TOWN OF WINCHENDON v. DILLON INVESTMENTS, LLC

This action is the second of two related Land Court cases concerning property owned by Dillon Investments, LLC (Dillon) in Winchendon (Dillon Property). [Note 1] In case number 06 Misc. 325147 (First Case), filed June 22, 2006, the Town of Winchendon (Town) filed a single-count complaint seeking a declaration that Dillon violated the notice requirements of G. L. c. 61, § 8, by failing to give the Town notice of Dillon’s intent to convert the Dillon Property to a use other than forestry use. [Note 2] In its answer to the complaint in the First Case, Dillon maintained that it was not required to give notice to the Town because the Dillon Property was no longer subject to the provisions of G. L. c. 61. Following an initial case management conference and status conference with the court, Dillon sent a letter (Offer Letter), dated October 30, 2006, to the Town’s Board of Selectmen, giving notice to the Selectmen “pursuant to G. L. c. 61, § 8 of the Town’s option to purchase [the Dillon Property] at full and fair market value to be determined by impartial appraisal.”

The receipt of the Offer Letter rendered moot the Town’s single-count complaint, and on December 28, 2006, the parties filed a stipulation of dismissal, and the First Case was closed. The stipulation provided: “With the defendant now having provided the plaintiff with notice of the plaintiff’s option to purchase [the Dillon Property] under G. L. c. 61, Section 8, the parties agree and stipulate that this action is hereby dismissed without prejudice and without costs pursuant to Mass. R. Civ. P. 41 (a)(1)(ii).”

In accordance with the requirements of G. L. c. 61, § 8 (sometimes referred to herein as “Section 8”), the Town obtained an appraisal of the Dillon Property by LandVest of Boston, an appraisal firm approved by the Commonwealth, which set the fair market value of the Dillon Property at $1,200,000.00. Based on the LandVest appraisal, the Town held a special Town Meeting, which authorized the purchase of the Dillon Property for the appraisal price and the subsequent conveyance of a fee interest in the Dillon Property, subject to conservation restrictions, to the Commonwealth Department of Fish and Game. The Town timely forwarded to Dillon, via certified and first class mail, a “Notice of Intent to Exercise Option Pursuant to G. L. c. 61, § 8” (Notice of Intent). As required by G. L. c. 61, § 8, the Notice of Intent also was recorded with the Worcester South District Registry of Deeds in Book 40686, at Page 52. Finally, the Town secured funds (some through the Commonwealth) and advised Dillon of a closing date of February 26, 2007, at 10:00 a.m., at the office of Town Counsel.

The Town appeared at the office of its counsel on February 26, 2007, prepared to close, with funds and several documents in hand. Also at the closing was a representative from the Commonwealth Department of Fish and Game, with a check for $600,000.00, to be used by the Town toward the purchase of the Dillon Property. Dillon did not appear at the closing and confirmed its intention not to attend when Town Counsel called Dillon’s counsel at approximately 10:30 that morning.

On March 15, 2007, the Town commenced the instant action by filing a two-count complaint and a motion for preliminary injunction, seeking conveyance of the Dillon Property to the Town in accordance with the Notice of Intent. Count I of the complaint is a claim for specific performance under G. L. c. 185, § 1 (k). In Count II, the Town seeks a declaratory judgment that Dillon must convey the Dillon Property to the Town for the purchase price of $1,200,000.00, less customary closing adjustments. Dillon filed its opposition to the Town’s preliminary injunction motion on March 22, 2007, and a hearing was held the next day, following which this court granted the Town’s motion for preliminary injunction. This court ordered Dillon to convey good clear, marketable title in the Dillon Property to the Town at a date mutually agreeable to the parties, but not later than June 27, 2007, for the purchase price of $1,200,000.00, less customary closing adjustments. This court further ordered that following closing, the Town could not convey the Dillon Property or any part thereof or encumber it or any part thereof, nor could it commit any waste thereof, until final judgment was entered in this action. Subsequently, in accordance with the preliminary injunction, Dillon conveyed the Dillon Property to the Town, by two deeds dated April 26, 2007, subject to the terms of the preliminary injunction order, which was recorded with the deeds.

Dillon maintained at the preliminary injunction hearing, and continues to argue, that the appraisal price of $1,200,000.00 was below the full fair market value and that the LandVest appraisal was not impartial. On April 4, 2008, a one-day trial was held. At trial this court heard the testimony of James M. Kreidler, Jr., Town Manager; Jay Closser, LandVest real estate appraiser; Scott Dillon, principal of Dillon; and John Burton, a real estate appraiser whose testimony was proffered by Dillon. Fourteen exhibits, including a stipulation of facts, were entered in evidence and both parties submitted post-trial briefs on June 2, 2008.

