This partition case is now before me for decision following an evidentiary hearing held to determine the amount of the net proceeds of sale to be distributed, following sale, to each party. Arthur H. Schore and Valerie E. Schore [Note 1] (the petitioners) seek, pursuant to G. L. c. 241, § 1 et seq., partition of a parcel of land located at 5 Green Hollow Road in Nantucket, Nantucket County, Massachusetts (the property). The petitioners own of record, as husband and wife as joint tenants with right of survivorship, [Note 2] a seventy-five percent interest in the property, and respondents Clifford J. Johnson and Fabrizia Macchiavelli (respondents) own of record, as husband and wife as joint tenants with right of survivorship, a twenty-five percent interest in the property; as to each other, the petitioners and the respondents hold as tenants in common. The petitioners and the respondents jointly purchased the property, which was, at the time of purchase, an undeveloped parcel of land. The parties constructed two houses on the property, with one house to be used by the petitioners as their summer home (Schore house) and the other house to be used by the respondents as their year-round residence (respondents house).
In an order dated May 11, 2005, I granted a motion by the petitioners for partial summary judgment and denied a motion by the defendants for partial summary judgment, ruling as a matter of law that the property may not be divided advantageously by metes and bounds. By interim order dated July 27, 2005, I appointed J. Timothy Nealon, Esquire, of Hopkinton, Massachusetts to serve as partition commissioner. I held a status conference on August 29, 2006, at which time the commissioner filed his report in open court, [Note 3] and I gave the parties the opportunity to review the commissioners report and to submit briefs concerning any objections to a sale to be conducted in accordance with the report.
On September 27, 2006, the respondents filed a motion to extend the time for filing their objections to the commissioners report, as well as for an evidentiary hearing on the commissioners report. [Note 4] In particular, the respondents sought to have the court, prior to ordering sale, hear evidence and find facts as to how the proceeds of sale ought to be distributed. I held a hearing on the respondents motions on November 2, 2006. [Note 5] Although no written opposition was submitted by the petitioners prior to the hearing, petitioners counsel argued in opposition to the respondents motions. After hearing argument, I directed the petitioners to submit written opposition, as well as giving the respondents an opportunity to file a written reply. After considering the briefs submitted and arguments offered at the hearing, I issued an order dated December 5, 2006, setting the case down for an evidentiary hearing, prior to ordering sale, on the amount of the net proceeds of sale, following sale, to be distributed to each party.
I held a pre-trial conference on January 23, 2007. [Note 6] On February 2, 2007, the parties filed an amended joint pre-trial memorandum. The evidentiary hearing commenced on February 5, 2007. Reporter Karen Smith was sworn to transcribe the testimony and proceedings. The respondents, through counsel, filed in open court a motion to keep the record open to allow for testimony to be given by respondent Fabrizia Machiavelli. I deferred taking action on that motion until the conclusion of the hearing. One hundred and seventy-five exhibits were introduced into evidence, and three witnesses testified: petitioner Arthur H. Schore, real estate appraiser Robert F. Ranney, and respondent Clifford J. Johnson. At the conclusion of the hearing, I allowed the respondents motion in part --I directed the record remain open until February 28, 2007, to allow the respondents, if they so elected, to conduct a deposition of respondent Machiavelli with a deposition transcript to be filed within three weeks following the deposition. No deposition was taken within the time allowed, and the taking of evidence closed on February 28, 2007. [Note 7] The parties later submitted post-trial legal memoranda, including supplemental filings on the petitioners request for treatment of their legal fees in the partition.
On all of the testimony, exhibits, stipulations and other evidence properly introduced at the evidentiary hearing or otherwise before me, and the reasonable inferences I draw therefrom, and taking into account the pleadings, memoranda, and arguments of the parties, I make the following findings of fact and rulings of law.
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1. The petitioners and the respondents knew each other prior to August 2000. In the year or two leading up to August 2000, petitioner Valerie Schore grew interested in the possibility of purchasing a house or building a new house on Nantucket, and she sought respondent Clifford Johnsons advice and assistance when she set out on her search for a suitable property. At Valerie Schores request, Johnson obtained building plans for various Nantucket residences from the building department and reviewed them with her. The evidence tended to show, and I find as a fact, that petitioner Arthur Schore was not involved in any material way in Valerie Schores search for a house or buildable property.
2. Valerie Schore eventually found an undeveloped parcel of land for sale, which was zoned for residential use, located at 5 Green Hollow Road in Nantucket (the property). On August 7, 2000, Valerie Schore executed, solely in her own name, a $390,000 offer to purchase the 5 Green Hollow Road property and gave a $1,000 deposit to the listing broker. The seller rejected her initial offer, but then accepted an increased offer made by Valerie Schore for $420,000. [Note 8] Valerie Schore then contacted the respondents by telephone to ask, for the first time, whether they would jointly purchase the property together with the Schores.
3. During the two or three days after Valerie Schore made her proposal to them, the respondents held discussions with her, and ultimately agreed to purchase the property together with the Schores. Arthur Schore participated little, if at all, in the negotiations between the parties Schore gave testimony, which I credit, that his wife, his son and the respondents presented the idea to him after they had already discussed it among themselves. Based on the general understanding they had reached, respondent Fabrizia Macchiavelli undertook the drafting of a written memorandum (first memorandum) memorializing the details. The first memorandum provides, in pertinent part:
This letter is to verify that the property of 5 Green Hollow Rd., in Tom Nevers (Nantucket) is being purchased by the Schores and the Johnsons under the Tenants in Common act. The property will be co-owned by both parties. The Schores will own 75% of the property and the Johnsons the remaining 25%.
The Johnsons agree to pay for their portion of the property in three ways: $50,000.00, Cliff Johnsons agreement to act as General Contractor [See footnote 1 to memorandum below] on the Schores house, and the use of the Johnsons first time home owners exemption from the building cap.
The Schores agree to take out a mortgage on the remainder of the costs for the land and the estimated costs of the construction of their home.
It is understood and agreed by both parties that all names are to be on the mortgage, but only the Schores names will be on the note, making the Schore party the only party responsible for the initial mortgage taken on the property.
It is also agreed by both parties that once the Johnsons receive their building permit, (which may take as long as two years,) they will then take out a second mortgage on the property, for the construction cost of the home. Once again all names will be on the mortgage application, but only the Johnsons will be on the note, making only them responsible for the second mortgage.
The Schores and Johnsons have already placed a 10% deposit on the land, to which the Schores have given $32,000 and the Johnsons $10,000. The remainder of the price of the property will be paid by the mortgage.
[Footnote 1] Cliff Johnson will act as General Contractor on the Schores house which he has agreed to build at cost. He will not mark_up any other trades, materials or labor. He will not obtain a percentage fee for acting as general contractor on the Schores house.
At some time between August 10 and 15, 2000, all four parties signed the first memorandum in each others presence. The petitioners also had begun seeking a mortgage in accordance with the terms of the first memorandum i.e., encumbering the entire property with a mortgage but with only the petitioners obligated under the note.
4. On August 22, 2000, the parties all signed a second memorandum (second memorandum) memorializing additional details upon which they had reached agreement. The second memorandum provides:
To Whom It May Concern:
Below is a list of agreements held between the Schores and the Johnsons concerning the purchase (under the tenants in common act) of the 5 Green Hollow Rd property on Nantucket MA.
Each party agrees to give the other right of first refusal in the event that the party may want to sell his/her shares in the property
If irreconcilable differences arise, forcing the Schores and Johnsons to sell the property and divide the income of the sale, only fair market offers will be entertained.
The Johnsons agree to rent their 25% holding of the Schore house back to them and the Schores agree to rent their 75% holding of Johnsons house back to them. Both leases will be for the sum of 15 a month for the next 19 years. Both leases are to be renewed by both parties for the remainder of the ownership of the property. This will for all intensive [sic] purposes make the Shores [sic] owners of their home on a 2 acre portion of the land, and the Johnsons owners of their home on a ¾ acre portion of the land.
