Opinion
20-P-1114
08-05-2021
MMK, LLC v. Carey DUBINSKY, trustee.
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
The defendant, Carey Dubinsky, as trustee of the 147 Pelham Street Realty Trust (trust), appeals from judgments entered against him on the plaintiff, MMK, LLC's (MMK) motions for summary judgment. The underlying dispute involves the terms of a commercial lease between the trust and MMK. The primary issue is whether the trust properly exercised an option to extend the original twenty-year term of the lease for an additional five-year term. We affirm.
Background. We summarize the undisputed facts contained in the summary judgment record. On January 22, 1998, Ranger Plaza, LLC (Ranger), as landlord, and Jackson Ventures, Inc. (Jackson), as tenant, entered into a twenty-year commercial ground lease (lease) for property located at 145-147 Pelham Street in Methuen. Dubinsky signed the lease on behalf of Jackson. The lease included an option to extend its term for five years. To exercise the option to renew, the tenant was required to provide written notice to the landlord no less than 270 days prior to the expiration of the original term.
The property is owned by MMK.
The lease provides, in relevant part:
"Tenant shall give written notice to Landlord no less than (270) days prior to the expiration of the Original Term or any subsequent Option Period to exercise any or all of the remaining Option Period(s) at the time of such notice."
The lease also contained a savings provision to avoid forfeiture of the tenant's right to extend the lease due to an "inadvertent failure" to give timely notice to the landlord. Under that provision the tenant was required to provide the landlord written notice of its intent to exercise the option within ten days of receiving notice from the landlord that exercise of the option was due. The lease further provided that any "notice, demand or communication upon the other party ... shall be in writing signed by the party serving notice, sent by registered or certified United States mail, return receipt requested and postage prepaid." The lease specified that any notice intended for the tenant "shall be addressed" to Jackson "c/o Carey Dubinsky [at] 435 Essex Street, Lawrence, MA 01840 with a copy to: Jay James, Esq. [at] 23 Main Street, Andover, MA 01810." A notice also could be sent to "such other address as either party may have furnished to the other in writing as a place for the service of notice."
The provision states:
"[I]f the Tenant should fail to give notice to the Landlord of Tenant's election to extend the Original Term of this Lease or any subsequent Option Period, Tenant shall not be deemed to forfeit its right to extend until such time that the Landlord gives ten (10) days written notice to Tenant that Tenant's notice to exercise such Option Period is due, and only upon Tenant's failure to exercise such Option Period within the additional ten (10) day notice period shall this Lease be terminated."
On the same date that the lease was executed, the tenant, Jackson, assigned its interest in the lease to Dubinsky as trustee of the trust. Dubinsky was an experienced real estate manager who had managed multiple commercial properties through his property management company, Dubinsky Management Group, LLC (DMG). Ranger subsequently assigned its interest as landlord under the lease to DF Methuen, LLC (DF Methuen). On September 30, 2007, the trust and DF Methuen executed a tenant estoppel certificate in which they agreed that the original term of the lease would expire on September 14, 2018. On November 20, 2009, DF Methuen assigned its rights under the lease to MMK.
Thereafter, at some point prior to July 2011, DMG moved its office to Boca Raton, Florida. Dubinsky's assistant sent MMK a flyer noting DMG's new address in Boca Raton, which was a UPS store, its telephone numbers, and an aol.com e-mail address.
The trust did not exercise its option to extend the lease 270 days before the expiration of the original term (i.e., on or before December 18, 2017). On February 8, 2018, MMK's principal, Emil Khalil, and Dubinsky spoke on the telephone about the option to extend the lease. About a week later, on February 16, 2018, Khalil sent a follow-up e-mail to Dubinsky at the aol.com address. The e-mail's subject line stated, "[N]ext lease Option." In the body of the e-mail Khalil wrote, "Carey, I hope you are doing good, I just want to follow up on our last phone call, please send a formal letter if you wish to exercise the next 5 year option from September 1, 2018 to September 30, 2023." Dubinsky did not respond to the e-mail.
Thereafter, by letter dated February 23, 2018 (February letter), MMK advised Dubinsky that the trust had failed to timely exercise its option to renew the lease and advised him that, unless the trust exercised the option within ten days after receipt of the February letter, MMK would deem the option to have been waived. MMK sent the February letter by Federal Express (FedEx) on or about February 23, 2018. It was addressed to Dubinsky as trustee "c/o Dubinsky Management Group, LLC," at the Boca Raton address of the UPS store that Dubinsky's assistant had previously provided. The FedEx packaging slip was marked "No Signature Required." FedEx delivered the February letter to the UPS store on February 26, 2018, and it was signed for by a UPS employee. MMK also sent the contents of the February letter to Dubinsky via e-mail.
