Tag Archives: termination

Actions Speak Louder Than (Written) Words: When Strict Compliance is not a Defense to Actual Notice in Commercial Leasing

By on October 11, 2018

The Massachusetts Superior Court (Essex) recently held that failure to strictly comply with commercial lease notice requirements did not invalidate a tenant’s email and verbal notice of its intent to terminate a lease.  Specifically, the tenant wanted to avoid triggering the automatic extension clause in the lease but did not send notice in the manner required by the lease. In SpineFrontier v Cummings (2018), the Court held that the tenant’s email and verbal notice, although not in strict compliance with the lease, sufficiently conveyed to the landlord that the tenant did not intend to renew its lease.  

The Court went on to state that setting the sufficiency of actual rather than lease-prescribed notice aside, the landlord waived its right to assert the necessity of strict compliance with the written lease language. The landlord, by its own history of action, acted as though the Tenant’s Notice was sufficient notice to terminate the lease. The Court noted:

At no point following the [email or verbal notice] did Cummings notify SpineFrontier that its notice failed to comply with the requirements of SpineFrontier’s lease…Moreover, in the several months that followed, Cummings acted as if proper notice had been provided, repeatedly attempting to strike a deal with SpineFrontier on different terms for office space…

We consistently remind commercial tenants and landlords to strictly comply with their lease obligations.  If a lease states that notice must be given in a certain way (e.g. certified mail, overnight delivery, etc), then a landlord or tenant should always follow that, even if it seems unnecessary.  The “notice” provision is often overlooked at the beginning negotiations of a lease, but tenants and landlords should take the time to make sure it is workable.  Even so, SpineFrontier v Cummings makes it clear that strict compliance does not always win the day.  

Therefore, if you are a tenant that has failed to strictly follow your lease, you should speak with a commercial real estate attorney to determine if you may still have options.  Likewise, if you are a landlord and your tenant has not strictly followed the lease, do not assume that such failure is automatically in your favor.  You too should consult with a lawyer to determine your options. 

Copying Employer Data Ruled Not a Material Breach of Employment Contract

By on March 29, 2016

A recent Massachusetts Supreme Judicial Court case, EventMonitor, Inc. v. Anthony Leness, narrowly interpreted a common employment contract provision. Leness was an executive at EventMonitor. The parties signed an employment agreement, which provided the manner in which EventMonitor could terminate Leness’s employment. The agreement provided a  for-cause termination provision, permitting termination if Leness engaged in fraud or “defalcation” (misappropriation) of EventMonitor’s funds or other assets. The employment agreement also included a nondisclosure provision, requiring Leness to avoid disclosure of any of EventMonitor’s proprietary information and to return all such information if his employment terminated.

After six years of employment, the relationship between Leness and EventMonitor soured, and EventMonitor terminated Leness without cause. Shortly thereafter, EventMonitor learned that Leness had bought a one-year subscription to an on-line data storage service, and used this service to copy all of EventMonitor’s files that were on the computer. These files included proprietary information. After learning that Leness copied such information, EventMonitor retroactively changed Leness’s termination to be “for cause,” which allowed EventMonitor to suspend severance payments owed to Leness.

EventMonitor sued Leness for breach of contract, and Leness asserted several counterclaims, arguing that EventMonitor had no valid reason to consider Leness’s termination “for cause” and cease making severance payments. After a bench trial, the judge found that Leness had not materially breached the employment contract, and thus could not have been fired for cause. The judge found for EventMonitor on other counts, and both parties appealed.

The Supreme Judicial Court upheld the ruling. The court explained that a contract breach is a material breach when it involves “an essential and inducing feature of the contract.” Although Leness’s copying and failure to return EventMonitor’s proprietary information was a breach of the employment contract, the breach was not material because there was no evidence that Leness used the proprietary information for any purpose or disclosed the information to anyone. The court accepted the trial judge’s finding that the essential purpose of the relevant section of the employment contract was to protect the confidentiality of EventMonitor’s proprietary information, and as there was no evidence that EventMonitor’s information was disclosed to any third parties, Leness’s contract breaches were not material.

This ruling may be surprising to some observers because Massachusetts courts are ordinarily very protective of a business’s confidential information, and there was no dispute that Leness retained copies of such information. However, the plain language of Leness’s employment contract indicated that EventMonitor wanted to prevent the disclosure of such information. Because such information was not actually disclosed, EventMonitor’s interests, as stated in its contract, were protected. This ruling is instructive for employers.  Employment contracts should expressly state that the return of all company information is considered a material part of the agreement, and further that any severance packages are conditioned on not only the nondisclosure of proprietary information, but also on its full return, in order to ensure their enforceability. Concerned companies should contact a Massachusetts employment lawyer for a review of their contracts.