United States District Court, D. Colorado
NORTHGLENN GUNTHER TOODY'S, LLC, a Colorado limited liability company, Plaintiff,
HQ8-10410-10450 MELODY LANE, LLC, a Delaware limited liability company, Defendant.
ORDER ON PENDING MOTIONS
William J. Martinez, United States District Judge
action, Plaintiff Northglenn Gunther Toody's, LLC
(“Gunther Toody's”), sues Defendant
HQ8-10410-10450 Melody Lane, LLC (“Melody Lane”)
for, among other things, breach of a restrictive covenant in
a shopping center lease. (See ECF No. 8.) Currently
before the Court are four motions: (1) Melody Lane's
Motion for Summary Judgment (ECF No. 78); (2) Melody
Lane's Motion to Exclude the Opinions of Proposed Expert
Witnesses Stephen E. Poludniak, Timothy Belinski and Steve
Mize (“Melody Lane's Rule 702 Motion”) (ECF
No. 79); (3) Gunther Toody's Motion to Exclude
Defendant's Expert Richard F. Weil (“Gunther
Toody's Rule 702 Motion”) (ECF No. 80); and (4)
Gunther Toody's Motion for Leave to File Supplemental
Response to Defendant's Motion for Summary Judgment
(“Motion to Supplement”) (ECF No. 104).
reasons explained in detail below, the Court finds that
Gunther Toody's has failed to offer a construction of the
restrictive covenant that does not render most of its
language superfluous. Melody Lane's summary judgment
motion is therefore well- taken and will be granted as to all
causes of action. The Court finds that this result would be
the same even taking into account the proffered opinions of
Gunther Toody's experts, so Melody Lane's Rule 702
Motion will be denied as moot. Conversely, the Court has
ignored the proffered opinion of Melody Lane's expert,
and so Gunther Toody's Rule 702 Motion will also be
denied as moot. Finally, the Court finds that the information
Gunther Toody's seeks to add through its Motion to
Supplement was substantially in the record already and does
not change the Court's analysis. Thus, the Motion to
Supplement will be denied as moot. All pretrial and trial
proceedings will be vacated and final judgment will enter in
favor of Melody Lane.
judgment is warranted under Federal Rule of Civil Procedure
56 “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed.R.Civ.P. 56(a);
see also Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248-50 (1986). A fact is “material” if,
under the relevant substantive law, it is essential to proper
disposition of the claim. Wright v. Abbott Labs.,
Inc., 259 F.3d 1226, 1231-32 (10th Cir. 2001). An issue
is “genuine” if the evidence is such that it
might lead a reasonable trier of fact to return a verdict for
the nonmoving party. Allen v. Muskogee, 119 F.3d
837, 839 (10th Cir. 1997).
analyzing a motion for summary judgment, a court must view
the evidence and all reasonable inferences therefrom in the
light most favorable to the nonmoving party. Adler v.
Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir.
1998) (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986)). In addition, the
Court must resolve factual ambiguities against the moving
party, thus favoring the right to a trial. See Houston v.
Nat'l Gen. Ins. Co., 817 F.2d 83, 85 (10th Cir.
FACTS & PROCEDURAL HISTORY
following facts are undisputed unless attributed to one party
or another, or otherwise noted.
The Gunther Toody's Restaurant at Northglenn
Lane claims that it owns a shopping center on 104th Avenue in
Northglenn, Colorado, known as the “Northglenn
Marketplace.” (ECF No. 78 at 3, ¶ 1.) Gunther
Toody's disputes this, asserting that Northglenn
Marketplace “is under contract and/or has been sold to
another entity.” (ECF No. 83 at 3, ¶
In any event, it appears undisputed that, at all times
relevant to the events giving rise to this lawsuit, Melody
Lane owned Northglenn Marketplace.
