ANALOGIC CORPORATION v. HOWARD RICH, trustee of RICH’S ENTERPRISE REALTY TRUST [Note 1]

Introduction

Plaintiff Analogic Corporation (“Analogic”), a former tenant at the 20 Computer Drive facility in Haverhill then-owned by defendant Rich’s Enterprise Realty Trust (the “Trust”), [Note 2] brought this action seeking a declaration that its lease expired on April 30, 2005, that it surrendered the facility to the Trust on or before that date in “a rentable condition and in accordance with the lease and the requests of the Trust,” and that it had no further financial or other obligations to the Trust. In addition, it sought the return of its $109,958.33 security deposit and the $14,152.19 May 2005 real estate tax payment it previously had advanced to the Trust, [Note 3] alleging that the Trust’s refusal to return those sums was a breach of contract, unlawful conversion, unjust enrichment, and in violation of G.L. c. 93A, § 11, entitling Analogic to multiple damages and attorneys’ fees. [Note 4]

The Trust denied these claims and counterclaimed for additional rent (the months of May and June, 2005), additional management fees (for the same two months), and compensation for damage to the facility (an issue related to the epoxy floor installed by Analogic and Analogic’s removal of its security system, discussed more fully below). [Note 5] Analogic’s denial of liability for such sums and consequent refusal to pay them was alleged to be in violation of G.L. c. 93A, § 11, for which multiple damages and attorneys’ fees were sought.

Since at least some of these claims were outside the jurisdiction of the Land Court (e.g. the alleged violations of G.L. c. 93A [Note 6]), I sought and received an interdepartmental assignment as a Justice of the Superior Court to hear and decide those claims. Order of Transfer and Assignment (Mulligan, CJAM). (Aug. 9, 2006). All aspects of the case were thus before me.

The lease, which began April 17, 2002, allowed for termination April 30, 2005 if notice and payment of $317,187.50 were received by the Trust no later than July 15, 2004. Analogic sent such notice and payment in timely fashion but mistakenly stated that its term would end May 31, 2005. [Note 7] Analogic thus moved for partial summary judgment that its termination letter, despite this mistake, was nonetheless valid to give notice that the lease term would end effective April 30, 2005. The Trust did not contest this when the motion was argued, clarifying that its claim to additional rent and fees was limited to the months of May and June 2005 and based solely on after-term “holdover,” either under the holdover provisions of the lease (Net Lease § 3, ¶ 3, (Apr. 17, 2002)) or the common law. Analogic’s motion was thus allowed. [Note 8] Its Mass. R. Civ. P. 11 request for attorneys’ fees related to that motion, however, was denied. [Note 9]

The remaining issues in the case were tried before me, jury-waived. Based upon the testimony and exhibits admitted into evidence at trial, my assessment of the credibility, weight and inferences to be drawn from that evidence, and as more fully set forth below, I find and rule as follows.

Facts

These are the facts as I find them after trial.

Analogic, a corporation based in Peabody, designs and builds imaging equipment for use in medical and security applications. In the aftermath of the September 11, 2001 terrorist attacks it received an order from the United States government for approximately 500 CT (computed tomography) machines to scan checked baggage at the nation’s airports — an order too large to fill from its existing production lines. Accordingly, in April 2002, it began seeking additional space to manufacture those machines.

The Trust was the then-owner of the facility at 20 Computer Drive in Haverhill — a 203,000 square-foot, single-story, open-floor warehouse and annex, previously used as a warehouse/distribution center by Rich’s Department Stores and, most recently, by Lucent Technologies. Lucent had moved out and the facility was immediately available. With system upgrades and other improvements, its space could be converted to a manufacturing facility suitable for Analogic’s needs. Analogic and the Trust thus began negotiations for its rental. In rapid succession, counsel were retained, lease drafts were prepared, those drafts were marked-up, discussed, and exchanged again, and the process culminated in a written Net Lease Agreement dated April 17, 2002 (the “Net Lease”).

The Net Lease was lengthy and detailed, but its relevant provisions can be summarized briefly as follows.

* The term was for three years (April 17, 2002-April 30, 2005), automatically extended for a fourth year unless a notice of termination, accompanied by a payment of $317,187.50, was delivered by July 15, 2004. There were also options for further extensions.

