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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. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  2. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  3. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

  4. When I hear 'Juvenile Lawyer' I think of an attorney helping a high school aged kid through the court system for a poor decision; like smashing mailboxes. Thank you for opening up my eyes to the bigger picture of the need for juvenile attorneys. It made me sad, but also fascinated, when it was explained, in the sixth paragraph, that parents making poor decisions (such as drug abuse) can cause situations where children need legal representation and aid from a lawyer.

  5. Some in the Hoosier legal elite consider this prayer recommended by the AG seditious, not to mention the Saint who pledged loyalty to God over King and went to the axe for so doing: "Thomas More, counselor of law and statesman of integrity, merry martyr and most human of saints: Pray that, for the glory of God and in the pursuit of His justice, I may be trustworthy with confidences, keen in study, accurate in analysis, correct in conclusion, able in argument, loyal to clients, honest with all, courteous to adversaries, ever attentive to conscience. Sit with me at my desk and listen with me to my clients' tales. Read with me in my library and stand always beside me so that today I shall not, to win a point, lose my soul. Pray that my family may find in me what yours found in you: friendship and courage, cheerfulness and charity, diligence in duties, counsel in adversity, patience in pain—their good servant, and God's first. Amen."

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