H & B Realty, LLC v. JJ Cars, LLC

• Decision Date: 23 March 2021
• Docket Number: Docket: BCD-20-82
• Citation: 246 A.3d 1176
• Parties: H & B REALTY, LLC v. JJ CARS, LLC, et al.
• Court: Maine Supreme Court

246 A.3d 1176

H & B REALTY, LLC

v.JJ CARS, LLC, et al.

Docket: BCD-20-82

Supreme Judicial Court of Maine.

Submitted On Briefs: September 29, 2020

Decided: March 23, 2021

Marshall J. Tinkle, Esq., Thompson, MacColl & Bass, LLC, Portland, for appellant H & B Realty, LLC

Neal L. Weinstein, Esq., Old Orchard Beach, for appellee JJ Cars, LLC, and John Mokarzel

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

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

Dissent: CONNORS and HORTON, JJ.

GORMAN, J.

[¶1] H & B Realty, LLC, appeals from a judgment of the Business and Consumer Docket (Duddy, J. ) in favor of JJ Cars, LLC, and John Mokarzel on H & B's complaint for breach of contract. H & B contends that the court erred by applying the affirmative defenses of breach of contract and failure to mitigate damages as pleaded by JJ Cars and Mokarzel.¹ We affirm the judgment.

I. BACKGROUND

[¶2] In its judgment, the court made the following findings of fact, which are supported by competent evidence in the record. See Dupuis v. Ellingwood , 2017 ME 132, ¶ 3, 166 A.3d 112. H & B and JJ Cars entered into a five-year commercial lease agreement commencing on July 1, 2011, and ending on June 30, 2016, whereby JJ Cars leased a car dealership property in Portland from H & B. Mokarzel, the sole member of JJ Cars, personally guaranteed the payment of rent and other charges under the lease. Article XIII of the lease contained the following provision regarding subleasing:

Lessee will not ... sub-let ... the lease premises, without the prior written consent of Lessor in each instance which consent shall not be unreasonably withheld or delayed. The consent by Lessor to any ... sub-letting shall be subject to Lessor's reasonable review and approval of subtenant's or sublessee's creditworthiness, business experience, and capacity to perform the Lessee's obligations under this lease. ...

Any assignment ... as to which Lessor has consented ... shall not be effective or deemed valid unless at the time of such assignment:

(a) Each ... sublessee shall agree in a written statement satisfactory to Lessor to assume and abide by all of the terms and provisions of this Lease ... and

(b) Each ... sublessee has submitted a current financial statement ... and

(c) Lessee shall pay Lessor an assignment fee .... The assignment fee will be ... ($250.00).

Lessor shall not be obligated to consent to any proposed ... subletting if ... at the time of the proposal ... Lessee is in material default under any term, covenant or condition of this Lease ....

Article XX(a)(iv)(B) of the lease also required that "[u]pon any termination of the Lessee's right to possession only without termination of the Lease: ... Lessor shall use commercially reasonable efforts to relet the leased premises or any part thereof for such rent and upon such terms as Lessor, in its reasonable discretion, shall determine."

[¶3] JJ Cars operated a car dealership at the location from July of 2011 until February of 2013. By February of 2013, JJ Cars was in financial distress, and Mokarzel, the sole member of JJ Cars, decided to close the business and sublet the property.

[¶4] From February of 2013 until October of 2015, three separate businesses sublet the property from JJ Cars. Approval for the first and third of these sublets by H & B was provided by its sole member, Sterling Boyington. As to the second sublet, the court found that "Boyington never objected." JJ Cars never submitted any of the financial information required by the lease terms for any of these sublets to H & B.

[¶5] In November of 2015, Wholesale Motors, Inc., owned by Dave McGovern, began occupying the property. Wholesale Motors wanted to sublet the property and was also interested in extending the lease or purchasing the property. When JJ Cars sought H & B's consent to sublease the property to Wholesale Motors, Boyington refused to give consent on behalf of H & B because he "did not like McGovern." Because H & B refused to approve the sublease, Wholesale Motors vacated the property in November of 2015.

[¶6] After the sublease opportunity with Wholesale Motors ended, the property was unoccupied and JJ Cars stopped paying rent. H & B obtained a forcible entry and detainer judgment against JJ Cars on March 24, 2016, and then sold the property on or about April 7, 2016.

