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

Filing 77

OPINION AND ORDER: Judgment shall enter in favor of Sleepys, but the Judgment shall not be final until all issues surrounding attorneys fees and costs are resolved. Therefore, Sleepys has thirty (30) days to file a petition for fees and costs. If Sle epys files a petition, final judgment shall enter after the Court rules on Sleepys petition. If Sleepys does not file a petition within thirty (30) days, judgment shall become final. So Ordered by Chief Judge William E. Smith on 9/7/2016. (Jackson, Ryan)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
)
)
)
Plaintiff,
)
)
v.
)
)
SLEEPY’S, LLC,
)
)
Defendant.
)
___________________________________)
CRANSTON/BVT ASSOCIATES,
LIMITED PARTNERSHIP,

C.A. No. 13-594 S

OPINION AND ORDER
WILLIAM E. SMITH, Chief Judge.
In July 2004, Cranston/BVT Associates Limited Partnership
(“BVT”)

leased

a

retail

store

in

Cranston,

Sleepy’s LLC (“Sleepy’s”), a mattress retailer.

Rhode

Island

to

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

1

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

tenancy.

then

converted

the

Lease

to

a

month-to-month

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.
offer

As a result of Shaw’s solicitation, Shaw received an

from

Sleepy’s

Cranston Parkade.

on

May

21,

2004

to

lease

space

at

the

(Trial Ex. 1; Trial Tr. vol. 2, 10:19-21,

Dec. 22, 2015, ECF No. 75.)
2

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

contact with regard to the Property.

was

Sleepy’s

primary

(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

negotiations” and “helping to resolve disputes.”

“[o]ngoing
(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.
delivered

In
on

Acker’s
the

interactions
oral

with

agreements

3

Shaw,

they

Shaw

always

reached

during

negotiations.

(Trial Tr. vol. 2, 121:8-10, Dec. 22, 2015, ECF

No. 75.)
9.

The

Lease

set

forth

requirements

for

sending notices regarding the Lease to BVT.

Sleepy’s

when

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.
part

Section 15.13, titled “Exhibits,” provides in relevant

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”).
11.

(Trial Ex. 2, § 15.13.)

Prior to May 2013, the parties made changes to the

Lease on at least four occasions.
12.
(Trial

The first change took effect on November 20, 2007.

Ex.

3.)

The

amendment

itself

was

document titled “First Amendment to Lease.”

4

type-written
(Id.)

on

a

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”).
for

a

Renewal

Term

(Id.)

would

Each option to renew the Lease

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.
14.

(Id.)

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.
2009.

The next change to the Lease occurred on January 13,

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.)
with Acker.

Ellis remembers also discussing the rent issue

(Trial Tr. vol 1, 21:13-21, Dec. 21, 2015, ECF No.
5

74.)

Acker, however, recalls negotiating the issue only with

Shaw.

(Trial Tr. vol. 2, 102:5-24, Dec. 22, 2015, ECF No. 75.)

16.
letter

The negotiations culminated with a January 13, 2009
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 “kick out” clauses of various leases it had
with BVT.
17.

(Id.) 1
The letter was signed on behalf of First Hartford and

BVT by “Jay A. Shaw / [illegible initials].”
Shaw’s

signature

was

typed

“Jay

President/Director of Leasing.”
on behalf of Sleepy’s.

(Id.)

A.

(Id.)

Shaw,

(Id.)
Senior

Under
Vice

Acker signed the letter

Ellis claims that he directed his

secretary to sign Shaw’s name on the letter.
20:18-21:10, Dec. 21, 2015, ECF No. 74.)

(Trial Tr. vol 1,

Acker, however, worked

with Shaw on the terms memorialized in the letter and had no
knowledge of Shaw’s discussions or interactions with others at
BVT.

(Trial Tr. vol 2, 102:20-103:9, Dec. 22, 2015, ECF No.

75.)

