Tuesday, April 30, 2013

A REMINDER THAT A TENANT CAN HOLD LEASED PREMISES IN ACCORDANCE WITH THE TERMS OF AN EXPIRED LEASE.


There is an interesting lease discussion in a recent case alleged breach of a lease to operate a restaurant at the Charlotte Inn on Martha's Vineyard. See Edgartown Art Gallery, Inc. v. Il Tesoro, Inc., CIV.A. 12-11549-JLT, 2013 WL 628655 (D. Mass. Feb. 19, 2013). The defendant operated a restaurant under a one year written lease (with an option to renew for four more years) with the Edgartown Art Gallery (“EAG”). I somehow missed eating at “Il Tosoro at the Terrace” during the few years it was in existence.

After the first year the tenant did not renew but continued to operate the restaurant under the terms described in the lease, and in 2012 the landlord terminated the tenancy. The plaintiff/landlord brought an action that included claims of 1) breach of contract; 2) breach of the implied covenant of good faith and fair dealing; 3) breach of personal guaranty; 4) interference with advantageous business relationships; and 5) violation of Mass. Gen. Laws ch. 93A.

The defendant argued that “…the Statute of Frauds bars any subsequent oral agreement between the parties because the original lease involved real property and contemplated a four-year renewal period. Thus, Defendants argue, EAG's claims predicated on the existence of the lease—breach of contract, implied covenant of good faith and fair dealing, and personal guaranty—must fail.”

However, Judge Tauro found that “EAG has sufficiently alleged that upon expiration of the lease, Il Tesoro became a tenant at will subject to the same terms as the original lease. A holdover tenant becomes a tenant at sufferance, ‘[b]ut a tenancy at sufferance is readily changed into a tenancy at will by express or implied agreement of the parties. Whether there has been such agreement is, of course, commonly an issue of fact.’ (citation omitted) The tenant at will holds the premises ‘according to the terms of the written lease, in the absence of a new agreement,” Boudreau v. Johnson, 241 Mass. 12, 134 N.E. 359, 361 (Mass.1922).  ‘the only difference being that, instead of being in under a written lease and for a fixed term, they [are] in by parole and as tenants at will.’ Id, quoting Walker Ice Co. v. Am. Steel & Wire Co., 185 Mass. 463, 70 N.E. 937, 939 (Mass.1904). ”

The defendant/tenant’s motion to dismiss was denied. I have no idea how the case ended up in Federal Court.

 

PAUL F. ALPHEN, ESQUIRE

BALAS, ALPHEN & SANTOS, P.C.

 

 

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