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Talkington v. Renzelli

United States District Court, N.D. West Virginia

April 24, 2019

MARLA ANN TALKINGTON and LOUIS GARY DAVIS, Plaintiffs,
v.
MICHAEL RENZELLI, MARY LOU RENZELLI, OLIVERIO'S CATERING, INC. and SHIRLEY C. OLIVERIO, in her capacity as a personal guarantor of Oliverio's Catering, Inc., Defendants.

          MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT SHIRLEY C. OLIVERIO'S MOTION FOR SUMMARY JUDGMENT, GRANTING AS FRAMED PLAINTIFFS' AND CROSS-CLAIMANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT AS TO THE CONTRACT CLAIMS PENDING AGAINST THE OLIVERIO'S DEFENDANTS AND AS TO THE PLAINTIFFS' REQUEST FOR DECLARATORY RELIEF, DENYING DEFENDANTS' MOTION FOR JURY TRIAL, SCHEDULING REASONABLENESS HEARING AS TO ATTORNEYS' FEES AND BRIEFING REGARDING ATTORNEYS' FEES, DIRECTING PARTIES TO MEET AND CONFER CONCERNING THE AMOUNT OF TOTAL DAMAGES AND VACATING PRETRIAL CONFERENCE AND TRIAL

          FREDERICK P. STAMP, JR. UNITED STATES DISTRICT JUDGE

         I. Background

         The plaintiffs, Marla Ann Talkington and Louis Gary Davis (“the plaintiffs”), filed an amended complaint in this Court against the defendants, Michael Renzelli, Mary Lou Renzelli (“the Renzelli defendants”), Oliverio's Catering, Inc., and Shirley C. Oliverio (“the Oliverio's defendants”). The plaintiffs seek to require the partition by sale of parcels in Harrison County, West Virginia, pursuant to West Virginia Code § 37-4-1, et seq. The plaintiffs seek to have the subject parcels sold at judicial sale to the highest bidder by a Special Commissioner appointed by this Court. The plaintiffs collectively own 50% of the parcels and the Renzelli defendants own the other 50% of the parcels, as tenants in common with the plaintiffs. The plaintiffs' first cause of action in their amended complaint is this action for partition.

         The remaining causes of action relate to the Oliverio's defendants. In 1996, before the plaintiffs acquired their interests in the subject parcels, Mary Roda Renzelli and Helen Roda Davis entered into a lease agreement (“Lease Agreement”) with Oliverio's for one of the subject parcels. In 2007, the parties executed an amendment to the Lease Agreement (“Amendment”), that dealt with changes to the subject property, specifically including a portion of the building housing the restaurant which was formerly occupied by Louis Roda and Mary Roda as their residence (see ECF No. 70-2 at 1-4). From 2006 through 2016, Oliverio's failed to make their rent payments in full, and substantial payments remain outstanding. Plaintiffs' second cause of action is for breach of contract. Specifically, plaintiffs allege that Oliverio's has breached the Lease Agreement by failing to pay rent, fees, expenses, and interests. The plaintiffs' third cause of action is for unjust enrichment, in which the plaintiffs allege that they are entitled to recover a reasonable rental value from Oliverio's, plus interest and other expenses. Plaintiffs' fourth cause of action seeks a declaratory judgment, declaring that Oliverio's right of first refusal contained within the lease agreement is invalid and unenforceable, and that Oliverio's materially and intentionally breached the Lease Agreement.

         A. Defendant Shirley C. Oliverio's Motion for Summary Judgment

         On February 25, 2019, the defendant, Shirley Oliverio, filed a motion for summary judgment. ECF No. 72. In support of her motion, she contends that the Lease Agreement stated that she would guarantee all obligations and duties under the Lease Agreement for the initial term only. Id. at 2. She asserts that the 2007 Amendment to the Lease Agreement did not change the term of the guaranty, and that there was no new consideration exchanged for any additional term. Id. Moreover, defendant Shirley Oliverio claims that there has never been any independent oral agreement to assume a greater period beyond the initial term. Id.

         The plaintiffs and the Renzelli defendants filed a response to defendant Shirley Oliverio's motion for summary judgment. ECF No. 74. In that response, the plaintiffs and cross-claimants contend that the plain language of the Amendment to the Lease Agreement is without restriction, and that the Amendment to the Lease Agreement modified the underlying Lease Agreement and now controls. Id. at 3-6. Defendant Shirley Oliverio did not file a reply.

