NANCY GOTTLIEB and SUSAN WISIALKO, AS CLASS REPRESENTATIVES FOR A CLASS INCLUDING ALL OF THE ADULT WESTWOOD GIRL SCOUTS, v. GIRL SCOUTS OF EASTERN MASSACHUSETTS, INC.

Fitting the agreement at issue in this case into the appropriate category under real estate law is not unlike trying on suits off the rack. The plaintiffs, as representatives of the Adult Westwood Girl Scouts, argue that a 1980 agreement purportedly giving that group rights to control the sale of a property in Westwood owned by the defendant Girl Scouts of Eastern Massachusetts is enforceable as a right of first refusal. The defendant, on the other hand, argues in its Motion to Dismiss that the agreement is a restriction that has expired. After consideration, the court finds that the agreement fits neither category, but is rather a restraint on alienation. Whether the restraint on alienation makes the agreement unlawful depends upon the scope of the restraint. Because the agreement is ambiguous, the scope of the restraint must be determined by an inquiry into the circumstances surrounding its execution and the parties’ intent, and the Motion to Dismiss must be denied.

Procedural History

Nancy Gottlieb and Susan Wisialko, as class representatives for a class including all of the Adult Westwood Girl Scouts (WAGS), filed the original complaint in this action on February 9, 2016, and thereafter filed a First Amended and Verified Complaint on March 1, 2016 (Complaint). On March 10, 2016, WAGS filed its Motion for Endorsement of Memorandum of Lis Pendens and In Furtherance of a Preliminary Injunction (Lis Pendens Motion). Girl Scouts of Eastern Massachusetts, Inc. (GSEM) filed its Motion to Dismiss Plaintiff's First Amended and Verified Complaint (Motion to Dismiss) and Memorandum of Law in Support of Defendant Girl Scouts of Eastern Massachusetts, Inc.'s Motion to Dismiss Plaintiff's First Amended and Verified Complaint on March 11, 2016. GSEM filed a Motion for a Protective Order to Stay Discovery Pending a Decision on the Motion to Dismiss and to Prohibit Plaintiffs from Seeking Information Not Relevant to Their Asserted Claims and a supporting Memorandum on March 30, 2016. GSEM filed an Opposition to Plaintiff's Motion for Endorsement of Memorandum of Lis Pendens and In Furtherance of a Preliminary Injunction and Special Motion to Dismiss on March 31, 2016. On April 4, 2016, the court denied WAGS' Lis Pendens Motion without prejudice, as the certification did not comply with G. L. c. 184, § 15.

On April 11, 2016, WAGS filed its Opposition to Defendant's Motion to Dismiss and Special Motion to Dismiss and an Amended and Restated Verification to Plaintiff's First Amended and Verified Complaint. On April 19, 2016, GSEM filed its Reply Brief in Further Support of Defendant's Motion to Dismiss and Special Motion to Dismiss. WAGS filed its Opposition to Defendant's Motion for a Protective Order on April 20, 2016.

The Motion to Dismiss was heard on April 21, 2016, and taken under advisement. This Memorandum and Order follows.

Standard for Motion to Dismiss

The Motion to Dismiss seeks dismissal of counts I, II, and III of the Complaint under Mass. R. Civ. P. 12(b)(6), for failure to state a claim upon which relief can be granted. In considering a motion to dismiss for failure to state a claim, the court accepts as true well-pleaded factual allegations and reasonable inferences drawn therefrom, Marram v. Kobrick Offshore Fund, Ltd., 442 Mass. 43 , 45 (2004), but does not accept “legal conclusions cast in the form of factual allegations.” Iannacchino v. Ford Motor Co., 451 Mass. 623 , 633 (2008), quoting Schaer v. Brandeis Univ., 432 Mass. 474 , 477 (2000). Generally, if matters outside the pleadings are presented to and not excluded by the court, the motion will be treated as a motion for summary judgment. Mass. R. Civ. P. 12(b), 12(c). The court may, however, take into account matters of public record and documents integral to, referred to, or explicitly relied on in the complaint, whether or not attached, without converting the motion to a motion for summary judgment. Marram, 442 Mass. at 45 n.4; Schaer, 432 Mass. at 477; Reliance Ins. Co. v. City of Boston, 71 Mass. App. Ct. 550 , 555 (2008); Shuel v. DeIeso, 16 LCR 329 , 329 n.2 (2008).

