United States District Court, D. Minnesota
William M. Burns, Esq., R. Thomas Torgerson, Esq., and David L. Tilden, Esq., Hanft Fride, PA, Duluth, MN, on behalf of Plaintiff.
Richard T. Thomson, Esq., and Amy L. Schwartz, Esq., Lapp, Libra, Thomson, Stoebner & Pusch, Chartered, Minneapolis, MN, on behalf of Defendant.
MEMORANDUM OPINION AND ORDER
ANN D. MONTGOMERY, District Judge.
On December 13, 2013, the undersigned United States District Judge heard oral argument on Defendant Wells Fargo Bank, N.A.'s ("Wells Fargo") Motion for Summary Judgment [Docket No. 18]. Plaintiff Corporate Real Estate Services, Inc., ("CRS") opposes the motion. The parties' dispute centers on the interpretation of a contract regarding services provided by CRS to Wells Fargo. For the reasons stated herein, Wells Fargo's motion for summary judgment is denied.
As part of commercial lease agreements, tenants sometimes pay maintenance fees, real estate taxes, utilities, and other fees in addition to rental payments. Plaintiff CRS provides auditing, consulting, and administration services to commercial tenants. Among other things, CRS reviews its client's commercial lease or leases for errors and other discrepancies to ensure the client is not inadvertently overpaying on its obligations.
On February 1, 2007, Wells Fargo contracted CRS for commercial lease auditing services for certain Wells Fargo commercial facilities. R. Thomas Torgerson Aff. [Docket No. 36] Ex. D (the "Agreement") at 1. The contract between the parties stated CRS would review designated commercial leases for miscalculations, errors, and other possible cost savings (termed "Discrepancies"). Id. at § 1.1. In exchange, Wells Fargo agreed to compensate CRS as follows:
2.1. Contingency Fee.
[¶1] In consideration for the Work, Client shall pay to CRS for any audit issues found by CRS that result in Discrepancies, a fee (the "Contingency Fee") equal to thirty four percent (34%) of the aggregate amount which is (i) reimbursed to Client by the landlord; (ii) applied by Client to future rents or any other obligation owed by Client to the landlord; and/or (iii) rebated to Client in any other fashion acceptable to Client (collectively, "Savings"). The Contingency Fee shall be payable for all Savings relating to the time period from commencement of the lease term to the end of the calendar year of formal resolution with the landlord ("Savings").
[¶2] To the extent that Discrepancies corrected due to the audit Work result in limited recoveries (i.e. Landlord does not allow for prior year recoveries and the savings are primarily in the future) Client and CRS will endeavor to arrive at an equitable Fee arrangement.
[¶3] By way of example: Audit Work completed in 2007 results in the discovery of Discrepancies in a 2004 base year but the lease only allows for a one year look back, therefore only 2006 and forward are subject to adjustments. CRS could then be entitled to Fees from Savings for 2008 in addition to 2006 and 2007 in accordance with the above Fee structure. The parties also recognize that when there is no prohibition, pursuant to the lease, in obtaining retroactive adjustments, yet a settlement is reached with the landlord limiting such adjustment, Client and CRS will endeavor to arrive at an equitable Fee arrangement.
[¶4] A Contingency Fee shall be due and payable to CRS at such time that Savings are received or applied for the benefit of Client. It is understood that Savings include any and all amounts, payments or other forms of remuneration, which benefit Client by any form or method in connection with, directly, or indirectly in any lease year, the Discrepancies found by CRS. Client shall promptly forward copies of all relevant information and documentation to CRS relating to the computation of Savings.
Agreement § 2.1 (paragraphs numbered for ease of reference). The Agreement applies Minnesota law to the ...