• The base rent began at $1,218,000 per year, escalating after the second year, [Note 10] to which tax assessments were added. [Note 11] Analogic was responsible for all maintenance and utility charges incurred for the period of its occupancy. [Note 12]
• A $109,958.33 deposit was made by Analogic and held by the Trust as security for Analogic’s “full, faithful and punctual performance, fulfillment and observance” of its obligations under the lease. [Note 13] The deposit was to be returned promptly at the conclusion of the lease, less any sums necessary to compensate the Trust for Analogic’s breaches of the lease, if any. [Note 14]
• The facility was leased “as is” and the rent was set on that basis. [Note 15] Analogic had the option to make upgrades and improvements to the building, but it had no obligation to do so, the rent was not discounted in consideration of any that were made, and the Trust had the right to insist that all of them be removed at the end of the lease. [Note 16]
• The facility would be used, and could only be used, for “light manufacture and distribution of electronic devices, including explosive detection systems (‘EDS’), and ancillary office and repair uses.” [Note 17]
• If Analogic “held over” after its lease expired, it became a month to month tenant at sufferance subject to all of the terms in the lease, except that its monthly rent would be one and one-half (1 ½) times the previous month’s rate and it would owe that rent for each month or part month of the holdover period. [Note 18]
• At the end of Analogic’s occupancy, the Trust had the option of either retaining Analogic’s upgrades and improvements to the facility or requiring Analogic to return the facility to its condition at the beginning of the lease, “reasonable wear and tear” excepted. [Note 19] With the exception of “Building Systems” (a term defined in the lease as “the electrical, mechanical, sprinkler, plumbing and heating, ventilating and air conditioning systems contained in or on the Premises,” Net Lease § 8), Analogic had the unrestricted right to remove its “trade fixtures” and “personal property” when it left. I find that these “trade fixtures” and “personal property” included the card-reader security system Analogic installed at the facility, as discussed more fully below. [Note 20] As previously noted, at the time the lease was over, the Trust was obligated promptly to return the Security Deposit to Analogic less only such sums, if any, necessary to compensate it for any breaches of the lease. [Note 21]

After the lease was signed, the Trust contacted Analogic and requested an additional provision — one it claimed it had inadvertently neglected to raise during negotiations and omitted from the lease drafts exchanged by the parties. This was a $25,000 per year “management fee.” [Note 22] Analogic agreed to this and, over the three years it occupied the facility, paid $75,000 over and above its rental obligations in the lease itself.

From April 17-June 30, 2002, to prepare the building for the manufacture of CT machines, Analogic made a series of upgrades and improvements. These included the installation of parabolic lighting, 4000 amp electrical wiring, dropped ceilings, 400 tons and 30 commercial units of HVAC (heating, ventilating and air conditioning) to supplement the existing system, a telephone and data system, overhead crane beams, improved employee bathrooms, fire sprinklers and alarms, partition walls and office renovations. Analogic also installed a card-reader security system to identify people who went through doors, custom-configured for its security needs. [Note 23]

For cleanliness and maintenance purposes, Analogic also needed a better floor. The existing floor was bare concrete with bolt holes, scars, imperfections and blemishes, and its clear polyurethane coating was loose and peeling. However fine for a warehouse, it was not suitable for the manufacture of sensitive CT machines. [Note 24] Analogic thus contracted for the installation of an epoxy floor. This encountered problems. The Trust had not disclosed the high degree of moisture in the concrete floor and such moisture, depending upon its degree, could affect the epoxy surface. Analogic thus installed a moisture barrier over the concrete. Even with this barrier, however, minor bubbling and occasional cracks occurred in limited areas from time to time, which Analogic addressed by cutting out the affected flooring and re-coating with new epoxy. The areas repaired were visually obvious, but only that. They performed functionally the same as the other areas of the floor. The Trust observed all this on an on-going basis and raised no objections. In particular, it was aware of the issues with the epoxy floor and the need for occasional repair.

All told, the upgrades and improvements cost Analogic nearly $8,000,000, and the Trust was pleased with the vastly improved appearance and functionality of the facility. What formerly had been a drab, poorly lighted and poorly heated warehouse had now, at no expense to the Trust, been transformed into Class-A manufacturing space.

