VILLAGE AT BEDFORD WOODS CONDOMINIUM TRUST vs. CENTURY BANK & TRUST CO. and MIDDLESEX POINT LLC.

This case pertains to a dispute between Plaintiff Village at Bedford Woods Condominium Trust (“Plaintiff”), which is an organization of unit owners at The Village at Bedford Woods Condominium (the “Condominium”), and Defendants Century Bank & Trust Co. (the “Bank”) and Middlesex Point LLC (the “Declarant”) [Note 1] (together, “Defendants”) as to whether the Declarant has a continued right (defined, infra, as the Phasing Rights) to access Condominium land and construct additional units thereon pursuant to certain phasing provisions in the Condominium’s master deed, and whether the Bank has any interest in the Phasing Rights pursuant to a mortgage (defined, infra, as the Mortgage) granted to the Bank by the Declarant. Plaintiff seeks a judicial declaration that the Declarant’s said rights have expired, and also seeks an injunction against the Bank (preventing the Bank from foreclosing upon the Mortgage and selling or transferring the Phasing Rights) pending the resolution of the issue of the Phasing Rights.

To that end, Plaintiff commenced this action by filing a Verified Complaint on May 27, 2014, by which Plaintiff sought (a) certain judicial declarations, pursuant to G. L. c. 231A, relative to the Declarant’s Phasing Rights under the Master Deed [Note 2], and (b) injunctive relief, pursuant to G. L. c. 185(1)(k), prohibiting the Bank from foreclosing upon and/or transferring any rights in the Condominium in which the Bank holds a security interest. A case management conference was held on June 25, 2014. On June 30, 2014, the Bank filed its Answer to the Complaint, which included a Counterclaim seeking a declaratory judgment, pursuant to G. L. c. 231A, relative to the Declarant’s Phasing Rights and the Bank’s security interest therein. [Note 3] On July 1, 2014, an entity called Tower LLC (which had alleged an interest in the Mortgage) filed a motion to intervene; both Plaintiff and the Bank filed opposition to the motion to intervene, which was later withdrawn on July 14, 2014. On July 11, 2014, Plaintiff filed an Answer to the Bank’s Counterclaim. The Declarant never appeared or filed an answer in this case. [Note 4]

On September 24, 2014, Plaintiff filed its motion for summary judgment, together with a memorandum of law, statement of undisputed material facts, and an appendix of exhibits, including an affidavit (the “Anctil Affidavit”) of Robert W. Anctil, Esq. (“Anctil”), who claims to be an expert in condominium master deed construction. On October 31, 2014, the Bank filed its opposition to Plaintiff’s motion, as well as its cross-motion for summary judgment, together with a memorandum of law, statement of additional material facts, and an appendix of exhibits, including an affidavit of James M. Flynn (“Flynn”), Senior Vice President of the Bank. [Note 5] On November 10, 2014, Plaintiff filed its opposition to the Bank’s cross-motion for summary judgment, together with a statement of additional material facts and a supplemental appendix. [Note 6] A hearing was held on all motions on December 8, 2014, at which time all matters were taken under advertisement.

Based upon the evidence in the summary judgment record, I find that the following material facts are not in dispute:

1. The Condominiumis located in Bedford, Massachusetts, and was established pursuant to a master deed (the “Master Deed”) dated September 21, 2006 and recorded in the Middlesex County South Registry of Deeds (the “Registry”) on October 12, 2006 at Book 48312, Page 293. By comprehensive permit (the “Comprehensive Permit”) issued by the Town of Bedford (the “Town”) on August 26, 2004 and recorded in the Registry at Book 43879, Page 320, the Town authorized the construction of the Condominium, subject to several conditions specified therein, including that twenty-two of the eighty-eight total Condominium units be affordable housing units.

2. Plaintiff is the organizationof the Condominium’s unit owners and the governing body of the Condominium. Plaintiff was created pursuant to a declaration of trust dated September 21, 2006 and recorded in the Registryat Book 48312, Page 324 (the “Declaration of Trust”, and together with the Master Deed, the “Condominium Documents”).

