Opinion
SUCV20162676BLS1
11-27-2017
MINICHIELLO BROS., INC. et al. v. Joseph MARCHESE, Jr. et al.
MEMORANDUM AND ORDER ON DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT ON COUNT XII OF THEIR COUNTERCLAIMS
Edward P. Leibensperger, Justice
The parties are engaged in litigation with respect to four different parcels of real estate located in Boston and Everett, Massachusetts. In general, the defendant, Joseph Marchese, Jr., controls ownership of the parcels through various business entities. The plaintiff, Minichiello Bros., Inc., is a tenant conducting commercial activity on the parcels. For ease of reference, I will reference plaintiffs as the Tenant and defendants as the Landlord, with more specific identification used as necessary. The Tenant commenced this litigation claiming that it possessed a right to purchase some of the parcels and that the Landlord was interfering with that right and was otherwise disrupting the Tenant’s business of scrap metal recycling by wrongful acts. The Tenant sought specific performance and damages for breach of contract, fraud, violation of G.L.c. 93A and other claims. The Landlord responded by denying all claims of wrongdoing and by asserting counterclaims against the Tenant. The counterclaims are contained in 23 counts. The counterclaims allege, among other things, breach of contract, right to possession, indemnification, etc.
Neither the Tenant’s First Amended Complaint nor the Landlord’s Amended Answer and Counterclaim is a " short and plain statement of the claim" as urged by Mass.R.Civ.P 8(a).
This motion concerns Count XII of the Landlord’s counterclaim. That count is a claim for possession of what is called " the Second Street Property." The Landlord alleges that the Tenant occupies that parcel pursuant to an oral lease. Because it is an oral lease, the Tenant is a tenant at will. The Landlord claims that it has taken the proper steps to terminate the at will tenancy. As a result, the Landlord seeks possession of the property pursuant to G.L.c. 239, § 1, the summary process statute. By this motion for summary judgment on Count XII, the Landlord contends that there are no material factual disputes and that it is entitled to possession as a matter of law.
FACTS
The following facts are taken from the parties’ Statement of Undisputed Material Facts (" SUMF"). The facts referenced appear to be undisputed, although the SUMF contains a plethora of stated facts propounded by both sides that are, " disputed" by the other side. Some of those disputed facts are material, as discussed below.
On February 19, 2009, the Tenant entered into a written, commercial lease for property located at 0 Terminal Street in Everett. From that location, the Tenant operated a scrap metal business. Two years later, on May 24, 2011, the Landlord, specifically, Marchese Realty, LLC, purchased the property immediately adjacent to the 0 Terminal Street property. The address of this property is 413-421 Second Street in Everett. This property, 413-421 Second Street, is referred to as the Second Street Property. The Second Street Property is the subject property of Count XII of the counterclaim, seeking possession by the Landlord.
The parties had discussed expanding the Tenant’s scrap metal business to the Second Street Property prior to the purchase of the property. That the Tenant would occupy the Second Street Property, expand its scrap metal business onto the property, and undertake improvements on the Second Street Property were motivating factors for the Landlord to purchase the property. After the purchase of the Second Street Property by the Landlord, the Tenant moved onto the property. According to the sworn testimony in 2012 of Joseph Marchese Jr. in another action, the Tenant " handled the complete development of the property from start to finish ..."
Joseph Marchese, Jr. is the principal of the Landlord entities. He is also an attorney.
The Tenant and the Landlord reached an oral agreement for the Tenant to occupy the Second Street Property. No written lease was executed. When the Tenant asked (at an unspecified date) for a written lease, Marchese replied " Frank, we’ve been together since 2006. We don’t have any problems with each other." Marchese also testified that the term for the occupation of the Second Street Property was the same ten-year period as set forth in the lease of the 0 Terminal Street property. With respect to the lease for the Second Street Property, Marchese testified " it’s a continuation onto the other one." According to the Affidavit of Joseph Marchese, Jr., submitted in support of this motion for summary judgment, the Tenant " was to occupy the property initially as a tenant at will, though we contemplated that we would eventually attempt to negotiate a written lease." The Tenant, by its principal, Frank Minichiello, Jr., avers in answers to interrogatories in another litigation that the oral agreement reached with the Landlord was that the Tenant occupied the Second Street Property " pursuant to the lease for 0 Terminal Street." According to Minichiello, Marchese told him that the lease at 0 Terminal Street " protected" the Tenant. The Landlord requested the Tenant to pay additional rent for the Second Street Property, which the Tenant paid.
