Z View Enterprises LLC v. Giant Eagle Inc

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 20-1151
______
Z VIEW ENTERPRISES, LLC; Z POINTE ENTERPRISES, LLC; MON VALLEY
FOODS, INC; PENN SUPERMARKETS, LLC, and; SCOZIO SUPERMARKETS,
INC.; SEVEN Z ENTERPRISES, INC.; SUPER 8 CORPORATION; B.L.B. FOODS,
INC.; OCH SUPERMARKETS, LLC; THROCKMORTON ENTERPRISES, INC., and;
THROCKMORTON SUPERMARKETS, INC; CELTIC EAGLE, INC.
v.
GIANT EAGLE, INC.
Mon Valley Foods, Inc.,
Appellant
____________________________________
Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civil No. 2:17-cv-00740)
District Judge: Hon. Christopher C. Conner
____________________________________
Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
October 1, 2020
Before: SHWARTZ, PHIPPS, and FISHER, Circuit Judges.
(Filed: November 3, 2020)
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OPINION *
___________
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
PHIPPS, Circuit Judge.
This appeal centers around a sublease between Giant Eagle, Inc., a regional
supermarket, and Mon Valley Foods, Inc., the operator of three stores under the Giant
Eagle banner in the Monongahela Valley in Southwestern Pennsylvania. The dispute is
part of a broader controversy between several other licensed operators of Giant Eagle
grocery stores and Giant Eagle. Through two supplemental complaints, those operators
allege twenty-seven counts against Giant Eagle, including a claim for false advertising
under the Lanham Act, which serves as a basis for federal question jurisdiction and
supplemental jurisdiction over the remaining claims. See 28 U.S.C. §§ 1331, 1367. In
response, Giant Eagle pleaded ten counterclaims, three of which are at issue in this
appeal.
Those three counterclaims hinge on the assertion that Mon Valley Foods did not
timely renew its sublease for the Fisher Heights supermarket. If that sublease was not
renewed, then a retailer’s agreement between Mon Valley Foods and Giant Eagle could
be terminated at Giant Eagle’s option, which could trigger Giant Eagle’s option to
terminate subleases for the Finleyville and Uniontown stores. Through these
counterclaims, Giant Eagle sought to terminate all agreements governing Mon Valley
Foods’s operation of those three supermarkets under the Giant Eagle brand – all on the
premise that Mon Valley Foods did not timely renew the sublease for the Fisher Heights
supermarket.
The District Court entered judgment in Giant Eagle’s favor on those three
counterclaims. It first concluded that the sublease for the Fisher Heights store had
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expired and was not timely renewed. As a result, the District Court ordered, among other
things, specific performance related to Giant Eagle’s option to purchase the assets used in
operating that store, and it declared that the contracts for the Finleyville and Uniontown
stores had terminated. In reaching that result, the District Court expressly determined
that there was no just reason for delay, and it entered final judgment under Civil
Rule 54(b). See Fed. R. Civ. P. 54(b).
Mon Valley Foods timely appealed. In exercising appellate jurisdiction, see
28 U.S.C. § 1291, and on de novo review, we will affirm the judgment on the pleadings
because there are no disputes of material fact and Giant Eagle is entitled to judgment as a
matter of law. See Zimmerman v. Corbett, 873 F.3d 414, 417 (3d Cir. 2017).
I
Mon Valley Foods opens with a civil procedure argument. It contends that the
District Court erred because Giant Eagle waived and abandoned its three counterclaims.
Giant Eagle pleaded those counterclaims several months before Mon Valley Foods filed
its second supplemental complaint. But according to Mon Valley Foods, Giant Eagle
needed to replead those counterclaims in answering the second supplemental complaint,
and Giant Eagle did not do so.
Intuitively, such formalism is out of place here. In filing a second supplemental
complaint, Mon Valley Foods did not replead all its prior allegations and counts. Instead,
it added allegations related only to its new claims. Even so, Mon Valley Foods contends
that because it pleaded new allegations, albeit only for those supplemental counts, Giant
Eagle had to replead its full array of counterclaims, including counterclaims to Mon
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Valley Foods’s unchanged prior claims. While the law does not always comport with
intuition, it does so here, and Mon Valley Foods’s argument fails.