         B. Plaintiffs' and Cross-Claimants' Motion for Partial Summary Judgment

         On February 6, 2019, the plaintiffs and the cross-claimants, the Renzelli defendants, filed a motion for partial summary judgment. ECF No. 64. In support of their motion, they contend that as a matter of law, they are entitled to their breach of contract claims for back rent, expenses (e.g. tax payment), and to attorneys' fee/expense recovery based on the plain language of the Lease Agreement, and the Amendment to the Lease Agreement. ECF No. 65 at 11-13. The plaintiffs and cross-claimants further assert that if the Court is to award them partial summary judgment, Shirley Oliverio should be adjudged to be personally responsible for the satisfaction of the judgment since she personally guaranteed defendant Oliverio's obligations and willingly assumed personal liability. Id. at 13-14. Lastly, the movants contend that they are entitled to summary judgment on their declaratory judgment claim because “the record is clear that the Oliverio's defendants' actions and omissions materially breached the Lease Agreement, rending any purported right of first refusal in the Lease Agreement void and unenforceable as [t]he right to exercise this Right of First Refusal is condition[ed] upon the faithful performance of all the covenants, conditions, and agreements required to be performed by it as Lessee under this Lease Agreement[, ]” citing Exhibit 4, Section 5. Id. at 14 (internal quotation marks omitted).

         The Oliverio's defendants then filed a response in opposition to plaintiffs' and cross-claimants' joint motion for partial summary judgment. ECF No. 70. In their response, the Oliverio's defendants first argue that the movants' calculation of the amount of actual rent owed is not correct based upon oral agreements of the parties and their course of conduct or dealing for the past 11 years prior to plaintiffs bringing this civil action. Id. at 3-6. Moreover, the Oliverio's defendants assert that the monthly rental basis for the calculations is incorrect even when considering the rental leases since Michael Renzelli admitted under oath that Oliverio's never exercised any of the written options to renew and that the lessors did not provide written consent; therefore, the Oliverio's defendants have been month-to-month tenants from the expiration of the initial term of the lease. Id. at 6-8. Citing the Lease Agreement, defendants state that under the circumstances, the amount of rent owed is the amount of the immediately preceding monthly installment of rent plus an increase of 20% over such amount. Id. Second, the Oliverio's defendants contend that defendant Shirley Oliverio is not a guarantor for any obligation sought in this civil action since Shirley Oliverio only guaranteed all obligations under the lease for the initial term, and that there was no amendment indicating that she would be a guarantor for any other term. Id. at 9-10. Lastly, defendants assert that there is no genuine issue of material fact as to taxes, since Michael Renzelli previously stated that the Renzelli defendants would pay half of the taxes. Id. at 10. Moreover, “[w]ith regard to the interest alleged to be due and owing, that factor, [defendant contends, ] would be dependent upon a consideration of what amount is due and owing; whether the terms of the interest requirements under the lease are usurious or otherwise void or voidable under the law; and whether any interest applies to any alleged oral agreement beyond the statutory prejudgment interest rate for the last five (5) years - as the claims for taxes beyond [five] years prior the filing would be barred by the applicable statute of limitations.” Id. Finally, the Oliverio's defendants assert that an award to plaintiffs for attorneys' fees is not appropriate based on principles of equity. Id. at 10-11.

