20 Thames St. LLC v. Ocean State Job Lot of Me. 2017 LLC

• Decision Date: 24 June 2021
• Docket Number: Docket: Cum-20-184
• Parties: 20 THAMES STREET LLC et al. v. OCEAN STATE JOB LOT OF MAINE 2017 LLC
• Court: Maine Supreme Court

252 A.3d 516

20 THAMES STREET LLC et al.

v.OCEAN STATE JOB LOT OF MAINE 2017 LLC

Docket: Cum-20-184

Supreme Judicial Court of Maine.

Argued: February 10, 2021

Decided: June 24, 2021

Glenn Israel, Esq. (orally), Bernstein Shur, Portland, for appellants 20 Thames Street LLC and 122 PTIP LLC

Seth W. Brewster, Esq. (orally), and Micah A. Smart, Esq., Eaton Peabody, Portland, for appellee Ocean State Job Lot of Maine 2017 LLC

Panel: MEAD, GORMAN, JABAR, HUMPHREY, and CONNORS, JJ.

Majority: MEAD, GORMAN, JABAR, HUMPHREY, and CONNORS, JJ.

Concurrence: CONNORS, J.

MEAD, J.

[¶1] 20 Thames Street LLC and 122 PTIP LLC (collectively, 20 Thames) appeal from a decision of the Superior Court (Cumberland County, Stewart, J. ) affirming the judgment of the District Court entered in the Business and Consumer Docket (Portland, Duddy, J. ) in favor of Ocean State Job Lot of Maine 2017 LLC. 20 Thames asserts that the District Court erred when it granted Ocean State's motion to dismiss and determined that 20 Thames's complaint for forcible entry and detainer (FED) was barred by the claim preclusion branch of res judicata. We agree and vacate the judgment and remand for further proceedings.

I. BACKGROUND

[¶2] The following substantive facts are taken from the allegations in the complaint and are viewed as if they were admitted, see Ramsey v. Baxter Title Co. , 2012 ME 113, ¶ 2, 54 A.3d 710, and the procedural facts are drawn from the record.

[¶3] 20 Thames is the landlord and Ocean State is the tenant pursuant to a commercial lease for property in Falmouth. On April 25, 2018, 20 Thames provided a "Notice of Default and Termination" to Ocean State enumerating four events of default:

1. Failure to sign and return the Subordination Non Disturbance Agreement as required by Section 27 of the Lease;

2. Failure to sign and return the Estoppel Certificate within 10 days after request as required by Section 29 of the Lease;

3. Failure to provide evidence of insurance naming the Landlord as an additional insured as required by Section 9 of the Lease; and

4. Failure to comply with Section 3 of the Lease by allowing a trailer to remain at the loading dock for a period of time in excess of overnight or as otherwise may be permitted by the Lease.

The notice further provided: "There is no way to cure the default enumerated in item 2 above and Section 29 provides that the Lease may be terminated immediately. The additional defaults are not in waiver of the Landlord's right to immediately terminate the Lease for failure to provide the Estoppel Agreement." It directed Ocean State to surrender the premises. Ocean State responded by letter dated May 3, 2018, in which it asserted, among other things, that its trailer-parking practices did not violate the lease.

[¶4] After Ocean State refused to vacate, 20 Thames filed an FED complaint on May 7, 2018, in the District Court. The complaint asserted one count for possession of the property, and paragraph twenty-one specifically provided:

By reason of a Notice of Termination of Lease for failure to:

a. sign and return the SNDA and sign and return the Estoppel as required by the Lease;

b. provide evidence of insurance naming the Plaintiff as an additional insured as required by the Lease; and

c. comply with Section 3 of the Lease by allowing a trailer to remain at the loading dock for a period of time in excess of overnight or as otherwise may be permitted by the Lease,

Defendant's tenancy has been terminated. See [the 2018 termination notice], Defendant's refusal to execute the estoppel.

The matter was transferred to the Business and Consumer Docket, and after a three-day trial, the court (Mulhern, J. ) entered judgment in favor of Ocean State. The judgment addressed only 20 Thames's assertion of default and termination based on Section 29 of the lease. 20 Thames appealed, and the Superior Court (Warren, J. ) affirmed the judgment on the merits but vacated an award of attorney fees. Ocean State appealed the attorney fees decision, and we affirmed the Superior Court's decision. See 20 Thames St. LLC v. Ocean State Job Lot of Me. 2017, LLC , 2020 ME 55, ¶ 1, 231 A.3d 426.

[¶5] Meanwhile, on September 25, 2019, 20 Thames sent another "Notice of Termination" to Ocean State. It stated:

The purpose of this letter is to provide Tenant with notice of the immediate termination of the Lease due to Tenant's ongoing and continuous violation, since April 2018, of Section 3 of the Lease pursuant to which Tenant is prohibited from storing trailers on the Premises other than during times when those trailers are being unloaded and, in any event, no longer than overnight. Tenant has regularly stored trailers on the Premises for between 2 and 5 days at a time.

