Cranberry Commons, Ltd. v. Bimbo Bakeries USA, Inc.
| Decision Date | 18 July 2012 |
| Docket Number | CIVIL ACTION NO. 11-11654-RWZ |
| Parties | CRANBERRY COMMONS, LTD. v. BIMBO BAKERIES USA, INC. |
| Court | U.S. District Court — District of Massachusetts |
ZOBEL, D.J.
Plaintiff claims against defendant in two counts: breach of contract (Count I) and negligence (Count II). In 1995 the parties entered into a five-year commercial lease (the "Lease"). Through a series of addendums, the Lease was extended to November 2008, and in March 2009 the defendant vacated the premises. Plaintiff alleges that defendant left the demised premises in disrepair and that it was required to install replacement flooring, windows, doors, and fencing. In addition, it had to repair and repaint the interior walls and re-pave certain areas around the premises and make other significant interior and exterior repairs. Plaintiff contends these costs are properly attributable to defendant under the terms of the Lease, addendums, and a 1995 rider to the original Lease (the "Lease Rider"). Plaintiff also seeks certain "allocable expenses" comprising of, inter alia, common expenses and real estate taxes, and it requestsjudgment for all items in the amount of $574,976 plus interest, attorney fees and costs. The matter is before me on defendant's motion for summary judgment.
Plaintiff's claims fall generally into two categories: first, $246,603 for allocable expenses from 2003-2008. Allocable expenses includes, per Section 3(c) the Lease, "common area charges, maintenance charges, operating expenses, real estate taxes, [and] insurance premiums...".1 Second, $328,373 in "restoration costs" for returning the leased premises "back to the original layout ...." including $33,520 for "repaving services," for a total sum claimed of $574,976.
Defendant challenges the claim for allocable expenses because plaintiff had never sought these charges at any time during the 14 years of the lease. Given the prior course of dealing by the parties and their respective performance under the Lease, plaintiff is now barred by the doctrines of estoppel, waiver and/or laches.2 Defendant further notes it was prejudiced by plaintiff's failure to charge these expenses because it would not have renewed the Lease had it known of plaintiff's intent to levy them. Finally, defendant argues that plaintiff's negligence claim is barred by the economic loss doctrine.
As an initial matter, Massachusetts applies a 6-year statute of limitations for breach of contract actions which begins to accrue at the time of the breach. Saenger Organization, Inc. v. Nationwide Ins. Licensing Associates, Inc., 119 F.3d 55, 64 (1st Cir. 1997) (citing Mass. Gen. Laws ch. 260, § 2). This action was filed on August 24, 2011. Plaintiff may only recover for breaches that occurred during the period from August 24, 2005, until August 24, 2011. Therefore, to the extent that any portion of the $246,603 in "allocable expenses" is attributable to breaches that occurred outside of this time period, it is barred.
To establish estoppel defendant must show (1) a representation, or conduct amounting to a representation, intended to induce a course of conduct on the part of the person to whom the representation is made; (2) an act or omission resulting from the representation, whether actual or by conduct; and (3) detriment to such person as a consequence of the act or omission. Cellucci v. Sun Oil Co, 2 Mass.App.Ct. 722, 728 (1974). Waiver "must be premised upon 'clear, decisive, and unequivocal conduct on the part of an authorized representative ... indicating that [it] would not insist on adherence to the [agreement].' " Paterson-Leitch Company, Inc. v. Massachusetts Electric, 840 F.2d 985, 992 (1st Cir.1988). Laches requires: "1) unreasonable delay in pursuing a claim, and 2) prejudice to the opposing party resulting from that delay." USL Capital v. New York 30, 975 F.Supp. 382, 386 (D. Mass. 1996).