1

In commercial leases, “kick out” clauses, generally,
allow a tenant to terminate a lease before the expiration of the
term if the tenant fails to meet certain sales thresholds.
As
Acker stated, by waiving these provisions in the Lease, Sleepy’s
was extending its commitment at the Premises.
(Trial Tr. vol.
2, 104:11-15, Dec. 22, 2015, ECF No. 75; Trial Ex. 6.)
6

18.

The parties transmitted the letters to each other via

facsimile.

(Trial Ex. 6; Trial Tr. vol. 1, 60:16-17, Dec. 21,

2015, ECF No. 74; Trial Tr. vol. 2, 103:21-104:1, Dec. 22, 2015,
ECF No. 75.)
19.
Acker

The third change to the Lease occurred in June 2011.

and

amendment

Shaw
to

communicated

section

9.1.2

of

Sleepy’s name to 1800Mattress.
20.

via

email

the

regarding

Lease

that

a

proposed

would

change

(Trial Ex. 8.)

Ultimately, Sleepy’s drafted a letter agreement, which

stipulated that if BVT agreed to its terms BVT should “sign this
letter

agreement

where

indicated

below

and

return

a

fully

executed original letter agreement to [Sleepy’s] by facsimile
. . . and by regular mail.

Facsimile or electronic signatures

shall be deemed original signatures.”
21.
(Id.)

(Trial Exs. 9, 38.)

The parties executed the agreement on June 9, 2011.

Ellis signed for BVT; Acker signed for Sleepy’s.

(Id.)

BVT’s in-house counsel, David Burns, indicated in an email to
Shaw that Burns had faxed a copy of the executed agreement to
Sleepy’s.

(Trial Ex. 38.)

Burns asked Shaw to send a scanned

copy of the agreement to Sleepy’s as well.
with

this

request

and

forwarded

Sleepy’s

(Id.)
a

Shaw complied

copy

via

email.

(Id.; see Trial Tr. vol. 1, 69:13-17, Dec. 21, 2015, ECF No.
74.)

BVT maintained a paper copy of the agreement with original

7

signatures in its files.

(Trial Tr. vol. 1, 23:22-24:17, Dec.

21, 2015, ECF No. 74.)
22.

Finally, on January 31, 2012, First Hartford sent a

letter to Sleepy’s, addressed generally to “Tenant,” allowing
Sleepy’s to change the name on the Lease from “1800Mattress”
back to “Sleepy’s.”

(Trial Ex. 10.)

for BVT and copied Shaw via email.

Ellis signed the letter

(Id.)

The letter did not,

however, contain a signature line for Acker, and neither Acker,
nor anyone else at Sleepy’s signed the letter.
23.

BVT

also

introduced

leases,

and

(Id.)
amendments

to

the

leases, for other retail stores Sleepy’s leased from affiliates
of BVT.
74.)
at

(Trial Tr. vol. 1, 60:16-17, Dec. 21, 2015, ECF No.

The leases for these buildings were the same as the Lease

issue

in

provision.

this

action

and

contained

the

same

modification

(Trial Tr. vol. 1, 13:2-19; 14:17-15:9; 75:13-17,

Dec. 21, 2015, ECF No. 74; Trial Exs. 29, 34.)

Amendments for

these other leases were signed by Ellis, “David B. Harding, Vice
President,” and “Jay A. Shaw, Senior Vice President.”

(Trial

Exs. 30, 31, 32, 6.)
24.
Harding

BVT
and

President.”

tries
Shaw

to

distinguish

despite

Specifically,

both
Ellis

between

having

the

testified

the

authority

title
that

of

of

“Vice

Harding

was

formally appointed Vice President by the Board; Shaw was not.
(Trial Tr. vol. 1, 76:13-24, Dec. 21, 2015, ECF No. 74.)
8

Ellis

admits, however, that BVT never communicated this distinction to
Sleepy’s.
25.

