JOHN A. GIFFORD and DEBRA F. GIFFORD vs. ANDREW J. BURKE

Petitioners John A. Gifford and Debra F. Gifford filed their Petition for Partition relative to property located at 15-15A Pierview Avenue, Revere, MA (the “Partition Property”) pursuant to G. L. c. 241 on December 30, 2008. [Note 1] Defendant Andrew J. Burke filed his Answer on February 3, 2009. A case management conference was held on March 10, 2009, at which time the parties indicated that they were interested in converting the Partition Property to a condominium. At a status conference held on June 18, 2009, at which Defendant did not appear, Petitioners indicated that the condominium conversion was still in process. At a status conference held on July 31, 2009, the parties indicated they could not reach agreement on the condominium conversion and this court ordered a partition commissioner to be appointed. [Note 2] By Order dated August 4, 2009, this court appointed Robert Cotton, Esq. as a Partition Commissioner. The Commissioner filed his first report on September 24, 2009, and based on Defendant’s response, filed a Supplemental Report on October 5, 2009. At a status conference held on October 13, 2009, there was a dispute between the parties as to how the property was to be sold and how the respective allocations would be made. By Order dated December 23, 2009, this court issued a Warrant to Sell the Partition Property by Private Sale at a minimum price of $370,000. Petitioners filed a Motion to Withdraw Petition for Partition on December 31, 2009. At a status conference held on January 19, 2010, this court denied the Motion to Withdraw Petition. On February 2, 2010, Petitioners filed their Motion for Reconsideration of Petitioners’ Motion to Withdraw or in the alternative, Motion for Specific Performance for Condominium Conversion. A hearing was held on the motion on March 11, 2010, at which time the Motion for Reconsideration was denied. A mediation held on April 1, 2010, was unsuccessful. At a status conference held on April 27, 2010, the parties were required to list their respective contributions for the Partition Property with the Commissioner. A pre-trial conference was held on July 15, 2010, to discuss the issues of specific performance, parties’ contributions, and method of sale. [Note 3] At that time Petitioners indicated that they would file a new complaint for specific performance, which would put the partition action on hold.

Petitioners filed their Complaint for Specific Performance on July 30, 2010 (10 MISC 435104), seeking 1) specific performance of the contract to convert the Partition Property to condominium status, or in the alternative, of the contract to convey the Partition Property to Petitioners, 2) breach of the contract to convert the Partition Property to condominium status, or in the alternative, of the contract to convey the Partition Property to Petitioners, and 3) breach of the implied covenant of good faith and fair dealing to convert the Partition Property to condominium status, or in the alternative, of the contract to convey the Partition Property to Petitioners. A case management conference was held on August 24, 2010. On August 26, 2010, Defendant filed his Motion to Dismiss, together with supporting memorandum, and on October 18, 2010, Petitioners filed their Opposition, together with supporting memorandum. The Motion to Dismiss was heard on December 6, 2010, and the matter was taken under advisement.

“In reviewing a motion to dismiss under rule 12(b)(1) or (6), ‘we accept the factual allegations in the plaintiffs’ complaint, as well as any favorable inferences reasonably drawn from them, as true.’” Sullivan v. Chief Justice for Admin. and Mgmt. of the Trial Court, 448 Mass. 15 , 20-21 (2006) (quoting Ginther v. Comm’r of Ins., 427 Mass. 319 , 322 (1998)). “A motion to dismiss will be granted only where it appears with certainty that the non-moving party is not entitled to relief under any combination of facts that he could prove in support of his claims.” Id. at 21.

The following material facts are not in dispute:

1. The parties each own a 50% undivided interest in the Partition Property as tenants in common, which consists of two residential units on a parcel containing 2,822 square feet of land in Revere, MA.