When the Landlord purchased the Second Street Property in May 2011, the property was known to be a site listed with the Massachusetts Department of Environmental Protection (" MassDEP"). Environmental response actions had been conducted on the Second Street Property prior to the Landlord’s purchase, however, the actions represented only a temporary solution. Environmental restrictions were imposed on the site. On May 24, 2011, the day the Landlord purchased the property, the Tenant entered into an Environmental Indemnity and Release From Liability Agreement (Environmental Agreement) with the Landlord concerning the Second Street Property. The Environmental Agreement obligated the Tenant " to assume all responsibilities and obligations as to remediation of the environmental conditions at the Property ..." No time deadline for the remediation was imposed by the Agreement. The document referenced the Tenant as the " lessee." Further, pursuant to the Environmental Agreement, the Tenant agreed to release the Landlord from all liabilities for environmental conditions on the property and to indemnify the Landlord for all losses arising from the property.
In connection with the Environmental Agreement, the Tenant engaged a Licensed Site Professional to provide advice and services. The Tenant performed site work at the Second Street Property in the summer of 2011. The Tenant received invoices for the 2011 site work in the amount of approximately $250,000. The Tenant states in answers to interrogatories that " while the work was being done" by the Tenant as it took on responsibility for remediating the property, there were oral discussion with Landlord regarding the cost of remediation. " When the property was ready for use, [Tenant] questioned [Landlord] about the need for a new lease for the Premises. [Landlord] stated to [Tenant] that no new lease was needed because the properties had been tied together. [Landlord] told [Tenant] that he would be protected under the terms of the existing 0 Terminal St. Lease." In reliance, the Tenant continued to occupy the property, pay rent, and undertake remedial efforts with respect to the environmental issues.
In 2015, the Tenant missed a portion of its rent payment. The Landlord and the Tenant began to engage in efforts to negotiate a written lease for the Second Street Property. The negotiations were unsuccessful. By the summer of 2016, the relationship between the Landlord and the Tenant had deteriorated substantially. The Landlord served the Tenant with two Notices of Termination of Tenancy at Will, one dated August 1, 2016 and the other dated November 22, 2016. The Landlord commenced a summary process action in Malden District Court. The action was dismissed, upon motion of the Tenant, in favor of the present action which had been filed previously.
Tenant disputes this statement.
The Landlord asserts that the environmental work performed by the Tenant on the Second Street Property was inadequate and/or not in compliance with Massachusetts environmental laws and regulations. The parties submit over thirty (30) separate statements in the SUMF concerning the environmental remediation and the legal obligations to perform the work. All such statements are " Disputed." The statements from the Landlord include references to opinions from an environmental expert engaged by the Landlord. The Tenant responds that it has engaged an expert " who is working on the site and who is focused on improving the limited compliance issues" that have been identified. The Tenant also moves under Mass.R.Civ.P. 56(f) to delay consideration of the Landlord’s contentions concerning the Tenant’s compliance with environmental obligations until after it has had the opportunity to take discovery, including a deposition, of the Landlord’s expert. Pursuant to the existing scheduling order, the parties have until March 31, 2018 to complete expert discovery.
DISCUSSION
In evaluating a motion for summary judgment the court " must ... draw all reasonable inferences" from the evidence presented " in favor of the nonmoving party." Godfrey v. Globe Newspaper Co., Inc., 457 Mass. 113, 119 (2010). A request for summary judgment must be denied where a claim turns on disputed issues of fact or on disputed inferences from admitted facts. See Molly A. v. Commissioner of Dept. of Mental Retardation, 69 Mass.App.Ct. 267, 284 (2007) (" summary judgment cannot be granted if the evidence properly before the motion judge reveals a genuine issue of disputed material fact"); Flesner v. Technical Communications Corp., 410 Mass. 805, 811-12 (1991) (" Where a jury can draw opposite inferences from the evidence, summary judgment is improper").
Termination of Tenant At Will
The principal issue presented in this motion is straightforward. The Landlord points to the undisputed fact that there is no written lease for the Second Street Property. Also, there is no written amendment of the 0 Terminal Street lease to include the Second Street Property. Thus, the Tenant is a tenant at will on the Second Street Property. See G.L.c. 183, § 3 (" An estate or interest in land created without an instrument in writing signed by the grantor or by his attorney shall have the force and effect of an estate at will only, and no estate or interest in land shall be assigned, granted or surrendered unless by such writing or by operation of law"). The Tenant has been served with Notice of Termination. Therefore, the Landlord wants an order of possession. The Tenant’s defense is that the Landlord should be estopped from contending that the Second Street Property did not become part of the 0 Terminal Street lease, as represented by the Landlord.
The Restatement (Second) of Contracts § 129 states as follows:
A contract for the transfer of an interest in land may be specifically enforced notwithstanding failure to comply with the Statute of Frauds if it is established that the party seeking performance, in reasonable reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided only by specific performance.
