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Motsis v. Ming's Supermarket, Inc.

Appeals Court of Massachusetts, Suffolk

November 5, 2019

LEO J. MOTSIS, trustee, [1]
v.
MING'S SUPERMARKET, INC.

          Heard: July 12, 2019

          Civil action commenced in the Superior Court Department on August 25, 2015. Summary Process. Complaint filed in the Superior Court Department on November 22, 2016. After consolidation, the case was tried before Paul D. Wilson, J., and a motion for a new trial was considered by him.

          Dana Alan Curhan for the plaintiff.

          Richard E. Gentilli for the defendant.

          Present: Henry, Sacks, & Ditkoff, JJ.

          SACKS, J.

         This case presents the question whether a lessor's material breach of a commercial lease permits the lessee both to recover lost profits due to lost use of the premises and to obtain an order for specific performance of the lease provision requiring the lessor to make structural repairs. After a Superior Court jury trial and the judge's resolution of the parties' G. L. c. 93A claims, a judgment awarding both forms of relief entered for the lessee, the defendant and plaintiff in counterclaim, Ming's Supermarket, Inc. (Ming's), against the lessor, the plaintiff and defendant in counterclaim, Leo J. Motsis, as trustee of a realty trust (Motsis). We conclude that, in the circumstances of this case, such relief was proper. We also reject Motsis's challenge to the judge's findings in favor of Ming's under G. L. c. 93A, and we see no merit in Motsis's various claims of trial error. We thus affirm the judgment.

         Background.

         1. The lease.

         The jury could have found that Motsis owned the premises in question, a four-story warehouse on East Berkeley Street in Boston. Ming's operated a specialty supermarket, selling Asian food, on Washington Street in Boston; the rear portion of the supermarket building connected directly to the warehouse. In 1999, the parties signed a lease of the premises to Ming's for a term of ten years and five months, effective January 1, 2000, with two extension options of ten years each.

         The lease provided, with exceptions not relevant here, that Motsis was "responsible for making all structural repairs and replacements to the foundation, walls and roof of the building on the leased premises. The cost of such structural repairs and replacements will be charged to [Ming's] as additional rent if they are necessitated by the fault or negligence of [Ming's] . . . ." Other repairs and maintenance were Ming's responsibility. The lease also provided that if a "casualty . . . renders the leased premises substantially unsuitable for their intended use, a just and proportionate abatement of rent shall be made, and [Ming's] may elect to terminate this lease" if certain conditions were met. The lease required that in any situation where Motsis's consent was required, Motsis could not unreasonably withhold or delay it. Finally, the lease gave Ming's a right of first refusal if Motsis received any offers to purchase the premises.

         The premises had previously been used to store and repair motor vehicles, and the city had issued a permit for that purpose. Ming's intended to use the space to store food and grocery items. That use was not allowed under the existing permit and, because of zoning regulations, required what the parties refer to as a conditional use permit from the city's zoning board of appeals.[2] Precisely when Ming's became aware that it needed such a permit was an issue at trial. Nevertheless, even without that permit, Ming's used the premises for food and grocery storage into 2010 and, under a lease extension, until early 2015.

         2. The dispute.

         In February 2015, a sprinkler pipe froze and burst which, among other things, led the city's inspectional services division (ISD) to pay a visit. ISD issued citations for numerous building code violations, including unsafe structural conditions such as a fractured fourth-floor ceiling with delaminating concrete, a fracturing concrete beam, and fractures in the staircases.[3] ISD also found violations concerning the mechanical systems, elevators, and sprinklers. Finally, ISD issued a citation for failure to have a permit to use the premises for food storage. ISD told the administrative manager of Ming's that Ming's could not use the building because of its structural problems and the lack of a proper permit.

         Ming's moved its stored food and grocery supplies out of the premises but continued to pay rent through April 2015. Ming's made some of the internal repairs, but took the position that the elevator repairs could not be completed until the premises were made structurally sound. Ming's and Motsis both understood that Ming's could not apply for the conditional use permit until the structural repairs, or at least the plans for such repairs, were complete. Ming's needed Motsis's cooperation in the permit application process. Ming's asked Motsis to make the structural repairs (their cost was later estimated at approximately $500, 000), but Motsis did not do so, asserting that at least some of them were the responsibility of Ming's.

