United States District Court, D. Minnesota
A. O. Ruzicka, Elizabeth A. Sellers, and Caitlin Hull, DORSEY
& WHITNEY LLP, for plaintiff.
K. Bassin, Michael R. Carey, and Roxanna V. Gonzalez, BOWMAN
AND BROOKE LLP, for defendants.
Patrick J. Schiltz United States District Judge
Orion Investments Edina, LLC (“Orion”), leased
office space to defendant Fresenius Management Services, Inc.
(“Fresenius”). ECF No. 1-1 at 12-24, 28-29. Orion
then started a construction project near the office space
that allegedly created so much noise that Fresenius could not
conduct its business. ECF No. 14 at 8. After complaining
about the noise, Fresenius purported to terminate the lease
effective November 21, 2016. ECF No. 1-1 at 31.
brought this action against Fresenius, alleging that
Fresenius had no right to terminate the lease and seeking to
recover almost $300, 000 in rent. ECF No. 1-1 at 3-9.
Fresenius counterclaimed, alleging that Orion breached the
lease agreement and thereby relieved Fresenius of its
obligation to pay rent. ECF No. 14 at 8-9. This matter is
before the Court on two motions: (1) Orion's motion to
dismiss Fresenius's counterclaim, ECF No. 8, and (2)
Fresenius's motion to sanction Orion for moving to
dismiss Fresenius's counterclaim, ECF No. 18.
MOTION TO DISMISS
survive a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), a counterclaim must “state a claim
to relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although the
factual allegations in the counterclaim need not be detailed,
they must be sufficient to “raise a right to relief
above the speculative level.” Id. at 555. In
assessing the sufficiency of the counterclaim, the Court may
disregard legal conclusions that are couched as factual
allegations. See Ashcroft v. Iqbal, 556 U.S. 662,
678-79 (2009). The Court must, however, accept as true all of
the factual allegations in the counterclaim and draw all
reasonable inferences in the counterclaimant's favor.
See Id. at 678. The Court may consider materials
that are necessarily embraced by the counterclaim as well as
any exhibits attached to the counterclaim (such as the lease
agreement between Orion and Fresenius) without converting the
motion into one for summary judgment. Mattes v. ABC
Plastics, Inc., 323 F.3d 695, 697 n.4 (8th Cir. 2003).
counterclaim alleges that Orion breached the lease in two
First, Fresenius alleges that Orion breached the
lease by “commencing a major construction project at
the location of the [leased] Premises”-a construction
project that generated so much noise that Fresenius's
employees could not do their work. ECF No. 14 at 8. According
to Fresenius, Orion thereby “deprived [Fresenius] from
its use of the Premises.” Id.
Minnesota law, a tenant may terminate a lease if the landlord
commits a material breach of that lease. See Maple Bank
v. St. Louis Park Pub. Sch. Dist. No. 283, No. A13-2102,
2014 WL 2921941, at *3 (Minn.Ct.App. June 30, 2014).
A breach is material if “one of the primary
purposes” of the contract is violated. Steller v.
Thomas, 232 Minn. 275, 282, 45 N.W.2d 537, 542 (1950). A
breach is also material if it “goes to the root or
essence of the contract.” BOB Acres, LLC v.
Schumacher Farms, LLC, 797 N.W.2d 723, 728 (Minn.App.
2011) (quotation omitted). When a material breach has
occurred, the non-breaching party is excused from further
performance and may sue for damages. Id.
Maple Bank, 2014 WL 2921941, at *3. The
“primary purpose” of the lease agreement was
obviously to provide space for Fresenius to conduct its
business, as the first numbered paragraph of the lease
reflects. ECF No. 1-1 at 12.
has adequately pleaded a breach-of-contract claim by pleading
that Orion created so much noise in the course of its
construction project that Fresenius could not use the leased
premises to conduct its business. Fresenius has also
adequately pleaded a claim of constructive eviction, which
“occur[s] when the beneficial enjoyment of [leased
premises] by the lessee is so interfered with by the landlord
as to justify an abandonment.” Colonial Court
Apartments, Inc. v. Kern, 163 N.W.2d 770, 771 (Minn.
1968). In fact, in Colonial Court Apartments, the
Minnesota Supreme Court affirmed a trial court's finding
that a tenant had been constructively evicted from her
apartment after she repeatedly complained about noisy
neighbors and the landlord failed to abate the noise.
Id. at 770-72. Fresenius need not use the precise
term “constructive eviction” (which, after all,
is merely a type of breach of contract) or allege precise
decibel levels in order to plead a plausible
Fresenius alleges that Orion breached the lease “by not
providing adequate parking in direct contravention of the
lease terms.” ECF No. 14 at 8. The Court agrees with
Orion that this claim is not adequately pleaded, given that
nothing on the face of the lease obligates Orion to provide a
particular number of parking spots to Fresenius. The lease
requires Orion to provide some parking-and the lease
requires that “[s]uch parking . . . be provided in
accordance with all applicable federal, state and local laws,
ordinances and regulations.” ECF No. 1-1 at 22. But the
counterclaim does not ...