Facts

For purposes of the Motion to Dismiss pursuant to Mass. R. Civ. P. 12(b)(6), the court accepts as true the following facts as alleged in the Complaint.

1. WAGS is a defined group of women who are involved in girl scouting in the Town of Westwood (Town) and who have registered and paid dues to GSEM. WAGS contains over 150 potential members and membership in the group is formally recognized in a registry maintained by GSEM.

2. GSEM is a 501(c)(3) corporation organized under the laws of the Commonwealth of Massachusetts.

3. WAGS has used a property located in the Town to hold meetings and related Girl Scout activities for over eighty years (Scout House Property).

4. The Scout House Property was initially owned by Troop 1, Westwood Girl Scouts.

5. In the summer of 1941, the construction of a scout house was completed on the Scout House Property.

6. In July 1941, Troop 1, Westwood Girl Scouts conveyed the Scout House Property to Westwood Scout House, Inc.

7. In approximately 1944, Westwood Scout House, Inc. obtained a quitclaim deed for the Scout House Property.

8. In 1962, Westwood Scout House, Inc. gifted the Scout House Property to Westwood, Mass. Local Council of Girl Scouts, Inc.

9. Westwood, Mass. Local Council of Girl Scouts, Inc. later merged with eleven other local councils to form Blue Hill Girl Scout Council, Inc.

10. After the merger, in 1964, Westwood, Mass. Local Council of Girl Scouts, Inc. gifted the Scout House Property to Blue Hill Girl Scout Council, Inc.

11. Westwood, Mass. Local Council of Girl Scouts, Inc. and Blue Hill Girl Scout Council, Inc. entered into an agreement in 1964 (1964 Agreement) which provides in relevant part:

In the event that [Blue Hill Girl Scout Council, Inc.] shall determine at any time to sell, transfer or otherwise dispose of the WESTWOOD LANDS or any part thereof, then BLUE HILL shall give two weeks' written notice to the ADULT WESTWOOD GIRL SCOUTS, and shall cause a meeting of said members to be held at an appropriate place and time. Thereafter, before BLUE HILL shall sell, transfer, or otherwise dispose of the WESTWOOD LANDS or any part thereof, BLUE HILL shall first offer said land to any and all such persons, firms, corporations or trusts as an unencumbered gift, sale or otherwise to be used by any such person, firm, corporation or trust for any charitable or civic purpose all as the ADULT WESTWOOD GIRL SCOUTS shall direct at the meeting, hereinabove referred to, by a majority vote of those members who are present and voting at said meeting.

12. The “Westwood Lands” consist of the Scout House Property.

13. In January 1980, Blue Hill Girl Scout Council, Inc. merged with Bay Path Colonial Girl Scout Council, Inc., Girl Scouts of Greater Boston Area, Inc., and Mistick Side Girl Scout Council, Inc. to form Massachusetts Girls Scouts, Inc.

14. Blue Hill Girl Scout Council, Inc. and Massachusetts Girl Scouts, Inc. executed an agreement in 1980 (1980 Agreement) which provides:

In the event that [Massachusetts Girl Scouts, Inc.] shall determine at any time to sell, transfer or otherwise dispose of the WESTWOOD LANDS or any part thereof, then MGSI shall give two weeks' written notice to the ADULT WESTWOOD GIRL SCOUTS, and shall cause a meeting of said members to be held at an appropriate place and time. Thereafter, before MGSI shall sell, transfer, or otherwise dispose of the WESTWOOD LANDS or any part thereof, MGSI shall first offer said land to any and all such persons, firms, corporations or trusts as an unencumbered gift, sale or otherwise to be used by any such person, firm, corporation or trust for any charitable or civic purpose all as the ADULT WESTWOOD GIRL SCOUTS shall direct at the meeting, hereinabove referred to, by a majority vote of those members who are present and voting at said meeting.

15. After execution of the 1980 Agreement, Massachusetts Girl Scouts, Inc. changed its name to Patriot's Trail Girl Scouts Council.

