Whether an option to purchase land, triggered by a buyer's failure to build on a residential subdivision lot, may be exercised after the passage of a considerable period of time, is the issue in this case. Specifically, the plaintiffs claim the right to exercise an option, styled as a restrictive covenant, to repurchase a lot from the defendants nine years after the plaintiffs' right to do so ripened as a result of the defendants' failure to commence construction within a year after their purchase of the property. In 2005, plaintiff Pinewood Road, Inc. ("Pinewood") subdivided a parcel of land into thirty-three building lots for the purpose of selling each to residential purchasers, and building homes for many of those purchasers on the lots. Pinewood executed and recorded a "Declaration of Restrictive Covenants" ("Declaration") that applied to all lots in the subdivision, placing restrictions on the use of the lots and the appearance of the residences to be built on the lots. The Declaration also contained a provision allowing Pinewood to repurchase any lot at the original sale price if construction had not commenced within a year after Pinewood conveyed that particular lot. Walter and Janina Pielecha purchased Lot 29 in the subdivision from Pinewood in October, 2005; a year later, they had not begun construction. They subsequently conveyed the property to their daughters, defendants Anna Pielecha Kuntz, Danuta Budzyna, and Elzbieta Gomes, as trustees of the W&J Pielecha Family Trust. By 2015, construction still had not begun on the lot. On October 20, 2015, Pinewood informed the Trust that it was demanding reconveyance of the property pursuant to the covenant.
On December 2, 2015, Pinewood brought this action, alleging that it is entitled to enforce the restrictive covenants, and that the defendants have failed to comply with those covenants; it seeks a declaratory judgment ordering the defendants to reconvey the lot to Pinewood. On the eve of trial, Pinewood amended its complaint to add MHB, Inc. ("MHB") as a plaintiff. MHB is another entity owned and controlled by the same individuals who own and control Pinewood. [Note 1] This action came on for trial before me on October 6, 2016. Following the filing of post-trial briefs on December 22, 2016, I took the matter under advisement. For the reasons stated below, I find and rule that the defendants are obligated to reconvey Lot 29 to the plaintiff Pinewood.
Based on the facts stipulated by the parties, the documentary and testimonial evidence admitted at trial, and my assessment as the trier of fact of the credibility, weight, and inferences reasonably to be drawn from the evidence admitted at trial, I make factual findings as follows:
1. Pinewood Road, Inc. was incorporated on October 19, 2001. John Manganaro, III was the president, treasurer, clerk, and sole director of Pinewood. [Note 2]
2. Pinewood acquired title to a 24-acre parcel of land in Ludlow in March, 2005. Pinewood was incorporated for the purpose of taking title to this property, subdividing it, and selling the resulting lots. [Note 3]
3. On November 13, 2002, Pinewood recorded a subdivision plan entitled, "Pinewood Road Subdivision," dated January 23, 2002, dividing the property into twenty-five residential lots. The subdivision plan was recorded at the Hampden County Registry of Deeds ("Registry") in Plan Book 327, Page 32. [Note 4]
4. On April 5, 2005, the Ludlow Planning Board approved a plan entitled, "Revised Plan of Lots", dated April, 2005. The Revised Plan, approved as "approval under the Subdivision Control Law not required" pursuant to G.L. c. 41, § 81P, changed the lot configuration of the previously approved subdivision plan so as to increase the number of lots from twenty-five to thirty-three. The Revised Plan was recorded in the Registry on April 11, 2005 in Plan Book 336, Page 104. [Note 5]
5. On June 23, 2005, Pinewood recorded a "Declaration of Restrictive Covenants" ("Declaration") applicable to all thirty-three lots in the subdivision. Pinewood recorded the Declaration in the Registry on June 28, 2005 in Book 15127, Page 331. [Note 6]
6. Paragraph 6 of the Declaration provides as follows:
Construction of the primary dwelling on each lot shall commence within ONE (1) YEAR of the date of purchase of said lot from Pinewood Road Inc. The outside construction including framing; roofing; siding; lighting; windows; doors; garage doors; gutters and down spouts; lighting; painting; steps; sidewalks; paved driveway; and landscaping shall be commenced within SIX (6) MONTHS after commencement of construction. Commencement of construction shall be defined as the date of the issuance of a building permit. In the event construction does not commence within one year of the date of purchase, Pinewood Road Inc. has the right to purchase the lot back at the same price that it was originally sold to the purchaser. Pinewood Road Inc. will not be responsible for any costs beyond the original purchase price. Written notice shall be given by Pinewood Road Inc. to the owner and the owner shall within thirty (30) days after receiving said notice, deliver a Warranty Deed to Pinewood Road Inc. conveying the property free and clear of all material defects and encumbrances of record that did not affect the property at the time of conveyance.