         The plaintiffs and cross-claimants then filed a reply in support of their motion for partial summary judgment. ECF No. 73. In their reply brief, they first address the issue of taxes, interest and attorneys' fees. They allege that: (1) the Oliverio's defendants previously admitted in this civil action that they were to pay, as additional rent, taxes on Green Acres Restaurant property; (2) prior to this civil action, the plaintiffs attempted to correspond with the Oliverio's defendants but such correspondence was returned to plaintiffs' counsel; and (3) equity would dictate an attorneys' fee award to be appropriate. Id. at 2-3. The movants then assert that the Oliverio's defendants' argument that the Lease Agreement was orally modified is contrary to the plain language of the Lease Agreement and the Amendment to the Lease Agreement, specifically stating that the Amendment to the Lease Agreement confirmed that the original Lease Agreement was in full force and effect. Id. at 3-5. The movants then contend that defendants' argument that the Oliverio's defendants have been month-to-month tenants from the expiration of the initial term of the lease is contrary to the plain language of the Lease Agreement, the Amendment to the Lease Agreement, and case law. Id. at 6. Specifically, the movants assert that the Oliverio's defendants breached the Lease Agreement that placed an obligation on the Oliverio's defendants to provide written notice of renewals, but that such a breach is immaterial since the Lease Agreement expressly contemplates and allows for waiver of conditions by plaintiffs. Id. at 8. Moreover, the movants assert that case law states that a breaching party cannot invoke a contractual provision for their benefit, citing Jones v. Kessler, 98 W.Va. 1, 17 (1925). Id. The movants further state that the Oliverio's defendants' conduct undercuts the proposition that Oliverio's was a month-to-month tenant since they made significant investments in the property. Id. at 8. Lastly, the movants contend that based on the plain language of the Amendment to the Lease Agreement, Shirley Oliverio is jointly and personally responsible for the satisfaction of the judgment. Id. at 9-10.

         C. The Oliverio's Defendants' Motion for Jury Trial

         On January 15, 2019, this Court held a status and scheduling conference. At the conference, the Court inquired as to whether or not the defendants have invoked their right to a trial by jury on the breach of contract claim. Counsel for the parties at that time were not certain as to whether or not a party had invoked such a right. Further, counsel for the plaintiffs indicated that they intend to object to the Oliverio's defendants' request for a trial by jury, if the defendants seek to do so. Accordingly, this Court established a briefing schedule: Counsel for the defendants were ordered to file a brief by January 29, 2019. ECF No. 60 at 11. Counsel for the plaintiffs were ordered to file a brief in response by February 12, 2019. Id. at 12. The defendants were ordered to file any reply by February 19, 2019. Id.

         On January 29, 2019, the defendants filed a motion for a jury trial. ECF No. 62. In that motion, the defendants asserted that there is no prejudice to the parties with respect to the motion, and that courts have routinely allowed jury trials despite a lack of a request in an original pleading. Id. at 2.

         On February 1, 2019, the plaintiffs filed a response in opposition to defendants' motion for a jury trial. ECF No. 63. In their response, plaintiffs asserted that the defendants failed to comply with Federal Rule of Civil Procedure 38, which sets forth the requirements for a jury demand, and that in doing so, defendants have waived their right to a jury trial. Id. at 4. Citing Malbon v. Pennsylvania Millers Mut. Ins. Co., 636 F.2d 936, 940 (4th Cir. 1980), the plaintiffs stated that: (1) “the remaining issue (the issue of damages) is ripe for determination by the Court - given that the damage calculation in this matter is of a complex nature, with substantial interests/penalty amounts associated with the non-payment of contractually owed rent[;]” (2) “the parties have justifiably relied on the assumption that this case would be tried to the Court throughout motion practice and discovery - such that certain parties have coordinated their trial strategy accordingly[;]” (3) the defendants' motion “was filed approximately fifteen (15) months after the Complaint was filed in this action[;]” and (4) defendants did not offer a meaningful rationale for their failure to make a timely jury demand. Id. at 4-5.

         On February 18, 2019, the defendants filed a reply to the plaintiffs' response in opposition to defendants' motion for a jury trial. ECF No. 69. In the reply, the plaintiffs argue that: (1) “the inclusion of the relief found in [Federal Rule of Civil Procedure] 39 and the overriding judicial embrace of the sanctity of jury trials weighs in favor of allowing a jury trial to proceed on factual issues[;]” (2) the plaintiffs are not actually prejudiced by the demand; and (3) defendants did not waive of their defenses. Id. at 1-3.

         For the reasons set forth below, defendant Shirley Oliverio's motion for summary judgment (ECF No. 71) is granted, plaintiffs' and cross-claimants' joint motion for partial summary judgment as to the contract claims pending against the Oliverio's defendants, and as to the plaintiffs' request for declaratory relief (ECF No. 64) is granted as framed, and defendants' motion for jury trial (ECF No. 62) is denied.