(Id. at 76:24-77:6.)
Mindful that the Nonrenewal Notice deadline for the

Lease was May 30, 2013, Rita Pendergast emailed Acker on April
30, 2013 asking if he wanted to speak to Shaw regarding the
Lease.

(Trial Ex. 11; Trial Tr. vol. 2, 109:13-110:19, Dec. 22,

2015, ECF No. 75.)
26.

Acker responded affirmatively.

(Id.)

Shaw did not want Sleepy’s to give Nonrenewal Notice

because Sleepy’s was a good tenant and Shaw wanted them to renew
their Lease.
No. 75.)

(Trial Tr. vol. 2, 29:25-30:4, Dec. 22, 2015, ECF

To that end, he engaged in negotiations with Sleepy’s

over the terms of a new lease.

(Id. at 30:5-11.)

Without these

ongoing negotiations, Shaw admits that Sleepy’s would have sent
the Nonrenewal Notice and vacated the Premises.

(Id. at 30:12-

14.)
27.

On

May

7,

2013

and

May

10,

2013,

Acker

discussed the upcoming renewal option by telephone.

and

Shaw

(Trial Tr.

vol. 2, 111:10-112:5, Dec. 22, 2015, ECF No. 75; Trial Exs. 12,
14.)
28.
May

As part of a weekly memorandum Shaw sent to Ellis on

13,

2013,

titled

“Outstanding

Items

5/6-10/2013,”

Shaw

noted, among other things, Sleepy’s Nonrenewal Notice deadline
of “5/31/2013.”

(Trial Ex. 15.)

9

29.

During their negotiations, Shaw and Acker reached an

agreement to extend the Nonrenewal Notice deadline in the Lease
by

thirty

days.

(Trial

Tr.

vol.

2,

116:10-20, Dec. 22, 2015, ECF No. 75.)

84:16-85:5;

112:3-18;

They agreed to this

extension so that they could have more time to negotiate a new
lease.

(Id. at 112:12-18.)

30.

On May 29, 2013, at the direction of Acker, Pendergast

emailed Shaw stating:

“Jay, As per your conversation with David

Acker this email is to confirm the extension of notice period
for the above listed locations [Cranston, RI] to June 30, 2013.
Please confirm.”

(Trial Ex. 16; Trial Tr. vol. 2, 94:22-95:1;

115:14-116:19, Dec. 22, 2015, ECF No. 75.)
31.

On May 30, 2013, Shaw replied in an email stating,

“Documentation to follow from David Burns in legal.

Can you

send me asap, schedule C specs that details LL work required for
North Adams Sleepy’s relocation[?]”
32.

(Trial Ex. 16.)

Acker interpreted this email as confirmation of the

change of the Nonrenewal Notice deadline to June 30, 2013 for
the Premises.
No.

75.)

(Trial Tr. vol. 2, 117:12-13, Dec. 22, 2015, ECF

Shaw’s

another property.
33.

Acker

request

for

“schedule

C

specs”

email,

along

related

to

(Id. at 118:21-119:1.)
relied

on

this

with

the

conversations and discussions he had with Shaw, in deciding not

10

to submit a Nonrenewal Notice by the May 30, 2013 deadline.
(Trial Tr. vol. 2, 84:16-85:5, Dec. 22, 2015, ECF No. 75.)
34.

Shaw

did

not

have

express

authority

extend the Nonrenewal Notice deadline.

from

Ellis

to

(Trial Tr. vol. 2, 12:1-

13; 14:20-25; Trial Tr. vol. 1, 34:23-35:2, Dec. 21, 2015, ECF
No. 74.)
116:14-20,

But Shaw did not tell Acker this.
Dec.

22,

2015,

ECF

No.

75.)

(Trial Tr. vol. 2,
Nor

did

Shaw

tell

Sleepy’s that BVT refused to extend the Notice period.

(Id.

40:3-6.)
35.

After May 30, 2013, the parties continued negotiations

surrounding the Lease.

(See id. 40:8-9; 41:21-44:3.)

