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Case 1:19-cv-00033-LG-RHW Document 1 Filed 01/28/19 Page 1 of 7

IN THE UNITED STATES DISTRICT COURT


FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION

SINGING RIVER MOB, LLC, )


)
Plaintiff, )
)
v. ) CIVIL ACTION NO.: 1:19-cv-33-LG-RHW
)
SINGING RIVER HEALTH )
SYSTEM, )
)
Defendant. )

COMPLAINT

Singing River MOB, LLC (“Singing River MOB” or “Plaintiff”) hereby submits this

Complaint against Singing River Health System (“SRHS” or “Defendant”) to recover rent and

other amounts owed under the four subleases between Singing River MOB and SRHS.

PARTIES, JURISDICTION, AND VENUE

1. Singing River MOB is an Alabama limited liability company doing business in

Jackson County, Mississippi through its ownership of a medical office building built pursuant to

agreements with SRHS. Singing River MOB’s members are citizens of the state of Alabama.

2. SRHS is a community hospital owned by Jackson County, Mississippi (“Jackson

County”), and is a political subdivision of the State of Mississippi.

3. This Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C.

§ 1332 because the parties are completely diverse and the amount in controversy exceeds

$75,000.
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4. Venue is proper in the Southern Division of the U.S. District Court for the

Southern District of Mississippi because Defendant SRHS is located in and owned by Jackson

County, which is located in the Southern Division. See 28 U.S.C. § 1391.

FACTUAL ALLEGATIONS

5. In or about 2008, SRHS invited Johnson Development, LLC (“Johnson

Development”), an Alabama limited liability company, to make a proposal to assist SRHS in

connection with the development of a design/build-to-suit medical office building. In connection

therewith, Johnson Development presented SRHS with proposals that would allow for the

development of the medical office building using advantageous financing through the use of

GoZone tax exempt bond financing and the use of new market tax credits.

6. Singing River MOB was formed as an affiliate of Johnson Development in

reliance upon representations of SRHS regarding its verified authority to enter into a series of

transactions that included an initial ground lease from Jackson County (“the Prime Ground

Lease”) and a sub-ground lease to Singing River MOB (“the SRHS Ground Lease”), followed by

leasebacks of improved property to SRHS (the “SRHS Subleases”).

7. As a predecessor transaction to the SRHS Ground Lease and the SRHS Subleases,

on March 26, 2009 Jackson County and SRHS entered into the Prime Ground Lease, in which

Jackson County leased unimproved real property to SRHS for the leasehold improvements

contemplated by the SRHS Ground Lease and the SRHS Subleases.

8. SRHS proceeded to enter into subleases with Singing River MOB, namely the

SRHS Ground Lease and the SRHS Subleases. Copies of the SRHS Ground Lease and the SRHS

Subleases are attached hereto as Exhibits A and B1–B4, respectively.

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9. Singing River MOB then entered into binding financing agreements and

proceeded with construction of the medical office complex for the benefit of SRHS.

10. The SRHS Subleases consist of four twenty-five year leases for: an “Imaging

Space” with a current annual lease payment of $341,965.11, an “Option Space” with a current

annual lease payment of $118,601.28, a “Multi-Use Space” with a current annual lease payment

of $612,322.25, and a “Wellness Space” with a current annual lease payment of $666,366.34.

These amounts are calculated according to the “Rental” section of each sublease. See Exhibits

B1–B4 at Section 5.

11. The SRHS Subleases each provide that SRHS shall make a monthly lease

payment on the first day of each calendar month. Id. at Section 5.1.

12. SRHS has not made the payments due January 1, 2019 under the SRHS

Subleases.

13. The SRHS Subleases each provide that “[a] late fee of ten percent (10%) of the

Base Rental then in effect shall be due and payable with respect to all installments of Rent more

than ten (10) days past due.” Id. at Section 5.3. Those late fees incurred on January 11, 2019 total

$18,261.51.

14. SRHS has not paid the 10% late fee on the past due rent installments.

15. Each of the SRHS Subleases defines “any failure of Tenant to pay any Rental or

other sums of money when due hereunder” as an event of default by which SRHS “shall be

deemed in breach and default of this Lease . . . .” Id. at Section 24.1. “Rental” is defined as “the

Base Rental and any other sums to be paid by Tenant to Landlord hereunder.” Id. at Section 1.2.