All required expenses on the property will be agreed upon by all parties and expenses will be divided according to the percentages of property ownership; 25% for the Johnsons and 75% for the Schores.
All property taxes will be divided according to percentage of property ownership.
All closing fees and legal fees regarding purchase the land will be divided 50/50.
Each party has the right to rent their home if desired.
Each party has the right to build an addition on their home is [sic] desired.
The Johnsons will commence construction of their home as soon as their building permit is issued.
Each party is responsible for landscape related costs for their portion of the property.
Each party will be responsible for their portion (by percentage) for the installation of all utilities and driveway costs.
If for any reason the Johnsons are unable to obtain their building permit within a maximum time span of three years, the Schores are obligated to buy back the 25% portion of the property for the amount of money that the Johnsons put into it.
Both parties have the right to refinance their individual mortgages.
Both parties have the right to add amendments to this sheet, all of which must be signed upon by all parties and witnessed by a notary.
5. By deed dated September 28, 2000, the trustee of the 3 Green Hollow Road Realty Trust conveyed the property shown as Lot 887 on Land Court Plan 5004-56, sheet number 6, filed with Certificate of Title No. 9587 at the Land Court Registry District of Nantucket County (Registry District) to the parties for a purchase price of $420,000. Following the registration of the deed, the Registry District issued Certificate of Title No. 19654, certifying title in the parties as tenants in common, with the petitioners holding an undivided seventy-five percent, or three-fourths, interest as husband and wife as joint tenants with right of survivorship, and respondents holding an undivided twenty-five percent, or one-fourth, interest as husband and wife as joint tenants with right of survivorship.
6. The parties granted a purchase money mortgage on the property (purchase money mortgage) to Nantucket Bank, dated October 6, 2000, securing a borrowing in the original principal amount of $85,000, the proceeds of which were used as part of the payment made to purchase the property. Notwithstanding the parties initial intention (as evidenced by the first memorandum) to grant a mortgage which would encumber the entire property yet obligate only the Schores under the note, both the petitioners and the respondents executed the mortgage and the note. There is no dispute that the petitioners made all the payments on account of the purchase money mortgage loan.
7. Of the $420,000 purchase price paid for the property, the respondents contributed $50,000 cash and the petitioners contributed the $370,000 balance, as well as the legal and closing costs. Of the total amount contributed toward the purchase price by the petitioners, $85,000 represented the proceeds of the purchase money mortgage loan.
8. Around the time of the purchase or shortly thereafter, petitioner Valerie Schore settled upon a particular (albeit general in nature) design for the house she wished to have Johnson construct on the property. She picked an existing house that she liked on Clifford Street in Nantucket, and then she had Johnson obtain, from the town building department, plans for the house that showed architectural elevations. Valerie Schore also discussed with Johnson at that time the petitioners fixed budget (made known to her by Arthur Schore, who did not himself participate in the design discussions with Johnson) for the cost of building a residence. Based on the plans for the Clifford Street house, and taking into account the Schores budget, Johnson produced a rough estimate of the cost to build a plain vanilla house of approximately 2,100 square feet with five bedrooms and three and a half bathrooms. In further discussions with Ms. Schore, Johnson suggested design features which would reduce some of the expenses in his estimate, including, among other things, constructing a crawl space beneath the house rather than a basement, leaving the crawl space uninsulated, installing carpeting on the first floor rather than wood flooring, installing Formica counter tops rather than granite, and putting in plain white walls made of drywall with no plaster. Johnson ultimately provided a written estimate to the Schores in the form of a computer print-out reflecting a total cost of materials and parts as $347,826. Nothing on the face of the estimate indicates that it was intended to memorialize any type of agreement between the parties regarding the construction of the Schores house on the property, nor was any other writing put into evidence which memorialized particular terms of agreement between the parties as to the construction of the Schore house.
9. The petitioners contracted with designer David Holcomb in November, 2000 to prepare building plans for the Schore house. Holcomb prepared plans for a four bedroom dwelling with two and a half bathrooms, comprising 2,976 square feet. Although Johnson did not participate in the dialog regarding design between Valerie Schore and Holcomb, Johnson advised Valerie Schore that two large porches depicted on the plans could not be constructed within the budget. Schore assented to the removal of the porches from the design. She also requested the addition of two feet to the planned size of the deck. Schore chose to include in the new plans her selection of more expensive, higher-quality windows than called for in Johnsons initial estimate. Holcombs plans were approved by the Nantucket Historical District Commission (HDC) on February 13, 2001.
10. The parties granted another mortgage on the property to Nantucket Bank, dated March 22, 2001, for an original principal amount of $500,000, the proceeds of which were used to pay off the purchase money mortgage and to finance construction of the Schore house (Schore construction loan mortgage). The note was executed solely by the petitioners, and the petitioners made all payments towards this loan. After the first dollars out of the proceeds went to satisfy the purchase mortgage loan, the petitioners received approximately $409,000. They intended to use any remaining proceeds of the loan in excess of the cost of construction for the purpose of purchasing appliances and furniture.
11. In August 2001, $126,000 of the Schore construction loan proceeds were deposited by the Schores into a joint checking account at Nantucket Bank (construction account), for which Valerie Schore and Clifford Johnson were signatories.
12. Johnson commenced construction of the Schore house in August 2001. Nearly all the costs of construction, including the purchase of construction materials, work by contractors and other expenses, were paid for by checks drawn on the construction account most of the checks were written by Johnson, although a few were written by Valerie Schore.
13. With construction of the Schore house underway, the parties granted an additional mortgage on the property to Nantucket Bank, dated September 21, 2001, to secure additional borrowing in the original principal amount of $165,000, the proceeds of which were intended to be used to finance construction of the respondents house (respondents construction loan mortgage). The petitioners and the respondents executed the mortgage and the note, but only the respondents made payments on the loan.
14. During July, 2001, Toscana Corporation (Toscana) began clearing the property and digging the foundations for both the Schore house and the respondents house. Toscana continued to perform excavation work at the property until the end of 2002, including installing septic systems for both houses during March, 2002. In all, Toscana sent seven invoices to Johnson for work attributable to both houses, for an amount totaling $45,854.50.
The first three invoices from Toscana were all marked as having been paid: (1) an invoice dated July 26, 2001, for $18,208.40 (including charges for clearing the property and excavating both foundations); (2) an invoice dated August 9, 2001, for $2,318.90; and (3) an invoice dated August 23, 2001, for $157.50. Valerie Schore wrote a check payable to Toscana, dated August 17, 2001, drawn on the construction account in the amount of $15,066.00 an amount representing very nearly three-fourths of the total $20,884.80 in charges.
The fourth Toscana invoice, dated September 6, 2001, for $3,525.00 (including charges for backfilling the foundations for both houses) also was marked as having been paid. None of the other three Toscana invoices sent to Johnson were marked as having been paid: the fifth invoice, dated December 26, 2001, for $3,186.70 (including charges for delivery of concrete); the sixth invoice, dated March 15, 2002, for $18,000 (including charges for installation of septic systems for both houses); and the seventh invoice, dated January 3, 2003, for $258.00. Johnson wrote a check from the construction account in June, 2002, payable to Toscana, for $11,886.70. Although the check was marked as having been returned for insufficient funds, the evidence submitted shows that payment was made on the check on June 27, 2002.
On all the evidence, I find that the petitioners paid $26,952.70, or roughly fifty-eight percent, of the $45,854.50 total amount owed as shown on the invoices from Toscana that were put in as evidence.
15. As construction of the Schore house progressed, Valerie Schore requested that Johnson make a number of changes from the plans designed by Holcomb at added expense. The evidence tended to show, and I find as a fact, that some of those changes caused additional work to have to be performed, and that some of the changes led to previously-completed work having to be redone.
16. Changes, requested by Schore, which caused the Schore house as-built to differ from Holcombs plans, and which led to additional and at times duplicative work, occurred throughout the construction process. When Johnson notified Valerie Schore of problems that had arisen during excavation for the foundation of the house, Schore authorized Johnson to change the construction of two large crawl space areas (which, according to Holcombs plans, were to be joined by a small, full basement area) to construct instead a full basement beneath the entire house. Among other changes made at Schores behest, the location of the front door was moved to the entry room, and the stairs were widened from the dimensions shown on the plans.
