Court Opinion

ID: 9400062
Source: CourtListenerOpinion
Date Created: 2023-06-07 14:08:14.337475+00
Date Added: 2024-06-11T17:19:41.724792
License: Public Domain

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21-P-1054                                             Appeals Court

    SOURCING UNLIMITED, INC.1     vs.   CUMMINGS PROPERTIES, LLC.

                             No. 21-P-1054.

            Essex.       November 3, 2022. - June 7, 2023.

              Present:    Neyman, Desmond, & Grant, JJ.

Contract, Lease of real estate, Construction of contract,
     Option. Real Property, Lease, Option. Landlord and
     Tenant, Renewal of lease. Notice, Timeliness. Electronic
     Mail.

     Civil action commenced in the Superior Court Department on
January 24, 2017.

     The case was heard by Janice W. Howe, J., on motions for
summary judgment, and entry of separate and final judgment was
ordered by her.

    Jonathan D.H. Lamb for the defendant.
    Orestes G. Brown for the plaintiff.

    NEYMAN, J.       We consider whether electronic mail (e-mail)

communications from a tenant to its landlord constituted

effective notice to invoke a nonrenewal option to prevent

    1   Doing business as Jumpsource.
                                                                      2

automatic five-year renewal of a commercial lease.     Although the

"notice" provision in the lease prohibited electronic notice, we

nonetheless hold that the e-mail communications constituted

effective notice where (1) it is undisputed that the landlord

received timely and unequivocal written notice of the tenant's

decision not to extend the lease; (2) the nonconformity in the

method of delivery of the notice neither was consequential nor

contravened the crux of the option provision; and (3) the option

provision at issue was not exclusive to the tenant but was a

mutual option that could be exercised by either party.     Thus, we

affirm.

    Background.   1.   The lease.    On or about April 14, 2010,

the plaintiff-tenant, Sourcing Unlimited, Inc., doing business

as Jumpsource (Jumpsource), and the defendant-landlord, Cummings

Properties, LLC (Cummings), executed a commercial lease for

office space in Beverly.     The lease was extended by agreement

through November 30, 2016.    Section 30 of the lease contained an

automatic extension provision stating as follows:

    "AUTOMATIC FIVE-YEAR EXTENSIONS. This lease, including all
    terms, conditions, escalations, etc. shall be automatically
    extended for additional successive periods of five years
    each unless LESSOR or LESSEE serves written notice, either
    party to the other, of either party's option not to so
    extend this lease. The time for serving such written
    notice shall be not more than 12 months or less than six
    months prior to the expiration of the then current lease
    term. Time is of the essence."
                                                                   3

Section 21 of the lease contained a general notice provision

that provided as follows:

    "NOTICE. . . . Any notice from LESSEE to LESSOR under this
    lease shall be given in writing and shall be deemed duly
    served only when served by constable, or delivered to
    LESSOR by certified or registered mail, return receipt
    requested, postage prepaid, or by recognized courier
    service with a receipt therefor, addressed to LESSOR at
    [street address] or to the last address designated by
    LESSOR. No oral, facsimile or electronic notice shall have
    any force or effect. Time is of the essence in the service
    or any notice."

The parties agree that to exercise its nonrenewal option under

section 30 -- thereby preventing the lease term from

automatically extending for an additional five-year period --

Jumpsource had to provide written notice to Cummings between

December 1, 2015, and May 30, 2016 (i.e., "not more than 12

months or less than six months prior to the expiration of the

then current lease term").

    2.   The e-mail communications.    In December of 2015, and

January of 2016, Jumpsource and Cummings discussed the

possibility of Jumpsource relocating from its then current

office space to a different unit within Cummings's portfolio and

extending its term lease, but the parties did not agree to terms

on any such relocation or extension.   On January 12, 2016,

Jumpsource's vice-president of sales sent an e-mail to

Cummings's account manager stating:

    "At this time [Jumpsource has] decided we are closing the
    office in Beverly at the end of the contract (Nov 2016).
                                                                   4

    We are trying to get all the employees down here to FL.
    Thanks for the help though!"

