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504 Redevelopment LLC v. SBA Site Management, LLC

United States District Court, N.D. Indiana

September 18, 2018

504 REDEVELOPMENT LLC, Plaintiff,
v.
SBA SITE MANAGEMENT, LLC, Defendant.

          OPINION AND ORDER

          THERESA L. SPRINGMANN CHIEF JUDGE

         This matter comes before the Court on two motions for summary judgment [ECF Nos. 35, 39]. On April 1, 2015, the Plaintiff 504 Redevelopment LLC filed the instant action in state court [ECF No. 4] against SBA Communications Corporation and Prime Investment Management Corporation (“Prime”). The case was removed to federal court and the Plaintiff voluntarily dismissed its claims against Prime [ECF No. 10]. On June 20, 2018, the Court granted the parties' stipulated motion to substitute the Defendant SBA Site Management, LLC, for SBA Communications Corporation [ECF No. 47].

         The Plaintiff alleges that the Defendant breached an antenna roof top management agreement relating to property owned by the Plaintiff (Count II), and seeks a declaratory judgment that the agreement is not enforceable against the Plaintiff (Count I), and ejectment of the Defendant from the property (Count III). On February 15, 2018, the Defendant filed a motion for summary judgment [ECF No. 35]. On April 3, 2018, the Plaintiff filed its response to the Defendant's motion for summary judgment, which contained a cross-motion for summary judgment [ECF No. 39 (Pl. Resp.)].[1] The motions have been fully briefed and are ripe for review.

         BACKGROUND

         In 2010, nonparty EFN Gary Property, LLC (“EFN”) owned the commercial building located at 504 Broadway, Gary, Indiana (“Property”). On June 10, 2010, EFN entered into an Antenna Site Roof Top Management Agreement (“Agreement”) with Prime pursuant to which EFN allowed Prime to rent roof top and certain interior space of the Property (“Premises”) to tenants for purposes of placing equipment that transmits and receives radio communications signals in exchange for the upfront payment of $600, 000.[2] [ECF No. 36-2 (Agreement), §§ 2, 5.] The Agreement defines “Premises” as “[t]he areas shown as outlined on the floor plans attached and as further described on Exhibit A together with the non-exclusive right of use of the common areas of the Building and exclusive right of use of the roof except as described herein.” (Agreement at 1.) Exhibit A to the Agreement includes a written description of the Premises as well as outlined floor plans of the roof top and floors 7-10 of the building. (Id. at SBA000049-54.) The term of the Agreement is 99 years. (Id., § 4.)

         Section 8 of the Agreement includes an easement provision:

[A]s consideration for the fee paid under this Agreement, Building Owner [EFN] hereby grants Manager [Prime] an easement in, under and across the Building for ingress, egress, utilities and access to the Premises adequate to install and maintain utilities, which include, but are not limited to, the installation of power, telephone service cable and emergency power generators, to service the Premises and the Communication Facilities at all times during the term of this Agreement (collectively “Easement”). The Easement provided hereunder shall have the same term as this Agreement. . . .

(Id., § 8(d).)

         Section 9 of the Agreement requires the Manager to maintain the Premises:

Manager hereby agrees (a) to keep the Premises in good working order and condition and promptly repair all damage to the Premises or to the personal property of the Building Owner's occupants caused by Manager, its tenants, agents, employees, contractors, invitees or guests and [] (b) not to materially disrupt, adversely affect or interfere with other providers of services in the Building or with any occupants['] use and enjoyment of the Building. In the event Manager does not repair damage to the Premises cause by Manager or its tenants, agents, employees, contractors, invitees or guests as provided in (a) above within twenty (20) days following the receipt of written notice from Building Owner, then Building Owner may make any such repairs it deems necessary and Manager shall reimburse Building Owner within ten (10) days after an invoice for its costs resulting from any such repairs. If Manager fails to reimburse Building Owner as hereinabove stated, then Building Owner shall have the right to terminate (in addition to other rights) this Agreement in accordance with Section 11 below.

(Id., § 9.) Section 11 provides that “[t]he following events shall be deemed to be Events of Default by Manager”:

Manager shall fail to comply in any material respect with any provision of this Agreement not requiring the payment of money, and such failure shall continue for a period of thirty (30) days after written notice of such default is given to Manager, provided, however, if such condition cannot be reasonably be cured within such thirty (30) day period, it instead shall be an Event of Default if Manager shall fail to commence to cure such condition within such thirty (30) day period and shall thereafter fail to prosecute such case diligently and continuously to completion within one hundred eighty (180) days after the date of Building Owner's notice of default. . . .

