Goldfarb Correspondence Dated Aug 05 2011

8/3/2019 Goldfarb Correspondence Dated Aug 05 2011

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kelley I donion 1 gill I huck I goldfarb

R E C E I V E D

o w l I DAugus t 5, 2011

KELLEY, D0M0N, GILL,H u c K & G O L D F A R B , P L L C7 0 1 F i f t h A v e n u e , S u i t e 6 8 0 0S e a t t le , W a s h i n g t o n 9 8 1 1 0w w w . k d g - l a w . c o mM i ch a e l A . G o l d fa r b( 2 0 6 ) 452-26 0 [ p h o n e ]( 2 0 6 ) 3 9 7 - 3 0 6 2 [ fa x ]goldfarbkdg-law.com

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A U G - 8 2 0 1 1Via Electronic and certjfied MailK&L GatesH U C K R O Y C EC h a r l e s H . Royce925 Four thAvenueSuite 2900S e a t t l e , W A 9 8 1 0 4 - 1 1 5 8

R e: Lease dated May 17, 2002 between Fryelands Sixth Avenue, LLC and the MonroePublic School DistrictDear Mr . Royce ,

This i s in response to you r l e tt e r o f July 29 , 20 11 , which inco r rec t ly asser ted tha t theM onroe P ubl ic Scho ol D istr ic t ("Distr ic t") is not in violat ion of the Lease . As set for th below ,w e again request tha t the Dis t r ic t com ply w i th the Lease term s, and th is i s fu r ther not ice ofbreach.

A s a p r e li m i n a r y m a t te r w e n o t e t h a t , w h i le t h e D i st ri c t c o n ti n u e s to m a k e b r o a ds ta tem ents about dec reases in fund ing, i t has no t provided any docum enta tion suppor t ing th iscla im despite the landlord 's pending pub l ic records requests and other w ri tten requests for thisinform at ion. The Dist rict long a go co uld have provided not only the financial data support ing i tsa l leged c la im but a l so a l l in te rna l and Board docum ents, inc lud ing em ai l , m em oranda o r o therdocum ents addressing the decision to seek term ination of the Lease.

M u c h m o r e i m po r t a n tl y , h o w e v e r , e v e n i f t h e D i s t ri c t p r o v i d e d s u c h s u ppo r t in gdo cum entat ion, i ts purported term inat ion, contrary to the claim s in your le t ter , is not within thes c o p e o f S e c t i o n 2.3 of the Lease, and the D ist rict lack s the authori ty to termina te the Lease ont h a t b a s i s . T e r m i n a t i o n u n d e r S e c t i o n 2 . 3 r e q u i r e s " a c h a n g e i n s t a t e l a w , r u l e , r e g u l a t i o n and/ors t a t e f l m d i n g t h a t i s beyond the Te nant's control." I t a p p e a r s t h a t t h e D i s t r i c t d o e s n o t l a c k t h efunds necessary to m eet the Lease obl igat ions or to operate the program s current ly operated inthe Leased space, but rather desires to spend those funds in other w ays. For exam ple, your le t ternotes that it is "mo re cost -effect ive for the Dist rict to operate i t s rem aining program s in owne d,ra ther than leased fa ci l i ties ." This is an internal bud getary d ecision clear ly w ithin the D istric t 'scon t ro l , and i s no t a bas i s f o r t e rm ina tion under Sec t ion 2 .3 . The Lease d oes no t en t it le t he


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Dist rict to terminate s imply bec ause, under current econo m ic condi t ions, the Lease is no longerthe m ost "cost-effective" me ans of m eeting the D istr ic t 's needs.

Termination under Section 2.3 also requires that the current use is no longer"acceptab le ." This clause was included in the Lease to reflect the fact that , when the Lea se wa sen te r ed , the S ky Va l l ey a l te rna t ive second a ry ed uca t ion p rog ram w as " exper im en ta l. " Thepar t i es ackno w ledge d the r i sk that , af te r an in i t ia l " t r ia l" per iod , the State m ight deem theexperim ent to have fa i led and el iminate funding for that specif ic program , thereby m aking theuse no lo nger "acce ptable." The Distr ic t 's let ters , how ever , indicate that this has not occu rred:the program is cont inuing and i s funded , but the Dis t r ic t s imply w ants to m ove i t to ano therloca t ion. The fac t tha t the D is t ric t wishes to term inate the Lease , by i t se l f , is not eno ugh torender the use "unacceptable ." I f i t we re , this clause w ould b e rendered superfluous, contrary tow ell-established principles of contract interpretation. See Wagner v. Wagner, 95 W n.2d 94 , 101(1980) ("An interpretation of a w ri t ing w hich gives effect to al l of i t s provis ions is favored overone w hich renders some of the language m eaningless or ineffect ive.").

Final ly , your sugg est ion tha t the D is t r ic t 's pr ior a t tem pts to term inate the Lease a resuf f ic ien t i s cont ra ry to W ashington law . None o f the D is tr ic t 's prev ious l e t te r s provided therequi red no t ice to F rye lands tha t the D is tr ic t in tended to t e rmina te , the Lease in i ts en t i re ty ."Pow ers o f t e rmina t ion m ust be exerc ised s t r ic t ly in the ma nner provided in the te rm ina t ionclause." Tacoma Rescue Mission v. Stewart, 155 W n. App. 250, 255 (201 0 ) . Fur the rm ore , a"not ice to terminate a lease general ly to be effect ive must be unequivocal and uncond it ional andm us t be such as to be fu l ly unders tood by the rec ip ient" Bright v. Coastal Lumber Co;, CIV. A.2:89-0258 5 1991 W L 337362 (S .D .W . Va . J an . 31 , 1991 ) affd, 9 6 2 F . 2 d 365 (4th Cir . 1992 )(quoting Hix v. Roy, 139 Cob . 457, 459-60, 340 P.2d 438, 439-40 (1959)).

