Commercial Lease Litigation

Massachusetts Superior Court Concludes Lender Properly Foreclosed and Seized Borrower's Personal Property Following Loan Default

A recent Massachusetts Superior Court case, Germinara v. Bakis, et al. (decided May 13, 2019), involved a plaintiff borrower who obtained a commercial loan in order to fund the purchase and operation of a gas station/convenience store, which was owned by an LLC formed by the plaintiff. The loan was secured by both the gas station property and contents and a second property that was owned by the borrower in trust. Further, the lender and the funder of the loan were granted mortgages and deeds-in-lieu of foreclosure to secure the interest on both properties owned by the borrower. When the plaintiff defaulted on the loan, the lender and the funder took title to the two properties by exercising the deeds-in-lieu of foreclosure. They sold both properties and, additionally, seized some items of the borrower's personal property that had been located at the properties, such as trucks and vehicles. Some of these items were owned by the plaintiff in his individual capacity, and not by the LLC that held title to the gas station; however, the lender held other security obligations which included the vehicles.

The Fate of Fixtures at the End of a Commercial Lease: Who Pays for Removal?

The obligation of a tenant to remove fixtures and the right of the landlord to recover the cost of removal of fixtures and attendant repairs to the property were the subject of a recent decision by Suffolk Superior Court Judge Robert Gordon in The Wilder Companies, Ltd. v. California Pizza Kitchen, Inc., 32 Mass L. Rptr. 505 (2015).

Appraisers Have Final Say on Lease Extension Rent

A panel of the Massachusetts Appeals Court recently grappled with the reviewability of rent-setting calculations performed by professional appraisers pursuant to a commercial lease, and determined that even mistaken appraisers will have the last word so long as they apply any criteria or formula set forth in the lease, and do not exceed the authority the parties have granted them.

275 Washington St. Corp. v. Hudson River Int'l., LLC: Collecting Indemnification Damages in Commercial Leases

In a recent case, 275 Washington St. Corp. v. Hudson River Int'l., LLC, 465 Mass. 16 (2013), the Supreme Judicial Court ruled that a commercial landlord cannot recover post-termination damages under an indemnification clause until the original lease term expires. In 275 Washington St. Corp., the tenant vacated the premises and ceased paying rent 18 months into a 12-year lease. The lease included an indemnification clause that provided, "Tenant shall indemnify Landlord against all loss of rent and other payments which Landlord may incur by reason of such termination during the remainder of the term." After the tenant vacated, the landlord terminated the lease, and, relying on the indemnification clause, demanded that the tenant pay the landlord's lost rent over the entire 12-year lease term, in addition to the unpaid rent that accrued prior to termination of the lease. The landlord's total potential damages with interest exceeded $1,000,000.

Tenant's Corporate Parent Insulated from Lease Default Claim; But Liable for Use and Occupancy

Last Fall, the Massachusetts Appeals Court held in OMV Associates, L.P. v Clearway Acquisition, Inc., 82 Mass. App. Ct. 561 (2012), that a lessee's corporate parent could not be reached under traditional veil-piercing principles to pay the debt of a subsidiary that breached a commercial lease.

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