Based on all the evidence and reasonable inferences drawn therefrom, this court finds the following material facts:

1. Dillon purchased the Dillon Property on or about April 22, 2005, for 1.17 million dollars.

2. As of April 22, 2005, and for some period of time thereafter, the Dillon Property was classified as forestry land for tax purposes under General Laws Chapter 61. [Note 3]

3. On October 30, 2006, Defendant sent a letter to Plaintiff giving notice of Plaintiff’s option to purchase “pursuant to G. L. c. 61, § 8 . . . [the Dillon Property] at full and fair market value to be determined by impartial appraisal.”

4. The provisions of G. L. c. 61, § 8 inform the transaction between Plaintiff and Defendant because the Offer Letter sent by Defendant on October 30, 2006, expressly invokes the terms of the statute.

5. On or about November 28, 2006, James Kreidler contacted Jay Closser, a real estate appraiser with LandVest, an appraisal firm approved by the Commonwealth, and asked him to perform an appraisal of the Dillon Property for the Town. [Note 4] As of the date of this request the parties were not in litigation, and Mr. Closser was not told of the First Case. Mr. Closser was told that the Town needed a “fair market appraisal” because the Town had received an option to purchase the Dillon Property pursuant to Chapter 61. Further, that he needed to have an appraisal down in a tight timeframe that would be acceptable to the State because it would be participating. Mr. Closser was not given any guidance by Mr. Kreidler as to how much the Town could spend, or any other information that directed his determination of value.

6. Jay Closser performed an appraisal of the Dillon Property between November of 2006 and January of 2007.

7. On or about January 17, 2007, Mr. Closser informed Mr. Kreidler via e mail that the Dillon Property was worth 1.2 million dollars. [Note 5] After Mr. Closser provided that figure, Mr. Kreidler asked him to determine what the Dillon Property would be worth subject to a conservation restriction. The purpose of this exercise was to determine the amount the Commonwealth of Massachusetts would be willing to provide toward the purchase price. Mr. Closser did not consider the possibility of this restriction in his initial appraisal of the Dillon Property, but he calculated it and included it in his final report, also dated January 17, 2007.

8. The appraisal conducted by LandVest at the request of the Town was impartial. Mr. Closser determined that the highest and best use for the Dillon Property was for residential development. He used the “market approach” in his appraisal and considered several factors in determining the fair market value of the Dillon Property, all of which were set out in his report and were the subject of his testimony at trial. These factors included the price Defendant had paid for the Dillon Property while it was subject to G. L. 61, the value of the timber on the property, and the sale prices for comparable properties.

9. On January 29, 2007, the Town held a Special Town Meeting and voted to authorize the Town’s acquisition of the Dillon Property for 1.2 million dollars.

10. On February 20, 2007, Plaintiff provided Dillon with a Notice of Intent to purchase the Dillon Property pursuant to G. L. c. 61, § 8, and duly recorded the notice in accordance with the statute. This notice was provided within 120 days of Defendant’s October 30th letter, and as such, was timely under G. L. c. 61, § 8. 11. The fair market value of the Dillon Property was 1.2 million dollars, as of the date relevant to this litigation. [Note 6]

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In the instant case, the Town seeks a declaration that the Town is entitled to purchase the Dillon Property for 1.2 million dollars and an order for specific performance of the sale contract for the Dillon Property. The Town’s argument relies on the presumption that G. L. c. 61, § 8 governs the transaction between the parties. Defendant argues that Section 8 does not apply to this transaction because the Dillon Property was properly withdrawn from classification under G. L. c. 61. Defendant argues that because the Dillon Property was withdrawn from G. L. c. 61, no subsequent action by Dillon can “invoke the jurisdiction” of that statute. Under the unusual circumstances presented, this court disagrees for two reasons: First, Dillon is estopped from denying the application of Chapter 61, § 8 due its actions, and, second, because parties are free to enter into contracts under any agreeable terms that are lawful and do not offend public policy. Dillon, as offeror, set the terms by incorporating by reference G. L. c. 61, § 8, and the Town accepted.

