Edgartown Art Gallery, Inc. v. Black et al

Filing 11

Judge Joseph L. Tauro: ORDER entered. MEMORANDUM and ORDER. (Geraldino-Karasek, Clarilde)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

EDGARTOWN ART GALLERY, INC.,
Plaintiff,
v.
IL TESORO, INC. and A.J. BLACK,
Defendants.

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Civil Action No. 12-11549-JLT

MEMORANDUM
February 19, 2013
TAURO, J.
I.

Introduction
This action arises out of the alleged breach of a lease to operate a restaurant at the

Charlotte Inn on Martha’s Vineyard. Plaintiff Edgartown Art Gallery, Inc. (“EAG”) brings five
counts against Defendants: 1) breach of contract; 2) breach of the implied covenant of good faith
and fair dealing; 3) breach of personal guaranty; 4) interference with advantageous business
relationships; and 5) violation of Mass. Gen. Laws ch. 93A. Before the court is Defendants’
Motion to Dismiss [#6]. For the reasons below, Defendants’ Motion to Dismiss [#6] is DENIED.
II.

Facts1
EAG and Defendant Il Tesoro, Inc. (“Il Tesoro”) entered into a lease on May 1, 2009. Il

Tesoro agreed to lease the restaurant space at the Charlotte Inn and operate a high quality

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The court takes the following facts from EAG’s complaint, Notice Removal, Ex. 1, at 3
[#1] [hereinafter Compl.], and presents them in the light most favorable to EAG.
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restaurant called “Il Tesoro at the Terrace.” Defendant A.J. Black executed the agreement as both
president of Il Tesoro and personal guarantor.2 The lease contained an initial one-year term, with
an option to renew for four more years. Il Tesoro did not exercise its right of renewal prior to the
end of the initial term, but EAG allowed it to operate the restaurant under the same lease terms.3
Defendants’ performance did not measure up to EAG’s expectations as set forth in the
lease. Among other failings, Il Tesoro refused to maintain the restaurant’s required hours of
operation and dress code.4 Its poor performance caused the restaurant to receive consistently
poor reviews.5 Il Tesoro also failed to acquire adequate insurance and pay all of its vendors.6 As a
result of failings throughout Il Tesoro’s tenancy, EAG exercised its right of termination in January
2012.7 Defendants subsequently appropriated EAG’s property and goodwill by using the
restaurant’s name without permission.8 They also refused to surrender the restaurant’s liquor
license, which prevented EAG from opening a new restaurant at the inn throughout 2012.9
III.

Analysis
a.

Standard of Review

To survive a motion to dismiss under Rule 12(b)(6), a complaint must include factual
allegations that demonstrate a plausible claim for relief.10 The “court must ‘take all factual

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Compl. ¶ 6.
Compl. ¶ 7.
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Compl. ¶¶ 9, 12.
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Compl. ¶ 13.
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Compl. ¶¶ 10, 15.
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Compl. ¶ 17.
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Compl. ¶ 14.
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Compl. ¶ 19.
10
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-58 (2007).
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allegations as true and draw all reasonable inferences in favor of the plaintiff.’ ”11 Nevertheless,
the court need not accept the plaintiff’s legal conclusions, and the plaintiff must provide more than
“labels and conclusions or a formulaic recitation of the elements of a cause of action.”12
b.

Defendants’ Motion to Dismiss

Defendants raise several arguments in support of dismissal. They argue that the Statute of
Frauds bars any subsequent oral agreement between the parties because the original lease involved
real property and contemplated a four-year renewal period. Thus, Defendants argue, EAG’s
claims predicated on the existence of the lease – breach of contract, implied covenant of good
faith and fair dealing, and personal guaranty – must fail. Defendants argue that the remaining
claims must fail because EAG has not alleged sufficient facts to state a claim.
Defendants’ arguments fall short. As to Counts I-III, EAG has sufficiently alleged that
upon expiration of the lease, Il Tesoro became a tenant at will subject to the same terms as the
original lease. A holdover tenant becomes a tenant at sufferance, “[b]ut a tenancy at sufferance is
readily changed into a tenancy at will by express or implied agreement of the parties. Whether
there has been such agreement is, of course, commonly an issue of fact.”13 The tenant at will holds
the premises “according to the terms of the written lease, in the absence of a new agreement,”14 “
‘the only difference being that, instead of being in under a written lease and for a fixed term, they
[are] in by parole and as tenants at will.’ ”15 EAG’s averments that Il Tesoro continued to operate

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Pettengill v. Curtis, 584 F. Supp. 2d 348, 362 (D. Mass. 2008) (quoting RodriguezOrtiz v. Margo Caribe, Inc., 490 F.3d 92, 96 (1st Cir. 2007) (emphasis omitted)).
12
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and citations omitted).
13
Staples v. Collins, 73 N.E.2d 729, 730 (Mass. 1947).
14
Boudreau v. Johnson, 134 N.E. 359, 361 (Mass. 1922).
15
Id. (quoting Walker Ice Co. v. Am. Steel & Wire Co., 70 N.E. 937, 939 (Mass. 1904)).
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a restaurant with permission for nearly two years after the lease expired sufficiently allege the
creation of a tenancy at will. Thus, EAG’s first three counts may proceed.
Defendants’ remaining arguments rest on a largely inaccurate reading of EAG’s complaint.
Contrary to Defendants’ assertion, EAG does allege that it terminated the lease pursuant to the
lease’s termination provision.16 And, EAG’s claim for interference with an advantageous business
relationship does not fail because EAG never intended to operate its own restaurant. Rather, EAG
sufficiently alleges that Defendants interfered with the relationship between EAG and its inn
customers.17 Similarly, EAG does not seek to hold Defendant Black liable for Il Tesoro’s tortious
conduct and breaches of contract but rather for his alleged individual conduct, which, of course,
must be proved at trial.
Finally, EAG has stated a claim for violation of Mass Gen. Laws Ch. 93A. Chapter 93A
prevents unfair or deceptive trade practices.18 “[C]onduct ‘in disregard of known contractual
arrangements’ and intended to secure benefits for the breaching party constitutes an unfair act or
practice for c. 93A purposes.”19 EAG has alleged more than a mere breach of contract.20 It claims
that Defendants misappropriated its goodwill and property, failed to pay debts to third party
vendors, and refused to surrender the restaurant’s liquor license, preventing EAG from opening a
new restaurant.21 EAG’s allegations withstand Defendants’ motion.
16

Compl. ¶ 17.
Compl. ¶ 28; see Fafard Real Estate & Dev. Corp. v. Metro-Boston Broad, Inc., 345 F.
Supp. 2d 147, 154 (D. Mass. 2004) (listing elements of claim for interference with advantageous
business relations).
18
See Ahern v. Scholz, 85 F.3d 774, 796 (1st Cir. 1996) (citing Mass. Gen. Laws Ch.
93A, § 11).
19
Anthony’s Pier Four, Inc. v. HBC Assocs., 583 N.E.2d 806, 821 (Mass. 1991).
20
See Ahern, 85 F.3d at 798 (“The simple fact that a party knowingly breached a contract
does not raise the breach to the level of a Chapter 93A violation.”).
21
Compl. ¶¶ 14-15, 19.
17

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IV.

Conclusion
For the foregoing reasons, Defendants’ Motion to Dismiss [#6] is DENIED.

AN ORDER HAS ISSUED.
/s/ Joseph L. Tauro
United States District Judge

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