7. On October 6, 2005, Walter and Janina Pielecha purchased Lot 29 in the Pinewood Road Subdivision from Pinewood for $127,000.00. The deed conveying Lot 29 was recorded in the Registry on November 7, 2005, in Book 15478, Page 88. [Note 7] At the time of the purchase, Mark Manganaro and Cynthia Manganaro met with the Pielechas and discussed the covenant requiring construction to commence within one year. [Note 8]
8. Pinewood's repurchase right as to the Pielechas' lot ripened on October 6, 2006. As of that date, the Pielechas had not commenced construction of a residence on the lot. [Note 9]
9. Mark Manganaro visited the subdivision daily throughout 2005, 2006, and 2007. He was responsible for monitoring compliance with the covenants. [Note 10]
10. On May 8, 2007, Pinewood deeded the final twelve unsold lots in the subdivision to Amboy Realty, Inc., [Note 11] now known as MHB, Inc. John Manganaro is the president, treasurer, secretary, and one of two directors of MHB. MHB, Inc. is owned by John, Cynthia, and Mark Manganaro.
11. As of the May 8, 2007 conveyance of the last twelve unsold lots, Pinewood no longer owned any lots in the subdivision: eleven of the thirty-three lots had been deeded to separate individual purchasers, ten had been deeded to Manganaro Home Builders, Inc., and twelve had been deeded to another Manganaro entity, Amboy Realty, Inc., now MHB, Inc. [Note 12]
12. Pinewood filed articles of voluntary dissolution on December 31, 2008. The corporation was dissolved on January 5, 2009. [Note 13]
13. By November, 2010, homes had been constructed on nearly every lot on the Pinewood Road Subdivision. Certificates of use and occupancy had issued by this time for homes on every lot except Lot 29, owned by the Pielechas, and Lot 22. A certificate of use and occupancy was issued for Lot 22 in 2013, leaving Lot 29 as the only lot in the subdivision upon which a home had not been constructed. [Note 14]
14. On June 18, 2011, Walter and Janina Pielecha conveyed Lot 29 to their daughters, Anna Pielecha Kuntz, Danuta T. Budzyna, and Elizabeth Gomes, as Trustees of the W&J Pielecha Family Trust.
15. In 2012, Mark Manganaro informally reached out to a mutual acquaintance of the Pielechas, and asked the acquaintance to see if the Pielechas were interested in selling Lot 29 back. Mark Manganaro also instructed a friend who owned a lot across the street from Lot 29 to make the same inquiry if he saw Walter Pielecha at Lot 29. These attempts to contact the Pielechas were unsuccessful. [Note 15]
16. On March 21, 2013, a Pinewood-related entity, Manganaro Home Builders, Inc., sold the last remaining lot (Lot 22) in the subdivision to a final home buyer. As of that date, neither Pinewood nor any of the other entities owned or controlled by the Manganaros owned any property in the subdivision, and by that date, there were homes constructed on all of the lots in the subdivision except Lot 29. [Note 16]
17. On November 6, 2013, Mark Manganaro directed his attorney, William Rooney, to draft and send a letter to the Pielechas asking if they were interested in selling the lot back. Rooney sent a second letter making the same inquiry on February 10, 2014. [Note 17] These letters did not indicate that Pinewood was exercising its right to compel a conveyance. No response was received to either of these letters. [Note 18]
18. On October 20, 2015, Pinewood sent a letter to defendants stating that it was exercising its option and demanding reconveyance of Lot 29 for $127,000.00, the price the Pielechas had paid for the lot in 2005. [Note 19] The defendant Trustees received the letter exercising the option on October 26, 2015. [Note 20]
19. The defendants refused to reconvey Lot 29 for payment of $127,000.00. [Note 21]
20. On December 5, 2015, Pinewood filed the instant action.
21. On March 8, 2016, the defendants employed a contractor to dig a well on Lot 29. [Note 22]
22. On March 28, 2016, Walter and Janina Pielecha applied for a building permit to construct a home on Lot 29. [Note 23] On April 4, 2016, on application of the plaintiff Pinewood, this court issued a preliminary injunction barring any construction on Lot 29 pending the resolution of this action.
