Case Studies

Winning Summary Judgment for Retailer in Real Estate Dispute

Epstein Becker Green has won a significant summary judgment motion as to all claims for its client Wakefern Food Corporation (“Wakefern”). The claims at issue were $24 million. Wakefern is the largest retailer-owned supermarket cooperative in the United States and manages the trademark for ShopRite Supermarkets. Wakefern was sued in the Eastern District of Pennsylvania (Arsenal Inc. et al. v. Ammons et al, 14-CV-1289) by a property developer who alleged that Wakefern and one of its member supermarkets caused the failure of plaintiff’s commercial development by pretending to be interested in locating a supermarket there while simultaneously planning to locate the supermarket at a competing development. Because the site related to the claims was a former military installation that had been a political issue for the last 25 years, the allegations against Wakefern were politically charged and closely followed in the region. After Wakefern’s initial motion to dismiss disposed of several claims, and after vigorous discovery on the remaining claims, for promissory estoppel, tortious interference, and negligent misrepresentation, plaintiff and defendants filed cross-motions for summary judgment. In a 25-page decision, Judge Anita B. Brody dismissed plaintiff’s three remaining claims, finding that Wakefern had made no enforceable promises to the developer, was under no obligation to enter into any lease with plaintiff, and had made no actionable misrepresentations.

The Epstein Becker Green team included Princeton attorneys Anthony Argiropoulos, Theodora McCormick, William Gibson, and Scheherazade A. Wasty.

Epstein Becker Green Serves as Health Care Regulatory Counsel in Acquisition of Capella Healthcare

Epstein Becker Green ("EBG") participated as health care regulatory counsel in the $900 million acquisition of Capella Healthcare Inc. (“Capella”), a private equity-owned operator of acute care facilities and one of the largest for-profit hospital companies in the United States. The purchaser was Medical Properties Trust Inc. (“MPT”), an Alabama-based real estate investment trust that acquires and develops net-leased health care facilities. The $900 million acquisition price breaks down as $600 million for Capella’s real estate and approximately $300 million for Capella’s operating entities, which will be jointly owned by MPT and Capella’s management. EBG attorneys provided health care regulatory advice and due diligence to Capella on the transaction, which is expected to close during the second half of 2015.

As a result of the Capella acquisition, MPT will obtain seven acute care hospitals in five states. In total, MPT will have 183 properties in 30 states, with acute care facilities making up a majority of its portfolio.

The EBG team included Mark E. Lutes, Joshua J. Freemire, Richard H. Hughes IV, and Evan J. Nagler.

Massachusetts Superior Court Throws Out Tax Case Against Epstein Becker Green Clients

On June 1, 2015, Epstein Becker Green ("EBG") obtained the dismissal of a tax case brought by the owner of the Berkshire Mall (“Mall”) in the Massachusetts Superior Court. The Mall sought a declaration that certain taxes assessed by the Baker Hill Road District (“District”), which is located in the Town of Lanesborough, Massachusetts, were unauthorized and excessive. The Mall also claimed that the District’s tax assessments were “ultra vires” (i.e., beyond the District’s powers) and unconstitutional. EBG represented three individual officials of the District in this case.

The District was originally created to acquire and maintain a road that leads to the Berkshire Mall. In addition to assessing a tax to acquire and maintain that road, the District entered into four contracts relating to police, fire, and ambulance services. The District’s tax assessment, which was issued on January 2, 2015, incorporates the costs associated with these service contracts. The District has only three taxpayers.

With regard to the service contracts, EBG argued before the court that the Mall lacked standing to sue about the District’s alleged abuse of power by entering into the service contracts, because, under a state statute, this lawsuit must be started by a petition of not less than 10 taxable inhabitants of the town. The court agreed with EBG’s argument that, not only was this suit brought by less than 10 taxpayers, but the Mall could not qualify as a “taxable inhabitant” under the statute because the Mall is not a “natural person.” Moreover, even if the Mall could qualify as a taxpayer under the statute, there were only three taxpayers in the District—not enough to meet the 10-taxpayer threshold for the petition.

