Kenwood Realty, LLC v. Change Healthcare Solutions, LLC

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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
KENWOOD REALTY LLC,
Plaintiff,
v.
CHANGE HEALTHCARE
SOLUTIONS, LLC
Defendant.
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C.A. No. 1:24-CV-00367-MSM
MEMORANDUM AND ORDER
Mary S. McElroy, United States District Judge.
Can a commercial landlord recover from a former tenant the costs of repairs
required by the lease, where the landlord sells the property to a third party without
having made those repairs? This is the question at the heart of this breach of contract
action by the plaintiff, commercial lessor Kenwood Realty LLC (“Kenwood”), against
the defendant, Change Healthcare Solutions, LLC (“Change”), the guarantor for
Kenwood’s former tenant.
For the reasons that follow, the Court holds that Kenwood is not entitled to
recover the cost of repairs that Kenwood has not and will never incur and GRANTS
Change’s Motion for Summary Judgment.
I. 	BACKGROUND
Most of the relevant facts in this case are not in dispute and, unless otherwise
stated, are drawn from the complaint. (ECF No. 1.) In January 2013, Kenwood (as
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Lessor) entered into a ten-year lease with American Medical Alert Corp. (as Lessee),
for the premises at 100 Freight Street in Pawtucket, Rhode Island. 	ECF No. 1 at
¶¶5-8. 	The Lessee later assigned the lease to an affiliate of Change’s—HCI
Acquisition Corp.
Id. at ¶¶ 15-18. In September 2019, Change executed a Guaranty
by which it guaranteed the obligations of the Lessee (including the assignee of the
lease, HCI Acquisition Corp.) to Kenwood.
	Id. at ¶19. 	In March 2024, Kenwood
agreed to sell the premises (together with several nearby parcels) to the City of
Pawtucket for $14.8 million. 	Statement of Undisputed Facts (ECF No. 18) at ¶15.
This conveyance included the fixtures and furniture then-present in the building.
See
ECF 20-5 (Resolution of the City Council of Pawtucket indicating that the Purchase
& Sale contract language provided for the conveyance of “the Property” and “fixtures
and any furniture, furnishings, and other personal property of the Seller at or on the
Property”).
On August 16, 2024, Kenwood sued Change in state court, claiming that the
former tenants of 100 Freight Street failed to maintain the property in good condition
as required by the lease, and seeking $2.7 million in repair costs laid out in a “Facility
Assessment, Repair and Replacement Cost Estimate” (the “R&R Cost Estimate”)
prepared by Kenwood’s damages expert. ECF 18 at ¶¶ 1, 3, 11. Kenwood admitted
in discovery that the repair and replacement work described in the R&R Cost
Estimate “hasn’t been done,” and the expense will never be incurred because
Kenwood has sold the building.
Id. at ¶13. Kenwood further confirmed in discovery
that all of the damages it sought (excluding attorneys’ fees and costs) were contained
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within that cost estimate.
Id. at ¶11.
After discovery, Change sought summary judgment based on Kenwood’s
failure to incur any of the repair costs set out in the R&R Cost Estimate prior to its
sale of the property to the City of Pawtucket. Change argues that since Kenwood has
now sold the property it will never incur those costs and cannot prove the damages
needed to sustain its breach of contract claim.
Kenwood objects primarily to Changes’ contention that Kenwood needs to have
incurred the repair costs in order to be entitled to compensation under the lease and
argues in the alternative that there remain disputed questions of material fact
regarding damages sufficient to defeat summary judgment.
II. 	SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate only when “there is no genuine dispute as
to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). 	A dispute is genuine “if the evidence about the fact is such that a
reasonable jury could resolve the point in the favor of the non-moving party,” and a
fact is material “if it carries with it the potential to affect the outcome of the suit
under the applicable law.”
	Santiago-Ramos v. Centennial P.R. Wireless Corp., 217
F.3d 46, 52 (1st Cir. 2000). But “factual disputes that are irrelevant or unnecessary
will not be counted.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “The
evidence of the non-movant”—here Kenwood—“is to be believed, and all justifiable
inferences are to be drawn in [its] favor.”
	Id. at 255. 	Summary judgment is
permissible, however, against a party who “fails to make a showing sufficient to
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establish the existence of an element essential to that party’s case, and on which that
party will bear the burden of proof at trial.”
Doe v. Ord. of St. Benedict in Portsmouth,
Rhode Island, 717 F. Supp. 3d 220, 228 (D.R.I. 2024) (quoting
Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986)).
III. 	DISCUSSION
A. Change’s Potential Liability as Guarantor
A guarantor is only liable to the guarantee if the guarantee has a valid claim
against the principal.
