United States District Court, D. Colorado
ORDER GRANTING SUMMARY JUDGMENT
RICHARD P. MATSCH, SENIOR JUDGE
plaintiff Mikulas Investments, LLC, (Landlord) owns a
commercial building in Monument, Colorado, which it leased to
defendant, Colonial Management Group L.P. (Tenant) on January
27, 2015. In this civil action brought pursuant to 28 U.S.C.
§ 1332, Landlord claims that Tenant breached the lease
by failing to restore the property to the same condition and
layout as existed when it was given possession.
The relevant provisions of the lease are these:
6.02 Proper Zoning: LANDLORD warrants and
represents, to the best of its knowledge and belief, that no
zoning or other restriction exists preventing or restricting
use of the Premises for Tenant's Use. TENANT hereby
confirms that they have obtained from the Town of Monument in
El Paso County a letter indicating that the Premises is
properly zoned for Tenant's Use (“Tenant's
Zoning Letter”) and shall furnish such letter to
LANDLORD, but TENANT reserves all rights to terminate
pursuant to Article 25.
ARTICLE 10 - FIXTURES
10.02 Removal of TENANT's Property. Upon
expiration of this Lease, or any earlier termination hereof,
TENANT, at its expense, shall remove from the Premises all of
TENANT'S Property, and TENANT shall repair any damage to
the Premises resulting from any installation and/or removal
of TENANT'S Property, and shall restore the
Premises to the same physical condition and layout as they
existed at the time TENANT was given possession of the
Premises, reasonable wear and tear excepted. TENANT
shall have five (5) days after the expiration or termination
of the Lease to complete such tasks with a license to enter
the Premises. Any other items of TENANT'S Property which
shall remain in the Premises, or after such period of five
(5) days, may, at the option of LANDLORD, be deemed to have
been abandoned, and in such case, such items may be retained
ARTICLE 25 - OPTION TO TERMINATE
25.01 Contingent on Licenses and Permits. In the
event that: (i) TENANT is unable to maintain in full force
and effect any and all necessary local, County, State and
federal permits licenses and approvals for the operation of
TENANT's Use during the Term or any Option Term, or (ii)
Tenant fails to receive TENANT's Zoning Letter after
TENANT may request same, then TENANT shall have the right, at
TENANT's option, upon notifying the LANDLORD in writing
to terminate the Lease as set forth in Article 25.02. TENANT
will use its best efforts to keep all licenses, permits and
approvals as described in Article 25.02.
25.02 Termination of Licenses or Permits Lost. The
LANDLORD and the TENANT agree that the continuing obligations
of the TENANT to be bound by the terms of this Lease is
expressly contingent upon the TENANT maintaining in full
force and effect any and all necessary local, County, State
and federal approvals, licenses and permits for the operation
of TENANT's Use during the entire term of the Lease and
any renewals term. In the event that (i) the TENANT shall
lose any such approvals, licenses and/or permits, for any
reason whatsoever; or (ii) any event described in Article
25.0l may occur, then the TENANT shall notify the LANDLORD
and the lease agreement shall terminate within 120 days of
the date of notification. The TENANT shall be responsible for
all lease payments and expenses during the 120 day period.
At the end of this period, the Lease agreement shall
become null and void and all obligations of TENANT under the
Lease shall be terminated. Lease Agreement (Doc.
24-3) (bold added).
defendant has moved for summary judgment of dismissal.
following statement of facts is not disputed.
acquired the subject property in 1998. Until 2014 it was used
primarily by a pediatric clinic or medical group.
operates outpatient substance abuse clinics in nineteen
states. In 2014 the State of Colorado requested Tenant to
consider locating a treatment clinic in the Monument area.
Tenant identified the property as a potential location and
began negotiations with Landlord. On October 2, 2014, the
Town of Monument issued to Tenant a Zoning Use Conformation
providing that the planned clinic was an approved use in the
Town's business district.
invested in modifications of the building to make it suitable
for its purposes, including installation of a security
system, new doors and windows, plumbing, HVAC, electrical and
these improvements had been made, but before the clinic
opened, public opposition to the clinic was mobilized by
citizens of Monument. On June 25, 2015, an appeal of the
previously granted zoning approval was filed with the
Town's Board of Adjustment. After a public hearing on
August 10, 2015, the Town revoked its approval to operate a
clinic at the property.
result, Tenant was unable to open or operate its planned
clinic. On April 29, 2016, Tenant gave notice to Landlord of
its intent to terminate the Lease pursuant to Article 25.
Tenant never occupied the property and the improvements ...