Next, regarding the Mall’s claim that the tax assessments were ultra vires and unconstitutional, the court agreed with EBG’s argument that the court lacked jurisdiction to hear this claim as well, since the Mall was required by law first to seek an abatement from the local board of assessors and, if denied, to appeal to the State Appellate Tax Board. However, the Mall failed to exhaust these administrative remedies before filing this lawsuit.

Member of the Firm Barry A. Guryan and Senior Counsel J. William Cook led the EBG team. The case is Comm 2005-FL10 Berkshire Mall LLC v. Baker Hill Road District, Civ. No. 2014-00355 (Mass. Sup. Ct., Berkshire Cty., 2015).

Epstein Becker Green Enjoins Landlord from Terminating Clients’ Gas Station Lease

Epstein Becker Green successfully prevented a landlord from terminating the commercial lease of clients Shell Oil Company and Motiva Enterprises LLC (collectively, "Shell/Motiva") at a gasoline service station in Suffolk County, Long Island. On Sept. 3, 2011, Shell/Motiva received a notice indicating that the landlord intended to terminate the lease within 30 days because of Shell/Motiva's allegedly unlawful use of the leased premises as a gasoline refilling station with a convenience store. (The certificate of occupancy permits the leased premises to be used as a gasoline refilling station with a garage.) On Sept. 30, 2011, Epstein Becker Green, on behalf of Shell/Motiva, immediately requested a temporary restraining order, which was granted that day. EBG subsequently filed a motion, on behalf of Shell/Motiva, seeking a "Yellowstone injunction" to stop the landlord from terminating the lease and ejecting Shell/Motiva from the leased premises.

On March 23, 2012, the Suffolk County Supreme Court granted the motion for a Yellowstone injunction. The court found that Shell/Motiva had met the criteria for the injunction, including demonstrating that they have the desire and ability to cure the alleged default. Additionally, the court pointed out that the landlord acknowledged that Shell/Motiva had already stopped using the leased premises as a convenience store. Based on the clear and unambiguous language of the lease, the court also rejected the landlord's argument that Shell/Motiva had an affirmative obligation to restore the automobile repair shop operation, which had been discontinued several years ago.

The EBG team representing Shell/Motiva consisted of New York Litigation attorneys William Ruskin and J. William Cook.

Epstein Becker Green Obtains $1 Million Judgment for Client in Corporate Dispute

On July 15, 2009, Epstein Becker Green succeeded in obtaining a judgment of more than $1 million for its client. The dispute concerned shareholders of a close corporation.

In 1985, EBG's client received from his brother a gift of stock representing a 70 percent interest in a "Subchapter-S" corporation that his brother utilized to own and manage New York City apartment buildings. Our client set aside the certificate for 20 years. In 1986, the NY Secretary of State dissolved the corporation for failure to pay franchise taxes. The brother waited 90 days and incorporated another entity with the same name as the dissolved corporation and continued business as usual, including buying a building in Harlem in 1987 and selling the other properties in 1988. EBG's client was unaware of these activities. The brother died in 2001, and his wife sold the Harlem building in 2005 for a $1.2 million profit.

In 2006, our client found the stock certificate and asked the wife for his share of the $1.2 million profit. She refused to pay, arguing that our client owned stock only in the first corporation, but the building was bought and sold by the second corporation. Our client sued.

After a bench trial, the New York Supreme Court in Manhattan granted EBG's client 70 percent of the profit from the sale, ruling that the second corporation was a mere continuation of the first. More importantly, the judge agreed with EpsteinBeckerGreen's position that to allow the wife to prevail would encourage shareholders to avoid paying franchise taxes and, when faced with dissolution, merely reincorporate for a few dollars. Such schemes violate public policy.

This case was challenging because the brother had been dead for eight years, our client had no knowledge of the brother's business (neither did the wife), corporate records were non-existent, the wife's son had destroyed all other records of the real estate sale at issue, and most of the corporate activities occurred 20 years ago. Fortunately, EpsteinBeckerGreen found and deposed the lawyer who represented the brother in the 1980s. The lawyer testified that there was no need to transfer title of the first corporation's property to the second corporation in 1986 since "they were the same corporation" and that it was the brother's practice not to pay franchise taxes when it was just as easy and cheaper to reincorporate.

The Epstein Becker Green team representing the client included New York Litigation attorney Kenneth J. Kelly.