PATRICIA A. SULLIVAN, Magistrate Judge.
In this dispute over the Lease between a landlord, Defendant Omni Rhode Island, Inc., and its tenant, Plaintiff Cigar Masters Providence, Inc., Omni has filed a motion (ECF No. 23) asking the Court to preliminarily enjoin Cigar Masters from permitting the smoking of any tobacco products on the leased premises. Omni grounds its motion in the likelihood that it will succeed on the merits of its claims that the tobacco smoke and related odors escaping from Cigar Masters' business constitute a trespass and a private and public nuisance, as well as that Cigar Masters has breached its Lease-based promise to "install and maintain throughout the Term a ventilation system designed to remove, to the extent technologically feasible, smoke and related odors from the interior of the Premises and from any exhaust to the outside of the Premises and into any Common Areas." In arguing that the equities favor interim relief, Omni asks the Court to focus not only on the significant adverse impact on its other tenants (a restaurant known as "Fleming's" and luxury condominiums known as the "Residences") and on its own guests, staff and reputation, but also on the harm to members of the general public, who are unwittingly exposed to the air laced with secondhand smoke emitted by Cigar Masters.
Cigar Masters counters that the injunction Omni seeks is a death-knell to its business, which is the operation of a smoking bar specializing in providing a comfortable space for customers who wish to smoke tobacco products. Pointing out that both Rhode Island law and the express language of the Lease permit it to operate a smoking bar, Cigar Masters also contends that the escape of tobacco smoke and odors from its premises is beyond its control because the out-migration of smoke-laden air is caused by air pressure imbalances and gaps and openings in building spaces controlled by Omni and its other tenants, yet Omni has failed to do anything to correct these causes. Accordingly, it contends, the equities lean unambiguously toward denial of Omni's motion for preliminary injunction.
The motion was referred to me for report and recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). After the motion was initially filed on January 19, 2017, the parties agreed to a discovery schedule to explore the issues raised by the motion. When discovery and briefing was completed, the Court held an evidentiary hearing on April 24, 2017. Post-hearing briefing closed on May 24, 2017. Consistent with the proposed findings of fact and conclusions of law that follow, I recommend that the Court enter a preliminary injunction that is more limited than the draconian order sought by Omni. Instead of a death-knell order, my proposed findings support the conclusion that, until this case is resolved, Cigar Masters should be ordered to strictly comply with its basic obligations as set out in the Lease and in the applicable Rhode Island statute and regulation. If it declines to do so or fails to comply, in that event, I recommend that all smoking on its premises be banned.
These proposed findings of fact are based on the pleadings, evidence and testimony received during the evidentiary hearing, which is briefly summarized here. Omni called four witnesses: Allen Potter, who was employed by Omni's predecessor, PRI XVIII, L.P. (referred to as "the Procaccianti Group"), and dealt with Cigar Masters on its behalf from November 2008 until the end of 2012, after which he continued to deal with Omni about Cigar Masters in his capacity as director of operations on behalf of the Residences; Ronan Sweeney, Omni's director of finance, who dealt with Cigar Masters from April 2014 to the present; Michael Shurtleff, who testified by deposition (Ex. D2) as a Fed. R. Civ. P. 30(b)(6) witness on behalf of Phalanx Engineering ("Phalanx"), the entity that installed Cigar Masters' ventilation system and maintained it until May 2016; and Richard Ecord, an industrial hygienist, who was qualified and testified as an expert regarding the conclusions he reached based on testing for nicotine and nicotine markers, as well as regarding the general health effects of the particulates found during testing. Cigar Masters called one witness, Jack Dakermanji, who has been employed by Cigar Masters since 2011, has worked at its Providence location since 2014 and became the general manager at the Providence location in May 2016. All of these witnesses presented credible testimony that was relevant to the issues and helpful to the Court.
Cigar Masters is a Rhode Island corporation with its principal place of business in Providence, Rhode Island. Counterclaim, ECF No. 7 ¶ 2. Since at least 2006, Cigar Masters has operated a "cigar bar" in Providence, Rhode Island; the sale and on-premises use of tobacco products, and particularly cigars, is integral to its business. Tr. 186. To operate legally in Rhode Island, Cigar Masters' retail establishment is registered with the Rhode Island Division of Taxation pursuant to R.I. Gen. Laws § 23-20.10-2(15)(a), which permits the operation of "an establishment whose business is primarily devoted to the serving of tobacco products for consumption on the premises," provided that revenues generated by tobacco products must be greater than 50% of the total for the establishment.