16. On or about January 2008, Patriot's Trail Girl Scouts Council merged with two other councils to form defendant GSEM, which held legal title to the Scout House Property until February 12, 2016.

17. In 2014, GSEM began negotiations with the Town to carry out a land swap whereby GSEM would transfer title in the Scout House Property to the Town in exchange for approximately $400,000 and a site to develop a new scout house.

18. GSEM initially included WAGS in negotiations with the Town and acknowledged WAGS' approval rights under the 1964 Agreement and 1980 Agreement.

19. In December 2015, GSEM cut off all negotiations with WAGS and conducted negotiations with the Town privately.

20. On February 12, 2016, GSEM transferred the Scout House Property to the Town and recorded a quitclaim deed in the Norfolk County Registry of Deeds (registry) at Book 33851, Page 342.

21. The Town granted GSEM a parcel of land on which to build a new scout house (Hanlon School Parcel) and recorded a quitclaim deed dated February 5, 2016 in the registry at Book 33848, Page 232.

22. The land swap was completed without the prior approval of WAGS.

23. WAGS filed its original complaint on February 9, 2016, and thereafter filed a First Amended and Verified Complaint on March 1, 2016.

Discussion

The Complaint has three counts. Count I claims a breach of contract. Count II is a request for a declaratory judgment pursuant to G. L. c. 231A. Count III is a request that a constructive trust be imposed on the Hanlon School Parcel.

GSEM argues that the Complaint should be dismissed because WAGS is not a third-party beneficiary of the 1980 Agreement, WAGS is an unincorporated and loosely affiliated group of individuals and therefore has no enforceable property interest in the Scout House Property, the 1980 Agreement violates the common law rule against perpetuities and the common law rule against unreasonable restraints on alienation, and the approval right set forth in the 1980 Agreement is a 'restriction' within the meaning of G. L. c. 184, § 23 and therefore expired in January 2010.

In response, WAGS argues that the 1980 Agreement grants it an enforceable right of first refusal over the Scout House Property, the 1980 Agreement does not violate the common law rule against perpetuities because it was executed between charitable organizations, the 1980 Agreement does not impose an unreasonable restraint on alienation, the term of the 1980 Agreement is not limited to thirty years under G. L. c. 184, § 23 because GSEM is a charitable organization, and a constructive trust should be imposed on the Hanlon School Parcel.

1. Girl Scouts of Eastern Massachusetts, Inc. is a party to the 1980 Agreement

Defendant GSEM contends that it is not bound by the 1980 Agreement because it is not an identified party in the 1980 Agreement. The court disagrees with GSEM's argument. The Complaint alleges that GSEM obtained ownership of the Scout House Property in 2008 through a series of name-changes and mergers involving Massachusetts Girl Scouts, Inc., Patriot's Trail Girl Scouts Council, and two other Girl Scout councils. Construing the facts presented in the Complaint in the plaintiff's favor, the court accepts as true the allegation that GSEM obtained ownership of the Scout House Property as a successor to Massachusetts Girl Scouts, Inc., rather than as a purchaser by sale. The 1980 Agreement is binding on “Massachusetts Girl Scouts, Inc., its successors and assigns.” Assuming that GSEM is a successor to Massachusetts Girl Scouts, Inc., GSEM would be bound by the 1980 Agreement.

2. Adult Westwood Girl Scouts is a third-party beneficiary of the 1980 Agreement

Under Massachusetts law, a contract confers third-party beneficiary status where the language and circumstances of the contract show that the parties to the contract clearly and definitely intended the beneficiary to benefit from the promised performance. Cumis Ins. Soc'y, Inc. v. BJ's Wholesale Club, Inc., 455 Mass. 458 , 466 (2009); Restatement (Second) of Contracts § 302 (1981) (“a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and … the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance”). Blue Hill Girl Scout Council, Inc. and Massachusetts Girl Scouts, Inc. executed the 1980 Agreement for the sole purpose of granting WAGS approval rights prior to any sale, transfer, or conveyance of the Scout House. The parties to the 1980 Agreement clearly intended to bestow a benefit upon WAGS. In this way, it is distinguishable from Cumis Ins. Soc'y, Inc., cited by GSEM, where the disputed agreement explicitly stated, “[t]his agreement … is not for the benefit of, and may not be enforced by, any third party.” Cumis Ins. Soc'y, Inc., 455 Mass. at 465-466. There is no such language in the 1980 Agreement limiting enforcement of its terms to parties that are signatories to the agreement.

