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</span> <span class="bsf-rt-display-time" reading_time="6"></span> <span class="bsf-rt-display-postfix" postfix="Minute Read"></span></span></b></p> </div> <div class="col-sm-3 social-share-links"> <meta property='og:title' content='Landlord’s alleged breach doesn’t justify end of rent payments'/> <meta property='og:image' content='https://masslawyersweekly.com/files/2017/04/construction.jpg'/>  <meta property='og:url' content='https%3A%2F%2Fmasslawyersweekly.com%2F2024%2F11%2F08%2Flandlords-alleged-breach-doesnt-justify-end-of-rent-payments%2F' /> <ul class="social-share-links"><li><a class="twitter" href="https://twitter.com/intent/tweet?text=Landlord’s alleged breach doesn’t justify end of rent payments&url=https%3A%2F%2Fmasslawyersweekly.com%2F2024%2F11%2F08%2Flandlords-alleged-breach-doesnt-justify-end-of-rent-payments%2F" target="_blank"><img src="https://masslawyersweekly.com/wp-content/themes/hello-elementor/images/twitter.svg" alt="twitter"></a></li><li><a class="facebook" 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href="/cdn-cgi/l/email-protection#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" title="Share by Email"><img src="https://masslawyersweekly.com/wp-content/themes/hello-elementor/images/email.svg" alt="email"></a></li></ul> </div> </div> <div class="news-detail"><div id="bsf_rt_marker"></div><p>As a sophisticated party presumed to have understood the terms, a tenant could not cease paying rent and terminate its commercial lease, given language making the rent obligation independent of every other covenant in the lease, a judge in the Superior Court’s Business Litigation Session has decided. <p>In <a href="https://masslawyersweekly.com/2024/11/06/landlord-and-tenant-termination/"><em>Waltham Centerpoint I Investment Group, LLC v. Generation Bio Co.</em></a>, a landlord sued its tenant, seeking a declaratory judgment that the tenant had no right to terminate the lease or withhold rent. <p>Judge Debra A. Squires-Lee called the landlord’s argument “straightforward and persuasive and wholly consistent with the language of the Lease.” <div class="clear"></div><div class="divider"></div> <blockquote><p><strong>While <em>Centerpoint</em> does not break any new ground, the decision offers a helpful reminder that the Supreme Judicial Court’s 2002 decision in <em>Wesson v. Leone Enterprises, Inc., et al.</em> means what it says in allowing parties to contract out of the general rule that covenants in a lease are mutually dependent, attorneys say.</strong></blockquote> <div class="clear"></div><div class="divider"></div> <p>In reaching her decision, Squires-Lee also rejected the tenant’s argument that it had been constructively evicted from the premises, noting that the tenant had voluntarily relinquished its right to make that argument. <p>In the lease, the tenant had agreed that it would have no right to terminate the lease based on a breach by the landlord. Not only was its obligation to pay rent independent of every other covenant in the lease, but the tenant had waived the benefit of “any statute or judicial law to the contrary,” Squires-Lee noted. <p>Even assuming that the tenant was correct that the common law defense of constructive eviction abrogated that express provision in the lease, the tenant had failed to produce evidence to establish a material dispute about whether the conduct complained of resulted in a constructive eviction, the judge said. <p>While the landlord had declined to approve the tenant’s improvement plans — arguably breaching the lease — it indicated that it would approve a different set of plans. As a result, the tenant held the “proverbial keys” to making the premises habitable, Squires-Lee said.<div class="article_dfp_ads"> <div id="div-gpt-ad-in_content_300x250_a" class="div-gpt-ad-in_content_300x250_a in_content_300x250_a dfp_ad_pos"> <script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script><script type='text/javascript'> googletag.cmd.push(function () { googletag.display('div-gpt-ad-in_content_300x250_a'); googletag.pubads().collapseEmptyDivs(true); }); </script> </div> </div> <p>However, the tenant fared better on the landlord’s motion to dismiss its counterclaim alleging breach of contract and violation of G.L.c. 93A, §§2, with all but a portion of its breach of contract claim surviving dismissal. <p>The <a href="https://masslawyersweekly.com/2024/11/06/landlord-and-tenant-termination/">22-page decision is Lawyers Weekly No. 09-128-24</a>. <h2 style="font-size: 22px; text-align: center;"><strong>Watch the wording</strong></h2> <p>While <em>Centerpoint</em> does not break any new ground, Squires-Lee’s decision offers a helpful reminder that the Supreme Judicial Court’s 2002 decision in <a href="http://masscases.com/cases/sjc/437/437mass708.html"><em>Wesson v. Leone Enterprises, Inc., et al.