Opinion
21-P-889
06-06-2022
STONEGATE GROUP MANAGEMENT, LLC v. TUCARD, LLC, & others. [1]
Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule 23.0, as appearing in 97 Mass.App.Ct. 1017 (2020) (formerly known as 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 23.0 or 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 23.0
Stonegate Group Management, LLC (Stonegate) filed an amended verified complaint in the Superior Court against Tucard, LLC, Joseph DiCarlo, Jr., and Frank Polak (collectively Tucard), in connection with the sale of commercial property. As relevant here, Stonegate filed a motion for endorsement of a memorandum of lis pendens and an order for specific performance. In response, Tucard filed a special motion to dismiss pursuant to G. L. c. 184, § 15 (c0 (special motion). After a hearing, the judge, in a thoughtful memorandum and order, denied Tucard's special motion, found that the action constituted a claim of right to title to real property, and endorsed the memorandum of lis pendens. This appeal followed. We conclude that the judge erred in endorsing the memorandum of lis pendens, but affirm the denial of the special motion.
General Laws c. 184, § 15 (d), permits an appeal from an interlocutory order denying a special motion to dismiss.
Background.
We recite the factual allegations as set forth in the parties' verified pleadings and affidavits. See Ferguson v. Maxim, 96 Mass.App.Ct. 385, 386 (2019). Tucard owned commercial property in Dracut that it offered for sale in July 2020. In September, Tucard accepted Stonegate's offer to purchase the property for $8.5 million. The offer provided that the parties' obligations were subject to the execution of a purchase and sale agreement (P&S) . In October, Tucard directed Stonegate to prepare an initial draft of a P&S. Over the next few months, the parties exchanged drafts of the P&S. Stonegate assented to nearly all of Tucard's proposed revisions. On December 13, 2020, Stonegate sent version six of the P&S to Tucard, which incorporated all of Tucard's requested changes. Tucard's attorney responded that he would review the P&S with his client, and "confirm [that] we are 'there' ... on my end." Thereafter Stonegate sent version seven of the P&S to Tucard. Version seven incorporated all of Tucard's suggested revisions and made a few minor grammatical corrections. Stonegate signed version seven of the P&S. In late December, Tucard notified Stonegate that it was unwilling to sign the P&S. This litigation followed.
Discussion.
Tucard contends that the judge erred in endorsing the memorandum of lis pendens because the verified complaint failed to name as defendants the "part[ies] in occupation under a written lease" as required by G. L. c. 184, § 15 (b). It also claims that the judge erred in denying the special motion. We address each in turn.
1. Lis pendens.
"A lis pendens is a written notice that alerts prospective buyers of property to pending lawsuits that claim an interest in that property." Ferguson, 96 Mass.App.Ct. at 388. General laws c. 184, § 15 codifies the process for obtaining a lis pendens. Id. As relevant here, a plaintiff is required to file a verified complaint naming as defendants all of the owners of record and any party in occupation under a written lease. See G. L. c. 184, § 15 (b). The complaint must also contain "the claimants' sworn certification 'that the complainant has read the complaint, that the facts stated therein are true and that no material facts have been omitted therefrom.'" Ferguson, supra, quoting G. L. c. 184, § 15 (b). When "[p]resented with a statutorily compliant verified complaint in which the 'subject matter of the action constitutes a claim of a right to title to real property or the use and occupation thereof,' the judge 'shall' make a finding to that effect and endorse the lis pendens." Id. The judge's discretion is limited; so long as the statutory perquisites are met, "the allowance or denial of a memorandum of lis pendens hinges on the nature of the claim, not the merits thereof." Id. at 388-389, quoting DeCroteau v. DeCroteau, 90 Mass.App.Ct. 903, 905 (2016).
"We review a judge's decision allowing a memorandum of lis pendens ... to determine whether the judge committed an error of law or abused his discretion." Citadel Realty, LLC v. Endeavor Capital N., LLC, 93 Mass.App.Ct. 39, 44 (2018). Here, Tucard claims that the judge abused his discretion in endorsing the memorandum of lis pendens because Stonegate failed to comply with the lis pendens statute where it did not name the commercial tenants as defendants. The judge concluded that this was not fatal to Stonegate's complaint because "[t]he names of lessees available from publicly available documents may or may not be current and may or may not be the lessee's true corporate name." He also noted that "the Offer required Tucard to provide the names of the lessees, which it has failed to do."
