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High Rock Westminster Street, LLC v. Bank of America, N.A.

United States District Court, D. Rhode Island

September 7, 2016

HIGH ROCK WESTMINSTER STREET LLC, Plaintiff,
v.
BANK OF AMERICA, N.A., Defendant.

          MEMORANDUM AND ORDER

          WILLIAM E. SMITH, Chief Judge.

         Before the Court are Bank of America, N.A.'s (“BOA” or the “Bank”) Motion for Summary Judgment (“Motion for Summary Judgment” or “BOA's Motion”) (ECF No. 205) and High Rock Westminster Street LLC's (“High Rock”) Motion to Amend the Complaint (“Motion to Amend” or “High Rock's Motion”) (ECF No. 257). For the reasons set forth below, BOA's Motion is GRANTED IN PART and DENIED IN PART; High Rock's Motion is DENIED.

         I. Background

         This dispute centers on BOA's obligations under a ten-year, so-called “triple net” lease (the “Lease”) between BOA and High Rock[1] for the building at 111 Westminster Street in Providence, Rhode Island (the “Building” or “Premises”).[2] The interaction between the Lease's Repair and Termination Provisions form the core of the parties' dispute. Under the Lease's Repair Provision, BOA agreed to

keep the Premises in good condition and repair and be responsible for all maintenance, repairs and replacements to the Premises, structural and nonstructural, ordinary or extraordinary, foreseen or unforeseen, including, but not limited to, all structural repairs and replacements to the foundation, exterior and/or load bearing walls, interior and exterior windows, roof, and mechanical, heating, ventilation and air conditioning systems of the Premises . . . .

(Lease § 6, Ex. H to BOA's Statement of Undisputed Material Facts (“SUF”), ECF No. 207-8.) The provision goes on to specify that BOA would

make all such repairs and replacements as may be necessary to keep and maintain the Premises in a condition consistent with other Class B high rise office buildings of similar age and construction located in the greater Providence, Rhode Island metropolitan area, and shall not defer any repairs, maintenance or replacements in anticipation of the expiration of the term.

(Id.) BOA also agreed that

[n]otwithstanding the foregoing, (a) [BOA], at its sole cost, shall replace the existing main electrical switch gear (“Switch Gear”) in the basement of the building located at the Premises, provided that if at the end of the term [BOA] has not replaced the Switch Gear and has not exercised its right pursuant to Section 2.2 to extend the term of the this Lease, then [BOA] shall pay the sum of $120, 000.00 to [High Rock] . . . .

(Id.) And the Repair Provision concludes by requiring BOA to

keep the heating, ventilating and air conditioning, plumbing, electrical and other mechanical systems in good operating condition . . . [, ] make any repairs, replacements or improvements which may be required by any laws, rules, regulations, ordinances or orders of any federal, state, local, or other governmental authority . . . [, ] [and] use all reasonable precaution to prevent deterioration, waste, damage or injury to the Premises.

(Id.) In a separate provision, BOA also agreed to indemnify High Rock for costs, damages, and expenses of certain types of asbestos in the Building. (See Id. § 27.)

         As detailed below, the parties hotly dispute how these maintenance and repair requirements interact with the Lease's Termination Provision. There, BOA agreed to

surrender the Premises to [High Rock] in as good condition and repair as when the Lease commenced, excepting ordinary wear and tear, condemnation, damage from any cause not required to be repaired or replaced by [BOA] . . . .

(Id. § 18.) BOA also agreed that

[a]ll movable furnishings, trade fixtures and other equipment and personal property owned by [BOA] may be removed from the Premises by [BOA], at [BOA]'s sole expense, no later than the date of termination . . . .

(Id.)

         In 2013, BOA decided not to renew the Lease and vacated the Building. Shortly thereafter, High Rock commenced the present suit. According to High Rock, BOA (1) failed to meet its maintenance and repair obligations for a number of the Building's components including its façade, electrical distribution system, and heating and cooling systems (“HVAC” systems) (Counts I and II); (2) breached the Lease's implied covenant of good faith and fair dealing and committed waste when it failed to properly maintain the Building (Counts III and IV); (3) left so much furniture in the Building that BOA was effectively a holdover tenant liable for rental payments (Count V); and (4) that as a result of BOA's maintenance failures, BOA has caused High Rock to lose rental income for the Building (Count VI).[3] (See Compl., ECF No. 1.) High Rock also moves to amend its Complaint to add allegations that BOA failed to remove asbestos as required under the Lease. (See Pl.'s Mot. to Am., ECF No. 257.)