At the time it leased the facility, Analogic was hopeful it would receive additional orders for baggage-scanning machines. As it turned out, however, there were no further orders and, as early as May 2004, the Trust was aware that Analogic would be leaving at the end of the third year. The Trust thus hired a marketing representative who began work immediately to find a new tenant. By letter dated July 9, 2004, the Trust informed Analogic that it wanted to keep all the upgrades and improvements Analogic had made. Indeed, Analogic’s renovations, described as having created a “dramatic manufacturing area”, were a major selling point in the Trust’s marketing materials. [Note 25]

On July 12, 2004, Analogic sent the Trust its formal notice opting out of the fourth year of the lease, including the termination payment of $317,187.50. Although the letter mistakenly stated that the lease would terminate May 31, 2005, the error did not operate to extend the lease term beyond the end of the 36th month (April 30, 2005). Memorandum and Order on Plaintiff Analogic Corporation’s Motion for Partial Summary Judgment (Oct. 23, 2007).

The Trust concedes that Analogic’s July 12, 2004 letter was proper notice of the termination of the lease term as of April 30, 2005 despite the mistaken May 31, 2005 date in the body of the letter. Id. It contends, however, that the May 31 date legally obligated Analogic to “holdover” rent for that extra month, and that it interpreted and relied on it as such. I do not find this credible, for at least two reasons.

First, the letter states that it is the “termination election notice…pursuant to which the Term of the lease shall end…” (emphasis added, capital “T” in original). “Term” (capital “T”) is defined in the Net Lease as “the period commencing on the Commencement Date…and ending on the last day in the 36th full month in which the Commencement Date occurs [i.e. April 30, 2005] subject to automatic one (1) year extension unless timely termination notice and payment is given…” Net Lease, § 1(d) (emphasis added). The word “holdover” does not appear anywhere in Analogic’s July 12 letter. Rather, as any fair reading makes plain, the letter is solely and exclusively Analogic’s notice that it is opting out of the one-year automatic extension of the lease Term. Its mistaken use of the May 31 date did not change the intent or the legal effect of the notice. It was sent and intended to give notice of the opt-out and thus the end of the lease “on the last day in the 36th full month” and, for the reasons set forth below, its legal effect was to do that and nothing more.

Second (and the reason why the July 2004 letter had no legal effect beyond giving notice of the opt-out and consequent end of the lease Term on April 30, 2005), “holdover” is a two-way street. As the lease provides, having given notice that it was opting out of the automatic one-year extension, Analogic could only remain at the facility beyond the end of its Term (April 30, 2005) with the Trust’s sufferance. Net Lease, § 3 (emphasis added). [Note 26] Analogic could not unilaterally decide it could stay another month, certainly not without risk, and thus would never assume that the simple sending of that letter entitled it to stay. Based on the evidence at trial, I find that the Trust and its lawyers knew this and thus knew that a response (yes or no) was both expected and necessary if a holdover truly was at issue. Analogic and the Trust were both sophisticated commercial parties, represented by sophisticated counsel, with a major manufacturing operation and over $100,000 in monthly rent and other charges at stake Had the Trust truly considered the July 2004 letter to be a request for a one-month holdover, it would immediately have communicated that understanding to Analogic and then memorialized the agreement in writing. It did neither. For those same reasons, I find the Trust’s alternate contention — that the letter was a lease amendment — equally not believable. Again, any amendment would have required mutual assent and been negotiated and put in a detailed, signed writing. [Note 27]

To the extent the Trust has any tort-based claims based on the mistaken May 31 date in Analogic’s July 2004 letter, these fail as well. For the reasons set forth above, the Trust could not (and, I find, did not) reasonably rely on that letter as promising a one-month holdover or extension of the lease. Moreover, the Trust did not suffer any consequent damage. It did not have a tenant, or even any prospect of a tenant, ready, willing and able to take occupancy on May 1, 2005. The rental market was soft and, despite the Trust’s best efforts, it did not have a tenant for any space in the facility until Middleton Aerospace signed a lease for half of it on March 30, 2006. In short, I find the Trust’s contentions on these points to be “after the fact” pretexts, made by the Trust in an effort to justify its retention of the security deposit.