This equitable principle has been specifically adopted in Massachusetts. Hickey v. Green, 14 Mass.App.Ct. 671, 673 (1982) (applying § 129 as the rule applicable in most jurisdictions). See also, Hurtubise v. McPherson, 80 Mass.App.Ct. 186, 188-89 (2011) (citing § 129 and recognizing the " equitable qualification" to the Statute of Frauds); Greenstein v. Flatley, 19 Mass.App.Ct. 351, 356 (1985) (applying this principle of estoppel to a promise of a lease). As stated in Cellucci v. Sun Oil Co., 2 Mass.App.Ct. 722, 728 (1974), aff’d 368 Mass. 811, 812 (1975), the elements of an equitable estoppel are (1) a representation intended to induce a course of conduct on the part of the person to whom the representation is made, (2) an act resulting from the representation by the person to whom the representation is made, and (3) detriment to such person as a consequence of the act. Upon proof of an equitable estoppel, an oral promise to convey real property rights, such as a lease, may be enforced. Hurtubise v. McPherson, 80 Mass.App.Ct. at 188.
The Tenant argues that there are genuine issues of fact with respect to the elements of estoppel. Thus, summary judgment should be precluded. The Landlord responds with a temporal argument. Specifically, the Landlord says that the record demonstrates that even if a representation regarding the " tie" to the 0 Terminal Street written lease was made by it, the representation occurred after the Tenant’s actions that the Tenant contends constitute detrimental reliance. Specifically, the Landlord points to Minichiello’s previous answer to an interrogatory in another case where he stated: " When the property was ready for use, [Tenant] questioned [Landlord] about the need for a new lease for the Premises. [Landlord] stated to [Tenant] that no new lease was needed because the properties had been tied together. [Landlord] told [Tenant] that he would be protected under the terms of the existing 0 Terminal St. Lease." The Landlord contends that " when the property was ready for use" necessarily means a point in time after the Tenant had expended more than $250,000 to remedy environmental issues. Because that expenditure occurred before the Landlord’s alleged representation connecting the Second Street Property to the 0 Terminal Street lease, the Landlord argues that estoppel is unavailable.
The Landlord’s position is based on an overly narrow view of the record and the reasonable inferences from the record (which must be indulged in favor of the Tenant). First, the statement by Minichiello, referenced above, does not provide a precise time line as to when " the property was ready for use" and when the Tenant expended money for the benefit of the property constituting detrimental reliance. It is reasonably likely that the Tenant continued to expend money to address the environmental issues, for the benefit of the property, at times after the representations by Marchese that the Second Street Property was part of the 0 Terminal Street lease.
Moreover, the history of the dealings between Marchese and Minichiello, going back to the decision to buy the Second Street Property for the purpose of Tenant moving onto the property, gives rise to a reasonable inference that the Tenant detrimentally relied on representations made by the Landlord at the time of purchase. In the same answers to interrogatories cited by the Landlord in support of its motion for summary judgment, Minichiello also states, under oath, that " [i]t was conveyed from the very beginning that Minichiello Bros. did not need a new lease, that the properties were being tied together, and our rights as tenants were covered by the 0 Terminal St. lease."
In sum, there are disputed issues of fact regarding what the representation by the Landlord was, when it occurred, and whether, and to what degree, the Tenant reasonably relied upon the Landlord’s representations. I find that taking on the obligation to remediate the property, pursuant to the Environmental Agreement, and then expending substantial sums permanently to benefit the environmental condition of the property, are the types of reliance that, if proved, may justify the imposition of an equitable estoppel prohibiting the Landlord from denying the application of the 0 Terminal Street lease to the second Street Property.
Default Under the 0 Terminal Street Lease
The Landlord’s fall-back argument is that, assuming the 0 Terminal Street lease applies to the Second Street Property, the Tenant has defaulted under the lease. The only basis asserted for the default is the Tenant’s alleged failure to conduct the environmental remediation in compliance with applicable environmental regulations. The Landlord relies on the terms in the 0 Terminal Street lease requiring that all work at the property comply with applicable law and regulations and that such work be done in a good and workmanlike manner, employing materials of good quality. Failure by the Tenant to live up to those lease covenants is an Event of Default under the lease.
The parties’ SUMF do not provide a sufficient undisputed record for the court to determine, as a matter of law, that the Tenant has defaulted under the 0 Terminal Street lease. The determination of a default requires precise findings of fact and the application of a myriad of environmental regulations to those facts. Such a determination is the stuff trials are made for. The Landlord also relies on opinions from its own expert engaged for this litigation. The Tenant seeks time to conduct discovery from that expert in order to prepare a defense to the claim of default. On this record, therefore, a finding of default is both premature and unwarranted.
CONCLUSION
For the reasons stated above, defendants’ motion for partial summary judgment as to Count XII of their amended counterclaims (Paper No. 45) is DENIED.