17. Among those changes that Schore requested which led to unnecessary or additional work, Schore chose to move the location of the stove in the kitchen, requiring the already-installed electrical, gas and plumbing lines to be relocated. When the refrigerator was delivered, its size required that the already-installed kitchen cabinets be uninstalled, as well as that a larger opening be cut to move the appliance into the kitchen. In addition, Schore decided to move the location of a half-bathroom, depicted as bathroom 206" on Holcombs plans, from its location adjacent to the dining room to an area adjacent to the kitchen. In turn, this change required creating a new kitchen door opening, as well as relocating kitchen cabinets and re-doing plumbing.
On the first floor, Schore decided to change the floor covering from the carpet included in Johnsons estimate to more-expensive cherry hardwood. In addition, after the plaster and drywall work had been completed on the first floor linen room and bathroom, Schore decided to have significant structural changes made to the area: the washer and dryer were relocated from the linen room to the bathroom, the doors to the bathroom were relocated, the already-installed double sink was changed to a single sink, and the linen room was eliminated to create closet space for the bedrooms (instead of the closet spaces shown on the plan for the bedrooms).
In the master bathroom on the second floor, Schore decided to move the location of the toilet from the main bathroom into an adjacent room previously shown on the plans as a master bedroom closet. She also decided to separate the shower and the bathtub into individual units next to one another. Johnson gave testimony, which I credit, that Schore yielded to his admonishments to scale back a number of her other requested changes to the master bathroom (including marble flooring, a fully-enclosed glass shower and a high-end tub) on the grounds that they also exceeded the budget.
Schore also requested that Johnson make changes and additions to the fireplace and mantelpiece, as well as a bookshelf, in the living room area on the second floor. Johnson declined to make those requested changes and additions.
18. Johnson testified that at the time the parties purchased the property, they understood that there was a functioning well on the land. Johnson also testified that the parties learned they would need to drill a new well, or multiple wells, around the time that Valerie Schore decided she wanted to move into the Schore house ahead of the planned schedule during the summer of 2002. I credit Johnsons testimony that he acted on the recommendation of R.J.R. Water Wells, Inc. (R.J.R.), to have two wells drilled one for each house so that each would be self-sufficient. The first well was drilled and completed by R.J.R. on June 19, 2002, for a total amount of $1,862. Although Johnson testified that the first well was intended for use by the Johnson house, I find his testimony to be in conflict with the well completion reports and invoices offered into evidence at trial. Resolving the conflicting evidence by following the documents over Johnsons testimony, I find that the invoice for the first well was made out to Valerie Schore and I therefore draw the inference that the first well was intended to serve the Schore house. The second well was drilled and completed by R.J.R. on July 23, 2002. An invoice for the total amount of $1,698 for the second well was made out to Cliff Johnson Construction and I therefore infer and find that the second well was intended to serve the Johnson house.
Electricity from the Schore house was connected to power the pump for the first well. Plumbing for both the Schore house and the Johnson house was connected to the first well, enabling both houses to draw water from it. Neither electricity nor plumbing has been connected to the second well from either house and it is not in use. Both the Schore house and the Johnson house continue to draw water from the same well.
19. I credit the testimony given by Johnson that, although Johnsons initial estimate for the cost of constructing the Schore house included $8,000 for interior painting, he based his estimate on painting the walls and ceiling plain white by spraying he did not account for painting the doors and trim, nor did he account for using colors, nor did he account for application by hand. I also credit Johnsons testimony that during the process of constructing the Schore house, Valerie Schore decided that she wanted the walls to be painted with colors, as well as to have the doors and trim painted. Johnson referred Valerie Schore to Kevin ODonnell, the owner of Sconset Painting, LLC (Sconset Painting), with whom she dealt directly. I find that Johnson did not participate in and was not involved with Valerie Schores subsequent discussions and dealings with Sconset Painting. Schore chose several different colors for various areas and rooms within the house: one color for the second floor and first floor entrance area, different colors for the bedrooms as well as yet another color for the master bedroom. Sconset Painting did the painting work between March, 2002 and June, 2002. All the painting was done by hand at a greater expense than it would have cost to apply by spraying.
20. A number of payments were made to Sconset Painting as painting work progressed in the Schore house, amounting to somewhat more than half the total owed upon completion, but payments ceased being made in June, 2002. A statement of amount due under a lien against the property was filed by Sconset Painting, pursuant to G. L. c. 254, § 8, in the amount of $14,745.00, and registered with the Nantucket Registry District on August 23, 2002 as Document No. 098280 on Certificate No. 19654. [Note 9] Both Schore and Johnson gave corroborating testimony tending to show that Sconset Painting eventually asserted claims for the amount it was owed in lawsuit against the petitioners and the respondents. Both Schore and Johnson also testified that in that lawsuit by Sconset Painting, the respondents asserted no cross-claims against the Schores. Schore and Johnson testified that after the filing of the lawsuit by Sconset Painting, the petitioners and the respondents participated in a mediation session with Sconset Painting. As a result of the mediation, Schore paid Sconset Painting $4,000.00. Johnson testified that Sconset Paintings lawsuit eventually went to judgment solely against him (and not the Schores) for the full $14,745.00 amount of the lien. The parties have not put into evidence any documents (noted on the certificate of title or otherwise) showing that an execution issued upon a judgment against the respondents or the petitioners, or both of them. Insofar as Sconset Painting has any pending claims or unsatisfied judgment against the petitioners, the respondents, or both of them, I rely only upon parties stipulation of agreed facts in finding that the property remains encumbered by Sconset Paintings $14,745.00 lien as noted on the certificate of title.
21. BSC Group, Inc. (BSC) performed all of the surveying and engineering services at the property: preparing a plot plan, staking out the building foundations for both the Schore house and the respondents house, as well as for the septic systems and wells, and preparing an as-built survey. The two invoices put into evidence, for amounts totaling $5,233.43, reflect the work performed by BSC in relation to both houses. Johnson wrote a check payable to BSC dated May 7, 2002, drawn on the construction account, in the amount of $3,680.19 representing approximately seventy-five percent of the total amount billed. Although the $3,680.19 check to BSC was returned with the marking insufficient funds, it is clear on the evidence submitted that payment was eventually made from the construction account for the amount of the check. I credit the testimony given by Johnson that he paid BSC for the full amount attributable to respondents house, and I find as a fact that the respondents have satisfied $1373.24 of the total amount owed to BSC approximately twenty-five percent of the total amount billed.
22. Visco Pumping submitted two invoices to Johnson for portable toilet rental and cleaning fees at the property, totaling $368.00: an invoice dated May 20, 2002 for $184.00, and a second invoice dated June 30, 2002, also for $184.00.
23. Phillips Construction (Phillips) performed all the grading work on the property, for which an invoice dated June 14, 2002, in a total amount of $13,018, reflects amounts owed in relation to the entire propertyboth the parts of it involved with the Schore house and with the Johnson house. I credit Johnsons testimony that he paid $5,658 toward the balance owed. I find that a check in the amount of $7,360 (the remaining balance owed to Phillips), was written on the construction account, payable to Phillips Construction. Johnson testified, and I find as a fact, that the $7,360 check was returned for insufficient funds. Nothing in the evidence shows that payment was made upon the check, and it appears that the parties agree the balance of the bill remains outstanding.
24. An invoice to Johnson from Johnsen Excavation and Trucking (Johnsen), dated July 17, 2002, reflects charges for $487.50 for monthly rental of a dumpster by Cliff Johnson, $60 for monthly rental of a dumpster at Greenhollow and I find that this charge is attributable to the work at the property as well as $670.00 for rental of a dumpster at an unrelated location, 288 Polpis Road. Johnson wrote a check to Johnsen, drawn on the construction account, in the amount $3,217.00, and receipt of the check as payment is reflected on the Johnsen invoice. After the payment, the invoice shows a total balance of $5,302.
