Wheels fall off Charlestown landlord's $75-million suit against company that pulled out of proposed lease for R&D space

A judge this week ruled the owners of Hood Park off Rutherford Avenue have only themselves to blame for the way a robotic-luggage company pulled out of a seven-year lease and so tossed their $75-million lawsuit.

In his ruling, Suffolk Superior Court Judge Kenneth Salinger agreed with Piaggio Fast Forward - whose little luggage carts can be seen wheeling around Sullivan Square, from its current location on Roland Street - that Hood Park LLC essentially canceled a lease agreement by stalling on a verbal agreement to change one key condition in the proposed lease.

After agreeing to a seven-year lease, but before it signed it, Salinger wrote in a summary of the case, Piaggio asked for a clause that would let it pull out of the lease after just four years - on condition it would then remunerate Hood Park for the remaining three years. Hood said that was acceptable but asked that Piaggio sign the initial lease and then the two sides could agree on specific language for a lease amendment allowing that. Piaggio's CEO signed the initial lease - after several days of delay because he had broken his leg - but the company forwarded the signed agreement with a note saying it was contingent on agreement of the lease amendment.

And then the delays began. Hood Park said it could not provide the lease amendment until its lender gave its OK, then said it wouldn't even approach its lender until it got assurances that Piaggio was "on the same page." Piaggio then asked for an amendment that, instead of requiring it to pay three years of rent all at once should it terminate early, it be allowed to pay Hood Park in monthly installments for three years. Hood said no. Piaggio took another look at the space, previously rented to Bunker Hill Community College, and concluded it would cost twice as much to outfit for designing and building robotic luggage carriers as it had first thought and about a month and a half later, told Hood Park it was pulling out of the deal completely.

Hood Park sued for the entire seven years' worth of rent, plus damages, plus $2.4 million for letting Bunker Hill move out of the space early, all times three.

In his ruling, Salinger agreed with Piaggio's request to toss the case before it got to a jury, ruling that Hood Park basically negated the existing contract, even if Piaggio had signed it.

He began by noting that the agreement it did sign also said it would go into effect "only upon execution and unconditional delivery" by both sides:

This provision allowed either party unilaterally to impose a condition that would have to be met before the lease became effective and enforceable.

Piaggio made such a condition in its demand for a specific early termination clause. The CEO's signature on the lease effectively became void because Piaggio made it clear in advance that it was conditioned on both sides agreeing to add that clause, he ruled, continuing that while Hood Park agreed to such a clause, it then added it would only sign onto it after it got approval from its lender.

By imposing this condition on its acceptance of PFF's prior offer, Hood's response operated as a rejection of that offer, not as an acceptance.

But PFF also did some things only a tenant with a lease would do, Hood Park argued. No, it didn't, Salinger ruled.

Hood has not alleged facts plausibly suggesting that PFF accepted the contract as written by partially performing its obligations under the lease. Hood says that PFF visited the premises to prepare its obligations under the lease. Hood says that PFF visited the premises to prepare to undertake design of the tenant improvements that it would have to complete within 90 days after executing the lease, and that PFF negotiated the terms of a letter of credit for the security deposit that would be required under the lease. But Hood does not allege that PFF started to make any tenant improvements, and Hood concedes that PFF never paid the security deposit. Making "preparations for performance" under a lease of other contract does not constitute acceptance of the contract terms.

Ditto for Hood Park's allegation of fraud: If no real contract between the two parties existed, then there was no fraud when Piaggio just gave up on the deal, the judge ruled. Same for its argument that PFF violated a provision of state law related to "unfair and deceptive" practices.

There was nothing unfair or deceptive about PFF declining to be bound by an unenforceable commercial lease. .. PFF was free to back out of the deal after Hood effectively rejected PFF's condition that the termination clause must be changed; doing so is not unfair or deceptive conduct and does not violate [state law].

Complete ruling (3.1M PDF).