After its nominee Ryan McGowan was the high bidder at auction, plaintiff Goodman, Shapiro & Lombardi, LLC (Goodman) executed a purchase and sale agreement for a commercial condominium unit in Sandwich. Consistent with the condominiums master deed and bylaws, the purchase and sale agreement provided a right of first refusal to the condominium association, which the Association purported to exercise and then assign. Goodman brought this action challenging the validity of the right of first refusal and the Associations exercise and assignment of the right. The parties have brought cross-motions for summary judgment. While Goodman has standing to challenge the right of first refusal, the right is not void under the rule against perpetuities, and Goodmans standing does not extend to its questioning whether the Association acted on behalf of the unit owners. Goodmans motion is denied, the Defendants motion is allowed, and this action will be dismissed with prejudice.
Procedural History
On December 22, 2014, Goodman, as nominee for Ryan McGowan, filed its verified complaint, Ex Parte Motion for Memorandum of Lis Pendens, Memorandum of Lis Pendens, Ex Parte Motion for a Temporary Restraining Order, and Memorandum in Support of Ex Parte Motion for a Temporary Restraining Order. On December 29, 2014, Defendants filed their Opposition to Plaintiff's Motion for Endorsement of Lis Pendens and Motion for a Temporary Restraining Order. The Court heard the motions on December 29, 2014, and ordered that the Defendants not convey or otherwise encumber the subject unit prior to the hearing on the cross- motions for summary judgment on March 3, 2015. On January 26, 2015, Goodman filed its Verified First Amended Complaint by Order of the Court (Verified Amended Complaint), naming as Defendants Sandwich Medical and Professional Center Condominium Association; Garry N. Blank (Blank) individually, as director of the Sandwich Medical and Professional Center Condominium Association and as trustee of the GDBS II Trust; Justin Manning in his capacity as attorney in fact for August Pereira, Jr.; and August Pereira, Jr. (Defendants).
On February 6, 2015, Goodman filed its Motion for Summary Judgment (Plaintiffs Summary Judgment Motion), Memorandum in Support of Plaintiff's Motion for Summary Judgment, Plaintiff's Statement of Material Facts to which there is no genuine issue to be tried in Support of its Motion for Summary Judgment (Pl. Facts), and Appendix to Plaintiff's Statement of Material Facts to which there is no genuine issues to be tried in support of its Motion for Summary Judgment. Also on February 6, 2015, Defendants filed their Motion for Summary Judgment and/or Motion to Dismiss (Defendants Summary Judgment Motion), Memorandum of Law in Support of Motion for Summary Judgment and/or Motion to Dismiss, and Concise Statement of Material Facts in Support of Motion for Summary Judgment and/or Motion to Dismiss (Def. Facts). Goodman filed the Affidavit of Frederick C. Casavant, IV, Esquire on February 11, 2015. On February 12, 2015, Defendants filed their Appendix to Defendants' Memorandum of Law in Support of Motion for Summary Judgment.
On February 27, 2015, Goodman filed its Memorandum in Opposition to Defendants' Motions for Summary Judgment, Plaintiff's Response in Opposition to Defendant Garry N. Blank's Statement of Facts (Pl. Response & Facts), and Appendix to Plaintiff's Statement and Memorandum in Support of their Opposition to Defendants' Motion for Summary Judgment. Also on February 27, 2015, Defendants filed their Opposition to Plaintiff's Motion for Summary Judgment, Memorandum of Law in Opposition to Plaintiff's Motion for Summary Judgment, and their Motion to Strike (Defendants Motion to Strike). On March 2, 2015, Defendants filed their response to Plaintiff's Statement of Material Facts to which there is no genuine issue to be tried in Support of its Motion for Summary Judgment (Def. Response & Facts) and their Supplemental Appendix. Hearing was held on the cross-motions for summary judgment and the motion to strike on March 3, 2015, and the Court extended its order of December 29, 2014. The Plaintiffs and Defendants Summary Judgment Motions and Defendants Motion to Strike were taken under advisement. This Memorandum and Order follows.