25. Johnsen also made out an invoice to Johnson dated June 28, 2002, for $487.50, reflecting charges for emptying a dumpster and the associated tipping fee from the dump.
26. Arthur Schore gave testimony, which I credit, that he gave Johnson $1,800 in cash in August of 2002 to perform some work on the Schore house after Johnson represented to Schore that he had run out of money.
27. The parties agree that in addition to the approximately $409,000 net proceeds from the Schore construction loan which were used to pay for construction of the Schore house, the petitioners expended approximately $50,000. By the end of August, 2002, the balance of the construction account had been depleted. No substantial further expenditure of funds was disbursed from the account to pay for construction of the Schore house after that time.
28. At some point during October 2002, the Schores provided Johnson with a punch list of items not yet completed as to the construction of the Schore house. I credit the testimony given by Arthur Schore that those incomplete items as of October 2002 included: the area around the well outside the house which needed grading; painting of the center staircase in the house which remained unfinished; banisters not yet having been erected on the staircase; some electrical sockets which remained uncovered and some ceiling fans which remained uninstalled; baseboards which had unpainted spots; the toilet in the master bathroom which was supplied with hot water rather than cold; as well as the bathtub and showers in the master bathroom which required grouting. Schore also testified that no outside shower was built, and I credit his testimony to the extent that I find the outside shower was not completed.
29. Johnson performed no additional work on the Schore house after October 2002. The Schores hired and paid for other contractors, including an electrician, to complete the remaining punch list items and I find that those remaining items were in large part completed between the end of 2003 and early 2004.
30. The parties have stipulated to the fact that Marine Lumber Co., Inc. obtained a judgment in the amount of $5,706 against Johnson individually as well as against his business, upon which Nantucket District Court issued an execution, and levy was made upon Johnsons undivided interest in the property on February 17, 2004 by registration of Document 106202 on Certificate No. 19654 in the Registry District.
31. During and after construction of the Schore house, Johnson took delivery of building materials from Island Lumber Co. (Island Lumber) that were used in the construction of the Schore house as well as the Johnson house, and also for some of Johnsons other contracting jobs. Island Lumber brought an action against Johnson for non-payment, in which Johnson asserted no claims against the Schores. The parties have stipulated to the fact that Island Lumber obtained a judgment in the amount of $186,417.98 against Johnson individually as well as against his business, upon which Nantucket District Court issued an execution, and levy was made upon Johnsons undivided interest in the property on September 16, 2004 by registration of Document 108919 on Certificate No. 19654 in the Registry District.
32. The parties have stipulated to the fact that the Town of Nantucket made a tax taking of the property for non-payment of real estate taxes for the year 2005 in the amount of $1,231.95, pursuant to G. L. c. 60, § 53 and 54, on March 31, 2006, and registered on April 6, 2006 in the Registry District as Document 115846 on Certificate No. 19654. Schore gave testimony, which I credit, that he paid seventy five percent of all the real estate taxes due in accordance with his understanding of the parties obligations under the second memorandum (which provides, in pertinent part: all property taxes will be divided according to percentage of property ownership). I also credit Johnsons testimony that the respondents had paid their portion of the real estate taxes due except for the year 2005 for which the tax taking was made.
33. The property is part of a homeowners association, the Property Owners Association of Tom Nevers East, Inc. (homeowners association) and the owners are responsible for paying dues for road maintenance to the homeowners association. An invoice from the homeowners association, dated November 30, 2004, for a total amount of $200.00 in dues for the year 2004, was put into evidence. The invoice reflects payment of $150.00 toward the total due, with $50.00 remaining overdue. I credit Arthur Schores testimony that the $150.00 payment three fourths of the total amount due was made by the petitioners. An invoice from the association, dated December 11, 2007, reflects a $0.00 balance forward from 2006, and $300.00 in dues for the year 2007, with a $225.00 payment having been made. I find as a fact that the $225.00 payment three fourths of the total amount due was made by the petitioners.
34. Commissioner J. Timothy Nealon, Esq. employed appraisers Robert F. Ranney and H. Flint Ranney to perform an appraisal of the property. After performing the appraisal, the appraisers reported their opinion that the market value of the property as of December 20, 2005, was $2,225,000. In arriving at their estimate, the appraisers employed the cost approach, which indicated a value for the property of $2,300,000, and the sales comparison approach, which indicated values of $900,000 for the property as a vacant lot and $2,225,000 for the property as developed with two houses. The appraisers gave weight to the outcome of the sales comparison approach they employed, over the outcome of the cost approach they also used, to reach their final estimate. The cost approach took into account the replacement construction cost for the dwellings, estimating $275 per square foot for the living areas of the dwellings, $50 per square foot for the basements, and $35 per square foot for the decks and porches. I credit Robert F. Ranneys testimony that the total replacement cost for the respondents house would be $675,320, and that the replacement costs for the Schore house would be $915,120, with a combined total replacement cost for both houses of $1,590,440. He also gave in his testimony the numerical calculation that the $675,320 replacement cost for the respondents house represents 42.5% of the total replacement cost for both structures, and that the $915,120 replacement cost for the Schore house represents 57.5% of the total.
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At bottom, the purpose of partition proceedings is to balance the rights and equities of the parties concerning the property at issue. Gonzales v. Pierce-Williams, 68 Mass. App. Ct. 785 , 787 (2007), quoting Moat v. Ducharme, 28 Mass. App. Ct. 749 , 751 (1990). The court may order the commissioner to sell and convey the whole or any part of the land which cannot be divided advantageously, upon such terms and conditions and with such securities for the proceeds of the sale as the court may order, and to distribute the proceeds so as to make the partition just and equal. G. L. c. 241, § 31. The phrase "just and equal" . . . means just and equitable. [citation omitted]. The equality is not absolute, but is an equality according to the respective rights of the parties in interest. Batchelder v. Munroe, 335 Mass. 216 , 218 (1957).
A decree ordering partition, although interlocutory in nature, is a final adjudication of the rights of the parties, and as such, parties are entitled to a full evidentiary hearing on disputed issues of material fact. See Asker v. Asker, 8 Mass. App. Ct. 634 , 637 (1979). The court in which a petition has been brought shall have jurisdiction in equity over all matters relating to the partition, and, in case of sale, over the distribution of the proceeds thereof; also to hear and determine all matters of accounting between the parties to the petition in reference to the common land. G. L. c. 241, § 25. General Laws chapter 241, § 23, provides, in pertinent part:
If the court in which partition proceedings are pending finds that one of the co-tenants has erected any buildings or made other permanent improvements on the common land, it may, if justice and equity so require, award such compensation as it deems proper for the value of such buildings or other improvements, not exceeding, however, the actual amount by which the market value of the common land has been increased thereby; and in awarding such compensation the court may deduct any benefit which the party claiming compensation has received from the common land. (emphasis added)
Confronted with a petition for partition, a co-owner may attempt to show that his beneficial interest is different from that indicated by the record title. Gonzalez v. Pierce-Williams, 68 Mass. App. Ct. 785 , 787 (2007), quoting Moat v. Ducharme 28 Mass. App. Ct. 749 , 751 (1990).
In this partition proceeding, the parties have put before me for decision issues which span the full breadth of the courts jurisdiction in equity under G. L. c. 241, § 25. The respondents, as co-tenants with the petitioners, seek in part a determination that their beneficial interest in the property exceeds the twenty-five percent interest as set forth on the certificate of title. The petitioners seek, as a matter of accounting, a determination that the respondents have not met their obligations as set forth in the first and second memoranda of agreement between the parties in particular, the petitioners claim that Johnson did not complete construction of the Schore house and that a portion of the respondents share of the proceeds ought to be set off to them.