	Rhode Island Hosp. Tr. Nat. Bank v. Ohio Cas. Ins. Co., 789
F.2d 74, 79 (1st Cir. 1986). In other words, Change, as the tenants’ guarantor, is only
liable to Kenwood if and to the extent that the tenants would be liable for breaches of
the lease.
Change does not dispute that it is bound by the guarantee contract and only
disputes that Kenwood has sufficiently proved the elements of its breach of contract
claim. Accordingly, the Court assesses the merits of Kenwood’s underlying claim for
breach of the lease.
B. Breach of Contract
Both the lease and the guarantee contracts provide for the application of Rhode
Island Law. Under Rhode Island law, a breach-of-contract claim requires the plaintiff
to “prove both the existence and breach of a contract, and that the defendant’s breach
thereof cause the plaintiff’s damages.”
	Nissensohn v. CharterCARE Home Health
Servs., 306 A.3d 1026, 1037–38 (R.I. 2024) (quoting
Fogarty v. Palumbo, 163 A.3d
526, 541 (R.I. 2017)). 	Actual damages are necessary to sustain the claim.
	Leone v.
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Nationstar Mortg., LLC, 698 F. Supp. 3d 242, 246, fn. 1 (D.R.I. 2023) (citing
Petrarca
v. Fid. & Cas. Ins. Co., 884 A.2d 406, 410 (R.I. 2005)).
Rhode Island law also requires that “the amount of damages sustained from a
breach of contract … be proven with a reasonable degree of certainty. 	The plaintiff
must establish reasonably precise figures and cannot rely upon speculation.”
	Sea
Fare’s Am. Café, Inc. v. Brick Mkt. Place Assocs., 787 A.2d 472, 478 (R.I. 2001)
(internal citation omitted). “However, ‘[p]laintiffs will not be denied recovery merely
because the damages … are difficult to ascertain, as long as they prove damages with
reasonable certainty.’”
Id. 	The appropriate measure of damages in a breach of
contract case is the “measures of damage as will serve to put the injured party as
close as is reasonably possible to the position he would have been in had the contract
been fully performed.”
	George v. George F. Berkander, Inc., 169 A.2d 370, 372 (R.I.
1961).
In the realty context, contract damages generally take one of two forms: where
the damage is temporary the cost of repair measure is usually appropriate, and where
the damage is permanent, damages can be measured by the diminution in value of
the property.
	Tortolano v. DiFilippo, 349 A.2d 48, 52 (R.I. 1975). 	Kenwood only
sought damages under the cost-of-repair theory, as set forth in the R&R Cost
Estimate 	and 	confirmed 	by 	Kenwood’s 	30(b)(6) 	witness, 	manager 	Kenneth
Zuckerman. (ECF No. 15-5 at 28.)
1. 	Kenwood Cannot Recover the Cost of Repairs It Has Not and Will
Never Incur.
Rhode Island caselaw in which landlords seek payment for repairs they do not
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intend to make on property they no longer own is sparse, but the Seventh Circuit’s
decision in
Bowes v. Saks & Co., 397 F.2d 113 (7th Cir. 1968), is instructive. 	In
Bowes, a landlord sued a former tenant for breach of a lease provision requiring the
tenant to deliver the premises “in good order” and “as near to its original condition as
practical.”
	Id. at 114. The tenant conceded that it had not restored the building as
the lease required.
	Id. But the landlord sold the building without having made the
repairs.
	Id. at 117. The court held that in such circumstances the landlord “cannot
claim as damages the out of-pocket expenditures required to perform the restoration”
as “[n]o such expenditures have occurred” and “no such expenses will occur.”
	Id.
Having sold the building, the landlord retained “no present or future interest in it.”
Id. The landlord cannot recover damages when a tenant has failed to perform a repair
or restoration that provides no value to them.
Id. at 119.
This Court is convinced that the same reasoning applies here. Having elected
to only sue under a cost of repair theory and having conceded that Kenwood did not
incur any of the expenses contained within the R&R Cost Estimate, Kenwood cannot
prove its damages.
See Sea Fare’s Am. Café, Inc., 787 A.2d at 478.
The cases that Kenwood cited in opposition to the Defendant’s motion do not
change this analysis. 	Kenwood cites
Sophie F. Bronowiski Mulligan Irrevocable
Trust v. Bridges, 44 A.3d 116, 121 (R.I. 2012), for the proposition that any time a
lease provides that the tenant agrees to restore the property to the same condition
that the premises was in prior to the lease term, a plaintiff is entitled to obtain cost
of repair damages. (ECF No. 19 at 4). But in that case, the plaintiff-landlord owned
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the subject property throughout the litigation and appeal.
