Cathay Cathay, Inc., et al. v. Vindalu, LLC, et al., C.A.

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STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS PROVIDENCE, SC. SUPERIOR COURT [Filed: July 5, 2018] CATHAY CATHAY, INC. and SURF & TURF GRILLE, INC. v. VINDALU, LLC d/b/a GOURMET INDIA, and ROUSE PROVIDENCE, LLC : : : : : : : : C.A. No. PC-2005-5324 DECISION LICHT, J. Before this Court is the sticky question of which competing food-court vendors had the right to sell certain oriental foods—primarily various types of rice—at the Providence Place Mall (Providence Place or the Mall). Two vendors, Cathay Cathay, Inc. (Cathay Cathay) and Surf & Turf Grille, Inc. (Surf & Turf) (collectively Plaintiffs), brought the instant action against fellow food-court competitors Vindalu, LLC d/b/a Gourmet India (Gourmet India) and Japan Café of Providence Place (Japan Café), as well as their landlord Rouse Providence, LLC (Rouse) (collectively Defendants). Facts and Travel1 The facts of this case have already been recounted ad nauseam over the course of two prior trips to the Rhode Island Supreme Court. Accordingly, for a more complete review of the history of this prolonged dispute, this Court directs those who are new to this matter to Cathay Cathay, Inc. v. Vindalu, LLC, 962 A.2d 740 (R.I. 2009) (Cathay Cathay I) and Cathay Cathay, Inc. v. Vindalu, LLC, 136 A.3d 1113 (R.I. 2016) (Cathay Cathay II). 1 Additional facts will be provided in the Analysis portion of this Decision. A The Leases The core facts of this litigation center around four leases entered into by Providence Place Group, LP (PPG), the original owner of the Mall, or Rouse, and the vendors of four food-court restaurants. Terms of each lease relevant to this case are summarized on Exhibit 1 of this Decision. i Cathay Cathay Lease To begin, we must travel back in time to December 29, 1995, nearly four years before Providence Place opened its doors for business. On that date, David Chu (Mr. Chu) signed a lease agreement (Cathay Cathay Lease) with PPG. (Pls.’ Ex. 1; Stipulated Fact 2.) Pursuant to Section 1.03 of the Cathay Cathay Lease, Mr. Chu agreed to operate under the trade name Cathay Cathay for the purpose of conducting business as a Chinese restaurant in the Mall. (Pls.’ Ex. 1.) Among the terms of the Cathay Cathay Lease was Section 1.04(a), which provides for the exclusive right of Cathay Cathay to serve a number of menu items, including “[w]hite rice— boiled or steamed” served either “alone or in combination with any other foods.” (Pls.’ Ex. 1, Ex. F thereto.)2 The Cathay Cathay Lease provided that if the Landlord violated this provision the Tenant could elect to reduce its rent by forty percent as its exclusive remedy. Id. at Section 2 The full language of Section 1.04(a) of the Cathay Cathay Lease states as follows: “(a) Landlord covenants and agrees that it will not enter into a lease with a tenant for space within the [Mall], other than Tenant, which allows, the operation of a restaurant providing for over-thecounter (“take out”) service selling the items set forth on Exhibit F attached hereto and made a part hereof. This exclusive shall exist for so long as Tenant is not in default beyond the applicable cure period. In the event Tenant is in default beyond the applicable cure period, Landlord shall have the option of terminating this exclusive in addition to any and all other remedies provided for in this Lease. In addition, this exclusive shall not apply to any anchor tenant or major store.” (Pls.’ Ex. 1.) 2 1.04(b). Cathay Cathay began operating in January 2000. Cathay Cathay II at 1115. Cathay Cathay ceased operations and vacated the Mall when its lease expired on August 31, 2009. (Stipulated Fact 4.) ii Japan Café Lease In 1999, prior to Cathay Cathay beginning operations in the Mall, PPG entered into a lease with Japan Café (Japan Café Lease). Cathay Cathay II at 1115. The Japan Café Lease provided that Japan Café would sell Japanese food and contained the following language: “Notwithstanding anything contained in this Lease to the contrary * * *, in no event shall Tenant sell any of the items listed on [E]xhibit I, whether by name or the same or substantially similar in content or form and under any other name.” Id. The list of foods provided in Exhibit I of the Japan Café Lease was nearly identical to the list of foods that Cathay Cathay had contracted for the exclusive rights to sell. Id. Japan Café opened for business on November 24, 1999, prior to Cathay Cathay. (Stipulated Fact 11.) Japan Café vacated its restaurant on May 29, 2007. (Stipulated Fact 12.) iii Surf & Turf Lease On November 10, 2000, Mr. Chu, the owner of Cathay Cathay, entered into a second lease agreement (Surf & Turf Lease) with PPG. (Pls.’ Ex. 2; Stipulated Fact 5.) That lease provided for the operation of a second oriental restaurant, Surf & Turf, in the Providence Place food-court. Id. Specifically, the Surf & Turf Lease granted Surf & Turf the exclusive right to sell “oriental style foods,” which were enumerated in an accompanying list, Exhibit I, which paralleled the list of foods identified in the Cathay Cathay lease. (Pls.’ Ex. 2.) The sole 3 distinction between the list in the Cathay Cathay Lease and the list in the Surf & Turf Lease is that Surf & Turf was granted the exclusive right to sell “rice—boiled or steamed,” while Cathay Cathay’s exclusive right was over the less restrictive “[w]hite rice—boiled or steamed.” (Pls.’ Exs. 1 and 2.) In addition to the items specifically enumerated within Exhibit I, Section 1.04(a) of the Surf & Turf Lease also gave Surf & Turf exclusive domain over the following: “any other foods that are distinctively part of Oriental cuisine served in Oriental (i.e., Chinese, Japanese, Malaysian, Thai, Korean, Filipino, Vietnamese, etc.) restaurants and any foods or dishes substantially similar thereto in taste, appearance, style and/or ingredients, whether or not styled or denominated as an Oriental food dish. However, notwithstanding the foregoing, the incidental sale or use of rice as a side dish or ingredient shall not constitute a violation of Tenant’s exclusive, unless it is part of a [sic] oriental style food.” (Pls.’ Ex. 2.)3 The Surf & Turf Lease also provided that if the Landlord violated this provision, the Tenant could elect to reduce its rent by forty percent as its exclusive remedy. Id. at Section 1.04(b). Surf 3 The full language of Section 1.04(a) of the Surf & Turf Lease states as follows: “(a) Other than (i) Tenant or (ii) any tenants having a lease predating the date of this Lease and operating in the [Mall] as of the date of this Lease or any replacement tenant thereof with a similar use to such tenants, Landlord covenants and agrees that it will not enter into a lease with or lease to a tenant for space within the [Mall] providing over-the-counter (“take out”) service selling oriental style foods in an oriental style restaurant (as defined herein), including but not limited to the items set forth on Exhibit I attached hereto and made a part hereof by reference. As used herein, the term “oriental style restaurant” is a restaurant that sells a substantial amount of oriental style food dishes. As used herein the term Oriental style foods include (but is not limited to) the items listed on Exhibit I and any other foods that are distinctively part of Oriental cuisine served in Oriental (i.e., Chinese, Japanese, Malaysian, Thai, Korean, Filipino, Vietnamese, etc.) restaurants and any foods or dishes substantially similar thereto in taste, appearance, style and/or ingredients, whether or not styled or denominated as an Oriental food dish. However, notwithstanding the foregoing, the incidental sale or use of rice as a side dish or ingredient shall not constitute a violation of Tenant’s exclusive, unless it is part of a [sic] oriental style food. This exclusive shall exist for so long as Tenant is not in substantial default beyond the applicable cure period. In the event Tenant is in substantial default beyond the applicable cure period, Landlord shall have the option of terminating this exclusive in addition to any and all other remedies provided for in this Lease. In addition, this exclusive shall not apply to any anchor tenant or major store.” (Pls.’ Ex. 2.) 