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Marsh wins $19.5M judgment against Roche

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A Hamilton Superior Court judge has awarded Marsh Supermarkets Inc. a total of $19.5 million in damages in a soured sublease deal with Swiss pharmaceutical- and medical-equipment-maker Roche.

The final judgment, entered Monday by Judge William Hughes following a bench trial in early October, includes nearly $1.4 million in attorney's fees to be paid to Marsh’s Indianapolis-based law firm, Lewis Wagner LLP.

Marsh’s multimillion-dollar award stems from a breach of contract suit it filed in July 2008 to enforce a deal with Roche Diagnostics Corp. to sublease the local supermarket chain’s entire 148,000-square-foot-headquarters in Fishers.

The deal, worth more than $47 million over 18 years, would have been one of the largest of its kind in central Indiana.

Roche, which has its North American headquarters and 2,800 employees spread over several buildings along Interstate 69 near East 96th Street, announced the lease of Marsh’s headquarters in March 2008 but backed out in late May of that year.

The abrupt reversal was a shock to Marsh, which had vacated most of the building, and Roche employees already were moving in and conducting meetings in the auditorium, the lawsuit claimed.

But Roche said it had a right to terminate the deal because Marsh failed to deliver certain documents, including a so-called subtenant non-disturbance agreement—standard paperwork that protects sublease tenants in many of the same ways primary tenants are protected.

Roche spokeswoman Betsy Cox said the company plans to appeal the decision.

“Roche’s corporate policy is to conduct business in a fair and ethical manner and the company believes it was acting in accordance with the terms of the contract when it terminated the sublease,” she said in an e-mail.

Big changes were afoot at Roche the month it canceled the sublease deal. On May 5, 2008, the company said it would transfer 300 local jobs to Germany. Later that month, North American CEO Tiffany Olson resigned abruptly. Roche’s Asia-Pacific chief, Michael Tillmann, took over the local post about a week before the firm told Marsh it was pulling out of the deal.

Tillmann, who resigned as CEO in January 2010, wanted to terminate the agreement with Marsh to give the company more flexibility if he decided to move Roche out of Indianapolis, according to court documents.

In his decision, Hughes said Roche had no right to terminate the sublease and found that Marsh and Roche signed a “valid and enforceable” agreement on March 28, 2008.

A spokesman for Marsh said the company is pleased with the judge’s decision.

Marsh’s losses resulting from the termination through November 2026, the span of the original lease with Roche, totaled $47.1 million, the judge said.

He reduced damages to nearly $18.2 million because Marsh is using 20,000 square feet of space in the building, in addition to a sublease the grocer signed in June 2011 with First Advantage Background Services Corp. for 44,200 square feet.

Including attorney's fees, the judgment totals more than $19.5 million.

Marsh moved its headquarters from Yorktown after it built the four-story building in the Crosspoint commercial park in 1991. The company has since moved several employees to offices at its warehouses on Franklin Road in Indianapolis and in Yorktown.
 

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  • Excellent Court Decision
    The Management Team from Roche North America ran head-on into Senior Roche Management in Basel, Switzerland, nothing more. Unless my math is wrong, local Roche Management entered into a sublease contract that would extend to 2026, with no "out clauses" for downsizing. Contract Law is "black and white" and the fact that 30% of the Contract Value was awarded by the court, suggests that the contract between the parties was well structured, signed by both parties, and then vacated by Roche Senior Management in Basel. The next news story from Roche North America will be the termination of one or more managers involved in this mess.

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