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Ouedraogo v. Downtown Denver Business Improvement District

United States District Court, D. Colorado

February 13, 2014



JOHN L. KANE, Senior District Judge.


Former Downtown Denver 16th Street Mall vendor Souleymane Ouedraogo brings this action to challenge the decisions of Defendant Downtown Denver Business Improvement District (the "DDBID") in not renewing Mr. Ouedraogo's lease of a sales Kiosk on the Downtown Denver 16th Street Mall (the "16th Street Mall" or the "Mall"). Mr. Ouedraogo brings the following five claims: 1) breach of contract; 2) equal rights violation of 42 U.S.C. § 1981; 3) unjust enrichment; and 4) tortious interference with a prospective advantage. Before me is the DDBID's Motion for Summary Judgment, Doc. 33, which, for the reasons that follow, I GRANT in toto. Mr. Oueraogo also seeks to amend his complaint to add four claims under 42 U.S.C. §1983. These proposed additional claims will be addressed in turn and will have no more success than Mr. Ouedraogo's original claims. Wherefore, the DDBID's Motion for Summary Judgment, Doc. 33, is GRANTED and Mr. Ouedraogo's Motion for Leave to Amend, Doc. 36, is DENIED.


Mr. Ouedraogo is a Colorado resident. The DDBID is a management organization, funded by commercial property owners, that regularly conducts business in Colorado. I have subject matter jurisdiction per 28 U.S.C. §§ 1331 (federal question), 1343 (civil rights), and 1367 (supplemental jurisdiction). Because a significant part of the events giving rise to Mr. Ouedraogo's claims occurred in the District of Colorado and the DDBID "resides" in this judicial district for venue purposes, venue in the District of Colorado is proper. 28 U.S.C. § 1391(a)(2).


Summary judgment is appropriate where there is no genuine dispute of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Adamson v. Multicommunity Diversified Servs., Inc. 514 F.3d 1136, 1145 (10th Cir. 2008). A fact is material if it could affect the outcome of the suit under governing law; a dispute of fact is genuine if it could affect the outcome of the suit under governing law; a dispute of fact is genuine if a rational jury could find for the nonmoving party on the evidence presented.


In applying this standard, I examine the factual record and reasonable inferences therefrom in the light most favorable to the party opposing summary judgment. See Bennett v. Coors Brewing Co., 189 F.3d 1221, 1227 (10th Cir. 1999). Neither unsupported conclusory allegations nor mere scintillae of evidence, however, are sufficient to create a genuine dispute of material fact on summary judgment. See Mackenzie v. City and County of Denver, 414 F.3d 1266, 1273 (10th Cir. 2005). When a moving party has carried its burden under Rule 56(c), more than "some metaphysical doubt" as to the material facts must be demonstrated by the nonmovant to survive summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).


The DDBID maintains the 16th Street Mall, including funding district-wide security, marketing and business support programs to provide a clean, safe and vibrant Downtown environment. From 2007-2008, the DDBID, along with the Downtown Denver Partnership (the "DDP") commissioned several studies to analyze possibilities for revitalizing the then 25-year-old mall. The report from these studies included a number of recommendations to address the future of 16th Street Mall and recognized an existing problem with declining retail vitality and inconsistent street level presentation. In May 2008 the Regional Transit District, the City and County of Denver Public Works ("the City"), the DDP and the DDBID agreed to share funding of a planning process known as the 16th Street Urban Design Plan for the 16th Street Mall that would address the studies' recommendations regarding the rehabilitation, renovation, economic development and management of the 16th Street Mall.

Following the studies, the DDBID and the DDP implemented several new policies to achieve an upgraded vending program, to attract new retail to the Mall and to use vending as an interim step to better retail on the Mall and in Downtown in general. Among other policy changes, the DDBID achieved a change in Denver City Ordinance § 49-538.12 so that it could receive a "Cluster Vending Permit" from the City and County of Denver and this "Cluster Vending Permit" gave it the power to issue permits and control vending on the 16th Street Mall. With the Cluster Vending Permit, the DDBID discontinued issuing Kiosk Lease Agreements and having vendors obtain individual permits from the City and instead issued vendors with Temporary Revocable License Agreements ("Temporary Revocable License Agreements" or "License Agreements").

