Opinion
WOCV200301215.
02-15-2012
Richard ARONOVITZ Individually & dba Lincoln Discount Pharmacy et al. v. Madlyn FAFARD et al.[1] as Trustees.[2]
MEMORANDUM OF DECISION AND ORDER ON REMAND FROM THE APPEALS COURT
RICHARD T. TUCKER, Justice.
The operative facts in this case date back to 1983, when plaintiff Richard Aronovitz, d/b/a Lincoln Pharmacy (" Aronovitz" ), and the defendant trustees' (" Trustees" ) predecessor-in-interest entered into a one-year lease for premises located in Westborough, Massachusetts (" Premises" ). During the term of the lease, the contracting parties had a disagreement over who was liable for the Premises' real estate taxes. They also had a related disagreement regarding the validity of Aronovitz's attempt to exercise an option to purchase contained in an addendum to the lease.
After a somewhat complicated procedural history between the parties, Aronovitz filed the present case in 2003, seeking damages arising out of his reliance on the option. The case reached the Appeals Court in 2009, and in 2010, that court remanded the case to the Superior Court to determine at trial " the limited issue whether the trustees (or [the trustees' predecessor-in-interest] ) breached the lease by not honoring Aronovitz's attempted exercise of the option to purchase." The parties to the case now request that the court decide the issue on the documentary materials they submitted in a joint appendix. The limited issue the Appeals Court directed the court to determine, however, presents issues of disputed fact that require an evidentiary proceeding.
BACKGROUND
The relevant facts are as follows. On October 5, 1983, Aronovitz as lessee and Howard A. Fafard (" Fafard" ), the Trustees' predecessor-in-interest, as lessor entered into a one-year commercial lease (" Lease" ) for the Premises, which Aronovitz intended to (and did use) as a pharmacy. The Lease's term was December 1, 1983 to November 30, 1984. According to Lawrence J. Doane (" Doane" ), a then-employee of Fafard, the Lease was a standard form lease that Fafard (via Doane) filled in with the relevant specific information.
It is not clear from the documents the parties submitted whether Doane still works for one or more of Fafard's companies.
Section 23 of the Lease dealt in part with real estate taxes in two paragraphs. At some point, " DELETE" stamps were placed over the two paragraphs. At the end of the second paragraph, the following language was typed in: " The total tax bill for the above named property will be forwarded to the lessee. The tax bill will be due and payable to Howard A. Fafard within ten days, subject to maximum legal interest after 10 days."
In an addendum to the Lease, Fafard granted to Aronovitz an option to purchase the Premises for $715,000.00 (" Option" ). The Option contained the following language. " Prior to exercising the foregoing right Aronovitz shall deliver to [Fafard] written notice of his desire to purchase the Premises at the predetermined price ... on or before the last day of the sixth month from the Commencement Date [of December 1, 1983]." An asterisk was inserted after this sentence, and the following language typed in at the bottom of the page: " Provided, however, that said notification time shall be extended during the demised term unitl [ sic ] such time as the sign noted in Section 3 of this lease is constructed."
The sign referred to in the Option was a sign to be posted on Route 9, and Aronovitz was responsible for its permitting and construction. Despite Aronovitz having such obligation, Fafard applied for the sign's permitting. He was unable to obtain the required permits from Westborough, however, and by letter dated June 16, 1984, Doane informed Aronovitz that " our latest attempt at getting you a sign on Route 9 has been unsuccessful ... I believe we have exhausted all approaches to the situation, and that we must face the fact that you will not be able to have a sign on Rte 9." There is no evidence that the sign was ever constructed.
The sign provision is actually contained in a second addendum to the Lease. It provided that if the sign is built, Aronovitz's rent for the Premises would change from a percentage of retail sales to an amount based on the Premises' square footage.
By letter dated July 30, 1984, Fafard billed Aronovitz for six months of real estate taxes (January 1984 through June 1984). Aronovitz refused to pay the bill. By letter dated September 20, 1984, Fafard purported to terminate the Lease for Aronovitz's failure to pay the real estate taxes. The letter indicated that " [u]nfortunately, the termination of your leasehold interest in the premises will also foreclose your opportunity to exercise any option to purchase you may have once had."
The copy of the July 30, 1984 letter in the joint appendix has the following hand-written notation: " VOID- see pg 21 of lease agreement. Taxes not payable by us during lease."
Termination was pursuant to Section 28 of the Lease, which allowed Fafard to terminate for Aronovitz's failure to pay any amount due under the Lease.
Despite this letter, Aronovitz attempted to exercise the Option on November 29, 1984, one day before the end of his leasehold. He hand delivered written notice of his intent to exercise the Option to Fafard's attorney, also delivering a check that included the required $62,500.00 deposit. Based on his purported earlier termination of the Lease, Fafard refused to sell to Aronovitz under the Option and returned the deposit.
After a summary process action filed by the Trustees reached the Supreme Judicial Court, Aronovitz filed the current action, seeking damages he incurred in reliance on the Option. The Appeals Court concluded that " the case must be remanded for trial on the limited issue whether the trustees (or Fafard) breached the lease by not honoring Aronovitz's attempted exercise of the option to purchase."
DISCUSSION
As noted above, Aronovitz and the Trustees submitted a joint appendix of materials and have asked the court to determine the remand issue solely on those materials. An evidentiary proceeding is required, however, for the following reasons.