Summary Judgment Standard
Summary judgment may be entered if the pleadings, depositions, answers to interrogatories, and responses to requests for admission . . . together with the affidavits . . . show that there is no genuine issue as to any material fact and that the moving party is entitled to
judgment as a matter of law. Mass. R. Civ. P. 56(c). In viewing the factual record presented as part of the motion, the court is to draw all logically permissible inferences from the facts in favor of the non-moving party. Willitts v. Roman Catholic Archbishop of Boston, 411 Mass. 202 , 203 (1991). Summary judgment is appropriate when, viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to a judgment as a matter of law. Regis Coll. v. Town of Weston, 462 Mass. 280 , 284 (2012), quoting Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117 , 120 (1991).
Undisputed Facts
The following facts are undisputed.
1. Sandwich Medical and Professional Center Condominium (Condominium) is a condominium organized under and pursuant to G.L. c. 183A and established by a master deed dated July 27, 1984, recorded with the Barnstable County Registry of Deeds (registry) at Book 4218, Page 165 (Master Deed). Pl. Response & Facts ¶ 3; Def. Response & Facts ¶ 1.
2. The Condominium consists entirely of medical and professional commercial units. Pl. Facts ¶ 2; Def. Response & Facts ¶ 2.
3. Sandwich Medical and Professional Center Condominium Association (Association) is the organization of unit owners in the Condominium as defined in and governed by G.L. c. 183A, the Master Deed, and the bylaws dated August 17, 1984, and recorded with the registry at Book 4218, Page 187 (bylaws). Pl. Facts ¶ 3; Def. Response & Facts ¶ 3; Verified Amended Complaint ¶ 3.
4. August Pereira, Jr. (Pereira) formerly owned Unit 1 of the Condominium located at 449 Route 130, Sandwich, MA (Subject Unit). Def. Facts ¶ 4; Pl. Response & Facts ¶ 4; Verified Amended Complaint ¶ 6.
5. On December 3, 3014, Justin J. Manning (Manning), offered the Subject Unit for auction on behalf of Pereira. Ryan McGowan (McGowan) was the highest bidder at the auction. Def. Facts ¶¶ 12, 13, 14; Pl. Response & Facts ¶ 12, 13, 14.
6. Manning, acting as attorney in fact for Pereira, executed a purchase and sale agreement (P&S) for the Subject Unit with McGowan and/or nominee, dated December 3, 2014. Def. Facts. ¶ 15; Pl. Response & Facts ¶ 15; Verified Amended Complaint Exhibit (Exh.) I.
7. In the P&S, McGowan and/or his nominee agreed to purchase the Subject Unit for the sum of $44,000.00, and tendered a $5,000.00 deposit to Manning upon the signing of the P&S with the balance of $39,000.00 due at closing. Def. Facts ¶¶ 16, 17; Pl. Response & Facts ¶¶ 16, 17; Verified Amended Complaint Exh. I.
8. Paragraph 24 of the P&S provides:
The Board of Managers of the Sandwich Medical Professional Center Condominium Association shall have a right of first refusal with respect to the sale of the unit. Said right must be exercised within 15 days from the date of notice of this agreement. Should the Association not exercise its right, any adjoining unit owner may exercise a right of first refusal within 7 days after the expiration of the 15 days granted to the Board. Should either the Association or an adjoining unit owner exercise its [sic] right, all deposits made hereunder by BUYER shall be immediately returned to BUYER and this contract shall become null and void.
Def. Facts ¶ 19; Pl. Response & Facts ¶ 19; Verified Amended Complaint Exh. I.
9. Section 8(j) of the Master Deed states: Each unit shall be subject to the rights of first refusal as set forth in the By-Laws and Section 15 of this Master Deed. Pl. Facts ¶ 7; Def. Response & Facts ¶ 7; Verified Amended Complaint ¶ 11, Exh. D.
