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Cranston/BVT Associates, Limited Partnership v. Sleepy's, LLC

United States District Court, D. Rhode Island

September 7, 2016

CRANSTON/BVT ASSOCIATES, LIMITED PARTNERSHIP, Plaintiff,
v.
SLEEPY'S, LLC, Defendant.

          OPINION AND ORDER

          WILLIAM E. SMITH, Chief Judge.

         In July 2004, Cranston/BVT Associates Limited Partnership (“BVT”) leased a retail store in Cranston, Rhode Island to Sleepy's LLC (“Sleepy's”), a mattress retailer. For nine years, working primarily through Jay Shaw, the Senior Vice President and Director of Leasing at First Hartford Realty Corporation (“First Hartford”), an affiliate of BVT, the landlord and tenant had an amicable relationship. The parties' relationship, however, began to sour in May 2013, as the Lease approached the end of its term. The Lease required Sleepy's to notify BVT by May 30, 2013 if it did not want to renew, otherwise, the Lease would automatically renew for five years. Faced with this deadline, Sleepy's reached out to Shaw to negotiate changes to the Lease. The communications Sleepy's had with Shaw during these negotiations form the core of this dispute. Sleepy's argues, under both contract and promissory estoppel theories, that these communications extended the Lease's nonrenewal notice deadline and then converted the Lease to a month-to-month tenancy. BVT disagrees, arguing that it never agreed to amend the Lease. Thus, according to BVT, since Sleepy's missed the May 30, 2013 notice deadline, the Lease automatically renewed for five additional years.

         The parties tried the case before the Court without a jury on December 21-22, 2015. Having considered the evidence presented at trial and the pre-trial and post-trial memoranda submitted by the parties, the Court makes the following findings of fact and conclusions of law, pursuant to Federal Rule of Civil Procedure 52(a).

         I. Findings of Fact

         1. In 2004, Jay Shaw, Senior Vice President and Director of Leasing at First Hartford, an affiliate of BVT, solicited Sleepy's to lease retail space in Cranston, RI that was owned by BVT. (Trial Tr. vol. 2, 10:16-11:3, Dec. 22, 2015, ECF No. 75; see Trial Ex. 28, p. 53.)

         2. As a result of Shaw's solicitation, Shaw received an offer from Sleepy's on May 21, 2004 to lease space at the Cranston Parkade. (Trial Ex. 1; Trial Tr. vol. 2, 10:19-21, Dec. 22, 2015, ECF No. 75.)

         3. On July 22, 2004, BVT and Sleepy's entered into a type-written lease agreement (“Lease”) for retail space at 200 Garfield Avenue, Cranston, RI (the “Property” or “Premises”). (Trial Ex. 2; Trial Tr. vol. 1, 11:3-10, Dec. 21, 2015, ECF No. 74.)

         4. David Acker, Sleepy's owner and president, signed the Lease on behalf of Sleepy's. (Trial Tr. vol. 2, 64:8-10, Dec. 22, 2015, ECF No. 75; Trial Ex. 2.)

         5. Neil Ellis, BVT and First Hartford's president, signed the Lease on behalf of BVT. (Trial Tr. vol. 1, 5:16-24, Dec. 22, 2015, ECF No. 74; Trial Ex. 2.)

         6. At all times relevant, Shaw was Sleepy's primary contact with regard to the Property. (Trial Tr. vol. 1, 47:2-7, Dec. 21, 2015, ECF No. 74; Trial Tr. vol. 2, 24:22-23, Dec. 22, 2015, ECF No. 75.) He was responsible for “[o]ngoing negotiations” and “helping to resolve disputes.” (Trial Tr. vol. 2, 10:22-11:1, Dec. 22, 2015, ECF No. 75.)

         7. Shaw received his title, Senior Vice President and Director of Leasing at First Hartford, to give him “credibility with new tenants and marketing of the projects.” (Trial Tr. vol. 2, 10:6-12, Dec. 22, 2015, ECF No. 75.)

         8. In Acker's interactions with Shaw, Shaw always delivered on the oral agreements they reached during negotiations. (Trial Tr. vol. 2, 121:8-10, Dec. 22, 2015, ECF No. 75.)

         9. The Lease set forth requirements for Sleepy's when sending notices regarding the Lease to BVT. This provision, “Section 15.1 Notices from Tenant to Landlord, ” states

Any notice from Tenant to Landlord shall be deemed duly given on the date delivered or rejected if forwarded to the accepted or rejected [sic] by Landlord at the address hereinbelow [sic] set forth by registered or certified mail, return receipt requested, or by express mail. Landlord's original address:
149 Colonial Road P.O. Box 1270 Manchester, CT 06045-1270 Attn: Neil H. Ellis cc: Jeffrey M. Carlson, Esq.

(Trial Ex. 2, § 15.1.)

         10. Section 15.13, titled “Exhibits, ” provides in relevant part that “[n]o subsequent alteration, amendment, change or addition to this Lease shall be binding upon Landlord or Tenant unless reduced to writing and signed by them.” (“Modification Provision”). (Trial Ex. 2, § 15.13.)

         11. Prior to May 2013, the parties made changes to the Lease on at least four occasions.

         12. The first change took effect on November 20, 2007. (Trial Ex. 3.) The amendment itself was type-written on a document titled “First Amendment to Lease.” (Id.) It was hand- signed by Acker on behalf of Sleepy's and Ellis on behalf of BVT. (Id.)

         13. Among other things, the first amendment allowed Sleepy's to move to a larger space at the Cranston shopping center. (Id.) It also extended the initial Lease term to November 30, 2013 (the “Initial Term”) and gave Sleepy's the option to renew the Lease for two consecutive five-year terms (each a “Renewal Term”). (Id.) Each option to renew the Lease for a Renewal Term would be automatically exercised unless Sleepy's sent notice of its intention not to renew the Lease (“Nonrenewal Notice” or “Notice”) at least six months prior to the end of the Initial Term or the then current Renewal Term, as applicable. (Id.)

         14. Sleepy's had no obligation to renew the Lease, but if it wanted to exercise its nonrenewal option, it had to send BVT the Nonrenewal Notice by the May 30, 2013 deadline. (Trial Tr. vol. 1, 30:14-19, Dec. 21, 2015, ECF No. 74; Trial Tr. vol. 2, 112:22-113:8, Dec. 22, 2015, ECF No. 75.)

         15. The next change to the Lease occurred on January 13, 2009. Prior to that date, in November 2008, Acker communicated with Shaw about reducing Sleepy's rent for the retail space. (Trial Tr. vol. 2, 101:19-102:4, Dec. 22, 2015, ECF No. 75; Trial Ex. 5.) Ellis remembers also discussing the rent issue with Acker. (Trial Tr. vol 1, 21:13-21, Dec. 21, 2015, ECF No. 74.) Acker, however, recalls negotiating the issue only with Shaw. (Trial Tr. vol. 2, 102:5-24, Dec. 22, 2015, ECF No. 75.)

         16. The negotiations culminated with a January 13, 2009 letter on First Hartford letterhead in which, among other things, BVT agreed to reduce Sleepy's rent by ten percent for a period of six months. (Trial Ex. 6.) In exchange, Sleepy's agreed to waive the ...


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