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Paul Qi v. Federal Deposit Insurance Corporation

December 20, 2010

PAUL QI, PLAINTIFF,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, IN ITS CAPACITY AS RECEIVER OF WASHINGTON MUTUAL BANK, DEFENDANT.



The opinion of the court was delivered by: Reggie B. Walton United States District Judge

MEMORANDUM OPINION

The pro se plaintiff's complaint alleges that the defendant Federal Deposit Insurance Corporation ("FDIC"), as receiver for Washington Mutual Bank ("WaMu"), improperly breached a lease agreement and seeks relief for damages arising from the FDIC-receiver's repudiation of the lease. Currently before the Court is the defendant's Motion for Judgment on the Pleadings Pursuant to Federal Rule of Civil Procedure 12(c) ("Def.'s Mot.").*fn1 For the reasons explained below, the defendant's motion is granted.

I. Factual Background

On May 30, 2006, the plaintiff, as lessor, and WaMu, as lessee, entered into lease agreement for the entire occupancy of a commercial building located at 1747 Springfield Avenue, Maplewood, New Jersey. Complaint ("Compl.") ¶ 5. The lease commenced on July 15, 2006, id., had a term of ten years, id., and generally reflected the fact that WaMu intended to use the property to provide commercial banking services, see Verified Answer ("V. Answer"), Ex. A. (Lease § 1.14). As most leases do, the lease set forth the mutual rights and obligations of the parties concerning the use, maintenance, and improvement of the property, as well as the rents due to the lessor from the lessee during the lessee's occupation of the building. See generally id., Ex. A (Lease).

A. The Lease

The lease specified that the rentable square feet in the building was "[a]pproximately 4,600" square feet, id., Ex. A (Lease §§ 1.11, 1.12), and it identified the tenant's proportionate share of that rentable space as "100%." Id., Ex. A (Lease § 1.13). Section 3.1 of the lease, subtitled "Lease of Premises," explicitly states that "[u]se of any mezzanine, basement or storage space shall be at no additional charge and the area of such space shall not be included in the area of the Premises." Id., Ex. A (Lease § 3.1). The parties agreed to a monthly base rent of $14.78 per rentable square foot for years one through five, increasing to $16.26 per rentable square foot for years six through ten of the lease term. Id., Ex. A (Lease § 1.8). The lease entitled the tenant to written notice of default from the landlord should the landlord determine that the tenant has failed to observe or perform any of the provisions of the lease. Id., Ex. A (Lease § 18.1(b)).

In a section titled "Maintenance, Repairs and Alterations," the lease provides that the landlord "shall maintain, repair and replace as necessary the structural portions of the Building in a first class condition and in compliance with all applicable laws." Id., Ex. A (Lease § 11.1). The lease further specifies that the tenant, "at its sole cost and expense, shall perform all maintenance and repairs to the Premises (other than for those portions of the Premises described in Section 11.1 [(landlord obligations)] above), and shall keep the Premises (other than for those portions of the Premises described in Section 11.1 [(landlord obligations)] above) in good condition and repair, reasonable wear and tear expected." Id., Ex. A (Lease § 11.2). Section 11.2 continues to state that "without limiting the foregoing," the tenant shall be exclusively responsible for maintenance of the buildings HVAC system and maintenance of the parking areas and landscaping. Id., Ex. A (Lease § 11.2). This subsection concludes with the admonishment that "[a]ll repairs shall: (i) be at least equal in quality, value and utility to the original work or installation; and (ii) be in accordance with all laws." Id., Ex. A (Lease § 11.2).

The final subsection of the "Maintenance, Repairs and Alterations" section, entitled "Alterations and Additions," provides that

Other than as set forth in Exhibit C [to the lease-the Workletter agreement], Tenant shall not make any structural alterations, improvements, additions or utility installations (other than cabling for telephone or computer installations) in or about the Premises . . . without first obtaining the written consent of [the] Landlord. . . . However, [the] Landlord's consent shall not be required for any alteration that satisfies all of the following criteria: (1) complies with all Laws; (2) is not visible from the exterior of the Premises; (3) will not materially affect the systems or structure of the Building; and (4) does not unreasonably interfere with the normal and customary business operations of other tenants in the Building. If [the] Landlord fails to respond in writing within thirty (30) days of [the] Tenant's request for approval of an [a]lteration, [the] Landlord shall be deemed to have approved the alteration.

Id., Ex. A (Lease § 11.4).

The lease also governs tenant improvements of the leased building. See id., Ex. A (Lease § 3.3). The lease provides for a tenant improvement allowance of $15,000 to be paid to the lessee by the lessor for use in "designing, permitting, and constructing" the improvements. Id., Ex. A (Lease § 1.9). Additionally, the lease explains that the Workletter Agreement attached to the lease as exhibit C "sets forth the obligations of [the] Landlord and [the] Tenant with respect to the design and construction of the initial 'Tenant Improvements.'" Id., Ex. A (Lease § 3.3).

Plans and specifications for such Tenant Improvements . . . shall be subject to the prior approval of [the] Landlord. . . . Upon expiration or sooner termination of this Lease, all improvements and additions to the Premises (other than [the] Tenant's trade fixtures and moveable personal property) to the extent they were paid for using the Tenant Improvement Allowance, shall be deemed the property of [the] Landlord.

Id., Ex. A (Lease § 3.3). Section 3 of the Workletter Agreement further clarifies that the lessee shall provide to the landlord its plans for [the] tenant's intended leasehold improvements in form suitable for permit application (collectively, the 'Working Drawings'). Working Drawings, and all material changes thereto, shall be subject to [the] landlord's written approval . . ., which shall be deemed given if not denied in writing within five (5) business days after [the] Tenant submits them.

Id., Ex. A (Lease Ex. C [Workletter Agreement ¶ 3]). A concluding section of the Workletter Agreement provides that upon the expiration or termination of the lease, the tenant shall not be required to remove any of the improvements, so long as all of its personal property and trade fixtures are removed and any damage caused by the removal is repaired. Id., Ex. A (Lease Ex. C [Workletter Agreement ¶ 8]).

The last portions of the lease relevant to this case are those that spell out the brokerage commission to be paid by the plaintiff-lessor to WaMu's broker. See id., Ex. A (Lease § 4.4). Section 24.11 of the lease provides for the payment, by the lessor, of the commission earned by the tenant's broker. Id., Ex. A (Lease § 24.11). In a section of the lease affording WaMu a one-time option to terminate the lease on the fifth annual anniversary of the lease's commencement, the lease conditions this right to ...


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