Opinion
Civil Action AP-2020-02
06-12-2020
20 THAMES STREET LLC, and 122 PTIP LLC Plaintiffs/Appellants v. OCEAN STATE JOB LOT OF MAINE, LLC, Defendant/Appellee
ORDER
Harold L. Stewart, II, Justice
Before the court is an appeal by 20 Thames Street LLC and 122 PTIP LLC (collectively "Thames Street") from the decision of the Business and Consumer Court (Doody, J.) granting Defendant Ocean State Job Lot of Maine 2017, LLC's (hereafter "Ocean State") motion to dismiss on the basis Thames Street's forcible entry and detainer action is barred by the doctrine of res judicata. To address this appeal, a partial review of the procedural history and facts from an earlier forcible entry and detainer case between the same parties (20 Thames Street, LLC, et al. v. Ocean State Job Lot of Maine 2017, LLC, BCD-SA-2018-01) is necessary, and will be incorporated herein.
By agreement of the parties, judicial notice was taken of the 2018 FED action, including pleadings, attachments, transcripts and judgments. (See Fn. 1, Order Granting Ocean State's Motion to Dismiss (Doody, J.), A 6)
1. Procedural History
On May 7, 2018, Thames Street filed a one count complaint for forcible entry and detainer, which was transferred to the Business and Consumer Court. On August 14, 2018 the court issued judgment for Ocean State. That judgment was affirmed on appeal.
On November 4, 2019 Thames Street filed a second action for forcible entry and detainer, and the matter was again transferred to the Business and Consumer Docket. Ocean State timely responded and on November 6, 2019 filed a motion to dismiss. Thames Street responded to the motion on November 22, 2019, and Ocean State replied on November 25, 2019, Hearing on the motion was held December 17, 2019. On December 20, 2019 the court issued an order granting the motion to dismiss. On January 6, 2020, Thames Street filed its notice of appeal.
Thames Street filed its appellant's brief and appendix for this appeal on February 18, 2020. Ocean State filed its appellee's brief on May 7, 2020. On May 20, 2020, Thames Street filed its reply brief. Oral arguments were not held by agreement of the parties.
2. Facts
Thames Street is the owner and landlord of property at 251 U.S. Route 1 in Falmouth (the "Premises"), which Ocean State leases pursuant to a commercial lease dated August 3, 2017 (the "Lease"). (A. 21). By a letter dated April 25, 2018, Thames Street served on Ocean State a Notice of Default and Termination, (the "2018 Notice"). (A. 113). The 2018 Notice asserted several bases for default of the lease, including: violation of Section 27 of the Lease which requires signing and returning of the Subordination Non Disturbance Agreement; violation of Section 29 which requires signing and returning an Estoppel Certificate; violation of Section 9 which requires providing insurance and naming Landlord as an additional insured; and violation of Section 3 which prohibits allowing a trailer to remain at the loading dock for a period of time in excess of overnight. (Id.). The 2018 Notice further stated:
There is no way to cure the default enumerated in item 2 above and Section 29 provides the Lease may be terminated immediately. The additional defaults are not in waiver of the Landlord's right to immediately terminate the Lease for failure to provide the Estoppel Agreement. (Id.).
The 2018 Notice requested Ocean State to quit and surrender the Premises. (Id.).
Ocean State responded through its counsel by a letter dated May 3, 2018, and denied being in default. (See Exhibit A to Ocean State's Appellee Brief). With respect to the trailer parking issue, Ocean State responded:
Section 3 of the Lease permits the Tenant to park its trailers at the truck loading docks while unloading the same, including overnight. The trailer is removed when emptied and replaced with a different trailer that is then unloaded. The trailer is active and is constantly replaced. (Id.).
Ocean State did not surrender the Premises.
On or about May 7, 2018 Thames Street filed a Complaint for Forcible Entry and Detainer, (the "2018 Complaint"). (A. 106). The 2018 Complaint made reference to the 2018 Notice issued by Thames Street, and to the May 3, 2018 response by Ocean State. (2018 Complaint, ¶¶ 16, 18; A. 109, 110). The 2018 Complaint also alleged:
21. By reason of a Notice of Termination of Lease for failure to:
a. sign and return the SNDA and sign and return the Estoppel as required by the Lease;
b. provide evidence of insurance naming the Plaintiff as an additional insured as required by the Lease; and
c. comply with Section 3 of the Lease by allowing a trailer to remain at the loading dock for a period of time in excess of overnight or as otherwise may be permitted by the Lease,
Defendant's tenancy has been terminated. See Exhibit H. Defendant's refusal to execute the Estoppel.
