Winn-Dixie Stores, Inc. et al v. Dolgencorp, LLCRESPONSE in Opposition to Third-Party Defendant Avon Square Ltd's Motion to Dismiss Second Amended Third-Party ComplaintS.D. Fla.March 22, 2012IN THE UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA Consolidated Case No. 11-80601-CIV-DMM W1NN-DIXIE STORES, INC.; WINN-DIXIE STORES LEASING, LLC; WINN-DIXIE RALEIGH, INC.; WINN-DIXIE RALEIGH LEASING, LLC; WINN-DIX1E MONTGOMERY, LLC; and WINN-DIX1E MONTGOMERY LEASING, LLC, Plaintiffs, V. DOLGENCORP, LLC, f/k/a DOLGENCORP, INC., a Kentucky corporation; et al., Defendants and Third-Party Plaintiffs, V. PARK CENTRAL PLAZA CRP, LLC, et al., Third-Party Defendants. BIG LOTS STORES, INC.'S RESPONSE IN OPPOSITION TO THIRD-PARTY DEFENDANT AVON SQUARE LTD'S MOTION TO DISMISS SECOND AMENDED THIRD-PARTY COMPLAINT On February 16, 2012, the Court entered Defendant and Third-Party Plaintiff Big Lots Stores, Inc.'s (hereinafter, "Big Lots") Second Amended Third-Party Complaint (the "SATPC") [Case No. 9:11-cv-80641, ECF Nos. 90-1, 1771. Pursuant to Rule 14 of the Federal Rules of Civil Procedure, Big Lots' pleading asserts five claims against common landlords, seeking to hold these Third-Party Defendants liable to Big Lots to the extent that Big Lots is found ot have violated certain "grocery exclusives" alleged by Plaintiffs Winn-Dixie Stores, Inc., Winn-Dixie 1 Case 9:11-cv-80601-DMM Document 300 Entered on FLSD Docket 03/22/2012 Page 1 of 9 Stores Leasing, LLC, Winn-Dixie Raleigh, Inc., Winn-Dixie Raleigh Leasing, LLC, Winn-Dixie Montgomery, LLC, and Winn-Dixie Montgomery Leasing, LLC (collectively, "Plaintiffs" or "Winn-Dixie"). On February 27, 2012, Third-Party Defendant Avon Square, Ltd. (hereinafter "Avon") filed a Motion to Dismiss the SATPC [ECF No. 264]. Big Lots hereby files its Response in Opposition to Avon's Motion to Dismiss the SATPC [ECF No. 264], demonstrating that Avon's Motion should be denied for the following reasons: I. Counts One And Two Of The SATPC Are Proper Because Avon Breached Key Promises Made In Its Contractual Agreement With Big Lots. In deciding a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim, a court must accept the allegations in the plaintiff s complaint as true and construe them in the light most favorable to the plaintiff. Am. Dental Assoc. v. Cigna Corp., 605 F.3d 1283, 1288 (11th Cir. 2010); Duke v. Cleland, 5 F.3d 1399, 1402 (11th Cir. 1993) (stating that all reasonable inferences are to be made in favor of the plaintiff). For purposes of reviewing Avon's Motion to Dismiss, all well-pleaded facts in Big Lots' SSATPC "and all reasonable inferences drawn from those facts are taken as true." Raven v. The Lincoln National Life Ins. Co., 2011 U.S. Dist. LEXIS 131739, *13 (S.D. Fla. Nov. 15, 2011) (denying motion to dismiss) (citing Jackson v. Okaloosa County, Fla., 21 F.3d 1531, 1534 (11th Cir. 1994)). Avon argues that it should be absolved from liability under the breach of covenant claim because "[a] covenant of quiet enjoyment cannot possibly extend to claims by third parties against Big Lots where Big Lots has been proven to have breached its own contractual obligations to that third party." ECF No. 264 at 7. This statement reveals a central misunderstanding on the part of Avon-Big Lots, in fact, has no contractual obligations to Winn- Dixie. Big Lots maintains no contractual privity with Winn-Dixie. Thus, it is impossible for Big Lots to have breached a contract with Winn-Dixie. On the other hand, Big Lots does have a 2 Case 9:11-cv-80601-DMM Document 300 Entered on FLSD Docket 03/22/2012 Page 2 of 9 contract with Avon, a contract in which Avon makes key promises, such as to provide quiet enjoyment to Big Lots for the operation of its store, and the promise that the premises were to be used for the retail sale of general merchandise-the central operation of any Big Lots store. In Section 18 of the Lease for Big Lots Store 550, Avon covenants that Big Lots shall have quiet enjoyment of the premises: Landlord hereby covenants, warrants, and agrees that if Tenant shall not be in default beyond any period for the cure thereof, Tenant shall, at all times during the original term of this Lease and any renewal term, have peaceable and quiet enjoyment and possession of the Demised Premises without any manner of let or hindrance from the Landlord or any other person, firm, or corporation. ECF No. 264-1 at 12 of 36. 