Omni is a limited liability company organized and existing under the law of Delaware, with its principal place of business in Dallas, Texas. Counterclaim, ECF No. 7 ¶ 1. In late 2012, Omni acquired from the Procaccianti Group certain real estate located at 1 West Exchange Street, Providence, Rhode Island, including a building that houses a hotel (hereinafter the "Hotel"). Tr. 75-77; Exs. A-B. In the east tower of the building, there are various retail tenants, including a fine-dining steak restaurant called "Fleming's," a parking garage, Hotel rooms, hallways and common areas, and over a hundred luxury condominium units on the upper floors operating as "the Residences." Tr. 14-16, 75-76. During the period prior to the sale to Omni, the Procaccianti Group owned and operated both the Hotel (under a different name) and the Residences. Tr. 15-16. After Omni assumed ownership, the Residences became an independent entity occupying the east tower of Omni's building. Tr. 14-16.
Other than in the premises occupied by Cigar Masters, smoking is not permitted in the public areas of the premises occupied by Omni and its tenants, including Fleming's, the guest rooms and common areas of the Hotel and the common areas of the Residences. Tr. 15, 76; Ex. 5A. The Residences includes a no-smoking rule in its condominium documents and considers its status as a non-smoking facility to be an important selling point when marketing its condominium units. Tr. 15. The Omni prides itself on operating non-smoking hotels throughout the United States — it features its smoke-free atmosphere in its advertising to attract guests to its properties throughout the nation, including the Hotel. Tr. 76.
On December 28, 2006, the Procaccianti Group entered into a predecessor lease with Cigar Masters, which contemplated that Cigar Masters would occupy a retail location within the Hotel. Ex. A at 1. On August 21, 2007, the Procaccianti Group and Cigar Masters entered into the Lease that is in issue in this case (Ex. A), granting Cigar Masters the exclusive right to occupy retail space located on the first floor of the east tower for the purpose of operating a "cigar café," selling alcoholic beverages, light food and tobacco products, as well as permitting both on-site consumption of food and beverages and the use of tobacco products by retail customers. Ex. A §§ 6.1, 18.4. In addition, at some time between October 2007 and June 2009
The Lease provided Cigar Masters with an initial five-year term and options to extend for additional terms. Ex. A §§ 1(f), 2.4. After Omni acquired the real estate and became the owner and operator of the Hotel, it executed an amendment to the Lease with Cigar Masters dated August 20, 2013; the amendment transferred the rights and obligations of landlord from the Procaccianti Group to Omni, adjusted the rent, and extended the term of the Lease to February 28, 2018, with Cigar Master retaining the option to extend for two successive five-year terms. Ex. B § 1. Otherwise, the original Lease terms were ratified. Ex. B § 10.
The provisions of the Lease on which the parties' dispute is principally focused are found in Article 18. Ex. A at 14-15. Most critical to the matter in issue is § 18.3, which addresses "Odor Control." This section imposes on Cigar Masters the absolute duty to:
Ex. A § 18.3. Also in § 18.3, Cigar Masters acknowledges that tobacco smoking is strictly regulated by the State of Rhode Island and is objectionable to the public, and that, "as such [Cigar Masters] has a duty to eliminate the odor and smoke from its premises and from any Common Areas."
Other Lease language that is important to the matter in issue appears in § 19.7. That provision states that waiver or indulgence by the landlord (either the Procaccianti Group or Omni) of a Cigar Masters default neither alters the terms of the Lease nor operates as a waiver of a subsequent default. Ex. A § 19.7. This section makes clear that no custom or practice of the parties that is at variance with the Lease obligations can constitute a waiver of the landlord's right to demand exact compliance.
The physical configuration of the space in and adjacent to the east tower affects the dispute so I pause briefly to describe it.
Pursuant to the Lease, Cigar Masters occupies the corner of West Exchange and Francis Streets, on the ground floor. Ex. A. Embedded in the wall facing West Exchange Street that borders the public sidewalk, and approximately twelve feet from the ground, is the vent exhausting air from Cigar Masters to the outside. Tr. 23-24. Immediately adjacent to Cigar Masters' exhaust panel is the entrance to the parking garage for the Residences. Tr. 23. This parking garage has a large door that opens and closes constantly throughout the day and night. Tr. 19. Just above the Cigar Masters exhaust panel is a much larger panel of louvers that allow outside air to be sucked into the parking garage when powerful fans on the opposite wall are activated by rising carbon monoxide levels. Tr. 19. Around the corner in both directions from Cigar Masters and its exhaust panel are the front and back entrances to the Residences and to Fleming's.