During

these negotiations, BVT never notified Sleepy’s that the Lease
had automatically renewed.

(Id. 40:16-25, 45:17-20; see Trial

Tr. vol. 1, 31:15-32:10, Dec. 21, 2015, ECF No. 74; Trial Ex.
22.)
36.

On June 3, 2013, Shaw traveled to Hicksville, New York

to meet with Acker regarding the Lease.

(Trial Tr. vol. 2,

43:11-45:13, Dec. 22, 2015, ECF No. 75.)

At the meeting, Shaw

and Acker discussed the possibility of changing the tenancy to
month-to-month status.
37.
month

Acker

tenancy

negotiations.

(Id. 119:8-18)

believed
would
(See

converting

allow
id.

the

the

Lease

parties

119:11-18;

to

123:9-23.)

to

a

month-to-

continue
It

their

gave

the

parties more flexibility and would mean that they would not have
11

to

be

concerned

about

deadlines

at

the

end

of

every

month.

(Id.)
38.

On June 25, 2013, Pendergast, on behalf of Acker, sent

an email to Lois Crawford, a secretary at First Hartford, in
which Pendergast asked, “Please confirm that we agree to amend
our obligation at the above listed location[] [Cranston, RI] on
a month to month basis.”

(Trial Ex. 19; Trial Tr. vol 2, 88:13-

16; 95:2-20, Dec. 22, 2015, ECF No. 75.)

Receiving no response,

Pendergast sent a follow up email to Crawford and Shaw on June
27, 2013, in which she asked “Can you please confirm this via
email? Our notice is due on Sunday, otherwise I will have to
send the notice today.

Email confirmation will work for us.”

(Id.)
39.

Shaw orally confirmed the month-to-month status of the

Lease during a telephone conversation with Pendergast on June
28, 2013.

(Trial Ex. 20; Trial Tr. vol. 2, 136:20-137:22, Dec.

22, 2015, ECF No. 75.)
40.
him

When Shaw did not respond in writing, Pendergast sent

another

anything.

email

stating,

“Jay,

we

Please confirm via email.”

responded with a single sentence:

still

have

not

received

(Trial Ex. 19.)

“Rita[,] The month to month

lease status for Cranston and north adams is confirmed.”
Shaw intended Sleepy’s to rely on this email.
2, 50:11-51:20, Dec. 22, 2015, ECF No. 75.)
12

Shaw

(Id.)

(Trial Tr. vol.

41.

On July 1, 2013, Shaw included a note in his “Weekly

Update” memo to Ellis stating “Sleepy’s Month to month leases
for Cranston, North Adams, Jeff Carlson.”
42.

(Trial Ex. 21.)

Shaw did not have actual authority to amend the Lease

to change Sleepy’s tenancy to month-to-month status.

(Trial Tr.

Vol. 1, 35:3-6, Dec. 21, 2015, ECF No. 74; Trial Tr. vol. 2,
12:1-13; 21:18-19, Dec. 22, 2015, ECF No. 75.)
43.

However, Acker believed that Shaw had the authority to

agree to the month-to-month status change.
121:5-20, Dec. 22, 2015, ECF No. 75.)

(Trial Tr. vol. 2,

Thus, Acker did not send

a Nonrenewal Notice on June 30, 2013 because he was satisfied
with Shaw’s representations in the email.
44.

(Id. 90:5-11.)

Despite the representations in Shaw’s emails, on July

8, 2013, BVT notified Sleepy’s by letter that “the Lease term
will be extended until November 30, 2018” because Sleepy’s “has
not

provided

[BVT]

with

6

months’

advance

written

notice

to

elect to permit the Lease term expire [sic] on November 30, 2013
.

.

.

.”

(Trial

Ex.

22.)

According

“deadline for this notice was May 30, 2013.”
45.
letter.
75.)