         II. Applicable Law

         Under Federal Rule of Civil Procedure 56(c), summary judgment is appropriate if “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” The party seeking summary judgment bears the initial burden of showing the absence of any genuine issues of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). “The burden then shifts to the nonmoving party to come forward with facts sufficient to create a triable issue of fact.” Temkin v. Frederick County Comm'rs, 945 F.2d 716, 718 (4th Cir. 1991), cert. denied, 502 U.S. 1095 (1992)(citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)).

         However, as the United States Supreme Court noted in Anderson, “Rule 56(e) itself provides that a party opposing a properly supported motion for summary judgment may not rest upon the mere allegations or denials of his pleading, but . . . must set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256. “The inquiry performed is the threshold inquiry of determining whether there is the need for a trial - whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.” Id. at 250; see also Charbonnages de France v. Smith, 597 F.2d 406, 414 (4th Cir. 1979) (explaining that summary judgment “should be granted only in those cases where it is perfectly clear that no issue of fact is involved and inquiry into the facts is not desirable to clarify the application of the law.” (citing Stevens v. Howard D. Johnson Co., 181 F.2d 390, 394 (4th Cir. 1950))).

         In Celotex, the Court stated that “the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322. Summary judgment is not appropriate until after the non-moving party has had sufficient opportunity for discovery. See Oksanen v. Page Mem'l Hosp., 912 F.2d 73, 78 (4th Cir. 1990), cert. denied, 502 U.S. 1074 (1992). In reviewing the supported underlying facts, all inferences must be viewed in the light most favorable to the party opposing the motion. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

         III. Discussion

         A. Defendant Shirley C. Oliverio's Motion for Summary Judgment

         1. Defendant Shirley C. Oliverio is not liable for any obligations and duties under the Lease beyond the initial term

         Plaintiffs do not dispute that the initial Lease Agreement indicated that defendant Shirley Oliverio is a guarantor for all obligations and duties under the Lease Agreement for the initial term only and acknowledge that “[t]he plain language of the Lease Agreement provides that the initial term of the lease ended at midnight on December 31, 1998.” ECF No. 74 at 3. Plaintiffs argue in their brief in opposition that summary judgment should not be granted in favor of defendant Shirley Oliverio because: (1) “on February 19, 2007, Shirley C. Oliverio personally guaranteed Oliverio's Catering, Inc.'s obligations, and assumed personal liability for this risk/exposure, when the executed Amendment to Lease Agreement as an unconditional ‘GUARANTOR'[, ]” and that (2) Shirley Oliverio did not restrict or clarify her status as a guarantor in her response to plaintiff's requests for admission. ECF No. 74 at 4-5. Each argument is considered, and rejected, below.

         Although defendant Shirley Oliverio indicates that she is a guarantor without qualification in the Amendment to the Lease Agreement, there is no evidence suggesting that the Amendment to the Lease Agreement amends the guaranty provision in the initial Lease Agreement. On the contrary, paragraph 5 of the Amendment to the Lease Agreement specifically states: “Except as expressly amended by this Amendment to the Lease Agreement, all of the terms and provisions of the Lease Agreement shall continue in full force and effect.” ECF No. 70-2 at 4.

         Moreover, the cases the plaintiffs have cited in their response do not support the conclusion that defendant Shirley Oliverio is liable past the initial term as set out in the initial Lease Agreement. First, Esso Standard Oil Co. v. Kelly, 145 W.Va. 43, 47 (1960), does not help the plaintiffs because in that case it was clear that the written instrument sued upon was an absolute guaranty. Unlike the circumstances presented in this case, in Esso, the contract alleged and described an absolute guaranty of payment by the defendant to the plaintiff of a designated and liquidated amount. Id. at 46. If anything, Esso seems to support the conclusion that defendant Shirley Oliverio is not personally liable for any obligations or duties past the initial term set out in the initial Lease Agreement since the case explains that the intention of the guarantor governs. Id. at 47. Here, since the Amendment to the Lease Agreement deals only with changes to subject property, specifically including a portion of the building housing the restaurant which was formerly occupied by Louis Roda and Mary Roda as their residence (see ECF No. 70-2 at 1-4), it is unlikely to assume that defendant Shirley Oliverio intended to guarantee any duties and obligations past the initial term set forth in the Lease Agreement simply because she stated she was a “guarantor” without qualifying terms in the Amendment to the Lease Agreement and in her response to plaintiffs' requests for admission (ECF No. 73-1).

