Wesson v. Leone Enterprises, Inc

• Decision Date: 09 September 2002
• Citation: 774 NE 2d 611,437 Mass. 708
• Parties: JOHN T. WESSON, trustee, v. LEONE ENTERPRISES, INC., & another.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

437 Mass. 708

774 NE 2d 611

JOHN T. WESSON, trustee,¹ v. LEONE ENTERPRISES, INC., & another.²

Supreme Judicial Court of Massachusetts, Essex.

May 9, 2002.

September 9, 2002.

Present: MARSHALL, C.J., GREANEY, IRELAND, SPINA, COWIN, SOSMAN, & CORDY, JJ.

Michael Roitman for the plaintiff. Walter H. McLaughlin, Jr. (Eugene S. Summers with him) for the defendants.

>CORDY, J.

In this case, we abandon the common-law rule of independent covenants in commercial leases in favor of the modern rule of mutually dependent covenants as reflected in the Restatement (Second) of Property (Landlord and Tenant) § 7.1 (1977). In applying the rule of mutually dependent covenants to the facts present in this case, we conclude that a landlord's failure to keep the roof of his building in good repair deprived the tenant of a substantial benefit significant to the purpose for which the lease was entered. Consequently, the tenant had the right to terminate the lease and recover reasonable relocation costs.

1. Background. The plaintiff landlord, John T. Wesson, trustee of Wesson Realty Trust, owned a multi-tenanted commercial building located in Danvers (Wesson building), in which the defendant tenant, Leone Enterprises, Inc., a financial printing company, rented space. The lease ran for five years, commencing on March 31, 1988.³

The tenant first complained to the landlord about "significant leaks in the roof" in April, 1991.⁴ The parties met soon afterward and the tenant pointed out "more than one," but less than five, leaks in the premises. The landlord agreed to fix the roof and called on his son, Wayne Wesson, who periodically managed the building, to oversee the repairs. Wayne patched the roof himself. The leaks reappeared later that spring, and the landlord hired a professional roofing contractor to make further repairs.

In early August, 1991, the roof began leaking in some of the same places previously repaired. The tenant complained several times to the landlord and Wayne about the leaks, and claimed that he and his subtenant⁵ were "forced to take necessary precautions to protect [their] businesses from more water damage."⁶ After these leaks were repaired by the landlord, the tenant notified him of another leak "in a different location" on September 6, 1991. This particular leak, however, was caused by a defective electrical conduit connected to the roof-top air conditioning unit, the maintenance of which was the tenant's responsibility under the lease.⁷ The landlord had the roof inspected the next day by a professional roofer, who sealed the leak. There was no evidence at trial of any additional leaks or complaints of leaks after September 7, 1991.⁸

On November 4, 1991, the tenant notified the landlord that he would be "vacating the premises on or before December 31, 1991,"⁹ for reasons "well known to you. The constant lack of minimal heat as well as the serious leakage problem."¹⁰ The tenant also paid rent in full through the end of 1991.

The landlord filed a complaint in the District Court alleging breach of contract and damage to the demised premises.¹¹ The case was transferred to the Superior Court on January 22, 1992. The tenant filed counterclaims for constructive eviction and deceptive business practices under G. L. c. 93A, § 11. The landlord then amended his complaint to add a claim against the tenant for interference with advantageous relations.¹²

A jury-waived trial on the claims for breach of contract, interference with advantageous relations, and constructive eviction was held on November 24 and 25, 1997. After hearing testimony from the landlord, Wayne Wesson, the tenant, and the architect who designed the Wesson Building, the judge found the tenant's testimony "regarding the frequency of his complaints about the leaky roof, the danger it posed upon his equipment and inventory and that he was forced to move out to be credible." In contrast, the judge found the testimony of Wayne Wesson and the landlord "regarding their reasonable responses to whatever complaints they received about the leaking roof not credible." The judge further found that "the roof was in a state of disrepair and needed more than spot repairs"; that "whether Wayne or a professional roofer attempted the repairs, the methods used were shoddy and unsuccessful"; and that, "from April 1991 through November of 1991 [but see note 8, supra], [the tenant] complained to both [the landlord] and [Wayne] by telephone and by letter that the roof leaked and put his business at risk." Based on these findings, the judge concluded that the tenant had been constructively evicted from the premises by the landlord's failure to adequately repair the roof and was therefore relieved of its obligation to pay rent. Alternatively, she held that, even if the tenant had not been constructively evicted, the tenant could have lawfully withheld the rent under the dependent covenants rule, where the landlord had failed to provide a "dry space," a service "essential" to the lease.

