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Sears Roebuck & Co. v. W/S Lebanon LLC

United States District Court, D. New Hampshire

September 6, 2017

Sears Roebuck & Company and Kmart Corporation
v.
W/S Lebanon LLC, W/S Development Associates LLC, S.R. Weiner & Associates, C/O Robert Currey Associates, now known as WS Asset Management Inc., Windalier West Lebanon, LLC, K.G.I. Properties, LLC and Keypoint Partners, LLC Opinion No. 2017 DNH 185

          MEMORANDUM ORDER

          Joseph N. Laplante, United States District Judge

         This action, arising out of flood damage to commercial property following a hurricane, implicates a party's liability for breach of a contract to which it is not party. Plaintiffs Sears Roebuck and Company and Kmart Corporation both suffered property damage at stores located in West Lebanon, New Hampshire, as a result of flooding brought on by Hurricane Irene in 2013. They brought separate actions against their respective landlords (W/S Lebanon LLC and Windalier West Lebanon, LLC) and property managers (W/S Development Associates, LLC, WS Asset Management, K.G.I. Properties, LLC, and Keypoint Partners, LLC), which were later consolidated for all purposes.[1]

         The plaintiffs bring various breach of contract, negligence, promissory estoppel, and accounting claims against the defendants.[2] Specifically, Kmart asserts claims of negligence and breach of contract against its lessor, Windalier, and Windalier's property managers, K.G.I. and Keypoint. Sears asserts claims of negligence, breach of contract, promissory estoppel, and a claim for accounting against its lessor, W/S Lebanon, and W/S Lebanon's property managers, W/S Development and WS Asset Management (the “WS defendants”).

         All defendants moved for summary judgment on all claims against them.[3] Both plaintiffs also moved for summary judgment, albeit only on their breach of contract claims.[4] The court denied the plaintiffs' motion for partial summary judgment entirely, and granted Windalier's and the WS defendants' motion for summary judgment in part and denied it in part, for the reasons stated on the record at the September 1, 2017 oral argument.

         This order resolves K.G.I.'s and Keypoint's motions for summary judgment. Because there is no privity of contract between Kmart and its property managers and because Kmart has not identified a legal duty owed it by its property managers, the court grants K.G.I.'s and Keypoint's motions for summary judgment.

         I. Applicable legal standard

         “The court shall grant summary judgment if the 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). The moving party must “assert the absence of a genuine issue of material fact and then support that assertion by affidavits, admissions, or other materials of evidentiary quality.” Mulvihill v. Top-Flite Golf Co., 335 F.3d 15, 19 (1st Cir. 2003). “A genuine issue is one that could be resolved in favor of either party, and a material fact is one that has the potential of affecting the outcome of the case.” Vera v. McHugh, 622 F.3d 17, 26 (1st Cir. 2010) (internal quotation omitted).

         Once the movant has made the requisite showing, “the burden shifts to the summary judgment target to demonstrate that a trialworthy issue exists.” Mulvihill, 335 F.3d at 19. The nonmoving party “‘may not rest upon the mere allegations or denials of [the] pleading, but must set forth specific facts showing that there is a genuine issue' of material fact as to each issue upon which he or she would bear the ultimate burden of proof at trial.” Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 52-53 (1st Cir. 2000) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986)).

         As it is obligated to do in the summary judgment context, the court “rehearse[s] the facts in the light most favorable to the nonmoving party (here, the plaintiff) consistent with record support, ” and gives them “the benefit of all reasonable inferences that those facts will bear.” Noviello v. City of Boston, 398 F.3d 76, 82-83 (1st Cir. 2005) (internal citation omitted). The following background takes this approach, drawing on the parties' recitations of undisputed facts.

         II. Background

         Kmart has leased and occupied commercial property in a shopping plaza (the “Kmart Plaza”) in West Lebanon, New Hampshire, since May 1974. The Kmart Plaza sits on the east side of the Connecticut River and south of the Mascoma River. On August 29, 2011, Hurricane Irene caused much of the Connecticut River and its tributaries to flood. The flooding caused water damage to the Kmart Plaza, including the building occupied by Kmart. The contents of Kmart's building were also damaged.

         At the time of the event, Kmart leased its building from Windalier. From July 2003 until a month before the event, K.G.I. managed the property pursuant to an agreement between it and Windalier. That agreement terminated, however, on July 31, 2011. Windalier then contracted with Keypoint to manage the property, and Keypoint was the property manager when Hurricane Irene struck.

         III. Analysis

         As discussed supra, Kmart has brought claims for breach of its lease against its landlord, Windalier, and against Windalier's property managers, K.G.I. and Keypoint. Kmart has also brought negligence claims against all three of these defendants.

         The court grants K.G.I.'s and Keypoint's motions for summary judgment on Kmart's breach of contract claims against them because they were not parties to the lease and, further, Kmart has not pleaded breach of, nor offered any evidence suggesting it has standing as a third-party beneficiary to sue under, the property managers' contracts with Windalier. Because these defendants owe Kmart no common-law duty under New Hampshire law, the court also grants the defendants' motions for summary judgment on to Kmart's negligence claims.

         A. Kmart's contract claim against K.G.I. and Keypoint Count 11)

         To succeed on a breach of contract claim under New Hampshire law, the plaintiff must show: “(1) that a valid, binding contract existed between the parties, and (2) that [the defendant] breached the terms of the contract.” Wilcox Indus. Corp. v. Hansen, 870 F.Supp.2d 296, 311 (D.N.H. 2012) (citing Lassonde v. Stanton, 157 N.H. 582, 588 (2008); Bronstein v. GZA GeoEnvironmental, Inc., 140 N.H. 253, 255 (1995)). This case does not implicate the contract's existence or validity, but only whether a breach of existing, valid contracts occurred. “A breach of contract occurs when there is a ‘[f]ailure without legal excuse, to perform any promise which forms the whole or part of a contract.'” Bronstein, 140 N.H. at 255 (quoting Black' Law Dictionary 188 (6th ed. 1990)).

         The parties' arguments touch on three contracts: the lease agreement between Kmart and Windalier, [5] the property management agreement between Windalier and K.G.I., [6] and the property management agreement between Windalier and Keypoint.[7] Kmart bases its contract claim against K.G.I. and Keypoint on a lease to which neither of the property managers was party: the Kmart-Windalier lease. Sections of that lease, Kmart alleged,

obligated Windalier, and its agents KGI and Keypoint, to maintain, replace and repair the roof, outer walls and structural portions of the building necessary to maintain the building in a “safe, dry and tenantable condition” and in “good order and repair”[;] . . . to maintain, replace and repair the underground utility installations, which include storm sewer systems[; and] . . . to properly service the building's storm sewers.[8]

         The damage that Kmart sustained as a result of the flooding caused by Hurricane Irene, Kmart further alleged, was “proximately caused by Windalier, K.G.I. and Keypoint's breach of their duties” under the contract between Windalier and Kmart.[9]It is undisputed that neither K.G.I. nor Keypoint is party to that lease. Because a valid, binding contract does not exist between Kmart, on the one hand, and K.G.I. or Keypoint, on the other, Kmart's breach of contract claim against K.G.I. and Keypoint fails as ...


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