The contiguity of the interior space on the first floor of the east tower is similarly pertinent. Specifically, on the other side of the interior walls enclosing Cigar Masters' premises are the common areas of the east tower, including halls and access to elevators that serve the floors above, where there are both Hotel rooms and over a hundred condominium units. Tr. 14-15; Ex. A at 22; Ex. 2 at 8. Fleming's, including its dining room, also shares interior walls with Cigar Masters. Tr. 56;
After signing the Lease in August 2007, Cigar Masters engaged Phalanx, an engineering firm, to install the required ventilation system. Ex. D2 at 5. According to the Phalanx representative, this ventilation system was "well and above" an ordinary system in that it included air exchangers that could change the air six or seven times an hour, bring in air from the outside and exhaust the air to the outside through the exhaust panel, with a bank of prefilters and carbon charcoal filters to filter smoke and odors out of the air circulating inside Cigar Masters' premises. Ex. D2 at 5-7. The entire system was designed to operate at slightly negative pressure relative to adjacent spaces so that the Cigar Masters' air would not be pulled into other spaces in the building; if anything, the slightly negative pressure was intended to pull in air from other areas, rather than to allow air to escape from Cigar Masters' premises, other than through the exhaust panel to the outside. Ex. D2 at 6-7. There is no evidence suggesting that this ventilation system did not conform to what Cigar Masters was obliged by § 18.3 to install.
Phalanx also was engaged in connection with Cigar Masters' ongoing duty ("throughout [the Lease] Term") pursuant to § 18.3 to "maintain" the ventilation system. Ex. D2 at 9. This involved periodically changing the prefilters and, less frequently, the charcoal filters, as well as performing other preventive maintenance. Ex. D2 at 9. Regular changing of the filters is critical to the operation of the ventilation system because "dirty filters" prevent air exchange. Ex. D2 at 10. Phalanx recommended that the prefilters be changed every eight to ten weeks and the charcoal filters every four months. Ex. D2 at 9-11. However, the amount of smoke generated by Cigar Masters led to consensus that the Lease-based duty to maintain the ventilation system required more frequent changes.
Despite Lease language unambiguously imposing on Cigar Masters the duty to change its filters at regular intervals, Cigar Masters declined to sign the agreement proffered by Phalanx to set up a protocol for automatic filter changes. Ex. D2 at 9-10. Rather, Cigar Masters told Phalanx that it would call when it wanted the filters changed. Ex. D2 at 11-12. After the system was installed, Cigar Masters delayed three months before the first maintenance call. When it was called in, Phalanx found the filters "already dirty, needed to be changed"; Phalanx concluded that it was the dirty filters that were "causing the problem" with air quality. Ex. D2 at 9-10. As years passed, Phalanx was called in for filter changes less and less frequently, eventually so infrequently that Phalanx assumed (wrongly) that Cigar Masters must be using someone else to do the work. Ex. D2 at 13. And when Phalanx was called in, typically because Cigar Masters had received complaints, it found that "changing the filter typically solve the issues . . . most of the time . . . [b]ecause if the prefilters get plugged, then we're not changing the amount of air that we need to be and if you can't exchange the right amount of air, you get smoke buildup in the space." Ex. D2 at 14.
The decline in Cigar Masters' calls to Phalanx for filter changes is reflected in the Phalanx invoices. Ex. D2 (Ex. 1). They establish that, after the problem in 2008 (when the filters were changed only twice), the filters were changed eight times in 2009, the first full year.
Based on this evidence, considered in light of the unambiguous Lease language in § 18.3 establishing the duty to maintain the ventilation system, I find that, from the execution of the Lease through the end of 2010, compliance required, at a minimum, changing the prefilters at least every ten weeks, or five to six times a year, and changing the charcoal filters at least every four months, or three times a year. Beginning at the latest in January 2011 (when Cigar Masters acknowledged the need to change the filters monthly) and continuing to the present, I find that compliance with Cigar Masters' duty to maintain the ventilation system required, at a minimum, changing the prefilters at least once a month, or twelve times a year, and changing the charcoal filters at least every six weeks, or eight to nine times a year. Further, as confirmed by the Cigar Masters' January 13, 2011, email (Ex. Z), I find that the Lease required Cigar Masters proactively to adopt and maintain the regular schedule and not to sit back and wait for complaints. Finally, I find that the evidence conclusively establishes that, since 2010, Cigar Masters has continuously been in breach of this duty to maintain the ventilation system pursuant to § 18.3 and that this breach has caused tobacco smoke and odors to build up in the air circulating inside Cigar Masters, as well as in the air exhausted by Cigar Masters into the street.
