Christopher Vaccaro

Cummings Properties operates over 10 million square feet of well-maintained commercial real estate in desirable locations throughout Boston’s suburbs. Cummings is also an exemplary corporate citizen.

Cummings’ founders, Bill and Joyce Cummings, have donated most of their real estate empire to the Cummings Foundation, one of New England’s largest nonprofits with nearly $2 billion in net assets. The foundation has awarded more than $200 million in local grants, promoting human services, education, health care and social justice. It contributed to rebuilding Rwanda after the 1994 genocide. The foundation is a major benefactor of the Cummings School of Veterinary Medicine at Tufts University, New England’s only veterinary school.

However, Cummings’ philanthropy is not easily reconciled with its approach to tenant disputes. SpineFrontier Inc., a medical technology firm, knows firsthand the dangers of getting on Cummings’ bad side.

SpineFrontier is a Massachusetts success story. SpineFrontier signed Cummings’ standard form lease in 2006, with pages of fine print within narrow margins, for 331 square feet at the Cummings Center in Beverly. The lease included two clauses that are not found in most commercial leases.

One clause provided for an automatic five-year lease extension unless either party gave the other six months’ advance notice of lease termination. The other clause allowed Cummings to sue SpineFrontier for liquidated damages equal to all unaccrued rent for the remainder of the lease term (reduced to present value) if SpineFrontier defaulted.

This second clause, known as a rent acceleration clause, effectively allows landlords to repossess and relet the leased premises, and still claim payment of all unaccrued rents through the end of the lease term. The Massachusetts Supreme Judicial Court upheld rent acceleration clauses in two landmark cases. The SJC decided the first case in 2007, in a suit by Cummings against a defaulted tenant, and approved Cummings’ claim for over $500,000 of accelerated rents. It decided the second case in 2008 in a suit brought by the New England Patriots against a stadium seat licensee. The licensee had failed to make payments during the first year of a 10-year seat licensing agreement. The Patriots sued the licensee for the entire 10 years of license fees, and the SJC ruled in favor of the Patriots. In both cases, the SJC noted that the defendants had not shown that the acceleration clauses were too punitive to be enforced.

Judge Rules in Tenant’s Favor

SpineFrontier soon outgrew its space in Beverly. It expanded and relocated within the Cummings Center to over 18,000 square feet at $30,466 monthly rent, and extended its lease term to July 30, 2015. The automatic five-year extension and rent acceleration clauses remained in effect.

Within the timeframe for giving lease termination notices, SpineFrontier emailed Cummings in October 2014 that it intended to leave Beverly and move closer to Boston. The email did not specify that SpineFrontier was terminating its lease, but it made clear that SpineFrontier would leave Beverly after its lease expired in July 2015. The parties’ representatives held subsequent discussions about available space in other Cummings developments, during which SpineFrontier repeated its relocation plans. Cummings employees listened quietly, without comment as to whether SpineFrontier’s termination notice was adequate.

SpineFrontier began removing its furniture and equipment from the Cummings Center in July 2015, and returned its keys in August, thinking that it was done with Cummings. It wasn’t. On Aug. 5, 2015, Cummings sent SpineFrontier a letter by certified mail demanding an August rent payment and threatening to terminate the lease and sue SpineFrontier for $1.73 million of accelerated rent over a five-year automatic extension term.

SpineFrontier asked the Superior Court to declare that it had properly terminated the lease. Cummings countersued for the accelerated rent. Last March, after a jury-waived trial, a Superior Court judge ruled that SpineFrontier’s email to Cummings and subsequent discussions were adequate notice to prevent the lease from automatically extending. The judge also ruled that even if the email and discussions were insufficient, the rent acceleration clause requiring SpineFrontier to pay Cummings five years of accelerated rent was too punitive to enforce.

Cummings is appealing this decision, arguing that the Superior Court judge disregarded Supreme Judicial Court precedent involving lease options and accelerated rent clauses. SpineFrontier’s lawyers will have to convince the Appeals Court otherwise. Cummings’ other tenants, and prospective tenants, should pay attention to this case.

Christopher R. Vaccaro is a partner at Dalton & Finegold in Andover. His email address is cvaccaro@dfllp.com.