The events surrounding Analogic’s advance of a tax payment for May, 2005 do not change this. On March 17, 2005, the Trust sent Analogic a demand for payment of the facility’s tax bill for the quarter April-June, 2005, a total of $42,246.62 ($14,152.19 per month). [Note 28] In response, on March 22, 2005, Analogic sent payment of $28,304.40 — $14,152.19 for the month of April and the same amount for May. This was done under its Chief Financial Officer’s then still-mistaken belief that the formal lease term ended May 31 rather than April 30. [Note 29] This letter and check, however, had no legal significance to hold over or extend the lease term (see the discussion above). In any event, the mistake was caught almost immediately and brought to the Trust’s attention on April 7, 2005 [Note 30] and again on April 28, [Note 31] both before the April 30 end of Term. The Trust was not mislead, and certainly not to its detriment. [Note 32] A formal end-of-lease “walk through” of the facility occurred on April 28 attended by three representatives of the Trust and four from Analogic, and Analogic confirmed by letter the next day (April 29) that it would be vacating the facility “on or before 30 April 2005.” [Note 33] (bold in original). By still another letter that same day (April 29), Analogic again stated that it “will have vacated the Premises” by April 30 and requested (1) return of its $109,958.33 security deposit, and (2) return of the $14,152.12 May 2005 tax payment it had advanced. [Note 34]

The return of the security deposit had been under discussion since early April. The lawyer conducting negotiations on behalf of the Trust (JoAnn Marzullo) told Analogic that John Hancock, the Trust’s mortgage lender, was holding the security deposit, had interpreted Analogic’s July 14, 2004 letter as a lease extension through May 31, and would not return the deposit unless a full May rental payment was made. This was false. John Hancock never held the security deposit provided by Analogic to the Trust. Stipulations of Fact (Nov. 24, 2008). Moreover, no employee or agent of John Hancock ever told or otherwise indicated to Ms. Marzullo an unwillingness or a hesitancy to return Analogic’s security deposit, or portions thereof, without being paid additional rent. Id.

During an early April walk-through, [Note 35] the parties discussed an approximately 20 foot by 20 foot area of the epoxy floor that was flaking. This was primarily a visual issue. It had not interfered with or affected Analogic’s manufacturing operations in any way. Nonetheless, Analogic offered to cut away the epoxy in a square, remove it, and repaint the exposed concrete floor the same color as the surrounding epoxy. The Trust’s representative, Allan Roscoe, agreed that Analogic could do this if it wanted, and the repair was subsequently done. The repaired floor remained completely functional for clean manufacturing and other purposes and, as Mr. Roscoe conceded, was not only “acceptable” but “looked fine.” [Note 36] This acceptance included not only the repaired area, but also the other portions of the floor that had bubbling or flaking. [Note 37]

During the April 28 walk-through, Analogic gave the Trust a key to the facility. [Note 38] The Trust later claimed that this was only a partial key (one that gave access to only part of the facility, not all) but I do not find this credible. The key was a “master key” used by a senior Analogic director; it came with the statement that “this key opens everything”; it opened every door in the facility except for the offices used by the plant managers; [Note 39] and the Trust representative to whom it was given (Mr. Roscoe), who at first claimed it would not open the main inside door, admitted when questioned further that he had never tried the key on that door. I thus find that, by April 28 at the latest, Analogic gave the Trust full access to the facility to use in any way and any time it pleased. I further find that the Trust freely came and went to the facility at any time it chose from and after April 28.

By April 28, Analogic had ceased all operations and removed all of its equipment from the facility. This included its card-reader security system, which it was entitled to remove under the terms of the lease. [Note 40] Only a few supplies remained, consisting of some paints, a gas cylinder and some paper goods. These were in a small corner of the annex (not the main building), occupied no more than twenty to forty square feet, [Note 41] and could easily have been removed at any time. Mr. Roscoe, for the Trust, indicated that they could remain past the April 30 date and did not change his mind until May 5 when he asked Analogic to remove them. Analogic did so that same day.

There were also minor “punch-list”-type items to address in connection with the turn-over, which I find to be typical and expected in such situations. Analogic had taken its portable fire extinguishers when it left the facility. The Trust claimed that others had been there at the time the lease began and wanted a full complement restored. It was unclear whether the extinguishers left by the Trust were actually functional, but Analogic did not argue and immediately put replacements in the facility. There were small holes in a wall, missed during the April 28 walk-through, which were brought to Analogic’s attention and promptly repaired. Internal lock cores were removed and replaced. A few ceiling tiles were replaced. The electrical system was tested and confirmed to be in good working order. Telephone and fire/intruder alarm lines were switched over.

The Trust requested an inspection of the HVAC system, which was done. The inspection confirmed that the system was fully operational, but identified a number of minor, maintenance-type issues. See Trial Ex. 57. I find that the problems identified were the result of normal wear and tear. Regardless, Analogic agreed to have them addressed and paid a contractor approximately $3,900 to do so. This maintenance work took no more than two days total, occurred primarily on the roof, was fully completed by May 31, and did not interfere in any way with the use of the facility.