4 & Turf opened for business on October 28, 2001. (Stipulated Fact 6.) Although the Surf & Turf Lease was scheduled to expire on October 28, 2016, Surf & Turf ceased operating and vacated the Mall on January 30, 2011. (Stipulated Facts 7 and 8.) iv Gourmet India Lease The fourth and final lease at issue in this case was entered into between Gourmet India and Rouse on January 7, 2005 (Gourmet India Lease), allowing Gourmet India to operate an Indian food restaurant in the Mall food-court. Cathay Cathay II at 1115. Section 1.1(F.) of the Gourmet India Lease contained the following provision: “Tenant is expressly prohibited from offering for sale at the Premises white rice or fried rice. In addition, Tenant is expressly prohibited from selling Oriental style foods, including but not limited to those items listed on Exhibit ‘I’ attached to this Lease and incorporated herein by reference and any other foods that are distinctly part of Oriental cuisine served in Oriental (i.e., Chinese, Japanese, Malaysian, Thai, Korean, [F]ilipino, Vietnamese, etc.) restaurants and any foods or dishes substantially similar thereto to [sic] in taste, appearance[,] style and/or ingredients, whether or not styled or denominated as an Oriental food dish.” Id. at 1115-16. Exhibit I of the Gourmet India Lease sets out a list of items that Gourmet India was prohibited from selling. Id. at 1116. That list closely mirrored the food items which Cathay Cathy and Surf & Turf had an exclusive right to sell. Id. However, as a caveat, the Gourmet India Lease also provided that: “[n]otwithstanding anything to the contrary contained in Exhibit ‘I’[,] Landlord warrants that Tenant’s incidental sale or use of Basmati Rice as a side dish or ingredient shall not be deemed a violation of the prohibition of the sale of rice.” Id. Gourmet India began operating in the Mall food-court on June 18, 2005. (Stipulated Fact 15.) Gourmet India vacated its foodcourt restaurant on October 31, 2014. (Stipulated Fact 16.) 5 Accordingly, as of Halloween 2014, all of the vendors at issue in this case had ceased their operation in the Mall food-court. B Summary of Testimony While specifics will be discussed in greater detail in the analysis, an overview of the testimony presented at trial is summarized here. At the outset, the Court can state that the fact witnesses were all credible. This saga is over twenty years old with the most crucial time period being twelve to eighteen years ago. The Court attributes any disparity in facts among the witnesses to fading memories and not to a lack of candor or truthfulness. Mr. Chu testified at the hearing in this case that he has worked in the Chinese restaurant industry for over forty years. In total, Mr. Chu testified that he had owned four Chinese restaurants in mall food-courts prior to opening his two restaurants at Providence Place. Mr. Chu testified that in 1987 he negotiated leases for two restaurants in the food-court of the Kingston Mall in Massachusetts. Mr. Chu indicated that his restaurants at the Kingston Mall performed adequately at first, but eventually a Cajun restaurant, owned by people of Chinese descent, entered the Kingston Mall and began serving the same menu items as Mr. Chu’s restaurants, specifically, white rice. At the time, John Charters (Mr. Charters) was the General Manager of the Kingston Mall. According to Mr. Chu’s testimony, he was unable to take action against the Cajun restaurant because his lease said that he would be the only Chinese food restaurant in the food-court and Cajun food is not technically Chinese food. Thereafter, Mr. Chu testified that Mr. Charters approached him about entering Providence Place. Mr. Chu indicated that he saw Providence Place as a big opportunity, as the 6 Mall was three levels, was home to a number of large stores, as well as a movie theatre, a Dave & Buster’s, and was centrally located in the downtown area with easy access to Route 95. However, Mr. Chu testified that he was concerned about his experience in the Kingston Mall and therefore told PPG that he wanted a better lease, with more exclusive protections. Mr. Chu stated that he was told he had to pay a higher price for this exclusive and indicated that he was willing to do so. As a result, a list of thirteen exclusive menu items was created, and Mr. Chu testified that he then agreed to pay double or triple the rent he would have paid without the exclusives. In fact, both parties have stipulated that Cathay Cathay agreed to pay a premium in order to secure the exclusives in the Cathay Cathay Lease. (Stipulated Fact 10.) Additionally, Mr. Chu testified that Mr. Charters told him that the Mall was going to put another Chinese food restaurant into the food-court unless he opened a second restaurant. As such, Mr. Chu indicated that he felt he had no choice but to open Surf & Turf. Mr. Charters contradicted Mr. Chu’s testimony and indicated that he never gave Mr. Chu any such ultimatum. While the memories of the credible witnesses may differ on this fact, it is of no import, as Mr. Chu ultimately entered into the second lease. Mr. Chu also testified he invested approximately $1,400,000 to build and develop Cathay Cathay and Surf & Turf. During the trial, Plaintiffs offered the prior testimony of N. Irving Lemack (Mr. Lemack), an expert in food analysis.4 Mr. Lemack testified that he organoleptically5 evaluated the foods at 4 Mr. Lemack is eighty-two years of age and currently resides in Florida. Additionally, he has been diagnosed with Parkinson’s disease and due to his deteriorating health was deemed unfit to travel and testify. Accordingly, this Court permitted Mr. Lemack’s prior testimony in this matter, provided on December 8, 2005, December 9, 2005, and January 13, 2006, to be admitted into evidence pursuant to R.I. R. Evid. 804(b)(1). Rule 804 addresses hearsay exceptions when the declarant is unavailable to testify. 5 The American Heritage Dictionary of the English Language (4th ed. 2000) defines “organoleptic” as “[r]elating to perception by a sensory organ” or “[i]nvolving the use of sense organs.” 7 issue in this case using his senses, namely, by examining the foods’ color, odor, flavor and texture. (Pls.’ Ex. 64(1) at 241.) Mr. Lemack testified that there are only two forms of rice, brown and white.6 Id. at 260. Mr. Lemack testified that he purchased rice at Japan Café, examined it organoleptically and under magnification, and found that “[i]t was categorically white rice, it had no bran.” Id. at 264. Mr. Lemack testified that he also purchased “Saffron Rice” at Gourmet India and organoleptically tested that dish in addition to examining it under magnification. Id. at 285. According to Mr. Lemack, the “Saffron Rice” was simply a “white rice that had been colored.” Id. Mr. Lemack testified that there is no such thing as yellow rice, but he had seen white rice with an artificial color called yellow rice sold at the supermarket. Id. at 269. Mr. Lemack further testified that basmati rice is an aromatic variety of rice, and that, as is true of all rice, it may be either white or brown. Id. at 287-89. Mr. Lemack also noted that Cathay Cathay does not use basmati rice in any of its menu items. (Pls.’ Ex. 64(2) at 325.) Additionally, Mr. Lemack testified that despite the presence of yellow coloring, the rice he purchased from Gourmet India tasted like white rice. (Pls.’ Ex. 64(1) at 290). Also, Mr. Lemack testified that the rice he ordered from Gourmet India did not stand out as basmati rice and that he took no notice of the rice’s aromatic flavor because he was not evaluating it for that purpose. (Pls.’ Ex. 64(2) at 299.) Mr. Lemack did note that the rice he purchased from Gourmet India was “bland” and that he tasted no particular seasoning or saffron. Id. Defendants offered no expert testimony of their own to contradict Mr. Lemack’s opinions. 6 According to Lemack’s testimony, “the distinction between brown and white rice has more to do with the milling process than with color. When rice is harvested, the paddy rice is either parboiled or allowed to dry. The husks are then removed, resulting in brown rice. It may also be further milled to remove the bran and germ, leaving only the endosperms, which is known as white rice.” Cathay Cathay I at 744 n.6. 8 Allan Feldman (Mr. Feldman), an expert economist, testified on behalf of the Plaintiffs. Mr. Feldman testified regarding the monetary damages sustained by Plaintiffs. Mr. Feldman also offered testimony regarding the set-up costs incurred by Cathay Cathay and Surf & Turf. The Court rejected Mr. Feldman’s testimony on lost profits because it was purely speculative and based upon Mr. Chu’s anticipated sales when he signed the leases. Mr. Feldman never tested the accuracy of those predictions, nor did he make an independent estimate of sales. Furthermore, the Court did not accept his calculations of damages from the forty percent rent reduction because he did not make appropriate calculations in accordance with the lease terms. Arnold Cohen (Mr. Cohen), Mr. Chu’s attorney, provided testimony regarding his representation of Mr. Chu and his numerous correspondence with the Mall representatives. Those letters are discussed in greater detail below; however, Mr. Cohen testified that the Mall representatives urged Plaintiffs to continue to pay its heightened rent and not exercise the forty percent rent reduction. Mr. Cohen testified that, in return, the Mall attorney promised to join Cathay Cathay in any action taken to enjoin Japan Café from violating the exclusivity provision set out in the Cathay Cathay Lease. Mr. Cohen also testified that he was informed that if Mr. Chu elected to exercise the forty percent rent reduction he would be in default, and the Cathay Cathay Lease could be terminated. Mr. Charters and Mark Dunbar (Mr. Dunbar), the current General Manager of the Mall, also provided testimony on behalf of the Defendants regarding their interactions with