As time passed, Omni and Cigar Masters came to understand that the failure of Cigar Masters to comply with its duty to maintain the ventilation system by timely changes of the filters was not the only cause of the smoke and odors escaping from Cigar Masters' premises. In February 2011, Cigar Masters paid for an engineering study (Ex. 2), which concluded that Fleming's was under what Phalanx's representative described as "severe negative pressure," causing it to pull air from Cigar Masters into its dining room and other areas through openings, gaps and cracks. Ex. D2 at 16; Ex. 2 at 8. This study also concluded that that negative air pressure in the Hotel, and particularly air pressure changes caused by the movement of elevators in the east towers, created a "stack effect," sucking air from Cigar Masters into the common areas, hallways, and the elevator shaft, which carried it up to the Hotel rooms and condominium units above. Tr. 53-54; Ex. 2 at 8. To minimize the effect of this problem, Cigar Masters paid to have cracks and gaps on its side of the interior walls sealed. Tr. 104, 184. However, it could not compel Omni, Fleming's or the Residence to do the same for the other side of these walls. Tr. 105-06. Nor was Omni able to persuade Fleming's to alter the air pressure in its dining room. Exs. 6-7; Tr. 69-72. I find that this cause (which I will refer to as the "air pressure imbalance") of escaping smoke and odor was beyond the control of Cigar Masters to ameliorate.
Also as time passed, the parties came to understand that the location of the Cigar Masters exhaust panel was problematic because the air spewing out of the panel was being pulled back into the parking garage either through the garage door or through the louvers above the exhaust panel. Ex. D2 at 19-20. In addition, when downtown Providence is windy, especially in the winter or during a snow storm, the air exhausted outside by Cigar Masters is swept around the corner into the entrances to Fleming's and the Residences. Tr. 26; Ex. D2 at 19. Finally, witnesses testified to smelling tobacco smoke and seeing smoke on the public sidewalk below the Cigar Masters exhaust panel.
Several witnesses testified about the relationship between, on one hand, Cigar Masters' abjuration of its § 18.3 duty to maintain its ventilation system and, on the other, the smoke infiltration caused by air pressure imbalance and the building configuration issues, which Cigar Masters could not control. For example, the Phalanx representative explained that, because of the building configuration issues and the air pressure imbalance, changing the filters regularly would minimize, but would not eliminate the tobacco smoke odor escaping from Cigar Masters. Ex. D2 at 27-30. Mr. Potter's testimony is consistent: "if the air within Cigar Masters was being properly treated then the amount of smoke whether it's going to the outside, the outdoors or into the building would be far less." Tr. 54-55. As he explained:
Tr. 47. Mr. Sweeney concurred: "we were noticing a difference when the filters were changed that we weren't smelling smoke as consistently as we had been." Tr. 113. He opined that the problem with smoke and odor begins with Cigar Masters' consistent failure to change their filters and is exacerbated by the negative air pressure in Fleming's, the movement of elevators in the east tower and the impact of wind carrying Cigar Masters' exhaust back into the building, which he described as "a design flaw when that building was built and at no time should we ever have leased it to a smoke bar." Ex. 16;
Based on this evidence, I find that Cigar Masters' breach of its § 18.3 duty to maintain the ventilation system seriously exacerbated the amount of tobacco smoke and odor contaminating the air that escaped from its premises due to air pressure imbalance and the configuration of the building. Further, I find that it would be speculation to draw any conclusions about the level of harm attributable to air pressure imbalance and the configuration of the building, above and beyond the harm caused by Cigar Masters' breach. That is, the evidence does not establish that, if Cigar Masters' air had been properly filtered by the ventilation system in accordance with the unambiguous terms of the Lease, the infiltration of such filtered air due to air pressure imbalance and building configuration issues would have caused significant or irreparable injury. Rather, the evidence establishes that proper maintenance of the ventilation system would significantly minimize the adverse impact of Cigar Masters' smoke on Omni and its tenants; as Mr. Potter testified, "what we found to work was if the, the ventilation system was maintained." Tr. 29.
Because the events that unfolded over the course of the dealings first between the Procaccianti Group and Cigar Masters, and later between Omni and Cigar Masters, affect the equities pertinent to this motion, I pause briefly to recast the facts in chronological order.
