Bachorz v. Miller-Forslund

• Decision Date: 22 September 2011
• Docket Number: C.A. No. 09–cv–30132–MAP.
• Citation: 812 F.Supp.2d 83
• Parties: Gary J. BACHORZ and Carmelo A. Scuderi, Plaintiffs v. Shauna MILLER–FORSLUND, Executrix of the Estate of Nairn L. Miller, Defendant.
• Court: U.S. District Court — District of Massachusetts

812 F.Supp.2d 83

Gary J. BACHORZ and Carmelo A. Scuderi, Plaintiffs

v.Shauna MILLER–FORSLUND, Executrix of the Estate of Nairn L. Miller, Defendant.

C.A. No. 09–cv–30132–MAP.

United States District Court, D. Massachusetts.

Sept. 22, 2011.

Mark J. Albano, Dalsey, Ferrara & Albano, Springfield, MA, for Plaintiffs.

David H. Rich, Todd & Weld, George James Kossuth, Todd & Weld LLP, Boston, MA, for Defendant.

MEMORANDUM AND ORDER REGARDING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT (Dkt. Nos. 26 & 31)

PONSOR, Senior District Judge.

I. INTRODUCTION

Plaintiffs Gary J. Bachorz and Carmelo A. Scuderi seek specific performance of an option to purchase a commercial property that they had leased from their now deceased landlord Nairn L. Miller to operate their autobody shop. Miller's daughter, Defendant Shauna Miller–Forslund, who inherited his estate, contends that Plaintiffs were in default of their obligations under the lease when they attempted to exercise the option to purchase in May 2009, thus relieving Defendant of her obligation to sell the property. Defendant has brought counterclaims for breach of contract, declaratory judgment, and violation of Mass. Gen. Laws ch. 93A. Defendant has filed a motion for summary judgment (Dkt. No. 26), and Plaintiffs have filed a motion for partial summary judgment (Dkt. No. 31). For the reasons stated below, Defendant's motion will be denied and Plaintiffs' motion will be allowed.

II. FACTS ¹

A. The Lease.

Plaintiffs Gary J. Bachorz and Carmelo A. Scuderi own Berkshire Auto & Truck, Inc., an automotive repair business, which they operate on property owned by Nairn L. Miller (“Miller” or “Landlord”), located at 850 Berkshire Avenue, Indian Orchard, in Springfield, Massachusetts (“the Premises”). On February 12, 1996, Plaintiffs entered into a fifteen-year lease (“the Lease”) running from March 1, 1996, until March 1, 2011. The Lease was between Plaintiffs personally and Miller doing business as Nairn Realty Ltd.

The Lease provided Plaintiffs with an option to purchase the Premises, which reads in pertinent part:

The Tenants shall have an option to purchase the real estate as described in Article 1.01 for the sum of One Hundred Seventy–Five Thousand ($175,000.00) Dollars to be exercised during the term of this lease by instrument in writing directed to the Landlord at its designated address provided that the Tenants shall not then be in default in the payment of rent or any of the other terms and conditions hereof.

(Dkt. No. 29, Ex. 1, Art. XVII, § 17.01.) The option further provides that a percentage of Plaintiffs' rental payments will be credited against the purchase price if they exercise the option.

Plaintiffs assert that they had originally intended to purchase the property from Miller in 1996, but Miller convinced them to enter into this lease agreement so that he could avoid paying a substantial capital gains tax on the property at that time. In support of this assertion, Plaintiffs note that they paid for a structural inspection of the building and secured a $200,000 mortgage commitment prior to signing the Lease.

B. Disagreements Arise.

Plaintiffs allege that the roof of their repair shop, which was warranted for ten years under Section 4.04 of the Lease, leaked every year from 1996 until May 2002.² They maintain that this leak interfered with their business operation by, for example, shorting out a radio and an alarm system. Defendant disputes this allegation, claiming that Miller fully complied with his obligations to repair the roof whenever Plaintiffs requested him to do so.

On May 13, 2002, Plaintiffs' counsel (at the time, Attorney Steven L. Winniman) sent a letter notifying Miller of the damages, estimated to be in excess of $15,000, and observing that Miller's attempts to fix the roof had failed. (Dkt. No. 32, Ex. 6.) Attorney Winniman demanded that Miller comply with his roof repair obligations under Section 4.04 of the Lease and stated that his clients would be withholding rent until he complied.

On May 22, 2002, Miller responded by letter stating that “repairs have been made as expeditiously as possible” and that Plaintiffs appeared to be demanding a new roof, which was “not an option.” (Dkt. No. 32, Ex. 7.) He also notified Plaintiffs that they were in violation of Section 6.01 of the Lease, which reads:

Tenants will not assign the Lease in whole or in part, nor sublet all or any part of the Leased Premises, without the prior written consent of the Landlord in each instance. Such consent will not be unreasonably withheld.