1 If Winn-Dixie is able to show that it indeed possessed a so-called "grocery exclusive" which would restrict Big Lots' ability to quietly enjoy the full possession of the premises for the intended purpose of operating Big Lots stores, then Avon, as the landlord who promised quiet enjoyment, has breached the express covenants of quiet enjoyment it made to Big Lots. Avon cannot avoid liability simply because Winn-Dixie is not Big Lots' landlord. As landlord who is a party to the lease with a co-located Winn-Dixie, Avon was aware of Winn- Dixie's so-called grocery exclusive at the time it agreed to grant Big Lots the quiet enjoyment of the leased premises. Avon's failure to provide quiet enjoyment is the basis of this claim. Therefore, the Court should deny Avon's motion to dismiss Count One of the SATPC. Similarly, as Avon acknowledges, it promised to provide the leased premises to Big Lots for "the retail sale of general merchandise." See ECF No. 264-1 at 3 of 36; ECF No. 264 at 7. Thus, the retail sale of general merchandise was an express, primary purpose of agyeeing to lease the space from Avon. By offering the premises for that purpose, Avon represented that the ' By citing to Avon's exhibit [ECF No. 264-11 Big Lots does not represent that the entirety of the exhibit is a wholly accurate reflection of the parties' agreement. Big Lots notes that the version of the Big Lots store 550 Lease filed at ECF No. 264-1 is marked up, and may contain information outside of the parties' agreement. Big Lots reserves the right to object to authenticity. 3 Case 9:11-cv-80601-DMM Document 300 Entered on FLSD Docket 03/22/2012 Page 3 of 9 premises were fit for that purpose. Yet, Avon failed to provide the premises to Big Lots for that purpose, thus breaching another contractual promise. For this reason, the Court should deny Avon's Motion to Dismiss Count Two of the SATPC. II. Avon's Motion to Dismiss Should Also Be Denied Because The Federal Rules Of Civil Procedure Permit Big Lots To Plead Alternatively. In its Motion to Dismiss, Avon argues that Big Lots' promissory estoppel count against it must be dismissed because of the existence of a contract between the parties. See ECF No. 264, at 8-10. Although a contract between Big Lots and Avon exists, the representations at issue do not fall within the ambit of that contract. Thus, dismissal is improper. Big Lots' Second Amended Third-Party Complaint is proper within the contours of the Federal Rule allowing alternative pleading in situations such as this. Fed. R. Civ. P. 8(d)(2). The rule "allows for a plaintiff's case to proceed in the face of uncertainty as to the existence of a contract or, perhaps uncertainty as to whether the particular issue at hands falls within the ambit of a contract that otherwise exists between the parties." Raven v. The Lincoln National Life Ins. Co., 2011 U.S. Dist. LEXIS 131739, *26 (S.D. Fla. Nov. 15, 2011); D.H.G. Properties, LLC, 2010 U.S. Dist. LEXIS 140208, 2010 WL 5584464 *11 (citing Donnelly v. Circuit City Stores, Inc., 2007 U.S. Dist. LEXIS 20571, 2007 WL 896337, at *3 (M.D. Fla. Mar. 22, 2007)). "A party may set out 2 or more statements of a claim or defense alternatively or hypothetically, either in a single count or defense or in separate ones. If a party makes alternative statements, the pleading is sufficient if any one of them is sufficient." Fed. R. Civ. P. 8(d)(2), formerly Rule 8(e)(2). Because Big Lots is allowed to plead in the alternative, the Court should deny Avon's Motion to Dismiss. Late last year, the Southern District of Florida denied dismissal of a complaint on similar grounds. See Raven, 2011 U.S. Dist. LEXIS 131739 at *27-29 (S.D. Fla. Nov. 15, 2011). In Raven, the plaintiff brought multiple claims against a defendant insurance company. Id. at *1-2. 