Cummings's account manager responded the same day, in relevant

part, as follows:

    "Thanks for your message. Please note that, while
    Jumpsource's lease is currently scheduled to terminate on
    November 30, 2016, you should consult the lease for more
    information, as many of our leases contain extension,
    renewal, and/or cancellation options. Such provisions may
    alter the lease end date or otherwise result in the lease
    not terminating on the date referenced above.

    "Despite your note, if there is any interest in maintaining
    even a much smaller one- or two-person office here at
    Cummings Center, please let me know, as we have some nice
    options in the range of 200 to 500 leasable square feet."

    On April 21, 2016, Cummings sent Jumpsource a letter

notifying Jumpsource that it "does not have adequate insurance

on file" and thus was in default of the lease.    The letter

further advised that Jumpsource could cure the default, that

Cummings could purchase insurance on Jumpsource's behalf, or

that Cummings could "declare the term of your occupancy ended."

Jumpsource promptly sent an e-mail to Cummings about the letter,

noting that its lease would expire on November 30, 2016, and

asking, "How do you suggest we proceed if we only need office

insurance for another 6 months or so?    As you know we will not

be renewing our Cummings Center lease . . . ."    Cummings

replied, in relevant part, as follows:

    "[I]n accordance with the notice provisions of your lease,
    we are unable to accept non-renewal notices that are
    transmitted by email. Per Sections 21 and 30 of your
                                                                      5

    lease, notice must be sent within the required time period
    via certified mail or recognized overnight courier. . . .
    If you wish to terminate your lease on November 30, 2016,
    please deliver Cummings . . . proper notice as and when
    required under the lease. In the meantime, please note
    that all terms of your lease, including all extension,
    renewal, and/or cancellation options contained therein,
    remain in full force and effect."

    On August 4, 2016, in response to an e-mail from Cummings

regarding August 2016 rent, Jumpsource sent an e-mail stating,

in part, "I'll mail a check to you here from Florida.    Sorry for

the mixup [sic].   What's the move out process like?    As you know

we aren't renewing our lease and the final date is November 30."

Cummings responded by e-mail as follows:

    "Thanks in advance for mailing the check.    I will update
    our accounting department.

    "Regarding the currently scheduled lease termination date,
    as referenced in my prior emails, Section 30 of
    Jumpsource's lease provides that the term of the lease
    shall automatically extend for additional successive five-
    year periods, unless either party provides timely written
    notice as required by the lease exercising its option that
    the lease not so extend. Such written notice must be
    served by one of the methods identified in Section 21 of
    the lease between six and 12 months prior to the then-
    current lease expiration date.

    "In this case, in order for the lease to terminate on
    November 30, 2016, written notice to preclude the automatic
    extension would need to have been served on or before May
    30, 2016. As we never received any such written notice as
    required by the lease, the lease has extended through the
    currently scheduled termination date of November 30, 2021.
    Please note that all terms of your lease, including all
    extension, renewal, and/or cancellation options contained
    therein, remain in full force and effect.

    "As always, feel free to contact me with any questions."
                                                                   6

     On November 30, 2016, Jumpsource vacated the premises.

There is no allegation that Cummings was unable to lease the

premises or was prejudiced by Jumpsource's purported violation

of the contract.

     3.   Prior proceedings.   On January 24, 2017, Jumpsource

commenced the present action in the Superior Court seeking a

declaratory judgment that it had provided sufficient and proper

notice of its option not to renew the lease and alleging a

violation of G. L. c. 93A.2    Cummings filed an answer and

counterclaim seeking a declaratory judgment that Jumpsource

failed to provide proper legal notice in accordance with the

lease of its decision to opt out of the five-year automatic

renewal and alleging breach of contract.    The parties filed

cross-motions for partial summary judgment3 and, in their joint

statement of material facts, defined the discrete issue of law

as follows:   "What is the legal effect, if any, of Jumpsource's

emails to Cummings to opt out of the lease's automatic

extension, where the notice provision in the lease required

     2 Cummings first filed a summary process action against
Jumpsource in the District Court. That action was dismissed
after the parties stipulated to Cummings's right to immediate
possession of the premises. The parties then initiated the
Superior Court action.