3. The Declarant was the declarant of the Condominium under the Master Deed, and was organized in 2003 for the acquisition, development, construction, sale, and leasing of Condominium realestate. According to Massachusetts Secretary of State, Corporations Division (the “Corporations Division”) records, the Declarant was dissolved by order of involuntary dissolution dated April 19, 2011. Said records indicate that Stephen F. Vazza (“S. Vazza”) was the sole manager and registered agent for service of process of the Declarant. [Note 7]

4. Pursuant to Section h, ¶ III of the Master Deed, the Condominium is a three-phase condominium. [Note 8] The first phase of development (“Phase 1") pertained to the property located at 1000 Albion Road, Bedford, Massachusetts (“1000 Albion Road”). Phase 1 was completed prior to the execution of the Master Deed, and it contains thirtyunits in three stories, plus an underground garage level. All thirty units in Phase I were sold by the Declarant between 2006 and 2008. Pursuant to Section h, ¶ III of the Master Deed, the Declarant had the right to add two additional phases of development (respectively, “Phase 2" and “Phase 3") of the Condominium at 2000 Albion Road (“2000 Albion Road”) and 3000 Albion Road (“3000 Albion Road”), Bedford Massachusetts -- which, if implemented, would result in three buildings (connected by the same underground garage) containing eighty-eight total units. [Note 9]

5. Pursuant to Section b of the Master Deed, the Declarant reserved a three-year access right (the “Construction Period”) to the Condominium for construction purposes, as follows:

The Declarant hereby expressly reserves to itself and its successors-in-title and their nominees, for a period ending three (3) years next after the date on which this Master Deed is recorded, the easement, license, right and privilege to pass and repass by vehicle and on foot in, upon, over and to the common areas and facilities of the Condominium (hereinafter defined) for all purposes, including but not limited to transportation of construction materials in order to complete construction work on the Condominium. [Note 10]

6. Pursuant to Section h, ¶ (III)(G)(i) of the Master Deed:

The Declarant’s reserved rights [i.e., the Phasing Rights] to amend this Master Deed to add all or any portion or portions of future Phases to the Condominium and/or to add new Units to the Condominium as part of future phases shall expire twenty-one (21) years [the “Phasing Period”] after the date of the recording of this Master Deed . . . .

This section further provides that the Phasing Rights expire upon (a) the completion of eighty-eight units in the Condominium (which has not occurred), (b) the Declarant’s relinquishment of said rights (which has not occurred), or (c) the expiration of the twenty-one year Phasing Period (i.e., October 12, 2027) -- whichever occurs first.

7. Section h, ¶ III (G)(xi) of the Master Deed provides, in pertinent part, as follows:

The Declarant hereby reserves the right to amend, restate, reaffirm or otherwise take whatever steps which may be required to complete the Condominium and construction of the Buildings, improvements and Units and the phasing of any of the same into the Condominium notwithstanding that any of the same may be required to be done beyond any time or period as may be otherwise provided herein so long as any such act or omission shall not be in violation of any rule of law, then in effect. [Note 11]

8. As of September 21, 2006 (the date on which the Master Deed was executed) the Declarant had largely completed Phase I of the Condominium and the underground garage -- which are today complete. To date, the Declarant has not commenced Phase II or Phase III.

9. The Bank is the mortgagee and holder of a mortgage granted by the Declarant (the “Mortgage”) dated October 8, 2004 and recorded in the Registry at Book 43879, Page 374, which secured two promissory notes from the Declarant in the amounts of $5,685,000 and $6,670,000. The Mortgage was granted by the Declarant prior to the establishment of Plaintiff and the Condominium, and its purpose was to fund the implementation of Phase I.

10. By subordination agreement (the “Subordination Agreement”) dated October 4, 2006 and recorded in the Registry at Book 48380, Page 331, the Bank and the Declarant agreed to subordinate the Mortgage to the Condominium Documents [Note 12], and clarified that the Mortgage was secured by the Condominium, including any future developments thereof. [Note 13]

11. Between 2006 and 2013, the Bank issued partial releases of the Mortgage for all but two units (i.e., Units 1108 and 1304 ) of the thirty units of Phase I of the Condominium. [Note 14]

12. In or around 2014, the Declarant defaulted upon its obligations under the Mortgage. Flynn stated, in his second affidavit, that the amount in default on the Mortgage (as of December 1, 2014) was $7,032,228.60. As a result of the Declarant’s default, the Bank noticed a foreclosure sale of the Phasing Rights, which sale was cancelled by the Bank in view of the pendency of this dispute.

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The Bank’s Motions to Strike

Before the court assesses the merits of the parties’ dispositive motions, it is necessary to resolve the two motions to strike filed by the Bank. The Bank’s first motion to strike seeks to strike the Anctil Affidavit on the bases that it was not based upon Anctil’s own personal knowledge of the facts relevant to this dispute, that it is unduly speculative, and that it does not include certified copies of certain documents referred therein. Plaintiff acknowledges that Anctil has no direct, personal knowledge of the facts relevant to this dispute, but argues that the Anctil Affidavit should nonetheless not be stricken, since, it argues, Anctil is “an expert in the drafting of condominium development documents”, whose testimony as to “industry practice[s]” is relevant to this dispute.

