Opinion
12-P-2016
06-30-2015
THOMAS FORD, trustee, v. WATERHOUSE PROPERTIES, LLC, & another.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The plaintiff, Thomas Ford, as trustee of Plymouth Conifer Realty Trust (Ford), filed a complaint in the Superior Court against the defendants, Waterhouse Properties, LLC and LG Automotive, LLC (Waterhouse), alleging breach of contract and seeking specific performance of an agreement to cooperate in building a road to access commercial property in Plymouth. Waterhouse, in turn, filed a number of counterclaims against Ford. Following a jury-waived trial, the trial judge entered judgment in favor of Waterhouse on the claims raised by Ford in his complaint and judgment in favor of Ford on Waterhouse's counterclaims. The parties cross-appeal from the respective judgments and Waterhouse appeals from an order denying its application for attorneys' fees.
Discussion. Following a jury-waived trial, we review the trial judge's findings of fact for clear error and review de novo his rulings on questions of law. Trace Constr., Inc. v. Dana Barros Sports Complex, LLC, 459 Mass. 346, 351 (2011). Additionally, we review the trial judge's ruling with respect to equitable remedies under an abuse of discretion standard. See Forman v. Gadouas, 247 Mass 207, 211 (1924) (specific performance); Astra USA, Inc. v. Bildman, 455 Mass. 116, 128 (2009) (rescission). We turn to the contentions of the parties on appeal, including breach of contract (Ford), easements (Ford), abuse of process (Waterhouse), covenant of good faith and fair dealing (Waterhouse), G. L. c. 93A (Waterhouse), and attorney's fees (Waterhouse)..
1. Breach of contract. Ford contends that Waterhouse breached its contractual obligations by failing to complete construction of the subdivision road. The trial judge found that, read as a whole, the "Joint Development Agreement" (agreement) between the parties and the 2007 amendment to the agreement did not impose an absolute obligation on Waterhouse to construct the road. Rather, he found that the agreement, as amended, required only that Waterhouse "diligently pursue completion of the contemplated roadway and to share in the costs of construction" and did not impose an absolute obligation on Waterhouse to complete the construction of the road. Our review of the agreement, as amended, discloses no error on the part of the trial judge in his interpretation of the contractual obligations imposed on Waterhouse. World Species List-Natural Features Registry Inst. v. Reading, 75 Mass. App. Ct. 302, 309 (2009) (interpretation of contractual language a question of law for the judge).
The judge also found that the credible evidence before him demonstrated that Waterhouse had stopped construction of the subdivision road because its application for a road opening permit had been indefinitely tabled by the board of selectmen of Kingston (board) and ultimately was denied. Thereafter, Waterhouse unsuccessfully sought judicial review of that decision.
The judge noted that Waterhouse filed suit in the Superior Court for judicial review of the board's adverse action, obtained a remand, and thereafter appealed the board's eventual denial of its permit application. Waterhouse's appeal was pending before this court at the time of the trial below. It was eventually decided in favor of the board in an unpublished memorandum and order pursuant to our rule 1:28, Waterhouse, LLC v. Selectmen of Kingston, 85 Mass. App. Ct. 1122 (2014), and further appellate review was denied by the Supreme Judicial Court. Waterhouse, LLC v. Selectmen of Kingston, 469 Mass. 1106 (2014).
In order to prevail, Ford must show that Waterhouse committed a material breach of the agreement. See Singarella v. City of Boston, 342 Mass. 385, 387 (1961). Accordingly, Ford testified that one of the Waterhouse partners stated to him that construction had in fact stopped due to the weather. He also testified that at another point in time the other Waterhouse partner stated he needed to sell something in order to fund the remaining road construction. The judge, however, as factfinder in this jury-waived trial did not find that road construction had stopped for either of those reasons. Rather, the trial judge credited the testimony on behalf of Waterhouse that the project was stopped due to its inability to obtain the necessary permits from the board.
Ford also asserts that the trial judge erred in not allowing two members of the planning board of Plymouth (board) to testify regarding an earlier decision of the board. He contends they would have explained that Waterhouse could have continued construction even without the Kingston permit. The trial judge concluded that it was for the court to interpret the board's decision and he did not permit witness testimony regarding what amounted to questions of law. See Perry v. Medeiros, 369 Mass. 836, 842 (1976). To the extent that Ford made an offer of proof that the witnesses would also testify regarding the approval process in Plymouth as to subdivisions and roadways, the judge determined that such evidence was not relevant to the issues before him. Given the trial judge's broad discretion with respect to evidentiary matters, we discern no error in the judge's ruling. See Gath v. M/A-COM, Inc., 440 Mass. 482, 488 (2003).