     3 The parties filed a joint statement of material facts,
none of which was disputed by either party.
                                                                        7

adherence to specified methods of notice to the exclusion of

other modes of transmission (including electronic and oral

notice)?"    A Superior Court judge ruled that the e-mail

communications from Jumpsource to Cummings constituted effective

and timely notice to opt out of the lease's automatic extension,

and thus allowed Jumpsource's motion and denied Cummings's

motion.4    Partial summary judgment entered in favor of Jumpsource

and against Cummings.    At the parties' joint request, the judge

entered separate and final judgment in favor of Jumpsource.5

Cummings timely appealed.

     Discussion.    1.   Standard of review.   a.   Summary judgment.

Summary judgment is appropriate where "there are no issues of

material fact, and . . . the moving party is entitled to

judgment as a matter of law."     Mass. R. Civ. P. 56 (c), as

amended, 436 Mass. 1404 (2002).     "We review a decision to grant

summary judgment de novo."    Boazova v. Safety Ins. Co., 462

Mass. 346, 350 (2012).    "[W]here both parties have moved for

     4 In her decision, the judge briefly addressed the issue of
waiver, and determined that "there is no evidence Cummings
waived the notice requirements of the [l]ease." Where we hold
that the e-mail communications constituted effective notice of
the option, we decline to reach the waiver issue.

     5 The parties represented that the allowance of Jumpsource's
motion for partial summary judgment effectively mooted
Cummings's counterclaims for declaratory judgment and breach of
contract subject to this appeal. Their joint motion indicated
that only Jumpsource's claim pursuant to G. L. c. 93A would
remain and that it would be stayed pending this appeal.
                                                                      8

summary judgment, the evidence is viewed in the light most

favorable to the party against whom judgment [has entered]"

(citation omitted).    Id.   "A party seeking summary judgment may

satisfy its burden of demonstrating the absence of triable

issues by showing that the party opposing the motion has no

reasonable expectation of proving an essential element of its

case" (citation omitted).    Id.

    b.   Contract interpretation.     The parties agree that the

relevant lease provisions are unambiguous.     "The interpretation

of an unambiguous written contract constitutes a ruling of law

that is subject to plenary review on appeal."     President &

Fellows of Harvard College v. PECO Energy Co., 57 Mass. App. Ct.

888, 891 (2003).   "Where there is no ambiguity, we construe the

words of a contract in their usual and ordinary sense"

(quotation and citation omitted).     DeWolfe v. Hingham Ctr.,

Ltd., 464 Mass. 795, 803 (2013).     See Shea v. Bay State Gas Co.,

383 Mass. 218, 225 (1981) (court must construe contract language

"to give it reasonable meaning wherever possible").     In

addition, "[w]hat constitutes timely notice under [a lease] is a

matter of contract interpretation and is therefore 'a matter of

law for the court.'"    Pilgrim Ins. Co. v. Molard, 73 Mass. App.

Ct. 326, 331 n.8 (2008), quoting Royal-Globe Ins. Co. v. Craven,

411 Mass. 629, 632 (1992).    Therefore, we likewise review this

contract interpretation dispute de novo.     See Baby Furniture
                                                                    9

Warehouse Store, Inc. v. Meubles D&F Ltée, 75 Mass. App. Ct. 27,

29 (2009).

    2.    Analysis.    Cummings contends that Jumpsource's e-mail

communications constituted ineffective notice to invoke the

nonrenewal option in the lease because Massachusetts law

requires an optionee to strictly comply with the terms of an

option.   Cummings argues that insofar as the lease specified

acceptable methods of notice and expressly excluded other

methods, including "electronic notice," Jumpsource did not

strictly comply with the plain terms of the lease, and thus the

notice was insufficient as a matter of law.

    Jumpsource responds that the purpose of the option

provision was fulfilled because Cummings had actual notice well

within the option period that Jumpsource had exercised its

option not to renew.    Jumpsource argues that our jurisprudence

makes clear that a party's timely receipt of actual notice is

generally not defeated by a nonconforming delivery method.