GSEM argues that WAGS is merely an incidental beneficiary of the 1980 Agreement and cites Massachusetts case law holding that unintended beneficiaries have no legal enforcement rights. Id. at 464 (stating, “[t]hat the plaintiffs derive a benefit from a contract between others does not make them intended third-party beneficiaries and does not give them the right to enforce that agreement”). WAGS does not merely derive a benefit from the 1980 Agreement. Given that the 1980 Agreement specifically references WAGS and was executed for the sole purpose of bestowing approval rights upon WAGS, the court regards WAGS as an intended third-party beneficiary with authority to enforce the 1980 Agreement.

Additionally, the court accepts as true the allegation in the Complaint that WAGS is a clearly defined group of individuals whose membership is formally recognized in a registry maintained by GSEM. The Complaint sufficiently defines WAGS as “a group of women who are involved in girl scouting in Westwood and who have registered and paid dues to the Defendant.” Therefore, WAGS has authority to enforce the 1980 Agreement as a defined third-party beneficiary of the agreement.

3. Common Law Rule Against Perpetuities

The 1980 Agreement does not violate the common law rule against perpetuities because it was executed between two 501(c)(3) corporations and therefore falls within the charitable exception to the common law rule. “The common law rule [against perpetuities] is traditionally defined as a rule that '[n]o interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest.'” Bortolotti v. Hayden, 449 Mass. 193 , 199-200 (2007), quoting J.C. Gray, Rule Against Perpetuities § 201 (4th ed. 1942). “The purpose of the rule is to invalidate contingent future interests that vest too remotely, unduly restrain alienation of land, or render real estate unmarketable for an unreasonable period of time.” Zecco v. Hess Corp., 777 F. Supp. 2d 207, 214 (D. Mass. 2011); see Odell v. Odell, 10 Allen 1 , 5 (1865) (“[t]he reason of the rule [against perpetuities] is that to allow a contingent estate to vest at a more remote period would tend to create a perpetuity by making the estate inalienable”). “The period allowed by the rule of perpetuities is twenty-one years commencing from the time the right was conferred.” Bortolotti, 449 Mass. at 200; see also Certified Corp. v. GTE Prods. Corp., 392 Mass. 821 , 823 (1984).

However, the rule against perpetuities does not apply to charities. Odell, 10 Allen at 6; see also Jackson v. Phillips, 14 Allen 539 , 550 (1867) (gifts to charities, made for charitable purposes, are not within the common law rule against perpetuities); Jones v. Habersham, 107 U.S. 174, 185 (1883) (“the rule against perpetuities does not apply to charities”). Taking the allegations of the Complaint as true, and drawing inferences in WAGS' favor, GSEM is a charity, and the 1980 Agreement is part of a charitable gift of the Scout House Property. Therefore, even though the 1980 Agreement is unlimited in duration and has run for a period of thirty-six years, the approval right defined in the agreement does not violate the common law rule against perpetuities.

4. Right of First Refusal

“A right of first refusal is … 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); see Bortolotti, 449 Mass. at 200; Roy v. George W. Greene, Inc., 404 Mass. 67 , 69 (1989) (holder of a right of first refusal has “a right to choose between purchasing and not purchasing [a] premises” under the same price and terms offered by a third-party purchaser). The “owner's obligation under a right of first refusal is to provide the holder of the right seasonable disclosure of the terms of any bona fide third-party offer. It is the prerogative of the holder then to decide whether to purchase the property at that price.” Uno Restaurants, Inc. v. Boston Kenmore Realty Corp., 441 Mass. at 382-383, citing Sudbury v. Scott, 439 Mass. 288 , 297 (2003).