After Allen Potter assumed responsibility for the Procaccianti Group's relationship with Cigar Masters in late 2008, he met with Cigar Masters; together they concluded that "shortening up on the timespan with filter changes aided in that effort a lot." Tr. 18. During this early period, Cigar Masters was proactively changing the filters. Tr. 31. However, over time, the filters were changed only if Mr. Potter complained — "over time [it] became more and more of an effort." Tr. 32-33. Mr. Potter attributed some of the difficulty to the fact that, at first, Cigar Masters' management had been directly involved with the Providence location and its employees were very responsive but, later, management was not onsite and Cigar Masters' staff was plagued by constant turnover; new personnel knew nothing of the "procedures for maintaining the system." Tr. 33-35. In January 2011, when Cigar Masters' co-owner and vice president, Brandon Salomon, directed the manager of the Providence location to procure a "standard work order" to get the filters changed on a regular schedule, "minimally monthly and charcoals every 6 weeks," Ex. Z, his instructions were ignored. Tr. 32.
In March 23, 2013, Mr. Potter apprised Omni, as the new owner, of the situation from his perspective:
Ex. N. In February 2014, Mr. Potter again summarized the smoke problem for Omni, advising that the east tower's parking garage and elevators make it a "natural chimney" and that the location of Cigar Masters' exhaust panel causes smoke-laden air to be sucked into the parking garage. Ex. O. He reiterated that "continued maintenance of the filtration system [is] the only method to be found effective."
As Cigar Masters' rate of changing its filters continued to decline, on February 18, 2014, Omni sent a formal notice requesting that Cigar Masters adopt the schedule of regular monthly filter changes, as well as that it repeat the sealing of the seams and gaps. Exs. D, 8. This notice included an offer by Omni to have an engineer inspect the premises of Cigar Masters and Fleming's to determine if additional work might "rectify this issue."
In the spring of 2016, patience ran out. Omni was persistently receiving negative feedback from Hotel guests on its customer satisfaction survey about the smell of smoke. Tr. 80. Then Fleming's sent a Notice of Default to Omni on March 9, 2016, based on Omni's failure to "remedy the noxious odors emanating from the nearby cigar bar." Exs. I, 13. Omni responded with its own notice of default sent to Cigar Masters on March 22, 2016; the notice demanded that it immediately establish a protocol for monthly filter changes. Exs. I, 14. Omni told Fleming's (but not Cigar Masters) that it planned to bring in an engineer to explore "what other steps, if any, can be taken to remedy the issue." Ex. 14. In response to the default notice, Cigar Masters brought in Phalanx for one prefilter change on March 25, 2016, and one charcoal filter change on April 8, 2016, but did nothing about setting up a regular maintenance schedule. Ex. G. By mid-May 2016, Fleming's was complaining again, and Omni itself observed that the filters were "filthy"; Cigar Masters did what turned out to be its last filter maintenance for almost a year, changing only the prefilters on May 25, 2016. Exs. 15, G, K; Tr. 132.
On June 14, 2016, Omni sent another formal demand to Cigar Masters — this one required the execution of an amendment to the Lease requiring Cigar Masters to pay for an annual contract for monthly prefilter changes and quarterly charcoal filter changes. Ex. L. Cigar Masters ignored the demand. Tr. 94. Mr. Dakermanji, who had just become Cigar Masters' manager in Providence, explained that Cigar Masters refused because Omni would not guarantee that the Lease amendment would end the dispute: "we'll still be liable for an engineering issue in the building . . . this is not going to solve the issue." Tr. 181. However, Mr. Dakermanji conceded that he did not know that the Lease placed the duty to install and maintain the ventilation system on Cigar Masters; according to him, no one at Cigar Masters knew when the filters were supposed to be changed. Tr. 186-92. He changed the filters himself in March of 2017, the first time it had been done since the spring of 2016. Tr. 182-83.
With no response from Cigar Masters to the demand that it arrange for monthly filter changes, Omni abandoned the plan to hire an engineering firm; instead, it proceeded to terminate the lease. Ex. 17; Tr. 121, 126. On June 29, 2016, it sent "Notice of Termination of Possession," which demanded that all smoking be stopped immediately and that Cigar Masters vacate the premises by July 29, 2016. Ex. M. Cigar Masters did neither. Instead it filed this suit in the Superior Court.