As a starting point, my decision as to how the net proceeds ought to be distributed to each party, following sale of the property, begins with the manner in which their interests are set forth by the certificate of title: the parties are tenants in common, with the petitioners holding an undivided seventy-five percent interest as husband and wife as joint tenants with right of survivorship, and the respondents holding an undivided twenty-five percent interest as husband and wife as joint tenants with right of survivorship. Neither party challenges the validity or legal effect of the deed or the certificate of title. The parties competing claims to the proceeds from sale of the property arise from the improvements that have been made on the common land, the payments for them, and related matters.
In my summary judgment order, dated May 11, 2005, granting in part the petitioners motion for summary judgment, which I incorporate into this decision for the purpose of any appeal, I ruled as a matter of law that the property could not be divided advantageously on the ground, i.e., by metes and bounds. From that ruling, which I have no occasion to revisit at this posture of the case, it follows that I am not able to treat the property as if it comprises two separate parcels of land, each improved by a residential structure. I may not simply allocate the market value of each improved subparcel to one or the other of the parties. That approach would be a surrogate for physical division in kind, which is not proper in this case, and would ignore the reality of the complex relationship between the parties.
Instead, the property must be sold as a single piece of improved land, and I conclude that just and equal partition under G. L. c. 241, § 31 requires that I order the commissioner to distribute the net proceeds from the sale of the property in a way which equitably carries out the essence of their co-tenancy, and of their dealings which resulted in their arrangement together to acquire, improve, and live side by side on the property. The gist of the transaction the parties put together, as I find the evidence to be, was that they would end up, after each having built a house on the property (to be paid for as they agreed in their memoranda to split the construction costs) with a house they would separately occupy, and that they would be common owners of the finished improved site, the petitioners having a three-quarters interest, and the respondents having a one-quarter interest.
To give meaning to this, and knowing that it is not possible to draw a line on the ground and award full ownership of severed parcels to the respective sides of this dispute, I must give the commissioner instruction that he place the property on the market, and then divvy up the proceeds in the manner, laid out below, which I decide makes the partition just and equal, under the circumstances.
The just and equitable way to accomplish partition here is to take the gross proceeds derived from sale of the entire property, as it now stands, with both houses on it, to a single buyer, and to make those payments and distributions out of the proceeds which put the parties into as equitable a position, given the facts as I have found them, as possible. There may be a few workable ways to accomplish this result, and the parties have urged on me markedly competing ones.
The approach I adopt begins by using the sale proceeds first to pay the reasonable fees and expenses of the commissioner, and of those whom he has engaged. The warrant will provide the opportunity for the commissioner, at the appropriate time, once a buyer is at hand, to account for these amounts, and for the parties, if they have any issues with them, to have the court resolve those.
Next, the funds derived from a sale are to be used to return to the parties the amounts due on the bank mortgage loans they each incurred to acquire and improve the property. These funds, of course, only pass to the respective parties nominally, because the commissioner at the time of closing will apply those amounts to pay off the loans which the outstanding mortgages secure, so that title clear of them passes to the third party buyer. The petitioner will receive from the sale proceeds the amount necessary to satisfy the Schore construction loan mortgage, and the commissioner will use those proceeds to obtain and register a discharge of that mortgage. The respondents will receive from the sale proceeds the amount necessary to satisfy the respondents construction loan mortgage, and the commissioner will use those proceeds to obtain and register a discharge of that mortgage. On the whole the evidence is that, with these two loans, despite the names on the loan documents, the parties throughout treated them each as the separate responsibilities of the separate co-tenants, making independent payments of the debt service, the petitioners towards the Schore construction loan and the respondents towards theirs. By paying these loans off, in pari passu fashion, the parties will be relieved of the essentially independent obligations they have shouldered. The propertys title will emerge free of the bank mortgages, and each co-tenant will have their obligations relieved as to those banks. (This assumes, as may not any longer be the case, that the amount necessary to pay off the mortgage loans, is the loan balance without any extra penalties, fees or charges attributable to delinquency. If it turns out that the respondents construction loan, for example, has fallen into delinquency, and, as a result, requires additional amounts to pay off, then that incremental amount ought to be taken out of the remaining net proceeds that, after payment of all other amounts under the warrant according to this decision, would come to the respondents. They should be solely responsible for the costs attributable to their failure to make timely payments towards their construction loan, and this amount should reduce what they otherwise receive from liquidation and sale of the common property.)
After using proceeds to pay off the mortgages, the commissioner is to use the proceeds of sale to pay off the obligations underlying other liens burdening the propertys title. Unlike the mortgage loans, for which the parties each voluntarily undertook to be separately responsible, the other liens exist because of some failure to make payment when due of obligations arising out of ownership and improvement of the property. The task is to review these liens to determine which of the co-owners, as a matter of equity and equality, ought to have responsibility to satisfy each of them. If a given lien represents an obligation of one or the other party, then the funds used to clear that lien ought to come from the separate share of that party. In some cases, the legal posture of the parties, including as a result of other litigation involving them and the creditors behind these liens, dictates to me how the responsibility is to fall, as between petitioner and respondents, and thus from whose share the funds ought to come to remove the lien for a third party buyer. In other cases there has been no prior litigation, but it is apparent that the lien relates to an item which is the responsibility of only one side of this dispute, and should be charged exclusively against the final proceeds that otherwise would come to that party. In other cases, no adjustment is needed, because the lien represents an expense that ought to have been shared by the petitioners and respondents as part of the business of creating the two houses now on the property, and it is just and equitable to let the parties, effectively, bear the expense without any special readjustment.
I now set out how, in what amounts, and from whose share of the proceeds the commissioner is to make payments to clear these liens and encumbrances burdening the title to the property.
The parties stipulation is that the property remains encumbered by a lien in the amount of $14,745 that Sconset Painting caused to be noted on the certificate of title. Both Arthur Schore and Johnson gave testimony that Sconset Paintings lien was litigated in an action that since has gone to judgment: they both testified that (a) Sconset Painting filed a lawsuit against the petitioners and the respondents, as well as that (b) Schore paid $4,000 to Sconset Painting, and that (c) Sconset Paintings lawsuit ultimately went to judgment solely against Johnson. Their combined testimony about the lawsuit comprises the only evidence the parties put before me which would permit me to conclude that Johnson is the sole party obligated to pay off Sconset Paintings lien on the property. In deciding this issue (the manner in which clearing Sconset Paintings lien from the title ought to affect the just and equal allocation of net proceeds between the parties), I am faced with a scant factual record, upon which the legal doctrine of issue preclusion has bearing on the one hand, and the weight of the equities in this case falls, on the other hand. [Note 10] On all the evidence, I am persuaded that the entirety of Sconset Paintings lien against the property, and the basis of its lawsuit against the parties, was for painting done wholly in the Schore house. As such, equity suggests that the petitioners ought to bear responsibility for the lien. Nonetheless, I conclude that for purposes of issue preclusion, the petitioners successfully established through testimony at trial that the respondents asserted no claims against them during the pendency of Sconsets prior action against both parties and therefore, the effect of that prior action having been determined solely against Johnson is conclusive on the parties. Johnson could have claimed against the Schores in the prior Sconset Painting litigation, asserting there that it was the Schores, rather than Johnson, who were the true parties responsible for the Sconset Painting charges. Johnson did not make any such claim, and should be precluded from having the issue of responsibility for the Sconset Painting invoices assigned to the Schores in the litigation now before this court. I will direct the commissioner to clear Sconsets lien against the title and deduct the amount from the respondents final separate share of the net proceeds.
The parties do not dispute that Island Lumber Co., Inc. obtained a judgment in the amount of $186,417.98 against Johnson, upon which an execution issued, and that levy was made against Johnsons undivided interest in the property as noted on the certificate of title. In their post-trial memorandum, the respondents do not dispute that the lien is to be cleared by payment from their share of the proceeds after sale. The respondents seek, however, a contribution in the amount of $50,000 from the petitioners share of the net proceeds toward payment of the execution. I am faced with little difficulty in concluding that, as to Island Lumbers lien against Johnsons interest in the property, the doctrine of issue preclusion prevents relitigation of the same issue in this partition proceeding that was earlier determined in Island Lumbers prior action against Johnson. Johnson testified that he asserted no claims against the Schores in that action. Nevertheless, he could and should have brought his claim against the Schores in that forum. On this basis, I find and rule that the petitioners successfully established that the issue of their obligation to pay off any of the Island Lumber lien was determined, in the Schores favor, by the final judgment in Island Lumbers prior action against Johnson. I further find and rule that the judgment in that case has a conclusive effect upon the parties in this proceeding. I will direct the commissioner to clear the Island Lumber lien upon the title, and to deduct the amount from the respondents final and separate share of the proceeds.
