books. The Defendant's sublease provides, in relevant part, that the lessor [now the Plaintiff] "hereby grants [l]essee [the Defendant] the sole and exclusive license, right and privilege of operating a full-service restaurant and catering service. . . ." The end result of the foregoing lease (and assignment) and sublease, is that Town Country currently leases space to the Plaintiff, which operates a "Books and Company" bookstore in part of that space and subleases the remainder to the Defendant, which operates its "Truffle's" café and catering service.
As noted above, in February, 1994, the Plaintiff obtained Brooklyn Books' interest in Town Country/Brooklyn Books lease, subject to the Defendant's sublease.
In its Complaint, the Plaintiff contends that the proposed "Joe Muggs" newsstand would not violate the exclusivity provision in the Defendant's sublease. As noted, supra, that provision gives the Defendant the exclusive right to operate a "full service restaurant" and "catering service." The Plaintiff reasons that its newsstand would not violate the sublease, because it would offer only coffee and baked goods, thus not qualifying as a "full service restaurant." In its Motion to Compel Joinder, however, the Defendant argues that the proposed newsstand would violate the Plaintiff's lease with Town Country, because the lease only permits the operation of "a" café selling coffee and baked goods. The Defendant reasons:
Phrased in the singular, the [l]ease arguably permits the operation of only one operation selling coffee and bakery items. In order to resolve this dispute this Court must construe the terms of the [l]ease, particularly the use limitation. In order to make that interpretation binding upon the landlord, Town Country must be a party to this suit. If it is not a party, then any interpretation of the [l]ease will not be binding upon it and the parties will be exposed to the possibility of inconsistent results.
(Doc. #7 at 2).
Finally, the Defendant attempts to demonstrate Town Country's status as a "necessary party" through two examples:
If this Court were to conclude that the [s]ublease does not prohibit [the Plaintiff] from selling coffee and baked goods[,] then there would be two such operations in a space that is arguably limited by the [l]ease to a single such operation. If Town Country is not a party to this suit, then there is nothing to prevent it from taking the position that there can be only one such operation and that one must close.
Alternatively, if this Court were to conclude that the [s]ublease only permits [the Defendant] to conduct the sale of food items, Town Country will not be bound by this Court's interpretation of the [l]ease and [s]ublease. As the owner of the real estate of which the demised premises is a part, there is nothing to prevent it from proceeding directly against [the Defendant], taking the position that the [l]ease limits [the Defendant] to the sale of coffee and baked goods only.
(Id. at 3).
After reviewing the parties' Memoranda, the lease, and the sublease, the Court finds the Defendant's arguments unpersuasive. In order to open its proposed "Joe Muggs" newsstand, the Plaintiff must comply with the terms of two agreements: (1) its lease with Town Country; and (2) its sublease with the Defendant. Contrary to the Defendant's assertion, however, the Court can construe the terms of the sublease between the Plaintiff and the Defendantwithout any need to construe the terms of the lease between the Plaintiff and Town Country. In short, the Court's adjudication of the Plaintiff's rights under the terms of its sublease with the Defendant simply does not involve Town Country. Contrary to the Defendant's argument, such an adjudication could not adversely affect Town Country's rights under the primary lease. Nor could such an adjudication adversely affect the rights of the Plaintiff or the Defendant. A review of the Defendant's two alternative arguments demonstrates that Town Country is not a "necessary party" to the present litigation.
If the Court concluded that the Plaintiff's proposed "Joe Muggs" newsstand would violate the terms of the sublease, such a ruling would have no impact upon Town Country. The status quo would be maintained, and the Plaintiff simply would not be permitted to construct its newsstand. The Defendant suggests, however, that Town Country would not be "bound" by the Court's ruling. As a result, the Defendant argues that Town Country might commence litigation directly against Truffle's, seeking to prevent it from operating its full-service restaurant and catering service. According to the Defendant, Town Country could argue that the Truffle's business violates the primary lease agreement, which allows the leased property to be used as a bookstore, with a café selling only coffee and bakery items. The Court finds this argument unpersuasive for at least three reasons. First, Town Country cannot maintain an action "directly against" the Defendant, based upon a breach of the lease between Town Country and the Plaintiff. "A sublessee can maintain no action against the original lessor upon the original lease[.] [N]either can the lessor maintain [an] action against the sublessee upon the original lease." Cozmyk Enterprises, Inc. v. Hoy, Franklin Cty. App. No. 96APE10-1380 (10th Dist. June 30, 1997); see also House of LaRose Cleveland, Inc. v. Lakeshore Power Boats, Inc., Cuyahoga Cty. App. No. 60904 (8th Dist. June 18, 1992). "Ohio courts have uniformly held that there is no privity of contract between the original lessor and a subtenant, and that therefore the lessor may not sue the subtenant for breach of a covenant contained in the original lease." Hooper v. Seventh Urban, Inc., 70 Ohio App.2d 101, 434 N.E.2d 1367, 1373 (8th Dist. 1980), citing Crowe v. Riley, 63 Ohio St. 1, 57 N.E.2d 1099 (1900); see also City of Cleveland v. A.J. Rose Manufacturing Co., et al., Cuyahoga Cty App. Nos. 63274, 63275 (8th Dist. Aug. 9, 1993). Second, Town Country could not reasonably contend that the Defendant's existing restaurant and catering service violates the primary lease agreement, because Town Country expressly consented, in writing, to the sublease which authorizes the Defendant's current business operations. (Doc. #7 at Exh. A, pg. 15). Third, and most importantly, if Town Country believes that the Defendant's existing restaurant and catering service violates the primary lease agreement, that belief has nothing to do with a construction of the parties' sublease. Indeed, Town Country could commence litigation now and raise such an argument. A declaratory judgment that the Plaintiff may not operate a "Joe Muggs" newsstand under the terms of the sublease would neither enhance nor preclude Town Country's ability to raise its argument. Consequently, the Court is unpersuaded that a ruling against the Plaintiff on its declaratory judgment action would implicate any of the concerns identified in Fed.R.Civ.P. 19(a).
