GARWIN K. FLEMING, JR. and another [Note 1] v. RAYMOND J. GOSSELIN and another [Note 2]

COVEN, P.J. In this appeal from the entry of summary judgment in favor of the plaintiffs, Garwin K. Fleming, Jr. and Page H. Fleming ("Flemings"), on their contract claim to enforce the payment provision of a settlement agreement, we examine the contractual doctrine of frustration of purpose raised as a defense by the defendants, Raymond J. Gosselin and Linda E. Gosselin ("Gosselins"). We conclude that the application of the doctrine, in these circumstances, raises a question of fact and return this case for further proceedings.

Background. The Gosselins, Flemings, and Rudolph Pizzano ("Pizzano") owned abutting parcels of land subject to building restrictions in the rear of each parcel known as the "No Build Area." The Gosselins' parcel is burdened by the largest part of the "No Build Area." The Gosselins brought a Land Court action against the Flemings and Pizzano seeking a determination that the restrictive covenants on the use of the "No Build Area" are no longer enforceable. During the course of that action, the Gosselins and the Flemings entered into a settlement agreement and a release was executed.

Through the settlement agreement, there was a mutual release of the Gosselins and the Flemings from the restrictions and easements in exchange for the Gosselins' payment of $25,000 to the Flemings. The release was conditioned on the following. First, "[N]o building or other structure, higher than four (4) feet, is to be constructed in the area." Second, "[I]f a pool is to be constructed in the ["No Build Area"] that it be a pool of a reasonable size and otherwise similar to others in the neighborhood, and that any ancillary structure consisting of a pool house, if constructed, shall be of reasonable size and likewise otherwise similar to others in the neighborhood, and in any event said ancillary building . . . shall not exceed twelve (12) feet in height."

Pizzano prevailed in the Land Court with that court declaring that the building restriction burdening each parcel was enforceable. As a result, neither the pool nor a pool house was erected by the Gosselins. This underlying action was commenced by the Flemings upon the Gosselins' breach to make payment as provided by the settlement agreement.

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Analysis. Where "the pleadings, depositions, answers to interrogatories, and responses to requests for admission . . ., together with the affidavits . . ., show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law," a court may grant summary judgment. Mass. R. Civ. P. 56(c). The court must "make all logically permissible inferences" in the nonmovant's favor. Willits v. Roman Catholic Archbishop of Boston, 411 Mass. 202, 203 (1991).

The motion judge acknowledged that, although the settlement agreement did not explicitly assign a risk -- failing to provide for it "explicitly" -- the unsuccessful action by the Gosselins against Pizzano in the Land Court was one of the "variety of risks" that the Gosselins and Flemings "tacitly" assigned to the Gosselins.

Under the doctrine of frustration of purpose, "'[P]erformance remains possible but the expected value of performance to the party seeking to be excused has been destroyed by [the] fortuitous event....' The principal question [is] 'whether an unanticipated circumstance, the risk of which should not fairly be thrown on the promisor, has made performance vitally different from what was reasonably to be expected'" (citations omitted). Chase Precast Corp. v. John J. Paonessa Co., 409 Mass. 371, 374 (1991). Stated differently in the Restatement (Second) of Contracts § 265 (1981):

"Where, after a contract is made, a party's principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary."

However viewed, when the allocation of risk is not assigned by the contract itself, "[A] judge must consider 'the foreseeability of the supervening event, allocation of the risk of occurrence of the event, and the degree of hardship to the promisor.' Given the importance of the factual context surrounding the [settlement] agreement, the determination of these questions is reserved for the trier of fact." Karaa v. Yim, 86 Mass. App. Ct. 714, 718 (2014). [Note 4]

It is particularly true in this case that a question of fact exists. The settlement agreement contained no allocation of risk. And more importantly, on the standard applied, no affidavit was submitted by the Flemings, the moving party. To find a "tacit" agreement, the motion judge necessarily looked to facts and circumstances extrinsic to the settlement agreement itself. A conclusion of such a tacit assignment involved a question of fact.

The judgment is therefore vacated, and this case is returned to the Salem District Court for further proceedings.