2. By letter dated March 26, 2009, counsel for Defendant stated that Defendant would be amenable to one of the following:

3. By letter to counsel for Defendant dated April 3, 2009, Petitioners stated that “[m]y wife and I are basically interested in securing a clearly defined ownership interest in the property. Indeed, the condominium option will assure that this will happen . . . Since we favor the condominium option, as does the court, I believe it was mentioned by the court that the costs of condominium conversion would be shared equally. We look forward to hearing from you.”

4. By letter from counsel for Defendant to Mr. Gifford dated April 22, 2009, Defendant stated

I have been informed by my client, he would be amenable to conveying his interest in the above-captioned property for the sum of Four Hundred Thousand ($400,000) Dollars. In the alternative, as previously stated, Mr. Burke would not object to the subject property being converted to condominiums, but he is not prepared to contribute to the cost of said conversion.

5. By letter to counsel for Defendant dated May 2, 2009, Petitioners stated

First, our “firm” counter-offer to Mr. Burke’s proposal is $177,950.00 . . . Second, we reiterate that we’re prepared and thus shall go forward with the condominium conversion as the architects plans have already been rendered, minus the specifics for a condominium conversion, i.e., site plan of the common areas, etc. Additionally, an interior inspection of Mr. Burke’s side of the two family (as presently identified in the Revere Assessor’s office) by the surveyor, is needed to complete the required plans, we are informing you that Boston Survey, Inc., of Charlestown, MA., will await your telephone call to set up the time for their interior inspection . . . In the meantime, we will commence drafting the condominium conversion paperwork. We will prepare as much of it personally to keep the costs down; and, you will receive a copy of all documents for your consideration, comments and approval.

6. By letter to Mr. Gifford dated May 11, 2009, counsel for Defendant stated

My client has reviewed your May 2, 2009, proposal and has instructed me to reject same. He further has reiterated his position that although he does not object to the property being converted to condominiums, he will not contribute to the costs of said conversion. He is prepared to proceed with the partition process. In a final attempt to settle this matter, I have been authorized to pass on a demand of $350,000, for Mr. Burke’s interest.

7. By letter to counsel for Defendant dated May 18, 2009, Petitioners stated

First, My wife and I are no longer interested in purchasing Mr. Burke’s interest in the above-referenced property. Second, We are prepared, at this time, to proceed with the condominium conversion of the above-referenced property. My wife and I, by our signatures below, agree to pay for the costs of the conversion . . .

8. By letter to Mr. Gifford dated May 21, 2009, counsel for Defendant stated

As previously stated, Mr. Burke is amenable to your converting the subject property to two condominium units, consisting of an equal number of square feet of livable space. He is not amenable to your proposal of setting off your $2,900 contribution for roof repairs towards the costs associated with the conversion.

9. By letter to counsel for Defendant dated May 27, 2009, Petitioners stated

The next step in this process is for your client to contact Boston Survey, Inc. (at 617-242-1313) and schedule their view/measurement of the interior of the property at 15 Pierview Avenue. As for the roof repair issue, please disregard our comment regarding same.

10. On June 11, 2009 Petitioners received confirmation from Boston Survey (the “Surveyor”) that during the previous week they were allowed access to Defendant’s unit. Subsequently the Surveyor sent to Petitioners a condominium plan that incorporated Defendant’s unit.

11. On June 12, 2009, an attorney, hired by Petitioners to draft the Master Deed and Trust for the converted condominium, forwarded to Petitioners draft copies of the proposed Master Deed and Trust that integrated therein the condominium plan completed by the Surveyor. At sometime between June 11, 2009 and July 29, 2009 the proposed Master Deed, Trust, and condominium plans were submitted to Defendant for his review.

12. By Assented to Motion for Continuance filed on June 18, 2009, Petitioners asked for a continuance of a status conference scheduled for June 18, 2009, and the Defendant assents to the continuance in order that sufficient time may be available for the preparation and execution of the documentation necessary for the conversion of [the Partition Property] into a condominium.

