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Crown Financial Corporation v. McDonald's Corporation

United States District Court, D. New Jersey

May 6, 2014

CROWN FINANCIAL CORPORATION, Plaintiff,
v.
McDONALD'S CORPORATION, Defendant.

Christopher Gibson, Esq., William F. Gill, IV, Esq., Maureen T. Coghlan, Esq., ARCHER & GREINER, P.C., Haddonfield, New Jersey, Counsel for Plaintiff.

August W. Heckman, III, Esq., Larry L. Turner, Esq., Timothy Browne Collier, Esq., MORGAN, LEWIS & BOCKIUS, LLP, Princeton, New Jersey, Counsel for Defendant.

OPINION

JOSEPH E. IRENAS, Senior District Judge.

Presently before the Court is McDonald's Motion for Reconsideration arguing that this Court clearly erred when it granted Crown Financial's Motion for Partial Summary Judgment concerning interpretation of the parties' long-term commercial lease. The challenged Order and Opinion decided two Motions for Partial Summary Judgment, both filed by Crown. The instant Motion for Reconsideration only challenges the first motion decided, concerning whether the Lease permits Crown to accept Crown, Cork & Seal Master Trust's offer to lease the premises at issue beginning October 12, 2013, as opposed to October 12, 2028.[1]

For the following reasons, McDonald's Motion for Reconsideration will be denied.

I.

The Court assumes familiarity with the underlying Opinion and Order, available at 2013 WL 5963005.

The Lease provides for a 25 year term with five "options to extend the term."[2] Paragraph 16 of the Lease allows Crown to accept bona fide offers to lease the premises "for a term commencing at or after the term of this Lease." Id. at *2. The previous Opinion and Order rejected McDonald's argument that "the Lease contemplates a singular Lease term, the duration of which can be extended, " Id. at *3, and accepted Crown's interpretation that the Lease provides for an initial 25-year term with five, individual, successive five-year extension terms.

II.

A motion for reconsideration may be granted on the ground that vacating the order is necessary to correct a clear error of law or prevent manifest injustice. North River Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194, 1218 (3d Cir. 1995).

III.

In adopting Crown's proposed interpretation of the Lease the Court explained,

The Court cannot accept McDonald's proposed interpretation of the Lease. The Lease was the result of a significant business transaction between two sophisticated parties dealing at arm's length. It is implausible that the parties intended that McDonald's would pay the same rent for up to [50] years, regardless of inflation or market rates.
Crown correctly observes that the Lease contains no rent escalation clause. The absence of such a clause is important because it leaves Paragraph 16 as the sole mechanism for adjusting rent over the potential [50]-year life of the lease. The only way to give effect to such a mechanism is to interpret Paragraph 16 as granting the lessor (Crown) the right to accept bona fide offers and terminate McDonald's lease at the ...

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