H&B Realty, LLC v. JJ Cars, LLC

STATE OF MAINE BUSINESS AND CONSUMER COURT
CUMBERLAND, ss. DOCKET NO. BCD-CV-2016-33

H&B REALTY, LLC, )
)
Plaintiff/Counterclaim Defendant, )
)
v. )
)
JJ CARS, LLC & JOHN MOKARZEL, ) ORDER FOLLOWING BENCH TRIAL
)
Defendants, Counterclaim Plaintiffs, )
& Third Party Plaintiffs, )
)
v. )
)
STERLING BOYINGTON, )
)
Third Party Defendant )

This case involves A commercial lease dispute, and a claim that the landlord racially

discriminated against the tenant's sublessees. The case was tried to the Bench on October 30, 2019.

Sterling Boyington (“Boyington”) testified on his own behalf, and on behalf of H&B Realty, LLC

(“H&B”). John Mokarzel (“Mokarzel”) testified on his own behalf, and on behalf of JJ Cars, LLC

(“JJ Cars”). Witnesses Justin Hynes, Abderrahim Lembarra, Shirley Deschenes, and Garrett

Chapman also testified. The parties submitted proposed Findings of Fact and Conclusions of Law

on November 27, 2019. For the reasons discussed below, the Court determines that the parties

have not prevailed on their respective claims. Accordingly, the Court grants judgment in favor of

Defendants, Counterclaim Defendant, and Third Party Defendant on the respective claims.

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FINDINGS OF FACT

The Court has carefully weighed the credibility of the parties and witnesses, who often

provided conflicting testimony. Based on the stipulations of the parties and the evidence adduced

at trial, and drawing all reasonable inferences there from, the Court makes the following findings

of fact.

At all relevant times, H&B was the owner of the premises situated at 220 Riverside Street,

Portland, Maine, and Boyington was the sole member of H&B. Boyington operated a car

dealership on the property. In 2011 Boyington decided to stop running the dealership and he put

up a sign that the property was for lease. Mokarzel saw the sign and decided he would like to

operate a car dealership at the property. Mokarzel created JJ Cars for that purpose. Mokarzel was

the sole member of JJ Cars.

On May 25, 2011, H&B and JJ Cars entered into a five-year Lease Agreement commencing

on July 1, 2011, and scheduled to terminate on June 30, 2016. Mokarzel guaranteed the payment

of rent and other charges under the Lease Agreement. As will be discussed in further detail below,

JJ Cars and Mokarzel ultimately experienced financial difficulties. They paid rent as required for

over four years, but made no rent payments after October 2015. H&B conveyed title to the

property to a third person purchaser on or about April 6, 2016, at which point the Lease Agreement

terminated.

Following execution of the Lease Agreement, JJ Cars took possession of the premises, and

from July 2011 until February 2013, Mokarzel operated a car dealership at the location. During

this period of time, Boyington would occasionally stop by Mokarzel’s 's dealership to check on

the property, and to socialize. During his visits, Boyington would make racist remarks about

people of color to the employees of JJ Cars, who were Caucasian. He referred to people of color

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as “those people." He occasionally used the N-word. Even though he lacked any authority,

Boyington would say to employees of JJ Cars that "if any of those people come in, they aren’t

allowed to use the facilities." He would also say “I don't like those people on my lot," even though

the lot was not Boyington’s to control. If Boyington observed a person of color use the bathroom,

Boyington would instruct one of JJ Cars' employees to clean up the bathroom afterwards. On at

least one occasion, Boyington told an employee to not let people of color into the office, but to go

outside to deal with them. The employees of JJ Cars generally disregarded Boyington, but were

offended by his comments. The comments also made Mokarzel uncomfortable. Mokarzel told

Boyington to stop making the comments; that those were Boyington’s opinions, not Mokarzel’s.

By February 2013, Mokarzel was in financial duress, and decided to close his business and

sublease the premises. JJ Cars sublet the premises to Omar Martinez (“Martinez”). Martinez

operated a business called Unique Auto Sales. Mokarzel did not provide H&B with the

prerequisites necessary to obtain H&B’s consent to sublet the premises, but Boyington

nevertheless consented. Martinez stayed in the location for six to seven months, but ultimately

moved his business to a new location on Warren Avenue in Portland.

