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Mansfield Square, Ltd. v. Big Lots

December 9, 2008

MANSFIELD SQUARE, LTD., PLAINTIFF-APPELLANT,
v.
BIG LOTS, INC., DEFENDANT-APPELLEE.



APPEAL from the Franklin County Court of Common Pleas. (C.P.C. No. 07CVH-04-4535).

The opinion of the court was delivered by: Bryant, J.

(REGULAR CALENDAR)

OPINION

{¶1} Plaintiff-appellant, Mansfield Square, Ltd., appeals from a judgment of the Franklin County Court of Common Pleas granting the summary judgment motion of defendant-appellee, Big Lots, Inc. ("Big Lots"), and dismissing plaintiff's complaint in its entirety. Because plaintiff could not reasonably rely on Big Lots' oral assurances that it would lease commercial premises from plaintiff when Big Lots had clearly manifested its intent not to be bound until the parties executed a written lease agreement, we affirm the trial court's decision to grant summary judgment to Big Lots on plaintiff's promissory estoppel claim.

{¶2} Plaintiff Mansfield Square, Ltd., is a limited partnership that owns several shopping centers, including the Kingsgate Mall shopping center in the Mansfield area. Skilken Properties is Mansfield Square, Ltd.'s leasing agent (collectively, "plaintiff") and manages not only Kingsgate Mall but several other shopping malls throughout Ohio and other states. Big Lots is an Ohio corporation that owns and operates retail stores in several states, including Ohio.

{¶3} In August 1998, through a ten-year lease agreement with plaintiff, Office Depot leased 30,000 square feet of retail space at Kingsgate Mall. Sometime in 2003, Office Depot advised plaintiff that it intended to vacate its Kingsgate Mall location. In September 2003, Big Lots began substantive discussions with plaintiff about leasing the Office Depot site at Kingsgate Mall in order to relocate a nearby retail store to that site. According to plaintiff's evidence, Big Lots' representatives repeatedly assured plaintiff's representatives during meetings in October 2003 that once Big Lots' Real Estate Committee gave its approval, a lease agreement between the parties for the Office Depot site at the Kingsgate Mall was a "done deal," with only resolution of minor details and execution of the paperwork remaining.

{¶4} In November 2003, the parties exchanged several letters of intent negotiating the terms of a potential lease agreement. All of plaintiff's letters of intent stated the letters were not intended to be binding and were contingent on execution of a mutually acceptable lease agreement for the premises. Big Lots' sole letter of intent contained the following notation: "This letter shall signify our intent to enter into a lease based on the terms set out" in the letter, but "[n]o commitment by Big Lots Stores Inc. shall be considered binding until all of the terms are reduced to a written lease, which has been reviewed and approved by our Legal Department and signed by an officer of the Company." (Nov. 17, 2003 letter from Big Lots to Skilken Properties.)

{¶5} On December 15, 2003, Big Lots' Real Estate Committee approved Big Lots' leasing the Office Depot site at Kingsgate Mall. In January 2004, plaintiff permitted Office Depot to terminate its lease at the site in return for Office Depot's paying $600,000 to plaintiff. Plaintiff's evidence states it permitted Office Depot to terminate its lease obligations in reliance on Big Lots' repeated assurances that the approval of its Real Estate Committee meant Big Lots would lease the Office Depot site. Plaintiff's evidence further indicates that in reliance on Big Lots' representations, plaintiff spent time, money and resources to modify the former Office Depot site and to obtain necessary easements and agreements with co-tenants to meet Big Lots' standards and specifications.

{¶6} Between January and July 2004, the parties exchanged five working drafts of a written lease agreement to resolve open issues and finalize the terms. Although the parties revised the proposed lease agreement numerous times, each of the drafts contained an integration clause stating that the written lease agreement set forth "all" promises between the parties. Significantly, each draft also included a paragraph stating that "[t]he submission by Tenant to Landlord of this Lease shall have no binding force or effect, shall not constitute an option for the leasing of the Demised Premises, nor confer any rights or impose any obligations upon either party" until the Landlord and Tenant execute the lease and deliver "a fully executed original counterpart thereof to Tenant." (¶36 of Draft Lease Agreements.)

{¶7} As late as July and August 2004, the parties were still negotiating the terms of the lease agreement. On July 16, 2004, plaintiff's counsel sent Big Lots' counsel an e-mail noting "several issues which are still open." The following month, on August 27, 2004, plaintiff's counsel sent Big Lots' counsel an additional letter stating, "I believe that once we are done with this issue [regarding signage] that we are in fact done with our negotiations. Upon receipt of your confirmation that you are working on execution drafts of the lease, I will therefore expedite execution of the amendment to the REA [reciprocal easement agreement]. Thank you very much."

{¶8} The parties never finalized and executed a written lease agreement. Instead, Big Lots' existing landlord in the area offered financial concessions for Big Lots to keep its nearby retail store at the existing location rather than relocate the store to Kingsgate Mall. Ultimately, Big Lots agreed to stay at its existing location in the area and ended the negotiations with plaintiff.

{¶9} Plaintiff subsequently filed an action against Big Lots to recoup damages plaintiff allegedly suffered as a result of Big Lots' refusal to lease the Kingsgate Mall site. Plaintiff voluntarily dismissed its original complaint against Big Lots, but on April 2, 2007 re-filed a complaint against Big Lots asserting five claims: breach of contract, promissory estoppel, negligent misrepresentation, breach of good faith and fair dealing, and tortious interference with a business relationship. In an August 24, 2007 entry, the trial court granted in part Big Lots' Civ.R. 12(B)(6) motion and dismissed all but plaintiff's breach of contract and promissory estoppel claims. The parties filed subsequent cross-motions for summary judgment, and, in a March 28, 2008 decision, the trial court dismissed plaintiff's remaining claims.

{ΒΆ10} The trial court concluded plaintiff's breach of contract claim failed for lack of a written contract demonstrating that the parties agreed on all material terms of the lease. With respect to the promissory estoppel claim, the court determined plaintiff's reliance on Big Lots' oral assurances that it agreed to lease the subject premises was unreasonable as a matter of law in the face of Big Lots' repeatedly expressed intent not to be bound until the parties executed a written lease ...


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