BROM+FLED II LLC & Another. v. COLONIAL TRADING COMPANY, INC.

NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule
23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28,
as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties
and, therefore, may not fully address the facts of the case or the panel's
decisional rationale. Moreover, such decisions are not circulated to the entire
court and, therefore, represent only the views of the panel that decided the case.
A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25,
2008, may be cited for its persuasive value but, because of the limitations noted
above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260
n.4 (2008).

COMMONWEALTH OF MASSACHUSETTS

APPEALS COURT

25-P-9

BROM+FLED II LLC & another. 1

vs.

COLONIAL TRADING COMPANY, INC.

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

The defendant, Colonial Trading Company, Inc. (tenant),

appeals from a Superior Court judge's judgment following a jury-

waived trial, ordering that the tenant pay the plaintiffs,

Brom+Fled II LLC and Brahmin Realty Associates LLC (landlord),

past-due rent (plus late fees and interest) and vacate the

leased building in the downtown section of the city of Boston

(building). The tenant contends that (1) its nonpayment of rent

was excused by the landlord's material breach, (2) the judge

erred by failing to treat the tenant's affirmative defenses as

counterclaims, (3) the tenant was entitled to a tenant

improvement allowance offset, and (4) if not excused for

1 Brahmin Realty Associates LLC.
nonpayment of rent, the tenant was only obligated to pay unpaid

rent, not additional fees associated with the nonpayment. We

affirm.

Background. The landlord and the tenant entered into a

ten-year commercial lease for the building on September 22,

2017. The monthly rent for the first five years was $12,500,

and for the last five years was $13,750, plus "additional rent"

covering real estate taxes and insurance.

On May 27, 2019, the tenant entered into a sublease with

Hostel Collective (hostel subtenant) for $6,700 monthly rent.

On July 2, 2019, the landlord instructed the tenant to cease

using the property "for Airbnb or other residential businesses

immediately," assertedly because the building was "registered

with the city as a commercial property" -- not residential.

Then, on September 3, 2019, the landlord sent a notice of

default alleging that the tenant was in breach of multiple

provisions of the lease and demanding that the hostel subtenant

leave the building, at which point the tenant asked the hostel

subtenant to vacate and the landlord took no further action.

In May 2020, the tenant ceased paying monthly rent. As a

result of the tenant's nonpayment, the landlord served a default

notice on July 30, 2020, informing the tenant that failure to

pay the rent for May, June, and July 2020, within five days

would constitute an event of default pursuant to the lease. The

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tenant did not make payment, and the landlord served a second

notice of default on September 3, 2020. Ultimately, on

September 25, 2020, the landlord filed an action against the

tenant for breach of contract and filed an amended complaint on

March 22, 2021.

Discussion. "The interpretation of a contract is a

question of law, which we review de novo." James B. Nutter &

Co. v. Estate of Murphy, 478 Mass. 664, 667 (2018). However,

"we accept the judge's findings of fact as true unless they are

'clearly erroneous.'" Millennium Equity Holdings, LLC v.

Mahlowitz, 456 Mass. 627, 636 (2010).

1. Material breach. "A breach of a contract is a material

breach when it involves an essential and inducing feature of the

contract" (quotation and citation omitted). EventMonitor, Inc.

v. Leness, 473 Mass. 540, 546 (2016). "It is well established

that a material breach by one party excuses the other party from

further performance under the contract." Ward v. American Mut.

Liability Ins. Co., 15 Mass. App. Ct. 98, 100 (1983).

The tenant argues that the landlord committed a material

breach of the contract when the landlord demanded that the

tenant terminate the sublease, and that the breach excused the

tenant from any obligation to pay rent. However, the argument

is unavailing because the landlord did not commit a breach of

the lease by requiring the tenant to terminate the sublease with

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the hostel subtenant. The tenant had not provided the landlord

with evidence that it had insurance to cover the hostel

subtenancy, the certificate of occupancy did not include use of

the building as a hostel, and the tenant began work on the

building without submitting plans to the landlord -- all

violations of the lease agreement. 2 Further, even if the

landlord's demand that the hostel subtenant vacate the building

had been unjustified, the tenant's foregoing material breaches 3

preceded the landlord's. And, although the landlord may have

later refused to consider any further subtenancies beginning

with a proposed subtenant in December 2021, any blanket refusal

of subtenancies began after the tenant was already in breach of

its obligation to pay rent. See Ward, 15 Mass. App. Ct. at 100.

2. Tenant's affirmative defense. At trial, the tenant

argued that the landlord's demand to remove the hostel subtenant

was a breach that either precluded the landlord from recovering

or entitled it to offset any damages. The tenant raised both of

these claims as a single affirmative defense in its answer to

the landlord's complaint. However, because the lease explicitly

2 We note that the appellant did not submit the then-
existing certificate of occupancy in the record on appeal.

3 The tenant makes no argument that its failure to comply
with the requirements related to insurance, the certificate of
occupancy, and the obligation to submit plans to the landlord
were not material breaches.

4
required that the rent be paid "without any set-off or deduction

whatsoever," the judge held that the tenant was barred from

seeking an offset. We discern no error. Balles v. Babcock

Power Inc., 476 Mass. 565, 571-572 (2017) ("When contract

language is unambiguous, it must be construed according to its

plain meaning").

The judge also appropriately declined to reach the tenant's

claim that the landlord had tortiously interfered with their

subtenancy, because the tenant had not asserted a counterclaim.

