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Hardin Street Marine LLC v. Kenova Terminal Co.

United States District Court, S.D. West Virginia, Huntington Division

May 22, 2019

HARDIN STREET MARINE LLC, Plaintiff,
v.
KENOVA TERMINAL COMPANY, Defendant.

          MEMORANDUM OPINION AND ORDER

          ROBERT C. CHAMBERS, UNITED STATES DISTRICT JUDGE

         Pending before the Court is the Motion for Summary Judgment filed by Plaintiff Hardin Street Marine LLC, and the Motion for Declaratory and Summary Judgment filed by Defendant Kenova Terminal Company.[1] ECF Nos. 16, 20. This case arises from a dispute about the meaning of an “option to purchase” clause in a lease agreement between the parties. See Compl., ECF No. 1, at 1. Plaintiff argues that the option to purchase clause allows it to purchase the premises at issue at any point during the lease, provided that it gives Defendant a 30-day notice from that point. See Mem. in Supp. of Pl.'s Mot. for Summ. J., ECF No. 21, at 1-2. However, it is Defendant's position that the option to purchase clause only allowed Plaintiff to purchase the premises the day the term of the lease commenced, provided that it gave Defendant a 30-day notice from that day-which Plaintiff did not do. See Mem. in Supp. of Def.'s Mot. for Summ. J., ECF No. 17, at 1. Predictably, both parties argue that the lease agreement terms “unambiguously” support their position. Id.; Mem. in Supp. of Pl.'s Mot. for Summ. J., at 1.

         The parties have fully briefed the issues and the motions are now ripe for adjudication. As explained below, the Court DENIES Plaintiff's Motion for Summary Judgment, and GRANTS Defendant's Motion for Declaratory and Summary Judgment.

         I. Background

         On October 1, 2000, Plaintiff's predecessor in interest, Marathon Ashland Petroleum LLC, the lessee, and Defendant, the lessor, entered into a lease agreement for approximately 70 acres of land bordering the Ohio River in Wayne County, West Virginia. Compl., at 2. While the lease agreement was effective October 1, 2000, the 25-year lease term did not commence until July 1, 2008. See Lease Agreement, ECF No. 1-1, at 1. Section 36 of the lease provides:

OPTION TO PURCHASE : … provided that Tenant is not then in default of any term or provision under this Agreement and Indenture of Lease, Landlord hereby grants and gives to Tenant the option to purchase the Premises, at the time the Term of this Lease shall commence, for the purchase price of Four Million Dollars ($4, 000, 000), as such purchase price may be adjusted as herein provided, and provided Tenant gives Landlord 270 days written notice of its intention to exercise this option on or before October 1, 2007.

Id. at 22.

         Section 36 of the lease also sets forth a formula for the adjustment of the base purchase price of $4, 000, 000 in order to account for inflation. See id.

         On September 28, 2007, three days before Defendant's option to purchase was set to expire, Marathon Petroleum Company LLC-another one of Plaintiff's predecessors in interest-and Defendant amended the lease. See Amended Lease Agreement, ECF No. 1-2. Section 2 of the amended lease provides:

OPTION TO PURCHASE : …provided that Tenant is not then in default of any term of provision under this Agreement and Indenture of Lease, Landlord hereby grants and gives to Tenant the option to purchase the Premises, at the time the Term of this Lease shall commence, for the purchase price of Four Million Dollars ($4, 000, 000), as such purchase price may be adjusted as herein provided or by mutual agreement of Landlord and Tenant, and provided that Tenant gives Landlord 30 days written notice of its intention to exercise this option.

         Id.

         Consequently, the amendment made two relevant changes. First, it changed the 270-day notice requirement to a 30-day requirement. Second, it removed the language specifying what date this notice requirement falls on.

         Following the execution of the amendment, Marathon Petroleum Company LP became the successor of Marathon Petroleum Company LLC, and Marathon Petroleum Company LLC's rights under the Lease transferred to Marathon Petroleum Company LP. See Compl., at ¶ 15. On January 1, 2015, Marathon Petroleum Company LP assigned its rights under the Lease to Plaintiff. See Id. at ¶ 17. By letter dated June 26, 2018, Plaintiff gave notice to Defendant of its exercise of the option to purchase the premises for $5, 561, 600.[2] See Id. at ¶ 20. Defendant, however, refuses to sell the premises at this price, and argues that it is not required to do so, because Plaintiff's option to purchase the land required Plaintiff to give Defendant a 30-day notice before the lease term began-which Plaintiff did not do. See Id. at ¶ 20; Mem. in Supp. of Def.'s Mot. for Summ. J., at I. Plaintiff subsequently filed its complaint on July 25, 2018. ECF No. 1.

         II. ...


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