After a careful review of the record we discern no error on the part of the trial judge in concluding that Ford failed to prove by a preponderance of the evidence that Waterhouse had breached its obligation under the agreement to diligently pursue completion of the roadway.
2. Easements. Ford argues that the trial judge erred in declining to order the rescission of the easements the parties had granted each other and thereby to return the situation to the status quo ante. See Schwartz v. Rose, 418 Mass. 41, 47 (1994). Rescission, however, is equitable in nature and such a remedy lies within the sound discretion of the judge, whose decision should be informed by the totality of the circumstances. Browning-Ferris Indus., Inc., v. Casella Waste Mgmt. of Mass., Inc., 79 Mass. App. Ct. 300, 313, (2011). Considering the circumstances here, we conclude that the trial judge did not abuse his discretion in denying Ford's request for rescission.
In declining to order rescission, the judge concluded that there was no mutual mistake of fact warranting such relief. "Neither side can rescind the contract merely because the known and assumed risk turned out to be greater than either or both expected it to be." Cook v. Kelley, 352 Mass. 628, 632 (1967), quoting from Aldrich v. Travelers Ins. Co., 317 Mass. 86, 88 (1944). He specifically found that "the parties understood that construction of the roadway was contingent on obtaining the necessary local permits and they jointly assumed the risk that such permits might not be granted within the five year performance period." The judge thus determined that the failure to obtain the Kingston permit was not a mutual mistake of fact, but rather an assumed risk of which both parties were aware. To the extent that the request for rescission was premised on a claim that there was a mutual mistake of fact between the parties, the judge properly declined to order rescission.
He similarly declined to rescind on the ground of frustration of purpose. As he pointed out, equitable relief is appropriate only where the frustration of purpose is so severe that it cannot fairly be regarded as an assumed risk. Massachusetts Mun. Wholesale Elec. Co. v. Danvers, 411 Mass. 39, 52, n.8 (1991). The parties here are experienced in business and there is no evidence that when they exchanged easements they failed to understand that permits would be required to construct the road. In this regard we note, as did the trial judge, that Ford did not argue that the conveyance of cross-easements was subject to a condition subsequent that the construction of the road actually occur. On appeal, however, Ford in part supports the request for rescission by asserting that the doctrine of merger by deed does not apply to the conveyance of the easements in issue here. We disagree.
On the record before us, there is no basis for Ford's claim that there was an understanding that, should the road not be constructed, the easements that were exchanged by the parties would be reconveyed. Absent such an understanding, any remaining terms of their preconveyance agreement are merged, or extinguished by, those contained in the deeds by which the easements were conveyed. See Lipson v. Southgate Park Corp., 345 Mass. 621, 625 (1963). Ford's suggestion that the doctrine of merger works only to the benefit of sellers also is without merit. In any event, in the circumstances here involving a cross-conveyance of easements, Ford and Waterhouse are both in the position of "seller" and "buyer" with respect to the easements in issue.
To the extent rescission may be granted where there has been a complete failure of performance by one party, see Barry v. Frankini, 287 Mass. 196, 199-200 (1934), the judge concluded that no such failure occurred here. As previously noted, the judge found that Waterhouse did not breach its contractual obligations to Ford. Consequently, it can hardly be stated that rescission was warranted based on a failure of performance by Waterhouse.
Finally, we consider Ford's assertion that the consideration for the easements has failed and that Waterhouse will be unjustly enriched if the easements remain in place. Unjust enrichment is the "retention of money or property of another against the fundamental principles of justice or equity and good conscience." Santagate v. Tower, 64 Mass. App. Ct. 324, 329, (2005), quoting from Taylor Woodrow Blitman Constr. Corp. v. Southfield Gardens Co., 534 F. Supp. 340, 347 (D. Mass. 1982). The facts here involve the conveyance of cross-easements by both parties and each party has obtained use rights over a portion of the property of the other. Even considering the difficulties involved in successfully completing their joint project, it cannot be said that the easements were exchanged without consideration. Nor can it be successfully asserted that in circumstances involving a mutual exchange of easement rights by the parties that Waterhouse has been unjustly enriched.
