Summary
stating that in Delaware a "party has a general duty to mitigate damages if it is feasible to do so."
Summary of this case from In re Pilgrim's Pride Corp.Opinion
C.A. No. 07C-04-623 JAP.
Submitted: August 14, 2008.
Decided: August 28, 2008.
On Plaintiff's Motion for Summary Judgment.
DENIED.Dear Counsel:
Before the Court is Plaintiff's Motion for Summary Judgment, which seeks a determination that Defendant is liable to Plaintiff pursuant to a commercial lease agreement for $13,050 in rent arrears, $1,826.40 in late fees, $41,760 in accelerated rent, and $36,257.94 in attorneys' fees, plus interest and costs. The issue presented in this motion is whether, as a matter of law, Plaintiff fulfilled its obligation to mitigate its damages once the Defendant notified Plaintiff it was vacating the leased premises. After viewing the facts in a light most favorable to Defendant, the non-moving party, the Court finds that there is a genuine dispute of material fact relating to this issue. Therefore, Plaintiff's motion is DENIED.
I. FACTS AND PROCEDURAL BACKGROUND
Plaintiff NorKei Ventures, LLC ("NorKei") is the owner of an office building known as the Legal Arts Building, located at 1225 King Street, Wilmington, Delaware 19801. Defendant Butler-Gordon, Inc. d/b/a Little Folks Too, Inc. ("Little Folks") leased Suite #1 of the Legal Arts Building pursuant to a 1998 written ten year lease agreement. Defendant operated several day care centers including one at the Legal Arts Building. In January 2006, Cleonice DeCherney, the owner of Little Folks, orally informed the Plaintiff that Little Folks would be vacating the Legal Arts site as of August 2006. After vacating the site in August 2006, Little Folks continued to pay rent to NorKei in September, October, and November 2006, but paid no rent after then. On April 23, 2007, NorKei served notice to Little Folks that the balance of the annual rent reserved under the Lease through the end of the Lease term was immediately due and payable. A few days later, Plaintiff filed this suit, seeking rent arrears, late fees, accelerated rent, and attorneys' fees.
Prior to vacating the premises, Little Folks presented to NorKei at least two potential replacement tenants — the Learning Link and Aunt Shannon's Day Care, Inc.. NorKei asserts it rejected both replacement tenants on the ground they were not "commercially viable assignees." Little Folks now argues that by doing so, NorKei failed to mitigate its damages.
II. STANDARD OF REVIEW
This standard by which summary judgment motions are evaluated is a familiar one, and little discussion of that standard is needed here. Summary judgment is appropriate only where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." If, however, material issues of fact exist or if a court determines that it does not have sufficient facts to enable it to apply the law to the facts before it, the court will not grant summary judgment.
Super. Ct. Civ. R. 56(c)
Motorola, Inc. v. Amkor Tech., Inc., 849 A.2d 931, 936 (Del. 2004).
Although the moving party has the burden of demonstrating that no material issues of fact are in dispute and it is entitled to judgment as a matter of law, the facts must be viewed "in the light most favorable to the nonmoving party." Furthermore, "[f]rom those accepted facts the court will draw all rational inferences which favor the non-moving party."
Mason v. United Servs. Auto. Ass'n, 697 A.2d 388, 392 (Del .1997).
Merrill v. Crothall-American, Inc., 606 A.2d 96, 99 (Del. 1992).
NorKei relies upon, among other things, deposition testimony from Little Folks' principal and an affidavit from one of its principals. Little Folks relies primarily on the affidavit of its principal and a term sheet extended by NorKei to a prospective tenant. Those materials show there is a genuine dispute of material fact.
III. DISCUSSION
The sole issue presented here is whether NorKei made adequate efforts to mitigate its damages. All rights and remedies under a commercial lease agreement are governed by general contract principles. Under contract law, "[a] party has a general duty to mitigate damages if it is feasible to do so." Indeed, NorKei does not dispute that it had a duty to mitigate its damages.
See 25 DEL. C. § 5101(b) (excluding commercial leases from the Residential Landlord-Tenant Code and providing that "[a]ll legal rights, remedies and obligations under any agreement for the rental of any commercial rental unit shall be governed by general contract principles. . . .").
Highline Fin. Servs., Inc. v. Rooney, 1996 WL 663100 (Del.Super. Oct. 25, 1996).
The parties dispute whether Plaintiff made sufficient efforts to mitigate its damages in this case. NorKei claims that it made substantial efforts but was unable to find a financially viable replacement tenant. Defendant, however, has provided evidence that NorKei's rejection of Learning Link was not based upon Learning Link's financial status and that Aunt Shannon's was financially viable.
In January, 2006, within days after Little Folks advised NorKei that it would be vacating the premises, NorKei was approached by Learning Link, which wanted to operate a day care center in the space used by Little Folks. NorKei rejected the application stating, according to Little Folks, "I don't want her [referring to Leaning Link's principal] type" in the building. Little Folks further contends NorKei made no mention to it that Learning Link was not a commercially viable tenant. Assuming, but not deciding, that Little Folk's recitation of this event is true, a reasonable trier of fact could infer that NorKei's rejection of Learning Link was not based upon its financial viability.
In her affidavit, Little Folk's principal stated that Learning Link located another facility where it remains current in its rent. The Court has disregarded the statement about Learning Link's current rent status since it is not apparent from the affidavit that the affiant has personal knowledge of this.
Little Folks also provided evidence that a second day care operator — Aunt Shannon's — sought to lease the space at the Legal Arts Building. Aunt Shannon's offered to pay the same rent being paid by Little Folks, but NorKei rejected this offer and demanded increased monthly rent as well as $35,000 upon termination. It is reasonable to infer from NorKei's extension of an offer that it believes Aunt Shannon's was financially viable.
Viewing the facts in the light most favorable to Defendant, there is a genuine issue of material fact as to whether Plaintiff satisfied its duty to mitigate damages after learning that Defendant intended to vacate the Leased Premises. "Under Delaware law, questions regarding mitigation of damages are factual and therefore properly determined by the trier of fact." Accordingly, summary judgment is inappropriate on this issue.
Mizel v. Xenonics, Inc., 2007 WL 4662113, at *8 (Del.Super. Oct. 25, 2007). See also Gutridge v. Iffland, 2005 WL 3454129 (Del.Supr. Dec. 15, 2005) (holding that summary judgment on the issue of damages was inappropriate because "[f]indings relating to damages and to mitigation of damages are issues to be determined by the trier of fact").
IV. CONCLUSION
After considering the facts and inferences in the light most favorable to Defendant, the Court finds that there is a genuine dispute of material fact relating to Plaintiff's efforts to mitigate its damages. Therefore, the Plaintiff's motion for summary judgment is DENIED.
IT IS SO ORDERED.