The testing done by Omni's expert, Mr. Ecord, established that nicotine was building up inside the Fleming's dining room, in one of the common hallways of the Residences and on the exterior of the Cigar Masters' exhaust panel. Tr. 161. The quantity found permitted him credibly to conclude, and I so find, that Fleming's staff and guests, the Residences' staff and occupants, the Hotel staff and guests, and pedestrians on West Exchange Street are all being exposed to secondhand smoke generated by Cigar Masters' operations, as well as that this exposure is at a level that poses a threat to public health. Tr. Tr. 160-65. In addition, both Omni and the Residences presented credible evidence of lost business and adverse impact on reputation, including guests, owners and tenants unhappy with being exposed tobacco smoke and odor while staying at, living in or visiting a facility with a reputation of being smoke-free. E.g., Tr. 45. Moreover, Omni established that it is facing the potentially serious, indeed catastrophic, consequence of having no restaurant for its guests, if Fleming's carries out its threat to break the lease.
On Cigar Masters' side, Mr. Dakermanji credibly confirmed that the inability to allow smoking would destroy the core of Cigar Masters' business and amount to a death-knell — "[w]e will never be able to stay in business." Tr. 185-86.
When considering a request for interim injunctive relief, courts are guided by the traditional equity doctrine that preliminary injunctive relief is an extraordinary and drastic remedy that is never awarded as of right.
Generally, the purpose of the preliminary injunction "is to preserve the status quo, freezing an existing situation so as to permit the trial court, upon full adjudication of the case's merits, more effectively to remedy discerned wrongs."
To illustrate, if a party seeks an interim order to force the closing of a business that has been operating for several years, that is a change to, rather than the preservation of, the status quo; in such a case, a greater showing is required of the moving party.
Under Rhode Island law, a plaintiff who claims breach of contract must prove that "(1) an agreement existed between the parties, (2) the defendant breached the agreement, and (3) the breach caused (4) damages to the plaintiff."
The starting point of the analysis is § 18.3's opening sentence, which imposes on Cigar Masters the duty to "maintain throughout the Term a ventilation system designed to remove, to the extent technologically feasible, smoke and related odors from the interior of the Premises and from any exhaust to the outside of the Premises and into any Common Areas." I have already found that Cigar Masters breached this duty. This duty is reinforced by §§ 18.4 and 6.2, in which Cigar Masters promises to abide by Rhode Island's laws and regulations related to tobacco sale and use in a public place. As pertinent here, Rhode Island law mandates that:
R.I. Gen. Laws § 23-20.10-2(15)(c). Also applicable is R.I. Admin. Code 31-1-17:2.2(b), which requires ventilation to prevent migration of smoke into "areas where smoking is prohibited," including areas available to and used by the general public in hotels, bars, elevators, lobbies, hallways and other common areas in condominiums, and restaurants. R.I. Gen. Laws § 23-20-10-3. I also find that Cigar Masters breached its duty to comply with Rhode Island law. I further find that these duties are not contingent on or subject to any obligation, duty or predicate action required to be performed by the landlord; rather, they are absolute, unequivocal and clear. However, they are cabined by the phrase "to the extent technologically feasible" — this limitation makes clear that § 18.3 of the Lease does not require Cigar Masters to do what is impossible. Therefore, Cigar Masters' defense that it lacked control over the air pressure imbalance or building configuration issues does not apply. If Cigar Masters had properly maintained an appropriately designed ventilation system, but complete removal of tobacco residue from its interior premises or its exhaust was technologically infeasible, to that extent, I find that Cigar Masters would not be in breach.
Focusing on the last sentence of § 18.3,
Cigar Masters extracts this improbable interpretation from the phrase "with the landlord's prior approval." Fairly read, I find that this sentence means only that a complaint may trigger
In a further attempt to avoid the consequences of its failure to maintain the ventilation system, Cigar Masters pounces on what I find is an obvious typographical error in § 18.2(b) of the Lease.
I find that the use of "Premises" instead of "premises" is plainly a typographical error.
The last question for consideration is whether Omni or the Procaccianti Group somehow waived the right of the landlord to insist on compliance with the duty to maintain the ventilation system by their undertaking, year after year, of asking, begging and cajoling Cigar Masters to change its filters. Section 19.7 of the Lease provides the answer:
Ex. A § 19.7. I find Omni's "indulgence" of Cigar Masters' perennial default of its § 18.3 obligations did not result in a waiver of any of Omni's contractual rights arising from the breach.