In analyzing this claim, we turn to the language of the statute. General laws c. 184, § 15 (b) provides that "[t]he complaint shall name as defendants all owners of record and any party in occupation under a written lease" (emphasis added). When used in a statute, the word "shall" generally denotes a mandatory requirement. See Sullivan v. Brookline, 435 Mass. 353, 360 (2001) ("shall" interpreted as mandatory in accord with general rule of statutory interpretation). This interpretation is underscored by the fact that "strict compliance with statutory prerequisites" is required to obtain a lis pendens, in no small part due to "the serious consequences that may arise from the recording of a memorandum of lis pendens." DeCroteau, 90 Mass.App.Ct. at 906.
Stonegate contends that it was unable to name the commercial tenants as defendants because Tucard failed to provide this information despite "repeated requests and demands." But Stonegate was not without any information. It appended to the amended verified complaint, as exhibit A, a twenty-four page, color brochure entitled "exclusive investment offer." The brochure contained, among other things, the rent rolls for three categories of tenants, and building descriptions that identified the lessee, lease term, and monthly rent of those tenants. It is true that some of the leases were expired, and that some of the lessees were named as "DBA." Stonegate argues that it did not want to "guess" as to the identity of the tenants, and that Tucard was estopped from challenging the lis pendens on this ground because it failed to provide the necessary information. But Stonegate did not make any effort in this regard. For example, the brochure contained detailed information about the three telecommunication tenants and self-storage facility, information that was likely subject to independent confirmation. And some of the leases were still current. We are not unsympathetic to Stonegate's position, but under the particular circumstances of this case, we are constrained to conclude that endorsement of the memorandum of lis pendens was error where the complaint failed to name the tenants as defendants. Cf. Ferguson, 95 Mass.App.Ct. at 395-396; DeCroteau, 90 Mass.App.Ct. at 906. Notwithstanding our conclusion, nothing herein prevents Stonegate from seeking to further amend its complaint to add the commercial tenants as defendants. See Mass. R. Civ. P. 15 (a), 365 Mass. 761 (1974). We note that any such request to amend is to be "freely given when justice so requires." Id.
There were seven commercial tenants, three telecommunication tenants, and a self-storage tenant.
This is an acronym for "doing business as."
That Stonegate could have cured its omission by amending the complaint does not alter our view, as it took no steps to do so. See Ferguson, 96 Mass.App.Ct. at 395.
2. Special motion to dismiss.
The lis pendens statute permits a defendant to file a special motion to dismiss if it "believes that the action or claim supporting the memorandum of lis pendens is frivolous." G. L. c. 184, § 15 (c0 . See Ferguson, 96 Mass.App.Ct. at 389-390. "[T]he burden is on the defendant[s] to demonstrate, by a preponderance of the evidence, that the plaintiff[s'] claim[s are] completely lacking in 'reasonable factual support . . . or . . . any arguable basis in law'" (citation omitted). Ferguson, supra at 390. "[T]he question to be determined by a judge ... is not which of the parties' pleadings and affidavits are entitled to be credited or accorded greater weight, but whether the party with the burden of proof (here, [Tucard]) has shown that the claim[s] made by [Stonegate were] devoid of any reasonable factual support or arguable basis in law" (quotation and citation omitted). Id. We review the denial of a special motion for an abuse of discretion. Id.
Tucard contends that Stonegate's complaint is devoid of any reasonable factual support because the offer was not a valid contract, and therefore it was not binding. It also argues that Stonegate's claims are barred by the Statute of Frauds; the misrepresentation count fails to state a claim upon which relief may be granted; and the G. L. c. 93A and declaratory judgment counts must be dismissed because they are inextricably linked to the other frivolous counts. We address each contention in turn.
a. The offer.
As to the enforceability of the offer, "[o]rdinarily the question whether a contract has been made is one of fact" (citation omitted). Coldwell Banker/Hunneman v. Shostack, 62 Mass.App.Ct. 635, 640 (2004) . Here, the offer was signed by sophisticated parties. It set forth the essentials of the agreement, including a negotiated purchase price resulting in close to a one million dollar increase from the original offer. For purposes of the special motion, we conclude that the signed, negotiated offer was supported by valid consideration. See Ferguson, 96 Mass.App.Ct. at 392 ("the offer attached to the complaint identified a buyer and a seller; specified a purchase price; established a date, time, and place for closing; and appeared to be fully executed"). As in Ferguson, supra, and McCarthy v. Tobin, 429 Mass. 84 (1999), the terms contained in the offer "support a finding that in executing the offer, [Tucard] and [Stonegate] intended to enter into a binding contract in which all material terms of the property sale were established." Ferguson, supra. That the offer contained conditions and limited uncertainties does not mean there was no contract. See Lafayette Place Assocs. v. Boston Redev. Auth., 427 Mass. 509, 518 (1998) ("Rules of contract must not preclude parties from binding themselves in the face of uncertainty. If parties specify formulae and procedures that, although contingent on future events, provide mechanisms to narrow present uncertainties to rights and obligations, their agreement is binding").
