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Capplanco Seven Inc. v. KFC of America Inc.

United States District Court, D. Arizona

July 7, 2016

Capplanco Seven Incorporated, Plaintiff,
v.
KFC of America Incorporated, et al., Defendants.

          ORDER

          Douglas L. Rayes United States District Judge

         At issue are Defendant KFC Corporation of Delaware’s (KFCC) Motion for Partial Judgment on the Pleadings, (Doc. 40), and Motion for Partial Summary Judgment, (Doc. 44). The motions are fully briefed, and the Court heard oral argument on June 21, 2016. For the following reasons, KFCC’s Motion for Partial Judgment on the Pleadings is denied, and its Motion for Partial Summary Judgment is granted.

         BACKGROUND

         In 2001, KFCC leased real property (Property) from Plaintiff Capplanco Seven Incorporated’s (Capplanco) predecessor in interest for a 20-year term.[1] (Doc. 45, ¶¶ 1-4.) KFCC ceased operations and vacated the Property in 2009, but continues to pay rent. (Id., ¶¶ 5-8.) KFCC does not expect to use the Property for the remainder of the lease term, but alleges it will continue to timely pay rent until the lease expires or is terminated. (Id., ¶¶ 10-11.)

At issue is Section 10.11 of the lease, which states:
Maintenance. Throughout the entire term of the Lease, Tenant, at its sole cost and expense, shall take good care of (a) the Tenant Improvements and (b) pursuant to and in the manner required by the Center Declaration, the Premises, and shall keep the same in good order and repair and in a neat, sanitary and attractive condition, and make all necessary repairs and replacements thereto, interior and exterior, structural and nonstructural, with due diligence and in good faith. When used in this Section 10.11, the term “repairs” shall include all necessary replacements, renewals and alterations.

(Id., ¶ 16.) Pursuant to the Center Declaration:

In the event of any damage or destruction of Building(s) on a Parcel, the Owner of such Parcel shall with reasonable diligence, and at its sole cost and expense . . . repair, restore and rebuild the same in its condition existing prior to such damage or destruction, subject to the provisions hereof, or with such chances, alterations or additions as are not inconsistent with this Declaration[.]

(Doc. 48-1 at 6.)

         Capplanco brought this lawsuit against KFCC in August 2015 and filed its amended complaint shortly thereafter. (Docs. 1, 12.) The amended complaint alleges four claims against KFCC, three of which are at issue here. Count I alleges that KFCC breached Section 10.11 of the lease by failing to maintain the Property and seeks damages “in an amount to be proven at trial.” (Doc. 12, ¶¶ 23-30.) Count III alleges that KFCC’s failure constitutes waste, for which Capplanco also seeks damages. (Id., ¶¶ 40-45.) Finally, Count IV alleges that KFCC breached Section 10.11 of the lease and seeks specific performance in the form of an order “[d]irecting KFC[C] to comply with its maintenance obligations under Section 10.11 of the Lease.” (Doc. 45, ¶ 24; Doc. 12 at 6-7.) KFCC has moved for judgment on the pleadings on Counts I and III, and for summary judgment on Count IV. (Docs. 40, 44.)

         DISCUSSION

         I. Motion for Partial Judgment on the Pleadings

         A. Legal Standard

         A motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) “is properly granted when, taking all the allegations in the non-moving party’s pleadings as true, the moving party is entitled to judgment as a matter of law.” Fajardo v. Cty. of L.A., 179 F.3d 698, 699 (9th Cir. 1999). “Rule 12(c) is ‘functionally identical’ to Rule 12(b)(6) and . . . ‘the same standard of review’ applies to motions brought under either rule.” Cafasso v. Gen. Dynamics C4 Sys., 637 F.3d 1047, 1054 n.4 (9th Cir. 2011) (quoting Dworkin v. Hustler Magazine Inc., 867 F.2d 1188, 1192 (9th Cir. 1989)). Thus, a motion for judgment on the pleadings should not be granted if the complaint contains ...


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