The Massachusetts Appeals Court today upheld a nearly $1.6 million verdict in favor of Ming's Supermarket on Washington Street in the South End over the landlord of an adjacent warehouse on East Berkeley Street in a rent dispute over an adjoining warehouse on East Berkeley Street that it used until February, 2015, when a pipe froze and then burst, flooding the warehouse and bringing in ISD, which declared the building unfit for occupancy.
Although Ming's paid for some of the repairs, it stopped paying rent after landlord Leo Motsis refused to make further repairs - without which Ming's could not seek a conditional permit from the zoning board to resume using the building for food storage, because it turned out the building was only permitted for motor-vehicle storage.
Motsis sued, Ming counter-sued and the whole thing went before a Suffolk Superior Court jury and judge, who decided Motsis was the main party at fault and owed Ming's $795,000 - which they then doubled as a penalty.
Motsis appealed. In its ruling today, the appeals court said he was at fault and had to pay up before he could check out of the legal imbroglio.
The court set the scene by discussing the extent of the damage:
ISD issued citations for numerous building code violations, including unsafe structural conditions such as a fractured fourth-floor ceiling with delaminating concrete, a fracturing concrete beam, and fractures in the staircases. ISD also found violations concerning the mechanical systems, elevators, and sprinklers. Finally, ISD issued a citation for failure to have a permit to use the premises for food storage. ISD told the administrative manager of Ming's that Ming's could not use the building because of its structural problems and the lack of a proper permit.
The court noted that Ming's lease required Motsis to make any necessary repairs to the building's exterior and that Ming's continued to pay rent for three months. It concluded that Motsis declined to spend the estimated $500,000 to make the repairs and that he wanted Ming's out so he could just sell off the building - especially since Ming's had a long-term lease with below-market rents, with an option to extend:
There was evidence that Motsis not only failed to make the structural repairs, but dragged his feet when asked about his plans to do so, and then asserted, without reasonable basis, that Ming's had caused the structural problems and was responsible for repairing them. In short, the judge could reasonably have found that Motsis hoped and attempted to induce Ming's either to abandon the lease or to commit a breach of it (by failing to pay rent) in a manner that would justify Motsis in terminating it. That would have allowed Motsis both to save the considerable cost of the structural repairs and to sell the property unencumbered by a below-market-value lease potentially in effect until the year 2030. This would constitute not an ordinary breach by Motsis, but "conduct in disregard of [the lease] and intended to secure benefits" for Motsis ... Anthony's Pier Four, Inc., 411 Mass. at 474. We therefore decline to disturb the judge's conclusion that Motsis violated G. L. c. 93A.
The court also ruled that Motsis will have to pay Ming's the cost of its legal representation. After the initial trial, the judge set that cost at $251,944.60, but the court ordered the judge to take a second look.