With the exception of those performing the minor repairs requested, all Analogic employees and security guards were gone by April 30. Trust employees were trained on the environmental system computer controls. With the exception of the last of the work on the HVAC system (completed by May 31), most of this was done by April 30 and the rest within days thereafter. None of these activities interfered with the transfer of the building or its availability for occupancy by a new tenant. There was, in fact, no new tenant. The Trust initially complained about Analogic’s removal of the card-reader security system, but had no right to do so and never had it replaced.

Over the course of the year after Analogic left the building, the Trust made various repairs to the epoxy floor. These were in small, limited areas where the floor was bubbling or experiencing minor cracks. None made the facility unrentable or affected its use as a warehouse, distribution center or manufacturing facility. All were within the range of normal “wear and tear” to be expected from this type of floor in this type of facility.

Analogic sent letters to the Trust on April 29 and June 16, 2005 requesting the return of its security deposit and May tax advance. No response was received until June 30, 2005 when the Trust’s law firm wrote to Analogic. In that letter, the Trust not only refused to return the security deposit and taxes but insisted on payment of an additional $139,881.37 as rent for the months of May and June, management fees for May and June, June taxes, and $20,000 for a new computerized security system. Three reasons were given in support of this demand. The first, now withdrawn, was that the mistaken date in Analogic’s July 12, 2004 letter had extended the lease term to May 31, 2005. The second was that Analogic, by storing materials on-site and continuing repair activities, did not “surrender” the premises until June 2, 2005 “at the earliest” and thus was liable for rent and associated tax and management charges through the end of that month (the “holdover” theory). The third was an assertion that, by removing the card-reader security system, Analogic had not surrendered the facility “in rentable condition.” No mention was made of any problems with the flooring or other aspects of the building. Analogic denied these claims, and this lawsuit followed.

Additional facts are set forth in the analysis section below.

Analysis

As noted above, the lease requires the return of Analogic’s security deposit at the end of the lease term except for such sums, if any, necessary to compensate the Trust for any breaches of the lease. Net Lease, § 32. These breaches are asserted to be (1) the removal of the card-reader security system, (2) the failure to pay “holdover” rent and pro-rated management fees for the months of May and June, 2005, (3) the failure to pay taxes for the month of June and, in an issue now raised in this lawsuit although never mentioned in the Trust’s June 30, 2005 demand letter, (4) an allegedly inadequate repair of the epoxy floor (the cut-out and paint-over of the 20’ x 20’ area rather than its re-epoxy and, presumably, the failure to address whatever bubbles, flaking and cracks might exist in that floor elsewhere, to whatever degree.).

The return of Analogic’s tax payment for May, and its liability for a tax payment for June, depend upon whether it was a holdover tenant those months. Analogic’s liability for May and June rent, plus associated management fees, likewise depends upon whether it was a holdover tenant. The issues of the card-reader security system and the epoxy floor are determined by the lease and the parties’ statements and conduct. The question of G.L. c. 93A liability ties directly into these issues. I thus address each in turn.

The Card-Reader Security System

I begin with Analogic’s removal of its card-reader security system at the time it left the facility. As the lease makes plain, Analogic had no obligation to leave it behind and no obligation to replace it. The Trust thus had no right to withhold any part of Analogic’s security deposit for this reason.

Under the terms of the lease, Analogic had the full, unrestricted right to remove its “trade fixtures” and “personal property” from the facility, with the sole exception of “Building Systems” as the lease defined that term. Net Lease, § 11. The security system was clearly Analogic’s “trade fixture” and “personal property.” Analogic installed it at its own expense. The Trust made no contribution towards its cost, nor adjust the rent in any way based on whether the system was there or not. The security system was chosen to meet Analogic’s needs, particularly the requirement for high security associated with the manufacture of airport security scanners in the wake of the September 11 terrorist attacks. It mirrored the ones used at Analogic’s other facilities, and its “keys” operated the same way. It was programmed to recognize and admit only those persons Analogic authorized, and was placed on both outer and inner doors.

Moreover, it was specifically excluded from the “Building Systems” that were required to be left behind. The Trust’s initial lease draft defined “Building Systems” as including “the HVAC, mechanical, electrical, security, sprinkler and plumbing systems contained in and on the Premises.” Trial Ex. 109, § 8 (emphasis added). The word “security” was stricken from that draft by Analogic (Tr. Ex. 109) and never appeared again. The definition in the final lease was thus “electrical, mechanical, sprinkler, plumbing and heating, ventilating and air conditioning systems.” Net Lease, § 8.