August 1998, Gunther Toody's predecessor-in-interest and
Melody Lane's predecessor-in-interest executed the
“Ground Lease, ” permitting the lessee to open
and operate in Northglenn Marketplace “a diner-style,
full-service restaurant with a liquor license[, ] and no
other purposes shall be permitted except as may be approved
in writing by Landlord, which approval shall not be
unreasonably withheld. Tenant may not sell popcorn from the
Premises.” (“Permitted Use Clause, ” ECF
No. 8-1 at 17 (art. X, ¶ B).) The Ground Lease further
contains a restrictive covenant that prohibits the landlord
from leasing or selling any other portion of Northglenn
Marketplace “for usage as a diner similar in concept to
the operation conducted from the Leased Premises by
Tenant.” (“Restrictive Covenant, ” ECF No.
8-1 at 32 (art. XXV, ¶ J).)
restaurant opened by Gunther Toody's
predecessor-in-interest was a Gunther Toody's restaurant.
Such restaurants are intentionally designed to evoke a
1950s-style diner with features such as vehicles from that
era on display, employee uniforms that resemble restaurant
uniforms of the 1950s, employees adopting fictitious names
associated with the 1950s, a jukebox with 1950s music,
checkered flooring, counter seating, and menu items
incorporating references to 1950s American culture
(e.g., the “Howdy Doody BBQ Burger”).
(ECF No. 78 at 13-14.) Not surprisingly, the restaurant serves
dishes generally regarded as American cuisine or
“comfort food, ” including American-style
breakfast (pancakes, eggs, hash browns, etc.) from 6:00 a.m.
to 11:00 a.m. daily. (See ECF No. 2-7; ECF No 78 at
(the entity referred to in this Order as “Gunther
Toody's”) became owner and operator of the Gunther
Toody's restaurant in Northglenn Marketplace sometime in
early to mid-2016. (ECF No. 8 ¶ 9.)
The New IHOP
16, 2016, Melody Lane executed a lease agreement with
non-party Tayseer Zuiater, a franchisee of the International
House of Pancakes (“IHOP”) system. (ECF No. 78 at
4, ¶ 6.) That lease permits Zuiater to operate at
Northglenn Marketplace “a full-service sit-down
restaurant serving breakfast food and related beverages as
the primary menu item, which is identified as selling 40% or
greater of gross sales towards breakfast food and related
beverages.” (ECF No. 26-2 § 1.17.)
specific premises leased to Zuiater were previously leased to
a different restaurant. (ECF No. 8 ¶ 15.) This building
is very close to Gunther Toody's-directly across one of
Northglenn Marketplace's internal streets. (See
ECF No. 73-2 at 6 (satellite photo).) Upon execution of his
lease, Zuiater took immediate possession of the premises and
began remodeling the building to be an IHOP. (ECF No. 78 at
5, ¶ 9.)
The Estoppel Certificate
the same time that Melody Lane and Zuiater were finalizing
the IHOP lease, Gunther Toody's was negotiating a new
loan. (See ECF No. 84-1 at 115.) Eleven days after
Melody Lane executed the Zuiater lease (June 27, 2016),
Melody Lane executed, at Gunther Toody's request, an
Estoppel Certificate and Agreement (“Estoppel
Certificate”) between Melody Lane, Gunther Toody's,
and Gunther Toody's lender. (Id.) Through the
Estoppel Certificate, Melody Lane represented, among other
things, that it was unaware of any Ground Lease defaults, or
of “any event or circumstance which, with notice or the
passage of time, or both, would constitute a default under
the [Ground] Lease.” (Id. at 116, ¶
Commencement of this Lawsuit & Preliminary Injunction
Toody's became aware of the coming IHOP by July 20, 2016,
at the latest, when it sent a letter to Melody Lane claiming
that Melody Lane had violated the Restrictive Covenant by
leasing to Zuiater knowing that he planned to operate in
IHOP. (ECF No. 78 at 6, ¶ 14.)