3. Abuse of process. Abuse of process occurs when process was used "to accomplish some ulterior purpose for which it was not designed or intended, or which was not the legitimate purpose of the particular process employed." Millennium Equity Holdings, LLC, v. Mahlowitz, 456 Mass. 627, 636 (2010), quoting from Quaranto v. Silverman, 45 Mass. 423, 426 (1963). In order to prevail on its claim in this regard, Waterhouse is required to show that process was used for an ulterior or illegitimate purpose and that, as a result, it was damaged. Gutierrez v. Massachusetts Bay Transp. Authy., 437 Mass. 396, 407 (2002). To that end, Waterhouse asserts that Ford's pursuit of its unsuccessful breach of contract action amounted to an abuse of process. It further contends that the trial judge erred in concluding there was no abuse of process by Ford and dismissing Waterhouse's claim to that effect.
We accept the trial judge's findings of fact unless they are clearly erroneous and will uphold those findings unless we have a "definite and firm conviction that a mistake has been committed." Mahlowitz, supra at 637, quoting from Kendall v. Selvaggio, 413 Mass. 619, 620-621 (1992). The trial judge here found that Ford's breach of contract claim, although ultimately unsuccessful, was brought in good faith. On the record before us we discern no clear error in that determination and are not left with the "definite and firm conviction" that the trial judge was mistaken. The judge heard the testimony from Waterhouse that Ford was disappointed that he had not first purchased the property now owned by Waterhouse. Even if he credited that testimony, however, the trial judge was not bound to conclude that Ford brought suit against Waterhouse and obtained a lis pendens for the improper purpose of obtaining its land at foreclosure. Moreover, we discern no error in the judge's conclusion that the credible evidence supported a reasonable belief by Ford that Waterhouse was in breach of the agreement and that he brought the resulting action in good faith. In the circumstances, the judge did not err in concluding that Waterhouse had failed to prove by a preponderance of the evidence that Ford's pursuit of its breach of contract action amounted to an abuse of process.
Because we conclude that the trial judge did not err in entering judgment in favor of Ford on the abuse of process counterclaim, we do not address the issue raised by Waterhouse regarding damages on the claim.
4. Covenant of good faith and fair dealing. A covenant of good faith and fair dealing is implied as a matter of law in every contract in the Commonwealth. Chokel v. Genzyme Corp., 449 Mass. 272, 276 (2007). The covenant operates as a condition of the contractual arrangement that the parties will act in good faith and emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the other party. Tufankjian v. Rockland Trust Co., 57 Mass App. Ct. 173, 177 (2003), citing Cadle Co. v. Vargas, 55 Mass. App. Ct. 361, 366 (2002). As such, the covenant is designed to protect against one party interfering with the other's ability to realize the benefits of the contract. Eigerman v. Putnam Inv., Inc., 450 Mass. 281, 287 (2007).
In arguing error in the trial judge's determination that Waterhouse did not prove by a preponderance of the evidence that Ford breached the implied covenant, Waterhouse makes two main assertions. The first is essentially a restatement of its claim that the trial judge erred in concluding that Ford's action did not amount to an abuse of process that was aimed at unfairly acquiring the Waterhouse property. Having already concluded that the judge did not err in this respect, we do not address the contention further.
The second assertion by Waterhouse is that where the agreement between the parties did not impose an absolute obligation on Waterhouse to build a roadway, Ford's complaint seeking construction of the road sought to exact a benefit that was collateral to the agreement. See Anthony's Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 473 (1991). This, Waterhouse argues, amounts to a breach of the implied covenant of good faith and fair dealing. We disagree. Although the trial judge ultimately concluded that Waterhouse did not breach its obligation to diligently pursue construction of the roadway, he also concluded that the credible evidence supported a reasonable belief by Ford that Waterhouse was in breach of the agreement as Ford understood its terms to be. The evidence before the trial judge was that all road construction had stopped and, in large part, the trial revolved around why that was so and what the legal consequences of the delay might be. In the circumstances, the judge did not err in ruling that Waterhouse had not proven by a preponderance of the evidence that Ford commenced his lawsuit for an improper purpose in violation of the implied covenant. The fact that the trial judge ultimately ruled in favor of Waterhouse on the issue of whether it was in breach of the agreement does not establish that Ford was in violation of his duty of good faith and fair dealing in bringing suit in the first place.
