Furniture Enterprises of Alaska, Inc. v. Jo-Ann Stores, LLC

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
FURNITURE ENTERPRISES OF
ALASKA, INC.,
Plaintiff,
vs.
JO-ANN STORES, LLC,
Defendant.
Case No. 3:20-cv-00272-JMK
ORDER GRANTING
PARTIAL SUMMARY JUDGMENT
Before the Court is Defendant and Counterclaimant Jo-Ann Stores, LLC’s
(“Jo-Ann”) Motion for Partial Summary Judgment1 and Plaintiff and Counter Defendant
Furniture Enterprises of Alaska, Inc.’s (“FEA”) Cross Motion for Partial Summary
Judgment.2 	Both motions are fully briefed.3 	Oral argument was not requested and is
unnecessary to the Court’s decision.
For the reasons below, Jo-Ann’s Motion for Partial Summary Judgment is
GRANTED and FEA’s Cross Motion for Partial Summary Judgment is DENIED. Under
1 Docket 22.
2 Docket 26.
3 See Docket 25; Docket 27; Docket 30; Docket 31; Docket 32. 	FEA filed its
“Memorandum in Opposition to Jo-Ann’s Motion for Partial Summary Judgment and in Support
of Cross-Motion for Partial Summary Judgment” at both Docket 25 and Docket 27.
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Federal Rule of Civil Procedure 56(f)(1), the Court also GRANTS summary judgment in
favor of nonmovant Jo-Ann with respect to FEA’s second claim for breach of lease.
I. 	FACTUAL BACKGROUND
This litigation stems from a dispute under the parties’ commercial lease (the
“Lease”); specifically, the parties disagree on which party was required to upgrade the
property’s sprinkler system for retail use. Landlord FEA owns a portion of the University
Center Mall in Anchorage, Alaska.4 In January 2019, FEA and prospective tenant Jo-Ann
executed a non-binding letter of intent (the “Offer Letter”) outlining an agreement that Jo-
Ann would lease Suite A-1 of the mall (the “Premises”) to operate its signature crafts and
fabric store.5 	The parties continued to negotiate over several months, ultimately signing
the Lease on August 8, 2019.6
The Premises needed significant renovation to function as a Jo-Ann’s Fabrics
store.7 	An attachment to the Lease entitled the “Shell Project Matrix” (the “Matrix”)
outlined each party’s construction obligations in anticipation of the store’s opening.8
Ultimately, 	FEA 	was 	to 	deliver 	a 	“code-compliant 	shell 	building” 	to 	Jo-Ann 	by
November 4, 2019.9 Jo-Ann would then complete the store’s internal improvements before
4 Docket 1-1 at 4.
5 Docket 22-14.
6 Docket 22-43; Docket 22 at 7.
7 The Premises was used as a Natural Pantry grocery store until approximately 2010, after
which it was a storage space for FEA’s owner, David Cavitt. 	See Docket 22-4 at 19:2–22;
Docket 22-5 at 39:22–40:1, 43:14–24.
8 The Matrix originally was included in the January 2019 Offer Letter and later was
incorporated into the signed Lease as Exhibit C. See Docket 22-14 at 8; Docket 22-43 at 62–63.
9 See Docket 27-17 ¶ 1.1; Docket 27-16 ¶ 2.
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its opening.10 The disputed provision assigns FEA “fire sprinkler system/monitoring – new
and/or modifications for building shell compliance with code” before delivering the
Premises to Jo-Ann.11
The Anchorage Municipal Fire Code requires a building’s sprinkler system
to deliver a certain amount of water per minute based on that building’s fire risk.12 	Any
retail store or space with a “mercantile use” is classified, at minimum, as an “ordinary
hazard II” fire risk.13 Accordingly, for Jo-Ann to operate its store, the Premise’s sprinkler
system must comply with code requirements for an “ordinary hazard II” fire risk.14 	By
contrast, a vacant building shell is classified as a “light hazard,” meaning that it has a lower
fire risk and therefore its sprinkler system has lower requirements for the amount of water
expelled per minute.15
In the spring of 2019, after the parties executed the Offer Letter and drafted
the Matrix, FEA began construction to prepare the Premises for occupancy.16 It retained
McKinley Fire Protection, LLC (“McKinley Fire”) to upgrade the sprinkler system for an
“open concept vanilla shell.”17 McKinley Fire changed the sprinkler heads from pendant
to upright and did any other work required to bring the Premises into compliance with the
10 See Docket 27-17 ¶ 1.2; Docket 27-16 ¶ 2.
11 Docket 27-17 ¶ 7.7.
12 Docket 27-2 at 15:5–15.
13 Stores with highly flammable goods or with “high-pile storage” may trigger a higher
hazard classification. Docket 27-2 at 16:19–18:21.
14 The Court refers to the code requirements for “mercantile use” and “retail use”
interchangeably.
15 Docket 27-2 at 16:4–16.
16 Docket 27-16 ¶ 7.
17 Docket 22-23; Docket 27-16 ¶ 7. FEA hired Neeser Construction to complete all other
repairs under the Matrix, excluding work on the sprinkler system. Docket 27 at 8.