         Further, Ives v. Williams, 143 Va. 855 (1925), does not seem to support the conclusion that defendant Shirley Oliverio is liable past the initial term as set out in the Lease Agreement. In Ives, the guaranty was held to be “unquestionably” an absolute guaranty. Id. at 859. The contract in that case provided for a certain, definite, and specific act of performance to be had by the debtor, and the performance of that act was guaranteed without any condition of any character being annexed to it. Id.

         Lastly, Looney v. Belcher, 169 Va. 160 (1937), does not seem to support the conclusion that defendant Shirley Oliverio is liable past the initial term as set out in the Lease Agreement. Unlike the circumstances presented in this case, in Looney an issue was whether the guaranty was continuing in nature. Id. Here, the issue is whether the Amendment to the Lease Agreement changed the guaranty provision that had a clear time limit. Again, if anything, Looney would support the conclusion that defendant Shirley Oliverio is not liable for any duties and obligations past the initial term set forth in the Lease Agreement since the court in Looney explains that “[t]he true principle of sound ethics is to give the contract the sense in which the person making the promise believed the other party to have accepted it, in fact, did so understand and accept it.” Id. at 172. Looney may support defendant Shirley Oliverio for the same reasons Esso may support defendant Shirley Oliverio.

         For the reasons set forth above, the Court grants defendant Shirley Oliverio's motion for summary judgment (ECF Nos. 71 and 72) with respect to defendant Shirley Oliverio's liability past the initial term of the Lease Agreement. Accordingly, plaintiffs' and cross-claimants' joint motion for partial summary judgment, with respect to the issue of whether defendant Shirley Oliverio is a guarantor past the initial term under the Lease Agreement, is denied.

         B. Plaintiffs' and Cross-Claimants' Joint Motion for Partial Summary Judgment

         As indicated by defendants' counsel, defendants concede that they breached the Lease Agreement.[1] Indeed, the parties agree as to many of the underlying facts, although they disagree as to the amount of damages owed. The resolution of whether or not plaintiffs and cross-claimants are entitled to judgment as to their breach of contract claims for back rent and expense turns on the legal interpretation of the Lease Agreement. Because the Lease Agreement is governed by West Virginia law, this Court will begin with a brief review of West Virginia law regarding breach of contract, as well as the provisions in the Lease Agreement that govern the resolution of this dispute.

         Under West Virginia law, to state a breach of contract claim, a plaintiff must show: (1) existence of a valid enforceable contract; (2) plaintiff performed under the contract; (3) defendant breached or violated a duty under the contract; and (4) plaintiff was injured by this breach. Wince v. Easterbrooke Cellular Corp., 681 F.Supp.2d 688, 693 (N.D. W.Va. 2010); Bettinazzi v. State Farm Fire and Cas. Co., C.A. No. 5:13CV166, 2014 WL 241694, at *2 (N.D. W.Va. Jan. 22, 2014).

         In Fraley v. Family Dollar Stores of Marlinton, West Virginia, Inc., the West Virginia Supreme Court of Appeals reviewed a contract where the plaintiff landlord sought termination of rent due and declared forfeiture of the supermarket's lease. With respect to interpretation of the contract, the Court explained:

This Court has long held that a valid written agreement using plain and unambiguous language is to be enforced according to its plain intent and should not be construed. The rule is set forth in Syllabus Point 1, Cotiga Development Co. v. United Fuel Gas Co., 147 W.Va. 484, 128 S.E.2d 626 (1962), which states: A valid written instrument which expresses the intent of the parties in plain and unambiguous language is not subject to judicial construction or interpretation but will be applied and enforced according to such intent.

188 W.Va. 35, 37, 422 S.E.2d 512, 514 (1992). See also Syl. Pt. 9, Arnold v. Palmer, 224 W.Va. 495, 497, 686 S.E.2d 725, 728 (2009) (“A valid written instrument which expresses the intent of the parties in plain and unambiguous language is not subject to judicial construction or interpretation but will be applied and enforced according to such intent.”); Rollyson v. Jordan, 205 W.Va. 368, 372, 518 S.E.2d 372, 376 (1999) (“Where parties contract lawfully and ...


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