The parties do not dispute that the respondents alone bear responsibility for payment, out of their share of the proceeds, of the amount of the execution in the amount of $5,706 that Marine Lumber Co., Inc. (Marine Lumber) caused to be noted on the certificate of title. I will direct the commissioner to clear Marine Lumbers lien against the title and deduct the amount from the respondents final separate share of the proceeds.
The parties stipulated that the Town of Nantucket made a tax taking of the property in the amount of $1,231.95, as noted on the certificate of title. Having already made a finding that the petitioners have paid seventy-five percent of all the real estate taxes due on the property, I find and rule that to whatever extent real estate taxes remain unpaid, they are the responsibility of the respondents. I will direct the commissioner to clear any real estate tax encumbrances from the title, and to deduct the amount from the respondents final separate share of the proceeds.
I turn now to the question whether adjustments are to be made for various invoices, not the subject of liens, attributable to the property and the construction of the houses on it, which remain outstanding, or whether adjustments are to be made for any charges attributable to both parties for which only one party paid:
The respondents claim that an invoice remains outstanding to R.J.R. Water Wells, Inc., in the amount of $1,862, for digging the first well on the property i.e., the same well which now provides water for both houses. The parties plan, however, was that each house would have its own well. Each well was to serve a single house, even when the arrangement was that the two houses would be owned, going forward, in the tenancy in common. Given this, it is fairest to treat the wells separately, and assign the costs of the well intended to serve the Schore house to the Schores, and the other well, intended to serve the Johnson house, to the respondents. I have found that the invoice still outstanding, in the amount of $1,862, issued with respect to the well intended to serve the Schore house. Because this is the invoice which remains outstanding, it should be paid by the commissioner out of the separate final share of the Schores.
The respondents also claim that they should be reimbursed $5,233.43 for surveying and engineering work performed by BSC Group, Inc. On the basis of my findings above, I reject this argument. Given that the surveying costs are difficult, if not impossible, to assign with specificity to the particular construction of one house or the other on the property, and may well have been carried out for the entire site, the surveying costs from BSC should be treated in the same general way as should be treated common costs associated with the whole of the property. The best interpretation of the parties understanding is that these types of general costs, which do not relate to a specific house site, should be allocated 75% to the Schores, and 25% to the respondents. This treats them in the manner set out in the second memorandum: expenses will be divided according to the percentage of property ownership; 25% for the Johnsons and 75% for the Schores. The facts, as I have found them, are that $3,680.19, only slightly less than 75% of the total BSC surveying costs, were ultimately paid out of the construction account, meaning that this payment was covered by the Schores. The difference between this amount and $3,925.07, the 75% figure, is $244.88, and it is this amount only for which the Schores remain responsible. This amount should be adjusted by the commissioner and paid out of the Schores separate share to the respondents.
It is difficult on the evidence I credit for me to make a precise allocation of the charges for excavation work performed by Toscana Corporation. The total is $45,854.50, and the Schores have paid $26,952.70. The better way to allocate the cost for excavation would be to assign the cost of work done specifically for a particular house to the intended occupant of it, and then to divide other, more general excavation costs, which do not relate specifically to one house or the other, in the 75% - 25% split contemplated for general work. Given the lack of ability reliably to allocate the Toscana charges to a particular house, I will direct that the allocation be made 75% - 25%. Of the total $45,854.50 of Toscana charges, that would leave the Schores responsible for $34,390.88. They have paid, I find, $26, 952.70, leaving their payment low by $7,438.18. The commissioner is to make allocation based on this finding. The commissioner is to see to it that the Toscana Corporation invoice amounts out of the $45,854.50 total which remain outstanding are paid out of closing proceeds.
The respondents claim that $368 in charges remain outstanding to Visco Pumping for the rental and maintenance of portable toilets used during construction at the property, and that each party ought to pay half. I find and conclude that both parties benefitted from the presence of these facilities on the property. They were necessary for the construction of both houses. The record is not clear enough to say whether there have been prior payments to Visco made with funds supplied by one party or the other to this litigation. To the extent that charges remain outstanding to Visco Pumping, petitioners are to pay 75% and respondents 25%..
Both parties apparently agree that $7,360 in charges remain outstanding to Phillips Construction for grading work performed on the property, out of a total cost of $13,018. Given the difficulty, based on the evidence, of making any particularized allocation between the Schores and Johnson on this cost item, I treat it as a general site cost, and rule that it ought be allocated 75% to be borne by the Schores and 25% by the respondents. Based on my finding that Johnson paid $5,658 toward the total $13,018 amount charged by Phillips Construction, I find that he has overpaid by $2,403.50. In distributing the proceeds, the commissioner is to pay the remaining invoice amount to Phillips Construction, $7,360. The Schores are to be charged, out of their separate share of the proceeds, $9,763.50; the balance of this amount above the $7,360 payment to Phillips Construction is to go to the credit of Johnson, in reimbursement of his overpayment.
The respondents claim that a $487.50 invoice from Johnsen Excavation and Trucking, for emptying of a dumpster and the associated tipping fee from the dump, remains outstanding. I note that the respondents seek no adjustment for the dumpster rental charges reflected on an invoice from Johnsen, which also showed rental charges for a dumpster at one of Johnsons other contracting jobs, 288 Polpis Road. Because I am not able to conclude what portion of the $487.50 balance owed to Johnsen is attributable to the petitioners interest in the property, and what portion might be attributable to the respondents interest or, for that matter, Johnsons other contracting jobs I decline to make any adjustment in favor of the respondents. To the extent that charges remain outstanding to Johnsen, the respondents are to pay for them.
The petitioners claim that amounts owed to Property Owners Association of Tom Nevers East Inc. ought to be paid by the respondents. Based on my finding that the petitioners have paid three-fourths of the homeowners association dues to date, I conclude that the respondents are obligated to pay any amount, up to one-fourth the total originally due, that remains outstanding to the homeowners association.
I have determined the amounts of liens and other unpaid invoices that must be paid in connection with a third party sale, and from whose share the funds necessary to make those payments need to come. I still must decide the manner in which the commissioner, after having paid all reasonable expenses and charges of the partition, and after paying those amounts necessary to clear liens and encumbrances upon the title to the property, and to satisfy unpaid invoices, is to distribute and pay over the remaining net sale proceeds to the parties to this action. In making my determination, I consider whether to award compensation to the parties for the amount by which the market value of the property has been increased by improvements, whether the respondents have established that their beneficial interest exceeds their twenty-five percent interest indicated by the record title, whether the petitioners are entitled to an accounting adjustment on the basis of their claim that the respondents failed to meet their obligations under the first and second memoranda between the parties, as well as whether there ought to be, as a matter of accounting, other adjustments made between the parties. These issues are interrelated.
General Laws chapter 241, § 25, confers jurisdiction on the court, in equity, over all matters relating to the partition, and, in case of sale, over the distribution of the proceeds thereof; also to hear and determine all matters of accounting between the parties to the petition in reference to the common land. This jurisdiction does not extend to taking of accounts between co-tenants which result from contracts pertaining to matters other than the common land; rather, the matters of accounting must have reference to the land held in common, not arising from collateral transactions. Moseley v. Moseley, 240 Mass. 22 , 25 (1921). The court does possess equity jurisdiction over these disputed issues between the parties. The issues involving the improvements made to the property, and the agreement by which Johnson agreed to construct the Schore house, lie at the heart of the parties partition dispute.