13. By letter to Mr. Gifford dated July 29, 2009, and filed with this court on the same day, the attorney for Defendant stated, “Kindly be advised my client, Andrew J. Burke, after reviewing the proposed condominium documents, is no longer interested in pursuing the option of converting the above-captioned property to condominiums.”

14. Petitioners spent approximately $7,000 on the preparation of condominium documents.

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Petitioners argue that they are entitled to specific performance on two agreements of Defendant: 1) that the Partition Property be converted to condominiums, and 2) that Defendant sell his undivided interest in the Partition Property to Petitioners for fair market value. I shall address each of these issues in turn. In the alternative, Petitioners seek an assessment of damages as a remedy for the breach of the agreements. The burden of proving the existence of a contract rests on the party seeking specific performance (Petitioners). Moreover, on a Motion to Dismiss, the court must accept the factual allegations of Petitioners’ complaint and inferences drawn therefrom.

Condominium conversion.

First, we must determine whether there was an agreement between the parties. Situation Management Systems, Inc. v. Malouf, Inc., 430 Mass. 875 , 878 (2000) states, “It is axiomatic that to create an enforceable contract, there must be agreement between the parties on the material terms of that contract, and the parties must have a present intention to be bound by that agreement.” A review of the negotiations between the parties indicates that prior to May 18, 2009, the parties were pursuing several different options. As of May 18, 2009 the parties were no longer interested in purchasing the other’s interest, but the condominium conversion was still being discussed. In each letter between the parties the signatory was waiting for additional information from the other side, and signed off with “Please advise” or “Kindly advise.” In Petitioners’ letter of May 27, 2009, Petitioners indicated that they would pay all expenses for the condominium conversion, a clear point of contention for Defendant. [Note 4] At that time, however, the Surveyor had not yet been to Defendant’s unit to complete the survey, and the condominium documents had been neither prepared nor distributed to either Petitioners or Defendant. As such, no final condominium plan had been contemplated and the only material issue that had been resolved was Petitioners’ agreement to pay all conversion expenses. [Note 5]

Petitioners argue that Defendant’s act of final assent to the condominium conversion occurred when he allowed the surveyor into his unit for the purpose of completing a final condominium plan for the Master Deed and Trust. [Note 6] This act, however, merely manifested Defendant’s willingness to take the next step in considering the condominium conversion. Indeed, at that time there had yet to be any final condominium plans (including common area dimensions), and the terms of the Master Deed and Trust had not yet been drafted, much less finalized. The common area dimensions and specific terms of the condominium documents are critical terms, and aside from the cost of the conversion, neither of these documents had been reviewed or resolved by both parties. As a result, Defendant could have no “present intent” to be bound. It is difficult to imagine that Defendant would assent to, without an opportunity to review, all terms of the condominium documents and dimensions of common areas that Petitioners had prepared. The fact that Defendant refused to pay any costs associated with the condominium conversion did not constitute a waiver of his right to have input in the condominium plans, Master Deed, or Trust.

The most reasonable inference from the facts is that Defendant, eventually being in possession of the condominium plans, the Master Deed, and Trust, would need time to review these documents and determine the efficacy of the condominium conversion. As evidence, Defendant assented to postponing the status conference scheduled with this court for June 18, 2009. [Note 7] Mr. Gifford, however, attended the status conference despite the confusion. At the June 18, 2009 status conference, Mr. Gifford, responding to the court’s question of how far along the condominium documents were, stated: “They’re all done. We’re just making the changes now. We know that’s going to take us probably at least a month because we know we’re going to have a couple of changes.” Status Conference Transcript, 6: 3-6 June 18, 2009. “[T]he parties’ intention to execute a final written agreement ‘justifies a strong inference that the parties do not intend to be bound’ until the agreement is executed.” Rosenfeld v. Unitd States Trust Co., 290 Mass. 216 (1935). In the case at bar, there was never any agreement executed, and the only terms to which assent were necessary, i.e. terms of the Master Deed, Trust, and condominium plans, were those terms which remained unresolved. Mr. Gifford admitted himself, on June 18, 2009, that there were still some changes to be made to the final condominium documents and that the terms of the condominium documents were not yet finalized, even to Mr. Gifford’s standard of approval. As such I find that there was no enforceable agreement between Petitioners and Defendant relative to a condominium conversion, nor was there a present intention to be bound by such conversion. [Note 8]

