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L.P. v. Fornel Entertainment Inc.

Supreme Court of Rhode Island

May 5, 2017

1112 Charles, L.P.
Fornel Entertainment, Inc., et al.

         Providence County Superior Court PC 11-1620 Associate Justice Patricia A. Hurst

          For Plaintiff: Robert D. Wieck, Esq. Attorney(s) on Appeal Richard L. Gemma, Esq.

          For Defendants: Carl Levin, Esq.

          Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.


          GILBERT V. INDEGLIA, Associate Justice

         The plaintiff, 1112 Charles, L.P. (1112 Charles or plaintiff), appeals the grant of summary judgment in favor of Fornel Entertainment, Inc. and Anthony Lancellotta (Fornel, Lancellotta, or defendants). This case came before the Supreme Court on March 30, 2017, pursuant to an order directing the parties to appear and show cause why the issues raised in this appeal should not be summarily decided. After hearing counsels' arguments and reviewing the parties' memoranda, we are satisfied that cause has not been shown. Accordingly, we shall decide this appeal at this time without further briefing or argument. For the reasons set forth herein, we affirm the judgment of the Superior Court.


         Facts and Travel

         This case concerns a lease dispute between 1112 Charles, a Rhode Island limited partnership that owns property at 1112 Charles Street, North Providence, Rhode Island, and Fornel, a Rhode Island corporation doing business under the name Lancellotta's Banquet Restaurant, located across the street at 1113 Charles Street, North Providence. On December 30, 1999, Fornel, through its president Lancellotta, entered into a lease agreement (original lease) with Joseph Simone, the then-owner of the property and a bakery located at 1112 Charles Street. Simone, lessor, agreed to lease a portion of his property to Fornel "for use solely by Lessee as a parking lot." The original lease stated that its term was to run from January 1, 2000, through "December 31, 2114." Under the original lease's terms, Fornel agreed to keep the premises in good condition, pay the cost of repaving and improving the parking lot, and pay $1.00 per month for the term of the lease.[1]

         In September 2002, Simone entered into an agreement with Karam Properties, LLC (Karam) to sell the property. Prior to the sale, however, errors in the original lease were discovered wherein the building on the property was included in the lease agreement and the lease term erroneously stated that it expired on December 31, 2114. On September 24, 2002, Simone, Lancellotta, and Karam executed an amended lease to clarify that the lease term expired on December 31, 2014, not 2114, and to exclude the building located on the premises from the original lease.

         Karam subsequently fell into receivership. In September 2005, the receiver agreed to sell the property to Eltahan Properties, LLC (Eltahan). Prior to closing, however, Sovereign Bank, Eltahan's lender, expressed concern with the original lease and, among other things, questioned whether it provided Eltahan with the right to park any cars on the property. To address these concerns, on September 29, 2005, Eltahan and Fornel entered into a "Second Lease Extension and Modification Agreement" (second lease extension), which extended the lease for another ten years, through December 31, 2024. It also clarified that the lessor could use five parking spots in front of the bakery between the hours of 7 a.m. to 7 p.m.[2] The second lease extension added the following provision (release provision) to the original lease: "Lessor and Lessee acknowledge the validity of the Lease and Amended Lease * * * . Lessor and Lessee have no defenses, setoffs, or counterclaims against the other in connection with the Lease and Amended Lease."

         Further, as a part of the financing agreement with Sovereign Bank, Eltahan and Fornel entered into a "Non-Disturbance, Attornment and Subordination Agreement and Tenant's Estoppel" (attornment agreement). Pursuant to the attornment agreement's subordination clause, Fornel subordinated its right as lessee under the original lease "to the right, title and interest of [the] Lender under the Security Deed * * * ." The nondisturbance clause safeguarded the lessee by providing that the lease would not be terminated as long as Fornel had not defaulted on any payments, continued to perform its obligations under the lease, and "attorn[ed]" as set forth in the attornment clause. Under the attornment clause, if the lessor's interests under the lease were transferred, Fornel, as lessee, was bound to the purchaser under the lease for the balance of its term, "with the same force and effect as if the Purchaser or Lender were the lessor under the Lease, and Tenant, as lessee under the Lease * * * ."[3]

         After Eltahan defaulted, the property was again sold at auction on October 6, 2010 to Bennie Sisto. According to defendants, Sisto knew about the lease agreement prior to the auction because the receiver and Lancellotta had announced it at the auction. Additionally, Sisto signed the "Terms of Sale" agreement, which stated that the property was "sold subject to prior mortgages and other encumbrances of record, if any, including that certain Lease dated December 30, 1999 * * * ." After the purchase, Sisto then assigned his property interest to 1112 Charles.

         On March 24, 2011, 1112 Charles filed a four-count complaint against defendants, alleging fraud and misrepresentation (count 1), a breach of the implied duty of good faith and fair dealing (count 2), and seeking a declaratory judgment (count 3), and the quieting of title in the plaintiff (count 4). With respect to the declaratory-judgment count, plaintiff sought declarations: (1) as to the parties' rights, duties, and obligations; and (2) that the original lease was void ab initio.

         On October 22, 2012, plaintiff moved for partial summary judgment on its declaratory-judgment count pursuant to Rule 56 of the Superior Court Rules of Civil Procedure. In support of its motion, plaintiff argued that the original lease did "not reflect the agreement of the parties to the Original Lease on three material points, to wit:" (1) the original lease term was intended to end on December 31, 2014, not December 31, 2114, as the original lease stated; (2) the term "premises" as used within the original lease was not intended to include the building on the property, although the original lease ...

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