[¶7] Two months after the sale, H & B filed a one-count complaint against JJ Cars and Mokarzel individually, alleging breach of contract and seeking damages for unpaid rent from November of 2015 through April 6, 2016. In their amended answer, JJ Cars and Mokarzel asserted five counterclaims against H & B—alleging breach of contract, fraud, discrimination, failure to mitigate damages, and punitive damages—and eight affirmative defenses, including breach of contract and failure to mitigate damages.²

[¶8] The court conducted a jury-waived trial during which Boyington and Mokarzel testified.³ In its judgment, the court found that JJ Cars and Mokarzel had breached the lease agreement by failing to pay rent beginning in November of 2015. The court also found that H & B breached Article XIII of the lease by unreasonably withholding its consent to JJ Cars to sublease to Wholesale Motors. The court further found that H & B breached its duty to mitigate damages—pursuant to Article XX(a)(iv)(B) of the lease—because it did not take steps to relet the property after JJ Cars began missing rent payments in November of 2015. Based on these findings, and citing Cellar Dwellers, Inc. v. D'Alessio , 2010 ME 32, ¶ 16, 993 A.2d 1, the court issued a judgment in favor of JJ Cars and Mokarzel on the ground that their breach—failure to pay rent—was excused by H & B's material breaches—unreasonably withholding consent to sublet to Wholesale Motors and failing to mitigate damages.

[¶9] The court denied H & B's subsequent motion for additional and amended findings and to alter or amend the judgment. See M.R. Civ. P. 52(b), 59(e). H & B timely appeals from the judgment on its complaint. See 14 M.R.S. § 1851 (2020) ; M.R. App. P. 2B(c)(2)(D).

II. DISCUSSION

[¶10] H & B raises a variety of challenges to the court's finding that it breached the lease by unreasonably withholding consent to Wholesale Motors’ proposed sublease.⁴ "Whether a breach of contract has occurred is a finding of fact reviewed for clear error." Coastal Ventures v. Alsham Plaza, LLC , 2010 ME 63, ¶ 20, 1 A.3d 416. Where, as here, a party's motion for further findings has been denied, we do not infer findings from the evidence in the record. See M.R. Civ. P. 52(b) ; Douglas v. Douglas , 2012 ME 67, ¶ 27, 43 A.3d 965. Rather, we confine our review to the trial court's explicit findings and determine whether those findings are supported by the record. See Ehret v. Ehret, 2016 ME 43, ¶ 12, 135 A.3d 101. Although the trial court's judgment must be "supported by express factual findings that are based on record evidence, are sufficient to support the result, and are sufficient to inform the parties and any reviewing court of the basis for the decision," Mooar v. Greenleaf , 2018 ME 23, ¶ 7, 179 A.3d 307 (quotation marks omitted), "there is no requirement that a court identify the reasoning it uses to reach each finding of fact." Theberge v. Theberge , 2010 ME 132, ¶ 18, 9 A.3d 809.

[¶11] H & B first contends that it reasonably withheld its consent to Wholesale Motors’ sublease because JJ Cars did not provide H & B with records or give H & B the opportunity to inquire into Wholesale Motors’ creditworthiness, experience, or capacity to perform. H & B also contends that its refusal to consent to the sublease was a result of Wholesale Motors’ request to extend the sublease beyond the four months remaining on the lease and, as such, its refusal was motivated by legitimate commercial business concerns.

[¶12] Although Boyington testified that those were the reasons he refused to agree to the sublease, the court did not credit those explanations. Instead, the court relied on Mokarzel's testimony that H & B's reason for withholding consent was Boyington's dislike for McGovern. Mokarzel testified as to Boyington's distaste for McGovern during direct-examination:

A: Eventually, I found another person ... McGovern. And when I asked ... [Boyington] to meet with [McGovern], he said I don't like him, I'm not going to meet him. I'm like, [Boyington], you got to work with me. [Boyington said] I don't like him. ... I don't like that guy, I don't like him. And I'm the one who's do[ing] business with him, and I'm not going to.

Mokarzel's testimony continued on cross-examination:

Q: And you didn't ask [Boyington] for his consent before you subleased to McGovern?

A: I did. He said no, I don't like him. Wouldn't meet.

Q: So, you did not get his written consent, correct?

A: He wouldn't give it. He wouldn't meet with him despite my asking because he "didn't like him."

Q: So ... he never met with him but he didn't like him, is that your testimony?

A: We met in the parking lot as discussed earlier, and [McGovern] said to [Boyington], I want to extend a longer-term lease. He said no. He wouldn't even talk about a longer-term lease. [McGovern] said, I want to invest money in the property... but ... I can't have a four-month lease. [Boyington] said, I'm not giving you a long lease. Take it up with [Mokarzel]. I'm not doing it.

The court did not—and was not required to—believe Boyington's version of events, nor was it required to credit Boyington as a witness over Mokarzel.⁵ See Guardianship of Gionest, 2015 ME 154, ¶ 7, 128 A.3d 1062 ; see also Roalsvik v. Comack, 2019 ME 71, ¶ 7, 208 A.3d 367 (explaining that great deference is paid to the fact-finder because it has the first-hand opportunity to see and hear the witnesses testify). There was competent, substantial evidence to support the trial court's finding that "Boyington did not withhold his consent based on a ‘reasonable review’ of [Wholesale Motors’] creditworthiness, business experience or capacity to perform...