Because we conclude that the trial judge did not err in entering judgment in favor of Ford on the implied covenant counterclaim, we do not address the question of damages on that claim.
5. G. L. c. 93A. Waterhouse argues that Ford violated G. L. c. 93A substantially for the same reasons argued in its claims for abuse of process and for a breach of the implied covenant of good faith and fair dealing. Ford argued below that the parties were engaged in a joint venture, and therefore not subject to G. L. c. 93A. On appeal, he disagrees with the judge's finding that the parties are in fact subject to 93A, but agrees with the ultimate decision that his actions were not unfair and deceptive.
G. L. c. 93A prohibits unfair and deceptive business practices that arise in dealings between discrete, independent business entities and not those that occur within a single company. Szalla v. Locke, 421 Mass. 448, 451 (1995). Nor does c. 93A apply to a transaction among private parties involved in the same venture. Newton v. Moffie, 13 Mass. App. Ct. 462, 469 (1982). Ford claims that this is exactly the type of venture in which the parties were engaged here. The judge, however, concluded otherwise.
Joint ventures can be said to exist where there is a contribution of money, assets and talents to a common undertaking, a joint property interest in the subject matter of the venture, and a shared right to control the venture. Zimmerman v. Bogoff, 402 Mass. 650, 660 (1988). Shain Invest. Co. v. Cohen, 15 Mass. App. Ct. 4, 8-9 (1982). Massachusetts Prop. Ins. Underwriting Assn. v. Georgaklis, 77 Mass. App. Ct. 358, 361-362 (2010). The trial judge here concluded that the agreement, as amended, did not indicate that the parties intended to share equally in profits or losses or to exercise joint control over an enterprise in such a way as to constitute a joint venture.
On this record, we discern no error in the trial judge's conclusion, which is supported by the evidence. The parties agreed to build a road that each would have access to, but the parties would otherwise separately develop and profit from their respective properties. Although both parties contributed financially to the project, there was no evidence that they intended to share in any of the resulting profits or losses. Although they did enter into a joint agreement, each party sought to benefit individually and separately from the other. The judge correctly concluded that the relationship into which the parties entered did not constitute the type of joint venture to which G. L. c. 93A would not apply.
We thus turn to Waterhouse's claims. In determining whether Ford's conduct was unfair and deceptive we look to the statutory criteria of whether it lies "within at least the penumbra of some common-law, statutory, or other established concept of unfairness; . . . whether it is immoral, unethical, oppressive, or unscrupulous; [and] . . . whether it causes substantial injury to consumers[,] competitors [,] or other business [entities]." Renovator's Supply, Inc. v. Sovereign Bank, 72 Mass. App. Ct. 419, 429 (2008), quoting from PMP Assocs. v. Globe Newspaper Co., 366 Mass. 593, 596 (1975). In asserting that Ford's conduct fits within the statute, Waterhouse relies on the facts it cites in support of its two previous common-law claims against Ford for abuse of process and breach of the implied covenant of good faith and fair dealing. Having already concluded that the trial judge did not err in determining that those claims are unsupported by the evidence, we give them no greater weight when raised in the context of Waterhouse's c. 93A claim.
Waterhouse goes on to argue that, even without the benefit of its common-law claims relating to abuse of process and breach of the implied covenant of good faith and fair dealing, Ford's conduct violated c. 93A in that it was otherwise unethical, immoral, oppressive, coercive or extortionate so as to be unfair under the statute. Waterhouse argues, however, that the trial judge did not make any findings on why Ford's conduct was not "unfair" within the meaning of G. L. c. 93A, § 11, even if not actionable at common law. Asserting that the trial judge consequently erred, Waterhouse goes on to cite the same claims it raised in support of its common-law claims, that (1) Ford sought to coerce Waterhouse into building a road it was not contractually bound to construct, and (2) Ford commenced suit in an effort to obtain ownership of the Waterhouse property.
We have already recited our view with respect to Waterhouse's two points as to the road construction and the ownership of its property. Neither lends support to its c. 93A claim. Nor is there support for its claim that the trial judge failed to make findings as to whether Ford's conduct was "unfair" on any basis other than the two common-law grounds. As to this point, we consider Waterhouse's characterization of the trial judge's decision to be unduly narrow. The judge articulates very clearly the various bases, common-law and otherwise, which can give rise to a successful c. 93A claim. Moreover, citing relevant case law, he describes how "unfairness" must be evaluated in the circumstances of each case. Having previously made extensive findings as to the conduct of the parties, he goes on to state that "under all the circumstances of this case, Waterhouse has not met its burden of proving that Ford's conduct was otherwise unethical, immoral, oppressive, coercive or extortionate so as to be unfair under G. L. c. 93A, § 11." The trial judge thus considered all grounds relevant to the issue before him, both common-law and otherwise, and we discern no error either in his analysis or in its scope.
