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SpineFrontier, Inc. v. Cummings Properties, LLC

Superior Court of Massachusetts, Essex

March 27, 2018

SPINEFRONTIER, INC.
v.
CUMMINGS PROPERTIES, LLC

          FINDINGS OF FACT, RULINGS OF LAW AND ORDER FOR ENTRY OF FINAL JUDGMENT

          Peter M. Lauriat, Justice of the Superior Court

         This action arises from a commercial lease dispute. SpineFrontier, Inc. ("SpineFrontier") sought a declaratory judgment that it had timely terminated its commercial lease with its landlord, Cummings Properties, LLC ("Cummings"). Cummings filed a counterclaim against SpineFrontier, asserting that SpineFrontier had breached the parties’ lease by defaulting on its lease obligations, and that SpineFrontier owed Cummings rent for the four-year, eleven-month balance of the automatically renewed five-year lease term.

         On August 12, 2016, the court (Drechsler, J.) denied Cummings’ summary judgment motion, concluding that there existed "a material issue of fact as to the parties’ intent concerning the automatic renewal provision" of their lease. Memorandum of Decision and Order on Defendant’s Motion for Summary Judgment, at p. 9 (Drechsler, J.). The court (Lauriat, J.) thereafter held a jury-waived trial on February 1, 2 and 6, 2018. It heard testimony from Stephen Drohosky, Justin D’Aveta and William Grant, all employees of Cummings, and from Kingsley R. Chin, Aditya Humad and Christopher Chang, all current or former employees of SpineFrontier. The court also received 70 agreed-upon exhibits in evidence.

         Upon consideration of the credible testimony of the witnesses, the exhibits, and the memoranda and arguments of counsel, the court makes the following findings of fact, rulings of law, and order for entry of judgment in this action.

         FINDINGS OF FACT[1]

         SpineFrontier is a Delaware corporation with a principal place of business in Malden, Massachusetts. Cummings is a Massachusetts limited liability company with a principal place of business in Woburn, Massachusetts. Cummings manages more than 10 million square feet of commercial real estate in more than 70 buildings located in ten Greater Boston communities, including Andover, Beverly, Burlington, Marlborough, Medford/Somerville, Stoneham, Sudbury, Wakefield, Wilmington, and Woburn.

         Cummings and SpineFrontier were parties to a commercial lease (as amended and extended, the "Lease"), which was comprised of six documents: an original lease, four written lease extensions, and one amendment to lease.

         Kingsley R. Chin ("Chin") and Christopher Chang ("Chang") co-founded SpineFrontier in or about 2005. At all relevant times Chin has been SpineFrontier’s chief executive officer. In or about early 2006, Chin and Chang decided to rent office space in Massachusetts for SpineFrontier. Chang lived in or near Beverly, Massachusetts. He chose SpineFrontier’s office space in the Cummings Center in Beverly.

         On or about May 3, 2006, SpineFrontier, LLS, a Delaware entity, as lessee, and Cummings, as lessor, executed a written agreement captioned "Cummings Properties, LLC Standard Form Commercial Lease" (the "Original Lease") for space 321-D at 100 Cummings Center in Beverly, Massachusetts. (Exhibit 1.) The original leased premises contained approximately 331 square feet of leasable space. Chang signed the Lease on behalf of SpineFrontier, LLS.

         The Original Lease’s initial term was for one year, commencing on May 1, 2006 and "ending at noon on April 30, 2007." Paragraph 31 of the Original Lease states as follows:

AUTOMATIC FIVE-YEAR EXTENSIONS. This lease, including all terms, conditions, escalations, etc. shall be automatically extended for additional successive periods of five years each unless LESSOR or LESSEE serves written notice, either party to the other, of either party’s option not to so extend the lease. The time for serving such written notice shall be not more than 12 months or less than six months prior to the expiration of the then current lease term. Time is of the essence.

         The premises was almost immediately too small for SpineFrontier’s needs. SpineFrontier informed Cummings that it needed a larger office. Cummings prepared and presented to SpineFrontier the lease documentation that would accompany SpineFrontier’s move to larger space.

         On June 26, 2006, Chang wrote to Cummings’ account manager for the SpineFrontier account, Justin D’Aveta ("D’Aveta"):

I am writing you in regards to my lease at 100 Cummings Center ... In specific reference to section 31 that states, an automatic five-year extension. This letter services as written notice to inform you that SpineFrontier will effectively end our one-year lease agreement on April 30, 2007. I will contact you if SpineFrontier needs to lease additional office spaces after the April 30, 2007 date.

         On June 30, 2006, Stephen Drohosky ("Drohosky"), Cummings’ vice president and general manager for Cummings Center, replied to Chang in writing as follows:

We have received your June 26, 2006 letter precluding the automatic extension of your lease at 100 Cummings Center, Suite 321-D. Accordingly, your lease will expire on April 30, 2007. We appreciate your business and understand that canceling the extension was a formality. Justin D’Aveta will stay in touch with you regarding SpineFrontier’s future facility requirements and we hope we will be able to agree on a new lease to continue your tenancy. In the meantime, please call either of us at any time if we can be of immediate assistance.

         The court finds, based on the credible testimony, that Cummings’ custom, practice and course of conduct was aimed at securing an extension to its existing lease prior to the expiration of the notice of termination period in the tenant’s then existing lease, so long as the tenant was in good standing and was current on its rental payments to Cummings.

         At Cummings’ urging, in the Fall of 2006, prior to the termination of the notice of lease period in the Original Lease, SpineFrontier and Cummings entered into a written agreement captioned "Cummings Properties, LLC Standard Form Lease Extension #1" ("Lease Extension No. 1"), which was signed by Kingsley Chin, on behalf of SpineFrontier, on or about October 27, 2006 and by Cummings on or about November 9, 2006. While the original lessee was SpineFrontier, LLS, that corporate entity’s liability was terminated by Lease Extension No. 1; SpineFrontier, Inc. became a (co)lessee in Lease Extension No. 1 and is the only proper lessee party to this action.

         Paragraph 1 of Lease Extension No. 1 states: "The lease is hereby extended for an additional term of three years ending at noon on April 30, 2010." Paragraph 5 of Lease Extension No. 1 states:

The lease, including all terms, conditions, escalations, etc. shall be automatically extended for additional successive periods of five years each unless LESSOR or LESSEE shall serve written notice, either party to the other, of either party’s desire not to so extend the lease. The time for serving such written notice shall be not more than 12 months or less than six months prior to the expiration of the then current lease period. Time is of the essence.

         In July 2007, again at Cummings’ urging and prior to the notice of termination period of Lease Extension No. 1, SpineFrontier and Cummings executed a written agreement captioned "Cummings Properties, LLC Standard Form Lease Extension #2" ("Lease Extension No. 2"), which was signed by SpineFrontier on or about July 2, 2007 and by Cummings on or about July 11, 2007.

         Paragraph 1 of Lease Extension No. 2 states: "The lease is hereby extended for an additional term of six months ending at noon on October 30, 2010." At SpineFrontier’s request and direction, Cummings stamped the words "THIS PARAGRAPH DOES NOT APPLY" over Paragraph 5 of the lease document-the notice of termination provision-and sent that document to SpineFrontier.

         In June 2008, again well in advance of the notice. of lease termination window, SpineFrontier and Cummings executed a written agreement captioned "Cummings Properties, LLC Standard Form Lease Extension #3" ("Lease Extension No. 3"). At the time Lease Extension No. 3 was signed, SpineFrontier’s Peter Forte ...


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