The 1980 Agreement is far broader than a simple right of first refusal over the sale of the Scout House Property. The 1980 Agreement vests in WAGS the right of approval by majority vote over any sale, transfer, encumbrance, or other transaction involving the Scout House Property. The approval right granted to WAGS in the 1980 Agreement is not limited to a right to accept a third-party offer, does not permit WAGS to become the purchaser of the Scout House Property, and gives WAGS the authority to dictate the sale of the Scout House Property to any party of its choosing. The 1980 Agreement is not a right of first refusal, and WAGS’ argument that it holds a right of first refusal over the Scout House Property fails as a matter of law.

5. Restriction under G. L. c. 184, § 23

The approval right granted to WAGS in the 1980 Agreement is not a “restriction” within the meaning of G. L. c. 184, § 23. “A ‘restriction on the use of land’ is a right to compel the person entitled to possession of the land not to use it in specified ways.” Labounty v. Vickers, 352 Mass. 337 , 347 (1967). Such a restriction may be imposed by a negative easement, an equitable servitude, or a covenant running with the land. Patterson v. Paul, 448 Mass. 658 , 662- 663 (2007). A negative easement is included in the term “restrictive covenant,” which is defined as “a negative covenant that limits permissible uses of land.” Restatement (Third) of Property (Servitudes) § 1.2-1.3 (2000).

The interest granted to WAGS by the 1980 Agreement is not a restriction on the permissible use of land. It does not run with the land, and it is not recorded in the registry. Rather, the 1980 Agreement grants WAGS the right to approve any entity that obtains future ownership of the Scout House Property. Based on the foregoing, the court finds that the 1980 Agreement is not a restriction subject to G. L. c. 184, § 23. The question of its term cannot be determined by reference to § 23.

6. Common Law Rule Against Unreasonable Restraint on Alienation

As discussed, rather than a restriction, the 1980 Agreement is a restraint on alienation, and, if unreasonable, is void. The common law rule against restraints on alienation is “'designed to insure that particular assets remain available for commerce.'” Bortolotti, 499 Mass. at 204, quoting Restatement (Third) of Property (Servitudes) § 3.3 comment b, at 427 (2000). The following factors, though not dispositive, support a conclusion that a restraint on alienation is in fact reasonable: “1) the one imposing the restraint has some interest in land which he is seeking to protect by the enforcement of the restraint; 2) the restraint is limited in duration; 3) the enforcement of the restraint accomplishes a worthwhile purpose; 4) the type of conveyances prohibited are ones not likely to be employed to any substantial degree by the one restrained; 5) the number of persons to whom alienation is prohibited is small.” Franklin v. Spadafora, 388 Mass. 764 , 766 (1983), citing Restatement (First) of Property § 406 comment i (1944).

Here, factor one supports a conclusion that the 1980 Agreement imposes a reasonable restraint on alienation because WAGS has some interest in the Scout House Property. As discussed above, WAGS has an interest in the Scout House Property as a third-party beneficiary of the 1980 Agreement.

The second factor, on the other hand, favors a finding that the 1980 Agreement is an unreasonable restraint on alienation because it is unlimited in duration. See Roberts v. Jones, 307 Mass. 504 , 507 (1940) (holding that an agreement that “fixes no time for its duration” and requires the consent of all tenants in common before any sale of property “unduly restricts the alienation of the property for an unreasonable length of time”).

As to factor three, the court accepts as true the allegation in the Complaint that GSEM has a mission to “build girls of courage, confidence, and character” through scouting. The court considers GSEM's mission a worthwhile purpose, but it is unclear at this stage of litigation whether WAGS' power to direct the sale or transfer of the Scout House Property interferes with or promotes GSEM's stated mission.

The court cannot determine at this stage whether factors four and five favor a finding of a reasonable or unreasonable restraint on alienation because the scope of WAGS' approval rights as defined in the 1980 Agreement is ambiguous. The question of whether a genuine ambiguity exists in a written agreement is a question of law to be determined by the court. Basis Tech. Corp. v. Amazon.com, Inc., 71 Mass. App. Ct. 29 , 36 (2008). “Genuine ambiguity requires language susceptible of more than one meaning so that reasonably intelligent persons would differ as to which meaning is the proper one.” Id. at 36-37, quoting from Citation Ins. Co. v. Gomez, 426 Mass. 379 , 381 (1998). “Where the terms of an instrument are ambiguous, a court must determine meaning from the intent of the parties upon consideration of the words in question, the entire instrument, and surrounding circumstances.” City of Haverhill v. George Brox, Inc., 47 Mass. App. Ct. 717 , 720 (1999). Where the agreement “has terms that are ambiguous, uncertain, or equivocal in meaning, the intent of the parties is a question of fact to be determined at trial.” Seaco Ins. Co. v. Barbosa, 435 Mass. 772 , 779 (2002).