16. In the event of default by SRHS, Singing River MOB is entitled to, “without

further notice or demand of any kind” and in addition to other available remedies, accelerate the

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rent due under the subleases. Additionally, Singing River MOB may “proceed by . . . suit or

otherwise to collect” delinquent or accelerated rent and any other amounts due under the

subleases. Id. at Section 24.2(a)(1) and (2).

17. The SRHS Subleases each provide for the recovery of attorneys’ fees and court

costs incurred by Singing River MOB in the event of default by SRHS and in connection with a

breach by SRHS. Id. at Sections 24.2(b) and (c).

18. The SRHS Subleases each provide for the recovery of interest on past due rental

amounts and on “any costs or expenses incurred by Landlord” in the event of default. Id. at

Sections 24.2(b) and (c).

19. On January 24, 2019, Singing River MOB, through its counsel, issued four

demand letters to SRHS for the rental payments and late fees owed. However, to date, SRHS has

not paid the past-due amounts owed under the SRHS Subleases. See Exhibits C1–C4.

20. On the morning of January 28, 2019, Singing River MOB, through its counsel,

issued four notices of acceleration for the respective SRHS Subleases. See Exhibits D1–D4.

COUNT ONE: BREACH OF CONTRACT

21. Singing River MOB incorporates the allegations in paragraphs 1 through 20 of

this Complaint as if fully alleged herein.

22. On March 26, 2009, SRHS entered into the four SRHS Subleases with Singing

River MOB. Under the SRHS Subleases, SRHS agreed to make monthly lease payments on the

first day of each calendar month and to pay late fees on past due lease payments.

23. SRHS has defaulted according to the terms of the SRHS Subleases and has

breached the subleases by failing to make the lease payments due January 1, 2019 and the late

fees due January 11, 2019.

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24. As a result, Singing River MOB is entitled to judgment against SRHS in the

amount of the lease payments due January 1, 2019, and the late fees due January 11, 2019, which

amount totals $200,876.59.

25. Also as a result of SRHS’s default, Singing River MOB has accelerated the

remaining rental amount due under the SRHS Subleases according to the terms of the subleases.

Singing River MOB is entitled to the accelerated rent, which amount totals $49,295,542.79.

26. Under the SRHS Subleases, Singing River MOB is additionally entitled to its

reasonable attorneys’ fees and court costs incurred in collecting these past-due amounts.

27. Under the SRHS Subleases, Singing River MOB is entitled to interest on the

accelerated rental amounts and on its attorneys’ fees and court costs incurred in collecting these

past due-amounts.

28. WHEREFORE, Singing River MOB prays that this Court will enter an order

awarding Singing River MOB:

a. Damages in the amount of $49,496,419.38, representing the past-due lease

payments and late fees and the remaining rental amount due under the SRHS

Subleases;

b. its attorneys’ fees and court costs incurred in bringing this action and in

connection with SRHS’s default, in a final amount to be determined; and

c. interest on these amounts at a rate to be calculated in accordance with the SRHS

Subleases.

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Respectfully submitted this 28th day of January, 2019.

/s/ John N. Bolus


John N. Bolus (MSB100585)
Maynard Cooper & Gale, P.C.
1901 Sixth Avenue North
Suite 2400 Regions/Harbert Plaza
Birmingham, AL 35203
Telephone: (205) 254-1000
Facsimile: (205) 254-1999

Peter C. Abide (MSB1026)


Currie Johnson & Myers, P.A.
925 Tommy Munro Drive
Suite H
Biloxi, MS 39532
Telephone: (228) 385-1010
Facsimile: (228) 385-1011

Attorneys for Defendant Singing River


MOB, LLC

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CERTIFICATE OF SERVICE
I hereby certify that I have served a copy of the foregoing document on the following by
U.S. First Class Mail, hand delivery, fax, or email on this the 28th day of January, 2019.

Patrick R. Buchanan
Michael E. Bruffey
Brown Buchanan, P.A. – Biloxi
P.O. Box 1377
Biloxi, MS 39533-1377
Telephone: (228) 374-2999
mailb@brownbuchanan.com
Attorneys for Defendant Singing River Hospital System

/s/ John N. Bolus


OF COUNSEL