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275 Wash. St. Corp. v. Hudson River Int'l

Appeals Court of Massachusetts

June 23, 2015

275 Washington Street Corp ., trustee, [1]
v.
Hudson River International, Inc ., [2] & another. [3]

Editorial Note:

This decision has been referenced in an "Appeals Court of Massachusetts Summary Dispositions" table in the North Eastern Reporter. And pursuant to its rule 1:28, As Amended by 73 Mass.App.Ct. 1001 (2009) are primarily addressed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, rule 1:28 decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28, issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass.App.Ct. 258, 260 N.4, 881 N.E.2d 792 (2008).

MEMORANDUM AND ORDER PURSUANT TO RULE 1:28

On appeal from a judgment, the plaintiff-appellant landlord, 275 Washington Street Corp. (landlord) argues error in orders of the Superior Court that: (1) denied its motion for prejudgment security; (2) awarded attorney's fees to the defendant-appellee Hudson River International, LLC and Laboratorio Lucas Nicolas S.L. (tenants); (3) awarded the tenants prejudgment interest on their fee award; and (4) awarded the tenants attorney's fees and costs incurred in responding to the landlord's motion for reconsideration. The tenants, in turn, request that we award them their attorney's fees and costs incurred in connection with this appeal. For the reasons that follow, we conclude that the landlord's claims lack merit and affirm the judgment of the Superior Court. We further conclude that the tenants are entitled to the attorney's fees and costs they incurred in connection with this appeal.

Background.

This case has been the subject of a prior appeal, and a brief statement of the procedural history is useful.[4] On April 13, 2006, the landlord, as trustee of the Washington Street Realty Trust (II), and the tenants entered into a twelve-year lease for commercial space at 221-275 Washington Street in downtown Boston (premises).[5] The tenants took possession of the premises on April 16, 2006, but closed the dental office in May, 2007, and removed the dental equipment in October, 2007. The tenants continued to make base rent payments through March, 2008. On May 9, 2008, the landlord sent a letter to the tenants listing their defaults and declaring that the landlord would " avail itself of all remedies to which it [was] entitled under the [l]ease." The landlord reentered and took possession of the premises on May 19, 2008, thereby terminating the lease. In March, 2010, the landlord signed a new ten-year lease for the premises with a replacement tenant, extending beyond the April 16, 2018, termination date of the original lease at a lower rent than was agreed to under the original lease.

On May 29, 2008, the landlord filed suit in the Superior Court against the tenants for breach of contract seeking to recover all damages arising from the breach. Some issues were resolved by pretrial rulings.[6] To avoid the cost of a trial concerning the remaining issues, including the amount of the rent differential between the original lease and the new lease and when that value should be assessed, the parties stipulated that judgment should enter for the landlord against the tenants in the amount of $1,092,653.36. The tenants expressly reserved their right to appeal all issues they raised in their motion for partial summary judgment. On appeal, this court affirmed the finding of liability in favor of the landlord, but vacated the judgment assessing damages and remanded the matter " for calculation of damages due to the landlord as of the time it recovered possession of the premises." 275 Washington St. Corp. v. Hudson River Intl., LLC, 81 Mass.App.Ct. 418, 428, 963 N.E.2d 758 (2012). On further appellate review, the Supreme Judicial Court affirmed that part of the judgment finding the tenant liable for breach of the lease, vacated that part of the judgment assessing damages for the period following termination of the lease, and awarding attorney's fees, and remanded the matter to the Superior Court. 275 Washington Street Corp. v. Hudson River Intl., LLC, 465 Mass. 16, 31, 987 N.E.2d 194 (2013). The court noted, in regard to its affirmance of the award of attorney's fees to the landlord, that " [t]he landlord was the prevailing party at the time of judgment, but the tenant[s] ha[ve] prevailed as to the issues on appeal." Id. at 31 n.12. It instructed that " [o]n remand, the judge shall determine whether to assess attorney's fees in accordance with [paragraph 29] in the lease, and the amount to be assessed." Ibid.