With this right of removal, Analogic’s only obligation was to “restore the Premises to the condition as of the Commencement Date, reasonable wear and tear and damage by fire or other casualty excepted.” Net Lease, § 8. This was done with the replacement of the lock cores. Tellingly, the Trust never replaced the card-reader with a similar system. Analogic thus has no liability to the Trust related to the card-reader security system, and the Trust had no right to withhold any part of the security deposit because of its removal.

The Epoxy Floor

The issue of the epoxy floor is also easily addressed. The Trust was fully aware of the floor at the time it was installed and raised no objections. Indeed, the epoxy floor significantly improved the appearance and functionality of the space, making it cleaner and brighter. The problems it experienced — minor bubbling and flaking — could not be avoided in this facility with its high moisture content in the underlying concrete and the advantages of the epoxy far outweighed these minor issues. The Trust was fully aware of the epoxy-related issues from the visits of its representatives throughout the term of the lease.

Both the condition of the floor and the repairs made by Analogic were found acceptable (indeed, “fine”) by the Trust’s representatives at the time of the end-of-lease walk-throughs. They did not make the facility unrentable nor affect its functionality. Even the visual effect was minor — small areas in a facility of over 200,000 square feet. There was no evidence, and certainly none persuasive, that the condition of the floor “discouraged” any prospective tenant or measurably affected either its rent or sale price. The minor amount of bubbling and cracking that occurred was well within the “ordinary wear and tear” contemplated by the lease terms. Net Lease, § 27.

The Alleged “Holdover” and Associated Claims

As noted above, Analogic’s July 12, 2004 letter and March 22, 2005 letter and May tax payment could not and did not constitute a “holdover” or extend the lease term beyond April 30, 2005. Nor could the Trust justifiably have relied on their doing so. The Trust was on clear notice, well in advance of April 30, 2005, that Analogic would be leaving the facility no later than April 30.

The question thus becomes whether any of Analogic’s post-April 30 activities, singly or cumulatively, constitute a “hold over” after that date. I find that they do not.

All of Analogic’s manufacturing equipment, all of its office equipment, all of its vehicles, all of its personnel, and all of its trade fixtures were gone by April 30. The almost $8,000,000 in improvements left behind (new wiring, new lighting, new dropped ceiling, new HVAC, new floor, overhead crane beams, etc.) were left behind at the Trust’s request. Full-access keys were provided to the Trust. Lock cores were arranged for change. What telephone service remained was left (at the Trust’s request) to enable a smooth transition to the Trust’s telephones and intruder/fire alarms. The facility was broom-clean, and all personal property removed except for a small 20 to 40 square foot area in the annex where a few remaining supplies had been stacked. These were intended to be there a short time only, and remained beyond April 30 with the Trust’s (Allan Roscoe’s) approval. When Mr. Roscoe changed his mind on May 5 and asked that they be taken away, they were removed in their entirety that same day. All of the repairs that were requested by the Trust prior to April 30 were completed by April 30 — a few damaged ceiling tiles, an overhead door apparently brushed by a forklift, scattered holes in the walls, and the cut-out, smoothing and repainting of the 20 by 20 foot section of the epoxy floor. At the Trust’s request, Analogic left behind the PC that controlled the HVAC system and trained the Trust in its use. The end-of-lease term walk-through had taken place, and the Trust had given the facility its blessing. Trial Exs. 51, 53.

Thereafter, the Trust noticed two additional small holes in a wall and another damaged ceiling tile, which promptly were repaired. An electrical inspection was performed, and the system was found to be in safe and excellent working condition. A full complement of fire extinguishers was placed in the facility by May 5, with no argument from Analogic as to whether it was required to do so or not.