We reject Tucard's contention that the language regarding execution of the mutually satisfactory P&S precludes a determination that the signed offer was a binding contract. See I&R Mech. Inc. v. Hazelton Mfg. Co., 62 Mass.App.Ct. 452, 455 (2004) (acceptance occurs when offeree gives return requested in offer, thus ripening into binding contract). Cf. McCarthy, 429 Mass. at 85-88 & 88 n.3. We also reject Tucard's argument that performance was conditioned on the execution of a "mutually satisfactory" P&S. Notably, Tucard's attorney admitted that Tucard did not sign the P&S because it "didn't like the deal." This admission is in direct contradiction to the requirement in the offer that the parties use "best efforts" to satisfy the offer's conditions and obligations, and cannot serve as a basis to dismiss the complaint. See Stabile v. McCarthy, 336 Mass. 399, 404 (1957) ("Even under an express requirement that 'reasonable effort' be employed, . . . it is a question for the trier of the facts whether reasonable efforts have been exerted").
Tucard next asserts that Stonegate is precluded from seeking specific performance. We disagree. "[R]eal property is unique and . . . money damages will often be inadequate to redress a deprivation of an interest in land." Greenfield Country Estates Tenants Ass'n, Inc. v. Deep, 423 Mass. 81, 88 (1996). Notwithstanding, Tucard relies upon a provision of the offer entitled "Refund of Deposit," which limits the parties' remedies beyond the return of Stonegate's deposit "[i]f the conditions set forth [in the document] are not satisfied after the acceptance of [the] offer, or a Purchase Agreement is not signed" (emphasis added). "However, '[i]t is settled . . . that the right to specific performance ... is not lost because the contract contains a provision for the payment of a penalty or liquidated damages in the event of a breach.'" K.G.M. Custom Homes, Inc. v. Prosky, 468 Mass. 247, 256 (2014), quoting Rigs v. Sokol, 318 Mass. 337, 342-343 (1945) . See also Perroncello v. Donahue, 448 Mass. 199, 204 (2007) ("the retention of a deposit as liquidated damages is an alternative to specific performance"). This is especially true where, as here, it relates to a failed sale of commercial property.
b. Statute of Frauds.
Tucard argues that Stonegate's claims are barred by the Statute of Frauds because neither Tucard nor anyone authorized by Tucard signed the P&S. The Statute of Frauds prohibits the enforcement of a contract for the sale of land "[u]nless the promise, contract or agreement upon which such suit is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged . . . or by some person thereunto by him lawfully authorized" (emphasis added). G. L. c. 259, § 1. The writing must also describe the property. See Andre v. Ellison, 324 Mass. 665, 666 (1949) (alleged written contract failed to satisfy Statute of Frauds where it did not contain written description of parcel being sold). So long as the essential requirements are present, "[a] memorandum to satisfy the [S]tatute of [F]rauds need not be a formal document intended to serve as a memorandum of the contract." Pes Brisay v. Foss, 264 Mass. 102, 109 (1928). Moreover, multiple documents pertinent to a transaction may be read together to determine whether the Statute of Frauds has been satisfied. See Tzitzon Realty Co. v. Mustonen, 352 Mass. 648, 653 (1967).
We agree with Stonegate that the offer described the terms of the sale, the purchase price, and a description of the property, and when read together with version seven of the P&S, the requirements of the Statute of Frauds are satisfied for purposes of the special motion.
c. Remaining claims.
"Our review of an interlocutory order . . . denying a special motion to dismiss under § 15 (c0 is limited to those claims supporting the memorandum of lis pendens." Citadel Realty, LLC, 93 Mass.App.Ct. at 44. "[C]laims supporting the memorandum of lis pendens [are those that] 'affect[] the title to real property or the use and occupation thereof" (citation omitted). Id. Stonegate's G. L. c. 93A and misrepresentation claims are not inextricably linked to the breach of contract claim as to warrant dismissal. These claims relate to Tucard's acts, omissions, and representations, and do not affect title to the property or its use and occupation. Finally, for the reasons discussed supra, Stonegate's declaratory judgment count has both factual support and an arguable basis in law, and therefore dismissal was not warranted.
Conclusion.
We vacate the endorsement of the memorandum of lis pendens and thereby dissolve the lis pendens. The order dated May 26, 2021, denying Tucard's special motion to dismiss, is affirmed.
So ordered.
The panelists are listed in order of seniority.