23. Lot 29 is currently assessed by the Town of Ludlow at a value of $96,200.
24. The defendants have paid $15,055.25 in real estate taxes for Lot 29 since 2007. [Note 24]
Plaintiffs seek to enforce the provision in Paragraph 6 of the Declaration of Restrictive Covenants that would require the defendants to sell Lot 29 back to Pinewood for the price Walter and Janina Pielecha originally paid for the property in 2005. They seek a declaratory judgment requiring that the defendants "shall convey Lot 29 to Pinewood Rd. Inc./MHB, Inc. in accordance with Paragraph 6 of the Restrictive Covenants." The parties have stipulated that the only issue presented for trial is the enforceability of the covenant for reconveyance, and not the enforceability of the remaining design and use covenants.
The nature of the right. In order to determine the parties' rights with respect to Paragraph 6 of the Declaration, the court must first determine whether it is truly a restrictive covenant, or whether it is more properly characterized as an option to purchase. If the paragraph imposes a restrictive covenant on Lot 29, then the paragraph must be interpreted in light of the requirements of G.L. c. 184, §§ 26-30, which impose statutory limitations on the enforcement of restrictions on the use of land. These sections articulate the circumstances under which such a restriction loses its enforceability, including where its enforcement is no longer of substantial benefit, where changes in the neighborhood reduce the likelihood of it accomplishing its original purpose, or where the periodic conduct of its holders has rendered it unenforceable. See G.L. c. 184, § 30. The nature of the obligations imposed, rather than the title given to the paragraph or the document of which it is a part, will be determinative of whether the paragraph is properly characterized as a restriction or as an option. See St. Germain & Son, Inc. v. Taunton Redevelopment Auth., 4 Mass. App. Ct. 46 , 49 (1976) (while the title to a provision may be considered, "the text and not the title is controlling.").
Although contained within a document titled, "Declaration of Restrictive Covenants", the rights enumerated in the second part of Paragraph 6 of the document cannot be characterized properly as a restriction on the use of land within the meaning of G.L. c. 184, §§ 26-30, and accordingly, are not subject to the requirements of these sections. G.L. c. 184, §§ 26-30, concern only "restrictions on the use of land or construction thereon " See G.L. c. 184, § 26. Such a restriction is properly defined as "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). Here, Paragraph 6 contains two separate parts, contextually related, but nevertheless possessed of distinct legal character when viewed through the lens of this traditional definition. The first part requires that construction commence within one year of the purchase of the lot from Pinewood, and that exterior construction be completed in the following six months. This is indeed a restriction cast from the mold of Chapter 184, as it stipulates a requirement that the land can only be used in a certain way, restricting its use to occupancy by a residential structure, where enforcement would typically take the form of compelling compliance. However, this is not the part of the paragraph that the plaintiffs seek to enforce. The plaintiffs seek to exercise the provision granting Pinewood an alternative remedy, the right to repurchase the property in the event the lot remains vacant. This does not dictate the manner in which defendants may use the land, even when contextually connected to a true restriction like the construction-related requirements. Rather, this provision triggers a remedy, the requirement to reconvey the land, which does not itself impose independent requirements on the use of the land. This right of the grantor, and obligation of the grantee, must be evaluated separately, as it is conceptually distinct from the enforcement right that inherently accompanies a restriction. See City of Bos. v. Roxbury Action Program, Inc., 68 Mass. App. Ct. 468 , 472 (2007) (holding that, where covenant contained use requirement and reconveyance remedy, court must separately evaluate remedy to determine if Chapter 184, §§ 26-30 applies, because enforcement of the use requirement would not alone result in the requested reconveyance). Accordingly, the enforceability of this particular provision is not properly subject to the rubric found in G.L. c. 184, § 30.
Given the distinct nature of a right to repurchase, the courts have instead characterized such a supplemental remedy as a conditional option to purchase, triggered by the failure to comply with the restriction. The Appeals Court, in Tristram's Grp, Inc. v. Morrow, was confronted with a deed restriction nearly identical to the one at issue here, where the grantor reserved the right to repurchase the property if a dwelling had not been constructed on the property within four years from the purchase date. See Tristram's Grp. Inc. v. Morrow, 22 Mass. App. Ct. 980 , 981 (1986). The Tristram's Group court found that this restriction functions no differently from an option, and "is properly characterized as an option reserved to the grantors." Id. Here, the right enumerated in Paragraph 6 is no different, and thus it must be viewed as an option rather than as a restrictive covenant. This construction is likewise appropriate given the fact that the right is specific and personal to Pinewood rather than for the benefit of any particular parcel of land owned by Pinewood, as a restriction that does not benefit a particular dominant estate is to be considered "a mere personal contract on both sides." Snow v. Van Dam, 291 Mass. 477 , 480 (1935). The option, "being unilateral in its nature must be exercised, if it is exercised at all, by turning corners squarely." Tristram's Grp., Inc. v. Morrow, supra, 22 Mass. at 891.