Mokarzel next subleased the premises to an individual referred to as "Captain Bill."

Captain Bill operated an outboard motor repair business on the premises for about one month, but

then relocated. Mokarzel did not provide Boyington with the prerequisites necessary to obtain

approval to sublet premises to Captain Bill, but Boyington never objected to the sublet.

After Captain Bill left, JJ Cars subleased the premises to AHF, LLC (“AHF”). AHF was

owned by Abderrahim Lembarra (“Lembarra,” but sometimes referred to in the testimony as

“Abraham”) and two other individuals. AHF used the premises to operate a car dealership and a

transportation service. As with the other subtenants, Mokarzel did not provide to Boyington any

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of the prerequisite information and documents required by the Lease Agreement in order to obtain

the landlord’s consent to sublet the premises, but Boyington consented anyway.

Lembarra only met with Boyington on one occasion, about six weeks after AHF had

occupied the premises. Boyington appeared at the premises. Lembarra offered Boyington a cup

of tea. Boyington complained that in the past, Somalis from the business next door would come

onto the premises and do damage to his property. Boyington told Lembarra that “I wish I had a

wall to block niggers coming over to my property, they have done a lot of damage to my property."

Boyington asked Lembarra where he was from. Lembarra was offended by the tone and content

of Boyington’s comments.

AHF’s car dealership never turned a profit, and by approximately October 2015 AHF

decided to close its car business and relocate its transportation service to a better location. Once

again, Mokarzel began looking for a new subtenant.

By November 2015, Mokarzel had identified Wholesale Motors, Inc., a nearby company

owned and operated by David McGovern (“McGovern”), as a potential subtenant. McGovern is

Caucasian. McGovern began to occupy the premises. McGovern not only wanted to sublet the

premises, but to extend the Lease Agreement and possibly buy the property. In November 2015,

Mokarzel and McGovern asked to meet with Boyington, but Boyington refused. Mokarzel

persisted in attempting to arrange for Boyington to meet with McGovern, but Boyington said he

didn’t like McGovern and wouldn’t meet with him. Boyington refused to approve a sublease for

McGovern, and McGovern soon vacated the premises.

After that, the premises sat unoccupied. Mokarzel stopped paying rent and any other

expenses, and Boyington took no steps to find a new tenant. Boyington simply decided he no

longer wanted H&B to lease the premises. On February 1, 2016, Boyington sent JJ Cars and

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Mokarzel a notice of default. On March 10, 2016, Boyington served JJ Cars and Mokarzel with a

Complaint for FED. On March 24, 2016, with the cooperation of Mokarzel, Boyington obtained

an FED judgment for the premises. Thereafter, Boyington contacted a broker at CBRE to sell the

property. The property went under contract promptly, and closed on or about April 7, 2016.

CONCLUSIONS OF LAW

Based on its one count Complaint, H&B seeks damages for unpaid rent and other charges

under the Lease Agreement for the period November 2015 through April 6, 2016, which was the

day before the premises were sold. JJ Cars and Mokarzel seek to avoid paying damages on a

variety of grounds, two of which are persuasive. 1 Article XIII of the Lease Agreement provides

that Lessor’s consent to Lessee’s proposed sublease “shall not be unreasonably withheld or

delayed.” In this case, Boyington refused to provide H&B’s consent for JJ Cars to sublease to

McGovern, simply because Boyington did not like McGovern. Boyington did not withhold his

consent based on a “reasonable review” of McGovern’s creditworthiness, business experience, or

capacity to perform JJ Cars’ obligations under the lease. Boyington refused to conduct any review

at all, and refused to even talk with McGovern. McGovern wanted not only to sublease the

premises, but to extend the Lease Agreement and possibly even buy the building. Had Boyington

provided the reasonable consent required under the Lease Agreement, JJ Cars and Mokarzel would

not have been in the position of being unable to pay rent and other charges from November 2015

through April 6, 2016. H&B’s breach of the Lease Agreement therefore excused JJ Cars and

Mokarzel’s lack of performance. See Cellar Dwellers, Inc. v. D'Alessio, 2010 ME 32, ¶ 16, 993

A.2d 1.