</em></a>, means what it says in allowing parties to contract out of the general rule that covenants in a lease are mutually dependent, attorneys say. <p>First-year law students who have learned the general rule that a party in breach of a contract cannot, in turn, enforce the contract might well be surprised by the result in <em>Centerpoint</em>, said Boston attorney Stephen D. Riden. <p>“This is another lesson to practitioners, to be sure, to draft with precision [and] ensure that the language that’s used is clear and intentional [and free of] any ambiguities,” he said. <p>Westborough lawyer David S. Katz agreed. <p>“This is a good example of how important it is for commercial tenants to read, understand and fully appreciate every term of the lease,” he said. <p>Boston’s Alexander Tsianatelis said that when he represents commercial tenants, he pushes to remove language like that in the lease in <em>Centerpoint</em>, where the tenant must abide by the lease and continue to pay rent even in the face of a landlord’s breach. <p>“Very seldomly do we get it out wholesale,” he said. “What you can get sometimes is that tenants will have the right to terminate only for very specific reasons.” <p>At the end of the day, courts are simply not going to give the parties a better bargain than the one they negotiated for, which is not all bad, Riden added. <p>“The benefit of this sort of black-and-white analysis is that it provides predictability to parties,” he said. “What the BLS is doing here is consistent with its mission of providing a strong court for businesses to know that they’re going to be operating in an environment where they can predict outcomes of their disputes.” <p>Tsianatelis said he could understand why the defendant argued constructive eviction based on the fact pattern in <em>Centerpoint</em>. <p>“But the court’s logic makes sense in summarizing that constructive eviction is more about when a space becomes unusable, rather than when a space could be usable albeit in a way that the tenant doesn’t prefer,” he said. <p>Still, the facts as laid out at length in Squires-Lee’s decision made Boston attorney Justin P. O’Brien think the landlord’s lawyers “shouldn’t be completely high-fiving each other yet because it sounds like the case is far from over.” <p>Neither counsel for the plaintiff nor the defendant could be reached before deadline. <h2 style="font-size: 22px; text-align: center;"><strong>Build-out never comes to fruition</strong></h2> <p>In 2021, Generation Bio, a company working to create non-viral genetic medicines, began a search for commercial space to build a manufacturing facility. The space had to be large enough to accommodate the manufacturing processes it was currently using but also flexible enough to allow the company to sublease all or a portion of the facility if it could scale down its processes. <p>Generation Bio believed that it had found such a property at 41 Seyon St. in Waltham and entered into a 12-year lease with two five-year extension options with its then-owner. <p>Plaintiff Centerpoint purchased the property in January 2023 and assumed the landlord’s obligations under the lease. <p>When the lease was signed, the premises had no plumbing, bathrooms, heat, electrical outlets or systems necessary for a modern biotech manufacturing. <div class="box shadow alignright" style="width:300px"><div class="box-inner-block"><i class="tieicon-boxicon"></i> <p><strong>Waltham Centerpoint I Investment Group, LLC v. </strong><strong>Generation Bio Co.</strong> <p><strong>THE ISSUE:</strong> Given language in a commercial lease specifying that a tenant’s obligation to pay rent was independent of other covenants in the lease, did a tenant have the right to stop paying rent and terminate the lease under circumstances it construed as a constructive eviction? <p><strong>DECISION:</strong> No (Superior Court Business Litigation Session) <p><strong>LAWYERS:</strong> John P. Bueker, Brooke P. Cohen, Sandra H. Masselink and Daniel Ward, of Ropes & Gray, Boston (plaintiff) <p>Kelly Frey, Michael P. Molstad and Laurence A. Schoen, of Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, Boston (defense) <p> </div></div> <p>Concurrent with the signing of the lease, Generation Bio had submitted and the landlord had conceptually approved a preliminary floor plan known as a “test-fit plan.” The lease contemplated that, within 60 days, Generation Bio would submit construction plans and specifications for improvements, the approval of which the landlord was not to unreasonably withhold. <p>The lease also required that the landlord pay $26 million as its contribution to the tenant improvements, which then had to be used for work performed within 24 months after Generation Bio began paying rent. <p>Under the lease, Generation Bio was permitted to sublet some or all the premises if it obtained the landlord’s consent. <p>After it signed the lease, Generation Bio refined its manufacturing processes such that it no longer needed a large floor plan and decided to seek to assign the lease or sublet all or a portion of the premises. <p>By May 11, 2023, Generation Bio had presented for approval to Centerpoint its improvement