A tenant must be deemed “in possession” of the premises to incur “hold over” liability. See n. 18, supra. Where, as here, “hold over” is alleged to have occurred as a result of items left on the premises after the end of term, the question is one of fact, “to be determined by taking into consideration the nature of the property leased, the amount paid as rent, the value of the real property, the value of the personal property left on the leased premises, the intent with which it was left, and all the other facts and circumstances surrounding the transaction.” Canfield v. Elmer E. Harris & Co., 222 A.D. 326, 225 N.Y.S. 709, 712-713 (NY Sup. Ct., Appellate Div., 4th Dept.,1927) and cases cited therein. See also Myers v. Beakes Dairy Co, 132 A.D. 710, 117 N.Y.S. 569, 572 (NY Sup. Ct., Appellate Div., 1st Dept, 1909) (possession of tenant “must be an actual possession of the property as against the landlord, so that the tenant would by virtue of his possession become a trespasser”); Beck v. Troiano, 138 A.2d 492, 493 (D.C. Mun. Ct. of Appeals, 1958) (“A holding over does not result from the leaving of property which is practically worthless or which is left merely for the convenience of the incoming tenant, nor does it result from the leaving of a small amount of the property on the premises without any intention of retaining or enjoying possession of the premises.”); Vosburgh v. Corn, 23 A.D. 147, 48 N.Y.S. 598, 599-600 (NY Sup. Ct., Appellate Div., 2nd Dept., 1897) (collecting cases; no holdover occurs when keys have been turned over, removal of property has been practically accomplished, and only small items, soon removed, remain). By this test, no holdover occurred. As the facts show, Analogic had no intention to remain and clearly yielded possession by April 30. [Note 42]

The Trust’s second argument for “hold over” is somewhat different. Reduced to its essentials, it is a contention that the HVAC system needed repair, that without such repairs the facility had not been yielded up in rentable condition, and thus that Analogic remained liable for rent as a “hold over” tenant until the HVAC repairs were completed. [Note 43] I find otherwise.

First, I am not convinced that Analogic had an obligation to “repair” the HVAC units or, more precisely put, that they needed repair. Analogic had not warranted their perfect condition and, so far as the record shows, they were working sufficiently well on April 30 for manufacturing and other activities at the facility. Analogic certainly used them, in their then-current condition, up until the time it left. The “repair” work at issue was in the nature of maintenance. [Note 44] Moreover, whether obligated to or not, Analogic had the units inspected, worked on, and brought to full performance at its sole expense. The Trust has no cause to complain on that score and, because Analogic paid for it, no basis to retain any portion of the security deposit to pay for that work or any asserted need for that work.

Second, for holdover to occur when damage or repair is at issue, the key question is whether the tenant has left the premises “with substantial damage or in an unusable condition.” Consumers Distributing Co., Ltd. v. Hermann, 107 Nev. 387, 812 P.2d 1274, 1277 (Nev., 1991); Friedman, supra at 18-50. Such is not the case here. Analogic’s obligation, at most, was to return the facility in “good, clean, tenantable condition, repair and order”, “reasonable wear and tear” excepted. Net Lease, § 27. The HVAC system was in working condition [Note 45] and its issues, all minor, were the result of “reasonable wear and tear.” In short, Analogic went above and beyond its obligations in the lease, and the Trust had no basis whatsoever to view the HVAC “repair” as a holdover for which Analogic was liable for rent.

Breach of Contract and the Implied Covenant of Good Faith and Fair Dealing

For the above reasons, the Trust was in clear breach of its contract with Analogic (the Net Lease) and the implied covenant of good faith and fair dealing in that contract, [Note 46] from and after May 1, 2005, when it refused, after demand, to return Analogic’s security deposit and May 2005 tax advance in full. It was obligated to do so as of May 1, and did not. Analogic fully complied with its lease obligations and has no liability to the Trust.

G.L. c. 93A, § 11

It goes without saying that Analogic has no liability to the Trust under Chapter 93A, § 11 or otherwise. It honored its obligations in full, and went above and beyond those obligations.

The question remains, however, whether the Trust has G.L. c. 93A, § 11 liability to Analogic. I thus turn to that next.

G.L. c. 93A, § 11, the so-called business-to-business provision of c. 93A, has six elements, four related to liability and the remaining two to the proper measure of damages.

To establish §11 liability, the plaintiff must show that the defendant engaged in the conduct of trade or commerce, that it employed an “unfair method of competition” or engaged in an “unfair or deceptive act or practice”, that that conduct “occurred primarily and substantially within the commonwealth,” and that the plaintiff “suffer[ed] [a] loss of money or property” as a result of that conduct. G.L. c. 93A, § 11. The remaining two questions are reached only if §11 liability is found. Was the conduct at issue a “willful or knowing violation”? And, if so, are double or treble damages the appropriate recovery? Id.

