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Vintage Rockland Realty Trust v. Smiths Medical ASD, Inc.

United States District Court, D. Massachusetts

February 14, 2018




         Massachusetts plaintiff Vintage Rockland Realty Trust brings the instant action in diversity against its former tenant, Minnesota defendant Smiths Medical ASD, Inc. The commercial lease agreement between the parties dates to May 2005, and was extended four times before expiring in April 2016. See Docket # 40-5 (Lease and amendments, hereafter “Lease”). Vintage sold the property to a third-party buyer in October 2016 for $3.7 million, see Docket # 43 (Consolidated Statement of Material Facts, hereafter “SOF”), at ¶¶ 16-17, but was dissatisfied with the condition in which Smiths left the property when it vacated. It claims injury in two areas[1] - unauthorized interior alterations and a damaged parking lot- under four causes of action: breach of contract (Count I); breach of the covenant of good faith and fair dealing (Count II); violations of Massachusetts General Laws chapter 93A, §§ 2 and 11 (Count III); and negligence (Count IV). Before me is defendant's motion for summary judgment on all counts.

         I. Factual Background

         I summarize the relevant facts in the light most favorable to plaintiff, the non-moving party. See Planadeball v. Wyndham Vacation Resorts, Inc., 793 F.3d 169, 172 (1st Cir. 2015).

         Plaintiff is a trust that had been organized for the purpose of owning the subject property. It has three trustees, but is operated by one, Joseph Gallo. Id. Defendant leased the property, 45, 580 square footage located at 160 Weymouth Street in Rockland, Massachusetts (“the Property”), for use in its manufacture of medical devices. At the time of the original lease, the Property was a mix of office and warehouse space.

         A. Alterations

         At all times during defendant's tenancy, the Lease prohibited defendant from making structural changes and from making non-structural changes without plaintiff's written consent. It also required defendant to “maintain the leased premises in good condition, reasonable wear and tear, damage by fire and other casualty only excepted . . .The LESSEE shall not permit the leased premises to be overloaded, damaged, stripped, or defaced, nor suffer any waste.” Lease at 4, ¶ 11A, as amended by paragraph 3 of Addendum A, id. at 8.

         It is undisputed that defendant nonetheless made significant alterations to the Property during the course of its tenancy and has produced no evidence of consent for those alterations. See Docket # 54-1, at ¶¶ 45-48, 50. Building permits filed with the Town of Rockland and identifying Smiths as the client include plans for new structural walls and ceilings, the addition of lab and sprinkler equipment, the removal of existing rooms, and the installation of rooftop HVAC equipment. Asked to anticipate the cost of putting the Property “back into a state ready to hand over to the land lord, ” defendant's site coordinator Dennis Sullivan observed, “There has been much work done to the facility over the years in regards to walls being put up and taken down, electrical additions, and the entire second floor being redone.” Docket # 50, at 6-7 (email response, dated February 18, 2015, to defendant's “Director of Operations Transformation”); see id. at 5 (notes of defendant's in-house counsel Shoua Xiong, dated January 22, 2015, describing “significant alterations” to Rockland facility); see also Docket # 40-3, at 22. The parties agree that these alterations occurred during the effective period of the Lease but disagree as to whether written consent was required.

         As the expiration of the Lease approached, Gallo made multiple attempts to address the alterations with Smiths. See Docket # 50, at 8-9 (July 22, 2015 email from Gallo to defendant stating, “there is also the question of returning the building to it's [sic] original state. we [sic] need to discuss this as well.”); Docket # 51, at 14 (August 11, 2015 email from Gallo to Xiong stating, “I do need to speak to Dennis [Sullivan] in regards to returning the condition of the property to its original status and repairs of the windows, which need attention asap.”). Defendant initially appeared amenable, see, e.g., Docket # 50, at 8 (July 23, 2015 email from Xiong to Gallo responding, “With respect to returning the building to its original state, we'd greatly appreciate it if you could do a walk-through of the building with Ricco [Feudo, Facilities Supervisor] sometime next week and identify any modifications you'd like us to make so that we can get the work underway as soon as possible."), but ultimately disavowed responsibility under the Lease. Docket # 51, at 23.

         B. The Parking Lot

         In addition to the unauthorized alterations, plaintiff complains of the condition in which defendant left the Property's parking lot. The parties agree that the parking lot had not been replaced since its 1985 installation and sustained extensive damage during the historic snowfall of 2013-2014. Defendant had asked in 2013 that the lot be resurfaced, and plaintiff included in the final Lease addendum a provision that it would finance the resurfacing if defendant renewed the Lease. The Lease required defendant to perform maintenance and repairs but ascribed responsibility for capital expenditures other than those expressly included in the Lease to plaintiff. Although the parties now disagree as to whether the lot resurfacing resulted from defendant's failure of maintenance or was appropriately plaintiff's capital expenditure, neither ultimately bore the cost, as described below.

         C. Sale of the Property to Third-Party Buyer

         When it became apparent that defendant would not renew the Lease, plaintiff engaged the brokerage services of James Rader, as owner of Rader Properties, to secure a new tenant. Although Rader identified prospective tenants, none were interested in leasing the Property in its present condition, and plaintiff concluded that the cost of restoration was prohibitive. Plaintiff ultimately negotiated a sale with a Rader-owned entity called 160 Weymouth LLC (“Buyer”).

         The Addendum to the Purchase and Sale Agreement dated August 4, 2016, ...

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