10. Article VII, § 1 of the bylaws states, in part:
SECTION 1. Sales and Leases. No unit owner may sell or lease, as herein defined a unit, except by complying with the following provisions:
Any unit owner who receives a bona fide offer for the sale of his unit which he intends to accept, shall give notice to the Board and to each owner of an adjoining unit, as defined in the Master Deed, of such offer and of such intention, the name and address of the proposed purchaser, the terms of the proposed transaction, and such other information as the Board may reasonably require, and such unit owner shall offer to sell such unit, together with the appurtenant interests, first to the Board or its designee, corporate or otherwise, on behalf of the owners of all other units, and then to each adjoining unit owners, on the same terms and conditions as contained in such offer.... Within 15 days after receipt of such notice, the Board may elect, by notice to such unit owner, to purchase such unit, on behalf of all other unit owners, on the same terms and conditions as contained in the offer and as stated in the notice from the offering unit owner. In the event the Board shall elect to purchase such unit, the deed shall be delivered and the consideration paid... the unit owner shall convey a good, clear record and marketable title to the unit to the Board, or its designee, on behalf of all other unit owners.
In the event the Board does not signify its intention to exercise its right of first refusal, within 15 days after receipt of notice of the offer, any individual adjoining unit owner may exercise such right of first refusal on his own behalf...
The Board shall not purchase any unit without the prior approval of 85% of the unit owners.
Verified Amended Complaint Exh. F.
11. Section 15 of the Master Deed states, in part:
15. Right of First Refusal of Adjoining Unit Owners.
In addition to the right of first refusal of the Board in case of sale of a unit as set forth in the By-laws, the owners of units adjoining any unit to be sold shall have a right of first refusal to buy such unit being sold as herein set forth. Units shall be deemed adjoining when only separated from the unit being sold by a common area wall.
Any unit owner who receives a bona fide offer of his unit which he intends to accept, shall give notice... in the same manner as notice is given to the Board pursuant to the right of first refusal in the By-laws.
In the event the Board does not exercise its right of first refusal, it shall notify the selling unit owner and the owners of the units immediately adjoining thereto.
The procedure to be employed in consummating a sale to a unit owner who exercises his right of first refusal shall be the same as that set forth above for consummating a sale to the Board.
Verified Amended Complaint Exh. E.
12. On December 16, 2014, the Association emailed Pereira a document dated December 15, 2014, entitled Notice of Exercise of Right of First Refusal and Notice of Assignment, stating it was exercising its right of first refusal and naming Blank as its nominee/assignee. Def. Facts ¶ 20; Pl. Response & Facts ¶ 20; Verified Amended Complaint ¶ 14, Exh. G.
13. On December 15, 2014, Blank executed a purchase and sale agreement with Pereira for the purchase of the Subject Unit for the sum of $44,000.00 and tendered a $5,000.00 deposit to Manning. Def. Facts ¶ 22; Pl. Response & Facts ¶ 22.
14. Blank is a duly elected member of the governing board of the Association and a trustee of a trust that owns a unit in the Condominium. Pl. Facts ¶ 4; Def. Response & Facts ¶ 4; Def. Facts ¶ 8; Pl. Response & Facts ¶ 8; Verified Amended Complaint ¶ 4.
15. On December 15, 2014, Manning notified McGowan by phone that the right of first refusal had been exercised. Def. Facts ¶ 21; Pl. Response & Facts ¶ 21.
16. On December 16, 2014, Manning notified Goodman by email that the right of first refusal had been exercised. Def. Facts ¶ 25; Pl. Response & Facts ¶ 25.
17. Manning emailed Goodman on December 17, 2014 to confirm he was returning the deposit and documents via Federal Express. Def. Facts ¶ 26; Pl. Response & Facts ¶ 26.
18. On or about December 17, 2014, Manning returned the deposit check to Goodman, but the return was refused by Goodman. Verified Amended Complaint ¶ 23.
19. On December 19, 2014, McGowan named Goodman his nominee. Def. Facts ¶ 30; Pl. Response & Facts ¶ 30; Verified Amended Complaint Exh. C.
20. Pereira conveyed his interest in the Subject Unit by delivering a quitclaim deed to Blank, as trustee of the GDBS II Trust, dated December 22, 2014 and recorded on December 29, 2014 with the registry at Book 28597, Page 247. Def. Facts ¶ 31; Pl. Response & Facts ¶ 31; Pl. Facts ¶ 22; Def. Response & Facts ¶ 22; Verified Amended Complaint ¶ 29, Exh. K.
21. Blank is the trustee of the GDBS II Trust under declaration of trust dated July 17, 1996 and recorded with the registry at Book 10304, Page 110. Def. Facts ¶ 9; Pl. Response & Facts ¶ 9.
