Opinion
No. 15–P–1679.
12-23-2016
GENEVA FURNITURE IV, LLC v. BRICKPOINT PROPERTIES, INC. & another.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
In this commercial lease dispute, Geneva Furniture IV, LLC (Geneva) appeals from the judgment entered on a jury verdict against it for breach of contract and from the denial of its motion to alter or amend the judgment. We affirm.
In light of the disposition, the cross appeal is waived by agreement of the defendants.
Background. Between October, 2006, and September 10, 2013, Geneva occupied commercial property in Stoughton owned or managed by Potoroo, LLC (Potoroo) and Brickpoint Properties, Inc. (Brickpoint) (collectively, the defendants) or their predecessors-in-interest.
The defendants purchased the property in the first year of the ten-year lease, assuming the role of lessor.
When Geneva's principal, Emadeddin Muntasser, entered into the lease, he was a defendant in Federal criminal proceedings unrelated to the lease. In light of Muntasser's precarious position, Geneva agreed to pay a large security deposit in the amount of the first year's "Net Minimum Rent" ($437,100). In turn, the lessor agreed to return, within thirty days after the Federal case against Muntasser was "resolved," $291,400 of the security deposit. In the event Geneva vacated the premises early, as occurred here, the default section of the lease provided the lessor with the right to elect among a number of remedies, including indemnification against loss of rental income and other payments during the unexpired term.
No definition of the word "resolved" was provided in the lease. On June 15, 2012, an amended judgment entered in the criminal case correcting Muntasser's sentence to time served plus six months of home detention. See United States v. Mubayyid, 658 F.3d 35, 74 (1st Cir.2011).
The default section established that the indemnification owed under this provision would be the "Net Minimum Rental" plus "Additional Rent."
The troubled tenancy generated a number of legal proceedings. On February 12, 2009, the parties entered into a settlement agreement intended to end their second summary process action. As relevant here, the settlement agreement acknowledged the termination of the lease and permitted Geneva to continue using and occupying the premises, subject to certain terms and conditions. There was evidence that the parties may have subsequently reinstated the lease in whole or in part. On or about February 9, 2012, the parties entered into a "Third Amendment to Lease."
In the settlement agreement, Geneva agreed that its "conduct ... shall at all times be in compliance with, and not in breach of, those requirements as defined and set forth in the Lease as if said Lease were still in force and effect." No definition of the word "conduct" was provided. The disputed issue of which lease provisions were incorporated into the settlement agreement was submitted to the jury.
Notwithstanding Muntasser's completion of his Federal sentence in late 2012, the defendants refused to return the security deposit, prompting Geneva to commence this action. Following the dismissal of most of Geneva's claims on summary judgment, a four-day jury trial was held in May, 2015, on competing breach of contract claims. The jury found in favor of the defendants on Geneva's claim and in favor of Potoroo on its counterclaim, and awarded $437,100 in damages.
After a hearing on the parties' cross motions for the entry of judgment, the trial judge refused to look behind the jury's verdict and ordered judgment to enter "in accordance with the jury's determination." The judge denied Geneva's postjudgment motion to alter or amend judgment and to reconsider the ruling on the cross motions."
Geneva did not appeal from so much of the judge's order that denied reconsideration. Thus, no issue regarding the ruling is before us. In any event, were the issue properly here, Geneva's passing reference to the judge's error does not qualify as adequate appellate argument. See Kellogg v. Board of Registration in Med., 461 Mass. 1001, 1003 (2001). We do not address the propriety of the ruling. See Tammaro v. O'Brien, 76 Mass.App.Ct. 254, 262 n. 14 (2010).
Discussion. Geneva contends that the judge misinterpreted the jury's verdict. Specifically, Geneva moved to amend or alter the judgment to reflect an offset of the security deposit of $437,100 against the damages in the same amount. A motion to alter or amend a judgment pursuant to Mass.R.Civ.P. 59(e), 365 Mass. 827 (1974), is designed to correct an erroneous judgment lacking legal or factual justification. See Pentucket Manor Chronic Hosp., Inc. v. Rate Setting Commn., 394 Mass. 233, 237 (1985). Such a motion is addressed to the sound discretion of the trial judge. R.W. Granger & Sons, Inc. v. J & S Insulation, Inc., 435 Mass. 66, 79 (2001).
We conclude, as did the judge, that the amount of the damage award was supported by the evidence. The jury could have found that §§ 4 and 20 of the lease were incorporated into the settlement agreement that governed the parties' rights and obligations, that Geneva breached the agreement first by failing to pay rent, and that upon Geneva's early vacating of the premises on September 10, 2013, Potoroo was entitled to elect indemnification as its remedy.
The jury could justifiably have rejected some of Potoroo's substantial damage claim. Muntasser testified that Geneva owed only two to three months of back rent in September, 2013, an amount far less than claimed by Potoroo. There was evidence presented of inaccuracies in the accounting records. The jury could also have found that Potoroo's mitigation efforts were not reasonable and settled upon one year's net minimum rent after offset, in the amount fixed in the initial lease, as an appropriate measure of damages.
Potoroo claimed that at the time Geneva vacated the premises, it owed $291,132.72, and that Geneva's balance would climb to $2,199,017.62 by the end of the lease term in September, 2016.
Geneva claims that the jury were charged solely with determining the amount of the debt, if any, owed to Potoroo, and that the security deposit was an issue that would be dealt with after the trial. The record does not bear out these contentions. The jury were put on notice that Potoroo was still in possession of the security deposit at the time of the trial. No binding admissions by the defendants' principal were made regarding the handling of the security deposit (or argued to the jury). The jury could have understood their role to include the application of the security deposit to their overall damage award. In fact, during their closing arguments, both attorneys gave specific examples of how offset might work and invited the jury to make some deductions if warranted.
Potoroo's attorney suggested to the jury, without any objection, that a fair verdict would be to award Potoroo $2.2 million as reduced by the $437,100 security deposit in Potoroo's possession. Geneva's attorney suggested that an offset from the security deposit for three month's unpaid rent might be appropriate.
Geneva has not shown that the judge's interpretation of the jury's verdict was erroneous. While the amount of the damage award and the security deposit were equal, the amount was also equivalent to one year's net minimum rent. Entering or amending the judgment to read zero dollars would have required undue speculation about the intentions of the jury. Accordingly, we conclude that the denial of the motion to alter or amend the judgment was not an abuse of discretion.
We note that the parties were well aware that the security deposit in Potoroo's possession might present difficulties for the fact finder. At summary judgment, the motion judge expressed her hope that the parties would enter into an agreement to apply those funds against Potoroo's damage award. There was no such agreement and no request for a special question or jury instruction on the offset issue. Moreover, Geneva failed to seek clarification on the jury's verdict when given the opportunity.
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Judgment on jury verdict affirmed.
Order denying motion to alter or amend judgment affirmed.