In adding new counts, Mon Valley Foods did not file an amended complaint but
rather a supplemental complaint. Compare Fed. R. Civ. P. 15(a) (setting forth standards
for amending a pleading) with id. 15(d) (setting forth standards for supplementing a
pleading). An amended pleading “supersedes the earlier pleading and renders the
original pleading a nullity.” Palakovic v. Wetzel, 854 F.3d 209, 220 (3d Cir. 2017)
(citing W. Run Student Hous. Assocs., LLC v. Huntington Nat’l Bank, 712 F.3d 165, 171
(3d Cir. 2013)); see also 6 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane,
Federal Practice and Procedure § 1476 (3d ed. 2010) (“A pleading that has been
amended under Rule 15(a) supersedes the pleading it modifies and remains in effect
throughout the action unless it subsequently is modified.”). As explained by a leading
treatise, amended pleadings relate “to matters that occurred prior to the filing of the
original pleading and entirely replace the earlier pleading,” but supplemental pleadings
are distinct in that they “represent additions to or continuations of the earlier pleadings”
based on events subsequent to the earlier pleading. 6A Wright & Miller § 1504
(emphasis added).
The question becomes whether Giant Eagle needed to replead its prior
counterclaims in response to Mon Valley Foods’s supplemental complaint. The
compulsory counterclaim requirement of Rule 13(a) applies to counterclaims that arise
out of a “transaction or occurrence that is the subject matter of the opposing party’s
claim.” Fed. R. Civ. P. 13(a)(1)(A). Under that rule, in answering Mon Valley Foods’s
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supplemental complaint, Giant Eagle had to file any counterclaims that newly arose from
the supplemental allegations. But Rule 13 does not compel Giant Eagle to replead – in
response to a supplemental complaint – counterclaims that arose from claims in an earlier
pleading. Thus, Giant Eagle did not waive or abandon its prior-pleaded counterclaims by
not realleging them in its answer to Mon Valley Foods’s supplemental complaint.
II
Mon Valley Foods also brings substantive challenges based on its construction of
the lease documents for the Fisher Heights store. Those written instruments – the
Overlease, the Sublease, and the Agreement Setting Lease Term – are each attached to
the pleadings and may be considered in evaluating a motion for judgment on the
pleadings. See Fed. R. Civ. P. 10(c); Wolfington v. Reconstructive Orthopaedic
Assocs. II PC, 935 F.3d 187, 195 (3d Cir. 2019) (“[I]n deciding a motion for judgment on
the pleadings, a court may only consider ‘the complaint, exhibits attached to the
complaint, matters of public record, as well as undisputedly authentic documents if the
complainant’s claims are based upon these documents.’” (quoting Mayer v. Belichick,
605 F.3d 223, 230 (3d Cir. 2010))).
The Overlease. The Overlease is a contract governed by Pennsylvania law, signed
on January 13, 1998, between Giant Eagle and two individuals: Joan G. and Aldo L.
Bartolotta, who at the time owned and operated not only Mon Valley Foods, but also the
real property at Fisher Heights. The Overlease contained a specific provision – Section
1.12 – setting the term of the lease. The lease term was to begin on the “Commencement
Date,” which was defined as the “date hereof.” Overlease § 1.1 (JA261). From that date,
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the Bartolottas agreed to lease the store building at Fisher Heights to Giant Eagle for a
term of twenty “Lease Years,” subject to optional renewal for two terms – the first for
five years, the second for four years. Overlease §§ 1.12, 46.1 (JA264, 291).
The start of that twenty Lease Year period originally depended on other events.
The first Lease Year was to begin on the first day of the first full month following the
“Completion Date.” Overlease § 1.6 (JA262–63). The “Completion Date” was the date
on which the Bartolottas completed their “Landlord’s Work,” which included a series of
improvements to the building detailed in an exhibit to the Overlease. Overlease §§ 5.1–2
(JA262, 265–66).