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fire code for an empty shell.18 As such, McKinley Fire’s permit for the sprinkler work was
based on a “light hazard” use and was conditioned as being “for Core and Shell only.”19
Indeed, in a letter submitted to the Municipal Fire Inspector, FEA stated that,
[a]s this space is unoccupied at this time, and we do not have a prospective
tenant for this space at this time, [we] are working to turn the space into an
open concept vanilla shell in preparation for any potential future tenants. As
such, we would like to turn the sprinkler heads in this space upwards to
maintain fire protection and keep with the open concept.20
The scope of this permit was entirely independent from the construction permit that Jo-
Ann would later receive for its tenant build-out.21 	Neither this permit nor FEA’s
communications with the Municipal Fire Inspector were shared with Jo-Ann.22
FEA 	delivered 	the 	Premises 	to 	Jo-Ann 	on 	November 	4, 	2019.23
Representatives from Jo-Ann walked through the space and visually confirmed that the
Premises met FEA’s requirements under the Matrix.24 	Jo-Ann conditionally accepted
delivery of the Premises pending the completion of smaller, unrelated projects.25 	That
winter, Jo-Ann began its tenant build-out.
On January 20, 2020, Jo-Ann’s sprinkler subcontractor informed Jo-Ann that
the sprinkler system was not up to code for ordinary hazard II risk, as is required for a retail
store, but was instead outfitted for light hazard risk as an open shell.26 Jo-Ann informed
18 Docket 27-16 ¶ 7.
19 Docket 27-15; Docket 22-21 at 1.
20 Docket 22-23.
21 Docket 22-21 at 1.
22 Docket 22 at 9–10; see also Docket 22-8 at 118:10–21.
23 See Docket 27-16 ¶ 10.
24 Docket 22-8 at 118:10–21; Docket 27-16 ¶ 10.
25 Docket 22-22 at 1.
26 See Docket 22-27.
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FEA of the issue that same day, but the parties did not agree on who was responsible for
the renovation.27 On February 21, 2020, Jo-Ann sent FEA a notice of default for its failure
to deliver a code-compliant building, informing FEA that it would perform the upgrades
on FEA’s behalf.28 In anticipation of the store’s opening, Jo-Ann completed repairs of the
sprinkler system on May 15, 2020.29
Jo-Ann has paid rent since it opened for business on August 13, 2020.30
However, because the parties dispute whose responsibility it was to bring the sprinkler
system up to code for mercantile use, the parties also dispute when rent began to accrue.
Under the Lease, Jo-Ann is required to start paying rent on “(i) the 151 st day after the
Delivery Date, or (ii) the day that Tenant opens for business in the Premises, whichever
day first occurs.”31 	The Delivery Date is defined as “the date Landlord delivers the
Premises to Tenant with all of the Delivery Requirements satisfied . . . . ”32 Jo-Ann argues
that FEA failed to satisfy its delivery requirements; therefore, rent began to accrue when
Jo-Ann opened for business on August 13, 2020.33 FEA argues that rent began to accrue
on April 3, 2020, which is 151 days after it purportedly satisfactorily delivered the Premises
on November 4, 2020.34 Under FEA’s interpretation of the Lease, Jo-Ann is in arrears for
$165,385, or approximately three months of rent.35
27 See id.
28 Docket 22-35.
29 Docket 22 at 12; Docket 22-41 at 1–2.
30 Docket 22-1 ¶ 4; Docket 22-37.
31 Docket 22-43 Section 2(b).
32 Id. Section 2(e).
33 Docket 22 at 16–17.
34 Docket 27 at 30.
35 Id.
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II. 	PROCEDURAL BACKGROUND
On September 23, 2020, FEA filed suit against Jo-Ann in Alaska Superior
Court.36 Jo-Ann removed the suit to this Court on October 26, 2020.37 FEA’s Complaint
includes three causes of action: 	(1) “Declaratory Judgment Action,” requesting a
declaration that “FEA complied with all of its obligations regarding delivery of the
sprinkler system when it provided a sprinkler system that complied with the Exhibit C
Matrix and the Landlord’s Approved Plans”;38 (2) “Breach of Lease,” alleging that Jo-Ann
defaulted due to non-payment of rent and breached the implied covenant of good faith and
fair dealing;39 and (3) “Termination of Lease,” seeking a ruling that the Lease has
terminated due to Jo-Ann’s breach.40
On 	October 	29, 	2020, 	Jo-Ann 	filed 	its 	Answer, 	which 	included 	a
counterclaim against FEA.41 	Jo-Ann also alleges three causes of action: 	(1) “Breach of
the 	Lease,” 	alleging 	that 	FEA 	failed 	to 	meet 	its 	obligations 	under 	the 	Lease;42
(2) “Declaratory Judgment Regarding the Lease,” requesting a declaration that FEA “failed
to meet its obligations regarding the sprinkler system under the Lease, that the Delivery
Date of the Premises is May 15, 2020, and that the Commencement Date [of rent] is
August 13, 2020”;43 and (3) “Breach of the Implied Covenant of Good Faith and Fair