Acker

was

very

surprised

when

to

the

letter,

the

(Id.)
he

received

BVT’s

(Trial Tr. vol. 2, 124:13-16, Dec. 22, 2015, ECF No.
He contacted BVT and discussed the letter with Ellis.

(Id. 124:18-125:11.)

Acker told Ellis of the existence of an

13

agreement with Shaw regarding the month-to-month tenancy, which
Ellis disputed.
46.

(Id.)

On July 16, 2013, Sleepy’s sent a letter, by certified

mail, to Ellis and Carlson, the individuals required to receive
notice under the Lease, stating that Sleepy’s was terminating
the Lease as of August 31, 2013.

(Trial Ex. 24.)

In pertinent

part, the letter stated, “[b]y this letter Tenant hereby informs
Landlord, pursuant to e-mail dated June 28, 2013, of Tenant’s
thirty (30) day notice to terminate the Lease.

Therefore, the

term of the Lease will expire on August 31, 2013.”
47.

(Id.)

On August 28, 2013, Sleepy’s sent a letter to Ellis,

with a copy to Carlson, enclosing the keys to the Premises.
(Trial

Ex.

25.)

Premises to BVT.
II.

With

the

letter,

Sleepy’s

delivered

the

(Id.)

Conclusions of Law
The legal issues presented to the Court at trial and in the

parties’

pre-trial

straightforward.

and

post-trial

memoranda

are

relatively

BVT advances a basic breach of contract claim.

In it, BVT argues that because Sleepy’s failed to submit its
Nonrenewal
renewed

Notice

for

by

another

May
five

30,

2013,

years,

the

until

Lease

automatically

November

30,

2018.

According to BVT, Sleepy’s then breached the renewed Lease when
it surrendered the Premises in August 2013 and stopped paying
rent.

Sleepy’s

counters

with
14

both

contract

and

equitable

defenses.

First, Sleepy’s argues that its admitted failure to

send the Nonrenewal Notice did not result in the Lease’s renewal
because BVT, through Shaw, amended the Lease.
Sleepy’s

argues

that

the

doctrine

of

And in any event,

promissory

estoppel

prevents BVT from arguing the Lease renewed for another five
years.
A.

Shaw as an Agent of BVT

The Court begins by analyzing Shaw’s agency relationship
with

BVT.

The

parties

hotly

dispute

whether

Shaw

had

any

authority to amend or waive provisions in the Lease, a disputed
fact that is essential to each of the arguments advanced by the
parties.
Rhode Island law recognizes an agency relationship “based
upon either actual authority or apparent authority.”

Commercial

Associates v. Tilcon Gammino, Inc., 998 F.2d 1092, 1099 (1st
Cir.

1993)

(citation

omitted).

Actual

authority

“requires

evidence of an actual understanding between the principal and
agent that the latter is to act on behalf of the former.”

Id.

Both Shaw and Ellis testified that Ellis, the principal, never
bestowed authority to amend the Lease on Shaw; Ellis retained
that authority.

(Trial Tr. vol. 1, 34:23-35:2, Dec. 21, 2015,

ECF No. 74; Trial Tr. vol. 2, 12:1-13, Dec. 22, 2015, ECF No.
75.)

Consequently, Shaw did not have actual authority to amend

Sleepy’s Lease.
15

But

Shaw’s

apparent

authority

is

a

different

matter.

Apparent authority “arises from the principal’s manifestation of
such

authority

to

the

party

with

whom

the

agent

contracts.”

Menard & Co. Masonry Bldg. Contractors v. Marshall Bldg. Sys.,
Inc., 539 A.2d 523, 526 (R.I. 1988) (citing Restatement (Second)
of

Agency

§

8

(1958)).

This

manifestation

of

authority,

however, “need not be in the form of a direct communication to
the third person.”

Id.

Instead, “[t]he information received by

the third person may come from other indicia of authority given
by the principal to the agent . . . .”

Id.

