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LLC v. Healthy Food Corporation

United States District Court, D. New Hampshire

March 23, 2016

17 Outlets, LLC
v.
Healthy Food Corporation, d/b/a Forzurt, and Tai H. Pham
v.
ThurKen III, LLC and Richard E. Landry, Jr. Opinion No. 2016 DNH 063

          ORDER

          JOSEPH DiCLERICO, Jr., District Judge.

         17 Outlets, LLC brought suit against Healthy Food Corporation, d/b/a Frozurt, ("HFC") and Tai H. Pham after HFC failed to pay rent due under a lease for commercial space in Merrimack, New Hampshire, that is subject to a guaranty signed by Pham. HFC brought a third-party complaint against ThurKen III, LLC and ThurKen's manager, Richard E. Landry, Jr., arising from the original lease agreement with ThurKen. 17 Outlets moves for summary judgment on its claims against HFC and Pham. HFC and Pham do not dispute that HFC failed to pay rent but object to the motion for summary judgment on the claim against Pham based on the guaranty, which they claim is unenforceable.

         Standard of Review

         Summary judgment is appropriate when the moving party "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 genuine dispute is one that a reasonable fact-finder could resolve in favor of either party and a material fact is one that could affect the outcome of the case." Flood v. Bank of Am. Corp., 780 F.3d 1, 7 (1st Cir. 2015). Reasonable inferences are taken in the light most favorable to the nonmoving party, but unsupported speculation and evidence that "is less than significantly probative" are not sufficient to avoid summary judgment. Planadeball v. Wyndham Vacation Resorts, Inc., 793 F.3d 169, 174 (1st Cir. 2015) (internal quotation marks omitted).

         Background

         ThurKen purchased a four unit strip mall on June 1, 2012. Prior to the purchase, ThurKen arranged to lease all four units. HFC and Pham believe that ThurKen was under pressure to have the four units in the business center leased by May 31, 2012, in order to close on the purchase of the property. On May 23, 2012, Orange Leaf, a frozen yogurt business, decided not to lease the space in the mall, as originally planned.

         Richard Landry, as manager for ThurKen, then contacted Tram Dang about HFC leasing the space because she had expressed interest in leasing space for a Frozurt store. On May 31, 2012, Tuan Dang signed a lease for commercial space in the mall, on behalf of HFC d/b/a Frozurt, as president and treasurer of HFC.[1] ThurKen was the lessor, and Landry signed the lease as manager of ThurKen. Under the terms of the lease, HFC was required to pay monthly rent and other amounts for a lease period of fifteen years.

         On the same day, Pham signed an agreement titled "Unlimited Guaranty."[2] The guaranty stated that it was provided "[t]o induce Landlord to enter into a certain lease agreement of even or near date with Tram Dang dba Frozurt (the Lessee'), for real property located in Merrimack, New Hampshire." Pham "absolutely and unconditionally guarantee[d] the full and punctual payment to Landlord of all sums which may be presently due and owing and of all sums which shall now and in the future become due and owing to Landlord from the Lessee, under the Lease." Pham also agreed to other provisions in the guaranty.

         In support of its motion for summary judgment, 17 Outlets submitted a copy of the "Business Entity Summary" for HFC filed with the Corporations Division of the Secretary of State's Office for the Commonwealth of Massachusetts. The Summary lists Tram Dang as president, treasurer, secretary, and director of HFC. Although the Summary is undated, counsel for 17 Outlets represents that the document appeared on the Secretary of State's website on November 16, 2015. In response, HFC and Pham submitted a copy of a "Statement of Change of Supplemental Information" for HFC from the Secretary of State's Office, that is dated May 3, 2012, that lists Tuan Dang as HFC's president, treasurer, secretary, and director.

         17 Outlets purchased the property from ThurKen on April 17, 2014, pursuant to a document titled "Assignment and Assumption of Lease Agreements." After the purchase, HFC failed to pay rent beginning in May of 2014. 17 Outlets served a demand for rent and an eviction notice on HFC on October 3, 2014. HFC has vacated the leased space.

         Part II, Section 17(c)(i) states that in the event of default, the stated fixed and additional rents become due and are required to be paid. Section 17(c)(iii) imposes as liquidated damages the deficiency between the amount of rent owed and the amount the landlord received by re-letting the space. The lease also provides for costs and attorneys' fees to the prevailing party in proceedings under the lease. Part II, Section 38(f).

         Discussion

         17 Outlets brings a claim of breach of contract against HFC and a claim of breach of guaranty against Pham. HFC does not contest the breach of contract claim against it. Pham contends that ...


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