36 Docket 1.
37 Id.
38 Docket 1-1 at 8.
39 Id. at 8–9.
40 Id. at 9.
41 Docket 7.
42 Id. at 12.
43 Id. at 13–14.
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Dealing,” alleging that FEA breached said covenants by taking actions to deprive Jo-Ann
of the bargained-for benefits of the Lease.44
On December 22, 2021, Jo-Ann moved for partial summary judgment on
FEA’s third cause of action for termination of the Lease.45 Jo-Ann argues that (1) “Jo-Ann
is not in breach of the Lease because it has fulfilled its rent obligations,” so the Lease
cannot be terminated, and (2) even if it were in default, “eviction is not an appropriate
remedy under these circumstances.”46
On January 18, 2022, FEA filed a response in opposition to Jo-Ann’s
motion47 and a separate cross-motion for partial summary judgment.48 FEA interpreted Jo-
Ann’s motion as seeking a declaration that Jo-Ann was not in breach of the Lease.49 	As
such, FEA’s cross-motion requests its own declaratory ruling that FEA complied with its
obligations under the Lease50 and its opposition asks the Court to deny Jo-Ann’s motion
with respect to the “termination of lease” claim.51
Jo-Ann filed a reply to its own motion52 and a separate opposition to FEA’s
cross-motion.53 In its opposition, Jo-Ann clarifies that it only sought summary judgment
on FEA’s “termination of lease” claim and asserts that FEA’s request for declaratory
44 Id. at 14–15.
45 Docket 22 at 5.
46 Id. at 14.
47 Docket 25.
48 Docket 26.
49 Docket 27 at 4.
50 Docket 26 at 1.
51 Docket 27 at 5.
52 Docket 30.
53 Docket 31.
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judgment is inappropriate because “a declaration of the parties’ responsibilities under the
Lease turns on factual determinations of extrinsic evidence outside the four corners of the
Lease.”54 In its reply, FEA reiterates that it seeks summary judgment on the issue of who
was responsible under the Lease for providing a sprinkler system that complied with the
code standard that applied to retail operations, regardless of Jo-Ann’s more narrow request
for relief.55
III. 	LEGAL STANDARD
Summary judgment is appropriate where “there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.”56 A material
fact 	is 	“one that 	might allow 	judgment in 	favor 	of the party 	opposing 	summary
judgment.”57 	The party moving for summary judgment has the burden of demonstrating
that there is no genuine dispute as to any material fact.58 Once the moving party has met
this burden, the nonmoving party must set forth evidence of specific facts showing the
existence of a genuine issue for trial.59 	The nonmoving party’s burden “is not a light
one.”60 	If the evidence provided by the nonmoving party is “merely colorable” or “not
significantly probative,” then summary judgment is appropriate.61 Further, the nonmoving
party cannot rely upon conclusory allegations or denials to create a triable issue; it must set
54 Id. at 4.
55 Docket 32 at 4.
56 Fed. R. Civ. P. 56(a).
57 Pac. Nw. Venison Producers v. Smitch, 20 F.3d 1008, 1013 (9th Cir. 1994).
58 JL Beverage Co., LLC v. Jim Beam Brands Co., 828 F.3d 1098, 1105 (9th Cir. 2016).
59 In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010).
60 Id.
61 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249–50 (1986).
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forth specific facts that “require a jury or judge resolve the parties’ differing versions of
the truth at trial.”62 All evidence presented by the nonmoving party must be believed for
purposes of summary judgment and all justifiable inferences are to be drawn in its favor.63
A court’s function on summary judgment is not to weigh evidence, but rather to determine
if there are genuine issues for trial.64
Under Federal Rule of Civil Procedure 56(f), a court may award summary
judgment independent of a motion, provided that the party against whom the judgment will
be entered was given “notice and a reasonable time to respond.” 	In particular, “[i]t is
generally recognized that a court has the power sua sponte to grant summary judgment to
a non-movant when there has been a motion but no cross-motion.”65 	However, in doing
so, the court must exercise “great care” to ensure the original movant has had an adequate
opportunity to show that its opponent is not entitled to judgment as a matter of law.66
IV. 	DISCUSSION
The Court acknowledges the unique procedural posture of this case. Jo-Ann
exclusively moves for summary judgment on FEA’s “termination of lease” claim and, in
doing so, argues that it has not breached the Lease.67 However, Jo-Ann does not move for
62 T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 631 (9th Cir. 1987)
(quoting First Nat. Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).
63 Anderson, 477 U.S. at 255.
64 Id. at 249.
65 Kassbaum v. Steppenwolf Prods., Inc., 236 F.3d 487, 494–95 (9th Cir. 2000) (collecting
cases); see also Charles Alan & Arthur R. Miller, 10A Federal Practice & Procedure § 2720.1 (4th
ed.) (“The practice of allowing summary judgment to be entered for the nonmoving party in the
absence of a formal cross-motion is appropriate.”).
66 Kassbaum, 236 F.3d at 494–95.
67 See Docket 22 at 14.
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summary judgment on either party’s breach of contract claim. 	FEA interprets Jo-Ann’s
motion as “seek[ing] a ruling that it is . . . not in breach of its obligations to pay rent under
the lease,” and its memorandum requests summary judgment on this question.68 But FEA’s
motion explicitly requests a declaratory judgment and does not appear to move for
summary judgment on any breach of contract claim.69 In any circumstance, both motions
require the Court to interpret the parties’ obligations under the Lease, which it does below.