For example, a

principal can cloak an individual with apparent authority by
giving the person a position with generally recognized duties,
see Haviland v. Simmons, 45 A.3d 1246, 1260 (R.I. 2012), or by
allowing a person to act in ways that give the appearance that
the person has authority, see Petrone v. Davis, 373 A.2d 485,
487–88 (R.I. 1977). 2

2

Apparent authority also requires that “[t]he third person
with whom the agent contracts . . . believe that the agent has
the authority to bind its principal to the contract.” Menard &
Co. Masonry Bldg. Contractors v. Marshall Bldg. Sys., Inc., 539
A.2d 523, 526 (R.I. 1988) (citing Restatement (Second) Agency §
8, comment a at 30-31).
And that belief must be reasonable.
Commercial Associates v. Tilcon Gammino, Inc., 998 F.2d 1092,
1099 (1st Cir. 1993) (citing Rodrigues v. Miriam Hosp., 623 A.2d
456 (R.I. 1993); Restatement (Second) of Agency § 267).
As
detailed infra, Sleepy’s believed that Shaw had authority to
make the agreements at issue and its belief was reasonable.
(See Section B.)
16

Here, it is clear that Ellis and BVT, at a minimum, cloaked
Shaw with apparent authority.
himself

out

as

First

First, they allowed Shaw to hold

Hartford’s

“Senior

Vice

President

and

Director of Leasing,” a title that certainly conveys authority
to negotiate and amend property leases.
10:6-12, Dec. 22, 2015, ECF No. 75.)

(See Trial Tr. vol. 2,
Further, BVT admits that

Shaw was Sleepy’s primary contact throughout the term of the
Lease.

(Trial Tr. vol. 2, 24:22-23, Dec. 22, 2015, ECF No. 75.)

He solicited Sleepy’s to fill the retail space and engaged in
“ongoing

negotiations”

with

Sleepy’s

during

the

Lease

term.

(Trial Tr. vol. 1, 47:2-7, Dec. 21, 2015, ECF No. 74; Trial Tr.
vol. 2, 10:16-11:1, Dec. 22, 2015, ECF No. 75.)
not

enough

to

establish

Shaw’s

apparent

And if that was

authority,

at

least

after January 2009, BVT held out Shaw as having actual authority
to amend and waive lease provisions.

(See Trial Ex. 6.)

It was

at this time that Shaw’s name and signature appeared at the
bottom of a letter amending the Lease. 3
BVT
overlook

argues,

[authority

this
to

rather

incredibly,

evidence

because

amend

agree

or

(Id.)
that

“[t]he
to

3

amend

the

only
any

Court

should

individual
lease]

was

with
Neil

According to Ellis, he instructed his secretary to sign
Shaw’s name instead of his own.
(Trial Tr. vol. 1, 21:2-10;
49:1-9, Dec. 21, 2015, ECF No. 74.)
This testimony reinforces
the conclusion that BVT cloaked Shaw with apparent authority.
Ellis, BVT’s principal, admits that he held Shaw out as someone
capable of amending not just one, but multiple leases on behalf
of BVT.
17

Ellis.”

(Pl.’s Pre-trial Mem. 31, ECF No. 35.)

While this may

have been the understanding between Ellis and Shaw, it certainly
was not what Ellis and Shaw projected to Acker and Sleepy’s.
Shaw’s

title,

negotiations

his

with

admission
Sleepy’s,

that

and

he

his

engaged

signature

in

ongoing

appearing

on

amendments to the Lease more than suffices for the Court to
conclude that Shaw had apparent authority to negotiate, amend,
and waive lease provisions on behalf of BVT.
B.

Promissory Estoppel

Whether or not Shaw’s assurances amended or modified the
Lease presents a close call.

However, the Court need not decide

the issues because Sleepy’s easily prevails on its promissory
estoppel defense.
Under

Rhode

Island

law,

promissory

estoppel

claims

lie

where (1) one party has made a clear and unambiguous promise;
(2) a second party reasonably and justifiably relies upon that
promise;

and

(3)

the

causes it a detriment.
(R.I. 2003).

second

party’s

reliance

on

the

promise

Filippi v. Filippi, 818 A.2d 608, 626

Sleepy’s easily satisfies each element.