Plaintiffs' possession of the right to exercise the option. Having determined the nature of the right, it is necessary to determine if either of the plaintiffs is a party entitled to exercise the rights conferred by Paragraph 6 of the Declaration. Pinewood is a corporation formed for the purpose of developing the Pinewood Road Subdivision and selling the subdivision lots to end users or to Pinewood's related construction entities for the purpose of constructing and then selling homes on the subdivision lots. MHB joined this action as plaintiff on the eve of trial, presumably to protect against a finding that Pinewood, which was dissolved in 2009 and no longer owns any property in the subdivision, lacked the power to exercise the rights conferred by Paragraph 6. MHB, formerly known as Amboy Realty, Inc., is a corporation, also an entity of the Manganaro family, that constructs homes, either on lots owned by MHB or others.
MHB has not demonstrated that it has any right to exercise the option, and I so find and rule. MHB claims that it is indeed so empowered by operation of Paragraph 22(A) of the Declaration, which provides that "Pinewood Road, Inc., its successors or assigns, or any Owner shall have the right to bring any action against any person violating, attempting to violate or permitting to be violated, any restriction, covenant, or easement, to prevent and permanently enjoin such violation and to recover damages for such violation." This provision grants Pinewood and other owners of lots in the subdivision standing to enforce the restrictive covenants imposed by the Declaration. As is discussed above, the option to repurchase a vacant lot contained in Paragraph 6 is not one of the restrictive covenants that owners of lots can enforce. Rather, it is a conditional contractual right owned by Pinewood alone, and one that is personal to Pinewood. [Note 25]
As a personal contractual right belonging to Pinewood, the option was within the power of Pinewood to directly assign to MHB, as contractual rights may be assigned unless such assignment is expressly forbidden. See Beaconsfield Townhouse Condo. Trust v. Zussman, 49 Mass. App. Ct. 757 , 763 n. 14 (2000). It is not disputed that Pinewood never expressly assigned its rights under the repurchase provisions of Paragraph 6 of the Declaration to MHB, but MHB argues that it "stepped into the shoes" of Pinewood, and thereby became the successor to and assignee of all of Pinewood's assets, including the option, when Pinewood deeded all twelve remaining lots in the subdivision to Amboy Realty, Inc., which then changed its name to MHB. The pertinent question is thus whether the deed conveying the twelve remaining lots to MHB served to assign the option itself. "The basic principle governing the interpretation of deeds is that their meaning, derived from the presumed intent of the grantor, is to be ascertained from the words used in the written instrument, construed when necessary in the light of the attendant circumstances." Sheftel v. Lebel, 44 Mass. App. Ct. 175 , 179 (1998). Looking first to the words of the deed itself, the deed purports to convey the lots in question, but includes no language indicating that it is also assigning the option to repurchase other previously sold parcels if the owners of those lots fail to comply with the requirement to build within one year. The deed does state that the lots conveyed are subject to the Declaration, and "subject to any reservations, rights, restrictions, covenants and easements of record, to the extent applicable and affecting these premises." This language did not, however, serve to assign the right to exercise the option to repurchase as to other lots. The option as to a particular lot, such as the Pielechas', was a distinct contractual right wholly separate and unrelated to those other lots transferred to MHB: Pinewood's power to exercise that particular option stemmed not from ownership of those other lots, but instead from the independent contractual right that Pinewood reserved to itself in the Declaration, and that each subsequent lot purchaser agreed to by agreeing to be subject to the Declaration. Pinewood's option to purchase previously sold lots was therefore not a right applicable to or affecting the premises later conveyed from Pinewood to MHB. The express words of the deed did not assign to MHB the right to repurchase the defendants' lot.