The DDBID licenses to vendors one-year use of enclosed kiosks on the 16th Street Mall. The DDBID maintains that its kiosks are best suited for point of sale transactions, specifically food and beverage sales, where money changes hands via a customer service window and the business transaction is satisfactorily completed without the need of the customer to enter the premises. The DDBID owns four such enclosed kiosks. One is an information center, and the remaining three are licensed to point of sale (food and beverage) businesses. To implement recommendations from the 16th Street Urban Design Plan, the DDBID purchased eight Retail Merchandising Units ("RMUs") in 2011. RMUs distinguish themselves from enclosed kiosks by being open-sided and having customer-facing retail fixtures and exposure, which features are designed for customer access to apparel or other goods that they may want to inspect, handle or otherwise experience before making a purchase.

On October 26, 2006 Mr. Ouedraogo entered into a Kiosk Lease Agreement ("Lease Agreement") with the DDBID for his apparel business, Solo Fashions. The Lease Agreement states that Mr. Ouedraogo "shall have first right of refusal upon expiration of this agreement." The Lease Agreement indicates that Mr. Ouedarogo agreed "to pay for all cost associated with the refurbishment and delivery of the Kiosk in the amount of $15, 500.00." In exchange for Mr. Ouedraogo's payment of refurbishment costs, the DDBID agreed not to charge him additional rental fees for 34 months beginning on October 26, 2006 and after such date the rental fee was fixed at $200 a month. The Lease Agreement required Mr. Ouedraogo to maintain his Kiosk "in a clean and orderly condition" and "failing to do so in [the DDBID's] sole discretion shall give [the DDBID] the right to terminate this Lease Agreement if Tenant shall not have commenced compliance with the written or oral notice of [the BID] within twenty-four (24) hours after receipt thereof." The Lease Agreement also permitted the DDBID to terminate the Lease Agreement in the event that Mr. Ouedrago failed to timely remit rental payments or any other fees due under the Lease Agreement. From August 2008 to April 2009 Mr. Ouedraogo failed to meet various terms and conditions of his Lease Agreement, including failure to pay vending fee permits and maintain the appearance of the Kiosk in an orderly condition.

Per the DDBID's policy change regarding Temporary Revocable License Agreements, Mr. Ouedraogo entered into a Temporary Revocable License Agreement with the DDBID on July 14, 2010. The term of the License Agreement was from July 14, 2010 to July 13, 2011. A provision of the License Agreement contained a requirement that Mr. Ouedraogo submit a Monthly Statement to the DDBID certifying the amount of gross receipts made during the previous month. On January 25, 2011 the DDBID advised Plaintiff of delinquent license and management fees in the amount of $1, 740.00.

On May 31, 2011 a merchant meeting was held by the DDBID explaining to current Mall vendors that for the DDBID to renew a Temporary Revocable License Agreement, the DDBID would be considering sales success, operational quality, visual standards, value to the downtown environment and commitment to the DDBID's program consistent with the 16th Street Urban Design Plan. On July 11, 2011, five days before Mr. Ouedraogo's License Agreement was to expire, Mr. Ouedraogo and the DDBID agreed to an amendment of the License Agreement, which extended the License Agreement through September 30, 2011.