First, Shaw - through his conversations with Acker, his
emails, and his conduct - clearly promised to extend the Lease’s
Notice deadline and agreed to convert the Lease to a month-tomonth tenancy.

Shaw’s promise to convert the least to a month-

to-month tenancy could not be clearer.
18

On June 28, 2013, he

emailed Sleepy’s with a single sentence:

“The month to month

lease status for Cranston . . . is confirmed.”

(Trial Ex. 19.)

And, while the email evidencing Shaw’s promise to extend
the Notice period is not as clear, the other evidence introduced
at trial leaves no doubt that Shaw unambiguously promised to
extend the Notice date from May 30 to June 30, 2013.

On the

stand, Acker testified that Shaw orally agreed to the extension
during their negotiations in May 2013, a fact corroborated by
Pendergast’s

May

29,

confirm his promise.

2013

email

in

which

she

asked

Shaw

to

(See Trial Tr. vol. 2, 84:16-85:5; 112:3-

18; 116:10-20, Dec. 22, 2015, ECF No. 75; Trial Ex. 16.)

And if

there remained any doubt that Shaw extended the deadline, BVT’s
conduct

dispels

Nonrenewal
continued
July.

Notice
to

on

Despite
May

negotiate

with

30,

Sleepy’s
Shaw

Sleepy’s

not

readily
into

submitting

admits

the

early

a

that

he

part

of

(Trial Tr. vol. 2, 40:8-9; 41:21-44:3, Dec. 22, 2015, ECF

No. 75.)
it

it.

have

If BVT had not extended the Notice deadline, why would
continued

to

negotiate

with

Sleepy’s?

Without

the

extension, the Lease would have automatically renewed and BVT
would

not

have

needed

to

negotiate

a

new

lease.

Thus,

considering the totality of the evidence, it is clear that Shaw
unambiguously promised to extend the Lease’ Notice period by
thirty days.

19

Further,
relied

on

Sleepy’s

both

has

promises

demonstrated

to

its

that

detriment.

it

At

reasonably

trial,

Acker

expressly testified that he relied on them in deciding not to
submit

Sleepy’s

Nonrenewal

Notice

at

the

deadline and the extended June 30 deadline.
84:16-85:5;

90:5-11,

words,

Shaw

had

Dec.

not

22,

made

2015,

the

ECF

promises,

original

May

30

(Trial Tr. vol. 2,
No.

75.)

Sleepy’s

In

other

would

have

submitted its Notice and would not have faced the prospect of
being liable for another five years of rent for the Premises.
And,

contrary

to

BVT’s

assertions,

Shaw’s assurances was reasonable.

Acker’s

reliance

on

As noted above, BVT cloaked

Shaw with a significant amount of authority to negotiate lease
terms on its behalf.
Leasing,

Sleepy’s

Shaw was, after all, the Director of

primary

point

of

contact

during

negotiations, and even signed formal lease amendments.

lease
These

interactions support Acker’s belief that he could rely on Shaw’s
promise to extend the Notice period and convert the Lease into a
month-to-month tenancy, at least while negotiations surrounding
the Lease were ongoing.
BVT advances two arguments to defeat Sleepy’s promissory
estoppel

claim.

First,

it

argues

that

Sleepy’s

reliance

on

Shaw’s emails was unreasonable because, in the past, the parties
had

consistently

amended

the

Lease

20

through

a

type-written

document

signed

unpersuasive.

by

Ellis

and

Acker. 4

This

argument

is

For starters, even if this was true, as just

noted, Shaw was responsible for negotiating the lease provisions
that BVT ultimately reduced to writing; nothing in the record
suggests that Shaw’s two promises ventured beyond the authority
he

exuded

during

these

negotiations.