Although Jumpsource's view is somewhat overbroad, it has the

better argument in the present case.

    We begin our analysis with the plain language of the

agreement, which states that the lease "shall be automatically

extended" for an additional five-year lease term unless either

party "serves written notice . . . of either party's option not

to so extend this lease" within a specified timeframe.     This
                                                                  10

provision gave both the landlord and the tenant the "option" to

cancel the automatic renewal of the lease by providing timely

written notice.   Unlike many leases that contain affirmative

options to purchase property or to terminate, renew, or extend a

lease, the provision here is framed as an "option not to so

extend" the automatic renewal of the lease.    See Pear v.

Davenport, 67 Mass. App. Ct. 239, 240-241 (2006) (tenant's

option to purchase); Qureshi v. Fiske Capital Mgmt., 59 Mass.

App. Ct. 463, 465-466 (2003) (option to extend); Loitherstein v.

International Business Machs. Corp., 11 Mass. App. Ct. 91, 92

(1980) (tenant's "right to terminate" ten-year lease "at the end

of the fifth year of the initial term"); Gerson Realty Inc. v.

Casaly, 2 Mass. App. Ct. 875 (1974) (tenant's option to renew

lease).   Contrast Patriot Power, LLC v. New Rounder, LLC, 91

Mass. App. Ct. 175, 176 (2017) (analyzing "termination option"

providing that lease "shall be automatically extended for

additional successive Renewal Terms of one (1) year each unless

Tenant or Landlord serves written notice . . . of either party's

option not to so extend the Lease" within specified timeframe).

Despite the somewhat awkward phraseology, both parties agree

that the language is unambiguous.   The parties further treat the

wording as an "option" not to renew the lease, and we treat it

as such for purposes of our analysis herein.
                                                                    11

    "Generally, conditions for the exercise of an option

require a more strict degree of adherence than may be the case

in provisions of a bilateral contract."    Westinghouse

Broadcasting Co. v. New England Patriots Football Club, Inc., 10

Mass. App. Ct. 70, 73 (1980) (Westinghouse).    We have noted that

because an optionee holds a unilateral right, there is a "lesser

inclination of courts to inquire into the materiality of a

breach of an option condition."    Id.   "In [such] circumstances

it may not be too much to ask that a person seeking to . . .

exercise option rights turn his corners squarely."     Id.   See

Trinity Realty I, LLC v. Chazumba, LLC, 77 Mass. App. Ct. 911,

912 (2010) ("Massachusetts takes a 'strict' view of options,

and . . . a tenant's noncompliance with lease terms may result

in its losing the privilege of exercising an option even if the

same noncompliance would not warrant forfeiture of the existing

tenancy").   See also Loitherstein, 11 Mass. App. Ct. at 94.

Thus, as a general rule, option provisions are strictly

construed such that we typically do not look to claims of

materiality with respect to their enforcement.

    However, Massachusetts courts have recognized limitations

to the concept of strict compliance with options.     In some

contexts, where a nonconformity does not contravene the crux of

an option provision, we have considered the nature and

materiality of minor deviations.    This is particularly so as to
                                                                          12

the method of delivery of notice.          For example, in Gerson Realty

Inc., 2 Mass. App. Ct. at 875, we considered whether a tenant

had effectively exercised its option to renew a lease where the

tenant provided notice via certified mail, but the lease

required that "such notice . . . shall not be deemed to have

been duly given or served unless in writing and forwarded by

registered mail."       Id.    We held that the notice of renewal by

certified mail was effective because "[t]he function of a

requirement that notice be transmitted by registered mail is to

provide a means of resolving disputes as to the fact of delivery

of the notice."     Id.       Where the fact and timeliness of delivery

were not in dispute, the differences between the manner of

notice required and the notice provided were "of no

consequence."     Id.

    Similarly, in Computune, Inc. v. Tocio, 44 Mass. App. Ct.

