Wesson v. Leone Enterprises, Inc.
| Decision Date | 09 September 2002 |
| Parties | JOHN T. WESSON, TRUSTEE, v. LEONE ENTERPRISES, INC., & ANOTHER. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Essex. Civil action commenced in the Salem Division of the District Court Department on December 18, 1991. On transfer to the Superior Court Department, the case was heard by Nancy S. Merrick, J. The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.
Michael Roitman for the plaintiff.
Walter H. McLaughlin, Jr. (Eugene S. Summers with him) for the defendants.
Present: Marshall, C.J., Greaney, Ireland, Spina, Cowin, Sosman, & Cordy, JJ.
[613] 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. n3
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n3 The initial rent for the 12,000 square foot space was $ 8,186 per month ($ 6,250 a month in base rent plus thirty-four per cent of the operating fees and expenses of the Wesson building). The tenant was required to indemnify the landlord "against all loss of rent and other payments which the LESSOR may incur" if the lease was terminated.
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The tenant first complained to the landlord about "significant leaks in the roof" in April, 1991. n4 The parties met soon afterward and the tenant pointed out "more [614] 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.
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n4 At trial, the tenant testified that there had been leaks before this time but that he had not complained "because [he] never thought they were a problem or an issue that [he] should be worried about."
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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 subtenant n5 were, "forced to take necessary precautions to protect [their] businesses from more water damage." n6 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. n7 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. n8
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n5 MicroNational Inc. sublet one-half of the tenant's space in the Wesson Building, from July 1, 1991, through the end of the lease term. MicroNational paid $ 3,500 a month directly to the landlord until it "went into bankruptcy" and paid only $ 2,323 a month from June, 1992, through December, 1992.
n6 The evidence at trial of "precautions" taken by the tenant was the covering of his equipment and stock with plastic sheeting. There was no evidence introduced of any precautions taken by the subtenant.
n7 The lease required the tenant to
n8 In her findings of fact, the trial judge found that the tenant had complained about leaks in the roof by telephone and letter "from April 1991, through November of 1991." There was no evidence at trial, however, of any complaints made by the tenant to the landlord after September 6, 1991. The only evidence of communication between the tenant and the landlord about roof leaks between September 7, 1991, and the tenant's letter of November 4, 1991 (notifying landlord of tenant's intent to vacate the premises) is a letter from the landlord to the tenant dated October 2, 1991, stating in relevant part that, "we have had several good rainstorms since [the September repair] and nothing has leaked." Neither the contents nor the receipt of the letter was disputed by the tenant at trial.
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On November 4, 1991, the tenant notified the landlord that he would be "vacating the premises on or before December 31, 1991," n9 for reasons n10 The tenant also paid rent in full through the end of 1991.
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n9 The tenant leased alternative space in Ipswich in November, 1991. The new lease, for 7,200 square feet at $ 3,000 a month, became effective on November 1, 1991.
n10 In addition to leaks, the tenant had also complained about problems with the building's heating system from September, 1989, through January, 1990. In January and February, 1991, attorneys for the plaintiff and the tenant exchanged correspondence about the heating system problems and the tenant's request for a rent reduction. Effective March 1, 1991, the parties agreed to reduce the total monthly rent to $ 7,000 through the end of the lease. The problems with the heating system are not an issue on appeal because, "while the parties litigated the issue of whether or not the lack of heat constituted a constructive eviction, [the tenant] conceded at the close of the evidence that the reduction in rent resolved this issue."
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The landlord filed a complaint in the District Court alleging breach of contract and damage to the demised premises. n11 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. n12
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n11 The landlord alleged $ 5,500 in physical damages to the premises, including "damage . . . caused by a forklift, and ink stains on the floor." The judge found that the actual cost to repair the damages was "unclear," and that the damage sustained was not "beyond normal 'wear and tear.'"
n12 According to the landlord, tenant threatened to inform the landlord's mortgagee of "various alleged breaches of the mortgage covenants" and "alleged statements made by [the landlord] . . . to induce the mortgagee to make the loan" if the landlord did not dismiss the complaint. Although the landlord presented evidence of this claim at trial, no damages were proved and the judge dismissed the claim.
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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...
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