Indeed,

as

Acker

testified, throughout his interactions with Shaw, Shaw always
made good on his promises.
22, 2015, ECF No. 75.)

(Trial Tr. vol. 2, 121:8-10, Dec.

Further, contrary to BVT’s assertions,

the parties did not pursue a consistent course of conduct when
amending the Lease.
amendments

through

Though the parties seemed to create formal
type-written

documents,

the

documents

(1)

took multiple forms (compare Trial Ex. 3 with Trial Ex. 6 with
Trial Ex. 9 with Trial Ex. 10 with Trial Ex. 31 with Trial Ex.
32); (2) were signed by various individuals on the part of BVT

4

BVT also argues that Acker’s reliance on Shaw’s
assurances
was
unreasonable
because
Shaw
suffered
from
Parkinson’s disease.
According to BVT, because the disease’s
“cognitive symptoms were clearly displayed during Mr. Shaw’s
testimony on December 22, 2015,” Sleepy’s should have been on
notice in 2013 that it could not “justifiably or reasonably
believe that Mr. Shaw had authority to bind BVT.” (Pl.’s PostTrial Mem. 2-3, ECF No. 68.) This argument is absurd. Although
Shaw testified that he had Parkinson’s disease in 2013, BVT did
not submit any evidence to verify his condition at that time.
Consequently, there is no evidence to support BVT’s argument
that a third party like Acker would have even known that Shaw
suffered from the disease in 2013, much less that his condition
was so advanced that Acker should have questioned whether
Sleepy’s could rely on Shaw’s assurances.
21

(compare Trial Ex. 10 with Trial Ex. 31); (3) were sometimes
only signed by one of the parties (see Trial Ex. 10); and (4)
were sometimes transmitted electronically via email or fax (see
Trial Ex. 38).

All of this is to say that Sleepy’s reasonably

relied on Shaw’s promises even though they were not type-written
documents that followed BVT’s technical interpretation of the
Lease’s Modification Provision.
Nor does BVT’s second argument – that Shaw’s assurances
were part of ongoing negotiations surrounding the Lease – defeat
Sleepy’s

promissory

estoppel

claim.

To

be

sure,

promissory

estoppel cannot rest upon preliminary negotiations or a mere
agreement to negotiate the terms of a contract.

See B.M.L.

Corp. v. Greater Providence Deposit Corp., 495 A.2d 675, 677
(R.I. 1985).

Here, as both parties admit, between early May and

July 2013, Shaw and Acker were actively negotiating terms of a
new lease.

But this does not mean that BVT and Sleepy’s were

also still negotiating the extension of the Notice deadline and
the month-to-month tenancy for the existing Lease.

As detailed

above, Shaw made the two promises to induce Sleepy’s to continue
negotiating a new lease.

Thus, both the Notice extension and

month-to-month tenancy were agreements between BVT and Sleepy’s
separate and apart from the ongoing negotiations surrounding a
new

lease.

They

were

not,

themselves,

22

subject

to

ongoing

negotiations

and

do

not

defeat

Sleepy’s

promissory

estoppel

claim.
Ample

evidence

supports

the

conclusion

that

Sleepy’s

reasonably relied on Shaw’s promises to its detriment.

Sleepy’s

sustains its promissory estoppel defense and for this reason
Sleepy’s is entitled to judgment in its favor.
III. Conclusion
For the foregoing reasons, BVT’s claims against Sleepy’s
fail.
Judgment

Judgment
shall

shall
not

be

enter

in

final

favor

until

attorney’s fees and costs are resolved.

of

all

Sleepy’s,
issues

but

the

surrounding

Therefore, Sleepy’s has

thirty (30) days to file a petition for fees and costs.

If

Sleepy’s files a petition, final judgment shall enter after the
Court rules on Sleepy’s petition.

If Sleepy’s does not file a

petition within thirty (30) days, judgment shall become final.

IT IS SO ORDERED.

William E. Smith
Chief Judge
Date: September 7, 2016

23