489, 493 (1998), we held that written notice delivered by

Federal Express, instead of by certified or registered mail as

required by the lease, constituted timely and effective exercise

of a lease option.      Here again, we reasoned that where the

notice to extend the lease was in writing, timely, and delivered

to the correct address, "the method by which the written notice

was delivered [did] not result in a material violation of the

lease."   Id.   We further recognized that, consistent with our

precedent, "[d]elivery by Federal Express, in the circumstances
                                                                  13

present here, serves the same function and provides the same

proof of delivery as certified or registered mail."    Id.

     In Trinity Realty I, LLC, 77 Mass. App. Ct. at 911, we

analyzed an option provision requiring that the tenant "not be

in default in the performance, fulfillment or observance of any

of the terms or provisions of this lease" to exercise the option

to extend the lease term.   Although the tenant "was not in full

compliance with two lease covenants when it exercised the

option," we held that the tenant's substantial compliance with

the lease terms constituted adequate performance to maintain its

rights under the lease, including its right to exercise the

option provision.   Id. at 912.   We further distinguished

"defaults of a significant nature" from technical violations

that do not "go to the heart of the parties' agreement."     Id. at

912 & n.4.6

     Finally, in Cadillac Auto Co. of Boston v. Stout, 20 Mass.

App. Ct. 906 (1985), we analyzed an option to purchase real

estate requiring, inter alia, that the option be exercised "by

     6 Among the examples we provided of "defaults of a
significant nature" was "the failure to exercise the option in
the manner prescribed in the lease." Trinity Realty I, LLC, 77
Mass. App. Ct. at 912 n.4. As discussed infra, however, our
jurisprudence has distinguished material flaws in the exercise
of an option from those that are immaterial. In circumstances
like the present, a nonconforming delivery method -- when timely
receipt of actual notice is undisputed -- is not a default that
goes "to the heart of the parties' agreement." Id.
                                                                    14

notice in writing," (1) given within a defined timeframe, (2)

"specifying a date and hour for delivery of the deed," and (3)

committing to a closing within a specified period.     Id. at 906,

907.    Stout, the holder of the option, provided a letter that

did not specify a date and hour for delivery of the deed, and

did not in clear terms commit Stout to a closing within the

specified period.    Id. at 907.   Consequently, we held that the

deviations from the option provision were "not immaterial" and,

on that basis, affirmed the Land Court's determination that

Stout's letter was ineffective to exercise the option.      Id.

       It is clear from this line of cases that our jurisprudence

has distinguished material flaws in the exercise of an option

from "immaterial," or "inconsequential," deviations,

particularly those involving the method of delivery of notice

where neither the timeliness nor fact of delivery of notice were

disputed.    See Westinghouse, 10 Mass. App. Ct. at 73-74

(comparing flaws in exercise of option such as failure to give

timely notice, failure to include purchase price, and failure to

provide written notice and cashier's check, to nonconforming

delivery method in Gerson Realty Inc., 2 Mass. App. Ct. at 875).

Such minor nonconformities as identified in Gerson have

typically not been held to render ineffective duly received

notice.   See e.g., Computune, Inc., 44 Mass. App. Ct. at 493.
                                                                 15

     Of further note, our precedent has also recognized that the

rationale for requiring strict compliance with the exercise of

an option stems from the creation of a "unilateral" right

exclusively held by the holder of the option.   See Loitherstein,

11 Mass. App. Ct. at 94 (termination option held by tenant

"created a conditional limitation on the leasehold estate; a

right which was unilateral in nature, exclusively for [tenant]'s

benefit, and thus to be strictly construed").   See also

Westinghouse, 10 Mass. App. Ct. at 73.   Here, no such

exclusivity existed, as both Cummings and Jumpsource held an

option not to extend the lease.   Accordingly, in the present

context where either party may exercise the option, the policy

underlying the rule of strict compliance is somewhat less

compelling.