As a threshold matter, the Court determines that summary judgment is
appropriate on two claims, FEA’s termination of lease claim and its breach of contract
claim.70 When sitting in diversity, this Court applies contract principles under Alaska law
to interpret a commercial lease.71 	Alaska courts “generally decide the meaning of
contractual language as a matter of law,” giving primary effect to the instrument itself.72
Under Alaska law, “the goal of contract interpretation is ‘to give effect to the reasonable
expectations of the parties.’”73 	While the contract’s language “remain[s] the most
68 Docket 27 at 4.
69 Docket 26 at 1. The Court notes that Jo-Ann’s request for declaratory judgment appears
to be duplicative of its breach of contract claim.
70 While the Court rules sua sponte in favor of Jo-Ann on FEA’s breach of contract claim,
it is not prepared to decide that FEA did not perform under the Lease given FEA’s affirmative
defenses and lack of briefing on this issue. Thus, it does not rule on Jo-Ann’s counterclaims or
FEA’s request for a declaration that FEA satisfied its contractual obligations.
71 See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); Rockstad v. Glob. Fin. & Inv.
Co., 41 P.3d 583, 586 (Alaska 2002) (“It is well-settled that leases are contracts and should be
interpreted according to contract principles.”); see also Docket 22-43 Section 41 (“The laws of the
state within which the Premises are located govern the validity, performance and enforcement of
this Lease without regard to its conflicts of law principles.”).
72 Kimp v. Fire Lake Plaza II, LLC, 484 P.3d 80, 87 (Alaska 2021), reh’g denied (Apr. 28,
2021). 73 Graham v. Mun. of Anchorage, 446 P.3d 349, 352 (Alaska 2019) (quoting Stepanov v.
Homer Elec. Ass’n., 814 P.2d 731, 734 (Alaska 1991)).
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important evidence of intention,”74 the court also may consider “extrinsic evidence of the
parties’ intent at the time the contract was made.”75 	If the contract is unambiguous, the
court construes it as a matter of law according to its written terms.76 “An ambiguity exists
only where the disputed terms are reasonably subject to differing interpretation after
viewing the contract as a whole and the extrinsic evidence surrounding the disputed
terms.”77 	“Only when both readings are reasonable does the parties’ intent become a
question of fact sufficient to overcome a motion for summary judgment.”78 As discussed
below, the Court determines that the Lease is unambiguous, and thus it will construe the
parties’ obligations as a matter of law.
Jo-Ann asserts that factual disputes prevent summary judgment without
reference to the standards of Alaska contract law articulated above.79 Specifically, Jo-Ann
does not appear to argue that the Lease is ambiguous,80 but that its interpretation involves
“extrinsic evidence outside the four corners of the Lease,” thereby preventing summary
74 Alaska Diversified Contractors, Inc. v. Lower Kuskokwim Sch. Dist., 778 P.2d 581, 584
(Alaska 1989) (quoting Restatement (Second) of Contracts § 212 comment b)).
75 Kimp, 484 P.3d at 87 (quotation omitted).
76 Rockstad, 41 P.3d at 586 (describing two-step analysis to determine the meaning of
lease terms).
77 Kimp, 484 P.3d at 87 (quoting id.).
78 Id.; see also Coleman v. Alaska USA Fed. Credit Union, No. 3:19-cv-0229-HRH, 2020
WL 1866261, at *2–3 (D. Alaska Apr. 14, 2020) (quoting Little Susitna Const. Co. v. Soil
Processing, Inc., 944 P.2d 20, 23 (Alaska 1997)) (“Contract interpretation becomes a task for the
trier of fact when the parties present extrinsic evidence to clarify a contract’s meaning, when this
evidence points toward conflicting interpretations of the contract, and when the contract itself is
reasonably susceptible of either meaning.”).
79 See generally Docket 31.
80 Docket 22 at 14 (“There is no factual or legal basis for Landlord’s claim that Jo-Ann
has breached the Lease for failure to pay its rental obligations . . . .”).
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judgment.81 	This position misunderstands the role of extrinsic evidence under Alaska
contract law.82 Further, Jo-Ann’s position contradicts its own motion for partial summary
judgment. 	With robust citation to the record, Jo-Ann’s motion requests that the Court
dismiss FEA’s termination of lease claim because, as a matter of law, “Jo-Ann has fulfilled
its rent payment obligations under the Lease.”83 	The Court cannot envision why this
question would be ripe for summary judgment under FEA’s “termination of lease” claim
but not its “breach of lease” claim. 	The two claims involve the same analysis regarding
the parties’ obligations under the Lease. 	Therefore, for the reasons below, a summary
ruling on both claims is appropriate.
