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Leiserv, LLC v. Summit Entertainment Centers, LLC

United States District Court, D. Colorado

March 16, 2016

LEISERV, LLC, a Delaware limited liability company, Plaintiff,
v.
SUMMIT ENTERTAINMENT CENTERS, LLC, a Colorado limited liability company, and SUMMIT COMPANIES INCORPORATED, a Colorado corporation, Defendants.

ORDER

PHILIP A. BRIMMER UNITED STATES DISTRICT JUDGE.

This matter is before the Court on defendant Summit Entertainment Centers, LLC’s Motion for Partial Summary Judgment Regarding Purchase Option [Docket No. 19]. This Court has jurisdiction pursuant to 28 U.S.C. § 1332.

I. BACKGROUND[1]

This action arises out of a dispute regarding the ownership and operations of a bowling alley (the “Center”) in Colorado Springs. Defendant Summit Entertainment Centers, LLC (“Summit”) is the owner of the Center. Docket No. 19 at 2, Statement of Undisputed Material Fact (“SUMF”) 1. Summit and Leiserv, Inc. entered into an Operations Services Agreement (the “Agreement”), whose effective date was April 15, 2011. Id. at 3, SUMF 2.[2] The Agreement states that disputes about the agreement are to be governed by Colorado law. Id.

The Agreement contains the following purchase option clause:

(c) Service Provider Purchase Option
(i) Upon termination of the Operations Services Agreement for any reason, [Leiserv] shall have the exclusive option to purchase the Center from [Summit] for fair market value. [Summit] and [Leiserv] agree to negotiate fair market value and the purchase price in good faith.
(ii) [Leiserv] must provide written notice within sixty (60) days following termination to [Summit] of its intent to exercise the Purchase Option.

Docket No. 19 at 3, SUMF 5. Subject to certain conditions, the Agreement may be terminated with or without cause. Id., SUMF 4; Docket No. 19-1 at 4, ¶ 4(a).

The Agreement also includes a dispute resolution clause that states that “[a]ny dispute arising out of or relating to this Agreement shall be resolved in accordance with the procedures described in this Section, which shall be the sole and exclusive procedures for resolution of any such disputes.” Docket No. 19-1 at 7, ¶ 5. The dispute resolution clause requires Leiserv and Summit to “try in good faith to settle the dispute through non-binding mediation.” Id., ¶ 5(a). If mediation is unsuccessful, the agreement provides the forum and venue for any lawsuit between Leiserv and Summit - either this Court or the District Court for the City and County of Denver, Colorado. Id., ¶ 5(b).

Disputes between Leiserv and Summit arose after Leiserv was purchased by Bowlmor AMF Corp. in the summer of 2014. Docket No. 19 at 3-4, SUMFs 3, 8. On March 20, 2015, Leiserv issued a “Notice of Default” to Summit indicating that, pursuant to the terms of the Agreement, Summit had thirty days to cure the default or Leiserv would terminate the Agreement. Id. at 4, SUMF 9. On March 27, 2015, Summit issued a “Notice of Termination for Cause” to Leiserv identifying alleged breaches of the Agreement and referencing Leiserv’s contractual duty to cure the alleged breaches within thirty days. Id., SUMF 10.

On or about April 19, 2015, Summit took over operations of the Center. Id. at 5, SUMF 12. On June 17, 2015, Leiserv notified Summit of its intent to exercise the purchase option based on an alleged appraised value of $5, 100, 000. Id., SUMF 13.

On June 18, 2015, Leiserv filed a complaint in this Court alleging three claims for relief: (1) declaratory judgment on the Center’s fair market value; (2) breach of contract; and (3) guaranty. Docket No. 1 at 4-7. On July 10, 2015, Summit filed a counterclaim alleging four claims for relief: (1) a declaratory judgment (a) that Summit did not breach the Agreement, (b) that Summit is not liable for the termination fee and that the purchase option has been triggered; (c) that Summit has no liability to Leiserv under the guaranty; (d) that Leiserv breached the Agreement; (e) that the purchase option is unenforceable; (f) that, if the Court determines that the purchase option is enforceable, to determine the fair market value of the Center; (g) that, if the purchase option is enforceable, Leiserv must purchase the Center for fair market value from Summit; (2) breach of contract; (3) breach of the covenant of good faith and fair dealing; and (4) breach of fiduciary duty. Docket No. 13 at 15-18.

On August 17, 2015, Summit filed the instant motion for summary judgment seeking a determination from the Court that the purchase option is unenforceable as an agreement to agree. Docket No. 19 at 7. Specifically, Summit contends that the Agreement anticipates future negotiations regarding the Center’s purchase price and lacks a methodology to resolve any price dispute, and that Leiserv failed to provide separate consideration for the purchase option. Docket No. 19 at 8, 12. Leiserv responds that the purchase option is supported by adequate consideration and is sufficiently definite to ...


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