Trial was held on the 2018 Complaint in June and July, 2018. The trial evidence focused primarily on Ocean State's alleged failure to provide the Estoppel Certificate, but Ocean State did offer some testimony related to parking of trailers at the loading dock for the purpose of delivering merchandise. (A. 97; see 2018 Trial Testimony, June 28, 2018, at 123:18-125:18; 147:12-15; 148:13-19; 151:6-11). Following trial, the court issued a written decision granting judgement to Ocean State. (A. 175). The written decision discussed the alleged failure to provide an estoppel certificate, but did not address the trailer parking issue. (Id.). The court's decision granting judgment to Ocean State was affirmed on appeal, but the award of attorney fees was vacated. (A. 189).
By letter dated September 25, 2019, Thames Street issued a Notice of Termination of Lease (the "2019 Notice"). (A. 93). The 2019 Notice stated:
The purpose of this letter is to provide Tenant with notice of the immediate termination of the Lease due to Tenant's ongoing and continuous violation, since April 2018, of Section 3 of the Lease pursuant to which Tenant is prohibited from storing trailers on the Premises other than during times when those trailers are being unloaded and, in any event, no longer than overnight. Tenant has regularly stored trailers on the Premises for between 2 and 5 days at a time.
Tenant received a Notice of Default regarding this Lease violation dated April 25, 2018. By letter dated November 19, 2018 Tenant's legal counsel argued that Tenant's trailer parking practices were "consistent with Section 3 of the Lease." (Id.).
The 2019 Notice again requested Ocean State to quit and surrender the Premises. (Id.). Ocean State did not surrender the Premises.
On November 4, 2019 Thames Street filed a second Complaint for Forcible Entry and Detainer, (the "2019 Complaint"). (A. 18). The 2019 Complaint referenced the 2018 Notice regarding the trailer parking violation and also the 2019 Notice, and both Notices were attached as Exhibits B and C, respectively. (See 2019 Complaint, ¶¶ 7, 14; A. 18). The 2019 Complaint specifically alleges Ocean State's trailer parking practices violate Section 3 of the Lease, (see 2019 Complaint, ¶¶ 7-13, A. 19).
3. Standard of Review
In this case, Ocean State was granted judgment pursuant to the court's finding Thames Street's claims were barred by res judicata. Application of the doctrine of res judicata is reviewed de novo. Ring v. Leighton, 2019 ME 8, ¶ 8; Wilmington Trust Co. v. Sullivan-Thome, 2013 ME 94, ¶ 6. The doctrine of res judicata is grounded on concerns for judicial economy and efficiency, the stability of final judgments, and fairness to litigants, Lewis v. Maine Coast Artists, 2001 ME 75, ¶ 9. Unlike collateral estoppel, or issue preclusion, which prevents the reopening in a second action an issue of fact actually litigated and decided in an earlier case, the doctrine of bar, or claim preclusion, prohibits relitigation of an entire cause of action between the same parties once a valid final judgment has been rendered in an earlier suit on the same cause of action. Beegan v. Schmidt, 451 A.2d 642, 644 (Me. 1982).
Claim preclusion bars relitigation if: (1) the same parties or their privies are involved in both actions; (2) a valid final judgment was entered in the prior action; and (3) the matters presented for decision in the second action were, or might have been, litigated in the first action. Wilmington Trust Co. v. Sullivan-Thome, 2013 ME 94, ¶ 7; Macomber v. Macquinn-Tweedie, 2003 ME 121, ¶ 22. To determine whether a claim is precluded, a transactional test is applied. Sebra v. Wentworth, 2010 ME 21, ¶ 12. The transactional test is applied by examining the aggregate of connected operative facts that can be handled together conveniently for purposes of trial to determine if they were founded upon the same transaction, arose out of the same nucleus of operative facts, and sought redress for essentially the same basic wrong. Id. Claim preclusion applies even where the second suit relies on a legal theory not advanced in the first case, seeks different relief than that sought in the first case, or involves evidence different from the evidence relevant to the first case. Id.
4. Discussion
There is no dispute that the same parties were involved in both forcible entry and detainer actions on the 2018 and 2019 Complaints, and that a valid final judgment was entered on the 2018 Complaint. Accordingly, this discussion will revolve around the third element.
In the 2019 action Thames Street seeks possession of the Premises due to an alleged lease violation, specifically violation of Section 3 of the Lease regarding parking and unloading of trailers. Prior to filing the 2019 Complaint, Thames Street served on Ocean State the 2019 Notice which alleges Ocean State was in ongoing and continuous violation, since April 2018, of Section 3 of the Lease which prohibits Tenant from storing trailers on the Premises other than during times when those trailers were being unloaded. In addition to asserting this was an ongoing and continuous violation since April 2018, the 2019 Notice states that Tenant had received a Notice of Default dated April 25, 2018, the 2018 Notice, regarding this violation. And the 2019 Complaint also references the 2018 Notice. In short, in the 2019 action Thames Street seeks possession of the Premises for alleged conduct and lease violation dating back to April 2018 and the 2018 Notice.
