Home THOMAS DIMARE and PAUL J. DIMARE, Trustees of DiMare Brothers Realty Trust vs. FRANCIS D. BURKE and PAUL E. GUARALDI, d/b/a BURKE & GUARALDI and NILES COMPANY, INC.

MISC 121857

January 25, 1989

Suffolk, ss.




The amended complaint in Miscellaneous Case No. 121857 was filed in the Land Court by the Plaintiffs, Thomas F. DiMare and Paul J. DiMare, Trustees of DiMare Brothers Realty Trust ("Plaintiffs"), on January 29, 1987. The Plaintiffs therein allege that the Defendants, Francis D. Burke and Paul F. Guaraldi ("Defendants" or "Burke et al") are in default under a Purchase and Sale Agreement ("Agreement") dated July 25, 1985 [Note 1] as extended, pertaining to certain real estate located at 485-495 C Street, Boston ("locus"). The Plaintiffs ask that the Court determine that the title to the real estate, on or about October 29, 1986, was free of such title defects as would justify the Defendants' refusal to purchase, the validity of the Agreement and that the Plaintiffs are entitled to the deposit of $240,000 plus accrued interest, which funds are now held by the Defendant Niles Company, Inc. ("Niles"), together with $10,000 from each of the Defendants Burke and Guaraldi. The Plaintiffs in Count II of this complaint seek a determination that the Defendant Niles is not entitled to any commission or fees for services rendered the Plaintiffs in the foregoing transaction. Count III contains a claim against Niles under G.L. c. 93A , §11 and is beyond the jurisdiction of this Court.

On March 12, 1987, Burke et al filed their answer, counterclaim and crossclaim for declaratory relief. The Defendants in their answer assert that the subletting of a portion of said real estate by Stop & Shop, a tenant thereof, renders the title defective or, not in accordance with the Agreement, and accordingly, said Defendants refuse to purchase the said real estate and demand return of their deposit. They further allege that the Agreement and subsequent extensions thereto were entered into pursuant to express and implied misrepresentation by the Plaintiffs that they would:

(i) use best efforts to assist defendants in efforts to acquire or purchase the lease interests, if any, of all occupants in order to make commercial development of the building viable and practicable;

(ii) disclose to the defendants in timely fashion all information in plaintiffs' possession pertaining to development of the realty, including information as to the status and interests of occupants;

(iii) that the occupants I interests, if any, could and would be purchased by plaintiffs for specified amounts or within a specified range of amounts at the earliest practicable time and if possible in advance of closing.

In addition thereto, the Defendants allege in their cross-action that the Plaintiffs herein failed to comply with the aforesaid representations and that at material times the Plaintiffs knew and did not disclose to the Defendants that Stop & Shop, a tenant of premises under an existing lease, was negotiating or had accomplished a sublease of the premises. The gist of the defense claim is that Stop & Shop, Inc. has sublet a portion of the premises to another tenant, that the Defendants were not timely informed of such sublease, and that the Plaintiffs raised no objection to such sublease. By their counterclaim, the Defendants seek breach of contract damages and return of their deposit.

On April 3, 1987, the Defendants filed suit in the Superior Court (Civil Action No. 87-1656) repeating the allegations of their counterclaim and including claims for specific performance and damages based on allegations of fraud, under G.L. c. 93A, and other allegations. By order of the Administrative Justice, both matters were assigned to be heard in the Land Court.

The Defendant Niles admits it is holding the sum of $240,000 in escrow pursuant to the terms of the Purchase and Sale Agreement, and says that it has performed all of the services required of it under an agreement between the Plaintiffs and itself dated April 30, 1985, that if it be determined that the Defendants have breached the Purchase and Sale Agreement, the Plaintiffs owe Niles the fair value of services in connection with the Purchase and Sale Agreement and alternatively, should it be determined that the Plaintiffs have breached the Agreement, then Niles should receive a full broker's commission. In either event, Niles seeks fair value for its services as escrow agent under the Agreement and legal costs. Niles' counterclaim essentially seeks the same relief and, in addition thereto, relief under G.L. c. 93A.

On February 18, 1988, the Plaintiffs filed a motion for summary judgment on Counts I and II of their complaint as well as Counts I through X of the Defendant Burke et al's amended complaint. Should the motion be allowed, the Plaintiffs will waive Count III of their complaint.

All of the parties have conducted extensive discovery and filed voluminous and thorough memorandums. In addition, counsel for all parties have argued various aspects of this matter on numerous occasions. The Plaintiffs' motion for summary judgment came on to be heard on July 8, 1988. All of the affidavits with exhibits thereto have been considered, as have the uncontested portions of the pleadings. In making my determination herein, I have used the copy of the Purchase and Sale Agreement of July 25, 1985 attached to the complaint in Civil Action No. 87-1656, said document therein being labeled "Burke First Amended Complaint Exhibit A."

