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Roche owes Marsh Supermarkets $18M for breaking sublease

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The Indiana Court of Appeals upheld judgment Monday in favor of Marsh Supermarkets LLC on its complaint alleging that Roche breached a contract to sublease space in the Fishers building that houses Marsh’s headquarters.

Marsh is a subsidiary of MSI Crosspoint Indianapolis Grocery LLC, which owns the building and land that Marsh leases for its headquarters. The property is mortgaged with Bank of America, and the lease allows for Marsh to sublease the building.

Roche Diagnostics Corp. executed a sublease with Marsh to rent space in the building in March 2008. The lease would begin April 1 and expire Nov. 21, 2026, with rent payments to begin Jan. 1, 2009.

The agreement contained a subtenant recognition agreement and a subordination, non-disturbance and attornment agreement. The parties were required to cooperate in obtaining these two documents. The original sublease said both must be delivered to Roche by April 25, 2008; if not, Roche could terminate the lease on or before May 15.

This case hinges on the SNDA. Roche originally rejected Marsh’s proposed draft of the SNDA, in which Bank of America had removed Roche’s 12-month liability limit. Two extension letters were executed, pushing back the deadline that the SNDA had to be obtained to May 30. Roche wanted the liability limit in the SNDA. On May 29, Roche decided it would not sublease the building and sent a letter overnight to Marsh. When Marsh received the letter, it contacted the bank and got the SNDA with the 12-month liability limit. The SNDA was hand delivered to Roche at 4:57 p.m. on May 30.

After Roche declined to participate in the lease, Marsh sued. Both parties moved for summary judgment, and the trial court denied both motions. At a bench trial, Hamilton Superior Judge William J. Hughes ruled in favor of Marsh, finding Roche’s failure to pay rent under the sublease was more than $47 million. Hughes set off that amount based on a new sublease Marsh obtained with First Advantage Background Services Corp. and found Roche owed $18,188,933.

In Roche Diagnostics Operations, Inc. v. Marsh Supermarkets, LLC, 29A02-1201-PL-4, Judges Patricia Riley and L. Mark Bailey affirmed in favor of Marsh. Roche challenged the denial of its motion for summary judgment, but the majority held that the extensions entered into contain the parties’ clear intent for Roche to have its termination option effective only upon a failure to deliver a compliant SNDA by May 30, 2008. The language of the extensions modified Roche’s unilateral option to terminate the sublease under the original agreement.

Regarding the judgment from the bench trial, the judges noted that Roche’s challenge is essentially the same as its argument on the denial of its motion for summary judgment. The trial court correctly interpreted that the original agreement was modified by the extensions, Riley wrote. They also affirmed that Roche breached its duty to cooperate by not accepting the May 30 SNDA.

Also, based on the language of the original agreement, Hughes didn’t err in determining Roche is on the hook for the $18 million calculated based on the entire length of the sublease for breaking it.

Judge Terry Crone dissented, believing the extension letters didn’t nullify Roche’s bargained-for right to terminate the sublease after April 25. He wrote that Roche terminated the sublease before Marsh delivered the SNDA, therefore, Roche wasn’t in default and its damages should be limited to up to Dec. 31, 2013, based on the sublease.

 

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  1. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  2. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  3. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

  4. Here's an idea...how about we MORE heavily regulate the law schools to reduce the surplus of graduates, driving starting salaries up for those new grads, so that we can all pay our insane amount of student loans off in a reasonable amount of time and then be able to afford to do pro bono & low-fee work? I've got friends in other industries, radiology for example, and their schools accept a very limited number of students so there will never be a glut of new grads and everyone's pay stays high. For example, my radiologist friend's school accepted just six new students per year.

  5. I totally agree with John Smith.

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