To summarize, I find that Omni is overwhelmingly likely to succeed on the merits of its claim that Cigar Masters completely failed in its duty to maintain its ventilation system as required by § 18.3 of the Lease. I further find that Omni is also likely to succeed on the merits of its claim that Cigar Masters failed in its duty set out in §§ 18.3 and 6.2 of the Lease to comply with R.I. Gen. Laws § 23-20.10-2(15)(c) and R.I. Admin. Code 31-1-17:2.2(b), both of which obligated Cigar Masters to maintain a "proper ventilation system that will prevent the migration of smoke" into the street or into the public areas, such as the Hotel common areas and Fleming's dining room. Finally, I find that Omni will likely succeed on the merits of its claim that Cigar Masters breached the covenant of good faith and fair dealing. A central purpose of the Lease is to ensure that Cigar Masters would assume the responsibility for the tobacco smoke and odor its operations would generate, as well as that the smoking of tobacco would not interfere with the business of Omni's other tenants, such as Fleming's and the Residences. Cigar Masters' blatant disregard of this responsibility has resulted in an interference with the operations of Fleming's serious enough to induce it to threaten to break its lease, an interference with the operation of the Residences serious enough to cause it to lose prospective owners and tenants, and an interference with the Hotel that has resulted in persistent customer complaints, thereby depriving Omni of the benefit of the parties' bargain.
Omni's alternative foundation for interim relief rests on its tort claims based on common law nuisance and trespass, arising from the infiltration of Cigar Masters' smoke, odors and noxious chemicals (nicotine) into the hallways of the Hotel and the Residences, into the dining room of Fleming's and into the area above the public sidewalk that serves its building.
Actionable nuisances fall into two classes, public and private.
Liability for nuisance is imposed only in those cases in which the harm or risk is greater than what is appropriate under the circumstances.
Omni argues that Cigar Masters' blatant disregard of its duty to maintain the ventilation system amounts to nuisance per se. Nuisance per se is an amorphous concept not well defined in the law, that is used to condemn activities that not only interfere with the use of property but also violate state or local law. For example, in
I find that Omni has proven that it will succeed on the merits of its tort-based claims. By its deliberate refusal to change its filters for months, causing its ventilation system to fail, Cigar Masters has unreasonably interfered with the rights of the private parties (Omni and its tenants) to enjoy the use of their property and with the right of the public to be free from the negative health effects of secondhand smoke. Further, Cigar Masters' abnegation of its duty to change the filters has caused smoke and nicotine, in observable and measurable amounts, to enter Fleming's public dining area, the Residences' condominium common areas, the Hotel's hallways and elevators and the air above the public sidewalk. The presence of such smoke not only constitutes a trespass, but also flaunts the statute and the regulation that authorize Cigar Masters' operation, which specify that smoking is permitted in a cigar bar only if the proprietor "provide[s] a proper ventilation system that will prevent the migration of smoke into the street," R.I. Gen. Laws § 23-20.10(15)(c), or into "areas where smoking is prohibited under the provisions of the Act or these Regulations." R.I. Admin. Code 31-1-17:2.2(b). Thus, this is a circumstance where the unreasonable interference and infringement with private and public rights is also a "violation of state laws or local ordinances."
Cigar Masters tries to counter Omni's evidence by pointing to the cases holding that an essential element of these torts is that the unreasonable interference or infringement must have been caused by an actor with control over the instrumentality alleged to have created the nuisance or the trespass.
Cigar Masters argues that it cannot guarantee that smoke from its operations will not be pulled into Fleming's and/or the Residences because of the air pressure imbalance and building configuration issues over which it completely lacks control. This blame-shifting argument requires the Court to overlook the reality that the smoke is generated by Cigar Masters, the ventilation system is under Cigar Masters' control and it is Cigar Masters that is obliged by law and the Lease to maintain the ventilation system, but persistently has failed to do.
I reject Cigar Masters' defense based on its lack of control over the negative air pressure and building configuration problems — this defense fails because it ignores Cigar Masters' complete control over its own operations and its ventilation system. If Cigar Masters had complied with its acknowledged duty to change its filters, it is possible, based on the evidence presented, that the escaping air caused by air pressure imbalance and the building configuration would have been sufficiently cleaned of noxious smoke and odors as to create only a de minimis interference or injury, if any. And if Cigar Masters was in full compliance with its side of the bargain, so that the only causes of tobacco-laden smoke infiltration were the air pressure imbalance or the building configuration, the defense of lack of control would require serious consideration. However, that is not the case. As in
In order to obtain a preliminary injunction, Omni must demonstrate "the potential for irreparable harm if the injunction is denied."
