Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

LLC v. Gator Swansea Property, LLC

United States District Court, D. Massachusetts

August 25, 2017




         Defendant Gator Swansea Property, LLC, seeks summary judgment in this lawsuit brought by plaintiff 58 Swansea Mall Drive, LLC, over a failed effort by 58 Swansea to negotiate a loan secured by its lease on a shopping center located (unsurprisingly) in Swansea, Massachusetts. For the following reasons, the motion is granted in part and denied in part.


         The following facts are presented in the light most favorable to 58 Swansea as the nonmoving party. 58 Swansea leases a commercial development in Swansea from Gator. 58 Swansea, in turn, subleases the storefronts. Beginning in 2013, Gator made a series of demands that 58 Swansea make repairs to the property. 58 Swansea contested many of Gator's characterizations of the condition of the property, but agreed to make most of the repairs.

         To fund some of the repairs, 58 Swansea applied for a $2 million loan from United Bank, secured by its interest in the property. The ground lease permitted 58 Swansea to mortgage its leasehold under certain conditions. Pertinent here is the requirement that 58 Swansea could not be “in default . . . beyond the applicable grace periods.” Dkt #162-1, Art. 6, § 3. To satisfy United Bank that this requirement was met, 58 Swansea invoked Article 14, Section 4 of the lease, which obliges Gator to “deliver an estoppel certificate” within ten days of request. The lease required that the estoppel certificate verify that the lease remained “in full force and effect” and describe “any set-offs or defenses against the enforcement of any of the agreements, terms, covenants or conditions of this Lease and any modifications of this Lease upon the part of Tenant to be performed or complied with, and if so, specifying the same.” Art. 14, § 2.

         According to 58 Swansea, Gator's initial estoppel certificate was insufficient: it did not state that the lease was “in full force and effect” and it identified defaults based on “maintenance” without providing sufficient specificity about what 58 Swansea needed to do to cure the defaults. Gator provided another estoppel certificate at the end of July of 2015 - over a month after 58 Swansea's original request - but the replacement certificate still listed defaults triggering maintenance obligations, now four in number. 58 Swansea contends that many of the defaults listed in both estoppel certificates were pretextual.

         Because the estoppel certificate Gator provided listed additional maintenance tasks in default of the lease, United Bank requested confirmation from Gator that it would provide the certification envisioned by Article 6, Section 3(n) of the lease. That section provides that in the event the tenant mortgages its leasehold interest, the landlord will “upon request, execute, acknowledge and deliver to each Leasehold Mortgagee making such request an agreement prepared at the sole cost and expense of the Tenant, in form reasonably satisfactory to such Leasehold Mortgagee, between Landlord, Tenant, and such Leasehold Mortgagee, agreeing to all of the provisions of this Section.”

         The 3(n) agreement proved to be less a solution than a new problem. United Bank sent a draft 3(n) agreement and a copy of the mortgage to Gator on August 18, 2015. Over the ensuing two months, the parties never managed to reach an acceptable 3(n) agreement. 58 Swansea argues that this resulted from Gator's attempt to force it to impose a lease of an outparcel on the property to Chick-Fil-A. It points to an August 21, 2015 internal email from Gator's CEO to the company's general counsel, which 58 Swansea reads as conditioning compliance with the 3(n) agreement on its willingness to relinquish the outparcel. On August 31, Gator's general counsel emailed outside counsel for 58 Swansea with a proposal regarding the outparcel. 58 Swansea's counsel responded the next day, asking about the status of the 3(n) agreement and stating that he would forward the proposal to his client. Gator's counsel responded that Gator was reviewing the relevant documents and would respond soon.

         Concerned with Gator's hesitation, 58 Swansea and United Bank agreed to a “dry closing, ” meaning that the mortgage documents were signed and the mortgage recorded, but that the mortgage itself would remain unfunded until the 3(n) agreement was executed. The “dry closing” was executed on September 8, 2015. On September 22, 58 Swansea again requested that Gator comply with Section 3(n) of the lease. On September 24, Gator asked for a telephone conference with 58 Swansea's CEO. 58 Swansea refused the request, stating that it believed litigation was likely if the 3(n) agreement was not forthcoming. Gator responded by writing that it preferred a call: “We made a proposal several weeks ago to your client . . . concerning an outparcel to the property and have not yet heard a response. I think that a conversation would be beneficial for both Gator and your client.” Dkt 82-16. 58 Swansea again rejected the request. On October 1, Gator made another attempt, emailing about the outparcel and providing a site plan. This lawsuit was filed the next day.

         The filing of the lawsuit brought an end to discussions about the outparcel, but not to disputes about the 3(n) agreement. On October 5, Gator sent a notice of termination and default, purporting to terminate the ground lease, and then two days later revoked its estoppel certificate. 58 Swansea alleges that these actions were purely retaliatory steps taken in response to its filing of this suit. On October 13, 58 Swansea sought a preliminary injunction to block the termination and force Gator to sign the 3(n) agreement. Gator wrote to 58 Swansea the following day, proposing a solution and mentioning (apparently for the first time) the possibility that the mortgage's proposed division of insurance proceeds conflicted with the lease. Gator expressed its willingness to sign a 3(n) agreement if it made clear “that United Bank's rights as mortgagee can in no way supersede Gator Swansea's rights under the Ground Lease, such as Gator Swansea's right to receive insurance proceeds and condemnation awards.” Dkt 166-4, Ex. 85 at 4. No resolution followed. The preliminary injunction was denied after a hearing on October 15, at which Gator represented to the court that it had withdrawn both the lease termination and the revocation of the estoppel certificate.

         On October 16, Gator iterated concerns about the insurance provisions of the mortgage. Over the ensuing week, Gator, United Bank, and 58 Swansea exchanged versions of a proposed 3(n) agreement. Although the details differ, Gator's desired changes attempted to specify that the lease's provisions controlled, particularly with respect to the distribution of insurance proceeds. United Bank rejected Gator's changes.

         United Bank eventually set a deadline of 5 p.m. on October 22 to receive an executed 3(n) agreement from Gator. On October 22, United Bank rejected the most recent version of the 3(n) agreement proposed by Gator, and the 5 p.m. deadline passed without any agreement. United Bank terminated the loan on October 28.

         58 Swansea's original Complaint limned four counts against Gator, a number enlarged to six in an Amended Complaint filed in April of 2016. Gator moved to dismiss, which was denied as to all counts except for Count VI.[1] After a lengthy and contentious discovery period, Gator has moved for summary judgment. This Order addresses ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.