The parties acquired the property for a purchase price of $420,000, of which the respondents contributed $50,000 in cash, and the Schores contributed the $370,000 balance: $85,000 from the proceeds of a purchase money mortgage, and $285,000 in cash plus the legal and closing costs. The respondents were able to take title to the property as tenants in common having an undivided 25% interest despite having contributed less than 12% of the purchase price in cash. This was due, principally, to Johnsons undertaking to act as general contractor and to construct the Schore house at cost. [Note 11] The best interpretation of the arrangement of the parties was that it was thisJohnsons commitment to build the Schores their house at costthat supplied the inducement to them to go forward. This sweat equity to be rendered by Johnson comprised the rest of the consideration respondents contributed to the joint venture. In keeping with the first and second memoranda, the Schores had their house built by Johnson and his subcontractors. The evidence shows that the replacement value of the Schore house increased the market value of the property by a greater amount than what the Schores actually expended on materials. The replacement value of the Schore house includes the profit that a general contractor ordinarily would have charged, and for which the Schores did not directly pay Johnson. The Schores certainly were able to get their house built in a way that produced a valuable improvement. The evidence shows that the Schores would have had to pay more to duplicate the same house using a conventional arrangement with another, third-party builder.
Given this determination, I need to address the equitable and just way in which the net proceeds of sale of the property to a third party ought to be divided up, after payment of the costs of the partition and sale by the commissioner, and the satisfaction of lien items and unpaid invoices in the manner already addressed. The correct approach is to hold the parties to the plans which they struck when they first came together to acquire and build the homes on the property. The two parties were to bear their own building costs, split the common development costs in accordance with a 25 percent, 75 percent division, and own the common improved site in that same proportion. It is only fair and just that that should be the manner in which the net proceeds are allocated.
In reaching my decision on these matters of accounting, I am not purely enforcing an agreement between the two parties as embodied by the first and second memoranda; rather, I am determining a just and equitable distribution of the net proceeds. To that end, I need not and do not decide whether one or the other of them breached terms of an agreement concerning Johnsons construction of the Schore house. In any event, however, on all the evidence, I find and conclude that no later than the end of October 2002, after Johnson had ceased work on the Schore house, construction of the Schore house was substantially complete; it was sufficiently fit to be occupied. To be certain, Arthur Schore gave testimony, which I credit, that a significant number of items remained incomplete at that time at least insofar as Schore contends that Johnson was obligated to finish them in his capacity as general contractor (under the arrangement memorialized in the memoranda). I make no adjustment for these items. Johnson substantially completed the house, and generally met this obligation.
No party involved here engaged in a professional, careful way in dealing with the construction of the Schore house. The documents that governed the deal were slipshod and casual. Johnson was not fully attentive to the management and oversight of the construction in all its details, a fact that may have had something to do with the way his general contractor fee was being paidas part of the overall development arrangement, and not in cash. Johnsons lax handling of the Schore house project also was, no doubt, attributable to the way in which Valerie Schore approached the constructionmaking extensive, expensive, poorly-planned and badly thought-out changes to the work. This well may have caused Johnson to lose his grip on the construction and to fail to exercise the full control over the project that he should have exercised. Particularly given the difficulties posed by Valerie Schores discursive way of handling the construction of her home, I find, on all the evidence, little basis to allow me to decide which party might have - if at all - breached any agreement regarding the completion of the Schore house. I make no specific finding as to whether there was non-performance by either party: whether Johnson justifiably stopped working because the Schores stopped paying, or because the Schores demands so greatly exceeded the scope of the initial plan for the project; or whether the Schores justifiably stopped paying because Johnson stopped working. I do conclude that Johnson left the Schores with a substantially complete house, one well beyond the much more modest version of it that had been in the parties minds when they put their memoranda together. I do not see any occasion, on these facts, to hold Johnson responsible (by charging his separate share of the proceeds) for the cost of completing any of the items the petitioners have identified as incomplete when Johnson stopped working on the Schore house.
Furthermore, I reject the petitioners contention that Johnson breached an agreement because he failed to construct and deliver the Schore house for the amount stated on Johnsons preliminary rough estimate. Nothing in the evidence persuades me that either party intended Johnson to be bound by the estimate. Johnsons estimate was based on an undetailed set of architectural drawings. The petitioners thereafter independently hired a designer to produce detailed and rather different plans, and Johnson did not participate in that process.
In any event, the petitioners authorized numerous changes from the plans during the course of construction of the Schore house. Several of those changes required expenditures for work that did not enhance the value of the property. Some of these were changes requiring unnecessary or duplicative work, such as reconfiguring the kitchen, the second-floor bathroom, as well as the first-floor linen room and bathroom. These produced economic waste and were the responsibility of the petitioners. On these facts, I could not in equity award an allocation of an amount out of Johnsons separate share with respect to the costs the Schores may have sustained in paying for a house that cost more than the initial estimate figure.
Beyond contending that Johnsons breach of his undertaking to complete the Schore house at the estimated cost entitles them to an allocation of the proceeds from the Johnson share, the petitioners also urge me to find that Johnson improperly expended funds from the construction account. Petitioners argue that Johnson did not account accurately for the dollars expended from this account, nor for every invoice associated with the Schore houses construction. On this additional ground the petitioners ask that I allocate proceeds from the Johnson share to make the Schores whole.
Without doubt, if the Schores successfully prove that Johnson diverted funds deposited in the Schore construction accountfunds designated to be used by Johnson only to build the Schore house--equity and justice would require that, in making distribution of the proceeds, the commissioner should be ordered to allocate to the petitioner a compensatory amount, out of the Johnson separate share. I find and rule, however, that those grounds have not been proved adequately by the petitioners, and that no such adjustment is to be made.
The evidence and testimony makes clear that neither party participated in the joint development of the property with anything approaching careful and deliberate record-keeping. There was a regrettable sloppiness and inaccuracy about the way the funds used to build the Schore house were handled by the Schores and Johnson. If there is more involved beyond that, it ought to be the petitioners burden to prove it, and I decide that they have not. I cannot ground a finding of diversion or misapplication of the construction account funds by Johnson on the evidence as I credit it. I conclude that the petitioners are not entitled to any adjustments with regard to Johnsons handling of the Schores construction money, or, more generally, based on his work as a general contractor building their house.
I have been asked to make additional adjustment to the distribution of the sale proceeds based on the provisions of G.L. c. 241, §23, which allows a court, in a partition case, if equity and justice so require, to award such compensation as [the court] deems proper for the value of buildings or other improvements that one of the co-tenants has erected... on the common land. I decide that, on the peculiar facts of this case, there is no reason to apply the remedy of section 23. This is not a case where one co-tenant has acted unilaterally to build on the common land, and will be left with an unequal and unjust distribution of the sale proceeds if they are divided simply according to the record title interests involved, and the co-tenant who built the building is not given further compensation for the funds unilaterally expended.
What I have instead in the case before me is an arrangement in which the parties were to divide up the common costs of developing the site, and then shoulder their own costs to build two separate dwellings. They entered into this arrangement with the expectation that, once all the work was done, each of the co-tenant undivided interests would continue to be as they were laid out in the deed and certificate of title75% to the Schores, and 25% to the respondents. This result should still obtain as the common interests are now partitioned by the court.
If, because of failure of one party or the other to pay what they were intended to pay, there was some departure from this arrangement, then distribution of the net proceeds in a strict 75% - 25% way would work some unfairness. However, as laid out above, I have directed that a number of adjustments be made by the commissioner to correct instances in which, on the evidence I heard, I am able to say that one of the co-tenant interest holders ended up bearing more of a particular expense or cost item than proper. With those adjustments made at the time of sale, the parties ought to be left with the split of the net proceeds at the 75% - 25% proportion that they expected to have at the beginning of their relationship. For this reason, there is no reason to apply the provisions of section 23, or other general equitable principles, to alter the 75% -25% split of the net proceeds which the parties will receive following the sale and the carrying out of the specific adjustments set out in this decision.
