LEO T. SOROKIN, District Judge.
Two of the defendants
Renaissance owns a property located in Shrewsbury, Massachusetts ("the premises"). Doc. No. 33 ¶ 3. Renaissance and Buca V are parties to a Commercial Property Lease ("the lease") in which Renaissance rents the premises to Buca V for the purpose of opening a restaurant.
Section 5.5(a) of the lease requires the lessee, Buca V,
Doc. No. 25-1 at 11. Section 5.5(g) requires the lessee
In August 2010, Renaissance and BRI (who was at that time the lessee) entered into the First Amendment. Doc. No. 33 ¶ 7. "Among other things, the First Amendment changed the rent payable by BRI to [Renaissance] and extended the term of the Original Lease from May 31, 2011 to May 31, 2020."
In January 2014, BRI assigned its rights and interest in the lease to Buca V. Doc. No. 33 ¶ 10. In September 2014, Renaissance and Buca V entered into the Second Amendment.
At the same time that Renaissance and Buca V executed the Second Amendment, Buca and BRI entered into a Guaranty ("2014 Guaranty") whereby they guaranteed performance of the lease, as amended.
Within a few months, Buca V ceased making payments under the lease and vacated the premises.
The Forbearance Agreement includes a provision in which Renaissance agrees to allow Buca V to pay $25,000 per month ("Monthly Forbearance Payments"), rather than the previously agreed-upon monthly rent of $36,299.23 ("Monthly Rent Payments"). Doc. No. 25-7 at 4. However, the Forbearance Agreement also provides that if any of the defendants default under the lease or the Forbearance Agreement, then Renaissance's acceptance of the lower monthly payment shall be voided.
At the time the Forbearance Agreement was signed in April 2016, neither Buca V nor any of the other defendants were occupying the premises. Doc. No. 33 ¶ 28. However, a number of aesthetic and structural problems had arisen with the premises, perhaps in part due to the fact that it was unoccupied. The need for repairs, the efforts the defendants have and have not taken in that respect, and the fact that the premises have remained unoccupied for over three years form the general basis for the present litigation. Accordingly, the Court reviews the evidence submitted by the parties with respect to these issues and recounts the facts in the light most favorable to the defendants, in accordance with the standard applicable to motions for summary judgment.
In October 2016, Renaissance
Thereafter, Renaissance forwarded the complaint to the defendants and provided an additional five items it wished the defendants to repair, along with pictures of the problems it identified at the premises. Doc. No. 25-12. That list included: "1. Clean up trash located at property[,] 2. Repair rotted wood on building exterior[,] 3. Repair light fixtures[,] 4. Fix Electrical System[,] 5. Repair Building sprinkler system but to not activate per discussion onsite."
On January 30, 2017, the Town sent Renaissance another letter notifying it of problems with the status of the sprinkler and fire alarm systems at the premises, as well as the lack of a building permit for the repairs needed to make the building weather tight. Doc. No. 25-14 at 3. A few days later, Renaissance forwarded the letter to the defendants, in an email which also stated that the "required installment payment and monthly forbearance payments [were] past due."
On August 11, 2017, Renaissance sent the defendants a Notice of Default ("the First Default Notice") which stated that the defendants were in violation of sections 5.5 and 6.1 of the Lease—the sections regarding maintaining and repairing the premises. Doc. No. 25-16. The First Default Notice also contained a list of twenty-one repair and maintenance items which Renaissance demanded the defendants fix within thirty days.
On November 1, 2017, the defendants sent Renaissance an email with a "summary chart" of the investigation into each of the twenty-one repair items and the projected timing for completing each. Doc. No. 33-4 at 10. In early 2018, the parties exchanged additional emails regarding the ongoing repairs at the premises, including problems the defendants had experienced with contractors and weather.
In June 2018, Renaissance received a check from the company insuring the premises for water damage which had occurred some months before. Doc. No. 33-8. Renaissance asked the defendants to sign the check and then return it for Renaissance to hold "in escrow until it is decided to best disburse funds for building repairs" at the premises.