The trust did nothing to exercise its option within ten days of the delivery of the February letter. In his deposition, Dubinsky acknowledged that the February letter was delivered to his UPS address on February 26, 2018, but asserted that he had no knowledge of it because his assistant did not retrieve it from the UPS store until sometime in mid-March, and then he failed to open it for several more weeks. In addition, Dubinsky testified that he did not immediately open the e-mails MMK had sent to him on February 16 and February 23, 2018.
On April 19, 2018, a lawyer representing the trust sent a letter to MMK acknowledging receipt of the February letter and stating that the trust wished to negotiate renewal terms before exercising the option. Negotiations were not successful, and by letter dated May 29, 2018, the trust, through its counsel, asserted for the first time that the February letter did not comply with the lease's notice provision. In a second letter dated June 11, 2018, the trust sought to exercise the option to extend the lease for five years. The letter was signed by Dubinsky as trustee of the trust and listed the Boca Raton address in the letterhead.
Shortly thereafter, on June 22, 2018, MMK commenced this action seeking a declaratory judgment that (1) the trust failed to timely exercise its option to extend the lease, (2) the trust was no longer entitled to exercise its option to renew the lease, and (3) the lease would expire without recourse on September 14, 2018. The trust, in turn, filed a counterclaim seeking a declaration that the February letter did not comply with the notice requirements in the lease and, therefore, the trust still had a right to exercise the option. The trust also filed counterclaims for breach of contract, breach of the implied "warranty" of good faith and fair dealing, tortious interference with contractual relations, and unfair and deceptive trade practices under G. L. c. 93A, § 11.
On the parties’ cross motions for summary judgment, a judge of the Superior Court (first motion judge) entered a declaratory judgment stating that the trust "failed to timely exercise its first five-year Option Period under the lease, that it is no longer entitled to exercise such Option Period, and that the lease therefore expired on September 14, 2018." Thereafter, on June 30, 2020, MMK's motion for summary judgment on the trust's remaining counterclaims was allowed by a different Superior Court judge (second motion judge).
Discussion. "Summary judgment is appropriate where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law." Boazova v. Safety Ins. Co., 462 Mass. 346, 350 (2012). See Mass. R. Civ. P. 56 (c), as amended, 436 Mass. 1404 (2002). We review a decision to grant summary judgment de novo. See Boazova, supra. "In a case like this one where both parties have moved for summary judgment, the evidence is viewed in the light most favorable to the party against whom judgment [has entered]" (citation omitted). Id.
1. Declaratory judgment. The trust contends that MMK is not entitled to summary judgment because the February letter did not comply with the lease's notice provision. We reject this argument for substantially the same reasons as the first motion judge.
First, contrary to the trust's argument, it matters not that MMK sent the February letter by FedEx and not by certified or registered mail as specified by the lease. In cases where a lease specifies that a notice must be sent by registered or certified mail, we have held that "the method by which the written notice was delivered does not result in a material violation of the lease." Computune, Inc. v. Tocio, 44 Mass. App. Ct. 489, 493 (1998). See Gerson Realty, Inc. v. Casaly, 2 Mass. App. Ct. 875, 875 (1974). As we explained in Computune and Gerson Realty, "[t]he function of a requirement that notice be transmitted by registered mail is to provide a means of resolving disputes as to the fact of delivery of the notice." Computune, supra, quoting Gerson Realty, supra. Here, there is no genuine dispute of material fact as to the "fact and timeliness of delivery" of the February letter to Dubinsky's UPS box. Gerson Realty, supra. Under the circumstances of this case, "[d]elivery by Federal Express ... serve[d] the same function and provide[d] the same proof of delivery as certified or registered mail." Computune, supra.
Second, the fact that MMK did not request a return receipt is of no consequence. While it is true that MMK checked the box labeled "No Signature Required" on the FedEx packing slip, FedEx nevertheless obtained a signature from the person who accepted delivery and confirmed to MMK that the February letter had been delivered.
The trust also argues that the July 2011 flyer sent to MMK by Dubinsky's assistant did not constitute notice that the trust had changed its address because the flyer referred only to DMG and not to Dubinsky as trustee of the trust. This argument does not require discussion. It suffices to note that Dubinsky himself included the same address in the letterhead of the June 11, 2018 letter in which he attempted, in his capacity as trustee, to exercise the option.
Third, the trust's claim that MMK's failure to send a copy of the February letter to Attorney Jay James amounted to a failure to comply with the notice provision of the lease is without merit. As previously noted, James was the attorney for Jackson at the time that the lease was executed in 1998 and is listed in the lease as a person to be copied on any notice sent to Jackson. Although James also had represented the trust in the past, the trust does not dispute that it never provided James's contact information to MMK, and no document in the record requires James to be copied on notices to the trust. Accordingly, MMK's failure to copy James on the February letter does not excuse the trust's failure to respond within ten days as it was required to do in order to exercise its option to extend the lease.
In addition, it is undisputed that James had been disbarred by the time of the events in question. The trust's assertion that, if MMK had sent a copy of the February letter to James's former legal practice, the attorney there would have seen to it that the trust was notified, amounts to pure speculation.