None of the previous letters gave an "unequivocal and unconditional" notice ofterminat ion pursuant to the terms of the Lease. R ather , the D istric t 's previous correspond enceuniform ly indicated that the Dist rict intended to term inate the Lease only w ith respect to certainport ions of the leased propert ies , but to cont inue rent ing other port ions of the pro perty under theterms o f the exist ing Lease. D espi te the recent suggestion in your let ter , nowhere did the D istr ic tindicate that i t intended to term inate the Lease in i t s ent i re ty and negot iate an ent i re ly new leasefor the remaining portions:

On Feb rua ry 23 , M r . Mann ix w ro t e : "As o f t he d a te o f t h is , c om m un iqu we are notcontemplating terminating the portion of the lease that involves 'Space D' of 'BuildingA' , o the rwise known a s the Summ it Program."On Feb ruary 28, w hen the Dist rict official ly announced i ts at tempt to part ial ly terminatethe lease , M r. Ma nnix wro te: "we he reby no t i fy you that the dis t r ict intends to terminatethe l ease i t cur ren t ly ha s fo r portions of the property held by Frye lands Sixth AvenueLLC ." Mr . M annix w ent on : "To c la r i f y , we be l i eve tha t the po r t i ons o f the l ea seconc erning 'Space A ' , 'Space B ' , and 'Space C ' in 'Bui ld ing B ' , as w el l as 'Spac e E ' in

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'Building C' - according to the sixth amendment to the original lease agreement - wouldbe impacted. As of this date we are not contem plating terminating the portion of thelease that involves 'Space 1)' of 'Building A', otherwise known as the SummitP r o g r a m . "On March 30, the District attempted to terminate another portion of the lease on apiecemeal basis: "we are hereby formally providing you with six months notice oftermination of that portion of the Summit Program lease informally known as the'gym." Again, Mr. Mannix reiterated that the District did not intend to tenninate ther em a in d e r o f t h e l e a s e : " W e d e s i r e t o continue to lease t h e c l a s sr o o m , o f f ic e a n d s u p p o r tspaces utilized by the Summit Program at that same location, and would like to meet todiscuss the prorated amount of the lease payment for the area we desire to continueopera t ing ."Nor can a defective notice be retroactively cured by a later "clarification." Chinatown

Apartments, Inc. v. Chu Cho Lam, 51 N.Y.2d 786, 787, 412 N.E.2d 1312, 1313 (1980) ("sincethe right to terminate the tenancy pursuant to the terms of the lease was dependent upon serviceo f a n a d eq u a t e n o t ic e , t h e s u b s eq u en t a m en d m en t o f t h e p e t i ti o n [ ]c o u l d n o t o p e r a t e r e t ro a c t i v e l yto cure a defect in the notice"); Paradise v. Augustana Hosp. & Health Care Ctr., 2 2 2 I l l. A p p .3d 672, 673, 58 4 N.E.2d 326, 327 (Ill. App. Ct. 1991) (rejecting party's claim that later notice"c la r i f i ed" a p rev ious , de f ec t ive no t ice fo r purposes o f f ix ing the te rm ina t ion da te o f a con t r ac t ) .

To make clear, as your letter and the District's July 28 letter appear to concede, theDistrict has no right under the Lease to effect a partial termination. See, e.g. Scenic GalvestonInc. v. Infinity O utdoor, Inc., 151 F.Supp.2d 812, 816 (S.D. Tex. 2001) ("From a plain reading ofthe contractual provision.. . it is clear that Defendant did not have the right to partially terminatethe contract."); In re Penn Central Transp. Co., 354 F.Supp. 776, 777 (E.D. Penn. 1972) ("Itsuffices to point out that there is no provision in the lease which would authorize a partialtermination. The present petition represents a unilateral attempt to reform the lease documents.The petition will be denied."); Curtis v. Am. Energy Dev., Inc., No. 2000-L-133, 2002 WL1357726, at *4 (Ohio Ct. App 2002) ("The affidavit could not partially terminate the lease,because a partial change would unilaterally alter the lease, which is prohibited by the statute off rauds .") .

The District's July 28, 2011 Notice of Termination of Lease was the first communicationin which the District indicated intent to terminate the Lease in its entirety. Therefore, even if theDistrict had a right to terminate the Lease under Section 2.3, which it does not, the six-montht e rm i n a ti o n p e r io d w o u l d b e g i n o n J u l y 2 8 , 2 0 1 1 .

T h e D i s tr i c t is o b l i g a t ed t o c o n t in u e t o p e r f o r m u n d e r t h e L ea s e , i n c l u d in g b u t n o t l im i t edto the payment of rent. Any failure of the District to meet the Lease terms will result in litigationto enforce the Lease. The landlord sincerely hopes that will not be necessary.3JPage


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I f you ha ve any ques t ions rega rd ing the l andlord ' s pos i t ion o r w ish to d iscuss th is m a t te rfur ther , please do no t hes i tate to contact m e.

Very Truly Yours ,

M ichae l A. Goldfa rbKELLEY, DON ION, GILL,H U C K & G O L DF A R B , P LL C .

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Goldfarb Correspondence Dated Aug 05 2011

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