In his affidavit, Anctil states that he has been licensed as an attorney for approximately twenty years, and that “[a] major portion of [his] practice involves the representation of developers of real estate with an emphasis on condominiums.” He further states that his law firm -- but not he in particular -- “represents over 750 condominium associations” without specifying the nature of this representation. He also notes that he has “drafted approximately 30 Master Deeds for developers of condominiums over the years.”

These qualifications suggest that Anctil is proficient as a practitioner of transactional real estate law, but they do not mean that he is an “expert” in identifying the intent of the draftsperson(s) of a legal document of which Anctil may or may not have any actual familiarity. Since, as Plaintiff admits, Anctil had no role in drafting the Master Deed, his sweeping generality (based on his experience with his own clients) that “developers desire flexibility in furthering their development scheme”, therefore, is nothing more than speculation as to what the drafters of the Master Deed may have intended. Moreover, whether or not “developers desire flexibility” in preparing condominium master deeds, Anctil does not actually provide any reason why, in view of such alleged desire, the court should apply Plaintiff’s suggested interpretation of the Master Deed. In fact, the Bank, in its summary judgment brief, also notes that condominium master deeds are drafted to allow flexibility, but concludes that the opposite interpretation of the Master Deed is implied.

In sum, the Anctil Affidavit is not based upon Anctil’s personal knowledge of the facts at bar, and, therefore, amounts to speculation, which has no place in the summary judgment record. As such, the Bank’s motion to strike the Anctil Affidavit is hereby ALLOWED.

The Bank’s second motion to strike seeks to strike Plaintiff’s statement of additional material facts and supplemental appendix on the bases that they were improperly filed in connection with Plaintiff’s reply brief, that the documents in Plaintiff’s supplemental appendix do not constitute newly-discovered evidence, and that Plaintiff improperly made new substantive arguments against the Bank. Plaintiff argues that these documents were filed in response to certain statements made in the Bank’s opposition brief with respect to whether the Mortgage is in default.

This court’s August 12, 2014 order set the briefing schedule for the parties’ dispositive motions, but did not specify what the parties’ reply briefs could and could not contain. Thus, as long as Plaintiff’s reply brief replied to the Bank’s arguments in its opposition brief (and did not proffer new arguments) nothing in that order prevented Plaintiff from filing what it did. Notably, with the exception of the settlement statements and the unit owner’s affidavit, all of the documents in the supplemental appendix are recorded documents on file with the Registry, of which this court could have taken judicial notice irrespective of whether they were submitted by the parties.

This case involves a dispute as to the interpretation of the Master Deed, not as to whether the Mortgage is in default. Plaintiff’s counsel acknowledged as much at the summary judgment hearing, and admitted that monies were owed by the Declarant on the Mortgage. In fact, in prior filings with this court (including in paragraph two of the Complaint), Plaintiff has repeatedly taken the position that the Mortgage is, in fact, in default. The documents submitted by Plaintiff in its reply brief on the issue of whether the Mortgage is actually in default appear to be of limited relevance -- namely, as to which Phase I units were sold and which units are still burdened by the Mortgage.

However, in its reply brief, Plaintiff -- for the first time in this litigation, and in contradiction of its prior statements -- took the position that “there is no evidence that the [Mortgage] is in default”. Further, Plaintiff claimed, based upon the evidence (included in the supplemental appendix) as to certain of the Phase 1 units, this court “may infer” that the vast majority of the outstanding balance of the Mortgage had been satisfied through payoffs to the Bank in connection with the sales of the thirty Phase I units. Thus, Plaintiff implied, the Bank “probably” received sufficient payment to satisfy the outstanding balance on the Mortgage, and, therefore, “the common areas and facilities are released from the [Bank]’s Mortgage.”

In the first instance, Plaintiff’s suggestion that the Mortgage might not actually be in default was not raised in its moving brief, and is directly contradictory to multiple statements previously made by Plaintiff in this case -- including in the Complaint. Even if this were not the case, Plaintiff’s argument here amounts to bare speculation as to what may be owed on the Mortgage. On summary judgment, the court’s role is to draw conclusions of law on the basis of known facts -- not to “infer” what the facts “probably” may be on the basis of an incomplete record. [Note 15] In any event, Flynn’s second affidavit -- accepted de bene at the summary judgment hearing -- settles this dispute once and for all: the amount in default on the Mortgage (as of December 1, 2014) was $7,032,228.60.

