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ICSC Legal Database - CasesMonday, February 22, 1999 05:01 PM

Case Index:
00113

Citation:
Ahmed and Cesare, Inc. v. Watertown Arsenal Assoc., 29 Mass.App.Ct. 923, 557 N.E.2d 59 (1990).

Issue:
Whether, upon the rejection of the primary lease by the lessee, a landlord's failure to consent to an assignment

of the lease to the sublessee created a tenancy at will between the landlord and sublessee?

Facts:
The defendant owned a shopping mall and entered into a ten year lease with a franchisor of sandwich shops.

The lessee, after operating the premises for over two years, entered into a franchise agreement and sublease

with the plaintiff. Shortly after execution of the sublease, the defendant arranged for the plaintiff to remit its

sublease payments directly to it since the lessee was slow in remitting the lease payments. Approximately two

years after executing the sublease, the lessee sought the defendant's required approval to assign its lease to

the plaintiff. The defendant did not consent. One month later the lessee filed a petition for an assignment for the

benefit of creditors in a Florida court. Although continuance of this proceeding for 60 days constituted a default

under the express erms of the lease entitling the defendant to take remedial steps including, interalia,

repossession of the premises, the defendant did not seek any contractual remedy at this point. The Florida

court entered an order rejecting the lease and the defendant promptly notified the plaintiff that, due to the

rejection of the primary lease, it was no longer a subtenant but a tenant at will. After failing to reach agreement

on the terms of a new lease, the plaintiff brought a declaratory action claiming it was the assignee of the lease.

The defendant served notice to quit and commenced summary process to regain possession. In a consolidated

proceeding the trial court granted the defendant's motion

for summary judgment and the plaintiff appealed.

Holding:
Affirmed. The rejection of the primary lease by order of the Florida court was an event of default entitling the

defendant to possession. The fact that the defendant failed to act upon the first event of default, the continuance

 of the Florida proceeding for 60 days, did not amount to the defendant's acceptance of a surrender of the lease.

 Additionally, failure to act upon the first event of default did not bar the defendant from asserting its rights in

the event of a subsequent default. The court also held that the direct dealings between the plaintiff and

defendant did not estop the defendant from exercising its right to consent to an assignment of the lease. The

court intimated that the putative assignment may also have failed to meet the Statute of Frauds but did not

reach this issue.

Publication:
Legal Update

Date:
Winter 1990

Classification 1:
Landlord and Tenant

Classification 2:

Classification 3:

00113 - Legal Update - Winter 1990