The DDBID informed Mr. Ouedraogo that this extension was being granted to allow him time to prepare for an upcoming meeting with the DDBID to discuss his future business plan and potential modifications to his operation. Mr. Ouderaogo was reminded that renewals would be negotiated on a case by case basis and that renewal considerations included sales success, operational quality, visual standards, value to the downtown environment and commitment to the program. On August 15, 2011 and September 12, 2011, 16th Street Mall Marketplace Manager Cord Rauba met with Mr. Ouedraogo to discuss the criteria for renewal. Mr. Ouedraogo told Ms. Rauba that Solo Fashions had the lowest sales of the three businesses in which he had an interest.[2]

On September 21, 2011 the DDBID sent Mr. Ouedraogo a Default Notice letter informing him that he was in default of his License Agreement for failure to report gross sales and revenue and that this was at least his second time he failed to report these numbers in a timely manner. The letter also reminded Mr. Ouedraogo that failure to report gross sales and revenues per the License Agreement could and would ultimately result in the termination of his agreement with the DDBID. On October 25, 2011 the DDBID sent Mr. Ouedraogo a letter repeating that it no longer entered into Lease Agreements, summarizing its intent not to renew the Kiosk Temporary Revocable License Agreement, and restating the reasons for this decision not to renew and asking him to confirm an offer for two other vending interests. The letter explicitly informed Mr. Ouedraogo that the DDBID's election not to renew his License Agreement was based on his poor sales history. Specifically, the letter stated "[y]our sales history and the resulting sales projections based on your experience with Solo Fashion on 16th Street Mall, do not benefit the 16th Street Mall retail environment and do not meet our criteria and we cannot assume reasonable likelihood of success of this business."

A few months later, the DDBID offered to lease Mr. Ouedraogo an RMU. He declined. The Kiosk formerly used by Mr. Ouedraogo became the premises for Wystone's World Teas ("Wystone's Teas"), a point of sale food and beverage business owned and operated by an African American. In support of his claim of discrimination, Mr. Ouedraogo alleges that two white men approached him and stated they were taking over his Kiosk. These individuals were not employed by the DDBID and the DDBID has no knowledge of these individuals. The owner of Wystone's Teas, however, has explained that during her negotiations with the DDBID, two white Wystone's Tea's employees visited the existing Kiosk on the 16th Street Mall to take pictures and scout the location.

Although Mr. Ouedraogo conclusorily alleges that the DDBID discriminated against other vendors based on their national origin, the evidence shows that these vendors were offered License Agreements by the DDBID but chose not to renew for various reasons. Indeed, Mr. Ouedraogo openly "admits that these vendors left the Mall after making a business decision that they could no longer be successful as a vendor there."


A. Mr. Ouedraogo's Breach of Contract Claim Must Be Dismissed Because the Temporary Revocable License Agreement Constitutes a Novation and Extinguishes any Rights or Liabilities Under His Earlier Lease Agreement.

Relying upon Fed.R.Civ.P. 8, which requires a party to set forth all affirmative defenses in responding to a pleading, Mr. Ouedraogo argues as threshold matter that DDBID may not pursue extinguishment through novation because DDBID's Answer did not specifically state "novation" as a legal defense upon which DDBID intended to rely. Mr. Ouedraogo is mistaken. In its Answer, DDBID pled as its Seventeenth Defense that "Plaintiff's Complaint may be barred or limited by the documents signed by Plaintiff, including but not limited to the lease agreement." Answer and Jury Demand, Doc. 9, ¶66.

While Fed.R.Civ.P. 8 requires that parties plead affirmative defenses in responding to a pleading, the failure to plead them according to their precise terms of art is not fatal where the opposing party had knowledge of the defense before trial. See Sauers v. Salt Lake County, 1 F.3d 1122, 1124 (10th Cir. 1993); see also Bull's Corner Restaurant, Inc. v. Director, Fed. Emer. Mgmt. Agency, 759 F.2d 500, 502 (5th Cir.1985) ("Where [an affirmative defense] is raised in the trial court in a manner that does not result in unfair surprise, ... technical failure to comply precisely with Rule 8 is not fatal.'")(citation omitted). Here, Mr. Ouedraogo knew that DDBID intended to argue novation as early as January 17, 2013, when the DDBID expressly and in writing advised him that it believed the License Agreement ...

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