LEWIS A. KAPLAN, District Judge.
This landlord-tenant dispute is before the Court on the motion of McDonald's USA, LLC ("McDonald's"), the tenant, to dismiss the breach of contract dispute brought by R&D Hotel, LLC ("R&D"). The dispute concerns whether R&D timely obtained "Landlord Approvals," as that term is defined in the parties' ground lease (the "Lease" or "Agreement"), required to operate a McDonald's restaurant on R&D's property.
R&D owned a parcel of real estate in Poughkeepsie, New York, on which McDonald's contemplated developing one of its familiar food establishments. The parties therefore executed the Lease on or about November 28, 2012.
Article 4A of the Lease required R&D to "obtain the approval, if necessary, of all public and governmental authorities as to matters relating to zoning, subdivision, lot splits, lot ties, replats or similar requirements for use of the Premises as a McDonald's restaurant."
The heart of this dispute is the meaning of the term "Landlord Approvals." R&D contends that "Landlord Approvals" refers to initial agency approvals ("Initial Approvals"), regardless of whether those approvals potentially could be appealed. McDonald's argues, by contrast, that "Landlord Approvals" refers to final, non-appealable approvals ("Final Approvals"). Although the Lease does not state explicitly whether the "Landlord Approvals" R&D was required to obtain within 270 days of the Lease Commencement Date were Initial or Final Approvals, the language surrounding that term provides some clues as to the parties' intent.
First, Article 4A defines the term "Approval Date" as "[t]he date Landlord obtains all final, non-appealable approvals described in this Article 4A."
Second, Article 4A explains the circumstances in which, if R&D fails to obtain the Landlord Approvals, McDonald's can attempt to obtain the Landlord Approvals on its own at R&D's expense:
R&D alleges that it fulfilled its obligation to obtain all Landlord Approvals by July 8, 2013 — over a month before the 270-day deadline — because it secured all Initial Approvals by that date, although some were being appealed by a third party.
R&D ultimately failed to obtain all Final Approvals by the amended 450-day deadline, although, as explained above, it allegedly obtained all Initial Approvals long before that deadline.
McDonald's now moves to dismiss pursuant to Rule 12(b)(6).
A court evaluating a motion to dismiss a breach of contract claim "is `not constrained to accept the allegations of the complaint in respect of the construction of the agreement.'"
The clearest evidence of the parties' intent can be discerned from the Lease Amendment. The one-page Amendment did one thing only — extend the deadline by which R&D was required to obtain the "Landlord Approvals" from 270 days to 450 days. But R&D alleges, and McDonald's does not dispute, that R&D already had obtained all Initial Approvals before both the original 270-day deadline and the date the Amendment was executed.
This view is confirmed by provisions of the Lease in which "Landlord Approvals" are referred to unambiguously as "final, non-appealable." For example, "Approval Date" is defined in Article 4A as the date R&D "obtains all final, non-appealable approvals described in this Article 4A."
The Lease, moreover, appears also to use the phrases "Landlord Approvals" and "final, non-appealable Landlord Approvals" interchangeably, further suggesting that both terms refer to Final Approvals. This is evident from the provision of Article 4A explaining that if R&D fails to obtain the "Landlord Approvals" by the 270-day deadline, then McDonald's may attempt to obtain the approvals itself at R&D's expense. The provision states first that "[i]f Tenant is successful in obtaining the final, non-appealable Landlord Approvals, then Landlord will reimburse Tenant for its costs and expenses in obtaining the final, non-appealable Landlord Approvals." It goes on to explain that "[i]f Tenant exercises its right to obtain the Landlord Approvals under this provision, Tenant will have a period of 180 days to do so."
In the last analysis, it is clear from reading the entire integrated agreement that the parties intended the term "Landlord Approvals" to refer to Final Approvals. Accordingly, R&D failed to fulfill its obligations under the Lease by failing to secure all Final Approvals by the extended 450-day deadline, and McDonald's therefore was entitled to terminate the Lease. R&D's breach of contract claim must be dismissed.
The motion of defendant McDonald's to dismiss the complaint [DI 12] is granted. The Clerk shall enter judgment and close the case.
SO ORDERED.
Two-hundred and seventy days after the Lease Commencement Date was August 25, 2013.
This extension gave R&D until February 21, 2014 to secure all Landlord Approvals.