In view of the foregoing, upon review of the parties’ supplemental filings, the Bank’s motion to strike Plaintiff’s supplemental filings is hereby ALLOWED, in part, as follows: Plaintiff’s supplemental filings will be included in the summary judgment record, as will Flynn’s supplemental affidavit. However, Plaintiff’s discussion, in its reply brief, as to whether the Mortgage is in default are stricken from the summary judgment record. As found, supra, the court considers the fact that the Mortgage is in default to be an undisputed fact -- irrespective of the amount of such default. [Note 16]

The Parties’ Motions for Summary Judgment

Summary judgment is appropriate where there are no genuine issues of material fact and where the summary judgment record entitles the moving party to judgment as a matter of law. E.g., Cassesso v. Comm’r of Corr., 390 Mass. 419 , 422 (1983); Cmty. Nat’l Bank v. Dawes, 369 Mass. 550 , 553 (1976); Mass. R. Civ. P. 56(c).

Plaintiff argues that the Declarant’s Phasing Rights under the Master Deed expired upon the conclusion of the Construction Period, and that the Declarant’s right to amend the Master Deed and/or commence Phase II or Phase III are now nullity because Phase II and Phase III were not at least commenced within the three year Construction Period. Plaintiff further argues that, because the Phasing Rights have expired, the Bank does not have any lien upon or other interest in the Phasing Rights, and, thus, that the Mortgage is now unsecured. The Bank argues that the Phasing Rights will not expire until the conclusion of the Phasing Period in 2027, and thus that the Bank continues to have a valid security interest in the Declarant’s rights and interests in the Condominium (including the Phasing Rights) pursuant to the Master Deed. I shall examine each issue in turn.

A. The Phasing Rights

In order to determine whether the Phasing Rights expired upon the conclusion of the Construction Period, it is necessary to consider first the plain language of the Master Deed, which “prescribes the rules of the game”. Strauss v. Oyster River Condo. Tr., 417 Mass. 442 , 452 (1994). Only in the event of ambiguity is it appropriate to look beyond the four corners of a condominium’s master deed. E.g., Seaco Ins. Co. v. Barbosa, 435 Mass. 772 , 779 (2002).

The language of the Master Deed “should be construed [so] as to give effect to the intent of the parties, unless inconsistent with some law or repugnant to the terms of the grant.” Harrison v. Marcus, 396 Mass. 424 , 429 (1985) (quotation omitted). To that end:

every phrase and clause must be presumed to have been designedly employed, and must be given meaning and effect, whenever practicable, when construed with all the other phraseology contained in the instrument, which must be considered as a workable and harmonious means for carrying out and effectuating the intent of the parties.

G.M. Abodeely Ins. Agency, Inc. v. Commerce Ins. Co., 41 Mass. App. Ct. 274 , 277 (1996). Conversely, it is not the province of the courts to read language into contracts where it is not present, nor to reform a contract for the parties. E.g., Rogaris v. Albert, 431 Mass. 833 , 835 (2000).

Here, Section a, ¶ II of the Master Deed specifically provides that “Section (h) III hereof sets forth the Declarant’s easements and rights to add Phases, Buildings and Units, and the procedure whereby the Declarant may amend this Master Deed at any time and from time to time . . . .” Likewise, Exhibit B of the Master Deed also makes reference to Section h of the Master Deed as providing the framework for the Declarant’s Phasing Rights.

Section h, ¶ III (G)(xi) of the Master Deed specifies that the Phasing Rights include:

the right to amend, restate, reaffirm or otherwise take whatever steps which may be required to complete the Condominium and construction of the Buildings, improvements and Units and the phasing of any of the same into the Condominium notwithstanding that any of the same may be required to be done beyond any time or period as may be otherwise provided herein so long as any such act or omission shall not be in violation of any rule of law, then in effect.

Section h, ¶ III (G)(iv) of the Master Deed further provides that the Phasing Rights include a right to “unilaterally amend this Master Deed to add new Units to the Condominium as part of future phases.” So specified, Section h, ¶ (III)(G)(I) of the Master Deed provides that these Phasing Rights expire upon the completion of the Phasing Period -- that is, twenty-one years after the date the Master Deed is recorded. The Master Deed was recorded in the Registry on October 12, 2006 at Book 48312, Page 293, so the Phasing Period will not end until October 12, 2027 unless either eighty-eight Condominium units are built or the Declarant relinquishes the Phasing Rights.

