Pizza Payment Problems

Panagiotidis v. Galanis, 2015 VT 134

By Andrew Delaney

Mr. Galanis bought a pizza business from the Panagiotidises (hopefully that’s the correct way to pluralize—I’m stumped). Part of the deal was that Mr. Galanis pay rent so that the Panagiotidises could keep paying the mortgage on their building (where, as I’m sure you’ve already deduced, the pizza business was housed). Mmm . . . pizza.

Things were apparently fine for about nine months. Then, Mr. Galanis decided that he wasn’t thrilled with the deal. So he had his attorney send some letters seeking to renegotiate terms and Mr. Galanis started to have his attorney put the rent money into the attorney’s escrow account.

The Panagiotidises were not impressed with this turn of events. They filed suit to evict Mr. Galanis, got a default judgment, and a writ of possession. Mr. Galanis got the case reopened and filed a counterclaim. He argued that he was fraudulently induced into entering the agreement and the lease should be void. He alternatively argued that any breach was cured because he’d paid the rent into an escrow fund.

For several months, Mr. Galanis paid the rent into his attorney’s escrow account. Eventually, the parties agreed that the rent should be paid into court and released to the mortgagee. In the meantime, the Panagiotidises had fallen behind on the mortgage payments. Mr. Galanis didn’t pay any court costs or interest.

So, the trial court concluded that the lease was valid and enforceable and that Mr. Galanis had breached it by failing to pay rent. While Mr. Galanis had a statutory right to cure, he hadn’t done so because while he’d paid the back rent into court, he’d failed to pay costs and interest. The trial court also noted that the lease itself provided a right cure (without interest and costs), but that right had to be exercised within ten days of written notice of the breach.

On this point the lease said notice by certified mail though this was not the exclusive means of notice. The trial court reasoned that personal service of the lawsuit was certainly written notice and, in fact, was more effective and reliable notice than certified mail. There was a hearing and the trial court issued an order on damages.

Mr. Galanis appeals. His first argument is that the notice had to be by certified mail, so the trial court flubbed it when it found notice-by-lawsuit effective.

The SCOV gives this argument somewhat significant consideration. Notice generally has to conform to the lease terms. In the end, however, the SCOV reasons that the trial court got it right. Certified mail wasn’t the exclusive means of notice—the lease simply states that notice would be “deemed to be given” upon the certified-mailing thing. In this case, the notice by lawsuit was—as the trial court reasoned—an even-more-effective means of providing notice. There’s a one-of-these-is-not-like-the-other aside dealing with this case where the SCOV notes that it might’ve said some things that were a little broad in that case and a follow-up case, but that it certainly didn’t intend to not allow more effective service of notice than that provided in a lease. So, that bit’s done. The notice was good and the within-ten-days cure didn’t happen.

Mr. Galanis’s remaining argument—that he didn’t actually breach the agreement because he paid rent into his attorney’s trust account and later into court and the lease allowed that, but even if he did breach, he paid rent into court and that cures the breach—gets a paragraph.

First, nowhere in the lease was there a Mr.-Galanis-can-pay-rent-into-his-attorney’s-trust-account-if-that’s-what-he-feels-like-doing provision. So the whole no-breach-of-the-agreement pitch isn’t getting off the ground. Second, the statute requires payment of interest and costs to cure a breach, so that’s not gonna work either.

The SCOV affirms the trial court.

Now that we’ve gotten the legal stuff out of the way, let’s talk about pizza. I love pizza. I grew up in an Italian neighborhood in Connecticut before my family moved to Vermont, so I’m a bit of a pizza snob. One of our firm’s favorite pizza joints is Basil’s in Barre—thin tasty crust, excellent sauce, and fresh ingredients. What are your favorite pizza joints? Let us know in the comments.