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Whole Foods Market Group, Inc. v. Wical Ltd. Partnership

United States District Court, District of Columbia

October 22, 2019

WHOLE FOODS MARKET GROUP, INC., Plaintiff,
v.
WICAL LIMITED PARTNERSHIP, Defendant.

          MEMORANDUM OPINION

          Royce C. Lamberth United States District Court Judge.

         This lawsuit involves a contractual dispute regarding the lease agreement between landlord Wical Limited Partnership (“Wical”) and tenant Whole Foods Market Group, Inc. (“Whole Foods”). Plaintiff Whole Foods has moved for partial summary judgment. Defendant Wical has moved for summary judgment on all counts. The Court has subject matter jurisdiction over this case based on diversity under 28 U.S.C. § 1332(a)(1). For the reasons set forth below, the Court finds that it would be inappropriate to grant summary judgment for either party and will therefore deny both motions.

         BACKGROUND

         Whole Foods began operating a grocery store at 2323 Wisconsin Ave. NW, Washington, D.C. 20007 more than twenty years ago. Wical owns the property and entered into a lease agreement with Whole Foods on March 10, 1994. Beginning in 2015, Whole Foods started noticing indications that rodents were present in the store. Plaintiff called upon its pest company, Rentokil-Steritch (“Steritech”), to escalate its services. In January of 2017, the D.C. Department of Health inspected the store and found evidence of rodents, so Whole Foods continued working with Steritech to try to eradicate the infestation. The Department of Health's February 8, 2017 inspection found no rodents, but its inspection the following day did show evidence of rodents in the store, so the Department of Health ordered a summary suspension. Whole Foods complied with the closure order and called in pest control services to clean the store and treat the rodent problem. The next day, Whole Foods was able to reopen the store. Following the February 28, 2017 inspection of the insulated drop ceiling in the top level of the underground garage (which lies below the entire sales floor), it became clear that the drop ceiling contained significant rodent activity and harborage and was exacerbating the store's rodent problem. The Department of Health conducted another inspection on March 13, 2017 and found evidence of rodents. Whole Foods closed the store for three days to further investigate and treat the infestation. Its efforts, however, did not fully resolve the store's rodent problem.

         Whole Foods decided to demolish the suspended ceiling and the interior of the store and began planning to rebuild and upgrade the interior. Whole Foods met with Wical on March 23, 2017 to discuss the pest problem and rebuilding. Wical allegedly advised Whole Foods that it was in default of the lease because the store would be closed more than sixty days as prohibited by Paragraph 4(G) and offered Whole Foods the opportunity to sign a new lease with higher rent (including a new percentage rent provision) and a twenty-year fixed term. At the time, Whole Foods was one year into its first of four five-year options.

         In April of 2017, Whole Foods informed Wical that it would be delayed in re-opening the store as a result of the demolition but asserted that the delayed reopening was excused under the force majeure clause in Paragraph 30(A) of the lease. Wical replied by declaring its belief that Paragraph 30(A) did not apply; it demanded that the store reopen by May 12, 2017 in accordance with the lease's cure provision. Whole Foods did not reopen the store by May 12, 2017, so on May 15, 2017, Wical issued a Notice of Default. Whole Foods cannot rebuild the store without a permit, as the District of Columbia requires the landlord's consent to the proposed plans before it will issue a permit. Whole Foods requested Wical's permission on May 23, 2017. As of this time, Wical has not given its consent.

         THE PARTIES' ALLEGATIONS OF MATERIAL BREACHES

         In order for one party's performance on a contract to be excused, the other party must have committed a material breach. In the District of Columbia, a court must consider the following factors when determining whether a breach was material:

(a) the extent to which the injured party will be deprived of the benefit which he reasonably expected;
(b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;
(c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture;
(d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking into account all of the circumstances including any reasonable assurances; and
(e) the extent to which the behavior of the party failing to perform or to offer to perform comports with the standards of good faith and fair dealing.

Howard Town Center Developer, LLC v. Howard Univ., 278 F.Supp.3d 333, 394 (D.D.C. Aug. 14, 2017) (citing Greyhound Lines, Inc. v. Bender, 595 F.Supp. 1209, 1224 (D.D.C. 1984) (quoting Restatement (Second) of Contracts ยง 241)). As explained below, it would be premature at this stage of the litigation to find that either party has breached the lease, so any determination of materiality must wait until trial. It is, however, still important to remember that a breach alone is insufficient to ...


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