L.L.C. v. Walton Foothills Holdings VI, L.L.C.

          ORDER

          LEWIS T. BABCOCK, JUDGE.

         This matter is before me on the Motion to Dismiss filed by Defendant Walton Foothills Holdings VI, L.L.C. ECF No. 4. I have jurisdiction pursuant to 28 U.S.C. § 1332. After considering the parties' arguments and exhibits, I grant Defendant's Motion for the reasons set forth below.

         I. Facts

         In November 2014, Defendant, as landlord, and Plaintiff, as tenant, entered into a lease for Plaintiff to operate a bar and restaurant in a shopping center in Fort Collins, Colorado. Compl. Declaratory J., ECF No. 6 at ¶¶ 2-6. The Retail Lease Agreement (the “Lease”) signed by the parties included an “Exclusive Use” provision which prohibited Defendant from entering into another lease with a different tenant who intended to open a similar establishment as Plaintiff's:

The Exclusive Use provision generally prohibits [Defendant] from entering into a “lease, purchase agreement or occupancy agreement for any space in the Shopping Center with any tenant or occupant or purchaser intending to use its premises for . . . (iii) a sports themed restaurant/bar larger than 5, 000 square feet.” This latter clause (iii) is defined in the CB & Potts Lease as the “Sports Bar Exclusive.”

Id. at ¶¶ 5, 7; ECF No. 4-1 at 26-27. The next subsection of the Lease contains a “Rouge Tenant” provision, which limits remedies pending certain actions if the Exclusive Use provision is arguably breached:

Subject to the last sentence of this subparagraph (b), Tenant shall have no remedy for a violation of subparagraph (a) above if: (i) another tenant or occupant of the Shopping Center violates a provision of its lease or license agreement, or other document burdening said tenant or occupant's premises or property, which either does not permit or specifically prohibits such violating tenant or occupant from engaging in the Exclusive Use; and (ii) after receiving written notice of such tenant or occupant's violation from Tenant, (A) Landlord provides written notice of the lease, license agreement or document violation to such other tenant or occupant; and (B) Landlord commences and diligently pursues all actions reasonably available to Landlord for the enforcement of the provisions of the lease, license, or other document. In such event (“Rogue Tenant Violation”), Landlord shall have a period of up to one year from receipt of the foregoing notice from Tenant within which to cure such violation of Tenant's Exclusive Use, and, in the event that at the end of such one-year period the Rogue Tenant Violation shall not be cured, Tenant shall have the right to pursue the remedies afforded to Tenant under this Agreement.

ECF No. 4-1 at 27.

         In August 2018, Defendant and Green Screens, L.L.C., operating under the trade name “XGolf, ” entered into a lease (the “XGolf Lease”) to open an establishment over 7, 000 square feet in the same shopping center “for the purposes of operating [] indoor golf simulators, to include the sale of golf-related apparel, a ‘fast casual' restaurant, and a bar.” ECF No. 6 at ¶¶ 8-9. The XGolf Lease reads that XGolf “may not, among other restrictions, use its premises for ‘a sports themed restaurant/bar larger than 5, 000 square feet.'” Id. at 10. In its Complaint, Plaintiff includes screenshots of various XGolf franchise webpages, including the Facebook page for the XGolf in Fort Collins. Id. at ¶¶ 14, 27, 29. On its Facebook page, the Fort Collins XGolf advertised using the hashtag moniker “#sportsbar, ” noted that it would have a “full bar with 12 taps for beer and 8 TVs, ” and featured cocktails and a bar in its photos. Id. at ¶¶ 29-31.

         In December 2018, representatives of Plaintiff's parent company expressed concern to Defendant that XGolf's business would violate the Exclusive Use provision in the Lease. Id. at ¶ 11. Defendant responded that XGolf was “not a sports themed restaurant and bar.” Id. at ¶ 12. During discussion between the parties, Plaintiff requested “a copy of any floor plan for the prospective XGolf facility, the number of seats, the number of [TVs], the location and type of video service to be used, the proposed menus for food and beverage, and whether XGolf intended to propose to offer a full bar serving liquor, beer and wine.” Id. at ¶ 16. While the parties continued discussion, the information was not disclosed; construction of XGolf had a projected completion date of May 2019. Id. at ¶ 25.

         Plaintiff filed suit in District Court of Larimer County, Colorado seeking declaratory judgment that: (1) the Fort Collins XGolf location contemplated in the XGolf lease is a “sports themed restaurant/bar larger than 5, 000 square feet”; and (2) that Defendant subsequently violated the Exclusive Use provision in the Lease. Id. at 7. Defendant filed this Motion to Dismiss, arguing that Plaintiff's claims were not ripe and that Plaintiff failed to state a claim upon which relief could be granted. ECF No. 4. Defendant then removed the case to this Court. Notice of Removal, ECF No. 1.

         II. Law

         As this is case proceeds under diversity jurisdiction, ECF No. 1 at ¶ 7, Colorado substantive law and federal procedural law applies. Haberman v. The Hartford Ins. Grp., 443 F.3d 1257, 1264 (10th Cir. 2006).

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