(Id., § 11(1).) Upon an Event of Default, the Building Owner has the option to terminate the Agreement, in which event the Manager shall immediately surrender all spaces used by the Manager in the building, including but not limited to, the Premises. (Id., § 11(2)(i).) Other available remedies include invoking any remedy allowed at law or in equity, including injunctive relief. (Id., § 11(2)(iii).) “Neither party shall be deemed to have waived any obligations by the other party unless such waiver expressly is set forth in a written instrument signed by the other party.” (Id., § 19.)

         Section 15 of the Agreement addresses assignment and subletting: “Manager may assign, sublet or otherwise transfer all or any part of its interest in this Agreement or in the Premises subject to the assignee assuming all of Manager's obligations herein. . . .” (Id., § 15.) Section 18 provides that “[t]he provisions of this Agreement, except as herein otherwise specifically provided, shall extend to, bind and inure to the benefit of the parties hereto and their respective personal representatives, heirs, successors and permitted assigns.” (Id., § 18).) The Agreement is governed by the laws of the State of Indiana. (Id., § 22.)

         EFN and Prime also executed a Memorandum of Roof Top Lease Agreement (“Memorandum”) [ECF No. 36-3 (Mem.)]. The Memorandum was recorded in the Lake County Recorder's Office on June 25, 2010. The Memorandum states that EFN and Prime entered into the Agreement for a term of 99 years, and attaches Exhibit A to the Agreement, which describes the Premises and the easement:

The Premises shall consist of any and all rooftop areas of the [Property] including the penthouse structure located on the roof (Exhibit A-5), all of Suites indicated on Exhibits A-1 through A-4, and the right to utilize an additional 2, 500 sq. ft. of reserved space as defined in Exhibit A-4. Building Owner further grants Manager a non-exclusive easement over and through the Building for the placement of transmission lines, utility lines, cable bridges and utilities from the Roof Top to its Equipment Shelter or to existing utility services necessary for the operation of Manager's or Manager's tenant's Communication Facilities.

(Mem. at SBA000061.) It also includes the highlighted floor plans of the building.

         On or about September 22, 2010, Prime assigned all of its rights, title, claim and interest in the Agreement to the Defendant via an Assignment and Assumption of Roof Top Lease (“Assignment Agreement”).[3] [ECF No. 36-4.] The Assignment Agreement was recorded in the Lake County Recorder's Office on October 7, 2010. (Id.)

         In early 2014, the Plaintiff purchased the Property from EFN. [ECF No. 39-10 (Kenney Aff.), ¶ 2.] The Plaintiff was aware of the Agreement when it purchased the Property. (Id.) The Plaintiff reviewed the Agreement as part of its due diligence in acquiring the Property, and was aware that the Agreement's fee had been prepaid.

         On March 19, 2015, the Plaintiff sent the Defendant a Notice of Demand for Information, Site Repairs, and Cure of Material Breaches (“Demand Letter”). [ECF No. 36-7 (Demand Letter).] The Demand Letter asserts that the Defendant was in default of the Agreement for failing to maintain portions of the Premises in a safe, clean, and orderly fashion. It attaches two written assessments of the Premises. The assessment dated April 11, 2013, suggests maintenance to the lattice towers on the Premises (“2013 Assessment”). The assessment dated February 18, 2015, suggests repairs and maintenance to several areas on the Premises (“2015 Assessment”).[4]The Demand Letter demands that the Defendant perform all necessary maintenance and repairs raised by the assessments within twenty days pursuant to section 9 of the Agreement, and states that it considers the failure to perform the required maintenance to be a breach of the Agreement under section 11. It asserts that the breaches “must be cured within thirty (30) days of this Notice.” (Id. at 2.)

         The Defendant hired a contractor who conducted the repairs and cleanup work on the Premises. On April 1, 2015, the Plaintiff signed an acknowledgement of the contractor's site clean-up activities and failed to note any new conditions found as a result of the site clean-up activities. [ECF No. 36-9 (Acknowledgement).] On that same day, the Plaintiff commenced this action in state court [ECF No. 4 (Compl.)].

         The Plaintiff's managing partner Vance R. Kenney (“Kenney”) testified that all needed repairs had been remedied at the point of his deposition in September 2017. [ECF No. 36-6 (Kenney Dep.) at 53.] His affidavit states that “[w]hile [the Defendant] commenced some remedial action within the given time period, a substantial majority of necessary repairs and ...


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