     Keeping this wealth of precedent in mind, we look to the

gravamen of the option provision in the lease, which is to

require the party exercising the option to timely inform the

other party, in writing, that it is not renewing the lease.7    It

     7 We note that the option provision at section 30 of the
lease required Jumpsource to serve "written notice" of its
option not to extend the lease, and to do so "not more than 12
months or less than six months prior to the expiration of the
then current lease term." The option provision does not
otherwise define the required method of notice. Rather, the
"notice" provision at section 21 of the lease is a separate
stand-alone provision that applies to any and all notices to be
provided by Jumpsource to Cummings under the lease. Where we
construe the lease as a whole, see East Coast Aviation Corp. v.
                                                                  16

is undisputed that Jumpsource did so, and Cummings does not

contest the timeliness or fact of its receipt of the unambiguous

written notice of Jumpsource's exercise of the option.8   Indeed,

despite Cummings's argument that settled law and public policy

demand, to ensure commercial certainty, that parties to a

contract be strictly held to the language they chose, Cummings

provides no persuasive argument that Jumpsource's multiple

communications within the opt-out period created any uncertainty

for Cummings.   See Korey v. Sheff, 3 Mass. App. Ct. 266, 268 n.5

(1975) ("It is generally held that timely notice of intent to

exercise an option to renew is effective upon receipt of such

notice").

     Cummings claims that the present case is distinguishable

from our precedent because the "notice" provision here specifies

that "[n]o oral, facsimile or electronic notice shall have any

force or effect."   We disagree, as our cases have held

nonconforming notice to be effective even where the notice

provision's language provided exclusive methods of delivery.

See, e.g., Gerson Realty Inc., 2 Mass. App. Ct. at 875

Massachusetts Port Authy., 346 Mass. 699, 705 (1964), whether
the details of the notice requirements are contained within the
option provision or as a stand-alone provision is not
dispositive.

     8 Nor does Cummings contend that an e-mail message does not
constitute "written" notice.
                                                                  17

(nonconforming notice was effective even though lease specified

that notice "shall not be deemed to have been duly given or

served unless in writing and forwarded by registered mail"

[emphasis added]).     In these circumstances, where Jumpsource

provided actual written notice of its decision not to extend the

lease within the time prescribed by the lease, the nonrenewal

option was not exclusive to Jumpsource, and there is no dispute

that Cummings received and acknowledged the e-mail notice, the

distinction proffered by Cummings does not alter the analysis or

the result we reach.

     Cummings also contends that policy reasons dictate that the

parties strictly adhere to the precise terms of the option

provision.   For example, Cummings posits that our holding would

enable tenants to misdirect landlords about their true

intentions as a negotiating strategy.9    Cummings further suggests

that under our holding, any notice -- whether via oral

communication or otherwise -- would invariably be sufficient to

exercise the option.    We disagree.   We do not intend to suggest

that any and all written communications of a party's intent to

     9 We reject Cummings's claim that Jumpsource could have
"changed its mind" after sending the e-mail messages expressing
its intent to invoke the option and subsequently relied on the
lease language to argue that its electronic communication was
ineffective. Had Jumpsource done so in the present factual
scenario under the same commercial lease, where the notice was
clear, repeated, and acknowledged, Jumpsource would have fared
no better than Cummings.
                                                                  18

exercise an option would be sufficient to satisfy the terms of

that option.   Likewise, we do not hold that an oral statement of

a party's intent to exercise an option would be sufficient (and

indeed it would not be so) where the contract requires the

notice to be in writing.   To be clear, we hold only that on the

undisputed summary judgment record before us, the clear, timely,

unambiguous written notice provided by the tenant and received

and acknowledged by the landlord constituted effective notice to

invoke the lease nonrenewal option before us.10

     The judgment dated September 17, 2021, is affirmed.

                                    So ordered.

     10In her decision allowing partial summary judgment, the
judge stated that "[t]here are no blameless parties here." She
further noted that Jumpsource failed to provide notice via the
methods specified in the lease, "a small act that would have
avoided costly litigation," while Cummings, despite having
"actual notice of Jumpsource's intent to terminate the
Lease . . . , covered its ears like a child unwilling to listen
to a piece of unwelcome information." Although our review is de
novo, we concur with the judge's assessment in this regard.
Protracted and needless litigation would have been avoided
through minimal reasonable conduct by either party.