(Dkt. No. 29, Ex. 1.) ³

Several months prior, in early 2002, Plaintiffs began subletting the Premises without Miller's written consent. From February through April 2002, Plaintiffs sublet the Premises to Berkshire RV Rental, Inc., owned by a man named Peter Cowles. The business ended after Mr. Cowles's death in April 2002. In early 2002, Plaintiffs also sublet the Premises to an individual named Matt Kochanowski, who ran an unlicensed dog food sales operation in which Kochanowski would “bring in damaged bags [of dog food] and sell them at a deep discount.” (Dkt. No. 29, Ex. 4, Scuderi Dep. 31:10–15.) Kochanowski did not pay rent, but he did give a percentage of his sales to Plaintiffs. Plaintiffs admit that neither of these subleases were memorialized in a written agreement, nor did they occur with the written consent of Miller.

Plaintiffs, however, claim that Miller repeatedly encouraged them to sublet the Premises, although never in writing. According to Plaintiff Bachorz, Miller told them at the signing of the Lease that the Premises were large and that they should consider finding a subtenant:

[I]t was a big building, and [Miller] was telling us that we should utilize the whole building. We should, you know, maybe get a tenant.

(Dkt. No. 32, Ex. 3, Bachorz Dep. 45:8–10.)

In addition, Plaintiffs contend that Miller was aware of various subtenants, including Kochanowski, Berkshire RV Rental, Berkshire Auto & Truck, Inc. (Plaintiffs' own company, which subleased the Premises from Plaintiffs individually), and Miller himself, who maintained an office on the Premises. Miller never objected to these subtenants and did not require Plaintiffs to obtain his written consent before allowing these subtenants to operate on the Premises.

C. A Compromise is Reached.

According to Plaintiff Bachorz, Miller approached Plaintiffs and told them that he “[didn't] want to pay for something that he's not going to own. So he says, ‘you guys should pay for the roof because you're going to own the building.’ ” (Dkt. No. 32, Ex. 3, Bachorz Dep. 139:22–24.) Miller then made the following proposition, as related by Plaintiff Bachorz at his deposition:

[Miller] says, “Plain and simple, I am not going to fix the roof.... You owe me some back rent.... I know what you are doing.” He says, “You pay for the roof.” At the bottom of [Miller's May 22, 2002] letter, it had something about no written agreement for a subtenancy. He says, “I am not worried about that if you take care of the roof. You make the roof bill go away and I am not going to worry about it.”

(Dkt. No. 32, Ex. 3, Bachorz Dep. 140:21–141:6.) Plaintiff Scuderi recalled a similar exchange:

[Miller] sends us a letter saying that we are in default because of a subtenant, and basically we say, “What do you want us to do, Nairn? Do you want us not to have a tenant?” And he basically says, “Look, I don't want to spend money on replacing this roof. You guys are going to own this place. You take care of it because you are going to get the money back. If you back off the roof, don't worry about the letter.”

(Dkt. No. 28, Def.'s Statement of Material Facts ¶ 47 (quoting Scuderi Dep. 50:3–19).) Plaintiffs then replaced the roof at their own expense, which totaled $22,400.

D. Exercising the Option to Purchase.

From 2002 forward, Miller did not maintain an office on the Premises and visited infrequently. He stopped visiting altogether when he left Massachusetts in 2005. Between the end of 2002 and the beginning of 2006, there were no subtenants on the Premises.

Beginning in 2006, Plaintiffs sublet a portion of the Premises to an entity called Tri–Lift, Inc. (“Tri–Lift”), which Plaintiff Bachorz described as “a forklift company.” (Dkt. No. 32, Ex. 3, Bachorz Dep. 82:1.) Tri–Lift has been a subtenant continuously since 2006 and pays Plaintiffs $500 per month to use and occupy the Premises. It is undisputed that Plaintiffs did not notify Miller about this sublease, nor did they obtain his written consent.

On April 29, 2009, Defendant's counsel sent a letter to Plaintiffs notifying them that they were in default on the Lease for, among other things, subletting a portion of the Premises without the Landlord's prior written consent. ⁴ (Dkt. No. 29, Ex. 8.) The other alleged defaults involved improvements Plaintiffs made to the Premises throughout the term of the Lease, including painting, paving, removing underground tanks, and installing garage doors. Plaintiffs assert that they received Miller's oral permission for each of these alterations:

When we did the paving, the doors, any improvements to the building, [Miller] said, “You guys are improving the building. This is going to be your retirement.” ... He said, “you are setting yourself up. You are doing a good job.”(Dkt. No. 32, Ex. 3, Bachorz Dep. 147:17–22.) Defendant contends that these alterations, which also included the installation of signs and a new heater, violated the Lease.

Furthermore, Defendant alleges that Plaintiffs have been cited for violating municipal ordinances (also a breach of the Lease) for installing signs without a permit, failing to plant shrubs as a buffer between the pavement and the tree belt, and failing to pay excise tax. Finally, Defendant asserts that Plaintiffs falsely applied as the owner of the property to receive permits for these alterations.

On May 28, 2009, Plaintiffs sent...