Mr. Chu. In essence, both testified that Mr. Chu would complain to them regarding his perceived violations of his exclusivity provision, and they would then forward those concerns to the Mall’s legal counsel. Mr. Charters also testified that he spoke on several occasions with Japan Café 9 about Mr. Chu’s complaints in an effort to insure that Japan Café was not violating the exclusivity provisions of Mr. Chu’s leases. C Travel On October 14, 2005, Plaintiffs filed this action against Japan Café, Gourmet India, and Rouse. Cathay Cathay II at 1116. Plaintiffs sought injunctive relief to enjoin Japan Café and Gourmet India from selling menu items over which they claimed to have exclusive rights to sell. Id. Additionally, Plaintiffs requested that Rouse be required to enforce its leases with Plaintiffs against Japan Café and Gourmet India. Id. Plaintiffs requested a jury trial seeking compensatory damages. Id. Subsequently, Plaintiffs filed an Amended Complaint. Id. The Amended Complaint included counts for tortious interference against Japan Café and Gourmet India. Id. Additionally, Plaintiffs’ Amended Complaint alleged a third-party contractual interest in the Gourmet India Lease and sought an injunction to enforce the provisions of that agreement. Id. i Cathay Cathay I On November 30, 2005, a hearing on the preliminary judgment was held in the Superior Court. Id. Following the first full day of testimony, the trial justice indicated that he was inclined to consolidate the hearing with the trial on the merits under Rule 65 of the Superior Court Rules of Civil Procedure.7 Cathay Cathay I at 743. On the following day, the trial justice consolidated the matter for a trial on the merits without any objection from either party. Id. After the conclusion of Plaintiffs’ presentation of evidence, Gourmet India moved for judgment on partial 7 Rule 65(a)(2) of the Superior Court Rules of Civil Procedure states, in pertinent part: “Before or after the commencement of the hearing of an application for a preliminary injunction, the court may order the trial of the action on the merits to be advanced and consolidated with the hearing of the application.” 10 findings under Rule 52(c) of the Superior Court Rules of Civil Procedure (Rule 52(c)).8 Id. at 744. Gourmet India argued that the plain language of the Gourmet India Lease explicitly permitted the sale of basmati rice and that Plaintiffs had failed to show any wrongful conduct necessary to sustain its tortious interference with contractual relations claim. Id. Subsequent to the conclusion of the proceeding, the trial justice granted Gourmet India’s motion for judgment on partial findings in accordance with Rule 52(c) and, on January 27, 2006, entered a final judgment pursuant to Rule 54(b) of the Superior Court Rules of Civil Procedure. Id. The trial court opined that Plaintiffs real interest was to ensure that no other vendors of oriental style cuisine would enter the food-court. Id. Additionally, the trial court found that Indian cuisine could not reasonably be considered oriental style cuisine. Id. Further, the trial court concluded that the parties to the contracts between Mr. Chu and the Mall did not intend for basmati rice to be encompassed within those agreements. Id. Thereafter, the Plaintiffs timely appealed, setting the stage for the Supreme Court’s ruling in Cathay Cathay I. Id. It is worth noting that neither Japan Café nor Rouse were parties to that appeal and that the claims against those two parties remained in the Superior Court. Cathay Cathay II, 136 A.3d at 1117. On January 9, 2009, the Supreme Court rendered its decision in Cathay Cathay I. The Supreme Court affirmed the judgment on Plaintiffs’ contractual claim for injunctive relief and damages against Gourmet India, but on different grounds from those relied upon by the trial justice. Cathay Cathay I, 962 A.2d at 747-48. Specifically, the Supreme Court 8 Rule 52(c) of the Superior Court Rules of Civil Procedure provides, in relevant part: “If during a trial without a jury a party has been fully heard on an issue and the court finds against the party on that issue, the court may enter judgment as a matter of law against that party with respect to a claim or defense that cannot under the controlling law be maintained or defeated without a favorable finding on that issue, or the court may decline to render any judgment until the close of all the evidence.” 11 found that Section 1.1(F.) of the Gourmet India Lease constituted a guaranty by Rouse that Gourmet India could sell either white or brown basmati rice. Id. at 746-47. The Supreme Court noted that because Plaintiffs’ rights as third-party beneficiaries were confined to enforcing the terms of the lease, it was clear that they would not be entitled to an injunction preventing Gourmet India from selling white basmati rice. Id. at 747. As such, the Supreme Court found that judgment was entered appropriately in favor of Gourmet India on Plaintiffs’ third-party beneficiary claim. Id. Secondly, the Supreme Court vacated the ruling on Plaintiffs’ claim of tortious interference and remanded the matter to the Superior Court to conduct a new trial on that Count. Id. at 748. In ruling on the tortious interference claim, the trial justice simply stated that “there is nothing in the contract between Gourmet India and the [M]all to suggest that they were trying to somehow subvert or undermine the exclusive that Mr. Chu enjoyed as a result of his lease with the [M]all.” Id. at 747. The Supreme Court held that “the trial justice’s conclusory statement concerning plaintiffs’ tortious interference claim is insufficient to satisfy the requirements of Rule 52(c) that any judgment thereunder be supported by findings of fact and conclusions of law.” Id. ii Japan Café Injunction In the interim, on May 4, 2006, while Plaintiffs’ appeal of the Gourmet India judgment was still pending before the Supreme Court, the trial justice issued another bench decision. Cathay Cathay II, 136 A.3d at 1117. In that decision, the trial justice focused almost exclusively on the liability of Japan Café and the issue of whether Japan Café violated its lease by selling 12 white rice and other foods that fell within the exclusive domain of Cathay Cathay.9 Id. The trial justice answered that question in the affirmative, granting Plaintiffs’ request for injunctive relief against Japan Café. Id. The trial justice briefly noted that Rouse owed Plaintiffs a duty of good faith and fair dealing, but made no findings on the issue of whether or not Rouse had breached that duty by remaining idle as Japan Café breached its lease. Id. The Superior Court’s written order, dated May 17, 2006, granted Plaintiffs’ request for injunctive relief, but did not grant Plaintiffs any relief against Rouse. Id. iii Cathay Cathay II In 2012, the Superior Court, now handling all the remaining claims, including those remanded in Cathay Cathay II, entered partial final judgment in favor of Rouse after a second trial justice concluded that the May 4, 2006 decision granting Plaintiffs injunctive relief against Japan Café “also included a decision denying plaintiffs’ breach-of-contract claims against Rouse and as a third-party beneficiary of Japan Café’s contract.” Id. at 1119. However, the Supreme Court disagreed, holding that “the first trial justice adjudicated only the claims for injunctive relief and not plaintiffs’ contractual claims against Rouse.” Id. at 1120. In sum, in Cathay Cathay II, the Supreme Court found that “there simply was no basis for the second trial justice to conclude that the May 4, 2006 decision resolved the claims against Rouse.” Id. The Plaintiffs also appealed the trial justice’s September 27, 2012 denial of their second motion to amend the Complaint based on res judicata, futility, and judicial estoppel. Id. at 1118-21. However, the Supreme Court declined to entertain that issue on the merits. Id. at 1121. The Supreme Court 9 Surf & Turf could not enforce its menu item exclusives against Japan Café because the Japan Café Lease predated the Surf & Turf Lease. (Stipulated Fact 9.) 13 thus vacated the entry of partial final judgment and remanded the case once more to the Superior Court. iv Proceedings Post Cathay Cathay II Subsequent to the Supreme Court’s second decision, the Superior Court granted leave for Plaintiffs to amend their Complaint a second time. (Second Am. Compl.). The Second Amended Complaint contains six Counts, five of which are applicable to Rouse: Count I, alleging Rouse violated both the covenants of Section 1.04 of its lease with Cathay Cathay and the covenant of good faith and fair dealing when Rouse entered into its lease with Japan Café; Counts II and III, alleging Rouse violated the covenants of Section 1.04 of its lease with Cathay Cathay and Surf & Turf, respectively, when Rouse entered into its lease with Gourmet India; and Counts V and VI are for bad faith, alleging that Rouse violated the covenant of good faith and fair dealing with Cathay Cathay and Surf & Turf, respectively, when Rouse entered into its lease with Gourmet India. In each Count, Plaintiffs request the rent reduction, pursuant to their lease with Rouse, lost profits, and other damages. Count IV does not involve Rouse, but instead alleges that Gourmet India tortuously interfered with the contracts between Plaintiffs and Rouse.10 Rouse also filed a counterclaim seeking both indemnification and breach of contract against Cathay Cathay and Surf & Turf. On November 2, 2016, Rouse moved for summary judgment on all claims against it, which Plaintiffs opposed. A hearing on that motion was held on June 6, 2017. On July 19, 2017, this Court issued an Order which granted in part and denied in part Rouse’s motion for summary 10 Plaintiffs have not pursued their claim against Gourmet India. No evidence was provided at trial in regard to Count IV of the Second Amended Complaint. As such, the Court will not address this Count. 