Discussion
I. Standing.
As discussed, the P&S provides:
24. RIGHT OF FIRST REFUSAL
The Board of managers of the Sandwich Medical and Professional Center Condominium Association shall have a right of first refusal with respect to the sale of the unit. Said right must be exercised within 15 days from the date of notice of this agreement. Should the Association not exercise its right, any adjoining unit owner may exercise a right of first refusal within 7 days after expiration of the 15 days granted to the Board. Should either the Association or an adjoining unit owner exercise it's [sic] right, all deposits made hereunder by BUYER shall be immediately returned to BUYER and this contract shall become null and void.
Verified Amended Complaint Exh. I.
The first question is whether the phrase null and void in the P&S deprives Goodman of standing to challenge the Associations exercise of its right of first refusal. Citing Brough v. Foley, 525 A.2d 919 (R.I. 1987), the Defendants argue that by virtue of this provision, Goodman lacks standing to challenge the Associations exercise of its right of first refusal because the P&S became null and void once exercised. In Brough, the Rhode Island Supreme Court held that the phrase null and void deprived a party of standing to challenge the exercise of the right of first refusal, finding that [t]he agreement gave no right to plaintiffs to second-guess the validity of the right of first refusal. Id. at 921. In response, Goodman cites Bortolotti v. Hayden, 449 Mass. 193 (2007), for the proposition that a legal interest exists for the third-party buyer to challenge the validity of the right of first refusal and the subsequent purchase. Id. at 197-198. In Bortolotti, the SJC distinguished the Brough case, in part, by noting that the right of first refusal in the subject case lacked the null and void language that was in the Brough right of first refusal. Id. at 197.
Notwithstanding the null and void language, Goodman has the right to challenge the validity of the right of first refusal provision under Bortolotti. Provisions that render a purchase and sale agreement null and void upon some act or failure to act must be interpreted in light of the agreement as a whole. See Tremouliaris v. Pina, 23 Mass. App. Ct. 722 , 726-728 (1987). Such language should not bar a party from being able to challenge whether the right of first refusal that contains such language is valid. In other words, Goodman has a cognizable legal interest in the validity of the restriction [it] challenges, and that is enough to confer standing. Bortolotti, 449 Mass. at 198.
II. Rule Against Perpetuities.
Goodman argues that the Associations right of first refusal violates the statutory rule against perpetuities, G.L. c. 184A, §§ 5, 5(a). The Defendants argue that the statute is prospective only from its effective date of June 30, 1990, St. 1989, c. 668, § 2, and that both the Master Deed and the bylaws fall outside the statute since they were recorded in 1984. [Note 1]
Courts look to the intent of the legislature to determine whether a statute applies prospectively or retroactively. See Fleet Natl Bank v. Commissioner of Revenue, 448 Mass. 441 , 448 (2007). Generally,
all statutes are prospective in their operation, unless an intention that they shall be retrospective appears by necessary implication from their words, context or objects when considered in the light of the subject matter, the pre-existing state of the law and the effect upon existent rights, remedies and obligations. Doubtless all legislation commonly looks to the future, not the past, and has no retroactive effect unless such effect manifestly is required by unequivocal terms. It is only statues regulating practice, procedure and evidence, in short, those relating to remedies and not affecting substantive rights, that commonly are treated as operating retroactively, and as applying to pending actions or causes of action.
Id. at 448-449, quoting Hanscom v. Malden & Melrose Gas Light Co., 220 Mass. 1 , 3 (1914). If uncertainty exists, it must be resolved against retroactivity. Id. at 449. In Peterson v. Tremain, 35 Mass. App. Ct. 422 (1993), decided not long after the enactment of G.L. c. 184A, the Appeals Court acknowledged the statute as prospective only, with the common law rule applying prior to June 30, 1990, and, in Bortolotti, the SJC agreed. Bortolotti, 449 Mass. at 199; Peterson, 35 Mass. App. Ct. at 423 n.1. Being prospective only, G.L. c. 184A, §§ 5 and 5(a), do not apply to the Association's right of first refusal because the Master Deed and bylaws were recorded on August 17, 1984, prior to the statute's June 30, 1990 effective date.