Likewise, if the Court concludes that the Plaintiff's proposed "Joe Muggs" newsstand complies with the terms of the sublease, that ruling would not necessitate the joinder of Town Country. Such a ruling would merely permit the operation of the Plaintiff's newsstand and the Defendant's restaurant/catering service under the terms of the sublease. Such a ruling would not impair Town Country's ability to argue that Plaintiff's proposed newsstand violates the terms of the primary lease.
Furthermore, to the extent that the Defendant seeks to make such an argument on behalf of Town Country, it cannot properly do so. "Since no privity of contract exists between the subtenant and the landlord, a subtenant has no right to enforce any part of the agreement between the primary lessee and the landlord." Professional Corporations Management Co., Inc. v. The Video Connection, Inc., Lucas Cty. App. No. L-97-1438 (6th Dist. Sept. 30, 1998).
As noted above, however, the Defendant fears that, following a ruling in favor of the Plaintiff, Town Country might "take the position that there can only be one such operation and that one must close." (Doc. #7 at 3). Town Country could, indeed, elect to make such an argument, based upon the terms of its lease agreement with the Plaintiff. Nevertheless, the Defendant fails to explain how the possibility of Town Country commencing future litigation against the Plaintiff, based upon the primary lease, makes Town Country a "necessary party" with respect to the sublease between the Plaintiff and the Defendant. Additionally, even if Town Country did commence such litigation, its lawsuit could not properly be directed against the Defendant; and Town Country could not force the Defendant's restaurant and catering service to close. As noted, supra, the absence of privity of contract precludes Town Country, the original lessor, from maintaining a lawsuit against the Defendant, the subtenant. See,e.g., Cozmyk, Franklin Cty. App. No. 96APE10-1380 (10th Dist. June 30, 1997); House of LaRose Cleveland, Cuyahoga Cty. App. No. 60904 (8th Dist. June 18, 1992); Hooper, 434 N.E.2d at 1373, citing Crowe, 57 N.E.2d 1099. Furthermore, Town Country consented, in writing, to the Defendant's operation of its Truffle's restaurant and catering service, and the Plaintiff's sublease also authorizes the Defendant's business. (Doc. #7 at Exh. A, pg. 15). Consequently, even if Town Country found the existence of two food service operations objectionable under the terms of its lease agreement, the only operation that could be forced to close would be the "Joe Muggs" newsstand.
Parenthetically, the Court notes that Scott Barrett, the Director of Leasing for Town Country, has provided the Court with an affidavit, stating that Town Country has no objection to the operation of a "Joe Muggs" newsstand and a Truffle's café. (Doc. #10 at Exh. A, ¶ 6).
Contrary to the Defendant's assertion, the Court simply perceives no need to construe the terms of Town Country's lease with the Plaintiff in order to resolve the pending litigation. The sole issue before the Court is whether the proposed "Joe Muggs" newsstand violates the exclusivity provision contained in the Defendant's sublease with the Plaintiff. Resolution of that issue does not turn upon the Court's interpretation of any language contained in the primary lease agreement.
Based upon the foregoing analysis, the Court concludes that the Defendant has failed to satisfy the requirements for joinder set forth in Fed.R.Civ.P. 19(a). The Court can provide the existing parties with complete relief, under the terms of their sublease, without Town Country's presence. Consequently, the Defendant cannot satisfy Rule 19(a)(1). Furthermore, Town Country's absence will not impair or impede its ability to protect its interests under the terms of its lease agreement with the Plaintiff. As a result, the Defendant cannot satisfy Rule 19(a)(2)(i). Finally, Town Country's absence will not result in either of the existing parties being subject to double, multiple, or inconsistent obligations, within the meaning of Rule 19(a)(2)(ii).
In reaching this conclusion, the Court distinguishesKeweenaw Bay Indian Community v. State of Michigan, 11 F.3d 1341 (6th Cir. 1993), upon which the Defendant relies. In Keweenaw, the absent parties were signatories to the treaty at issue, and the lawsuit concerned the absent parties' rights under that treaty.Id. at 1347. In the present case, however, Town Country merely consented to the sublease at issue, and its rights and interests could not be adversely affected by the Court's interpretation of that sublease.
The only conceivable "inconsistency" might be a finding by this Court that the proposed newsstand does not violate the terms of the sublease, and a subsequent judicial determination that the newsstand does violate the terms of the primary lease. This "inconsistency," however, would result from the Plaintiff's execution of two lease agreements with varying restrictions, and not from Town Country's absence from the present proceedings.
Accordingly, the Defendant's Motion to Compel Joinder (Doc. #7) is hereby OVERRULED.
Having determined that Town Country does not qualify as a necessary party under Rule 19(a), the Court need not resolve the Plaintiff's alternative argument that Town Country's presence would destroy diversity jurisdiction.