AZOX L.L.C. v. Bloom International Realty, L.L.C.

Background

Bloom and AzOx entered into an Owner’s Representative Agreement concerning Bloom’s renovation project involving the Associated Bank Building. In 2015, they amended that agreement to cover Bloom’s proposed Riverfront Property development in Rochester. Amendment One contemplated a 5% commission fee, which the parties valued at $400,000.

In November and December 2018, the parties negotiated and signed Amendment Two. That amendment divided AzOx’s work and compensation into two phases. Phase One involved negotiating with the City of Rochester and securing development assistance. Phase Two involved construction-management services. Amendment Two set the Phase Two fee at $300,000 and stated that Bloom could decide, in its sole discretion, whether to undertake the Riverfront development. It further provided that if Bloom decided not to proceed, AzOx would not perform the Phase Two services and Bloom would not owe the Phase Two fee.

Bloom later cancelled the project after receiving a feasibility report and terminated its purchase agreement with the City. AzOx sought the $300,000 Phase Two fee and asserted claims for breach of contract and fraudulent concealment. Bloom moved for summary judgment, which asks the court to rule without a trial when the record shows no genuine dispute over a fact that could affect the result.

Breach of Contract

The court held that Amendment Two was an enforceable contract. AzOx argued that it had signed the amendment based on an oral representation about immediate and installment payments and did not understand that Bloom had discretion to abandon the project. The court found that AzOx had an opportunity to read the amendment before signing it and that its failure to do so did not invalidate the agreement.

The court also rejected AzOx’s arguments that Amendment Two was vague or ambiguous. It found that the agreement clearly defined the two project phases. Although a separate payment provision referred both to a lump-sum payment and installments, the court determined that this issue did not affect the controlling provision, which made the Phase Two fee conditional on Bloom’s decision to proceed.

The court further rejected AzOx’s argument that Bloom breached the agreement by refusing to close on the Riverfront Property. It concluded that Bloom’s decision not to proceed was permitted by Amendment Two and excused both parties from further Phase Two performance. The court therefore granted summary judgment for Bloom on the breach-of-contract claim.

Fraudulent Concealment

AzOx argued that Bloom concealed its reconsideration of the project and drafted Amendment Two to avoid its earlier contractual obligations. Bloom argued that the record contained no evidence supporting fraudulent concealment and that it still intended to proceed when AzOx signed Amendment Two.

The court found that AzOx identified no genuine, material factual dispute showing fraudulent intent. It viewed the cited emails as primarily concerning a possible breach of Bloom’s agreement with the City, not fraud against AzOx. The court also found that the parties’ agreement contemplated Bloom’s decision not to proceed, that AzOx knowingly accepted the risk that Bloom might abandon the project, and that no special relationship required Bloom to keep AzOx informed of its plans. The court granted summary judgment for Bloom on the fraudulent-concealment claim.

Disposition

The court granted Defendant Bloom International Realty, LLC’s Motion for Summary Judgment and ordered judgment to be entered accordingly. Judge Susan Richard Nelson therefore resolved the case in Bloom’s favor on the claims presented.