At the close of the twenty Lease Years, Giant Eagle could exercise the first
renewal option. To do so, it had to provide written notice to the Bartolottas at least six
calendar months before the end of the then current term. But that renewal condition was
subject to a notice-and-grace provision. Under that provision, even if Giant Eagle did not
timely renew the Overlease, its option to renew would not expire until 30 days after it
received notice from the Bartolottas that (i) stated that a renewal was not received and
(ii) identified the expiration date for the Overlease.
The Sublease. On January 14, 1998, the day after it signed the Overlease for the
store building at Fisher Heights, Giant Eagle subleased the building to Mon Valley
Foods. The Sublease was governed by Pennsylvania law, and its initial term was
“equivalent to the [t]erm described in Section 1.12 of the Overlease.” Sublease ¶ 2
(JA238). Similar to the Overlease, the Sublease provided Mon Valley Foods the option
to renew for two sequential terms – of five years and then four years. The Sublease
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further attached the Overlease and stated that the Overlease was “made a part hereof.”
Sublease ¶ 1 (JA237).
The Sublease nonetheless contained terms distinct from the Overlease. The
Sublease did not contain a notice-and-grace provision. Instead, the Sublease’s renewal
options contained rigid deadlines: it required Mon Valley Foods to provide notice of an
intent to renew twelve months before the end of the current lease term, and if notice was
not received by that date, the Sublease would terminate at the end of its current term.
The Sublease also provided Giant Eagle with “the option to purchase all the assets
utilized in operation of the Supermarket” upon termination or expiration of the Sublease.
Sublease ¶ 23 (JA245).
The Agreement Setting Lease Term. On January 28, 2000, a little over two years
after entering the Overlease, the Bartolottas and Giant Eagle entered an Agreement
Setting Lease Term. That document recited that the Overlease “by its provisions,
established the length of the Lease Term but did not specifically state the [t]erm, as such
could not at that time be determined.” Agreement Setting Lease Term (JA308). That
explanation comports with the Overlease’s floating start date for the first Lease Year –
which was not a date certain because it depended on the completion of the improvements
to the store building. Through the Agreement Setting Lease Term, the Bartolottas and
Giant Eagle defined the lease term with certainty, agreeing that the Overlease “shall
commence on the 13th day of January, 1998, and shall terminate on the 31st day of
December, 2018.” Agreement Setting Lease Term (JA308). That agreement bounded
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only the term of the Overlease, and it did not recite or include as a term the Completion
Date for the Landlord’s Work under the Overlease.
In addition to those three legal instruments, the pleadings establish that Mon
Valley Foods did not provide a renewal notice for the Sublease to Giant Eagle until
January 31, 2018.
On these pleadings, the District Court entered judgment for Giant Eagle. The
District Court determined – and Mon Valley Foods does not dispute on appeal – that the
December 31, 2018 termination date for the Overlease also served as the termination date
for the Sublease. Using that termination date, the District Court then read the Sublease to
require renewal twelve months beforehand – by December 31, 2017. But Mon Valley
Foods did not renew by that date; instead it submitted its renewal notice on January 31,
2018. On that basis, the District Court determined that the renewal notice was untimely.
The District Court also concluded that the Sublease did not incorporate the Overlease’s
notice-and-grace renewal provision, and thus it was not renewed. Without a notice-and-
grace period and with the termination of the Sublease on December 31, 2018, the District
Court enforced Giant Eagle’s option to purchase “all the assets utilized in the operation of
the Supermarket.” Sublease ¶ 23 (JA245). And based on the non-renewal of the
Sublease, the District Court granted Giant Eagle’s other counterclaims to terminate its
contracts with Mon Valley Foods for the Finleyville and Uniontown stores.
Mon Valley Foods contests several components of the District Court’s analysis. It
argues that the Sublease has two ambiguities and that those prevent judgment on the
pleadings on the three counterclaims. Next, it contends that even without those
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ambiguities, factual disputes prevent entry of judgment on the pleadings on the three
counterclaims. For the reasons below, those arguments fail.