In consideration of the foregoing, I find that there are genuine issues of material fact and therefore, the case in its entirety is not ripe for summary judgment pursuant to Rule 56(d), Mass. R. Civ. P. I find that there are certain facts as to which no genuine issue exists.

I find the following facts to be undisputed and material:

1. On or about April 30, 1985, the Plaintiffs entered into an exclusive brokerage agreement with Niles, said agreement being dated April 30, 1985 and attached to the complaint in Case No. 121857 as Exhibit No. 3.

Paragraph IV c. thereof reads in part:

III. The Seller agrees: . . .

a. . . .

b. . . .

c. To pay the Broker a fee for professional services of 3% of the selling price if:

(1) A Buyer is procured ready, willing and able to buy said property in accordance with the price, terms, and conditions of this Agreement, or such other price, terms and conditions as shall be acceptable to the Seller; and the Buyer enters into a binding contract to do so, and the Buyer completes the transaction by closing the title in accordance to the provisions of that Contract. . . .

The words after "Seller" in paragraph (1) are handwritten and initialed.

2. At some time prior to July 30, 1985, the Plaintiffs and Defendants Burke et al entered into a Purchase and Sale Agreement dated July 25, 1985 regarding the 1ocus. The Defendant Niles joined in the Agreement as a party thereto.

Pertinent sections of the Agreement read as follows:

A. 3. Said premises are to be conveyed by a good and sufficient quitclaim deed running to the BUYER . . ., and said deed shall convey a good and clear record and marketable title thereto, free from encumbrances . . . .

B. 6. The agreed purchase price for said premises is $4,600,000, of which $30,000 has been paid as a deposit this day, $200,000 due as an additional deposit on October 31, 1985, and $4,370,000 to be paid at the time of delivery of the deed . . . . The $200,000 deposit is to be held in an interest bearing account by the broker and interest shall be paid to the party receiving the prinicipal under the terms of the agreement. The BUYER agrees to notify the SELLER of any objections to the title within 30 days of execution of this agreement, otherwise SELLER shall be deemed to be in compliance with paragraph 3 with respect to SELLER'S title, notwithstanding that some encumbrance may exist.

The words after "agreement" are handwritten and initialed.

C. 7. The BUYER shall purchase the subject property on or after January 15, 1986, and on or prior to February 1, 1986. . . .

D. 10. Full possession of said premises free of all tenants and occupants, except as herein provided in Addendum A, is to be delivered at the time of the delivery of the deed . . . .

E. 18. A broker's fee of 3% is due from the SELLER to Robert E. Connors of Niles Co., Inc. of Boston, Massachusetts, per a separate Agreement.

The words after Massachusetts are handwritten and initialed.

F. 24. The BUYER acknowledges that the BUYER has not been influenced to enter into this transaction nor has he relief upon any warranties or representatives nor [sic] set forth or incorporated in this agreement or previously made in writing . . . .

G. Addendum A contains the following information:

Floor 1, Tenant: Stop & Shop, Inc.; Tenant Since: 1980, Lease Expi res: 11/30/85; Options: 5 + 5; sq. ft. 13,5000; Rent PSF: $2.67; Annual Rent: $36,000; Operating Tax Base: 1980; Tax + Operating Percentage: 18%; First Option: $3.00 PSF - $40,000 annual; Second Option $33.25 PSF - $43,875 annually.

3. Pursuant to the terms of the Agreement, the Defendants Burke et al deposited the sum of $230,000 with Niles.

4. The Agreement was extended five times.

A. The first extension dated February 14, 1986 recognizes that "several unforeseen defects in the title" have been found which prevent the Seller from conveying a good and sufficient title. The performance date is "extended until such time as the Seller is able to resolve such conflicting claims to the subject property by the City of Boston, Consolidated Rail Corporation, and/or any other entities . . . In the event that the Seller is unable to resolve such conflicting claims . . . by May 1, 1986, all obligations of the parties shall cease and the Purchase and Sale Agreement shall become void and all deposits made therewith shall be refunded." Neither this nor the following extensions are executed by Niles.

B. The second extension dated June 2, 1986 reflects continuing title problems, recognizes the prior extension and requires that all "conflicting claims and encroachments be resolved by, July 2, 1986."

C. The third extension is silent as to the reasons therefore, is dated September 7, 1986 and extends the Agreement to September 29, 1986.