The court finds that the language of the 1980 Agreement is ambiguous. Read in its broadest scope, the 1980 Agreement would grant WAGS the power to prevent every possible sale of the Scout House Property and would therefore impose an unreasonable restraint on alienation. However, the approval right granted to WAGS in the 1980 Agreement may be more limited in scope such that the court would consider it a reasonable restraint on alienation of the Scout House Property. In Venuto v. DiClemente, the defendant held a right of first refusal over the plaintiff's property and prior written consent from the defendant was required before the plaintiff could sell or convey her property. Venuto v. DiClemente, No. 9904974F, 2001 WL 1174143, at *1 (Mass. Super. July 31, 2001). The plaintiff sought a declaration that the right of first refusal and the written consent provision in a will were null and void as unreasonable restraints on alienation. Id. at *2. Considering the fourth and fifth Spadafora factors, Judge Gants of the Superior Court stated, “whether this restraint on alienation is reasonable and enforceable, or unreasonable and unenforceable, depends entirely upon how [the defendant] intends to exercise his veto power. If he intends to veto all prospective buyers or to veto some prospective buyers without compelling reason, then this restraint must be declared null and void, because it unreasonably interferes with alienation. If, however, [the defendant] were to severely narrow the scope of his discretion so that it may be exercised reasonably … then the restraint on alienation may not be so broad or so undefined as to unreasonably interfere with alienation”). Id. at *4. Similarly here, a determination regarding the reasonableness of the restraint on alienation imposed by the 1980 Agreement requires further factual inquiry about the intent of the parties and the scope WAGS' power to prevent a sale of the Scout House Property to a willing third- party purchaser.

At this stage, the court cannot determine whether the 1980 Agreement should be read broadly or narrowly. To read the approval right in the 1980 Agreement broadly, thereby finding it an unreasonable restraint on alienation, would require the court to draw an inference of the parties’ intent in GSEM's favor, which is prohibited on a motion to dismiss. Given the ambiguity in the 1980 Agreement regarding whether WAGS can use its approval right to unreasonably or indefinitely prevent the sale or transfer of the Scout House, the Motion to Dismiss must be denied.

7. Constructive Trust on Hanlon School Parcel

WAGS asks the court to impose a constructive trust on the Hanlon School Parcel to ensure that the Hanlon School Parcel and the to-be-constructed scout house are subject to the approval rights set forth in the 1964 Agreement and 1980 Agreement. Under Massachusetts law, a court will impose a constructive trust when a party “acquire[s] … property through fraud, mistake, breach of duty, or in other circumstances indicating that he would be unjustly enriched.” Foster v. Hurley, 444 Mass. 157 , 167 (2005), quoting Fortin v. Roman Catholic Bishop of Worcester, 416 Mass. 781 , 789 (1994); see also Shehan v. Schlegel, 86 Mass. App. Ct. 1118 (2014) (unpublished decision) (“[i]f a defendant is unjustly enriched by the acquisition of title to identifiable property at the expense of the claimant or in violation of the claimant's rights, the defendant may be declared a constructive trustee, for the benefit of the claimant, of the property in question and its traceable product”).

The court accepts as true the allegations in the Complaint that GSEM conveyed the Scout House Property to the Town without the prior approval of WAGS and thereby violated the terms of the 1980 Agreement. Construing the facts in WAGS' favor, the imposition of a constructive trust on the Hanlon School Parcel is a potential remedy if GSEM is found to have breached the 1980 Agreement.

Conclusion

For the reasons set forth above, the Motion to Dismiss is DENIED. A continued case management conference is set down for July 5, 2016 at 10:15 am.

SO ORDERED