The U.S. District Court for the District of Massachusetts addressed this issue in a recent order on a motion in limine in the case Lennar Northeast Properties, Inc. d/b/a Lenna Northeast Urban, and Lennar Hingham Holdings, LLC v. Barton Partners Architects Planners Inc., et. al.
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.