Chapman v. Katz

844 N.E.2d 270, 65 Mass. App. Ct. 826
CourtMassachusetts Appeals Court
DecidedMarch 29, 2006
DocketNo. 04-P-1702
StatusPublished
Cited by2 cases

This text of 844 N.E.2d 270 (Chapman v. Katz) is published on Counsel Stack Legal Research, covering Massachusetts Appeals Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chapman v. Katz, 844 N.E.2d 270, 65 Mass. App. Ct. 826 (Mass. Ct. App. 2006).

Opinion

Katzmann, J.

In this commercial lease dispute, all parties appeal from the judgment. A Superior Court judge granted declaratory relief in favor of the plaintiffs (owners) terminating the lease, but at the same time required the plaintiffs to pay restitution to defendant Banknorth, N.A. (Banknorth), a subtenant, for [827]*827improvements it made to the property. The judge also entered judgment in favor of the defendants on the remaining counts of breach of contract and violation of G. L. c. 93A, § 11. While the parties press a number of claims on appeal, we essentially focus on the central, dispositive question, which requires that we interpret the interplay of the concepts of “trade fixture” and “structure” under the lease in issue.

The owners, as lessors, contend that defendants David L. Katz and The Camera Company, Inc. (collectively tenants), as lessees, breached the lease when they permitted their subtenant, Banknorth, to erect an automated teller machine (ATM) kiosk on the premises without the owners’ consent.3 The terms of the lease are generally not in dispute. The tenants were not prohibited from repairing or improving the property under the lease. “[Bjuildings, structures, additions, alterations and improvements” made by tenants or subtenants become the property of the owners at the termination of the lease, but “trade fixtures” installed by tenants or subtenants may be removed. Any damage caused by the removal must be repaired by the tenants. The lease permitted an initial structure to be erected on the property, but thereafter prohibited any “future buildings or structures . . . upon the demised premises during the entire term... or any subsequent renewal term unless approved in writing by the Lessor, which approval shall not be unreasonably withheld.”4 The lease also contained a clause permitting the owners to terminate the lease after providing the tenants with thirty days’ written notice of a failure to perform an obligation under the lease, so long as the tenants failed to remedy the default within the thirty days (a so-called “default clause”). As a threshold matter, at the heart of the dispute between the parties regarding the lease is the question whether the ATM kiosk is a “structure,” requiring the consent of the owners, or a [828]*828“trade fixture,” which does not require such approval. As constructed, the ATM kiosk is simply an ATM on a concrete pad, under a free-standing canopy, and in the drive-up lane in the parking lot.

The owners sued, claiming breach of contract and violation of G. L. c. 93A, § 11, and requesting a declaratory judgment that the lease had been terminated. The owners argued that the defendants materially breached the lease by failing to gain their consent before constructing the ATM kiosk. They also argued that the defendants violated c. 93A by falsely representing to the town of Natick that they were the agents of the owners. There was no evidence of any diminution in use or value of the property due to the construction. A Banknorth employee testified that, upon request, the ATM kiosk would be removed when the bank departed the premises.

The jury answered several special questions, finding that the tenants had materially breached the lease, that the owners had not unreasonably withheld consent, and that the tenants and Banknorth had wilfully or knowingly committed unfair or deceptive business practices. However, the jury also found that no damages resulted from either the breach of contract or the unfair or deceptive behavior. Because there were no damages, the judge entered judgment in favor of the defendants on those two claims (counts II and III, respectively). On the claim for declaratory judgment (count I), the judge ruled that the lease terminated due to the material breach, but also ordered restitution to Banknorth in compensation for the improvements already completed.

Discussion. At trial and in posttrial motions, the defendants argued that the ATM kiosk is a trade fixture and therefore, under the terms of the lease, not a structure. This, they contended, meant that there was no breach, because the defendants were only required to get the consent of the owners before constructing structures, not trade fixtures. At trial, the judge declined to rule that the ATM kiosk was a trade fixture as matter of law, but allowed the defendants to argue the question to the jury. In her memorandum of law and order, the judge stated that “[t]he court rejected as a matter of law the defendants’ claim that the kiosk was not a ‘structure’ but, rather, a ‘trade fixture.’ ” This was error. Whether the ATM kiosk is a [829]*829trade fixture or structure is “a mixed question of law and fact.” Leblanc v. Friedman, 438 Mass. 592, 596 (2003). Since there was no factual dispute over the nature of the ATM kiosk, the issue resolves itself into a question of contract law for the judge — whether the ATM kiosk is within the definition of trade fixture as used in the lease, and therefore not a structure. See Lumber Mut. Ins. Co. v. Zoltek Corp., 419 Mass. 704, 707 (1995). See also Robert Indus., Inc. v. Spence, 362 Mass. 751, 755 (1973); Thomas v. Christensen, 12 Mass. App. Ct. 169, 174-175 (1981). Considering that question now, we conclude that the ATM kiosk is a trade fixture. See Martha’s Vineyard Land Bank Commn. v. Board of Assessors of W. Tisbury, 62 Mass. App. Ct. 25, 27 n.3 (2004) (“an appellate court has plenary power of de nova review of all questions of law”).

We begin our analysis with the language of the contract. We interpret the language of the contract “as a whole, in a reasonable and practical way, consistent with [the contract’s] . . . background[] and purpose.” Vergato v. Commercial Union Ins. Co., 50 Mass. App. Ct. 824, 826 (2001), quoting from USM Corp. v. Arthur D. Little Sys., Inc., 28 Mass. App. Ct. 108, 116 (1989). Where not inconsistent with the terms of the contract, we give words their ordinary meaning. See Edmund Wright Ginsberg Corp. v. C. D. Kepner Leather Co., 317 Mass. 581, 587 (1945).

The words “trade fixture” are only used once in the lease in section nine, describing what property will stay with the real estate at the termination of the lease and what will remain the property of the tenants.5 Although this section does not explicitly define trade fixture, it does establish a distinction between trade [830]*830fixtures and structures under the lease. This distinction is crucial because if structure means “not a trade fixture,” and if the ATM kiosk is a trade fixture, then the lease did not require the tenants to seek permission from the owners under the section that prevented construction of “future buildings or structures.” See Clark v. State St. Trust Co., 270 Mass. 140, 151 (1930) (in interpreting a contract, “words used in one undoubted sense in one place may be presumed to be used in the same meaning in another place in the writing”).

Since the lease provides no further definition of trade fixture, we must apply the ordinary meaning of the phrase to determine if the ATM kiosk is a trade fixture. See, e.g., Given v. Commerce Ins. Co., 440 Mass. 207, 212-213 (2003) (use of dictionary to determine ordinary meaning of term in insurance policy). The definitions found in several legal and real estate dictionaries are consistent in theme. See, e.g., Black’s Law Dictionary 669 (8th ed.

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Related

Chapman v. Katz
448 Mass. 519 (Massachusetts Supreme Judicial Court, 2007)

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Bluebook (online)
844 N.E.2d 270, 65 Mass. App. Ct. 826, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chapman-v-katz-massappct-2006.