Further, the Court’s sua sponte ruling in favor of nonmovant Jo-Ann on
FEA’s breach of contract claim is appropriate under Rule 56(f). Because FEA reasonably
understood 	Jo-Ann’s 	motion 	to 	request 	summary 	judgment 	on 	the 	issue 	of 	lease
interpretation, it filed a “cross-motion” on the same question.84 Thus, FEA was on notice
of the need to prove its case, respond to Jo-Ann’s arguments, and present any evidence in
its favor. 	The record is fully developed, and FEA agrees that lease interpretation can be
decided as a matter of law.85
81 Docket 31 at 4–5.
82 See Mahan v. Mahan, 347 P.3d 91, 94–95 (Alaska 2015).
83 Docket 22 at 14–22.
84 Docket 27 at 4.
85 Id.
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A. 	The Matrix Requires FEA to Deliver the Premises with a Sprinkler System that
is Code-Compliant for Mercantile Use
Central to this litigation is the Matrix, which was incorporated into the Lease
and outlines each party’s responsibilities in preparation of Jo-Ann’s opening.86 	The
disputed provision, Section 7.7, assigns to FEA “fire sprinkler system/monitoring – new
and/or modifications for building shell compliance with code.”87 Jo-Ann argues that this
provision requires the building shell—that is, the empty space delivered to Jo-Ann—to
comply with code requirements in connection with Jo-Ann’s intended mercantile use.88 By
contrast, FEA argues that “building shell compliance with code” required it “to deliver a
shell space that complied with the code at the time it was delivered (i.e., a light hazard use,
with correspondingly lower specifications).”89 As such, FEA asserts that it performed its
obligations by delivering a space that complied with the code requirements for an empty
building shell.90
FEA’s interpretation isolates Section 7.0 of the Matrix.91 Standing alone, the
phrase “building shell compliance with code” could suggest compliance with the applicable
code for an empty and unoccupied shell. But such narrow framing ignores the principle of
contract law that any lease provision “must be interpreted in light of other relevant lease
provisions,”92 and that the court must “look to the language of the contract as a whole, the
86 See Docket 22-43 at 62–63; Docket 27-17 (enlarged version).
87 Docket 27-17 ¶ 7.7.
88 Docket 22 at 16–17.
89 Docket 27 at 17.
90 Id. at 7.
91 See id. at 6.
92 Rockstad v. Glob. Fin. & Inv. Co., 41 P.3d 583, 585 (Alaska 2002).
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objects sought to be accomplished by the contract, [and] the circumstances surrounding its
adoption” in order to interpret its meaning.93 Taking the Matrix as a whole, including its
purpose 	and 	the 	circumstances 	surrounding 	its 	adoption, 	FEA’s 	interpretation 	is
unreasonable.
First, the Court cannot locate language in the Matrix that obligates Jo-Ann to
renovate the building’s sprinkler system. As FEA notes, the Matrix is a detailed document
that captures all the work each party was expected to perform to prepare the building shell
for Jo-Ann’s tenancy.94 Given the thoroughness of the Matrix and the sophistication of the
parties, the Court concludes that the document captures which party is responsible for
ensuring the Premise’s sprinkler system complies with fire code. While FEA argues that
the Matrix does not require FEA to provide “any particular level of water pressure for the
fire sprinkler, achieve any particular rate of flow for the sprinklers, or provide branch or
main lines of any particular size” as is required for mercantile use,95 the Matrix does not
assign Jo-Ann any responsibility for the sprinkler system beyond modifying the sprinkler
heads.96 The exclusive reference to complying with code in relation to the sprinkler system
falls to FEA.97 	FEA’s interpretation would assume that the highly detailed Matrix,
negotiated by sophisticated parties, is silent as to this major piece of renovation.98
93 Monzingo v. Alaska Air Group, Inc., 112 P.3d 655, 660 (Alaska 2005).
94 Docket 27 at 5–7.
95 Id. at 7.
96 Jo-Ann’s only assigned work regarding the sprinkler system is modifying the sprinkler
branch lines and sprinkler heads “due to tenant interior build-out.” Docket 27-17 ¶ 7.6.
97 Id. ¶ 7.7.
98 If the Matrix were, in fact, silent as to this responsibility, the Lease indicates that the
FEA assumes responsibilities for any and all repairs that Jo-Ann is not required to make, including
repairs to the plumbing system. See Docket 22-43 Section 18(d).
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Second, the Matrix was agreed upon by the parties in connection with Jo-
Ann’s use of the Premises as a retail store.99 In context, the phrase “building shell” does
not signify a tenantless space, and the phrase “compliance with code” cannot be divorced
from Jo-Ann’s intended use as a retail store. 	Throughout the Matrix, FEA takes
responsibility for substantial work to the exterior and shell of the building in anticipation
of Jo-Ann’s specific tenancy, whereas Jo-Ann performs any interior improvements and
customizations for the store.100 Accordingly, Section 1.0 of the Matrix outlines the general
responsibilities of each party in the build-out: 	FEA is required to “obtain all applicable
shell permits, utility permits, planning and zoning permits; turn over code compliant shell
building to tenant/tenant’s general contractor,”101 while Jo-Ann must “obtain all applicable
tenant 	improvement 	permits, 	temporary 	certificate 	of 	occupancy 	or 	fixturing/
merchandising, final certificate of occupancy, turn over code compliant building.”102 Thus,
both parties are responsible for ensuring that the Premises are up to code for Jo-Ann’s
occupancy; the allocation of that responsibility turns on whether the construction relates to
the building’s shell or its interior improvements.