4 Case 9:11-cv-80601-DMM Document 300 Entered on FLSD Docket 03/22/2012 Page 4 of 9 The claims sounded in contract and equitable theories, including promissory estoppel and unjust enrichment. Id. The Court noted that promissory estoppel claims may not stand where an express contract covering the representations exists. The defendant sought to dismiss the promissory estoppel claim, alleging that the existence of a contract would preclude such a claim. The Court noted that, even where the contract was undisputed, alternate pleading allowed the plaintiff s promissory estoppel claim to proceed. Id. at *29 ("[I]t would be premature in this case to dismiss [plaintiff's] promissory estoppel claim where the alleged misrepresentation of [defendant's agent] was purportedly outside the ambit of the [contract]."). As noted above, Big Lots' SATPC reflects that the misrepresentations of Avon fall outside the ambit of the lease agreement. Thus, the Court should deny Avon's Motion to Dismiss Count Three of the SATPC. III. Big Lots' Claim For Common Law Indemnification Must Survive Avon's Motion To Dismiss, As Big Lots Has Sufficiently Pled The Requisite Elements. In its Motion to Dismiss, Avon argues that Big Lots may not recover for indemnity against Avon because of its position as a third-party defendant. [ECF No. 264 at 11-12.] Avon's assertion simply is not correct in this case. The SATPC clearly alleges that Avon may be liable for common law indemnification. "The obligation to indemnify need not be based upon an express contract of indemnification but may arise out of implied contractual relations or out of liability imposed by law." Mims Crane Service, Inc. v. Insley Mfg. Corp., 226 So. 2d 836 (Fla. DCA 2d. 1969) (third-party complaint properly pleaded common law indemnification even where it did not mention the word "indemnity"). The court in Mims quoted 41 Am. Jur. 2d, Indemnity, §2, p. 688, stating: Although it has been said that the right to indemnity springs from a contract, express or implied, the modern cases note that contract furnishes too narrow a basis, and that principles of equity furnish a more satisfactory basis for indemnity. Thus a right of indemnity has been said to exist whenever the relation between the parties is such that either in law or in equity there is an obligation on one party to 5 Case 9:11-cv-80601-DMM Document 300 Entered on FLSD Docket 03/22/2012 Page 5 of 9 indemnify the other, as where one person is exposed to liability by the wrongful act of another in which he does not join. Id. Big Lots has performed its duties and obligations based on the covenants in its lease with Avon, as well as in reliance on representations of Avon. As such, if Big Lots is held liable for any wrongdoing, then it should recover from Avon under a theory of common law indemnification. Therefore, the Court should deny Avon's Motion to Dismiss Count Four of the SATPC. IV. Big Lots' Negligent Misrepresentation Claim Against Avon Is Allowed Under The Economic Loss Rule. In its Motion to Dismiss, Avon states that Big Lots' negligent misrepresentation claim is "barred by operation of the economic loss rule," [ECF No. 264 at 14], because the negligent misrepresentations were made within the context of the lease between the parties. As stated above, Big Lots's SATPC clarifies that the misrepresentations were extraneous to the lease. Further, under well established Florida law, the economic loss rule does not preclude Big Lots' inclusion