In the 2018 action, Thames Street also sought possession of the Premises for lease violations. Prior to filing the 2018 Complaint, Thames Street served on Ocean State the 2018 Notice, the same 2018 Notice referenced above that was cited in the 2019 Notice. Now, whereas the 2019 Notice only asserted violation of Section 3 of the Lease regarding the trailer parking issue, the 2018 Notice asserted other lease violations, including failure to return the SNDA and Estoppel Certificate, as well as the trailer parking violation. And in the 2018 Complaint, Thames Street alleged Ocean State's tenancy had been terminated due to all of those violations, including the trailer parking issue.
In summary, both actions were commercial FED actions, involving the same parties, the same lease, and same premises. And the notices to quit and complaints in both actions were based, at least in part, for violation of Section 3 of the Lease and Ocean State's practice of parking and unloading trailers.
The court appreciates that trial on the 2018 Complaint and the decision issued by the trial court focused primarily on the Estoppel Certificate issue. None the less, Ocean State did present testimony regarding its trailer parking practices.
Of interest is that after Thames Street served on Ocean State the 2018 Notice, Ocean State responded by letter dated May 3, 2018, and stated:
Section 3 of the Lease permits the Tenant to park its trailers at the truck loading docks while unloading the same, including overnight. The trailer is removed when emptied and replaced with a different trailer that is then unloaded. The trailer is active and is constantly replaced.
In other words, Ocean State denied it was in violation of the Lease and defended its trailer parking practices as compliant. Thus, Thames Street knew prior to filing the 2018 Complaint Ocean State's denial and defense that its trailer parking practices were not a violation and that it had no plans to cease.
Again, the transactional test is applied by examining the aggregate of connected operative facts that can be handled together conveniently for purposes of trial to determine if they were founded upon the same transaction, arose out of the same nucleus of operative facts, and sought redress for essentially the same basic wrong. Sebra v. Wentworth, 2010 ME 21, ¶ 12. In Beegan v. Schmidt, the Law Court stated the following of the goals of the transactional test:
Requiring a plaintiff to pursue all rights he may have against a given defendant that grow out of the "transaction or series of transactions" from which his suit arises promotes judicial economy and the public perception of the stability and finality of court decisions. It eases both the financial and psychological burdens on a defendant, who can rest assured that no one will sue him more than once over the same incident or occurrence. And it is fair to the plaintiff, as well: He as well as the defendant will benefit economically - by saving counsel fees and other litigation expenses - if he consolidates as many of his factual allegations and legal theories as possible into one lawsuit. And the rules that have governed civil litigation in Maine since December 1, 1959, provide the plaintiff, as well as the defendant, with "ample procedural means for fully developing the entire transaction in the one action going to the merits to which the plaintiff is ordinarily confined."Beegan v. Schmidt, 451 A, 2dat 646.
In the 2018 action, the trailer parking violations had been raised and alleged in the 2018 Notice and Complaint. That Thames Street chose not to pursue that violation at the 2018 trial does not negate that the claim was raised and ready for litigation. The trailer parking violation arose from the same transaction and nucleus of facts, which all were related to Ocean State's compliance with the Lease and whether or not it violated the Lease, and whether Thames Street was entitled to possession. Whether or not there was a trailer parking violation could have conveniently been tried at the 2018 trial. To allow Thames Street to make a strategic decision not to pursue the trailer parking issue in the 2018 trial, and allow it another bite at the apple later after losing that trial defeats the stated goals of res judicata-judicial economy, efficiency, and fairness to litigants. The court finds that the matters presented for decision in the 2019 action, specifically whether Ocean State violated Section 3 of the Lease by its trailer parking practices, were matters which were presented in the 2018 action, notice of lease violations and termination being given that included the trailer parking practices, and which might have been litigated in 2018 but for Thames Street decision not to proceed on those claims. Accordingly, all of the required elements of res judicata exist barring Thames Street 2019 claims presented in the 2019 Complaint.
In its brief Thames Street asserts that the sole basis for termination raised in the 2018 Complaint was the Section 29 violation of not returning the Estoppel Certificate. But in addition to referencing in the Complaint the 2018 Notice that cited the Section 3 trailer parking violation, paragraph 21 of the 2018 Complaint clearly states that "By reason of a Notice of Termination of Lease for failure to: . .c. comply with Section 3 of the Lease by allowing a trailer to remain at the loading dock for a period of time in excess of overnight or as otherwise may be permitted by the Lease, Defendant's tenancy has been terminated."