On remand, the landlord filed a motion requesting that the tenants be ordered to post a bond in the amount of $1,267,100 as prejudgment security and that the trial court retain jurisdiction over the case until a final assessment of damages. That motion was denied; the judge determined that she had no authority to provide such relief. Instead, she ordered the immediate entry of judgment. Also, both parties filed motions for attorney's fees and costs. The judge ruled that judgment should enter for the landlord in the amount of $37,275.24, plus $19,997.50 in attorney's fees and $1,327.46 in costs. She also ruled that the tenants were entitled to attorney's fees in the amount of $277,347.50 and costs in the amount of $44,249.89 in connection with its opposition to the landlord's claim arising from the lease's indemnification clause.[7]

Discussion.

1. Landlord's motion for prejudgment security and to retain jurisdiction.

It is the law of the case that the landlord cannot recover losses under the lease's indemnification clause until the end of the period specified in the lease. 275 Washington Street Corp., 465 Mass. at 23. In this case, the tenants' obligation to indemnify the landlord does not arise until April 16, 2018, the " end of the original lease term, when damages may be 'wholly ascertained.'" Id. at 24, quoting from Gardiner v. Parsons, 224 Mass. 347, 350, 112 N.E. 958 (1916). Therefore, the judge was correct in ruling that when she considered the landlord's motion to order the tenants to post a bond and retain jurisdiction, the landlord's indemnification claim was not ripe, and the court did not have jurisdiction to entertain that claim. See Woodbury v. Sparrell Print, 187 Mass. 426, 430, 73 N.E. 547 (1905); Boston Herald, Inc. v. Superior Ct. Dept. of the Trial Ct., 421 Mass. 502, 504, 658 N.E.2d 152 (1995).

2. Award of attorney's fees to the tenants.

Preliminarily, we view the Supreme Judicial Court's analysis in this case as necessarily implying that the landlord's one-count complaint actually consisted of two distinct claims: a claim for pretermination rent and a claim for posttermination indemnification. See 275 Washington St. Corp., 465 Mass. at 31. The court's statement that " [t]he landlord was the prevailing party at the time of judgment, but the tenant[s] ha[ve] prevailed as to the issues on appeal" denotes that each party is a " prevailing party." See id. at 31 n.12. Specifically, it denotes that the landlord was the prevailing party as to its claim for pretermination rent, and that the tenants were the prevailing party as to the landlord's claim for posttermination indemnification. See ibid.

Absent language indicating a contrary intent, the term " prevailing party" in a contractual fee payment clause is to be given its commonsense meaning. In Bardon Trimount, Inc. v. Guyott, 49 Mass.App.Ct. 764, 778, 732 N.E.2d 916 (2000), we awarded a landlord its fees and costs as a " prevailing party" under a fee payment clause in a stock purchase agreement despite the fact that no judgment had been entered in its favor. Id. at 779, 781. The landlord sought fees and costs in connection with the dismissal of the action. Even though it did not necessarily " implicate the merits of the claim," we found it significant that the dismissal did " engineer a permanent defeat . . . and an award of attorney's fees under the contract reflected appropriately the fact that 'the plaintiff . . . dragged the defendant through a costly and ultimately fruitless exercise.'" Id. at 780, quoting from Anderson v. Melwani, 179 F.3d 763, 765-766 (9th Cir. 1999).

Similarly, in the present case, the landlord's indemnification claim was effectively dismissed when the Supreme Judicial Court vacated that part of the Superior Court judgment assessing damages for the period following termination of the lease. See 275 Washington Street Corp., 465 Mass. at 31. The Superior Court's award of fees and costs to the tenants thus appropriately reflects the fact that the landlord required the tenants to participate in a " costly and ultimately fruitless exercise" with regard to that claim. As in Draper v.Town Clerk of Greenfield, 384 Mass. 444, 452, 425 N.E.2d 333 (1981), the tenants are the " prevailing party" with regard to ...


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