99 See Docket 22-14; Docket 27-16 ¶ 1–4 (attesting that Lease negotiations included
several months of discussion about the Matrix).
100 Compare Docket 27-17 ¶ 1.15 (assigning landlord “compliance with all seismic
requirements, shell building”) with id. ¶ 1.16 (assigning tenant “compliance with all seismic
requirements, interior building”); see also Docket 27 at 9 n.14 (“There is no contention in this case
that FEA ever agreed to do a turn-key project: 	instead, the work was divided between FEA’s
responsibilities for the core and shell, and Jo-Ann’s for its own tenant improvements.”).
101 Docket 27-17 ¶ 1.1.
102 Id. ¶ 1.2.
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FEA cites deposition testimony that “core and shell” is an industry term for
“an empty space before it’s built out for a lease”103 and appears to argue that the Matrix’s
reference to “building shell” captures this specific meaning.104 However, here, the phrase
“building shell” describes the build-out for a specific lease and is used to distinguish the
structural construction and the interior improvements.105 FEA’s definition—that “building
shell” is confined to a vanilla, tenantless space—is incongruous with its use in the
Matrix.106
Further, the Matrix makes clear that “all work identified within this matrix
to be per current Jo-Ann Stores, Inc. prototype set of plans,” that “it is the landlord’s
responsibility 	to 	comply 	with 	all 	current 	prototype 	requirements.”107 	Given 	this
requirement, “building shell compliance with code” cannot mean the applicable code for
an empty, vacant shell space. FEA counters that Jo-Ann’s prototype had no bearing on its
work, citing an email from Jo-Ann’s attorney to FEA’s controller that any remaining
prototype drawings “only are relevant for Tenant’s Work – not your work.”108 In context,
however, this email exchange shows the opposite. FEA’s controller explains that FEA has
not received Jo-Ann’s prototype plans; instead, it has “spent the last several months
working with Joann’s team to evaluate our building and Joann’s needs,” therefore, FEA
103 Docket 22 at 14 (citing Docket 27-4 at 108:3–24).
104 See Docket 27 at 9–10, 20–22.
105 See generally Docket 27-17 (referring to “shell building” throughout Matrix).
106 Indeed, FEA President David Cavitt testified that his decision to upgrade the sprinkler
system to comply with the fire code for “core and shell” use was entirely independent of Jo-Ann’s
Lease, describing it as “general work that I could use as the base to show to any new tenant”
regardless of that tenant’s intended use of the Premises. Docket 27-16 ¶ 7.
107 Docket 27-17.
108 Docket 27 at 6 (citing Docket 27-19 at 2).
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proposes that any reference in the Lease to “prototype plans” be replaced with “Anchorage
plans” or similar.109 This reveals that FEA understood its construction to be in the context
of “Jo-Ann’s needs” and its “Anchorage plans,” as outlined by the Matrix.110 To deliver a
shell space that complied with code “at the time it was delivered” disregards the purpose
of the Matrix, which was to prepare the Premises for its use as a Jo-Ann Fabrics store.
Last, FEA argues that Jo-Ann’s interpretation of Section 7.7 would require
FEA to predicate its construction on a hypothetical, future use of the Premises.111 	FEA
explains that a building’s fire hazard is defined—in part—by the contents to be stored in
the space.112 	As such, Jo-Ann’s commodities could have triggered a higher fire code
classification.113 FEA argues that it complied with the fire code for an empty space because
“[d]elivering a ‘code compliant shell’ necessarily requires a code evaluation to be made at
the time the shell is delivered and cannot be based on hypothetical future store contents
that by definition are not part of an empty shell project.”114 	In short, FEA argues that it
had no way of knowing the applicable fire code.
109 Docket 27-19 at 2; see also Docket 27-18 at 2 (specifying in “Additional Comments”
that certain references to “tenant’s prototype” be replaced with “mutually agreed upon details and
specifications by LLD and tenant”).
110 Docket 27-19 at 2.
111 Docket 27 at 22.
112 Id. at 18–19.
113 Id. at 21–23; but see Docket 32 at 5 (stating as undisputed fact that “[a] retail store like
Jo-Ann’s is classified as an ordinary hazard II application (requiring .2 gallons per minute over a
1500 sf area)”); Docket 31-6 at 98:14–15 (testifying that “NFPA 13 mandates that a retail area or
mercantile area is an ordinary 2 at minimum”). FEA seems to argue that Jo-Ann’s, theoretically,
could stack highly flammable materials in such a way that the store requires a higher fire code,
just as a tenantless shell could require a higher fire code if it was used to store highly flammable
materials.