Toody's filed this lawsuit against Melody Lane on
September 27, 2016. (ECF No. 1.) On September 30, Gunther
Toody's filed an amended complaint, which remains the
operative complaint to this day. (ECF No. 8.) In the amended
complaint, Gunther Toody's asserts six causes of action,
or remedies framed as causes of action: (1) breach of
contract, referring to the Restrictive Covenant and the
Estoppel Certificate; (2) breach of the covenant of good
faith and fair dealing; (3) specific performance of the
Restrictive Covenant; (4) breach of warranty, referring to
the representations made in the Estoppel Certificate; (5)
declaratory judgment; and (6) injunctive relief.
with the complaint, Gunther Toody's filed a Motion for
Temporary Restraining Order and Preliminary Injunction
(“TRO/PI Motion”). (ECF No. 2.) The Court denied
the TRO portion of that motion because, among other reasons,
“the new restaurant is not operating or even close to
operating, ” so Gunther Toody's had failed to
“establish a harm so immediate and irreparable that the
status quo must be preserved pending a preliminary injunction
hearing.” (ECF No. 12 at 2.)
the preliminary injunction portion of that motion, the Court
eventually denied it as well. See Northglenn Gunther
Toody's, LLC v. HQ8-10410-10450 Melody Lane, LLC,
2016 WL 6569099 (D. Colo. Nov. 4, 2016) (ECF No. 35)
(“Gunther Toody's I”). In
particular, the Court found that Gunther Toody's had
failed to show a likelihood of success on the merits because
it interpreted the Restrictive Covenant to prohibit Melody
Lane from leasing to any other diner, rendering superfluous
the language from the Restrictive Covenant about a
“diner similar in concept” to Gunther
Toody's. Id. at *3-4.
Toody's appealed this denial of its requested preliminary
injunction to the Tenth Circuit on December 2, 2016. (ECF No.
The Two Restaurants in Operation
IHOP began operating sometime in the first quarter of 2017.
(ECF No. 78 at 5, ¶ 9.) The following list compares and
contrasts the Gunther Toody's and IHOP restaurants in
• Atmosphere & Decor. The Gunther
Toody's restaurant pervasively attempts to evoke 1950s
American culture with its interior and exterior design, wait
staff uniforms, wait staff fictitious names, menu item names,
and so forth. The IHOP has more generic, contemporary decor
and does not attempt to evoke any particular time in history.
• Cleanliness. Both restaurants are clean.
• Food Preparation. Both restaurants prepare
most of their food on a flat top grill.
• Franchise Awareness. The Gunther Toody's
restaurant is part of a 5-restaurant franchise located only
in Colorado. The IHOP is part of a 1, 600-restaurant
franchise located throughout the United States and
• Hours of Operation. The Gunther Toody's
restaurant is open from 6:00 a.m. to either 9:00 or 10:00
p.m., and closes on major holidays. The IHOP restaurant is
open 24 hours a day, every day of the year.
• Location. Both restaurants are very close to
each other in the same shopping center.
• Menu. Both restaurants build their offerings
from the same basic components (e.g., for breakfast
fare, both restaurants work from pancakes, eggs, hash browns,
etc.; for lunch and dinner fare, both restaurants offer
hamburgers and French fries). The IHOP offers ten pancake
items, as compared to Gunther Toody's two. The IHOP
serves breakfast at all times of the day and night, whereas
the Gunther Toody's serves breakfast from 6:00 a.m. to
11:00 a.m. The Gunther Toody's restaurant sells alcohol,
while the IHOP does not.
• Prices. The two restaurants charge similar
prices for similar items.
• Sales of Breakfast Items. The Gunther
Toody's restaurant derives about 30% of its revenue from
breakfast items. The IHOP restaurant “derives over 2/3
of its business from breakfast menu items.” (ECF No. 78
• Type of Service. Both restaurants offer
casual table service with made-to-order meals.
The Tenth Circuit's Disposition of the ...