Judgment entered in favor of the defendant tenant on the plaintiff landlord's breach of contract claim and on the tenant's counterclaim of constructive eviction. Relocation damages in the amount of $1,063 were awarded to the tenant.¹³ The landlord appealed, claiming the trial judge erred in (1) concluding that there was sufficient evidence to support the constructive eviction claim; and (2) applying the "dependent covenants" rule to the parties' commercial lease. We transferred the case to this court on our own motion.

We affirm the judgment for the defendant tenant, but for reasons different from those of the Superior Court judge. The judge's finding of constructive eviction was in error, but because we adopt the rule of mutually dependent covenants for commercial leases and conclude that the plaintiff landlord breached his covenant to maintain the roof, the tenant was entitled to terminate the lease and recover relocation costs.

2. Standard of review. In a jury-waived trial, the judge's findings of fact are accepted unless they are clearly erroneous. See Kendall v. Selvaggio, 413 Mass. 619, 620 (1992), and cases cited. "On the other hand, to ensure that the ultimate findings and conclusions are consistent with the law, we scrutinize without deference the legal standard which the judge applied to the facts.... Thus, the `clearly erroneous' standard of appellate review does not protect findings of fact or conclusions based on incorrect legal standards." (Citations omitted.) Id. at 621.

3. Constructive eviction. The landlord bases his claim that the judge erred in finding a constructive eviction on two alternative grounds: first, that the lease required the tenant, not the landlord, to maintain the roof and therefore the tenant cannot claim constructive eviction due to the landlord's failure to make repairs, see Stone v. Sullivan, 300 Mass. 450, 454-455 (1938)¹⁴; and second, that even if the lease required the landlord to maintain the roof, his actions or failures did not rise to the level of constructive eviction.

The landlord's contention that the terms of the lease make the tenant responsible for maintaining the roof is an argument made first on appeal and is therefore waived. In any event, the judge's implicit finding that it was the landlord's obligation under the lease to keep the roof in good repair is fully supported by the evidence, including the landlord's testimony at trial that "it was [his] obligation under this lease to maintain the roof ... in perfect working order."

We next consider whether the landlord's actions regarding the leaky roof constituted a breach of the covenant of quiet enjoyment amounting to the constructive eviction of the tenant. Where there is a breach of the covenant of quiet enjoyment, the tenant may raise constructive eviction as a defense to an action to recover rent. See Shindler v. Milden, 282 Mass. 32, 33-34 (1933). A constructive eviction is any "act of a permanent character, done by the landlord, or by his procurement, with the intention and effect of depriving the tenant of the enjoyment of the premises demised, or of a part thereof, to which he yields and abandons possession," id. at 33, and cases cited, "within a reasonable time." Stone v. Sullivan, supra at 455 It is the tenant's burden to prove that he was constructively evicted. Rome v. Johnson, 274 Mass. 444, 450 (1931). In ascertaining whether there has been a constructive eviction, it is "the landlord's conduct," and not his subjective intention, that "is controlling." Blackett v. Olanoff, 371 Mass. 714, 716 (1977). Therefore, a constructive eviction may be found even where a landlord did not intend to violate a tenant's rights, as the law assumes that the landlord intends "the natural and probable consequence of what [he] did, what he failed to do, or what he permitted to be done." Id. However, not every act or failure to act on the part of the landlord that causes disruption to a tenant rises to the level of a constructive eviction. To constitute a constructive eviction, the act must have "some degree of substance and permanence of character." Tracy v. Long, 295 Mass. 201, 204 (1936). Thus, a landlord's failure to provide a service that is essential to the use and enjoyment of the demised premises may qualify as a constructive eviction.¹⁵ Yet, conduct that does "not make the premises untenantable for the purposes for which they were used" will not constitute constructive eviction. A.W. Banister Co. v. P.J.W. Moodie Lumber Corp., 286 Mass. 424, 426 (1934) (landlord's breach of express covenant to supply steam to dry lumber "simply made the use [of the leased premises] less convenient and more expensive" and "[d]amages for breach of covenant ... afforded an adequate remedy").¹⁶

In this case, the judge found that the landlord failed to adequately maintain the roof, and that, as a consequence, there were periodic leaks during the course of the tenancy. While this finding was...