Finally, the trust argues that "it is the clear intent of the Lease terms that Dubinsky personally receive any notice under the lease." Our review of the lease provides no rational support for this assertion. The terms of the lease did not require that Dubinsky personally receive notice. Furthermore, as the trust acknowledges, Dubinsky's lack of personal knowledge of the notice conveyed in the February letter was due to his own delay in retrieving his mail and reading it. In any event, as the first motion judge properly concluded, Dubinsky's lack of knowledge that the February letter had been delivered to his UPS address is not relevant to the question whether MMK provided a valid notice to the trust.
The trust's reliance on McTernan v. Le Tendre, 4 Mass. App. Ct. 502, 504 n.2 (1976), for the proposition that where "notice" is required in a contract, "the operative fact is the receipt" by the party to be noticed, is misplaced. At issue in McTernan was a purchaser's late notice to exercise an option, see id. at 502-503, not, as here, a notice to an option holder that the exercise of an option was due. It was in McTernan’s context that the court referred to the common-law rule that the exercise of an option is effective upon receipt by the party to be noticed. See id. at 504 n.2. The rule, however, can be modified by agreement of the parties, as it was in McTernan, so that the notice is effective upon mailing. See id. at 503-504. As explained above, the terms of the lease in this case specify the requirements for an effective notice from either party to the other, and in the absence of a term stating that notice is effective upon receipt, we will not read such a term into the lease.
In light of our conclusion that the February letter constituted effective notice, we need not decide whether MMK's February 23 e-mail to Dubinsky also constituted effective notice under the lease.
Because the February letter constituted effective notice under the terms of the lease, the trust was required to exercise its option within ten days of delivery of the letter. As noted above, the trust does not dispute that it did not exercise the option within ten days. Thus, MMK was entitled to summary judgment on its claim for declaratory relief. For the same reasons, the trust's motion for summary judgment on its counterclaim for declaratory relief was properly denied.
As a result of our conclusion, we need not address the trust's arguments that its attempts to exercise the option after the ten-day period had lapsed were timely.
2. The trust's remaining counterclaims. The question whether MMK is entitled to summary judgment on the trust's counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, tortious interference with contractual relations, and violation of G. L. c. 93A requires only brief discussion.
a. Breach of contract. As the second motion judge noted in her decision, the trust concedes that its breach of contract claim is not viable if summary judgment properly entered in MMK's favor on its complaint seeking declaratory relief. In light of our conclusion that MMK is entitled to summary judgment, it follows that the trust's counterclaim for breach of contract, which is based on the same conduct, was properly dismissed.
b. Breach of the implied covenant of good faith and fair dealing. The trust argues that MMK breached the implied covenant of good faith and fair dealing when it rejected the trust's belated attempt to exercise the option on June 11, 2018. The trust contends that because the terms of the lease reflect the parties’ intent to avoid waiver, it is only fair that MMK should have permitted the trust to exercise the option late. The trust also argues that MMK acted in bad faith when it represented to the trust's subtenant that the trust had lost the lease and began negotiating with the subtenant directly.
Although the trust raised this argument in opposition to MMK's motion for summary judgment on the trust's remaining counterclaims, the second motion judge did not address it.
The covenant of good faith and fair dealing "guarantee[s] that the parties remain faithful to [their] intended and agreed expectations ... in their performance," but it "may not ... be invoked to create rights and duties not otherwise provided for in the existing contractual relationship." Uno Restaurants, Inc. v. Boston Kenmore Realty Corp., 441 Mass. 376, 385 (2004). Under the terms of the lease, after MMK sent the required ten-day notice and the trust failed to exercise the option within ten days, MMK was entitled to treat the option as waived and therefore could properly reject the trust's attempts to renew the lease. In addition, MMK was entitled to seek out other potential tenants, including the trust's subtenant. MMK's conduct thus did not amount to a lack of good faith. Summary judgment was properly entered in favor of MMK on this counterclaim.
c. Tortious interference with contractual relations and violation of G. L. c. 93A. The trust's argument that summary judgment in favor of MMK on these two counterclaims was erroneous is predicated solely on its unsuccessful claim that the declaratory judgment entered in favor of MMK was improper. As we have concluded otherwise, this argument fails. As previously discussed, MMK acted within its rights under the lease in rejecting the trust's untimely attempt to exercise the option and in seeking out a new tenant. MMK's conduct following the trust's failure to exercise the option therefore did not amount to tortious interference with a contract or unfair and deceptive conduct. Accordingly, the allowance of MMK's motion for summary judgment on the trust's counterclaims for tortious interference and violation c. 93A was proper as well.
3. Request for appellate attorney's fees and costs. MMK has requested an award of appellate attorney's fees and costs on the ground that the trust's appeal is frivolous.
Although MMK has prevailed, we decline to grant the request.
Judgments affirmed.