plans, but Centerpoint rejected them because it disfavored the idea of having the property used by multiple tenants. <p>As the Aug. 31, 2024, deadline for completion of tenant improvements loomed, Centerpoint initially agreed in principle to extend the deadline for a fee but continued to insist that the improvements had to be for a single-tenant use or what it called “core and shell improvements.” <p>As of Nov. 28, 2023, Generation Bio believed Centerpoint to be in default of the lease, having rejected its plans for a reason other than the one specified in the lease. <p>In its response, Centerpoint denied being in default and explained that it was motivated by not wanting to undermine its efforts to lease other space in the building that had been designed for smaller, multi-tenant use. <p>On Dec. 28, 2023, Generation Bio, by letter, purported to terminate the lease, construing Centerpoint’s failure to approve its improvement plans as “an unlawful constructive eviction.” <p>Generation Bio stopped paying rent as of Jan. 31 and fully vacated the premises, which was still without heat, plumbing, bathrooms, outlets and outfitting for a biotech facility. <p>Centerpoint continued to demand rent and, in March, drew $1.46 million against Generation Bio’s letter of credit with Silicon Valley Bank, which Generation Bio believed to be improper. <p>Centerpoint filed suit on Feb. 14 in the BLS seeking a declaratory judgment that Generation Bio had no right to terminate the lease or withhold rent and that its purported termination was of no force or effect. <h2 style="font-size: 22px; text-align: center;"><strong>Counterclaims largely survive</strong></h2> <p>Generation Bio based its breach of contract counterclaim on Centerpoint’s failure to approve its tenant improvement plans as well as its drawdown of the letter for credit Generation Bio had given it. <p>With respect to the failure to approve its improvement plans, Generation Bio highlighted a lease provision that required Centerpoint to grant its approval without condition or delay unless the work would “materially adversely affect the exterior, structural elements or systems of the Building,” which was not the basis of Centerpoint’s rejection. <p>Those alleged facts plausibly suggest a breach of the lease, Squires-Lee concluded. <p>However, the landlord succeeded in getting dismissed the claim premised on its drawdown of the letter of credit. A lease provision specifically authorized Centerpoint to draw on the letter of credit if Generation Bio failed to pay rent, Squires-Lee concluded. <p>As for Generation Bio’s Chapter 93A claim, Squires-Lee noted that Centerpoint was correct that “mere breach of contract” does not rise to a violation of the consumer protection statute. But the counterclaim alleged more than that, she continued. <p>According to Generation Bio’s complaint, Centerpoint refused to approve the tenant improvement plans to force Generation Bio to relinquish another contractual right — the right to sublease all or part of the premises. Centerpoint breached the contract to help its efforts to rent other smaller areas of the building, Generation Bio also claimed. <p>Centerpoint then “strung it along” throughout 2023, declining to amend the lease and then breaching the lease by refusing to approve the tenant improvement plans, all to “run out the clock” on Generation Bio receiving the landlord’s contribution to bringing those improvement plans to fruition, Generation Bio alleged. <p>If proven, those facts could establish a Chapter 93A violation, Squires-Lee concluded. <div id="jp-widget" class="widget"> <div class="widget-top"> <h4>RELATED JUDICIAL PROFILES</h4> <div class="stripe-line"></div> </div> <div class="widget-container"> <ul> <li><a href="https://masslawyersweekly.com/judicial-profiles/?p=3831" rel="bookmark" class="homepagebulletlink" >Squires-Lee, Debra A.</a></li> </ul> </div> </div> <div id="relatedByLwnum" class="widget"> <div class="widget-top"> <h4>Lawyers Weekly No. 09-128-24</h4> <div class="stripe-line"></div> </div> <div class="widget-container"> <h5>Massachusetts Lawyers Weekly</h5> <ul> <li><a href="https://masslawyersweekly.com/?p=506598" rel="bookmark" class="homepagebulletlink" >Landlord and tenant – Termination</a></li> </ul> </div> </div> </div> <div class="mobile-specific-data"> <div class="share-links"> <p class="share">Share this!</p> <ul class="social-share-links"><li><a class="twitter" href="https://twitter.com/intent/tweet?text=Landlord’s alleged breach doesn’t justify end of rent payments&url=https%3A%2F%2Fmasslawyersweekly.com%2F2024%2F11%2F08%2Flandlords-alleged-breach-doesnt-justify-end-of-rent-payments%2F" target="_blank"><img src="https://masslawyersweekly.com/wp-content/themes/hello-elementor/images/twitter.svg" alt="twitter"></a></li><li><a class="facebook" href="https://www.facebook.com/sharer/sharer.php?u=https%3A%2F%2Fmasslawyersweekly.com%2F2024%2F11%2F08%2Flandlords-alleged-breach-doesnt-justify-end-of-rent-payments%2F" 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