United States District Court, D. Massachusetts
MEMORANDUM AND ORDER ON DEFENDANT’S MOTION TO
DISMISS FOR FAILURE TO STATE A CLAIM
RICHARD G. STEARNS UNITED STATES DISTRICT JUDGE.
and tenant 58 Swansea Mall Drive, LLC (58 Swansea), leases
space at the Swansea Mall in Swansea, Massachusetts, from
landlord-defendant Gator Swansea Property, LLC (Gator). 58
Swansea sublets the leasehold to two retailers, Dollar Tree
Stores and PriceRite. 58 Swansea alleges that Gator has
attempted to coerce it into adopting a Chik-Fil-A restaurant
as a subtenant by making unreasonable demands for repairs and
threats to hold 58 Swansea in default. 58 Swansea alleges
that Gator’s tactics cost it a favorable third-party
loan that could have been used to make repairs to the Mall.
20, 1984, Gator’s predecessor, Equity Properties and
Development Company, entered a Ground Lease (lease) with 58
Swansea’s predecessor, Service Merchandise Company,
Inc., for 58 Swansea Mall Drive. The lease permitted 58
Swansea to mortgage its interest without Gator’s prior
consent on two conditions: (1) that 58 Swansea not be in
default "beyond the applicable grace period"; and
(2) that either 58 Swansea or the mortgagee provide the
landlord (Gator) with a copy of the mortgage. Dkt. # 56-1 at
purchasing 58 Swansea Mall Drive in 2013, Gator insisted that
58 Swansea undertake substantial repairs of the property. In
June of 2015, 58 Swansea (reluctantly) agreed. To pay for the
repairs, 58 Swansea negotiated a loan with United Bank,
secured by the leasehold. As a condition precedent to the
loan, United Bank required that Gator provide 58 Swansea with
an Estoppel Certificate. After some initial squabbling, Gator
provided the Estoppel Certificate on July 30, 2015. It
warranted in relevant part:
[58 Swansea] is not in default under the Lease beyond the
applicable grace, notice and/or cure periods and, except for
the repairs and maintenance as evidenced by the construction
documents attached hereto . . . Landlord does not know of any
other defaults . . . provided, however, that [Gator] reserves
the right to declare a default by [58 Swansea] under the
Lease in the event [58 Swansea] does not complete the repair
and maintenance work identified on the construction documents
. . . within ninety (90) days after the date of this Estoppel
Dkt. # 56-7 at 2-3. Gator gave 58 Swansea until October 28,
2015, to complete the three specified
second condition precedent, United Bank required that Gator
execute a so-called 3(n) Agreement, stipulating that the Bank
was an intended beneficiary of the terms of Article 6,
Section 3 of the lease. Over the next two months, Gator renewed
its demand that 58 Swansea accept Chik-Fil-A as a tenant. It
declined, however, to execute the 3(n) Agreement. On
September 8, 2015, United Bank and 58 Swansea agreed on the
terms of a $2, 000, 000 loan, conditioned on the tender of an
executed 3(n) Agreement no later than October 15, 2015. After
Gator ignored repeated requests for the Agreement, on October
2, 2015, 58 Swansea instituted this action and sought
injunctive relief in the Norfolk Superior Court. Three days
later, Gator served a Notice of Default and Termination on 58
October 9, 2015, Gator removed the case to this court on
diversity grounds. After a requested emergency hearing on
October 15, 2015, the court denied 58 Swansea’s motion
for a preliminary injunction. At some unspecified later date,
Gator signed and forwarded the 3(n) Agreement to 58 Swansea.
The delivery came too late to salvage the loan agreement.
United Bank terminated the loan on October 28, 2015.
April 14, 2016, 58 Swansea filed this Second Amended
Complaint, alleging breach of contract (Count I), breach of
the implied covenant of good faith and fair dealing (Count
II), and violations of the Massachusetts Unfair Id.
at 11 (emphasis added). Business Practices statute, Mass.
Gen. Laws ch. 93A (Counts IV and V). 58 Swansea also requests
specific performance of the lease (Count III), and a
declaratory judgment as to whether (a) 58 Swansea is in
default, (b) whether Gator improperly revoked of the Estoppel
Certificate and issued the Notice of Termination, and (c)
whether 58 Swansea is obligated to reimburse Gator for the
Property Condition Report (Count VI). On April 21, 2016,
Gator moved to dismiss the Complaint pursuant to Fed.R.Civ.P.
survive a motion to dismiss pursuant to Rule 12, the pleading
must "state a claim to relief that is plausible on its
face." Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). This standard requires more than
"labels and conclusions" or "naked assertions
devoid of further factual enhancement." Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (internal citations and
quotation marks omitted).
offers a number of alternative theories in support of its
motion to dismiss the breach of contract claim (Count
Gator stresses that Article 40 of the lease (an exculpation
clause of a type commonly appearing in ground leases)
disclaims liability on the part of Gator to "personally
to perform any covenant . . . herein contained." Dkt. #
56-1 at 29. Exculpatory clauses are strictly construed in
favor of the tenant. Cormier v. Cent. Massachusetts
Chapter of the Nat’l Safety Council, 416 Mass.
286, 288 (1993) ("[A]ny doubts about the interpretation
of the release must be resolved in the [tenant’s]
favor."); Marsman v. Nasca, 30 Mass.App.Ct.
789, 799 (1991) ("[E]xculpatory clauses are not looked
upon with favor and are strictly construed."). The
purpose of an exculpation clause is not to shield the
landlord from any liability for breach of contract,
but to protect the Gator next argues that 58 Swansea was in
default of the lease and that Gator therefore was under no
obligation to execute the 3(n) Agreement. This argument also
misses the mark. 58 Swansea vehemently disputes that it was
at any time in default; on a motion to dismiss, a
plaintiff’s plausible factual allegations must be taken
as true. While Gator relies upon the Estoppel Certificate
executed by both parties as evidence that 58 Swansea
acknowledged its own state of default, the Certificate
identified only three specific repairs and granted 58 Swansea
a ninety-day period to cure them, which 58 Swansea insists
that it did.
Gator argues that 58 Swansea could have, consistent with
Article 13 of the lease, signed the 3(n) Agreement itself on
Gator’s behalf, and offered the completed agreement to
United Bank. Characterizing Article 13 as a "condition
precedent" and "pre-suit requirement, " Gator
contends that 58 Swansea’s failure to do so bars
recovery. Article 13 merely states that a non-defaulting
party may, on ten days’ notice, perform the
obligations of a defaulting party - not that it
must. Dkt. # 56-1 at 17-18. landlord’s assets
over and above the landlord’s interest in the property
itself.Gator’s further ...