14 judgment. Rouse’s motion for summary judgment, based upon the Doctrine of Judicial Estoppel and regarding the breach of the covenant of good faith and fair dealing, was denied. See July 19, 2017 Order. However, the Court did find that Rouse did not breach its contract with Cathay Cathay simply by entering into a lease with Japan Café, but made no finding on the issue of whether Rouse’s dealings with Japan Café breached the duty of good faith and fair dealing that Rouse owed to Cathay Cathay. Id. The Court also found that if a violation of Section 1.04 of Plaintiffs’ leases is ultimately found, Plaintiffs’ sole remedy would be limited to a forty percent rent reduction. Id. The Court did not decide the question of whether there could be additional damages resulting from a breach of the duty of good faith and fair dealing. This matter was tried upon the merits with the Court sitting without a jury over the course of three days from March 26, 2018 through March 28, 2018. The Court heard closing arguments of counsel on April 23, 2018. Analysis A Requirements of Rule 52 “When a trial justice presides over a nonjury trial, Rule 52(a) of the Superior Court Rules of Civil Procedure requires that he or she ‘find the facts specially and state separately [his or her] conclusions of law thereon.’” S. Cty. Post & Beam, Inc. v. McMahon, 116 A.3d 204, 210 (R.I. 2015) (quoting JPL Livery Servs., Inc. v. R.I. Dep’t of Admin., 88 A.3d 1134, 1141 (R.I. 2014)). Therefore, in a non-jury trial, this Court sits as the trier of fact as well as of law and “‘weighs and considers the evidence, passes upon the credibility of the witnesses, and draws proper inferences.’” Parella v. Montalbano, 899 A.2d 1226, 1239 (R.I. 2006) (quoting Hood v. Hawkins, 478 A.2d 181, 184 (R.I. 1984)). “Yet, this requirement does not mandate an expansive 15 analysis by the trial justice.” A. Salvati Masonry Inc. v. Andreozzi, 151 A.3d 745, 748 (R.I. 2017) (citing S. Cty. Post & Beam, Inc., 116 A.3d at 210). “‘Even brief findings and conclusions are sufficient if they address and resolve the controlling and essential factual issues in the case.’” Hilley v. Lawrence, 972 A.2d 643, 651 (R.I. 2009) (quoting Donnelly v. Cowsill, 716 A.2d 742, 747 (R.I. 1998)). ‘“[I]f the decision reasonably indicates that [the trial justice] exercised [his or her] independent judgment in passing on the weight of the testimony and the credibility of the witnesses it will not be disturbed on appeal unless it is clearly wrong or otherwise incorrect as a matter of law.”’ A. Salvati Masonry Inc., 151 A.3d at 748 (quoting JPL Livery Servs., Inc., 88 A.3d at 1141). The Supreme Court has frequently noted a strong preference for “avoid[ing] piecemeal appellate review by delaying entry of judgment until all claims involving all parties are ripe for disposition and entering judgment as to all only when that time arrives.” Metro Props., Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 934 A.2d 204, 207 (R.I. 2007) (quoting Robert B. Kent, et al., Rhode Island Civil and Appellate Procedure § 54:3 (West 2006)). The delay of the entry of judgment allows the Supreme Court to avoid the monotonous and inefficient assignment of “having to keep relearning the facts of a case on successive appeals.” Astro-Med, Inc. v. R. Moroz, Ltd., 811 A.2d 1154, 1156 (R.I. 2002) (quoting Jack Walters & Sons Corp. v. Morton Bldg., Inc., 737 F.2d 698, 702 (7th Cir. 1984)). In Cathay Cathay II, the Supreme Court stated, ‘“[w]e are more than persuaded that the [parties to this case] have had their day in court—and then some.”’ IDC Props., Inc. v. Goat Island S. Condo. Ass’n, Inc., 128 A.3d 383, 394 (R.I. 2015) (quoting Palazzo v. Alves, 944 A.2d 144, 155 (R.I. 2008)). The Court emphatically noted that ‘“[t]he time has come for this litigation to end.”’ Id. (quoting Palazzo, 944 A.2d at 155). The Court expressed frustration that this matter 16 had been taken up in the absence of a final judgment on two prior occasions and was clear that the Court would be “loath to consider more issues on appeal before the complete and final resolution of the case in the Superior Court.” Cathay Cathay II, 136 A.3d at 1121. Simply put, this case has been left simmering for far too long, and the time has come for this Court to render a final decision. Should the parties not find that decision palatable, this Court’s aim is to properly set the table for the Supreme Court to take this debate off the stove once and for all. B Gourmet India and Cathay Cathay In Count II of Plaintiffs’ Second Amended Complaint, Cathay Cathay alleges that Rouse breached Section 1.04 of the Cathay Cathay Lease by entering into the Gourmet India Lease, which expressly permitted Gourmet India to serve basmati rice. In turn, Rouse denies that it breached the Cathay Cathay Lease by entering into the Gourmet India Lease because Cathay Cathay’s exclusive was not intended to apply to the operation of an Indian food restaurant. Cathay Cathay, Rouse, and Gourmet India exchanged correspondence regarding the allegations set out in Count II of Plaintiffs’ Second Amended Complaint. Shortly before Gourmet India opened for operation, Mr. Chu sent a letter dated June 1, 2005 to both the Mall and Gourmet India. (Pls.’ Ex. 19.) In that letter, Mr. Chu informed Gourmet India that Cathay Cathy had exclusive rights to serve rice and certain other Chinese cuisine type dishes. Id. On June 26, 2005, Mr. Chu sent a follow up letter to the Mall complaining that Gourmet India had opened for business and started to serve rice. (Pls.’ Ex. 20.) On August 4, 2005, counsel for Gourmet India sent Mr. Chu’s counsel a reply letter stating that Gourmet India serves basmati saffron rice, not white rice, and that Gourmet India was permitted to serve basmati saffron rice by the landlord. (Pls.’ Ex. 21.) Similarly, on August 12, 2005, one of Rouse’s attorneys sent Mr. 17 Chu’s counsel a letter stating that the Mall’s position is that Gourmet India’s operation was not in violation of the terms of the Cathay Cathay Lease. (Pls.’ Ex. 22.) On August 14, 2005, Mr. Chu wrote to the Mall with fifteen days’ notice of Cathay Cathay’s intent to exercise the forty percent rent reduction set out in Section 1.04(b) of the Cathay Cathay Lease. (Pls.’ Ex. 23.) Rouse’s argument that Cathay Cathay’s exclusive was not intended to apply to the operation of an Indian food restaurant is of no moment. The language employed by the parties to a contract is the best expression of their contractual intent, and when that language is “clear and unambiguous, words contained therein will be given their usual and ordinary meaning and the parties will be bound by such meaning.” Singer v. Singer, 692 A.2d 691, 692 (R.I. 1997) (mem.) (citing Aetna Cas. & Sur. Co. v. Graziano, 587 A.2d 916, 917 (R.I. 1991)). Whether a contract’s terms are ambiguous is a question of law. Dubis v. E. Greenwich Fire Dist., 754 A.2d 98, 100 (R.I. 2000); Rotelli v. Catanzaro, 686 A.2d 91, 94 (R.I. 1996). A contract may be deemed ambiguous only if “it is reasonably and clearly susceptible of more than one interpretation.” Rotelli, 686 A.2d at 94. The Supreme Court has consistently held that “[i]n situations in which the language of a contractual agreement is plain and unambiguous, its meaning should be determined without reference to extrinsic facts or aids.” Clark–Fitzpatrick, Inc./Franki Found. Co. v. Gill, 652 A.2d 440, 443 (R.I. 1994) (citing Greenwald v. Selya & Iannuccillo, Inc., 491 A.2d 988, 989 (R.I. 1985)). Unambiguous contract language, therefore, renders the parties’ intent irrelevant. Hilton v. Fraioli, 763 A.2d 599, 602 (R.I. 2000). Here, the Court need not reach the question of the parties’ intent because the exclusive in the Cathay Cathay Lease was clear and unambiguous. There exists no ambiguity in the term “[w]hite rice—boiled or steamed.” (Pls.’ Ex. 1.) Simply put, the term “white rice” is not susceptible to more than one interpretation, and therefore, the intent of Rouse and Cathay Cathay 18 is wholly irrelevant. Accordingly, the parties are bound by the ordinary meaning of that language. While the trial justice in Cathay Cathay I based his ruling on a finding of intent, the Supreme Court admonished him for it, stating “[h]ere, the trial justice considered evidence adduced at trial in determining the issue of intent without first making the requisite finding of ambiguity.” Cathay Cathay I, 962 A.2d at 746. Specifically, the Supreme Court opined that “[t]he trial justice began his analysis by observing that ‘while, indeed, the language of the documents is crucial in many ways, what is just as important is the intent of the parties.’” Id. The Supreme Court found that this was “a clear misstatement of the applicable law.” Id. Accordingly, the original trial justice should not have considered the intent of the parties, and this Court also declines to consider the intent of the parties. In permitting Gourmet India to sell basmati rice, the Court finds that Rouse violated Section 1.04(a) of the Cathay Cathay Lease. Section 1.04(a) of the Cathay Cathay Lease provided that “[Rouse] covenants and agrees that it will not enter into a lease with a tenant for space within the [Mall], other than [Cathay Cathay], which allows, the operation of a restaurant providing for over-the-counter (“take out”) service selling the items set forth on Exhibit F.” (Pls.’ Ex. 1.) Among the items set forth in Exhibit F was “[w]hite rice—boiled or steamed.” Id. The term “white rice” is not ambiguous. The uncontroverted evidence before this Court is that Gourmet India served white rice and it did so with the permission of Rouse. Mr. Lemack testified that he purchased “Saffron Rice” at Gourmet India and organoleptically tested that dish. (Pls.’ Ex. 64(1) at 285.) According to Mr. Lemack’s uncontroverted testimony, the so-called “Saffron Rice” was simply “white rice that had been colored.” Id. Perhaps Rouse thought that basmati rice was not white rice, but Rouse produced no evidence to contradict Mr. Lemack. Simply put, once Rouse stepped into the paddy, it was charged with the obligation of knowing what type of rice it 19 was authorizing Gourmet India to sell. Had the Gourmet India Lease only allowed Gourmet India to serve brown basmati rice, there would be no violation. However, because the Gourmet India Lease did not specify that the basmati rice had to be brown, there is a clear violation of Cathay Cathay’s exclusive over the sale of white rice. C Gourmet India and Surf & Turf In Count III of Plaintiffs’ Second Amended Complaint, Surf & Turf alleges that Rouse breached Section 1.04 of the Surf & Turf Lease by entering into the Gourmet India Lease, which expressly permitted Gourmet India to serve basmati rice. In contrast, Rouse denies that it breached the Surf & Turf Lease because Surf & Turf’s exclusive was not intended to apply to the operation of an Indian food restaurant. Just as he did for Cathay Cathay, Mr. Chu sent a letter to the Mall and Gourmet India indicating that Surf & Turf had exclusive rights to serve rice and other types of Chinese foods. (Pls.’ Ex. 19.) The Mall’s representatives and Gourmet India both expressed the same position in regard to Surf & Turf as they had regarding Cathay Cathay; namely, that Gourmet India serves basmati saffron rice, not white rice, and that Gourmet India was permitted to serve this type of rice by Rouse. (Pls.’ Ex. 21.) Accordingly, the Mall indicated that it did not believe that Gourmet India was in violation of the Surf & Turf Lease. (Pls.’ Ex. 22.) Mr. Chu again wrote to the Mall on August 14, 2005, with fifteen days’ notice of Surf & Turf’s intention to exercise the forty percent rent reduction set out in Section 1.04(b) of the Surf & Turf Lease. (Pls.’ Ex. 23.) Section 1.04(a) of the Surf & Turf Lease prohibits Rouse from leasing to a tenant “selling oriental style foods in an oriental style restaurant.” (Pls.’ Ex. 2.) The Court finds that the terms oriental style foods and oriental style restaurant lend themselves to more than one interpretation. 20 In fact, Section 1.04(a) identifies three ways in which an item of food would be deemed oriental style food: (1) the items listed on Exhibit I; (2) any other foods that are distinctively part of Oriental cuisine served in Oriental (i.e., Chinese, Japanese, Malaysian, Thai, Korean, Filipino, Vietnamese, etc.) restaurants; and (3) any foods or dishes substantially similar thereto in taste, appearance, style and/or ingredients, whether or not styled or denominated as an Oriental food dish. However, each of these three methods of determining if a food is oriental style is far from clear and unambiguous. First, Exhibit I is not exclusive as it is prefaced by the words “including but not limited to.” (Pls.’ Ex. 2.) While rice, whether brown or white, is on the list in Exhibit I and thus would conclusively be an oriental style food, Section 1.04(a) of the Surf & Turf Lease also includes the caveat that “notwithstanding the foregoing, the incidental sale or use of rice as a side dish or ingredient shall not constitute a violation of Tenant’s exclusive, unless it is part of a [sic] oriental style food.” This language is circular. According to the way it is written, rice is an oriental style food because it is listed on Exhibit I, but yet according to Section 1.04, rice can be served as long as it is not part of oriental style food which definition incorporates Exhibit I which includes rice. Therefore, in order for this proviso to have any meaning, the analysis must look to whether rice is part of an oriental style food without regard to Exhibit I. Therefore, we must then look at the second method, which requires a determination of whether Indian food is “oriental cuisine.” While Section 1.04(a) lists a number of countries whose cuisine would be considered oriental, it ends the list with “etc.” meaning that the list is not complete. The Random House Dictionary of the English Language (2nd ed. 1987) defines oriental as “pertaining to, or characteristic of the Orient, or East; Eastern.” It goes on to define the orient as: “a. the countries of Asia, esp. East Asia. b. (formerly) the countries to the E of the Mediterranean.” Certainly, India is a country of 21 Asia and it is clearly east of the Mediterranean. Whether India can be considered Eastern is a more ambiguous question. Similarly, The American Heritage Dictionary of the English Language (4th ed. 2000) defines oriental as “[o]f or designating the biogeographic region that includes South Asia south of the Himalaya Mountains and Southeast Asia from southern China to Borneo and the islands of the Malay Achipelago.” India is directly south of the Himalaya Mountains. As such, according to this definition, India would undoubtedly fall within the definition of oriental. It is entirely unclear what other countries would be encompassed within this list and whether or not India would fall within this definition. Certainly, some other countries, apart from those enumerated in the list, would be deemed oriental. However, no evidence was introduced that would shine light on what other countries the parties intended to be encompassed. The Court is then left to examine the third method of identifying oriental food and cuisine, which is “any foods or dishes substantially similar [to Oriental cuisine] in taste, appearance, style and/or ingredients, whether or not styled or denominated as an Oriental food dish.” Again, the Court finds that there is no ‘“plain, ordinary and usual meaning”’ to these words. Rubery v. Downing Corp., 760 A.2d 945, 947 (R.I. 2000) (quoting Rotelli, 686 A.2d at 94). As such, this Court is free to consider the intent of the parties. Hilton, 763 A.2d at 602. Mr. Chu testified extensively as to what he intended to accomplish by negotiating his exclusives with PPG. As previously discussed, because of his experience at the Kingston Mall, Mr. Chu was worried about other restaurants serving Chinese style food under the guise of a different label. There, a Cajun restaurant, owned by people of Chinese descent, opened at that mall and began serving the same menu items as Mr. Chu’s restaurants, specifically, white rice. Mr. Chu testified that white rice is the staple Chinese food. Further, combination plates using 22 white rice and other foods, particularly small pieces of chicken served in a sauce or fried in batter, are also crucial to Chinese style cuisine. At the time the Surf & Turf lease was negotiated, Mr. Chu had already raised issues about Japan Café violating the exclusive in the Cathay Cathay Lease. Mr. Chu testified that he believed the exclusive he was negotiating for the Surf & Turf Lease would provide him even more protection than the Cathay Cathay Lease. Furthermore, Mr. Chu’s counsel expressed concern that non-oriental restaurants would sell oriental style food. See Exhibits D and E. Rouse offered no testimony or evidence as to what the intent was behind Section 1.04. However, Mr. Charters and PPG were well aware of Mr. Chu’s concerns since Mr. Charters was the General Manager of the Kingston Mall, and, during lease negotiations, Mr. Chu was already complaining about Japan Café. In summation, Surf & Turf had an exclusive on rice, whether white or brown, unless it was sold as a side dish not part of oriental food or food in style and appearance similar to oriental food. Rouse authorized Gourmet India to serve basmati rice as a side dish, but it did not prevent Gourmet India from serving the rice in a similar style, taste, and appearance to oriental cuisine. Gourmet India served the basmati rice as part of a combination plate. (Pls.’ Exs. 32 and 33.) The Court finds that at least some of the rice served by Gourmet India was similar in style, appearance and ingredients to oriental cuisine. Moreover, the uncontradicted testimony of Mr. Lemack was that the rice he tasted from Gourmet India tasted like white rice and had no particular seasoning or saffron. As such, Gourmet India violated the exclusive of Surf & Turf even though Gourmet India may not have violated the terms of its lease with Rouse. For the above-stated reasons, the Court finds that, in permitting Gourmet India to sell basmati rice in this manner, Rouse violated Section 1.04 of the Surf & Turf Lease. 23 D Japan Café and Cathay Cathay In Count I of Plaintiffs’ Second Amended Complaint, Cathay Cathay alleges that Rouse breached Section 1.04 of the Cathay Cathay Lease by entering into the Japan Café Lease. Further, Count I alleges that Rouse acted in violation of its covenant of good faith and fair dealing by allying with Japan Café and by failing to take more forceful steps to prevent Japan Café from selling items over which Cathay Cathay had exclusive domain. As a threshold matter, the Court notes that having already found that Gourmet India violated Cathay Cathay’s exclusive, the Court need not address whether Cathay Cathay is entitled to a rent reduction stemming from Japan Café’s actions during the period where Rouse breached the Cathay Cathay Lease by permitting Gourmet India to sell basmati rice. Simply put, the Gourmet India violation entitled Cathay Cathay to reduce its rent by forty percent. Accordingly, any violation by Rouse with respect to Japan Café could not provide for another rent reduction. Therefore, as to Japan Café, the Court will only examine the time period from when Cathay Cathay began operating in the Mall in January 2000 up until the notice of rent reduction was sent to Rouse on August 14, 2005 based on the Gourmet India violation. (Pls.’ Ex. 23.) Before either Cathay Cathay or Japan Café opened for business, Mr. Cohen sent a number of letters raising concerns that Japan Café’s menu would infringe upon the exclusives provided for in the Cathay Cathay Lease. On November 19, 1999, Mr. Cohen sent Japan Café a letter informing them that many of the items listed on their menu appeared to be the same dishes listed in Cathay Cathay’s exclusive, under the guise of different names. (Pls.’ Ex. 56.) On that same day, Cohen also sent a similar letter to Joseph Koechel (Mr. Koechel), the Mall’s General 24 Manager. (Pls.’ Ex. 9.) In that letter, Mr. Cohen reiterated his client’s belief that a number of Japan Café’s menu items infringe upon the Cathay Cathay Lease and that “in reality, [Japan Café] will operate, though in name a Japanese restaurant, will essentially be a Chinese restaurant.” Id. Shortly thereafter, on December 2, 1999, several days after Japan Café opened for business, counsel for Japan Café sent Joseph Snyder (Mr. Snyder), the Mall’s attorney, a letter detailing the reasons why their menu items did not run afoul of the Cathay Cathay Lease. (Defs.’ Ex. A.) In that letter, counsel for Japan Café indicated that Japan Café had been “very careful to make sure not to sell any of the items listed on Cathay Cathay’s exclusivity provision” and stated that “Cathay Cathay has no basis for claiming that [Japan Café] is violating the exclusivity provision.” Id. On December 7, 1999, Mr. Snyder forwarded the letter he received from Japan Café to Mr. Cohen and sought a response. (Pls.’ Ex. 10.) Mr. Cohen responded on December 16, 1999, again stating that “Japan Café cannot avoid the Schedule F restrictions merely by giving the item a different name or varying an ingredient.” (Pls.’ Ex. 11.) On February 3, 2000, just days after Cathay Cathay opened for business, Mr. Cohen sent PPG a letter stating that because of Japan Café’s violation of Section 1.04 of the Cathay Cathay Lease, “Cathay is entitled to the 40 percent [rent] reduction set forth in Article 1.04(b) of the Lease. Notice is hereby given of Cathay’s intent to reduce its rent payments as provided in Article 1.04(b) of the Lease.” (Pls.’ Ex. 12.) On February 7, 2000, Mr. Chu sent another letter to Mr. Koechel stating his belief that Japan Café was operating in violation of Cathay Cathay’s exclusive list and again providing fifteen days’ notice of Cathay Cathay’s intent to take the forty percent rent reduction it was entitled to under Section 1.04(b) of the Cathay Cathay Lease. (Pls.’ Ex. 38.) In response, on February 18, 2000, PPG’s attorney sent a letter to Mr. Cohen on behalf 25 of PPG denying that PPG had violated Section 1.04 of the Cathay Cathay Lease. (Pls.’ Ex. 13.) Further, she stated that Cathay Cathay would be in default of its lease if it acted upon its stated intent to reduce rent payment and that, if that were to occur, PPG would be entitled to terminate the Cathay Cathay Lease. Id. Lastly, she wrote: “If Cathay Cathay will continue to pay its full rent, as I believe it must, PPG will cooperate with Cathay Cathay in any action Cathay Cathay takes to enjoin Japan Café’s alleged breach of Cathay Cathay’s exclusive. To that end, PPG would join as plaintiff in any action Cathay Cathay might file as the third-party beneficiary of the provision in Japan Café’s lease prohibiting Japan Café from violating Cathay Cathay’s exclusive.” Id. On February 23, 2000, Mr. Cohen sent her a follow-up letter disagreeing with her interpretation of the Cathay Cathay Lease advanced in the February 18, 2000 letter. (Pls.’ Ex. 14.) On April 10, 2000, PPG’s attorney again reiterated in a letter to Mr. Cohen that the Mall was willing to join Cathay Cathay in any action taken to enjoin Japan Café from breaching the Cathay Cathay exclusive. (Pls.’ Ex. 16.) On May 12, 2003, Mr. Chu contacted Mr. Charters, the General Manager of the Mall, to express concerns about Japan Café violating the leases of Cathay Cathay and Surf & Turf. (Pls.’ Ex. 17.) Namely, Mr. Chu stated “with … Japan Café, we do have a big problem, because their concept, booth setting and food servings are so similar to our operation.” Id. Mr. Chu noted that, although Japan Café had always violated Cathay Cathay’s exclusive to some extent, “recently the violations have been more and more aggressive, to the point it is hurting our business deeply.” Id. In response, on May 22, 2003, PPG sent Japan Café a letter informing them that “Japan Café is in violation of its lease with PPG due to its sale of items listed on Exhibit I of the Japan Café Lease” and demanding that Japan Café immediately comply with the terms of their lease. (Pls.’ Ex. 18.) 26 As previously discussed, this Court has already determined that Rouse did not breach its contract with Cathay Cathay simply by entering into a lease with Japan Café. (July 19, 2017 Order.) The Japan Café Lease expressly prohibited Japan Café from selling menu items that were exclusives in the Cathay Cathay Lease. However, the Court has made no finding on the issue of whether Rouse’s dealings with Japan Café breached the duty of good faith and fair dealing that Rouse owed to Cathay Cathay. “‘Virtually every contract contains an implied covenant of good faith and fair dealing between the parties.’” Dovenmuehle Mortg., Inc. v. Antonelli, 790 A.2d 1113, 1115 (R.I. 2002) (quoting Centerville Builders, Inc. v. Wynne, 683 A.2d 1340, 1342 (R.I. 1996)). “The implied covenant of good faith and fair dealing ensures that contractual objectives may be achieved, and that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.” McNulty v. Chip, 116 A.3d 173, 185 (R.I. 2015) (internal citations omitted). However, a claim for breach of the implied covenant of good faith and fair dealing does not create an independent cause of action separate and apart from a claim for breach of contract. Id. (citing A.A.A. Pool Serv. & Supply, Inc. v. Aetna Cas. & Sur. Co., 121 R.I. 96, 99-100, 395 A.2d 724, 725-26 (1978)). Rouse asserts a number of arguments as to why the implied covenant of good faith and fair dealing is inapplicable in this case. First, Rouse points to the plain language of the Cathay Cathay Lease, which unequivocally does not contain any provision requiring Rouse to enforce Cathay Cathay’s exclusives against any other tenant. Rouse argues that the implied covenant of good faith and fair dealing does not operate to create any such obligation. Second, Rouse argues that, under Rhode Island law, “a claim for breach of the implied covenant of good faith and fair dealing does not create an independent cause of action separate and apart from a claim for breach 27 of contract.” McNulty, 116 A.3d at 185. Rouse’s position is that because the Court has determined that Rouse did not breach its contract with Cathay Cathay by entering into the Japan Café Lease, there can be no breach of contract and thus no breach of the implied duty of good faith and fair dealing. The Court declines to draw that same conclusion. Instead, the Court believes that Rouse may still have breached its contract with Cathay Cathay by allowing Japan Café to operate in conflict with Cathay Cathay’s exclusivity provision. Rhode Island case law on this subject is sparse. However, the Court does not believe that a landlord can sit idly by and allow one of its tenants to violate the exclusivity rights which the landlord granted to a co-tenant. However, to the extent that Cathay Cathay has a viable claim against Rouse for violations of the implied covenant of good faith and fair dealing, the Court is unable to find by a preponderance of the evidence that PPG or Rouse violated that implied covenant. The evidence before the Court is that when Mr. Chu complained to its Landlord about Japan Café’s alleged violations, the Landlord responded by working with both Japan Café and Cathay Cathay to resolve those disputes. For example, Mr. Charters testified that he met with Japan Café’s management following a complaint from Mr. Chu and instructed Japan Café to not violate Cathay Cathay’s exclusives. Also, on May 22, 2003, PPG sent Japan Café a letter informing them that Japan Café was in violation of its lease with PPG and demanding that Japan Café immediately comply with the terms of the Japan Cafe Lease. (Pls.’ Ex. 18.) Further, PPG’s counsel wrote Mr. Chu that if Cathay Cathay brought a third-party beneficiary claim against Japan Café, then PPG would join with it to enforce the prohibition in the Japan Café Lease. (Pls.’ Ex. 13.) Plaintiffs contended that PPG and/or Rouse had a duty to evict Japan Café for violating the prohibition in its lease and selling items which were exclusive to Cathay Cathay. Even if such a duty exists, and this Court is not convinced that it does, Cathay Cathay had a 28 corresponding duty to mitigate its damages. For example, Cathay Cathay could have brought a third-party beneficiary suit much sooner than 2005. Mr. Chu testified that while he had concerns about Japan Café, he was relatively satisfied with Rouse’s response up until 2005, when Gourmet India entered the food-court. It is only then that Cathay Cathay commenced litigation. Rouse failed to honor its commitment to join in that suit on behalf of Cathay Cathay. 11 However, by that time, Rouse had already violated Section 1.04 of the Cathay Cathay Lease by entering into the Gourmet India Lease. Again, as stated above, the Court need not analyze the time period after Gourmet India arrived because the Court has already concluded that Rouse was in violation and Cathay Cathay would not be entitled to a double recovery. As such, Plaintiffs are not entitled to any damages stemming from Japan Café’s violations prior to the commencement of this suit. E Plaintiffs’ Damages The Court has previously ruled that the only measure of damages for breach of contract is the forty percent reduction in rent provided for in Section 1.04(b) of each lease.12 (July 19, 2017 Order.) The parties stipulated that the Plaintiffs paid a premium rent for the exclusive. 11 As Judge Fortunato explained in his May 4, 2006 Bench Decision in this case, “The defendant landlord has seen fit to [ally] itself with Japan Café. True enough, it was the plaintiffs in the suit that named the Mall as a defendant but against any contention that the plaintiff forced in alliance when he brought the suit, there are ways and means under our rules of procedure for a litigant to either withdraw from the litigation or to have the line-up of the parties recast. In other words, the landlord could have opted for plaintiff status.” Hr’g Tr. 14:6-16, May 4, 2006. 12 The Court left open whether there could be additional damages for the breach of the covenant of good faith and fair dealing. That door is now closed. Since there is no independent action for the breach of good faith and fair dealing, Rouse’s breach of that covenant can only result in a breach of the underlying contract, and the leases provide that the sole and exclusive remedy for a breach is the forty percent rent reduction. Moreover, even if there were some damages allowed independent of the forty percent rent reduction, the Court rejected the testimony of Mr. Feldman about damages as being speculative and not being accurate. As such, there is no evidence as to what those damages would be, if any. 29 (Stipulated Fact 10.) That fact was corroborated by the testimony of Mr. Chu and Mr. Charters, even though there might be disagreement as to the size of that premium. The rent in each lease is set forth in Article 3. (Pls.’ Exs. 1 and 2.) Section 3.01 provided for a Fixed Annual Minimum Rent which was $175,000 in the Cathay Cathay Lease increased by five (5%) percent in January of each year and $100,000 in the Surf & Turf Lease increased by three (3%) percent each year. In addition, both leases provided for Percentage Rent which equaled a specified percentage times gross receipts in excess of the Annual Minimum Gross Receipts. Cathay Cathay paid twelve (12%) percent in excess of $1,458,000 and Surf & Turf paid ten (10%) percent in excess of $1,000,000. Section 1.04(b) in each lease calls for a forty percent reduction in the Fixed Annual Minimum Rent in effect for the period of the breach of the exclusive. (Pls.’ Exs. 1 and 2.) However, the leases then differ in one respect. The Cathay Cathay Lease also calls for “a proportionate adjustment of Annual Minimum Gross Receipts.” (Pls.’ Ex. 1.) This reduction is not required in the Surf & Turf Lease. (Pls.’ Ex. 2.) On February 3, 2000, Cathay Cathay sent notice of its election to have its rent reduced by forty percent. (Pls.’ Ex. 12.) This election was repeated on August 14, 2005, when Mr. Chu wrote on behalf of both Cathay Cathay and Surf & Turf giving fifteen days’ notice of its election to have the rent reduced as the remedy provided by Section 1.04(b) of each lease. (Pls.’ Ex. 23.) Gourmet India was the last of the four restaurants to vacate the Mall. Since Rouse breached the exclusive covenant for Gourmet India’s entire tenancy, each Plaintiff is entitled to a forty percent rent reduction from September 1, 2005 until it vacated the premises. Because the beginning of each of the damage periods was in the middle of a calendar year, Sections 3.01(b) and 3.02(b) of each lease call for proportionate reductions in both Fixed Annual Minimum Rent 30 and the Annual Minimum Gross Receipts. If a lease year is less than a full calendar year, the same calculation must be made for the first and last year of the period of the exclusivity violation. Mr. Feldman calculated the rent reduction, but as Defendants pointed out, he calculated it wrong. He failed to reduce the Annual Minimum Gross Receipts for Cathay Cathay by forty percent, and he calculated the reduction for the whole term for each tenant. However, Plaintiffs’ Exhibits 57 and 58 set forth the Annual Minimum Rent paid and the Gross Receipts of each tenant. These amounts are uncontradicted. With this information, the Court can make the mathematical calculations necessary to determine the Plaintiffs’ damages. Those calculations are reflected on attached Exhibit 2. The Columns can be explained as follows: Column A represents time periods for which the violations of the exclusive covenant existed. Column B is the Fixed Annual Minimum Rent paid by each tenant. For a period less than a calendar year, the amount is proportionately reduced in accordance with Section 3.01(b) of each lease. Column C is the Annual Minimum Gross Receipts set forth in each lease. Again, for a period less than a calendar year, the amount is proportionately reduced in accordance with Section 3.02(b) of each lease. Column D contains the actual Gross Receipts for each tenant. Column E is the amount of Percentage Rent, if any, due from each tenant for each period calculated in accordance with Section 3.02 of each lease. That calculation is the applicable 31 percentage (12% for Cathay Cathay and 10% for Surf & Turf) times the difference between the actual Gross Receipts (Column D) and the Annual Minimum Gross Receipts (Column C). Column F is the Total Rent due from each tenant, being the sum of Column B and Column E. Column G is the forty percent reduction in the Fixed Annual Minimum Rent. Column H is again the Annual Minimum Gross Receipts except that for the Cathay Cathay Lease there is a proportionate reduction as required by Section 1.04 of the Cathay Cathay Lease. Column I represents the Percentage Rent that would have been due under each lease calculated by multiplying the applicable percentage by the difference between Column D and Column H. Column J is the total reduced rent which each tenant should have paid, calculated by adding Columns G and I. Column K is the damages for each tenant based on the difference between the rent paid (Column F) and the reduced rent (Column J). F Rouse’s Counterclaims Rouse has asserted four counterclaims against the Plaintiffs. In Counterclaim Count I, Rouse seeks indemnification from both Cathay Cathay and Surf & Turf. Counterclaim Count II is asserted against Surf & Turf for failure to pay rent and related charges due to Rouse in accordance with the Surf & Turf Lease. Likewise, Counterclaim Count III is asserted solely against Surf & Turf for abandonment of the leased premises prior to the culmination of the Surf & Turf Lease’s term. Lastly, Counterclaim Count IV is against Cathay Cathay and asserts a 32 breach of contract counterclaim based on Cathay Cathay’s guaranty of performance by Surf & Turf. i Counterclaim Count I In this Count, Rouse seeks indemnification from Plaintiffs for all liabilities, costs, and expenses, including reasonable attorneys’ fees that Rouse has incurred in connection with this litigation. In support of this contention, Rouse directs the Court to Section 1.04(d) of the Cathay Cathay Lease and Surf & Turf Lease. Those provisions state, in pertinent part, as follows: “Tenant shall indemnify and hold harmless Landlord, its successors and assigns from any and all claims, actions, damages, liabilities and expenses in connection with or arising from this Section 1.04 of the Lease or the acts or omissions of Landlord to prevent any other tenant from operating at the [Mall] in conflict with the terms of Section 1.04 of this Lease.” (Pls.’ Exs. 1and 2.) The Court finds that this provision was intended to indemnify Rouse in the event that Rouse either successfully defended against any claims of a breach of Section 1.04 or undertook legal action to enforce exclusive provisions against other tenants. It cannot be interpreted to mean that the Plaintiffs were indemnifying Rouse for its breach of Section 1.04. Because the Court has found that PPG and/or Rouse breached the covenants in Section 1.04 of each lease, and because neither PPG nor Rouse did anything to enforce either Plaintiffs’ exclusive, Rouse is not entitled to indemnification. ii Counterclaim Counts II and III In Counts II and III, Rouse seeks damages from Surf & Turf. Specifically, Count II alleges that Surf & Turf breached the Surf & Turf Lease based on its failure to pay monthly rent and related charges to Rouse. As to Count III, Rouse notes that the term of the Surf & Turf Lease 33 was scheduled to run until October 28, 2016, yet Surf & Turf vacated the premises on January 31, 2011. (Stipulated Facts 7 and 8.) Rouse alleges that Surf & Turf’s failure to remain in the Mall until the expiration of the Surf & Turf Lease constitutes a breach of the lease. Rouse seeks back rent, late payment fees, and late charges pursuant to the Surf & Turf Lease, as well as attorneys’ fees, costs, and expenses incurred by Rouse as a result of Surf & Turf’s alleged default. As to the rent, Surf & Turf made its rent payments through January 31, 2011. Rouse was able to mitigate its damages and release the premises beginning in May 2011. Accordingly, this Court finds that Surf & Turf owes Rouse three months of back rent. This figure equates to $67,459.83, or $22,486.61 per month for three months. (Defs.’ Ex. I.) Additionally, Surf & Turf does not appear to have paid the Percentage Rent owed to Rouse from the prior year, 2010, and such rent would also be due to Rouse in the amount of $17,701.30. (Defs.’ Ex. H.) As to the Common Area Maintenance (CAM) charges that Rouse alleges are owed by Surf & Turf, the Court finds that Surf & Turf is not responsible for the payment of these CAM charges. Mr. Chu testified that the CAM charges grew suddenly and rapidly in size. Mr. Chu also testified that he was willing to pay the increased CAM charges, but wanted those CAM charges itemized. In the interim, he continued to pay the amount of CAM charges due prior to this rapid increase. On June 17, 2009, Mr. Cohen sent a letter to Rouse requesting a statement of the basis for the increased CAM charges pursuant to Section 7.08(e) of the Surf & Turf Lease. (Pls.’ Ex. 25.) In pertinent part, Section 7.08(e) of the Surf & Turf Lease reads as follows: “Landlord shall furnish to Tenant a statement, certified as correct by Landlord, showing the actual Additional Operating Expenses for the Lease Year or Partial Lease Year just expired, the payments made by Tenant during such Lease Year for Additional Operating Expenses and Tenant’s actual share of 34 Additional Operating Expenses.” (Pls.’ Ex. 2.) There is no evidence that Rouse ever furnished Surf & Turf with the requested documents. As such, the Court finds that Rouse has failed to prove by a preponderance of the evidence that Surf & Turf is liable for these additional CAM charges. iii Counterclaim Count IV Cathay Cathay guaranteed performance by Surf & Turf of Surf & Turf’s various obligations under the Surf & Turf Lease. (Ex. E-1 to Pls.’ Ex. 2.) As such, Cathay Cathay is also responsible for Rouse’s damage as a result of Surf & Turf’s breach of its lease as found in the previous section. Conclusion For the reasons stated above, the Court finds that Rouse breached Section 1.04 of each lease by authorizing Gourmet India to sell basmati rice. The Court finds that, as a result of those breaches, Rouse is liable to Cathay Cathay in the amount of $292,617 and Surf & Turf in the amount of $280,683. The Court finds that prior to the filing of this action, PPG and/or Rouse had not breached the covenant of good faith and fair dealing owed to Cathay Cathay with respect to Japan Café. However, the failure to join with Cathay Cathay as a party plaintiff in the Japan Café action was a breach of its agreement to do so. However, since there cannot be a double recovery, Cathay Cathay is not entitled to any additional damages as a result of that breach. As to Defendants’ Counterclaim, the Court denies any relief under Count I. As to Counts II and III, the Court finds that Surf & Turf breached its lease by failing to pay Percentage Rent for 2010 and by vacating the premises before the lease term expired. It did not breach the lease by failing to pay the excess CAM charges. Surf & Turf is therefore liable to Rouse in the amount 35 of $85,161.13. Cathay Cathay, as a guarantor of the Surf & Turf Lease, is jointly and severally liable for that amount as well. The Court makes no finding on the parties’ respective claims for attorneys’ fees and costs pursuant to Article 11 of each lease and leaves the issue open to further determination. Counsel shall confer and present an order consistent herewith. 36 EXHIBIT 1 Summary of Mall Leases Tenant Date of Lease Date Opened Date Vacated Cathay Cathay December 29, 1995 January 2000 August 31, 2009 Japan Cafe 1999 November 24, 1999 May 29, 2007 Surf & Turf November 10, 2000 October 28, 2001 January 30, 2011 Gourmet India January 7, 2005 June 18, 2005 October 31, 2014 37 Exclusive Prohibition The items set forth on None Exhibit F, which includes“[w]hite rice—boiled or steamed” served either “alone or in combination with any other foods.” None Not to sell any of the items listed on Exhibit I, which mirrored Exhibit F of the Cathay Cathay Lease (including White Rice). Landlord agreed not None to lease to another tenant selling “oriental style foods in an oriental style restaurant.” None Prohibited from selling white rice, fried rice, or Oriental style foods. With the caveat that the incidental sale or use of Basmati Rice as a side dish or ingredient shall not be deemed a violation of the prohibition of the sale of rice. EXHIBIT 2 Calculation of Damages A B C Rent Paid MinimumAnnual Minimum Rent Gross Receipts 9/1-12/31 2005 148,899 972,000 2006 234,517 1,458,000 2007 246,243 1,458,000 2008 258,555 1,458,000 1/1-8/31 2009 180,988 972,000 D E F G H CATHAY CATHAY LEASE Gross Receipts 627,333 1,046,000 1,100,000 1,171,000 1,239,000 % Rent 32,040 I J K 40% Reduction Total Minimum Annual Minimum % Total Rent Rent Gross Receipts Rent Reduced Rent Damages 148,899 89,340 583,200 5,296 94,636 54,264 234,517 140,710 874,800 20,544 161,254 73,263 246,243 147,746 874,800 27,024 174,770 71,473 258,555 155,133 874,800 35,544 190,677 67,878 213,028 108,593 583,200 78,696 187,289 25,739 Total Cathay Cathay Damages 292,617 SURF & TURF LEASE Rent Paid MinimumAnnual Minimum Gross Rent Gross Receipts Receipts 9/1-12/31 2005 75,034 666,667 520,667 2006 115,927 1,000,000 785,000 2007 119,405 1,000,000 899,000 2008 122,987 1,000,000 844,000 2009 126,677 1,000,000 1,072,000 2010 130,477 1,000,000 1,177,000 1/1-1/31 2011 11,199 1,000,000 59,000 % Rent 7,200 17,700 40% Reduction Total Minimum Annual Minimum % Total Rent Rent Gross Receipts Rent Reduced Rent Damages 75,034 45,020 666,666.7 45,020 30,014 115,927 69,556 1,000,000.0 69,556 46,371 119,405 71,643 1,000,000.0 71,643 47,762 122,987 73,792 1,000,000.0 73,792 49,195 133,877 76,006 1,000,000.0 7,200 83,206 50,671 148,177 78,286 1,000,000.0 17,700 95,986 52,191 11,199 6,720 83,333.3 6,720 4,480 Total Surf & Turf Damages 280,683 Total Damages 38 573,300 RHODE ISLAND SUPERIOR COURT Decision Addendum Sheet TITLE OF CASE: Cathay Cathay, Inc. and Surf & Turf Grille, Inc. v. Vindalu, LLC d/b/a Gourmet India, et al. CASE NO: C.A. No. PC-2005-5324 COURT: Providence County Superior Court DATE DECISION FILED: July 5, 2018 JUSTICE/MAGISTRATE: Licht, J. ATTORNEYS: For Plaintiff: John J. DeSimone, Esq. For Defendant: Rachelle R. Green, Esq.; Stacey P. Nakasian, Esq. 39

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