First, the joint appendix reveals a factual dispute regarding whether the " DELETE" stamps placed over the Lease's real estate tax paragraphs apply to the typed-in language that required Aronovitz to pay the taxes. Resolution of this dispute is key to determining whether Fafard effectively terminated the Lease based on Aronovitz's failure to pay the taxes before Aronovitz attempted to exercise the Option. See Atlantic Richfield Co. v. Couture, 4 Mass.App.Ct. 230, 234 (1976) (" The option [to purchase] could have been exercised at any time prior to a termination of the lease" ). According to a deposition of Doane contained in the joint appendix, the typed-in language was added after the " DELETE" stamps were placed, meaning the added language is valid. Aronovitz, on the other hand, testified that the typed-in language had been present on earlier versions of the Lease and then the " DELETE" stamps were applied to the entirety of the real estate tax paragraphs, including the typed-in language. The court cannot resolve this factual dispute without live testimony.
Doane submitted the affidavit, dated November 4, 1992, in a related bankruptcy proceeding on Fafard's estate. There is also testimony in the joint appendix from Doane indicating that the " DELETE" stamps did not apply to the typed-in language.
Aronovitz gave the testimony on April 12, 1999 in a summary process appeal in the Superior Court.
The Trustees argue that the bankruptcy court, in a January 24, 1994 decision, already determined that Aronovitz was liable for the real estate taxes under the Lease and that the court should give this decision preclusive effect under the doctrine of issue preclusion. The Appeals Court already decided the preclusion issue, however, and did not require the Superior Court to consider it on remand. Even if the court chose to consider the issue, however, it would decide it the same way as the higher court. In determining that issue preclusion did not apply to the bankruptcy court's decision, the Appeals Court relied on the lack of information submitted by the Trustees regarding disposition of Fafard's estate in the bankruptcy proceeding. While the Trustees have submitted more materials to the court, these materials still do not provide the information the Appeals Court found lacking, i.e., " the size of the bankruptcy estate, Fafard's assets or debts, the existence or priority of other creditors, or any other information that would permit us to know or understand whether the real estate tax issue was essential or even important to the bankruptcy judgment." Aronovitz v. Fafard, 78 Mass.App.Ct. 1, 6 (2010); see also id . at 5-6 (issue preclusion requires that pertinent issue be essential to judgment).
Second, according to the materials in the joint appendix, Aronovitz may have failed to properly exercise the Option, thereby rendering the real estate tax determination moot. " The manner in which an option may be exercised is to be determined by the language of the option provision ... [and] a person seeking to ... exercise option rights [must] turn his corners squarely ..." Cadillac Auto. Co. of Boston v. Stout, 20 Mass.App.Ct. 906, 906-07 (1985) (citations and internal quotations omitted). Here, the Lease and Option, taken together, required Aronovitz to send to Fafard, at an Ashland, Massachusetts address, written notification via registered or certified mail of his intent to exercise the Option within the demised leasehold term, which ended on November 30, 1984. The joint appendix shows that Aronovitz hand delivered to Fafard's attorney (at the correct Ashland, Massachusetts address) a letter dated November 29, 1984 indicating his intent to exercise the Option. Thus, it appears that Aronovitz did not " turn his corners squarely" and therefore failed to properly exercise the Option.
As noted above, language added to the Option extended the deadline for the written notice for a period " during the demised term until such time as the sign noted in ... this lease is constructed." The Trustees claim that once Fafard (via Doane) notified Aronovitz by letter dated June 16, 1984 that his efforts to obtain permitting for the sign had failed, the deadline extension terminated because at that point, it was clear the sign could not be built. It was still possible that the sign could have been permitted and built, however, as there is no indication that Fafard appealed Westborough's various rejections of the sign or that Aronovitz himself- who was the party actually charged in the Lease with obtaining permitting for the sign- attempted to obtain permitting.
There is caselaw, however, indicating that such inadequacy in exercising an option may be waived if the person who granted the option does not raise the inadequacy until years later. See, e.g., Louis Stoico, Inc. v. Colonial Dev. Corp., 369 Mass. 898, 903 (1976) (time to exercise option extended beyond time initially contemplated by parties where option grantor " never indicated to anyone that it considered the option unenforceable" based on time lapse); Mayer v. Boston Metro. Airport, Inc., 355 Mass. 344, 352-53 (1969) (master properly found waiver where option grantor did not raise lack of timeliness of option exercise until four years later); see also Hardy v. Baran, 11 Mass.App.Ct. 82, 86 (1980), citing Louis Stoico, Inc., 369 Mass. at 903 and Mayer, 355 Mass. at 353 (" Sheldon's affidavit also warrants an inference that there was a subsequent waiver by the defendants of the inadequacy, if any, of the exercise of the option" ).
According to the joint appendix, Fafard did not raise Aronovitz's failure to properly exercise the Option until bankruptcy proceedings in the early 1990s, at least six years after Aronovitz's improper exercise. It therefore seems that Fafard waived any inadequacy. Waiver is a question of fact, though, and this is an additional basis for holding an evidentiary proceeding. See Mayer, 355 Mass. at 353 (" Ordinarily ... whether a waiver has taken place involves the decision of issues of fact" ).
ORDER
Based on the foregoing, it is hereby ORDERED that the parties to this action request an evidentiary proceeding before this court for resolution of the Appeals Court's mandate.