On August 22, 2018, Renaissance filed a Verified Complaint in this Court, asserting five counts against the five defendants and First Data Corporation, a "reach and apply" defendant. Doc. No. 1. Count I asserts that Buca V breached the Lease "by failing to perform necessary maintenance and repairs, and by vacating the Shrewsbury Premises for more than six months."
Renaissance filed a motion for partial summary judgment as to liability only on Counts I, II, and III. Doc. No. 24. The defendants opposed. Doc. No. 32. The Court heard argument from the parties on June 27, 2019.
Summary judgment is appropriate when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A genuine dispute "is one on which the evidence would enable a reasonable jury to find the fact in favor of either party."
Count I alleges that Buca V breached the Lease "by failing to perform necessary maintenance and repairs, and by vacating the [premises] for more than six months." Doc. No. 1 ¶ 31. The Court considers each theory in turn.
Renaissance argues that Buca V breached sections 5.1, 5.5(a), 6.1, and 15.2(a) of the lease by failing to perform necessary maintenance and repairs to the premises. Doc. No. 25 at 9. Section 5.1 requires that Buca V's occupation of the premises shall not "be unlawful or contrary to any State, Federal or local law or municipal by-law or ordinance in force in the Town[] of Shrewsbury." Doc. No. 25-1 at 10. As previously noted, section 5.5(a) requires Buca V, among other things, "to make all repairs, alterations, additions, or replacements to the [premises] required by any law or ordinance or any order or regulation of any public authority because of Lessee's use of the [premises] . . . and to comply with the orders and regulations of all governmental authorities."
The First Default Notice, sent by Renaissance on August 11, 2017, constitutes notice of breach for purposes of invoking the cure provision of the lease in section 15.2(a).
The record before the Court shows that the First Default Notice contained a list of twenty-one items in need of repair or maintenance. Doc. No. 25-16 at 4. A few months later, the defendants provided Renaissance with a list containing a brief statement of any investigation they had done into each item and the time at which they expected repairs to begin. Doc. No. 33-4 at 10. The items Renaissance listed as needing repair can be separated into two groups: items involving the roof repair (including those which reasonably, drawing all reasonable inferences in Buca V's favor, could not be completed until the roof was repaired) and items independent of the roof repair.
As to the first category of items, those involving the roof repair, Renaissance's motion fails for several reasons. First, the Notice of Default was sent in August 2017, when less than three years remained under the lease, which expires in May 2020. At that point, Renaissance, not Buca V, bore the burden of repairing or replacing the roof.
While there is some evidence in the record suggesting that the roof may have been in disrepair before the final three years of the lease, the record is insufficient to resolve this factual issue in favor of Renaissance on summary judgment and the parties have not addressed the application of the contract to the circumstance when the roof required repair with more than three years remaining while the notice of default issued with less than three years remaining. Notably, the defendants wrote in their response to Renaissance that they needed to "discuss possible solutions and cost allocation," which, for the foregoing reasons, is not a basis to enter summary judgment in favor of Renaissance. Doc. No. 33-4 at 10. Ultimately, it is Renaissance's burden at summary judgment to prove that the defendants were responsible for repairing the roof and that they were not acting with "all due diligence" to do so. Renaissance has not met this burden, and therefore summary judgment is not appropriate with respect to the repair items which were related to the repair of the roof. Because a variety of other deficiencies noted in the First Notice of Default reasonably appear to require roof repair (e.g. making the building water tight, replacing sections of roof shingles, repairing leaking seals on the skylights) for these same reasons, Renaissance has not met its burden to any of the items in the first category.
As to the second category of items, those which were independent of the roof repairs (e.g. painting the building, strong odor of mold throughout the building, repairing the sprinkler and fire alarm systems), there is some evidence in the summary judgment record that the defendants were making progress on those repairs. Some repairs are listed as "completed," while others are "[s]cheduled to start work first full week of November."
