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16 Cobalt LLC v. Harrison Career Institute

December 8, 2008

16 COBALT LLC, PLAINTIFF,
v.
HARRISON CAREER INSTITUTE, DEFENDANT.



The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge

MEMORANDUM OPINION

On March 28, 2007, this Court entered an order that denied in part and held in abeyance in part Defendant's [12] Motion to Set Aside Default Judgment. 03/28/07 Order, Docket No. [19], ("Order"). Specifically, the Court denied Defendant's motion to set aside the default judgment as to Plaintiff's liability, but determined that further briefing was necessary to determine whether the amount and timing of the damages awarded to Plaintiff in the default judgment order should be set aside or otherwise modified. Id. Accordingly, the Court held in abeyance Defendant's motion with respect to the amount and timing of Defendant's payments to Plaintiff pending further briefing from the parties. Id. The parties subsequently submitted the requested additional briefing, and now pending before the Court are Plaintiff's [24] Supplemental Brief ("Pl.'s Supp. Response"), Defendant's [23] Memorandum Responsive to the Court's Order ("Def.'s Supp. Response"), and Plaintiff's [25] Reply to the Defendant's Memorandum Responsive to the Court's Order (Pl.'s Reply to Def.'s Supp. Response"). Although both parties had the option of filing a reply, Defendant declined to do so. After a thorough review of the parties' submissions and applicable case law, the Court shall deny in part and hold in abeyance in part Defendant's Motion to Set Aside Default Judgment, as to the amount and timing of damages, for the reasons that follow.

I. BACKGROUND

The Court shall assume familiarity with the Court's March 28, 2007 Memorandum Opinion, see 16 Cobalt LLC v. Harrison Career Institute, Civil Action No. 06-175 (D.D.C. Mar. 28, 2007) (hereinafter "Slip Op."), which sets forth in detail the factual background of this case, and shall therefore only briefly address such facts as are necessary for resolution of the issues currently before the Court.

A. Procedural Background

On December 9, 2003, K Associates, the predecessor in interest to Plaintiff, entered into a ten-year commercial property lease with Defendant to commence in January of 2004 for a portion of the ninth floor and the entire tenth floor of the Building (the "Leased Premises") at 1627 K Street, NW, Washington, D.C. Pl.'s Mot. for Default J., Docket No. [6], ¶ 3 & Ex. B (Lease); Def.'s Mot. to Set Aside Default J., Docket No. [12], ¶¶ 1, 2. Defendant, however, ceased paying the monthly rent in June of 2005. Pl.'s Mot. for Default J. ¶ 5. On January 6, 2006, the parties signed an Agreement for Unconditional Surrender of Premises. Pl.'s Mot. for Default J., Ex. A ("Surrender Agreement"). On January 10, 2006, pursuant to the Surrender Agreement, Defendant vacated the Leased Premises, but "has not paid any of the Rent due and owing." Pl.'s Compl., Docket No. [1], ¶ 16.

On January 31, 2006, Plaintiff filed a Complaint for Damages against Defendant to recover damages suffered as a result of Defendant's breach of a written lease agreement. Pl.'s Compl. Having received no answer or response from Defendant, Plaintiff subsequently filed its First Motion for Default Judgment against Defendant, requesting the entry of a default judgment in the amount of $3,381,801.22. Pl.'s Mot. for Default J. at 1. Upon request of the Court, Plaintiff also filed a Supplement to its Motion for Default Judgment, which revised Plaintiff's damages claim to $1,972,247.62 and provided an itemized detail of the amounts of revised damages requested. See Supp. Mot. for Default J., Docket No. [8]. Specifically, Plaintiff requested: (a) the total value of the lease (i.e., past rent due and future rent that would have been paid through the term of the lease ending in 2014), late charges, attorneys' fees and costs, as well as leasing commission fees and tenant improvement costs incurred in reletting the premises; minus (b) the security deposit paid by Defendant and the rental payments (both past and future) due from three new tenants to whom Plaintiff had relet portions of the Leased Premises.*fn1 See id. Based on the Plaintiff's supplemented information, the Court issued an Order and Final Judgment for Plaintiff ("Final Default Judgment"), in the amount of $1,972,247.62. Order and Final J., Docket No. [9].

B. The Court's Order on Defendant's Motion to Set Aside Default Judgment

Defendant subsequently filed a Motion to Set Aside Default Judgment, see Mot. to Set Aside Default J., Docket No. [12], which the Court denied in part and held in abeyance in part, see Order; see also Slip. Op. at 1. Specifically, the Court denied Defendant's motion as to liability, finding that Defendant had not demonstrated excusable neglect and did not have any complete meritorious defenses to liability. See Slip. Op. at 7-21, 24. Accordingly, the Court refused to set aside the default judgment entered against Defendant holding it liable to Plaintiff for damages as specified in the Lease-i.e., past and future rent through the end date of the Lease term. Id. at 19-20.

As is relevant to the issues at hand, however, the Court explained that, because of the "parties' extremely sparse and cursory briefing," the Court was "still left with a number of unanswered questions . . . with respect to the amount and timing of Defendant's payments to Plaintiff." Id. at 21 (emphasis added). Although the Court determined that Plaintiff is legally entitled, both under the terms of the parties' Lease and applicable District law, to collect both past and future rent owed by Defendant, the Court was unable to determine two key issues regarding future rent owed by Defendant: (a) whether the amount of damages must be reduced to reflect Plaintiff's reasonable efforts to relet the Leased Premises and any rents thus obtained, and, if so, by how much; and (b) whether the damages, as related to future rents owed, could be legally paid in a single lump sum now or rather must be paid in periodic installments as such rents become due. See id. at 21-24. The Court therefore held in abeyance the Defendant's Motion to Set Aside Default Judgment as to the amount and timing of payment and requested additional briefing to assist in determining the damages owed by Defendant to Plaintiff. Id. The Court emphasizes that these are the only questions now before the Court-i.e., whether the amount and timing of the damages award originally granted to Plaintiff should be set aside or otherwise modified.

II. DISCUSSION

At the outset, the Court notes that the question of the amount and timing of Plaintiff's damages, as they relate to future rents owed under the Lease, implicates issues that are, in the views of courts and commentators alike, "'complex' and 'confus[ing].'" See Onal v. BP Amoco Corp., 275 F. Supp. 2d 650, 667 (E.D. Penn. 2003) (internal citations omitted). Unfortunately, despite multiple rounds of briefing, the parties' analysis of these issues remains sparse and cursory, leaving the Court to navigate the murky legal waters largely on its own. As a result, the Court finds-once again-that the record before it remains insufficient to permit complete resolution of the questions raised in this case.

Because the amount of damages owed by Defendant to Plaintiff ultimately turns on the terms of the parties' Lease, the Court first addresses the applicable lease provisions before turning ...


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