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Associates v. Sleepy's, LLC

United States District Court, D. Rhode Island

September 30, 2015

SLEEPY'S, LLC, Defendant.


WILLIAM E. SMITH, Chief Judge.

This case involves a contract dispute between a landlord, Plaintiff Cranston/BVT Associates Limited Partnership ("BVT") and its former tenant, Defendant Sleepy's LLC ("Sleepy's"). Magistrate Judge Patricia A. Sullivan issued a Report & Recommendation ("R&R") (ECF No. 28) on the parties' cross-motions for summary judgment, recommending that both motions be denied. The parties each timely objected to portions of the R&R. For the reasons that follow, the Court OVERRULES the objections and ACCEPTS the R&R pursuant to 28 U.S.C. § 636(b)(1).

I. Background

The R&R thoroughly recounts the underlying facts, and they need not be reproduced in detail here. In brief, the parties dispute whether two emails between Sleepy's and Jay A. Shaw ("Shaw"), Senior Vice President/Director of Leasing for First Hartford Reality Corp., BVT's partial owner and the manager for the property at issue, amended a commercial lease. The first email, dated May 30, 2013, involved Sleepy's request to extend the deadline for providing notice of non-renewal of the lease; the second email, dated June 28, 2013, involved Sleepy's request to convert the lease to a month-to-month tenancy.

At the center of the dispute is the proper interpretation of the lease's amendment provision. It states in relevant part that:

No subsequent alteration, amendment, change or addition to this lease shall be binding upon landlord or tenant unless reduced to writing and signed by them.

(Pl.'s Objection 2, ECF No. 31-1.) BVT argues that the parties' prior dealings make this provision unambiguous. According to BVT, amendments to the lease in 2007, 2009 and 2011 clearly establish that the term "writing" meant typewritten documents, and that "signed by them" meant handwritten signatures between BVT's president, Neil Ellis ("Ellis") and Sleepy's president, David Acker ("Acker").[1] Since the emails did not conform with BVT's interpretation of the amendment provision, BVT contends that the lease automatically renewed for an additional five year term on November 30, 2013.

Sleepy's presents a vastly different interpretation of the lease's amendment provision and the parties' prior dealings. It first argues that the emails actually conform with the lease's amendment provision since they were a writing signed by Shaw, an individual who had previously approved a lease amendment. In the alternative, Sleepy's asserts that its prior dealings with Shaw made its reliance on his emails reasonable and binding on BVT.

When Sleepy's notified BVT in July 2013 of its intent to terminate the lease, BVT commenced this lawsuit. It alleged that Sleepy's breached its contract with BVT and sought a declaration that BVT's interpretations of the lease were correct. (ECF No. 3.) Sleepy's timely answered BVT's complaint and asserted two counter-claims - one alleged that BVT, not Sleepy's, breached the lease agreement; the other alleged that Sleepy's detrimentally relied on Shaw's emails and was entitled to damages under the doctrine of promissory estoppel. (ECF No. 7.) After considering the parties' cross-motions for summary judgment (ECF Nos. 18 and 22), Magistrate Judge Sullivan issued her R&R recommending denial of both parties' motions. The parties objected and this Court considers each objection in turn.

II. BVT's Objections to the R&R[2]

BVT first objects to the R&R's finding that "there is an issue of fact which precludes summary judgment as to the meaning of [the amendment provision] of the Lease." (Pl.'s Objection 1, ECF No. 31-1.) In support of its objection, BVT argues that the parties' prior dealings demonstrate the only way to amend the lease was with typewritten documents that were hand-signed by the parties' presidents. (Id. at 9.)

As Magistrate Judge Sullivan aptly noted, BVT's prior course of dealing argument is "somewhat illogical." (R&R 18, ECF No. 28.) Taking the facts in the light most favorable to Sleepy's, the parties did not execute lease amendments to the Cranston property in a consistent, unambiguous manner. The parties' first amendment in 2007 followed BVT's interpretation of the lease; both Acker and Ellis hand-signed a typewritten document. (R&R 5, ECF No. 28.) The next amendment, in 2009, however, was signed by Shaw, not Ellis, on behalf of BVT and transmitted electronically via fax. (Id. at 5-6.) Then, in a 2011 amendment, the parties reverted to having Acker and Ellis sign the amendment but transmitted the amendment via email as an electronic attachment. (Id. at 6.) Further, the 2011 amendment stated that "electronic signatures shall be deemed original signatures, " a statement whose meaning and application to future lease amendments the parties dispute. (Id.) Based on these facts, and contrary to BVT's assertions, the only consistency or clarity in these amendments is their lack of consistency and clarity. A jury could accept BVT's interpretation of the amendment provision; or it could credit Sleepy's interpretation - that the emails were valid lease amendments because they were a writing signed by Shaw, the same individual who signed the 2009 amendment. Questions of fact abound relating to whether the emails amended the lease, precluding summary judgment.

BVT next argues that, even if the emails could amend the lease, they did not in this case because they lacked consideration. (Pl.'s Objection 16, ECF No. 31-1.) BVT's argument, however, is premised on resolving this matter's key factual dispute in its favor - that the emails did not amend the lease. (See id. at 17-18.) If a jury were to resolve this dispute in Sleepy's favor, the consideration for the alleged email amendments would, at the very least, present another question of fact for the jury. (See Def.'s Reply to Pl.'s Cross Mot. for Summ. J. 10-11, ECF No. 25.) BVT's consideration argument does not entitle it to summary judgment.

Finally, BVT argues that the emails could not have amended the lease as a matter of law because they lacked valid electronic signatures. (Pl.'s Objection 19-22, ECF No. 31-1.) BVT claims that Shaw's name at the end of the emails did not constitute an "electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record" as required under Rhode Island's Uniform Electronic Transaction Act. R.I. Gen. Laws § 42-127.1-2(8). This argument fails. Whether electronic or otherwise, "[t]he law demands only demonstration of a person's intent to authenticate a document as [his or her] own in order for the document to be signed." Hamdi Halal Mkt. LLC v. United States, 947 F.Supp.2d 159, 164 (D. Mass. 2013) (considering a definition of electronic signature in federal statute that is identical to R.I. Gen. Laws § 42-127.1-2(8)). Accordingly, so long as a party intends to sign an email with his or her signature, "a typed name on an electronic document suffices as a ...

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