Opinion
14-P-107
11-10-2014
ROCKPORT REAL ESTATE ASSOCIATION, INC. v. KENLO FOOD CORPORATION & another.
NOTICE: Decisions issued by the Appeals Court pursuant to its rule 1:28 are primarily addressed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, rule 1:28 decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28, issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
Rockport Real Estate Association, Inc. (Rockport), appeals from a judgment on a jury verdict and from the denial of its motion for judgment notwithstanding the verdict (JNOV) in an action against its former tenant, Kenlo Food Corporation (Kenlo), for breach of a lease agreement. Rockport maintains that (1) the jury incorrectly limited its damages to back rent owed because the judge erroneously permitted the jury to apply the rule of mutually dependent covenants, (2) the evidence of damages on Kenlo's counterclaim for Rockport's conversion of a check from the Christmas Tree Fund payable to Kenlo was insufficient, (3) the judge erroneously instructed the jury that the damages for conversion were the face amount of the check itself, and (4) the judge erred in denying Rockport's postjudgment motion requesting a judgment against the trustee for the funds in its possession (see note 3, supra).
Defendant Hildonen is guarantor of the lease.
Kenlo predicated its counterclaim for conversion on a check in the amount of $4,013 payable to Kenlo from the Christmas Tree Fund that was retained by Jay Smith, Rockport's manager and chairman of the Christmas Tree Fund, who instructed his bookkeeper to hold the check and tell Hildonen to contact him to make arrangements for its pick up.
After filing suit for breach of the lease, Rockport obtained an attachment by trustee process of the $4,013 due to Kenlo. It is undisputed that Rockport never negotiated the check or held the funds, which remain in the hands of the trustee.
The judge instructed the jury as follows:
"If you find that [a conversion occurred], and you must so find by a preponderance of the evidence, the Court will award Kenlo the amount of the check. That's $4,000 -- I think it was $4,003 [sic]."
We affirm so much of the judgment as limits Rockport's damages for breach of the lease and reverse so much of the judgment as awards Kenlo $4,000 for conversion of the Christmas Tree Fund check.
Discussion. In reviewing the denial of a motion for JNOV, we consider "whether 'anywhere in the evidence, from whatever source derived, any combination of circumstances could be found from which a reasonable inference could be drawn in favor of the [nonmoving party].'" Boothby v. Texon, Inc., 414 Mass. 468, 470 (1993), quoting from Poirier v. Plymouth, 374 Mass. 206, 212 (1978). "Conflicting evidence alone does not justify [JNOV] . . . [and] [t]he court may not substitute its judgment of the facts for that of the jury." Tosti v. Ayik, 394 Mass. 482, 494 (1985).
1. Rule of mutually dependent covenants. Rockport contends that the judge erred in refusing to direct a verdict on Kenlo's defense of mutually dependent covenants. We disagree. The rule of mutually dependent covenants provides:
"[I]f the landlord fails to perform a valid promise contained in the lease to do, or refrain from doing, something . . . and as a consequence thereof, the tenant is deprived of a significant inducement to the making of the lease, and if the landlord does not perform his promise within a reasonable period of time after being requested to do so, the tenant may (1) terminate the lease . . . ."Wesson v. Leone Enterprises, Inc., 437 Mass. 708, 720 (2002), quoting from Restatement (Second) of Property (Landlord and Tenant) § 7.1 (1977). To prevail under that doctrine, a tenant must "demonstrate the landlord's failure, after notice, to perform a promise that was a significant inducement to the tenant's entering the lease in the first instance." Id. at 721-722. Viewed in the light most favorable to Kenlo, the evidence at trial sufficed to permit the jury to conclude that Rockport's overcharge on common area maintenance fees was material and triggered the rule of mutually dependent covenants. First, the jury heard testimony that Rockport billed Kenlo fifty dollars per hour for snow removal despite only paying its employees fifteen to eighteen dollars for the work. Moreover, Hildonen testified that the common area maintenance charges seemed to increase annually and were excessive. Finally, the jury viewed bills sent by Rockport to Kenlo for common area charges including cleaning services, rock salt and ice melt, snow removal, landscaping, and trash removal. Because the jury could reasonably conclude, based on this evidence, that Rockport's overcharging Kenlo for common area maintenance deprived Kenlo of a significant inducement to making the lease, we discern no error in the judge's denial of Rockport's motion for JNOV on Kenlo's defense of mutually dependent covenants or the judge's instruction to the jury.
2. Conversion. We agree with Rockport that the judge erred in failing to direct a verdict in favor of Rockport on Kenlo's conversion counterclaim because Kenlo failed to prove any damages. Rockport's mere withholding of the Christmas Tree Fund check, without cashing the check and obtaining the funds, does not amount to a conversion for which the damages equal the full face value of the check. Even if Rockport converted the check, it did not convert the funds represented by the check itself. Indeed, the funds represented by the check remain in the hands of the trustee, available to Kenlo upon an order of the court, and unavailable to Rockport. Put differently, Rockport did not permanently deprive Kenlo of $4,013.
To the extent that Kenlo incurred damages from the withholding of the check by Rockport, it was incumbent on Kenlo to provide evidence of those damages for determination by the jury. See Glavin v. Eckman, 71 Mass. App. Ct. 313, 320 (2008) ("The assessment of damages is traditionally a factual undertaking appropriate for determination by a jury"). This Kenlo utterly failed to do. Absent such proof, Kenlo's claim that it is entitled to damages for lost use of the funds is unavailing. See Snelling & Snelling of Mass., Inc. v. Wall, 345 Mass. 634, 636 (1963) ("When . . . damages are sought they must be proved and not left, as here, to speculation"). Accordingly, the judgment as to the conversion counterclaim must be reversed, and the amount held by the trustee shall be applied as a setoff against the judgment for Rockport.
Conclusion. The October 12, 2012, postjudgment order is reversed insofar as it denies Rockport's motion for judgment against the trustee for the funds in its possession and for JNOV on Kenlo's conversion counterclaim. The judgment as to the conversion counterclaim is accordingly reversed. In all other respects, the judgment and postjudgment order are affirmed. The matter is remanded to the Superior Court for further proceedings consistent with this memorandum and order.
So ordered.
By the Court (Grasso, Kantrowitz & Meade, JJ.),
Clerk Entered: November 10, 2014.