         Ming's stopped paying rent in May 2015, [4] because it could not use the premises, Motsis was not making the structural repairs, and Ming's could not yet seek the conditional use permit. In August 2015, Ming's agreed to undertake the permit application process if the parties could cooperate to resolve the repair issues. Ming's stated, "If on the other hand the owner wants [Ming's] out and will attempt to terminate the lease at all costs, then we might as well know that now." Motsis replied that he would not allow Ming's back on the premises until Ming's paid for the structural damage it allegedly had caused, obtained the permit, and paid all back rent. Motsis then commenced this action in the Superior Court.

         3. The litigation.

         Motsis's complaint[5] asserted material violations of the lease, breach of contract, and a variety of other claims; Motsis requested damages and declaratory relief. Motsis's theory, stated briefly, was that Ming's had stopped paying rent in order to pressure Motsis either to sell the premises to Ming's at below-market value or to buy out the lease. Motsis sought a declaration that the violations by Ming's rendered the lease of no further effect.

         Ming's counterclaimed for breach of the lease, breach of the implied covenant of good faith and fair dealing, and violations of G. L. c. 93A. As relief, Ming's sought damages (including lost profits from decreased sales), a declaration that it had been constructively evicted and thus had no duty to pay rent, and an order for specific performance of the lease provisions requiring Motsis to make structural repairs and to cooperate with Ming's in obtaining a conditional use permit.[6] In essence, Ming's proceeded on the theory that, because the rent specified in the lease was substantially below market value, Motsis was attempting to force Ming's to abandon the premises and forgo its rights under the lease, leaving Motsis free to sell the premises unencumbered by the lease.

         Motsis later filed a separate summary process action. On a motion by Ming's, the cases were consolidated. In August of 2017, most of the claims were tried to a jury. The parties submitted proposed special questions for the jury; based on those submissions, and after extensive discussions with the parties during the trial, the judge developed a special verdict slip. The G. L. c. 93A claims, Motsis's summary process claim, and the request by Ming's for specific performance were tried to the judge.

         In response to questions on the verdict slip, the jury found, as to Motsis's claims, that Ming's had materially breached the lease by failing to pay rent. The jury found, however, that the breach was excused -- either because Ming's had been constructively evicted or because a casualty had rendered the premises substantially unsuitable for their intended use, entitling Ming's to a rent abatement.[7] Similarly, the jury found that Ming's had breached the lease by using the premises without a proper permit and by failing to make certain repairs, but that Motsis either had waived these claims or was estopped to assert them.[8]

         On the counterclaims that Ming's asserted, the jury found that Motsis had committed a breach of the lease by failing to make structural repairs, causing Ming's damages in the amount of $795, 000, plus $2, 250 for each future month.[9] The jury also found that Motsis had violated the implied covenant of good faith and fair dealing, both by failing to make the structural repairs and by failing to cooperate with Ming's in the permit application process. But the jury found that those breaches had not caused Ming's any additional damages beyond the amounts already awarded for Motsis's breach of the lease.

         As for the claims tried to the judge, the transcript indicates that the parties agreed to waive formal findings of fact and rulings of law and instead to have the judge indicate his rulings in the "short form of a jury verdict slip[-]like document."[10] Using such a form, the judge found against Motsis on his G. L. c. 93A and summary process claims. On the G. L. c. 93A counterclaim brought by Ming's, the judge found that Motsis had violated the statute, that the damages to Ming's were the same $795, 000 already awarded by the jury, that the violation was willful or knowing, and that the damages should therefore be doubled.[11] The judge ruled that Ming's was entitled to specific performance of the lease provisions requiring Motsis to make structural repairs and to cooperate with Ming's in seeking the conditional use permit. Finally, the judge ruled that damages of $2, 250 per month would continue to accrue until Motsis completed the structural repairs.

         Judgment entered in accordance with the jury verdicts and the judge's rulings, and Motsis now appeals.[12]

         D ...


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