United States District Court, D. Maine
ROBERT and ANDREW B. ROSENTHAL, in their capacity as trustees of the WATERVILLE SHOPPING TRUST Plaintiffs,
J.C. PENNEY CORPORATION, INC., Defendant.
ORDER ON DEFENDANT'S MOTION TO DISMISS
LEVY U.S. DISTRICT JUDGE.
and Andrew B. Rosenthal, in their capacity as trustees of the
Waterville Shopping Trust (“WST”), have filed
suit against J.C. Penney Corporation, Inc., seeking
declaratory and injunctive relief with respect to a
commercial lease between WST and J.C. Penney. ECF No. 10-2.
J.C. Penney moves to dismiss the Complaint. ECF No. 11. For
the reasons that follow, I grant the motion.
following account is based on the factual allegations in the
Plaintiffs' Complaint. WST and J.C. Penney entered into a
commercial lease agreement in 1983 under which J.C. Penney
leases retail space in a shopping center owned by WST in
Waterville, Maine. The lease had a 15-year initial term, but
included five options under which J.C. Penney could extend
the lease term for five years each. J.C. Penney has exercised
four of these options, and is expected to also exercise the
fifth, which will extend the lease to 2024.
2015, WST was presented with an opportunity to construct a
new set of buildings within the shopping center grounds,
which would house a restaurant and a retail store. WST
expects this opportunity to be economically beneficial to it,
J.C. Penney and the shopping center's other tenants, and
the city of Waterville.
Penney's lease contains a clause that requires WST to
obtain J.C. Penney's approval before constructing any new
building or structure within the shopping center. The lease
Without the prior approval of Tenant there shall not be
constructed within any part of the Entire Premises (1) any
facilities for the parking of motor vehicles other than at
ground level in the locations shown therefor on Exhibit B
hereto; (2) any building or structure except within the
building areas shown on said Exhibit B; or (3) any
improvements, or any replacements of, or alterations or
additions to, existing improvements which do not conform in
general exterior architectural treatment (including the
appearance of construction material used) to the other
portions of the Shopping Center or, in the case of the
replacement of an improvement, to the improvement which is
ECF No. 4-1 at 65. WST sought J.C. Penney's approval, but
J.C. Penney refused to consent to the construction. J.C.
Penney did, however, offer to give its consent in exchange
for additional options to extend the 1983 lease for two
additional 5-year terms.
the terms of the 1983 lease, J.C. Penney's current rent
is significantly less than the market value for its leased
space. WST asserts that further extensions of the current
lease terms would be economically untenable for it. WST
further asserts that J.C. Penney is withholding its consent
to the new construction for the sole purpose of using its
leverage to extract additional favorable extensions of the
1983 lease, and that J.C. Penney does not have any legitimate
business reason for opposing the new construction.
seeks a declaratory judgment interpreting the 1983 lease term
that gives J.C. Penney the authority to withhold consent to
new construction to include an implied term that such consent
may not be unreasonably withheld, which means, according to
WST, that J.C. Penney may not withhold its consent for no
reason, for a pretextual reason, or for the purpose of
extracting an economically unjustified extension of the
lease. WST also seeks injunctive relief to prevent J.C.
Penney from withholding approval of the specific construction
project described in the Complaint.
survive a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), a complaint “must contain
sufficient factual matter to state a claim to relief that is
plausible on its face.” Saldivar v. Racine,
818 F.3d 14, 18 (1st Cir. 2016) (quoting Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009)) (internal quotation
marks and alterations omitted). The court should accept all
well-pleaded facts as true, while ignoring conclusory legal
allegations. Id. All reasonable inferences should be
drawn in favor of the non-moving party. Id. at 16.
The complaint must contain facts that support a reasonable
inference “that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678.
Determining the plausibility of a claim is a context-specific
task that requires the court “to draw on its judicial
experience and common sense.” Saldivar, 818
F.3d at 18 (quoting Iqbal, 556 U.S. at 679)
(quotation marks omitted). The burden of demonstrating that
the complaint does not state a claim for which relief can be
granted is on the Defendant. See 5B Charles Alan
Wright & Arthur R. Miller et al., Federal Practice
and Procedure § 1357 (3d ed. 2017 Update).
asserts that the lease must be regarded as containing an
implied covenant of “good faith and fair dealing for
all commercial engagements including commercial real estate
leases.” ECF No. 12 at 13. WST seeks an equitable
determination that J.C. Penney's refusal to consent to
the new construction violates the terms of the lease when the
lease is read in the context of that implied covenant. J.C.