ALTITUDE INC v. ALTITUDE PROPERTIES LLC (2019)

MEMORANDUM AND ORDER PURSUANT TO RULE 1:28

At issue is whether the plaintiff was entitled to summary judgment in its favor in this declaratory judgment action. The sole legal question is whether the assignment provision of the commercial lease between the parties precluded the plaintiff's sole shareholder from transferring his shares to a third party. Like the motion judge below, we conclude that it did not and that the plaintiff was entitled to summary judgment in its favor.

The facts are undisputed, and we draw them from the parties' joint statement of undisputed material facts, which was submitted in connection with their cross motions for summary judgment. On June 6, 2000, the parties ² entered into a commercial lease for property located at 363 Highland Avenue, Somerville. The lease included the following provision, which the parties agree is unambiguous: ³

“The LESSEE does not have the right to assign this lease. Assignment can occur only in the event LESSEE acquires or merges with another company and maintains controlling interest in the merged entity.”

As defined at the outset of the lease, the “LESSEE” is “Altitude, Inc., a Massachusetts corporation.” The contract's definition of “LESSEE” is not expanded beyond the corporate entity itself. For example, it does not include the corporation's officers, directors, owners, shareholders, successors, etc.⁴ Brian Matt, in his representative capacity as president of Altitude, Inc., signed the lease on the corporation's behalf.

In addition to being Altitude, Inc.'s president, Matt was also its sole shareholder. As of December 30, 2016, Matt entered into a stock purchase agreement whereby he sold all his shares in Altitude, Inc. to a third party.⁵ The defendant argues that Matt's transfer of his shares constitutes a prohibited assignment of the lease.

We disagree for two primary reasons. First, Matt is not personally bound by the terms of the lease, having signed it only in a representative capacity on behalf of Altitude, Inc. See First Safety Fund Nat'l Bank v. Friel, 23 Mass. App. Ct. 583, 585 (1987); G. L. c. 106, § 3-402 (b) (1) (with respect to negotiable instruments) (“If the form of the signature shows unambiguously that the signature is made on behalf of the represented person who is identified in the instrument, the representative is not liable on the instrument”). Second, Altitude, Inc. did not assign the lease. An assignment is “the act of transferring to another all or part of one's property, interest, or rights.” Commonwealth v. Power, 420 Mass. 410, 420 n.8 (1995), quoting Black's Law Dictionary 119 (6th ed. 1990). Here, the lease always remained with Altitude, Inc., either in its original form as a Massachusetts corporation or its converted form as a Massachusetts limited liability company.⁶ See G. L. c. 156D, § 9.55 (a) (7) (ii) (after conversion “the surviving entity is considered to ․ be the same corporation or other entity without interruption as the converting entity that existed prior to the conversion”). Thus, no assignment of the lease occurred.

For these reasons, summary judgment was properly entered in favor of Altitude, Inc. However, we are unpersuaded that the appeal was frivolous and therefore deny Altitude, Inc.'s request for fees pursuant to Mass. R. A. P. 25, as appearing in 376 Mass. 949 (1979).

Judgment affirmed.

FOOTNOTES

2.   The defendant, Altitude Properties, LLC is the successor-in-interest to the original lessor under the lease, Spy Pond Associates, Inc.

3.   Both parties take on appeal (as they did below) the position that the lease language is unambiguous. Although we agree, we note that the parties' view (even though unanimous) is neither binding nor dispositive; determining whether an ambiguity exists is a question of law for the court. See Bank v. Thermo Elemental Inc., 451 Mass. 638, 648 (2008).

4.   By contrast, the definition of the corporate “LESSOR” “include[s] its heirs, successors and assigns.”

5.   Related to that transaction, Altitude, Inc. was converted to Altitude, LLC, a Massachusetts limited liability company, pursuant to G. L. c. 156D, §§ 9.50-9.53.

6.   The defendant does not contend that this conversion violated the terms of the lease.