Based on the evidence, I find that Omni has sustained its burden of proving irreparable harm if Cigar Masters is not enjoined despite the delay of almost six years during which Omni, and the Procaccianti Group before it, tried to nag, cajole and threaten Cigar Masters to comply with its duty to maintain the ventilation system. Once Fleming's gave its formal notice of default based on the level of tobacco smoke invading its dining room, Omni acted promptly, shifting from its fruitless effort to get Cigar Masters to comply to its current effort to get Cigar Masters out of the building. In addition to the significant loss to Omni if Fleming's were to act on its threat, Omni has also proven irreparable harm resulting from the adverse impact on its business caused by the material amounts of smoke, odor and nicotine collecting in its hallways, in Fleming's dining room and in the area of the public sidewalk, affecting both staff and members of the public who frequent Fleming's, the Hotel and the Residences.
Omni argues that the requested preliminary injunction will serve the public interest by ending the escape of secondhand tobacco smoke and toxic nicotine in public spaces that the General Assembly has specifically designated as smoke-free. R.I. Gen. Laws §§ 23-20.9-2; 23-20.10-3; 23-20.10-4. Omni's expert, Mr. Ecord, provided the testimonial foundation for the settled fact, which Cigar Masters has not attempted to controvert, that no amount of secondhand tobacco smoke is safe. Based on this evidence, I find that Cigar Masters' lackadaisical approach to its duty to maintain its ventilation system has caused such exposure to be inflicted on the public. Tr. 160;
With every other factor tipping in favor of an interim injunction, I turn last to the examination of the balance of the hardships. Based on the testimony of Mr. Dakermanji, Cigar Masters' manager, I am satisfied that the requested relief would be its death-knell. I find unpersuasive Omni's argument that Cigar Masters could survive by providing humidors for cigar aficionados (who would have to go elsewhere to smoke them) and could shift the focus of its business to the sale of alcohol or light food. From R.I. Gen. Laws § 23-20.10-2(15)(a), which requires Cigar Masters to be "primarily devoted to the serving of tobacco products for consumption on the premise," to its name, its clientele and its customers, in short everything about it, Cigar Masters' business rests on its ability to provide smokers with a hospitable venue to use tobacco-based products. The elimination of smoking would eviscerate the very essence of this business model. Yet on the other side of the scale is the significant impact of Cigar Masters' unfiltered tobacco smoke on Omni, as well as on the innocent public whose exposure could lead to adverse health consequences.
Based on the foregoing, I find that this balance-of-harms factor is in equipoise, favoring neither party because both will suffer substantial, though very different harms. Nevertheless, it poses an equitable reason for the Court to be reluctant to rush to issue the absolute ban on all smoking, as Omni requests, if a more moderate option adequately addresses the harm.
Mindful of the harms on both sides of the scale, and because the basis for the finding that Omni will succeed on the merits of its claims is focused on Cigar Masters' failure even to try to maintain its ventilation system (never mind to explore other devices or methods that it could adopt to comply with its duty to "minimize if not eliminate" smoke and odors), my recommendation regarding the interim remedy focuses in the first instance on an injunction that mandates Cigar Masters' compliance with that obligation. That is, I recommend that the Court order Cigar Masters to:
The engineering firm shall provide timely notice to Omni of the work it performs and of the recommendations it makes for additional maintenance or changes to the ventilation system or Cigar Masters' premises, including the degree to which Cigar Masters complies with the recommendations. To be clear, I am not recommending that Cigar Masters' implement every recommendation of the engineering firm. The Court is mindful that Cigar Masters' contractual obligation is limited to the removal of smoke and odors from the air in its premises and from its exhaust "to the extent technologically feasible," and to making improvements "to minimize if not eliminate such smoke and odors." Ex. A § 18.3 (emphasis supplied). Consistent with this Lease language, the Court is not requiring Cigar Masters to achieve total elimination, which may be impossible unless and until the negative air pressure and building configuration issues are addressed by Omni. However, if the engineer recommends an improvement and Cigar Masters declines to implement it, Omni may return to the Court for further relief.
If Cigar Masters fails or refuses to perform any of the three requirements that I am recommending, within five days of notice by Omni of such failure, Omni may return to the Court. Immediately upon the filing by Omni of competent proof evidencing such failure or refusal, I recommend that the Court enter the requested preliminary injunction, enjoining Cigar Masters from permitting any smoking or other use of tobacco products on its premises.
Based on the foregoing, I recommend that the Court grant the motion for preliminary injunction (ECF No. 23) to the extent that it enters the preliminary injunction as described above.
Any objection to this report and recommendation must be specific and must be served and filed with the Clerk of the Court within fourteen (14) days after its service on the objecting party.