There remains the question of attorneys fees under the partition statute. In their post-trial memorandum, the petitioners have made a request, pursuant to G. L. c . 241, § 22, that the court award them out of sale proceeds the full $84,933.38 amount of their attorneys fees and costs incurred during the course of this litigation, or in the alternative, a smaller percentage of the full amount. Their request is accompanied by a detailed affidavit of counsel which sets forth the applicable hourly billing rates and itemizes the time spent on this matter. General Laws chapter 241, section 22 provides, in relevant part: the reasonable expenses and charges of partition proceedings, including examination of title and preparation of plan ordered by the court... and the fees of counsel, of the commissioners . . . shall be determined by the court, and in case of sale paid by the commissioners out of the proceeds.
In support of their request, the petitioners rely on Aiello v. Aiello, 63 Mass. App. Ct. 914 , 915 (2005), where the Appeals Court stated: section 22 furnishes an exception to the general American rule that each party to litigation is responsible for its own expenses. Aiello, supra at 915. Aiello also explained: the purpose of the fee-shifting provision of G. L. c. 241, § 22, is to apportion the expenses incurred to achieve the common benefit from partition of share property among the parties receiving that benefit. Id. at 916. The purpose of G. L. c. 241, § 22, is different from that of other fee-shifting provisions, such as G. L. c. 231, § 6F, which seek to punish a party for acting in bad faith. Gonzalez, supra at 787. In some proceedings, the conduct of the litigation itself may give rise to equitable considerations favoring deviation from the presumptive proportionate allocation (such as, for example, when the petitioner needlessly pursues a course that causes the cost of the proceedings to escalate, or when substantial fees are incurred in resolution of issues unrelated to the partition). Aiello, supra at 916.
I do not read Aiello and the other cases cited to me by the parties to require, as an absolute matter, that the fees of litigating counsel for all parties to a partition be included in the amount of the proceeds to be distributed by the commissioner as part of the costs of the partition. In other words, these cases do not require that in all instances the full lawyers fees of all the parties to the litigation be treated in the same manner, and with the same priority, as the fees of the commissioner himself.
The Appeals Court noted in Aiello that other jurisdictions limit the apportionment of fees to only those fees incurred for matters of common interest and not resolution of, as is the case in the issues being decided here, bitterly contested matters between the parties. The Aiello court left the determination of those considerations to the sound discretion of the trial judge, based on appropriate findings. Id.
The principle in the Aiello case is that, under the statute, where the cost of bringing and prosecuting the partition action is borne primarily by the petitionerwho must shoulder these costs in the first instance--it is unfair to leave that burden on the petitioner, simply because he or she is the one who commences the action and takes on the predominant cost of carrying it through. All the co-tenants have an absolute right to partition, and it ought not to matter who first files the lawsuit, and thus ends up as the petitioner, in determining who bears the lawyers cost out of his or her share, and who does not.
The respondent derives benefit from the partition; he or she owns the divided land or receives a share of the proceeds of a sale, and yet what the respondent takes out of the partition will be more valuable if the petitioners costs of counsel are not required to be shared. It is for this reason that the statute includes the fees of counsel among the others that add benefit to the interests or proceeds the parties will receive when the partition is overlisting these costs with others such as title work, surveying, etc. Without expenditure for those types of items, which presumably any owner of land would have to incur to sell or divide it, the partition process cannot advance. If no plan is prepared, the court cannot order division according to a particular line. If the deeds of the commissioner do not get drafted, the title does not change as required to complete the partition.
The fees of the lawyers litigating this partition action, on the other hand, fall into a very different category. Here, the dispute between petitioners and respondents is not about simply finding the proper method, on the ground or otherwise, to divide up a piece of valuable commonly owned land. The dispute in the case before me is, in an overwhelming way, about the utter and bitter breakdown of a plan to develop consensually a residential building site with two structures. This case is much more of a dispute about a construction contract and a real estate venture gone bad, than a conventional partition action.
Reviewing the affidavit and supporting material submitted by counsel for the petitioners, I find that the overwhelming majority of the fees itemized on the sixty-page exhibit relate to these sorts of contested matters between the parties, rather than to matters of common interest necessary to bring about separation of the interests of the co-tenants. I conclude that the attorneys fees which constitute, under G. L. c. 241, § 22, reasonable expenses and charges of this partition proceeding, are so limited and inconsequential in the totality of this case that it would not be an appropriate use of section 22 to make the parties lawyers fees part of the expenses of the partition to be paid by the commissioner out of the sale proceeds. In the particular circumstances of this case, and what has been at issue in it, the equitable thing to do is to leave the parties to see to the payment of their own lawyers out of their separate funds. The commissioners responsibility to pay from the sale proceeds the fees and costs of the partition, including those of his own which are reasonable, will not extend to payment of the parties legal fees.
A warrant to sell by private sale is to issue in accordance with this decision. After the sale, the commissioner is to distribute the proceeds in accordance with this decision.
Gordon H. Piper
Dated: July 14, 2008.
[Note 1] Counsel for the respondents filed a Suggestion of Death, dated June 9, 2006, of petitioner Valerie E. Schore on February 25, 2006.
[Note 2] See note 1, above.
[Note 3] Having employed a real estate appraisal expert, the commissioners report recommended sale of the locus by private sale to a third party pursuant to G. L. c. 241, § 31 (by listing the property with a local real estate broker), for a fair asking price as determined by the appraiser to be $2,250,000. The commissioners report also recommended distribution of the proceeds to the petitioners and respondents according to the respective value of the primary and secondary houses on the basis of square footage as related to the market value estimated by the appraiser, and allocating the original cost of the land to each party according to their interests as set out in the deed.
[Note 4] A supplement to the commissioners August 29, 2006 report was filed on October 31, 2006.
[Note 5] The commissioner submitted an amended report, dated November 2, 2006, that appears to have been provided at or about the time of this hearing.
[Note 6] At the time of the pre-trial conference, the respondents filed in open court a motion to continue the evidentiary hearing, scheduled to take place on February 5, 2007. After hearing argument, I denied the motion. The plaintiffs filed a motion in limine on February 1, 2007, seeking to exclude the introduction of (1) evidence tending to show that the respondents are entitled, in the allocation of proceeds after sale, to any compensation for the value by which the common land was increased by improvements made by way of Clifford Johnsons work on the primary house, and (2) evidence tending to show the respondents are entitled to any amount of the proceeds from sale of the property in excess of twenty-five percent. In an order dated February 1, 2007, I denied the motion without prejudice to the renewal of such objections at the evidentiary hearing.
[Note 7] By agreement of counsel at trial, supplements to exhibits 16 and 160 were submitted into evidence on March 26, 2007.
[Note 8] Again, there is no dispute that neither Arthur Schore nor the respondents were aware of the increased offer at the time Valerie Schore made it.
[Note 9] The statement of account reflects an initial total amount due of $31,335.00, less $16,590.00 in previous payments.
[Note 10] Res judicata is a defense which encompasses two distinct legal doctrines: claim preclusion and issue preclusion. See Heacock v. Heacock, 402 Mass. 21 , 23 n.2 (1988). The doctrine of claim preclusion makes a valid, final judgment conclusive on the parties and their privies, and bars further litigation of all matters that were or should have been adjudicated in the action. Id. at 23. It applies only where both actions were based on the same claim. Id. at 24. To defend successfully on the ground of issue preclusion, the defendant must establish that the issue of fact sought to be foreclosed actually was litigated and determined in a prior action between the two parties or their privies, and that the determination was essential to the decision in the prior action. Id. at 25.
[Note 11] I note that the respondents also contributed their qualification as first-time Nantucket resident home buyers for the purposes of entitling the parties to exemption from a portion of the Nantucket Islands Land Bank (Land Bank) fee imposed on the purchase price under Chapter 669 of the Acts of 1983, Sec. 12(m). This same exemption also entitled the parties to obtain building permits more quickly than they otherwise would have been able to. Matters pertaining to a lien on the property held by the Land Bank are no longer relevant to the determination of this case, the lien now appears to have expired by the terms on its face.