Because we conclude that the trial judge did not err in entering judgment in favor of Ford on the G. L. c. 93A counterclaim, we do not address the issue raised by Waterhouse regarding damages on that claim.
6. Attorney's fees. The 2007 amendment to the agreement states: "In any action to enforce the provisions of this Agreement or for breach of this Agreement, the prevailing party shall be entitled to an award of reasonable attorneys' fees." With respect to agreements that provide for the payment of attorney's fees, the term "prevailing party" has been interpreted to include a party who succeeds in having a claim against it dismissed as well as one who brings a successful claim on which judgment enters. Bardon Trimount, Inc. v. Guyott, 49 Mass. App. Ct. 764, 778-779 (2000).
Here, neither Ford nor Waterhouse was successful as to any of the claims it brought against the other party. Consequently, neither party "prevailed" as to its own claims and thus is not be entitled to attorney's fees for work performed in their pursuit. Waterhouse, however, successfully defended against the claims brought by Ford, while Ford was successful in defending against the counterclaims brought by Waterhouse. Thus, both parties technically prevailed in defending against the claims brought against them and the trial judge noted that "[a]rguably Ford and Waterhouse each are entitled to recover its attorney's fees from the other under the 2007 Amendment." See Northern Assocs., Inc. v. Kiley, 57 Mass. App. Ct. 874, 879-880 (2003) (judge awarded both parties fees under contractual provision on claim by claim basis).
On appeal, Waterhouse asserts that it was error not to award it attorney's fees "because it should have prevailed on its claim for breach of the implied covenant." Waterhouse similarly argues that it should have prevailed on its c. 93A claim and thus is entitled to attorney's fees against Ford. We have already concluded that there was no error in the trial judge's denial of relief to Waterhouse on all of its counterclaims. Accordingly, Waterhouse cannot be characterized as a prevailing party on any of its counterclaims against Ford and on that basis is not entitled to attorney's fees.
Although recognizing that in the circumstances both parties are entitled to recover their reasonable attorney's fees under the 2007 amendment, the trial judge declined to make such an order. In doing so, he ruled that "justice and common sense dictate that each party bear its own attorney's fees and costs to reflect that each 'has dragged the [other] through a costly and ultimately fruitless exercise,'" quoting from Bardon Trimount, Inc., supra at 780.
The parties contractually agreed, however, to the award of reasonable attorney's fees in the circumstances presented here and neither argues that their agreement should not be enforced. In that the trial judge did not calculate the reasonable attorney's fees in this case, we view his decision as amounting to an abuse of discretion. WHTR Real Estate Ltd. Partnership v. Venture Distrib., Inc., 63 Mass. App. Ct. 229, 235 (2005) (reviewing award of attorney's fees for abuse of discretion).
Although Waterhouse has appealed the judge's decision not to order attorney's fees, Ford has not. As Ford did not appeal with respect to the denial of his attorney's fees, he has waived his right to further proceedings on that issue.
We conclude that this matter should be remanded to the Superior Court for the limited purpose of further proceedings with respect to Waterhouse's claim for attorney's fees consistent with this memorandum and order. The experienced trial judge may take further evidence and permit supplemental briefing on the issue, including that of the apportionment of Waterhouse's attorney's fees between the work performed in the successful defense against the claims brought by Ford (for which reasonable fees may be awarded) and the work done in the unsuccessful pursuit of Waterhouse's counterclaims (for which fees may not be awarded).
Conclusion. We affirm the judgment in favor of Waterhouse dismissing the claims brought against it by Ford in counts I and II of the plaintiff's complaint. We affirm the judgment in favor of Ford dismissing the counterclaims brought against it by Waterhouse in counts I, II, III and IV of the defendants' counterclaims. We vacate the order that each party bear its own attorney's fees and remand to the Superior Court for further proceedings consistent with this memorandum and order.
So ordered.
By the Court (Rapoza, C.J., Cypher & Fecteau, JJ.),
The panelists are listed in order of seniority. --------
Clerk Entered: June 30, 2015.