The Trust clearly engaged in “trade or commerce” in connection with this transaction. It is a commercial entity, and leased a commercial building to a commercial tenant. Its actions occurred exclusively in the commonwealth. The conduct at issue relates to the Trust’s refusal to return Analogic’s security deposit and May tax payment. The refusal to return that deposit and payment — a total of $124,110.52 — caused Analogic to lose that money. Thus, of the “liability” issues, only the question of whether that refusal was an unfair or deceptive act or practice within the statutory meaning is in real dispute. I thus discuss it first.

“[U]nfairness is determined from an examination of all the pertinent circumstances. Ordinarily a good faith dispute as to whether money is owed, or performance of some kind is due, is not the stuff of which a c. 93A claim is made. Mere nonpayment of a debt normally does not justify finding c. 93A liability. However, other additional conduct may lend support to finding a c. 93A violation.” Northern Security Ins. Co. v. R.H. Realty Trust, 78 Mass. App. Ct. 691 , 696 (2011) (internal citations and quotations omitted). The inquiry focuses “on the nature of challenged conduct and on the purpose and effect of that conduct as the crucial factors in making a G.L. c. 93A fairness determination.” Massachusetts Employers Ins. Exchange v. Propac-Mass, Inc., 420 Mass. 39 , 42-43 (1995). That determination is primarily a factual one. [Note 47] “It is not the definition of an unfair act which controls but the context — the circumstances to which that single definition is applied.” Kattar v. Demoulas, 433 Mass. 1 , 14 (2000). On the facts of this case, I find that G.L. c. 93A, § 11 was violated by the Trust. “Conduct in disregard of known contractual arrangements and intended to secure benefits for the breaching party constitutes an unfair act or practice for c. 93A purposes.” Anthony’s Pier Four, Inc. v. HBC Associates, 411 Mass. 451 , 474 (1991). That is what happened here. Analogic was terminating its tenancy earlier than the Trust had hoped. The Trust had mortgage obligations on the building, and months of marketing efforts had failed to find a new tenant. Worse, there was not even the prospect of a new tenant or a sale of the building in the near future. The Trust had been successful in getting “extra” money from Analogic in the past — the $25,000 per year “management fee” it “neglected” to put in the lease and had demanded only after Analogic was committed to the facility by the deadlines in its contract with the government. The Trust now pressed again, successfully obtaining new fire extinguishers and Analogic’s payment for maintenance repairs to the HVAC system. Its attorneys falsely stated that its mortgagee, John Hancock Insurance, considered Analogic’s July 12, 2004 letter to be an “extension” of the lease, for the purpose of leveraging an additional month’s rent. When that failed, the Trust reached for other excuses to withhold return of the security deposit and May tax payment. Its claims regarding the card-reader security system had no basis in the lease. Its “holdover” contentions (a claim for two months rent for the full 200,000 square foot facility when (1) less than 40 square feet was used to store stray items, with its permission, for less than a week, and (2) for the time it took to finish HVAC maintenance that was (a) not required by the lease, (b) did not interfere with the use of the facility, and (c) was for its benefit) do not survive scrutiny. Its complaints about the epoxy floor were “after the fact” and, again, had no basis.

For these same reasons, I find that the Trust’s actions were “willful and knowing” within the statutory meaning. These were not “good faith disputes” on what was owing. They were known, intentional over-reaches — at the very least, reckless — and provided no basis for the withholding of the security deposit and taxes, forcing Analogic to file and pursue this lawsuit. Multiple damages are thus appropriate. See Kattar, 433 Mass. at 16. Focusing on the “degree of the defendant’s culpability”, id., I find that double damages are the appropriate measure of recovery.

Conclusion

For the foregoing reasons, it is ORDERED, ADJUDGED and DECREED that plaintiff Analogic Corporation recover its actual damages of $124,110.52 from defendant Rich’s Enterprise Realty Trust for breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of G.L. c. 93A, § 11, [Note 48] that those damages be doubled pursuant to G.L. c. 93A, § 11, that interest to those sums be added in accordance with applicable law, and that Analogic recover its reasonable attorney’s fees in accordance with G.L. c. 93A, § 11. The Trust’s counterclaims are dismissed in their entirety, with prejudice.

Analogic is directed to file a properly supported application for its attorneys fees within thirty days, and the Trust shall file its response to that application within fifteen days thereafter. After the attorneys’ fee amount is resolved, Final Judgment shall promptly enter.

SO ORDERED.