See Sophie F. Bronowiski
44 A.3d at 118 (“The plaintiff is the owner of a historic home…”). An expert witness
testified to repairs that would be necessary because of damage that the tenant caused
and associated costs that the plaintiff would actually incur.
	Id. at 119. 	Likewise,
while Kenwood is correct that in
Tortolano v. DiFilippo 	the Rhode Island Supreme
Court held that repair damages may be based “on an estimated cost of repair if such
opinion is expressed by a qualified expert,” in that case the plaintiff continued to own
the subject property through the appeal. 349 A.2d 48, 52 (R.I. 1975). There was no
suggestion in
Sophie F. Bronowiski or in
Tortolano that the plaintiffs in either case
would not actually make the repairs.
While courts do not police parties’ use of monetary awards post-judgment, that
principle presupposes a proven loss, and contract damages are meant to remedy
harm, not provide parties with a windfall. Accordingly, insofar as Kenwood seeks to
recover based on repair estimates set out in the R&R Cost Estimate but never
actually incurred, Kenwood’s claim fails.
2. 	Kenwood’s 	Other 	Arguments 	Raised 	for 	the 	First 	Time 	in
Opposition to a Motion for Summary Judgment are Waived.
In response to Change’s Motion for Summary Judgment, Kenwood raised three
new arguments: first, that Change is liable for damages for theft of furniture from
the premises; second that Kenwood was harmed by defendant’s “failure to maintain
workstations”; and lastly that Change is liable for other repairs that Kenwood
actually made. As these legal theories were raised for the first time in opposition to
summary judgment, they have been waived. 	In any case, the first two arguments
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also fail on the merits.
A litigant may not raise a theory for the first time in opposition to a summary
judgment motion.
	Carrozza v. CVS Pharmacy, Inc., 992 F.3d 44, 59 (1st Cir. 2021).
Allowing such a strategy is unfairly prejudicial to defendants who have focused their
discovery efforts on the theories actually pled.
Miranda-Rivera v. Toledo-Davila, 813
F.3d 64, 76 (1st Cir. 2016)
. At the 30(b)(6) deposition, Kenwood’s manager testified
that “all of the damages that [Kenwood] seeks in the lawsuit [are] encompassed
within [the R&R Cost Estimate].” (ECF 15-5 at 28.) Kenwood thus waived costs not
included in that estimate, as well as “diminution in value” damages associated with
Kenwood’s sale of the property to the City of Pawtucket.
Kenwood’s “stolen furniture argument” also suffers from a lack of non-
speculative damages. The manager was unable to identify the value of the property
that they allege tenants removed from the building. Even if Kenwood had identified
such damages, the sale of the building to the City of Pawtucket conveyed “fixtures
and any furniture, furnishings and other personal property of the Seller at or on the
Property.” 	(ECF 20-5.) 	So, it is hard to see how Kenwood could establish any
damages based on theft of furniture included in the sale to the City of Pawtucket.
The same is true for Kenwood’s claim regarding tenants’ “failure to maintain
workstations.” Not only did Kenwood fail to substantiate what those damages might
be, but Kenwood sold the workstations to Pawtucket as-is and failed to show how it
was harmed by the allegedly sub-standard condition of the workstations.
Kenwood’s argument for damages resulting from repairs it
actually made is its
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strongest in the abstract, but in addition to having been procedurally waived, this
claim also suffers from the absence of specificity. Kenwood’s Rule 30(b)(6) testimony
confirms that the repairs Kenwood is alleged to have made after the lease termination
are not part of the R&R Cost Estimate, and Kenwood’s manager was unable to testify
as to actual costs for those repairs.1 Accordingly, this argument, too, fails.
IV. 	CONCLUSION
For the foregoing reasons, the Court GRANTS Change’s Motion for Summary
Judgment (ECF No. 15).
IT IS SO ORDERED.
_________________________________
Mary S. McElroy
United States District Judge
October 8, 2026
1
See ECF No. 15-5 at 22 (Zuckerman testifying that he had “no idea” what post-
termination plumbing repairs cost);
id. at 36 (Zuckerman admitting that he had “no
idea” what it cost for Verizon to install new fiber optic line and restore service to
elevator);
id. at 54 (Zuckerman testifying that alleged repairs to security and CCTV
system 	were 	something 	“we 	kind 	of 	pieced 	[] 	together 	ourselves”);
	id. 	at 	87
(Zuckerman testifying that he did not know the cost of any electrical work done after
lease termination).
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