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Tenants of Condominium Units Beware: Condo Trust’s Grant of Parking Rights to Abutter Ruled Not Interference with Lease Rights

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by Anthony L. Leccese

The landlord in this recent Massachusetts Appeals Court case owns a commercial condominium unit in a mixed-use condominium complex with mostly residential units. The condominium’s parking areas contain a total of 91 parking spaces, some exclusive (i.e., assigned to a particular unit), but most (66 spaces) are non-exclusive common areas (i.e., available to visitors, owners, and residents of the condominium on a first-come, first-served basis). The landlord’s unit comes with 11 exclusive parking spaces and the right, in common with others, to use of the non-exclusive parking spaces. The landlord leases the unit, together with its parking rights, exclusive and non-exclusive, to a restaurant. The restaurant opens and finds the parking situation satisfactory, especially during the weekday when the demand for residential parking is less. The restaurant develops a thriving lunch and early bird dinner business.

Several years after the opening of the restaurant, the Trustees of the Condominium Trust execute a license agreement allowing employees of an abutting U.S. Postal Service (U.S.P.S.) facility to use up to 15 of the non-exclusive parking spaces. The restaurant experiences a loss of business, which it attributes to the reduction in available parking spaces for its patrons, and brings a claim against the Condominium Trust for intentional interference with contractual relations. The complaint alleges that the Condo Trust, by executing the license agreement with the U.S.P.S., intentionally interfered with the restaurant’s parking rights under its lease with the unit owner.

These are the facts presented in JNM Hospitality, Inc. v. McDaid, 90 Mass. App. Ct. 352 (2016). Unfortunately for the restaurant, a divided Appeals Court ruled that the Condo Trust did not interfere with the restaurant’s lease.

A claim for intentional interference with contractual relations requires proof of four elements: (1) a contract between the plaintiff and a third party, (2) the defendant’s purposeful inducement of the third party to breach the contract in whole or in part, (3) such intentional interference by the defendant must also be improper in motive or means of accomplishment, and (4) resulting harm to the plaintiff.

In this case, the court found that the restaurant failed to establish the second element of its interference claim, an induced breach of the lease or interference with the landlord’s performance of its obligations. The court determined that the lease contained no guarantee that the non-exclusive parking spaces will be available at any particular time or in any specified number. The lease merely allowed restaurant customers to compete with other visitors, residents, and unit owners for available non-exclusive spaces in the parking lot. As there was no enforceable right to any of the non-exclusive parking spaces, there was no breach of the lease by the landlord, and, therefore, there could be no intentional interference with the lease by the Condo Trust.

One of the three Appeals Court judges disagreed and filed a dissenting opinion stating that the lease conveyed to the restaurant the landlord’s right to the non-exclusive use of the common parking spaces. The judge indicated that there was a question of fact for the jury to decide: whether the Condo Trust interfered with the restaurant’s rights by allowing persons outside the condominium use of the parking spaces. Under the majority’s reasoning, the Condo Trust would be free to rent out all the common parking spaces, which the dissent thought obviously wrong. Furthermore, under the zoning regulations applicable to the condominium, the complex was required to have a minimum number of parking spaces available for occupants of the condominium. The restaurant was entitled to rely upon this requirement, meaning that granting parking rights to outsiders could constitute interference with the landlord’s obligation to make the legally required number of non-exclusive parking spaces available.