         BOA now seeks summary judgment on five of High Rock's six claims and opposes High Rock's Motion to Amend.[4] BOA first argues that it satisfied the Lease's maintenance and repair provisions because it returned the Building in the same condition as when it started the Lease in 2003. BOA then argues that High Rock's remaining claims fail as a matter of law and, that in any event, High Rock's damages are too speculative to afford it any relief. BOA also opposes High Rock's Motion, arguing that High Rock has not presented any justification for its long delay in attempting to add the asbestos claim.

         II. Legal Standards

         Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). An issue of fact is only considered “‘genuine' if it ‘may reasonably be resolved in favor of either party.'” Cadle Co. v. Hayes, 116 F.3d 957, 960 (1st Cir. 1997) (quoting Maldonado-Denis v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir. 1994)). When deciding a motion for summary judgment, the court must “examine[] the entire record ‘in the light most flattering to the nonmovant and indulg[e] all reasonable inferences in that party's favor.'” Id. at 959 (quoting Maldonado-Denis, 23 F.3d at 581).

         Under Federal Rule of Civil Procedure 15(a), a party may amend its complaint once as a matter of course within 21 days of serving it or 21 days after the service of a responsive pleading. When this one-time right to amend is exhausted, “a party may amend its pleading only with the opposing party's written consent or the court's leave.” Fed.R.Civ.P. 15(a)(2). And, while under Rule 15, courts should “freely give leave” to amend “when justice so requires, ” this dictate is not without limits. Id. Even under Rule 15's “amendment-friendly regime, ” U.S. ex rel. D'Agostino v. EV3, Inc., 802 F.3d 188, 192 (1st Cir. 2015), courts can “deny leave to amend when the request is characterized by ‘undue delay, bad faith, futility, [or] the absence of due diligence on the movant's part.'” Nikitine v. Wilmington Trust Co., 715 F.3d 388, 390 (1st Cir. 2013) (quoting Palmer v. Champion Mortg., 465 F.3d 24, 30 (1st Cir. 2006)). Indeed, this Court's Local Rules specify that “[a]ny motion to amend a pleading shall be made promptly after the party seeking to amend first learns the facts that form the basis for the proposed amendment.” D.R.I. LR Cv 15 (emphasis added).

         III. Discussion

         A. High Rock's Breach of Contract Claims The parties largely agree on the principles of contract interpretation the Court should employ to determine BOA's maintenance and repair obligations under the Lease. Generally, “[i]f a contract is clear and unambiguous, the meaning of its terms presents a question of law for the court.” Rotelli v. Catanzaro, 686 A.2d 91, 94 (R.I. 1996) (citing Hodor v. United Servs. Auto. Ass'n, 637 A.2d 357, 359 (R.I. 1994)). And “whether the terms of a contract are clear and unambiguous is itself a question of law, and the court may consider all the evidence properly before it in reaching its conclusion.” Id. (citing Westinghouse Broad. Co. v. Dial Media, Inc., 410 A.2d 986, 991 (R.I. 1980)).

         To determine if a contract is unambiguous, the court must review the document “in its entirety and [give] its language . . . its plain, ordinary and usual meaning.” Paradis v. Greater Providence Deposit Corp.,651 A.2d 738, 741 (R.I. 1994). This means that the court must give every word of the contract “meaning and effect; an interpretation that reduces certain words to the status of surplusage should be rejected.” IDC Prop., Inc. v. Chicago Title Ins. Co., 974 F.Supp.2d 87, 99 (D.R.I. 2013) (quoting Andrukiewicz v. Andrukiewicz,860 A.2d 235, 239 (R.I. 2004)). But where a contract sets forth both general and specific provisions, the more specific provisions control. See Sch. Comm. of Town of N. Kingstown v. Crouch, 808 A.2d 1074, 1079 (R.I. 2002) (applying the rule that specific terms in a contract limit general terms); Elliot Leases Cars, Inc. v. Quigley,373 A.2d 810, 813 (R.I. 1977) (same); see ...


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