Therefore, the theory that Buca V breached the Lease by not making all necessary repairs is not a basis for summary judgment, but rather a trial question.
Renaissance also argues that Buca V violated sections 5.5(g) and 15.2(a) of the lease by vacating the premises for over six months. Doc. No. 25 at 10. Section 5.5(g) requires the lessee, Buca V, not to vacate the premises, "provided, however, that Lessee shall not be deemed to be in violation of this covenant if Lessee shall vacate the [premises] for a period not to exceed six (6) months so long as Lessee is actively attempting to assign or sublet the Lease." Doc. No. 25-1 at 12. Section 15.2(a) is the previously referenced cure provision providing thirty days—or more, if the lessee is acting with all due diligence—from the date of notice to cure the breach.
In this case, neither the First Default Notice nor the Second Default Notice specifically mentioned the fact that the defendants were not occupying the premises. The cure provision in the parties' contract provides for a thirty-day period from the date notice of the breach is given. Accordingly, there remains a question of material fact as to whether Renaissance in fact invoked the cure provision.
Even if the Court considers the cure provision to have been invoked, there remains a fact question as to whether the defendants exercised "all due diligence" in attempting to cure their breach regarding vacation of the premises. At the hearing, counsel for Renaissance and counsel for the defendants both agreed that resolution of this theory turns on the Court's resolution of the theory that Buca V breached the lease by not making all necessary repairs. That is, if Buca V was exercising all due diligence in making the necessary repairs, it was not in breach of the lease provision requiring it to occupy the premises because the premises were not in a condition suitable for occupation. As previously noted, a reasonable finder of fact could determine, based on the record before the Court, that the premises were not safe or ready to be occupied by the defendants (or another entity) for purposes of operating a restaurant, but that the defendants were exercising all due diligence in attempting to repair the problems. Accordingly, a reasonable finder of fact could also find that such actions constituted "all due diligence" for purposes of ensuring that the premises were reoccupied. The theory that Buca V breached the Lease by vacating the premises for over six months therefore is also not a proper basis for summary judgment.
The motion for summary judgment, Doc. No. 24, is DENIED as to Count I.
In the 2014 Guarantee, BRI and Buca each "guarantee to [Renaissance] the full and punctual payment and performance by [Buca V] of all the respective Obligations . . . to be kept and performed by [Buca V] under the Lease." Doc. No. 25-4 at 2. Count II alleges that Buca and BRI breached the 2014 Guarantee by virtue of the fact that Buca V breached the lease.
In the Forbearance Guarantee, signed in April 2016, Buca C and Planet Hollywood each "guarantee to [Renaissance] the full and punctual payment and performance by the Judgment Debtors of all of their obligations to [Renaissance] under (a) the Lease, (b) the Judgment, and (c) the Forbearance Agreement."
Counts II and III therefore both turn on the question of whether Buca V in fact breached the lease. Accordingly, for the reasons expressed herein, Renaissance's motion for summary judgment is DENIED on Counts II and III.
Renaissance also argues that the five defendants breached the Forbearance Agreement, which required them to pay the difference between the Monthly Forbearance Payments ($25,000) and the Monthly Rent Payments ($36,299.23)—approximately $11,000 per month— from April 1, 2016 through the date of the default. This provision of the Forbearance Agreement is only activated upon a default by the lessee, or Buca V. Therefore, because the Court denies summary judgment on the question of whether Buca V breached the lease, it also denies summary judgment on the question of whether any of the defendants breached the Forbearance Agreement.
Renaissance's motion for partial summary judgment, Doc. No. 24, is DENIED. Within fourteen days of the date of this Order, the parties shall file a joint status report with their joint or separate positions with respect to the schedule for the remainder of this case. The parties shall specifically address their availability to commence the bench trial in this matter on Wednesday, September 18, 2019.
SO ORDERED.
