MISC 137347

January 13, 1992

Essex, ss.



By decision dated March 14, 1991 this Court declared the rights of the plaintiffs, as lessees, and the defendants, as lessors, in and to a lease dated November 7, 1985 demising certain premises in Danvers in the County of Essex known as 156 Andover Street (Route 114). The trial was bifurcated and the issue of damages was tried separately. A hearing was held on September 5, 1991 on this facet of the litigation at which a stenographer was appointed to record and transcribe the testimony. All exhibits introduced into evidence are incorporated herein for the purpose of any appeal. The only witness was the plaintiff Charles E. Whitney.

The decision set forth at least two breaches by the lessors. The first concerned the covenants in the lease to Papa Gino's of America, Inc. (Exhibit No. 106A) imposing restrictions on the use of the lessors' remaining land to which the plaintiffs are subject but which are not set forth in the lease to them. The plaintiffs did not argue this phase of the case, and I assume that it has been waived. In any event any damage award would be of nominal damages only since no expert testified as to the value of a lease demising land to be used for any purpose and that where limitations on permitted uses exist.

The plaintiffs' principal contention is that the defendants have breached their implied covenant of cooperation and thus of quiet enjoyment. Accordingly it is contended that the plaintiffs are erititled to an award of damages for the breach. [Note 1] The plaintiffs contend that the defendants' breach prevented the plaintiffs from subletting the remainder of the building. They further argue that they are entitled to damages based on the fair rental value of the unused portion of the leased premises as evidenced by a) the existing subleases on the first floor and b) the market rate so far as the second floor is concerned.

On all the evidence I find and rule as follows:

1. The monthly rent reserved in a sublease from the plaintiffs to Laura's for a total of 1,066 square feet on the first floor of the building on the leased premises now is $2,104 (increased from $2,043) or $22 per square foot per year and in a sublease from the plaintiffs to Jenny Craig for a total of 2,000 square feet in said first floor is $3,433 (increased from $3,333) or $20 per square foot.

2. The plaintiffs have been unable to obtain certificates of occupancy as set forth below so the second floor has not as yet been sublet. Attorneys have offered to rent, by a letter dated September 24, 1991, 6,274 square feet of space at $11 per square foot on the second floor and with certain additional options. The offer is without the time frame of the period during which damages are recoverable. However, the letter is close enough in time to be some evidence of the fair rental value of the space.

3. The plaintiffs received many telephone calls inquiring about the availability of space in the building, but no transactions were consummated in the light of the refusal of the building inspector to issue certificates of occupancy without an approved site plan. In my opinion no site plan approval was required since the Shell parking lot in which all the tenants have rights was grandfathered. Basically this dispute arises from the municipal authorities' requirement that the plaintiffs make changes without their control and unacceptable to Shell, the intransigence of Shell and the defendants' inability to persuade Shell to act in a manner that would enable the defendants to meet their lease obligations to the plaintiffs. In effect, the root of the difficulty is the inconsistency of the leases. The situation has been hampered by the plaintiffs' efforts to cure the problem, but the major fault is the defendants'.

Rationality is hard to find among any player in this game, and willingness of the defendants, Shell, the Town of Danvers and their employees and attorneys to have the building sit largely empty for no substantive reason is a sad commentary on the state of local government in Massachusetts, particularly in view of the depression in which the economy is wallowing. The lessors' breach accordingly was not the sole cause of the plaintiffs' inability to use the building, but it was the major one.

4. There remains 3,800 feet of space on the first floor of the building which if leased for a period of ten months at a fair rental value of $20 per square foot would have generated approximately $63,333 in revenues. There similarly is 9,000 square feet of space on the second floor, the fair rental value of which the sublessors place at $10 to $14 per square foot depending on improvements. There has been a recent offer by a law firm to rent 6,275 square feet on the second floor at $11 per square foot per year without the relevant time frame, but this figure properly may be used as evidence of the rental value at an earlier more prosperous time. It also encompasses a gross figure so use of the rental somewhat lower than that testified to by one of the plaintiffs recognizes the duties imposed on the sublessors by the offer. Fair rental value then for ten months is $82,500.

5. In addition to the responsibility shared by others for the plaintiffs' unenviable predicament the economy must be factored into the damage calculation, and I reduce the estimated damages by thirty percent ($43,749.90) (30%) to reflect possible difficulties in signing tenants because of the current recession/depression. However, the prime cause for the award of damages is the intransigence as to the certificates of occupancy.

6. Accordingly I calculate the total of lost rents as $145,833. The lessors are responsible for only sixty percent of the damages suffered from the sublessors' inability to obtain certificates of occupancy or $61,249.80.

When a lessee seeks recovery from a lessor for breach of a covenant in a lease, the usual measure of damages is the difference between the value of the leasehold with the covenant performed and the value with that covenant broken. On the facts here that translates to the difference between the fair market value and zero. Parker v. Levin, 285 Mass. 125 (1934). Under certain circumstances the lessee may recover in the alternative the expenses he has incurred to remedy the lessor's breach. A.W. Banister Co. v. P.J.W. Moodie Lumber Corporation, 286 Mass. 424 (1934). Both rules are set forth in Charles E. Burt, Inc. v. Seven Grand Corp., 340 Mass. 124 , 130 (1959).

The appellate courts recognize that computation of damages can not be fixed with mathematical precision and leave much to the judgment of the trial judge. Exercising my discretion I therefore find and rule that the damages suffered by the plaintiffs are $61,249.80 plus interest to be recovered from the defendants who, of course, have collected rent from the plaintiffs during this entire period.

Judgment accordingly.


[Note 1] The plaintiffs also alleged a partial constructive eviction, but the Court excluded consideration of this ground for relief.