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Altitude, Inc. v. Altitude Properties, LLC

Superior Court of Massachusetts, Suffolk, Business Litigation Session

April 24, 2018

ALTITUDE, INC. nka Altitude, LLC
v.
ALTITUDE PROPERTIES, LLC

          MEMORANDUM OF DECISION AND ORDER ON THE PARTIES’ CROSS MOTIONS FOR SUMMARY JUDGMENT

          Mitchell H. Kaplan, Justice Superior Court

          The plaintiff, Altitude, LLC (Altitude) is a Massachusetts limited liability company with a usual place of business at 363 Highland Avenue, Somerville, Massachusetts (the Property). Altitude Properties, LLC (Properties) is also a Massachusetts limited liability company. It owns the Property and leases space in it to Altitude pursuant to a Commercial Lease (the Lease). A dispute has arisen between Altitude and Properties concerning the interpretation of a lease term. Properties maintains that a change in the ownership of Altitude constituted a material breach of the Lease and declared it in default. Altitude maintains that there is nothing in the Lease that could be interpreted as restricting its right to change ownership of its shares. Altitude brought this action against Properties asserting claims for Breach of Contract, Breach of the Implied Covenant of Good Faith and Fair Dealing, Vilolation of G.L. chapter 93A, and Declaratory Judgment. Properties answered asserting the same four causes of action as counterclaims against Altitude, and adding a claim for Summary Process with Account Attached.

         The case is now before the court on the parties’ cross motions for summary judgment on all claims. For the reasons that follow both parties’ motions are ALLOWED, in part, and, DENIED, in part.

         BACKGROUND

         The following facts are not in dispute.

         Altitude, Inc., a corporation all of whose shares were owned by Brian Matt, and Spy Pond Associates, Inc. executed the Lease on June 6, 2000. Sometime thereafter, Properties became the successor to Spy Pond Associates and the Landlord under the Lease. The original Lease term was 10 years, but in 2010 it was extended to 2021.

         The dispute between the parties arises out of a single provision of the Lease found in paragraph 13, which reads as follows:

The Lessee does not have the right to assign this lease. Assignment can occur only in the event LESSEE acquires or merges with another company and maintains controlling interest in the merged company.

         On December 28, 2016, Altitude wrote to Properties informing it that Altitude proposes to sell all of its stock to a subsidiary of Accenture plc, after which the Lease "may be assigned to Accenture Sub, Inc. or another of its affiliates." The letter requested that Properties consent to the transaction, to the extent Properties’ "consent may be required under the Lease." Properties responded on January 5, 2017:

We have reviewed your communications to date with our counsel and we agree that if this is merely a stockownership transfer as you have represented, and that the existing corporate tenant remains obligated as the existing operating company occupying the leased premises, then in that event there technically has not been as assignment of this lease within the present lease language. Therefore, is there [sic] no reason for us to provide a consent to anything regarding your internal corporate matters and transactions. But, we do appreciate your informing us of this change of stockholder ownership information.

          The sale of Matt’s stock in Altitude to Accenture Sub, Inc. closed on January 9, 2017. Also, on that date, Altitude, Inc. was converted into a limited liability company pursuant to G.L.c. 156D, § 9.50 et seq.

         However, on March 30, 2017, Properties sent Altitude a letter in which it asserted:

you have attempted and/or completed a transaction resulting in an assignment of your lease/occupancy to another entity in which you have not maintained a controlling interest as required.

         The letter went on to state that this transaction constituted a breach of the lease and therefore, an event ...


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