114 Docket 27 at 22.
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Again, this argument belies the purpose and scope of the Matrix. 	As
discussed, the Matrix explicitly ties the project to Jo-Ann’s tenancy and build-out; it is
disingenuous to classify its scope as an “empty shell project.”115 	Jo-Ann is not arguing
that “a shell is not code compliant unless all systems inside could also meet the permitting
requirements for non-shell future uses,” as FEA claims.116 Rather, Jo-Ann asserts that the
Matrix references the fire code in context of Jo-Ann’s Lease, which necessitates the
building shell’s sprinkler system be compliant with mercantile use. Jo-Ann’s commodities
never risked a higher fire hazard classification,117 but even if they did, it would not impact
FEA’s obligation to provide a code-complaint building shell. 	Jo-Ann acknowledges that
it would have been responsible for upgrading the sprinkler system had its commodities, as
opposed to the building itself, necessitated a higher fire code than is required for a retail
store.118
Read in context of the Matrix’s purpose and other provisions, Section 7.7
unambiguously obligates FEA to deliver the Premises with a sprinkler system that
complied with fire code for its use as a retail store.
B. 	The Lease’s Other Provisions Support Jo-Ann’s Interpretation of the Matrix
The rest of the Lease supports, if not compels, Jo-Ann’s interpretation of the
Matrix. Section 18 governs the parties’ responsibilities for repairs and maintenance of the
115 See, e.g., Docket 27-17 ¶¶ 4.17–4.19 (assigning responsibility for Jo-Ann signage); id.
¶ 5.0 (assigning responsibility for interior build-out).
116 Docket 27 at 23.
117 Docket 22-21; Docket 27-10.
118 Docket 31 at 21–22.
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Premises after the Delivery Date.119 	As with the Matrix, Section 18 generally assigns
responsibility to FEA for structural and exterior portions of the Premises, while Jo-Ann
maintains the Premise’s non-structural interior.120
Specifically, Section 18 commits FEA to any repairs and replacements of the
sprinkler system and expressly relieves Jo-Ann of such obligations. FEA warrants that the
sprinkler systems “are, and will be upon the Delivery Date, in good working order and
repair” and that “there are not, and will not be on the Delivery Date, any violations of any
Laws,” otherwise FEA is obligated to “promptly correct any code violations subsequently
found to exist.”121 Under Section 18(c), FEA is responsible for:
repair or replacement of the sprinkler, life safety, or other detection or
suppression systems except to the extent such systems are installed as part of
Tenant’s Work, in which case Tenant shall be solely responsible [for] any
such repairs or replacement system.
Similarly, Section 18(h) provides that FEA is responsible:
for making all alterations of or improvements to the Premises that are
required by any Public Entity (which requirement may arise as a result of
Tenant 	seeking 	approval 	from 	a 	Public 	Entity 	for 	alterations 	and
improvements to the Premises) and that (i) are structural in nature, (ii) relate
to the exterior thereof, including the Common Areas, (iii) relate to the
sprinkler, utility, or life safety systems therein.
This language envisions the precise circumstance before the Court. 	Jo-Ann sought
approval from a public entity (the Municipality of Anchorage), who then required an
119 See generally Docket 22-43 at 30–33.
120 See, e.g., Docket 22-43 Section 18(a) (“Except as otherwise provided, Tenant will
maintain 	the 	interior, 	non-structural 	portion 	of 	the 	Premises”), 	Section 	18(b) 	(landlord
guaranteeing that all structural portions of the Premises are in good working order), Section 18(c)
(tenant “must make all interior nonstructural repairs”).
121 Docket 22-43 Section 18(b).
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alteration of the Premises relating to the sprinkler system. 	In whole, the Lease plainly
allocates sprinkler work to FEA and requires FEA to upgrade the building’s sprinkler
system when necessary to comply with law.122
FEA argues that Section 18(h) is superseded by Section 18(c), which excepts
FEA from sprinkler repairs “to the extent such systems are installed as part of Tenant’s
Work.”123 Asserting that these two sections conflict and that Section 18(c) is more specific,
FEA argues that Section 18(c) must control.124 	First, the Court notes that a “repair”
contemplated by 18(c) is different than an alteration or improvement required by a public
entity. Second, Section 18(h) already contemplates a division of labor between tenant and
landlord work, noting that:
Tenant is responsible for making any interior non-structural alterations of or
improvements to the Premises that are required by any Public Entity after the
Delivery Date, except to the extent that such responsibility is imposed upon
Landlord [in the remainder of Section 18(h)].
Last, these provisions only conflict under FEA’s interpretation of the Matrix. If, instead,
the Matrix requires FEA to bring the building’s sprinkler system up to code for Jo-Ann’s
retail lease, the Matrix and Lease provisions harmonize.
The body of the Lease overwhelmingly supports Jo-Ann’s interpretation of
the Matrix and independently obligates FEA to alter the sprinkler system when required by
a public entity.
122 See also id. Section 26(a)(3) (landlord warrants that the Premises, excluding Tenant’s
Work, and all structural portions of the Shopping Center comply with law).
123 Docket 27 at 28–29; Docket 32 at 20–21.
124 Docket 32 at 21.
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C. 	Jo-Ann’s Construction Plans do Not Alter the Contract’s Written Terms
While the Matrix and the Lease are the primary evidence of the parties’
intent, the Court may consider extrinsic evidence to determine whether its terms are
ambiguous.125 	Here, FEA argues that “Jo-Ann’s tenant improvement plans explicitly
accept the burden of increasing pressure and flow for the sprinkler system as a Jo-Ann’s
responsibility.”126 The plans include general fire protection notes for Jo-Ann’s contractor,
stating that the “fire protection contractor is responsible to determine if a fire pump will be
required, and provide and install as necessary” in accordance with law.127 FEA notes that
the only reason a fire pump would be installed is to provide enough water pressure for the
sprinkler system to comply with fire code, “something that would not have been required
if FEA was the party obligated to ensure that the system provided enough water flow meet
the ordinary hazard II requirements for retail operations.”128 As such, FEA argues that Jo-
Ann understood its obligation to bring the sprinkler system up to code for mercantile use.