1 For the reasons discussed in connect with the Third Party Complaint against Boyington, the Court does not find the
claim of discrimination is a defense to H&B’s breach of contract claim.

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Not only did Boyington fail to provide reasonable consent to sublease the premises, when

JJ Cars and Mokarzel began missing rent payments, Boyington took no steps whatsoever to lease

the premises to anyone else. It was not until near the very end of the lease term that Boyington

eventually decided to sell the building, after which it took only approximately two weeks to bring

a sale to closing. By failing to take any steps sooner, Boyington failed to mitigate damages.

H&B and Boyington argue that in the commercial lease context, a landlord has no duty to

mitigate damages unless the duty is contained in the commercial lease agreement. Dahl v. Comber,

444 A.2d 392, 393 n. 2 (Me. 1982). In this case, however, the Lease Agreement does obligate

H&B to mitigate damages. According to Article XX(a)(iv)(B) of the Lease Agreement, which

applies when the Lessor claims right to possession of the premises but has not yet terminated the

lease, “Lessor shall use commercially reasonable efforts to relet the leased premises or any part

thereof for such rent and upon such terms as Lessor, in its reasonable discretion, shall determine.”

H&B and Boyington were therefore required to mitigate damages, and failed to do so. For all of

these reasons, judgment is granted to JJ Cars and Mokarzel on the Complaint.

In their two count Counterclaim, JJ Cars and Mokarzel seek damages against H&B for

breach of the Lease Agreement’s obligation to not unreasonably withhold consent to subleasing,

and for fraud. Both counts fail. Although as discussed above H&B unreasonably withheld consent

for JJ Cars to sublease the premises to McGovern, neither JJ Cars nor Mokarzel has suffered any

damages therefrom. As to fraud, JJ Cars and Mokarzel failed to adduce any evidence that H&B

or Boyington engaged in fraud of any kind during the making of the Lease Agreement or thereafter.

Accordingly, judgment is granted to H&B on the Counterclaim.

In their Third Party Complaint against Boyington, JJ Cars and Mokarzel seek damages for

public accommodation discrimination pursuant to the Maine Human Rights Act, 5 M.R.A. § 4592.

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Their theory is that Boyington harbors racial animus against persons of color; harassed and

discriminated against JJ Cars’ subtenants; and caused those subtenants to vacate the premises. The

problem is that the evidence does not support the theory, at least as to causation.

Based on his bigoted, repulsive, and discriminatory statements to Caucasian employees of

JJ Cars, about persons of color who arrived on the premises to purchase a car, Boyington appears

to harbor racial animus against people of color. However, all the comments credibly established

by the evidence occurred while JJ Cars was still in business and occupying the premises—before

the subletting occurred. There was no credible evidence that Boyington made similar comments

directed at the subtenants of JJ Cars, or that Boyington caused the subtenants to vacate the

premises. Moreover, not all the subtenants of JJ Cars were people of color. To the contrary, on

behalf of H&B, Boyington consented to subletting to subtenants who were persons of color. The

only subtenant Boyington objected to was McGovern, and McGovern is Caucasian.

During his one meeting with Lembarra, Boyington made reprehensible statements about

Somalis involved with a nearby business. However, the comments were not directed at Lembarra;

Boyington only had that one conversation with Lembarra; and Boyington consented to AHF’s

sublease. AHF’s car business eventually failed of its own accord, which caused AHF to close its

business and relocate its transportation service. On the evidence, JJ Cars and Mokarzel have not

sustained their burden of proving discrimination against their subtenants. Therefore, judgment is

granted to Boyington on the Third Party Complaint.

CONCLUSION

For all the reasons stated above, judgment is granted to JJ Cars and Mokarzel on the

Complaint. Judgment is granted to H&B on the Counterclaim. Judgment is granted to Boyington

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on the Third Party Complaint. The Court declines to award attorney fees to any party, and each

party is responsible for its own costs.

So Ordered.

Pursuant to M.R. Civ. P. 79(a), the Clerk is instructed to incorporate this Order by reference

on the docket for this case.

Dated: January 3, 2020 __s/________________________
Michael A. Duddy
Judge, Business and Consumer Docket

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