Plaintiff argues that laches cannot excuse failure to comply with a written contract, citing Srebnick v. Lo-Law Transit Mgmt., Inc., 29 Mass.App.Ct. 45, 49 (1990).However, Srebnick addressed a request to amend under Mass.R.Civ.P. 15(a) and explicitly acknowledged "procedurally, of course, equitable defenses may be raised in actions at law." 29 Mass.App.Ct. at 50; see also Summer Hill Limited Partnership v. Double Dixon Inc., 2010 WL 1779647 (Mass.App.Ct. 2011) (). Further, in Dipietro v. Sipex Corporation, 69 Mass.App.Ct. 29, 39-40 (2007), the court rejected the lower court's application of Srebnick to bar defendant's estoppel defense in an action for breach of a promissory note, noting "we are not persuaded that there is an unambiguous and compelling rule of law in Massachusetts making estoppel unavailable as a defense to an action for the enforcement of a promissory note ...." In the absence of "a resultant rule of law (statutory or decisional) compelling a decision for one or the other party," defendant may assert its laches and estoppel defenses. Dipietro, 69 Mass.App.Ct. at 40.
Defendant contends CNA Corporation v. Stoney Hill Sand & Gravel, Inc., 80 Mass App. Ct. 1101 (2011), compels judgment in its favor on the waiver defense. However, the CNA court was tasked with determining whether a prior written lease applied to a holdover tenancy and found that the landlord's acceptance of a lower rent for an extended period of time after the expiration of the original lease resulted in a new agreement. It also found that plaintiff's failure to collect taxes during the initial lease and extended period following its expiration acted as a waiver of the payment of taxes. CNA set forth its waiver finding in one sentence with no explanation. It is unclear what role facts adduced at the bench trial before the lower court may have had in itsdetermination and, as such, I do not read CNA as providing a rule of law compelling judgment in defendant's favor on waiver.
Plaintiff notes that "with each renewal, Orograin Bakeries affirmed its obligations to make [allocable expenses] payments," and that if defendant was concerned about the additional allocable expenses it could have inquired of plaintiff or discovered the real estate tax amounts, which are a matter of public record. Defendant counters that plaintiff regularly billed it for operating expenses, that it paid those expenses and that plaintiff did not make any demand for the amounts it now claims, dating back to 2003, until nine months after it had vacated the premises. It says that it would not have renewed the Lease had it known plaintiff would seek additional expenses and therefore was prejudiced. Although plaintiff's late claims do not appear to reflect normal and customary business practices, the facts surrounding these events are in dispute, foreclosing summary judgment.
Plaintiff sues for negligence and breach of contract on the same underlying facts and for the same damages. Defendant argues that plaintiff's claim for allocable expenses is barred by the economic loss doctrine because it is a claim for pure economic damages, not for personal injury or property damage. See Aldrich v. ADD Inc., 437 Mass. 213, 222 (2002). Plaintiff ignores this argument in its opposition; therefore, it is deemed waived, and summary judgment in defendant's favor is proper. See Schneider v. Local 103 I.B.E.W. Health Plan, 442 F.3d 1, 3 (1st Cir. 2006) (citing Nikijuluw v. Gonzales, 427 F.3d 115, 120 n.3 (1st Cir. 2005) ().
Although defendant has moved for summary judgment on the negligence claim only as it relates to allocable expenses,3 the remainder is also barred as it effectively merges into the contract claim.
Negligence requires the plaintiff to prove duty, breach, causation, and harm. See Banaghan v. Dewey, 340 Mass. 73, 162 N.E.2d 807, 812-13 (1959). Thus, if defendant is found to have acted within its contractual rights in leaving the premises in the condition it did, as a matter of law, there can be no "breach" of any duty owed to plaintiff. Cf. Coriatt-Gaubil v. Roche Bobois Int'l, S.A., 717 F. Supp. 2d 132, 139 (D. Mass. 2010) (); PepsiCo v. Cent. Inv. Corp., 271 F. Supp. 2d 1040, 1056 (S.D. Ohio 2001) (); PacifiCorp v. Pub. Util. Dist. No. 2 of Grant County, 780 F. Supp. 2d 1133, 1141 (D. Or. 2011) (). Similarly, if plaintiff succeeds on its contract-based claim, no additional recovery is sought or permitted in tort. Freeman v. MetLife Group, Inc., 583 F. Supp. 2d 218, 222 (D. Mass. 2008) () Therefore, even if both the negligence and contract claims remain, as a practical matter, there is no difference between them. The negligence count adds nothing to plaintiff's claims (rather, it limits those claims because they are subject to a shorter statute of limitations).
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