Tenant received a Notice of Default regarding this Lease violation dated April 25, 2018. By letter dated November 19, 2018 Tenant's legal counsel argued that Tenant's trailer parking practices were "consistent with Section 3 of the Lease." By letter dated December 10, 2018, Landlord's legal counsel explained why that statement is incorrect, and warned Tenant that its "current practice of storing trailers [on the Premises] for days at a time is an ongoing default and must stop immediately."

Despite the Notice of Default and the subsequent warning, Tenant continues to park trailers on the Premises for multiple days at a time and has stated in an email ... dated June 26, 2019 that it does not intend to change that practice. Accordingly, Landlord hereby exercises its right under the Lease to terminate the Lease effective immediately.

The letter directed Ocean State to surrender the premises. After Ocean State again refused to surrender possession, 20 Thames filed a new FED complaint in the District Court on October 21, 2019.

[¶6] The complaint alleged that 20 Thames had provided Ocean State with a notice of default in April 2018 based on its trailer-parking practices and that Ocean State had thereafter "admitted in an email ... that ‘[a] trailer is currently delivered 3 times a week, is unloaded and remains until the next truck delivery, at which time the trailer is removed and a new full one replaced and subsequently unloaded.’ " The complaint further asserted that Ocean State "always ha[d] at least one trailer parked on the Premises," had denied that its conduct violated the lease, and had failed to modify its conduct. Finally, the complaint asserted that, because Ocean State failed and refused to cure the default, the lease was terminated. 20 Thames attached to the complaint a copy of (1) the lease, (2) the 2018 termination notice, and (3) the 2019 termination notice. The case was transferred to the Business and Consumer Docket.

[¶7] Ocean State moved to dismiss the 2019 action on res judicata grounds, arguing that both claim and issue preclusion barred the action. On December 20, 2019, after oral arguments from both parties, the District Court (Duddy, J. ) granted Ocean State's motion to dismiss and entered judgment in favor of Ocean State.¹

[¶8] The court determined that issue preclusion did not apply but that 20 Thames's action was barred by claim preclusion. It found that the same parties were involved in both actions and there was a valid, final judgment in the prior action. The court then determined that the claim in the 2019 action based on Section 3 of the lease arose out of the same nucleus of operative facts as the defaults raised in the 2018 action. Next, the court examined whether it should apply claim preclusion to bar 20 Thames's 2019 action and noted that a subsequent FED action by a landlord should not be precluded where "new and different conduct occurs." However, it determined that new and different conduct had not occurred because 20 Thames's allegations referred to Ocean State's conduct as ongoing and continuous and that conduct predated the 2018 complaint.

[¶9] 20 Thames appealed, and on June 15, 2020, the Superior Court (Stewart, J. ) affirmed the District Court's judgment. See 14 M.R.S. §§ 6008(1), 6017(2) (2021). It concluded that 20 Thames's Section 3 claim in the 2019 action was raised in the 2018 action and might have been litigated at that time. 20 Thames timely appealed from that decision. See 14 M.R.S. § 1851 (2021) ; M.R. App. P. 2B(c)(1); M.R. Civ. P. 80D(f)(1).

II. DISCUSSION

[¶10] 20 Thames argues that the trial court erred in granting Ocean State's motion to dismiss on claim preclusion grounds because the Section 3 claim was not and could not have been litigated in the 2018 action, particularly because only Section 29 was at issue in that action. Ocean State contends that 20 Thames asserted a claim based on Section 3 in its 2018 complaint but chose to focus its case on Section 29 and, thus, the claim was or could have been litigated in the prior action.

A. FED Actions

[¶11] We begin with a brief overview of the characteristics of FED cases. FED actions are unusual in that they are intended to be narrow. See, e.g., 35A Am. Jur. 2d Forcible Entry and Detainer § 5 (2021) ("A forcible entry and detainer action is a limited or summary proceeding, and the remedy of forced entry and unlawful detainer is summary in character." (footnotes omitted)). Such actions are limited in scope because they are "summary proceeding[s] to decide who is entitled to the immediate possession of land." Town of Blue Hill v. Leighton , 2011 ME 103, ¶ 8, 30 A.3d 848 (quotation marks omitted). Consequently, the application of claim preclusion to bar subsequent claims is necessarily narrower than in other civil actions. See, e.g., Bureau v. Gendron , 2001 ME 157, ¶¶ 6, 8, 9, 6 n.2, 783 A.2d 643 (concluding that claims in subsequent tort and contract action were not barred because they "were not, and could not have been, adjudicated in the" FED action).

[¶12] Nevertheless, it is widely accepted that claim preclusion may apply in FED actions as a general matter. See, e.g., 50 C.J.S. Judgments § 1162, Westlaw (database updated June 2021) ("The doctrine of claim preclusion applies to actions of...