Goodman argues that, even if the statute does not apply, the common law rule against perpetuities applies because (1) the statute was enacted to replace the common law rule, and (2) the right was in gross, not appurtenant to or running with the land. Goodman does not cite authority for its position that G.L. c. 184A, §§ 5 and 5(a) simply memorialize the common law rule and allow retroactive application. In any event, this argument flies in the face of the holdings in Bortolotti and Peterson. Goodman's second argument, that the right of first refusal was in gross and not appurtenant to or running with the land, is also unsupported by authority in its memorandum. A right of first refusal is different from other interests affected by the rule against perpetuities. Bortolotti, 449 Mass. at 200. A right of first refusal is not an option to purchase property at a certain price, but a limitation on the owner's ability to dispose of property without first offering the property to the holder of the right at the third party's offering price. Uno Restaurants, Inc. v. Boston Kenmore Realty Corp., 441 Mass. 376 , 382 (2004). Once an owner decides to accept a third party's offer, the right of first refusal ripens into an option to purchase according to the terms of the third-party offer. Bortolotti, 449 Mass. at 201. As the right of first refusal is itself not an option, the common law rule against perpetuities does not apply:
Because the holder of a right of first refusal may only choose to purchase property on the same terms as a bona fide offer, if and when the owner decides to sell, there is no power either to compel an owner to sell the property at an unfavorable price, or to encumber an owner's ability to sell the property for a lengthy period of time. There is no casting of a cloud of uncertainty on the title to the property, and no potential to forestall a sale.
Id. at 201202. Especially in commercial agreements, the rule against perpetuities should not be applied in [a] rigid or remorseless manner. Childs v. Sherman, 351 Mass. 450 , 455 (1966), quoting Wong v. DiGrazia, 60 Cal.2d 525, 533-34 (1963). Instead, [d]ocuments should be interpreted, if possible, so as to avoid the conclusion that they violate the rule against perpetuities. Id. The Associations right of first refusal, created in 1984, does not violate the common law rule against perpetuities in effect at the time of its creation. As the right of first refusal is not void under either the statutory or the common law rule against perpetuities, the Associations exercise of its right of first refusal does not fail on the grounds that the right was itself void.
III. Goodmans Challenge to the Association's Exercise of its Right of First Refusal.
Goodman argues that the Association did not validly exercise its right of first refusal, alleging the right was not exercised either on behalf of or for the benefit of of the unit owners. [Note 2] Goodman does not have standing to raise this argument for two reasons. First, once the Association properly exercised its right of first refusal, the P&S became null and void and Goodman's standing to challenge the exercise of the right ended. Second, even assuming that Goodmans standing did not end once the right of first refusal was exercised, Goodman does not have standing to challenge whether the Association acted on behalf of the unit owners. That standing lies with the unit owners alone.
The P&S sets forth the terms by which the Association must exercise its right of first refusal: 1) the Association must exercise its right of first refusal within 15 days from the date of notice [of the P&S], and 2) all deposits made [under the P&S]... immediately returned to McGowan and/or Goodman once the right is exercised. The Association complied with both these requirements. First, the P&S is dated December 3, 2014. On December 15, 2014, the Association notified Pereira that it was exercising its right of first refusal. Manning phoned McGowan that same day and emailed Goodman the following day, December 16, 2014, that the right of first refusal was exercised. Whether the Association learned of the sale on the P&S date or as late as the date of its email to Pereira, the Association exercised its right of first refusal well within the fifteen days agreed to in the P&S and as required in the bylaws.
Second, on December 17, 2014, Manning emailed Goodman to confirm he was returning the $5,000.00 deposit and documents via Federal Express. Manning returned the deposit check to Goodman, but it was refused by Goodman. While Goodman may not have accepted it, the deposit was returned. If a person to whom money is owed refuses acceptance of its tender, the obligation to pay is discharged. See G.L. c. 106 § 3-603(b); Mondello v. Hanover Trust Co., 252 Mass. 563 , 568 (1925) (citing cases where courts held that if the person to whom money is due evades a tender, or absolutely refuses to accept money due, a tender is deemed to have been waived).