Thames Street asserts that in the 2018 matter it could not have proceeded on the Section 3 trailer parking violation because it had not allowed for a cure period in the 2018 Notice, dated April 25, 2018. As previously discussed, by letter dated May 3, 2018, Ocean State respondedthat it's trailer parking practices were not a violation of the Lease, So, when Thames Street filed its 2018 Complaint on or about May 7, 2018, it knew Ocean State's position, which was clear that it intended to continue its trailer parking practices. (See TD Banknorth, N.A. v. Hawkins, 2009 Me. Bus. & Consumer LEXIS 6- cure period not required if defendant refuses). And as previously discussed, in the 2018 Complaint, Thames Street unequivocally stated the tenancy had been terminated due in part to the Section 3 trailer parking violation. (See Fn. 2). Accordingly, Thames Street's argument it could not have proceeded on the Section 3 trailer parking violation in 2018 because the Lease had not been properly terminated is unavailing.
Also, by the time of trial in December 2018, any cure period had lapsed. As Thames Street stated in its 2019 Notice, this was an "..ongoing and continuous violation, since April 2018..". So even if a cure period was required, it had lapsed and the claim had fully matured prior to trial. See Stone v. Dep't of Aviation, 453 F.3d 1271, 1278 (10th Cir. 2006).
Similarly, Thames Street's comparison to a default based on failure to pay rent is distinguishable. In a rent default situation, each time a tenant fails to make a rent payment, a new default has occurred, So, for example, if a landlord brought an FED for failure to pay rent in 2018, and lost because it could not prove the default, the landlord would not be barred from bringing an FED in a subsequent month if the tenant failed to make a lease payment when it came due. A new obligation to pay rent accrues as each rent installment becomes due. But that is far different from the facts of this case. In this case, Thames Street put Ocean State on notice on
April 25, 2018 that it was in default due to its trailer parking practice of "allowing a trailer to remain at the loading dock for a period of time in excess of overnight or as otherwise may be permitted by the Lease." In the 2018 Complaint dated May 7, 2018 it alleged "By reason of a
Notice of Termination of Lease for failure to:, .c. comply with Section 3 of the Lease by allowing a trailer to remain at the loading dock for a period of time in excess of overnight or as otherwise may be permitted by the Lease, Defendant's tenancy has been terminated, '' Fast forward to September, 2019, in the 2019 Notice Thames Street stated:
The purpose of this letter is to provide Tenant with notice of the immediate termination of the Lease due to Tenant's ongoing and continuous violation, since April 201 S(emphasis added), of Section 3 of the Lease pursuant to which Tenant is prohibited from storing trailers on the Premises other than during times when those trailers are being unloaded and, in any event, no longer than overnight. Tenant has regularly stored trailers on the Premises for between 2 and 5 days at a time.
Tenant received a Notice of Default regarding this Lease violation dated April 25, 2018. By letter dated November 19, 2018 Tenant's legal counsel argued that Tenant's trailer parking practices were "consistent with Section 3 of the Lease, ""
Ocean State's counsel actually also argued the same thing in the May 3, 2018 letter.
The trailer parking practices exercised by Ocean State existed in 2018. Thames Street told Ocean Street this practice was a violation and to stop, to which Ocean State responded by stating it was not a violation and continued its practice for the next year and a half. The notice of termination and FED action that Thames Street commenced in 2019 was for the exact same conduct that existed when Thames Street issued its notice of termination and FED action in 2018. This was the same conduct, and accordingly the same claim. For whatever reason Thames Street chose not to pursue the claim in 2018, even though it might have been pursued. Wilmington Trust Co. v. Sullivan-Thorne, 2013 ME 94, ¶ 7. Even though it did not pursue this available claim in 2018 and instead pursued soleiy the Estoppel Certificate violation, it is now barred by res judicata. See Sebra v. Wentworth, 2010 ME 21, ¶ 2- Claim preclusion applies even where the second suit relies on a legal theory not advanced in the first case, seeks different relief than that sought in the first case, or involves evidence different from the evidence relevant to the first case.
The court has reviewed and considered the holdings in Fed, Borne Loan Mortg. Corp. v. Phom, 449 S, W.3d 230 (Tx, 2014) and S. Willow Props., LLC v. Burlington Coot Factory of NM, LLC, 1S9N.H. 494 and concludes they are of no weight to the disputes and claims of this case.
The entry shall be:
1. The judgment by the trial court granting judgment to defendant-appellee Ocean State Job Lot of Maine, LLC on the basis the claims presented by plaintiff-appellant 20 Thames Street LLC and 122 PTIP LLC are barred by res judicata Is affirmed.
2. The clerk is directed to incorporate this order in the docket by reference pursuant to Rule 79(a).