Petitioners contend that if the court does not award specific performance under the alleged contract to convert the Partition Property to condominiums, then Petitioners are entitled to money damages for Defendant’s breach of said contract. I find that since no contractual agreement existed between the parties, there can be no breach thereof. As a result, I find that there will be no grant of specific performance and no award of damages arising out of the alleged contract to convert the Partition Property to condominiums.

Petitioners allege that Defendant’s actions constitute a breach of the implied covenant of good faith and fair dealing implicit in the performance of the condominium conversion contractual obligation. “The purpose of the implied covenant [of good faith and fair dealing] is to ensure that neither party interferes with the ability of the other to enjoy the fruits of the contract.” Chokel v. Genzyme Corporation, 449 Mass. 272 , 276 (2007) (citing Anthony’s Pier Four, Inc. V. HBC Assoc., 411 Mass. 451 , 473 (1991). When no contract exists, however, there cannot be a breach of the implied covenant of good faith and fair dealing, as the claim and the covenant relate only to performance of the obligation. [Note 9] As a result, I find that there was no breach of the implied covenant of good faith and fair dealing arising out of the alleged contract to convert the Partition Property to condominiums.

Sale of Partition Property.

The same contract case law and analysis applies to the sale of an interest in the Partition Property. Petitioners allege that on or before October 13, 2009, Petitioners and Defendant entered into a contractual agreement whereby Defendant agreed to sell to Petitioners his interest in the Partition Property for the sum of $182,000 plus costs. Based on the letters discussed, supra, it is clear that in the May 18, 2009, letter Petitioners terminated the negotiations for the purchase of Defendant’s interest in the Partition Property. Moreover, the record contains no evidence of an offer and acceptance, let alone an offer for Petitioners to purchase or Defendant to sell his interest in the Partition Property, subsequent to Petitioners’ letter of May 18, 2009. In fact, the only offer that took place was at a status conference with this court on October 13, 2009, and was an offer by Defendant to purchase Petitioners’ interest in the Partition Property for $177,000, which was promptly rejected by Petitioners. As a result, I find that there was no agreement relative to the sale of the Partition Property and no present intention of Defendant to be bound by an agreement to sell his interest in the Partition Property.

Petitioners contend that if the court does not award specific performance under the alleged contract for Defendant to sell his interest in the Partition Property to Petitioners, then Petitioners are entitled to money damages for Defendant’s breach of said contract. I find that since no contractual agreement existed between the parties, there can be no breach thereof. As a result, I find that there will be no grant of specific performance and no award of damages arising out of the alleged contract for Defendant to sell his interest in the Partition Property to Petitioners.

Petitioners allege that Defendant’s actions constitute a breach of the implied covenant of good faith and fair dealing implicit in Defendant’s contractual obligation to convey his interest in the Partition Property to Petitioners. For the same reasoning as applied in the discussion of the condominium conversion, supra, this allegation fails. A binding contract for Defendant to sell his interest in the Partition Property never existed, thus there can be no breach of the implied covenant of good faith and fair dealing as the covenant and the claim relate to the performance of the alleged, but non-existent contract. [Note 10] As a result, I find that there was no breach of the implied covenant of good faith and fair dealing arising out of the alleged contract for Defendant to sell his interest in the Partition Property to Petitioners.

As a result of the foregoing, I ALLOW Defendant’s Motion to Dismiss.

Judgment to enter accordingly as to 10 MISC 435104

The parties shall attend a status conference on Tuesday, April 5, 2011 at 10:00 AM to determine the next step for the partition case, 08 MISC 390774.

Alexander H. Sands, III

Justice

Dated: February 18, 2011