However, the fact that a future contractor would, if appropriate, install a fire
pump does not contradict Jo-Ann’s interpretation of the Matrix or Lease. Indeed, Jo-Ann
125 See Kimp v. Fire Lake Plaza II, LLC, 484 P.3d 80, 87 (Alaska 2021), reh’g denied
(Apr. 28, 2021). The Court acknowledges that the Parties cite extensively to the record, both as
background and as evidence of intent. 	Much of this evidence has no bearing on the Parties’
intended meaning of the Matrix at the time it was executed. 	For example, the communications
from the Municipal Fire Inspector regarding FEA’s core and shell permit have no relation to the
Parties’ contractual obligations. Similarly, third party depositions are not evidence of the Parties’
intent at the time the contract was formed. See also Estate of Polushkin ex rel. Polushkin v. Maw,
170 P.3d 162, 169 (Alaska 2007) (post-litigation statements as to subjective intent are not
probative extrinsic evidence).
126 Docket 25 at 23.
127 Docket 27-9 at 28.
128 Docket 27 at 25.
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accepts that it would have been required to increase the water pressure had its commodities
triggered a higher fire code than that for normal retail use.129 	Although Jo-Ann’s
commodities did not, in fact, increase the store’s fire hazard risk, the 64-page document
reasonably 	includes 	this 	possibility 	for 	the 	contractor. 	Accordingly, 	the 	tenant
improvement plans neither support FEA’s interpretation of the contract nor contradict its
written terms.
D. 	Jo-Ann is Not in Default of the Lease Due to Non-Payment of Rent
Jo-Ann is required to start paying rent on the Lease’s Commencement Date,
which is either “(i) the 151 st day after the Delivery Date, or (ii) the day that Tenant opens
for business in the Premises, whichever day first occurs.”130 The Delivery Date is defined
as “the date Landlord delivers the Premises to Tenant with all of the Delivery Requirements
satisfied,”131 which in turn requires the Landlord’s work to be “Substantially Complete,”132
i.e., “complete with the exception of minor ‘punch list’ items that can be completed within
14 days without interfering with the performance of” Tenant’s work on the Premises.133
Under Section 27 of the Lease, Jo-Ann is deemed in default if it “fails to pay Rent on or
before the due date and then fails to pay within 10 days after receipt of written notice from
Landlord.”134
129 Docket 31 at 21–22.
130 Docket 22-43 Section 2(b).
131 Id. Section 2(e).
132 Id. Section 2(f)(1).
133 Id. Section 2(w).
134 Id. Section 27(a)(1).
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As discussed, FEA’s work included providing a sprinkler system that met
fire code requirements for mercantile use. 	Jo-Ann completed repairs of the sprinkler
system on May 15, 2020, rendering that work “substantially complete.”135 Therefore, the
Commencement Date is August 13, 2020, when Jo-Ann opened for business. Jo-Ann has
paid rent in full since that date.136 The Court concludes that Jo-Ann is not in default under
Section 27 of the Lease due to non-payment of rent.
V. 	CONCLUSION
For the reasons stated above, the Court GRANTS Jo-Ann’s motion for
partial summary judgment on FEA’s third cause of action (“termination of lease”). 	The
Court sua sponte GRANTS summary judgment on FEA’s second cause of action (“breach
of lease”) in favor of nonmovant Jo-Ann. 	The Court DENIES FEA’s motion for partial
summary judgment in its entirety.
The Court notes that its limited ruling simply interprets the Lease and finds
that Jo-Ann is not in default of the Lease. Neither party has moved for a summary ruling
on Jo-Ann’s counterclaims, and Jo-Ann did not move for summary judgment on FEA’s
request for a declaration that FEA satisfied its contractual obligations. 	The Court is not
prepared to rule sua sponte on those claims given FEA’s affirmative defenses and lack of
briefing on those issues. 	As such, Jo-Ann’s counterclaims remain active, as does FEA’s
first cause of action for declaratory judgment.
135 Docket 7 at 11.
136 Docket 27 at 30; Docket 22-1 ¶ 4; Docket 22-4 at 150:13-24; Docket 22-5 at 156:17–
25.
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The Court subsequently will issue an Order Re: Certification of Readiness
for Trial. In the Scheduling and Planning Conference Report, the parties stated they wished
to consider private mediation or a settlement conference with a judicial officer of this
Court. 	Given the nature of the remaining claims, this Court respectfully encourages the
parties to engage in such mediation and will schedule a judicial settlement conference upon
request.
IT IS SO ORDERED this 29th day of August, 2022, at Anchorage, Alaska.
/s/ Joshua M. Kindred
JOSHUA M. KINDRED
United States District Judge
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