of a negligent misrepresentation claim in the same complaint as a breach of contract claim. See Moransais v. Heathman, 744 So. 2d 973, 981, 983 (Fla. 1999) (noting "the danger in an unprincipled extension of the [economic loss] rule," stating, "[W]e have declined to extend the economic loss rule to actions based on fraudulent inducement and negligent misrepresentation.") (citing PK Ventures, Inc. v. Raymond James & Assocs., 690 So. 2d 1296 (Fla. 1997)). The court went on to reiterate that "[t]he economic loss rule has not eliminated causes of action based upon torts independent of the contractual breach even though there exists a breach of contract action." Moransais, 744 So. 2d at 981 (quoting HTP, Ltd. v. Lineas Aereas Costarricenses, S.A., 685 So. 2d 1238 (Fla. 1996)). 6 Case 9:11-cv-80601-DMM Document 300 Entered on FLSD Docket 03/22/2012 Page 6 of 9 A Motion to Dismiss on these grounds is improper, and last year, the District Court for the Middle District of Florida held that a dispositive application of the economic loss rule was a proper question for the jury. See Tardi f v. PETA, 2011 U.S. Dist. LEXIS 128092, *18-20 (M.D. Fla. Nov. 4, 2011) (refusing to dispose of a negligent misrepresentation claim on economic loss rule grounds at the summary judgment stage). There, the court, faced with a motion for summary judgment on economic loss rule grounds, stated: A jury verdict finding a breach of contract may indeed impact the viability of the tort claims, but this possibility does not justify summary judgment. Even when inconsistent remedies are asserted, Florida does not require a plaintiff to elect between counts prior to judgment. Additionally, plaintiff is allowed to plead counts in the alternative, regardless of consistency. Therefore, the motion for summary judgment on this ground is denied. Id. at *18-20 (internal citations omitted); see also Fed. R. Civ. P. 8(d)(2)-(3); Monco of Orlando, Inc. v. ITT Indus. Credit Corp., 458 So. 2d 332, 334 (Fla. 5th DCA 1984). Because Florida clearly recognizes a plaintiff's ability to allege claims of negligent misrepresentation in the same complaint as breach of contract claims, Avon's Motion to Dismiss should be denied. CONCLUSION Big Lots has sufficiently pled its claims against Avon, and for all reasons set forth herein, Big Lots respectfully requests that this Court deny Third-Party Defendant Avon's Motion to Dismiss Big Lots' SATPC. [SIGNATURES ON FOLLOWING PAGE] 7 Case 9:11-cv-80601-DMM Document 300 Entered on FLSD Docket 03/22/2012 Page 7 of 9 Dated: March 22, 2012 Respectfully submitted, /s/ Michael V. Elsberry Michael V. Elsberry Florida Bar No. 0191861 michael.elsberry@lowndes-law.corn W. Drew Sorrell Florida Bar No. 0160903 drew.sorrell@lowndes-law.corn Rebecca E. Rhoden Florida Bar No. 0019148 Rebecca.rhoden@lowndes-law.corn LOWNDES, DROSDICK, DOSTER, KANTOR & REED, P.A. 450 South Orange Avenue, Suite 800 P.O. Box 2809 Orlando, Florida 32802-2809 Telephone: (407) 843-4600 Facsimile: (407) 843-4444 With Co-Counsel: William N. Withrow, Jr. (Admitted Pro Hac Vice) william.withrow@troutmansanders.corn Brian P. Watt (Admitted Pro Hac Vice) brian.watt@troutmansanders.com Shakara M. Barnes (Admitted Pro Hac Vice) shakara.barnes@troutmansanders.corn TROUTMAN SANDERS LLP 600 Peachtree Street, NE, Suite 5200 Atlanta, GA 30308-2216 Telephone: (404) 885-3000 Facsimile: (404) 885-3900 Counsel for Defendant and Third-Party Plaintiff Big Lots Stores, Inc. CERTIFICATE OF SERVICE I hereby certify that on March 22, 2012, I filed the foregoing document with the Clerk of Court using the CM/ECF system, which will automatically send email notification of such filing to all parties of record. /s/ Michael V. Elsberry 8 Case 9:11-cv-80601-DMM Document 300 Entered on FLSD Docket 03/22/2012 Page 8 of 9 Michael V. Elsberry 9 Case 9:11-cv-80601-DMM Document 300 Entered on FLSD Docket 03/22/2012 Page 9 of 9