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DDJB Real Estate Holdings, LLC v. The Church of Scientology of Boston, Inc.

Superior Court of Massachusetts, Suffolk

May 8, 2016

DDJB Real Estate Holdings, LLC
v.
The Church of Scientology of Boston, Inc. No. 133542

          Filed Date May 9, 2016

          MEMORANDUM OF DECISION AND ORDER ON PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT [1]

          DENNIS J. CURRAN, Associate Justice.

         DDJB Real Estate Holdings, LLC has sued the prospective tenant of one of its properties, the Church of Scientology of Boston, Inc. On July 11, 2014, DDJB and the Church signed a three-year lease which recited an August 1, 2014 move-in date and provided that the Church would be responsible for any expenses related to any move-in delays caused by it. Just a month later, the Church repudiated the lease, citing a delay in the move-in date and the odor of a nearby transfer station as its reasons for doing so. Because the summary judgment record contains uncontroverted evidence that the Church knew, before signing, that the actual move-in date could be later than originally anticipated, DDJB is entitled to summary judgment as to its breach of contract claim. (Count I.) However, because there remains a question of material fact as to whether the Church's " motive in terminating the [lease] was to affect negatively the plaintiff's rights, " T.W. Nickerson, Inc. v. Fleet Nat'l Bank, 456 Mass. 562, 574 (2010), summary judgment must be denied as to DDJB's claim for breach of the covenant of good faith and fair dealing. (Count II.)

         BACKGROUND

         In the fall of 2013, the Church was seeking to move out of its then-current headquarters at 448 Beacon Street in Boston, Massachusetts, under an agreement by which it sold that property to The Congress Group, Inc. That agreement required the Church to vacate the Beacon Street location by August 23, 2014, extendable for an additional 180 days at a set fee of $250, 000, or if the Church failed to timely extend, at a per diem charge of $5, 700 for use and occupancy.

         In January 2014, the Church's Executive Directors, Graham Parker and Heather Landrey, viewed a potential rental property owned by DDJB at 112-114 Gerard Street in Boston, Massachusetts.[2] On March 27, 2014, the Church's real estate broker, Gary McCourt, provided DDJB with a letter of intent to rent the property. That letter proposed a five-year lease to commence on July 1, 2015 and requested that DDJB build out the " raw" space into rooms for the Church's use. On March 28th, Mr. Parker agreed to and accepted the letter on behalf of the Church, on a signature line designated " [d]uly authorized to sign." Joint Appendix, Exhibit 10. DDJB promptly signed the letter of intent and returned it to the Church sometime before March 31st.

         On April 3rd, DDJB provided an initial draft lease with a proposed start date of August 1, 2014 and requested that the Church identify its decision-maker for the terms of the build-out. The parties continued to negotiate for several weeks, including the Church's April 14th proposal of a second letter of intent, which DDJB declined to sign. On May 5th, DDJB informed Mr. McCourt that it could not commit to a budget and timeframe for the build-out until the Church indicated the precise nature of the facilities it needed and received bids for that work. It also sent a proposed version of the Lease, which included the following term related to constriction delays:

[S]hould [the Church] be deemed to have cause[d] delay in approving or designing the interior work, the occupancy date may be delayed, however [DDJB] will not be responsible for any temporary space, penalties or any other financial cost the [Church] may encounter due to the delay of occupancy. [DDJB] understands time is of the essence and will make all efforts to get the [Church] in on August 1st.

         Exhibit 17.

         On May 7th, DDJB emailed Mr. McCourt a timeline for further agreements and planning regarding the lease and the build-out, including a proposal that the Church sign the lease and provide a " [f]ull list of decision makers and point of contact" no later than May 9th. DDJB also informed Mr. McCourt that any delay in the proposed schedule would likewise delay the construction process.[3] That same day, the Church forwarded the lease to its national and international management personnel in Los Angeles and New York, whose permission it required before signing. It also forwarded a memorandum from its attorney, Marc LaCasse, which stated in pertinent part: " Time is of the essence since the build out of the space must commence almost immediately to ensure that it is ready for occupancy by August 1, 2014." Exhibit 19. In addition, on May 12th, DDJB emailed Mr. McCourt directly and informed him that the then-three days' delay in signing the lease, compared to the schedule proposed on May 7th, was " already going to delay the build out and move in." Exhibit 20. On May 19th, Ms. Landrey also emailed Mr. McCourt, acknowledging that the Church had hoped to have the lease signed the previous week and indicating that they were attempting to extend their tenancy at the Beacon Street location.

         More than two weeks later, on June 4th, Mr. Parker informed DDJB that the Church would not sign the lease without an estimated budget for the build-out, but that he could be approved to sign within twenty-four hours of receiving an estimate. The same day, Bryan Jasper, a Regional Property Development Director for the Church in New York, also contacted DDJB seeking an estimated budget. On June 5th, DDJB provided an estimated budget of $500, 000 and put Mr. Jasper, Mr. Parker, and Ms. Landrey in contact with its architect. On June 10th, DDJB informed the Church that it would not seek a building permit for the build-out until the Church signed the lease.

         Finally, on July 4th, the Church informed DDJB that it had received permission to sign the lease, and on July 11th, Ms. Parker signed it on behalf of the Church On July 15th, DDJB's architect indicated that it would take up to two weeks to secure the building permits, and thereafter, a minimum of six weeks to complete the build-out. On July 24th, Ms. Landrey emailed the Church's upper management, confirming that the build-out would not be completed until October 1st and stating, " This is 100% due to the comm[unication] lag on the lines for the building proposal and lease which took [m]onths to get approved instead of weeks . . . There was enough time to do the whole construction cycle if the lease approval had been handled in a timely fashion ." Joint Appendix, Exhibit 33. (Emphasis added.)

         On August 9th, Ms. Landrey received a text message from a member of Church's upper management, indicating that the Church would not be moving into the property, but instead would seek a longer term location where it could remain until construction was completed on a new headquarters. On August 11th, Mr. McCourt informed DDJB that the Church would not move into the property. Two days later, Attorney LaCasse sent DDJB a letter stating that the Church was terminating the lease because the build-out was not complete and also " in large part due to the stench present in the area surrounding the [property] caused by the transfer facility which is nearby." Exhibit 35. On August 18th, the Church asked DDJB if it would be willing to amend the lease for a firm, " drop dead move-in date" of October ...


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