D. The fourth extension dated September 25, 1986 extends the closing date to October 29, 1986 and states no specific reason therefor. It does state that the Seller intends to treat this transaction as an exchange under §1031 of the Internal Revenue Code and that accordingly, the deed may come from a third party.

E. The fifth and final extension is described below.

5. The last extension dated October 3, 1986 contains the following provisions:

. . . in consideration of the payment of Ten Thousand Dollars ($10,000) by the Buyer to the Seller, receipt of which is hereby acknowledged, the payment of Ten Thousand Dollars ($10,000) by the Buyer to the Seller on October 29, 1986, and the following mutual promises . . ., it is agreed.

1. The time for the performance of the above referred to . . . shall be extended until October 29, 1986 at 1:PM . . . provided, however, that the BUYER has received a firm, written mortgage commitment by October 29, 1986 and if such mortgage lender is unable to make such funds available by October 29, 1986 . . . BUYER shall be entitled to extend the time for performance of the above referred . . . Agreement up to December 1, 1986 upon payment of the sum of . . . ($866.67) for each day after October 29, 1986. . . .

3. Seller hereby represents and warrants that none of it, its agents or contractors have caused, or allowed to be caused, any encumbrances of title to the parcel of real estate . . . since July 25, 1985. Buyer hereby agrees that the title to the said parcel of real estate as at July 25, 1986 is in compliance with the relevant provisions of the above referenced . . . Agreement.

6. No closing has taken place. The Plaintiffs claim that the Defendants refused to close on October 29th as they did not have adequate financing. The Defendants allege that they refused to close because of a material breach by the Plaintiffs with respect to the Purchase and Sale Agreement, such breach being a sublease by Stop & Shop of its leasehold interest in the locus.

7. By letter dated October 29, 1986, the Defendants by their attorney informed the Plaintiffs, "The permitted subletting of the Stop & Shop premises and the interests thereby granted to Copley constitutes a material change in the state of title to the property . . . you may either return Guaraldi's and Burke's deposit forthwith or remedy the situation within 30 days. . . ."

8. Prior to July 25, 1985 and later in November, 1985 the Defendants were informed by agents of the Plaintiffs' that, in their opinion, the Stop & Shop interests could be purchased for the sum of approximately $150,000.

9. By letter dated May 1, 1986, the Plaintiffs received notice that Stop & Shop intended to sublease their portion of the premises to Copley Pharmaceutical, Inc. for a term running to November 29, 1990 with a five year option. The notice further stated that the sub-tenant will comply with all terms of the prime lease. Although the prime lease required the landlord's consent, which may not be unreasonably withheld, the Plaintiffs took no action as to such consent. The Defendants do not allege that such consent could have been reasonably withheld. They do, however, allege that they would have considered various options had they been seasonably inforned of the sublease.

10. At no time did the Plaintiffs inform the Defendants of such sublease.

11. The Defendants allege that the use of the Stop & Shop portion of the premises was vital to their development plans and that such sublease and/or the costs of their "buying it out" make their entire project uneconomic and impractical.

12. The Defendant Burke has been a member of the Massachusetts Bar since 1977. Over the past twenty-eight years he has been engaged in acquisition, development and management of real estate.

13. The Defendant Guaraldi is a graduate of M.I.T. and is professionally familiar with the factors involved in the development of properties such as proposed for locus.

14. The Defendant Burke did not see the Stop & Shop lease until some time during the period after July 25, 1985 and early in 1986.

In consideration of the foregoing, I find that there is an issue of fact concerning whether or not there were any duties and/or obligations of the Plaintiffs to inform the Defendants of the sublease at some time prior to the execution of the second extension. The second issue, assuming such duty or obligation to exist, is a question of fact as to whether or not the Defendants' action would have been different had they been so informed. Kannavos v. Annino, 356 Mass. 42 (1969) ; First Safety Fund National Bank v. Friel, 23 Mass. App. Ct. 583 , 588 (1987).

Inasmuch as the issues raised by Niles may be at least in part dependent upon the foregoing, no action thereon is appropriate at this time.

While I must deny in part the Plaintiffs' motion for summary judgment for the reasons stated above, I do find and rule that the Agreement of July 25, 1985 is clear, unambiguous and expresses the intent of the parties at the time of its execution. I further find and rule that the sublease of the Stop & Shop premises does not constitute a defect or a material change in title and that title to the locus was, on October 29, 1986, in the Trustees of DiMare Brothers Realty Trust, free of any title defects which would justify the Defendants' refusal to acquire the locus.

Judgment accordingly.


[Note 1] Complaint refers to an agreement dated July 30, 1985, however, copy attached to complaint is dated July 25, 1985.