As this court stated in the Order Granting in part Plaintiff’s Motion for Preliminary Injunction, it is difficult to see how Defendant’s Offer Letter does not mean what it says. By expressly invoking the terms of Section 8 in his Offer Letter to the Town, Defendant rendered moot the issue of when the Dillon Property was ever properly withdrawn from G. L. c. 61, as alleged in the First Case. The express language of the Offer Letter together with the express language of the Stipulation of Dismissal of the First Case, serves as an estoppel against Dillon from arguing that the notice and acceptance provisions of Section 8 do not apply. Therefore, this court need not reach the issue of when the Dillon Property had been withdrawn from the provisions of G. L. c. 61, leaving Dillon free to convey the property without first offering it to the Town.

While Dillon continued to argue in its post-trial brief that the land had been properly withdrawn, in this court’s view, the language employed by Dillon in its Offer Letter incorporated by reference the provisions of at least Section 8 of G. L. c. 61, if not the entirety of Chapter 61. The issue of its applicability is not, as characterized by Dillon, an issue of jurisdiction. The issue of when Dillon had removed the Dillon Property from G. L. c. 61 was effectively, if not intentionally, waived by Dillon when it sent the Offer Letter and thereafter executed a stipulation of dismissal of the First Case, based on the fact that the Offer Letter was in fact the required notice under Section 8.

Section 8 requires any town exercising its option to purchase land under the statute to comply with specific procedures, performed within a 120 days. Specifically, the Town was required to notify Defendant that it received the Offer Letter, conduct an impartial appraisal to determine the full and fair market value of the property, hold a duly-noticed public hearing, vote to purchase the property at the appraised price, send Defendant a Notice of Intent to purchase the property, and record said Notice with the Registry of Deeds. Here, the evidence set forth in paragraphs 5 through 10 above established that the Town complied with all of the statutory requirements inside the 120 days.

Defendant next argues that it does not have to prove that the appraisal conducted for the Town was partial. Instead, Defendant argues, he merely has to show an appraisal done for him reached a different conclusion as to the value of the Dillon Property. This court disagrees. General Laws, Chapter 61, § 8 does not contemplate such a battle of appraisals. Instead, the statute merely requires that the appraisal conducted by the Town be impartial. [Note 7]

This court finds that the appraisal conducted by LandVest for the Town was impartial. The appraisal was conducted by a firm approved by the Commonwealth and was conducted in accordance with well-established industry standards. The appraisal was conducted by Jay Closser, an appraiser with ample experience valuing properties in the Commonwealth of Massachusetts and Central and Western Massachusetts. Additionally, Mr. Closser did not consider, nor was he informed of the possibility of the Town imposing a conservation restriction until after he had informed Mr. Kreidler that he valued the Dillon Property at 1.2 million dollars. After valuing the property, Mr. Closser was asked to determine, and did determine, what the property would be worth subject to a conservation restriction. At that point, Mr. Closser determined that the Dillon property would be worth $600,000, if subject to a conservation restriction.

Defendant tried to introduce evidence of Mr. Closser’s partiality through cross-examination and through testimony of its own appraiser, Mr. John Burton. However, this evidence was not persuasive. Though Defendant attempted to show that Mr. Closser’s appraisal was rendered partial by his determination of the Dillon Property’s highest and best use as residential, rather than timber harvesting, this court disagrees. Additionally, the evidence established that the appraisal commissioned by Defendant, and performed by Mr. Burton, was conducted in the context of this litigation. Mr. Burton was aware that this litigation was proceeding, that the Town had produced an appraisal that valued the Dillon Property at 1.2 million dollars, and that Defendant believed the property was worth more. Furthermore the mere fact that Mr. Burton reached a different conclusion as to value does not render Mr. Closser’s appraiser “partial.” It is possible to have two impartial appraisals that differ as to value. This court finds that an impartial appraisal is all that is required under G. L. c. 61, § 8, and that the LandVest appraisal was impartial.

Finally, even if Section 8 did not apply to the transaction in this case, this court finds that the fair market value of the Dillon Property is 1.2 million dollars based on the evidence presented at trial. Therefore, as there was a valid offer to sell the property from Defendant, a valid acceptance to purchase the property by the Town, and as this court finds the value of the property to be 1.2 million dollars, Defendant is bound by the terms of the contract and must convey the property to the Town for 1.2 million dollars.

As set forth above, the Dillon Property was conveyed to the Town pursuant to this court’s preliminary injunction order dated April 6, 2007, by two deeds recorded with the Worcester County Registry of Deeds on April 27, 2007. Upon the issuance of the judgment herewith, the terms of the preliminary injunction order that prohibit the Town’s conveyance or encumbering of the Dillon Property shall be lifted.

Judgment to issue accordingly.

Karyn F. Scheier

Chief Justice

Dated: October 30, 2008