The Association properly exercised its right of first refusal when it notified Pereira within fifteen days and when it returned all the deposits the $5,000.00 check under the P&S. By the terms of the P&S, upon its notification and return of the deposits, the P&S became null and void. At that time, the P&S ceased. Goodman no longer had any contractual right under the P&S, and therefore, had no standing to look behind the Associations exercise of the right of first refusal and challenge what the Association did with its right to purchase the Subject Unit, whether it went through with the purchase, or, as it did, assign its right to purchase to Blank. When Pereira decided to accept McGowan and/or Goodman's offer, the [Association's] right of first refusal ripen[ed] into an option to purchase according to the terms of [the] offer. Bortolotti, 449 Mass. at 201. The Association has an implied right to assign its option to purchase, and the bylaws explicitly state that the Association may appoint a designee. See American Employers' Ins. Co. v. City of Medford, 38 Mass. App. Ct. 18 , 22 (1995) (finding it axiomatic that a contractual right can be assigned unless assignment is expressly forbidden by the terms of the contract) citing Garbers Auto Rental, Inc. v. Genoa Packing Co., 2 Mass. App. Ct. 298 , 301- 302 (1974) and Restatement (Second) of Contracts § 317 (1979). Because the P&S is null and void, Goodman has no standing to challenge that right.
Leaving aside the null and void provision, Goodman does not have standing to challenge whether the Association acted on behalf of the unit owners when it exercised the right of first refusal. That standing belongs solely to the unit owners. Condominium associations operate on behalf of the unit owners. The association trustees do not take property as individuals nor determine an individual unit owner's rights. See Golub v. Milpo, Inc., 402 Mass. 397 , 401 (1988) (concluding that [i]f the trustees may only act on behalf of all unit owners, it follows, therefore, that trustees do not have authority to settle the particular claim of an individual unit owner) citing Glickman v. Brown, 21 Mass. App. Ct. 229 , 236 (1985) (finding that the statutory scheme set out in G.L. c. 183A makes clear that 'the trustees act only for the benefit of all the unit owners); see also Berish v. Bornstein, 437 Mass. 252 , 265 (2002) (confirming that under G.L. c. 183A the trustees or other members of the organization of unit owners may act only on behalf of all of the unit owners); Fazio v. Trustees of River House Condo. Trust, 19 LCR 454 , 459 (2011), affd, 81 Mass. App. Ct. 1140 (2012) (recognizing that trustees are bound to the collective interests of all of the unit owners, and not to the interests of an individual unit holder, and need only act for the good of the unit owners as a whole).
In other words, the Association, like all condominium associations, by definition can only act on behalf of the unit owners. The use of the phrase on behalf of in the right of first refusal provision of the bylaws, Article VII, § 1, reflects that basic tenet. Its use follows the general purpose of c. 183A's statutory scheme that trustees can only act on behalf of the unit owners when the Association exercises its right of first refusal. See Golub, 402 Mass. at 401. The Association cannot act in an individual capacity nor for the Association trustees individually, but can only act on behalf of the unit owners. Id; see also Berish, 437 Mass. at 265. The Association does not exist for itself, nor for any one unit owner. Fazio, 19 LCR at 459. Rather, the Association represents and exists for the unit owners as a whole.
If the Association were to take an action not on behalf of the unit owners, it is the unit owners whose rights and interests would be impaired and who would have standing to challenge the Associations actions. Goodman is not a unit owner, but merely the buyer in the P&S. The buyer under the P&S has no interest in and no right to challenge whether the Association has acted on behalf of the unit owners in exercising the right of first refusal.
Conclusion
For the foregoing reasons, the Plaintiff's Summary Judgment Motion is DENIED, and the Defendants' Summary Judgment Motion is ALLOWED. Because the Defendants Summary Judgment Motion is allowed, the court need not reach the Defendants Motion to Strike.
Judgment shall enter dismissing the Verified Amended Complaint with prejudice.
SO ORDERED
GOODMAN, SHAPIRO & LOMBARDI, LLC, nominee for Ryan McGowan, v. SANDWICH MEDICAL AND PROFESSIONAL CENTER CONDOMINIUM ASSOCIATION, GARRY N. BLANK individually, as Director of the Sandwich Medical and Professional Center Condominium Association and as Trustee of the GDBS II Trust, and JUSTIN MANNING in his capacity as attorney in fact for August Pereira, Jr. and AUGUST PERIERA, JR.