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BioMed Realty, L.P. v. 700 Dexter, LLC

United States District Court, W.D. Washington, Seattle

February 23, 2017

BIOMED REALTY, L.P., Plaintiff,
v.
700 DEXTER, LLC, Defendant.

          ORDER ON MOTION TO AMEND JUDGMENT

          JOHN C. COUGHENOUR UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on Defendant 700 Dexter, LLC's motion to amend judgment (Dkt. No. 120). Dexter seeks to amend the decree of specific performance (Dkt. No. 118) and the findings of fact and conclusions of law (Dkt. No. 111) to add the following language: “Upon closing on the sale of the Property and tendering the Property in its current condition, Dexter has no further contractual obligations to BioMed.” (Dkt. No. 120 at 1.)

         According to Dexter, this amendment is necessary because BioMed “surprisingly refuses to acknowledge its waiver of certain obligations under the PSA, including representations and warranties, as well as Dexter's indemnification obligations.” (Id.) Dexter maintains that, because BioMed indicated that it would waive all remaining unsatisfied closing conditions, it is judicially estopped from now taking a contrary position. (Id. at 6.)

         Plaintiff BioMed Realty, L.P. opposes the motion, asserting that the true issue is a claim against the Property that Dexter failed to previously disclose:

Three weeks before trial, Dexter received notice of a new claim from a neighboring property owner, City Investors XI, L.L.C.[1] Dexter never disclosed that claim to BioMed or the Court. . . . Tellingly, Dexter's motion fails to mention the existence of both this claim and another previously-unknown claim.

(Dkt. No. 124 at 1.) BioMed maintains that it did not waive its right to indemnification for unknown claims and that the Court “should not find a waiver of contractual rights beyond what BioMed clearly agreed to waive.” (Id. at 1-2.)

         Having reviewed the briefing and the relevant record, the Court finds that BioMed waived its right to indemnification for the City Investors claim. When viewed as a whole, the facts show that BioMed was aware that such a claim was possible and sought possession of the Property regardless of its hindrances.

         This is first seen on July 27, 2016, when BioMed wrote to Dexter that it would seek specific performance at trial. (Dkt. No. 62-2 at 3-4.) BioMed used broad language in its letter:

BioMed's request for specific performance will not include asking the Court to enforce any 700 Dexter contractual obligation other than tendering the property in its current condition. For example, BioMed will not be asking the Court to require 700 Dexter to get a satisfactory opinion letter, resolve the Washington Builders claim, or handle the remaining post-closing remediation. By removing these complexities from the transaction, BioMed expects that the Court will order the parties to close the sale.

(Id. at 4) (emphasis added). The letter continued, “To obviate the need for trial, BioMed is prepared to close now on the Property in its current condition.” (Id.) In other words, BioMed communicated that it would take the Property as is, despite the likelihood of litigation. While BioMed was only explicit about the Washington Builders claim, it was well aware that other claims were possible-or even likely-as evidenced by its request that Dexter obtain a release of all claims from Vulcan. Because such a release could not be obtained, BioMed understood that the litigation warranty would preclude it from taking possession and determined that waiver of that warranty was in its best interests.

         At trial, BioMed's Senior Vice President and Senior Counsel, Kevin Simonsen, testified about the waiver in a more specific manner. For example, when asked if BioMed was agreeing to “waive everything, ” Simonsen answered “all the things that were outstanding, that we were fighting about, we would waive those.” (Dkt. No. 125-1 at 26.) In response to the question, “What about the Washington Builders claim, how do you propose that's dealt with in the reps and warranties, ” Simonsen responded, “We would be willing to carve that out from the reps and warranties and say that, basically, there would no litigation or claims known, except for that.” (Id. at 23.) Likewise, when asked why BioMed did not waive the litigation warranty earlier, Simonsen stated, “Well, we didn't think the time to waive was ripe. Now, we're trying to close, and it's ripe. So, we're saying that we would waive it with respect to the Washington Builders claim.” (Id. at 29.) According to BioMed, this testimony shows that its waiver extended to only the Washington Builders claim-not to its contractual right to indemnification for unknown claims.[2] (Dkt. No. 124 at 5.)

         While Simonsen's testimony was indeed narrowly tailored, the Court does not find this fact dispositive, especially in light of the specific performance decree language subsequently proposed by BioMed. The decree's waiver provisions-which were adopted by this Court-are far more general than Simonsen's testimony, stating: “BioMed has expressly waived any remaining, unsatisfied conditions to closing in Section 8.1 of the PSA, and Dexter's representation and warranty in Section 9.4 regarding litigation and condemnation.” (Dkt. No. 118 at 17.) Nowhere does the decree limit this waiver to the Washington Builders claim. If BioMed wanted to be more specific, it knew how to do so.

         Similarly, in BioMed's post-trial brief, it broadly states that “Dexter will have no post-closing Property obligations” and that “BioMed has waived and does not seek any post-closing performance from Dexter as part of its claim for specific performance.” (Dkt. No. 107 at 5, 6.) BioMed contends that “post-closing property obligations and performance” clearly refers to Dexter's obligation under Article 14 of the PSA to obtain an Ecology letter and remediate the Property. (Dkt. No. 124 at 10.) According to BioMed, indemnification is “not a ‘post-closing obligation' [and] is separately addressed in Article 15[3].” (Id.) Because the specific performance decree did not specifically mention Article 15, BioMed maintains that it did not waive the right to indemnification. (Id.)

         The Court rejects this argument for two reasons. First, BioMed's argument contradicts a common-sense understanding of its previous position, i.e., that it sought to close on the Property without enforcing Dexter's unfulfilled contractual obligations. (See, e.g., Dkt. No. 62-2 at 3-4.) With the benefit of hindsight, BioMed takes a fine-tooth comb to the PSA in a post hoc attempt to protect itself. While the Court ...


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