A. The Sublease is not ambiguous as to commencement date or its lack
of a notice-and-grace period for renewal.
Mon Valley Foods identifies two potential ambiguities in the Sublease – one as to
the commencement date and the other regarding the notice-and-grace period for renewal.
It argues that those potential ambiguities must be construed in its favor at this stage, thus
preventing entry of judgment on the pleadings. But the Sublease is not ambiguous in
either respect.
The commencement date for the Sublease is not materially ambiguous. For
reference, the Overlease provides that its commencement date is “the date hereof,” and it
was signed on January 13, 1998. Overlease § 1.1 (JA261). And although it was signed
the following day, the Sublease indicates that its initial term shall be the equivalent to the
term of the Overlease. Thus, the commencement date for the Sublease was January 13,
1998. That conclusion coincides with the position Mon Valley Foods took in separate
state-court litigation. But now, Mon Valley Foods relies on the Agreement Setting Lease
Term to argue that the commencement date for the Sublease is ambiguous. That is
unconvincing. The Agreement Setting Lease Term specified a date certain for the end of
the twenty Lease-Year term for the Overlease, but it did not alter the commencement date
for the Overlease, much less the Sublease. As the Overlease did originally, the
Agreement Setting Lease Term identified the start date for the Overlease as January 13,
1998. Tellingly, Mon Valley Foods has identified no other date that would render the
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commencement date for the Sublease capable of another meaning, let alone a
commencement date that would alter what is ultimately relevant here: the termination
date for the Sublease.
The Sublease is likewise unambiguous as to a notice-and-grace renewal period – it
lacks one. Mon Valley Foods argues that the Sublease incorporates the notice-and-grace
term from the Overlease because the Sublease attaches the Overlease, states that the
Overlease was made “a part hereof,” and has the equivalent lease term as the Overlease.
But the notice-and-grace period in the Overlease relates to renewal and not to the lease
term, and as a renewal provision, it is distinct from the lease term set forth in Section
1.12. Thus, neither the Sublease’s incorporation of the lease term from the Overlease nor
the Sublease’s inclusion of the Overlease as “a part of” the Sublease cause the
Overlease’s notice-and-grace period to replace the Sublease’s more stringent renewal
provisions.
B. Without an ambiguity, extrinsic evidence is not needed to construe
the Sublease.
Even without a material ambiguity in the Sublease, Mon Valley Foods identifies
factual disputes that it asserts prevent entry of judgment on the pleadings. Mon Valley
Foods focuses first on the timeliness of its obligations with respect to Giant Eagle’s
option to purchase. Although Mon Valley Foods was required to assist Giant Eagle in
effectuating that option within a reasonable time, Mon Valley Foods argues that a jury
should decide the reasonable-time issue. But in this instance, the determination of a
reasonable time is a question of law, and the District Court did not clearly err in its
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analysis. See Commonwealth Fin. Sys., Inc. v. Smith, 15 A.3d 492, 503 (Pa. Super. Ct.
2011) (“Where, as here, the facts are undisputed and the inference plain, the
determination of what constitutes a reasonable time is a question of law for the court.”
(quoting Trucson Steel Co. v. Fuhrmann & Schmidt Brewing Co., 192 A. 679, 680 (Pa.
1937))).
As a fallback, Mon Valley Foods argues that judgment cannot be entered on the
pleadings due to other factual disputes. Mon Valley Foods contends that Giant Eagle,
through its prior course of conduct, waived the ability to terminate the Sublease for
untimely renewal because Giant Eagle had not previously terminated a sublease for that
reason in over thirty years of business with independent retailers. Mon Valley Foods also
advances an unclean hands affirmative defense by citing evidence that Giant Eagle
terminated the Sublease as a litigation tactic. But those external facts and their attendant
legal theories cannot overcome the plain text of the Sublease, which provides Giant Eagle
a right to terminate the Sublease for untimely renewal. In short, the facts identified by
Mon Valley Foods do not undermine the District Court’s entry of judgment on the
pleadings.
***
For the foregoing reasons, we will affirm the judgment of the District Court on
three of Giant Eagle’s counterclaims.
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