The defendant contends that it was error not to treat its

affirmative defense as a counterclaim for tortious interference.

Mass. R. Civ. P. 8 (c), 365 Mass. 749 (1974), states, in

relevant part, that "[w]hen a party has mistakenly designated a

defense as a counterclaim or a counterclaim as a defense, the

court on terms, if justice so requires, shall treat the pleading

as if there had been a proper designation." However, the tenant

explicitly stated in its opening argument that: "We did not

file a counterclaim, and you'll find no evidence of a

counterclaim, but you'll find that we have been asking for these

offsets from the beginning of the case." On the second day of

trial, the tenant again stipulated that there was no

counterclaim and confirmed that the offset had been raised as an

affirmative defense. The judge, therefore, cannot be faulted

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for concluding that the tenant had not mistakenly designated

their counterclaim as a defense. See Mass. R. Civ. P. 8 (c).

3. The tenant improvement allowance. The lease agreement

provided for a tenant improvement allowance for up to $26,250,

subject to certain conditions, including that the tenant provide

a written disbursement request. The tenant contends that, by

virtue of the lease agreement, it was entitled to the tenant

improvement allowance. We are not persuaded. The tenant

improvement allowance was only available if the tenant were not

in default, and the only disbursement request that appears in

the record was made on December 23, 2020, long after the tenant

was in default. While the tenant testified that it submitted a

request prior to December 23, 2020, the judge was not required

to credit this testimony particularly where, as here, there was

no additional credible evidentiary support. See Millennium

Equity Holdings, LLC, 456 Mass. at 636-638.

4. Damages. The judge awarded the landlord damages in the

amount of $545,054.45, an amount which included unpaid rent,

late fees, real estate taxes, and repair and maintenance

reimbursements. The tenant contends that the damages

calculation was based on an incorrect application of the lease's

acceleration clause. 4 The argument is not supported by the

4 The tenant's argument regarding the acceleration clause
appears to be a response to an argument advanced by the landlord

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record. Although Section 23.1 (d) (i) of the lease contains an

acceleration clause, Section 23.1 (d) (ii) alternatively allowed

the landlord to collect "sums equal to the Fixed Minimum Annual

Rent and Additional Rent which would have been payable by

Tenant, had Tenant not committed such Event of Default and had

Landlord not otherwise terminated the Lease as a result, on the

dates such payments would have otherwise been due" under the

lease. The $545,054.45 damages figure reflects the tenant's

total unpaid rent and fees 5 from May 2020 through December 2023,

as calculated in a ledger that was entered into evidence at

trial. Each of the entries having already come due, the

landlord's damages therefore reflect a calculation of damages

according to Section 23.1 (d) (ii) of the lease, rather than an

application of the lease's acceleration clause, which would have

made the tenant liable for the entire remaining rent and fees.

in postjudgment motions, in which the landlord justified the
application of prejudgment interest pursuant to G. L. c. 231,
§ 6C, beginning with the September 29, 2020 notice of default
through the lease's acceleration clause. The tenant does not
appeal the application of prejudgment interest beginning from
September 29, 2020, so we only address the tenant's argument
related to the lease's acceleration clause.

5 These fees include unpaid real estate taxes, late fees,
insurance payments, and repair and maintenance reimbursements.
All such fees fall under the lease's definition of "Additional
Rent," which includes "all other payments (including but not
limited to Real Estate Tax Payments, late fees, interest or
other fees, charges or sums) to be made by the Tenant to the
Landlord."

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Because the damages do not reflect an application of the lease's

acceleration clause, whether the acceleration clause could

properly have accelerated the tenant's liability for fees

additional to rent need not be resolved. 6

The tenant's argument that it should be excused from paying

rent for the floors that it did not occupy is also unavailing.

Section 5.1 (a) of the lease states that the tenant would be

responsible for the full rental amount "without any set-off or

deduction whatsoever." Further, Section 17.8 (e) of the lease

makes it clear that a subtenancy of the building's upper floors

had no effect on the tenant's obligations to the landlord:

"Neither the Sublease nor Landlord's consent thereto shall

release or discharge Tenant from any liability or obligation

under the Lease, and Tenant shall remain liable and responsible

for, the full performance . . . with the same force and effect

as though no sublet had been made pursuant to the terms of the

6 Nevertheless, tenant's reliance on Cummings Properties,
LLC v. National Communications Corp., 449 Mass. 480, 492 n.5
(2004), for the proposition that an acceleration clause cannot
make a tenant in default responsible for additional financial
obligations beyond rent is misplaced. The acceleration clause
in Cummings Properties, LLC only allowed the lessor to collect
"the entire balance in rent," while the acceleration clause here
allows the landlord to collect "the remaining total amount of
Fixed Minimum Annual Rent, Additional Rent and other charges
which would have been payable and due by Tenant for the
remainder of the Lease." See id. at 491 n.3. We need not
consider whether the acceleration clause constitutes a penalty
and not liquidated damages. See id. at 497.

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Lease." The tenant would have been obligated for the full

rental amount even if a subtenant occupied the other floors. 7

Judgment affirmed.

By the Court (Vuono,
Desmond & Toone, JJ. 8),

Clerk

Entered: February 11, 2026.

7 Given the result we reach, if for no other reason, the
tenant's request for attorney's fees is denied.

8 The panelists are listed in order of seniority.

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