Plaintiff argues that, notwithstanding the multiple references in the Master Deed to Section h thereof as setting forth the procedure by which the Declarant was to exercise the Phasing Rights, in fact Section b of the Master Deed -- which sets the three-year Construction Period -- should be seen as overriding all other provisions of the Master Deed pertaining to the Phasing Rights. Plaintiff argues that Section b of the Master Deed should be read together with Section h thereof as implying that future Phasing Rights with respect to each respective Phase would be remain only if the Declarant had commenced construction on that Phase within the three-year Construction Period. And, Plaintiff argues, since the Declarant did not commence work on Phase II or III within the Construction Period, the Phasing Rights with respect to those Phases has expired.

Plaintiff’s interpretation of the Phasing Rights is extremely strained. Not only does it effectively read out large parts of the Master Deed, it relies entirely upon an interpretation of the term “complete” that finds no basis in the Master Deed itself. [Note 17] Moreover, the result that Plaintiff’s interpretation would produce is highly unnatural. To wit, notwithstanding Plaintiff’s claim that the Master Deed should be interpreted so as to maximize “flexibility” in the development of the Condominium, Plaintiff’s interpretation would require the Declarant to have (at least) started work on Phase II and III within the three-year Construction Period despite the fact that the Master Deed provides a full twenty-one years for the Declarant to complete said Phases. Thus, to ensure that the Phasing Rights do not expire (in case economics rendered completion of further phases of the Condominium feasible), the Declarant would have to build buildings and leave them vacant and unused for as much as the better part of two decades -- an absurd result that clearly was not intended by the drafters of the Master Deed. [Note 18] Indeed, such a result would fly in the face of the needs for “flexibility” that Plaintiff champions.

Section h, ¶ III of the Master Deed specifically states that the Phasing Rights apply “[n]otwithstanding anything in this Master Deed”. Likewise, Section h, ¶ III (xi) of the Master Deed specifically permits the Declarant to exercise the Phasing Rights “notwithstanding that any of the [actions required to do so] may be required to be done beyond any time or period as may be otherwise provided herein”. [Note 19] These provisions entail that the Declarant’s exercise of the Phasing Rights may supersede the deadline for construction set forth in the Construction Period.

In view of the foregoing considerations, and based upon the fact that, at the time the Master Deed was executed and recorded, only Phase I of the Condominium was (substantially) complete, the Construction Period set forth in Section b of the Master Deed should be interpreted as setting an expiration date for the Declarant’s initial easement and access rights needed to finish construction on Phase I. It is undisputed that only the finishing touches to complete Phase I was required at the time the Master Deed was drafted, so it would make sense to specify a limited period in which such finishing work would be done. [Note 20] Said rights could also have been exercised to start work on Phase II and/or III, but, as it turned out, neither of those phases were started. However, Section h, ¶ III of the Master Deed enabled the Declarant to create new easements and access rights in favor of itself even after the expiration of the Construction Period. Therefore, the Declarant would have had to exercise such rights to create new easements and access rights had it started work on Phase II and/or Phase III after the conclusion of the Construction Period -- as would the Bank or any successor in interest to the Phasing Rights going forward.

In sum, I find that the Declarant’s Phasing Rights in Phase II and Phase III of the Condominium did not expire on the conclusion of the Construction Period, but rather are still in effect, and will remain so (barring the occurrence of either contingency stated in Section h, ¶ (III)(G)(I) of the Master Deed) until October 12, 2027.

B. The Bank’s Interest in the Phasing Rights

Plaintiff argues that, because the Phasing Rights have expired, the Bank’s security interest pursuant to the Mortgage is rendered null and void, leaving the Mortgage unsecured. The Bank argues that the Phasing Rights have not expired, and thus that its security interest therein remains intact pursuant to the Subordination Agreement.

As noted, supra, pursuant to Paragraph 5 of the Subordination Agreement, the Declarant granted to the Bank:

all right, title and interest in and to the Condominium Master Deed, including, without limitation, the units created by said Master Deed, the rights of Declarant in and to the common areas and facilities and all “phasing” rights and easements as Declarant, including the right and easement to develop additional phases or units in the Condominium, as defined in the Master Deed.

Having already found that the Phasing Rights have not expired, the Bank’s security interest in said rights pursuant to the Subordination Agreement is intact. [Note 21] Therefore, I find that the Bank’s security interest in the Declarant’s Phasing Rights pursuant to the Mortgage remains in full force and effect.

Conclusion and Holding

In view of the foregoing discussion, the parties’ dispositive motions are hereby decided as follows. Plaintiff’s motion for summary judgment is DENIED in all respects, with prejudice. The Bank’s cross-motion for summary judgment is hereby ALLOWED. Plaintiff’s Complaint is hereby DISMISSED, with prejudice.

Judgment to enter accordingly.