Nor are there attendant circumstances compelling an inference beyond the intent apparent on the face of the deed. Mark Manganaro testified as to his intent at the time of the conveyance to render MHB the successor to all of Pinewood's rights and assets, and his belief that the conveyance of all of the remaining parcels accomplished this. However, the fact that the deed conveyed all of Pinewood's remaining real estate does not carry with it an inference that other rights and assets, not specifically assigned or conveyed in the deed, were also granted. Were the deed entirely silent on the status of such additional rights, the extent to which this claimed intent extends beyond the explicit conveyance would still render this an exceptionally strained inference; yet here the deed does indeed mention such other rights, and in doing so entirely negates the possibility of such an inference by stating that "[t]his conveyance is in the ordinary course of business and does not constitute a transfer of all or substantially all of the assets of the corporation." [Note 26] The contractual right to exercise the option was an asset thus retained by Pinewood. Although Mark Manganaro testified to his contemporaneous understanding that he was indeed transferring all of Pinewood's assets, this claim of subjective intent cannot overcome the entirely contrary intent objectively apparent in the words of the deed. The conveyance of Pinewood's real estate alone did not impliedly convey the corporation's other independent assets. MHB received the parcels and rights expressly deeded to it, but did not through this succeed to all of Pinewood's other unrelated rights. Accordingly, MHB never acquired the option to purchase the defendants' lot, and lacks standing to exercise the option. [Note 27]
Pinewood therefore continues to possess the right to exercise the option originally granted to it. The defendants argue that Pinewood's own ability to exercise this right is rendered uncertain by its status as a dissolved corporation. Pinewood was voluntarily dissolved on January 5, 2009. A corporation may continue to operate indefinitely after dissolution, but only for the purpose of winding up its affairs. See G.L. c. 156D, § 14.05. [Note 28] Under this section, "collecting its assets; disposing of its properties that will not be distributed in kind to its shareholders", and "doing every other act necessary to wind up and liquidate its business and affairs" are included as permissible acts for a dissolved corporation. G.L. c. 156D, § 14.05. The exercise of an option may be an appropriate action in winding up affairs. See 3 Fletcher, Cyc. Corp. § 8134 ("An option to purchase land is an asset within the scope of a winding up statute and it therefore survives the dissolution of the corporation, and may be exercised if such action is necessary to settle properly the affairs of the dissolved corporation."). There is no binding Massachusetts precedent addressing the circumstances under which the exercise of an option may or may not be an appropriate winding up action. At least one Massachusetts court has found the exercise of such an option to be an impermissible continuation of the business of the corporation. See 485 Lafayette St. Acquisition, LLC v. Glover Estates, LLC, Nos. 120462, SUCV2010-02350-BLS1, 2012 Mass. Super. LEXIS 207, at *16 (May 14, 2012) (Lauriat, J.). The defendants suggest that the exercise of the option here is likewise a continuation of precisely the same business in which Pinewood was previously engaged. A practical reading of the statute suggests, however, that this is too rigid an approach; the broad categories of Section 14.05 appear to encompass exercise of an option to purchase land as a permissible winding up activity, for acquiring and then selling the land in question may serve as the most straightforward way of disposing of the option for value and thereby liquidating a corporation's remaining assets. I find and rule that under the circumstances of this case, where the option to purchase Lot 29 appears to be the only remaining asset of Pinewood, and where obtaining ownership of Lot 29 through exercise of the option will allow Pinewood to collect and then dispose of its remaining valuable asset, exercise of the option is a valid winding up activity permitted by G.L. c. 156D, § 14.05.
Timeliness of exercise of the option. As noted above, the court in Tristram's Group found that the precise manner of "restriction" at issue here functions no differently from an option. Tristram's Grp., Inc. v. Morrow, supra, 22 Mass. App. Ct. at 981. It must, therefore, be interpreted pursuant to the principles and constraints traditionally applicable to option contracts. See id. The common law rule is that an option that does not supply a time limit for its exercise must be acted on within a reasonable period of time. See Chatham Mfg. Co. v. Avery Chem. Co., 235 Mass. 340 , 344 (1920); Powers, Inc. v. Wayside, Inc. of Falmouth, 343 Mass. 686 , 691 (1962); Aronovitz v. Fafard, 89 Mass. App. Ct. 1133 (2016). See also 1 American Law of Property, § 3.83 (1952). This applies to options embedded within restrictive covenants. See Tristram's Grp., Inc. v. Morrow, supra, 22 Mass. App. Ct. at 981. For an option that lacks a time limit, "[w]hat is a reasonable time depends on all the circumstances of the case. When the offer is one of sale or purchase, the subject matter of the offer is sometimes the major factor." Powers, Inc. v. Wayside, Inc. of Falmouth, supra, 343 Mass. at 691. Additionally, "the provisions of the original contract, the circumstances under which it was executed, and the nature of the property" are relevant considerations for what is reasonable. See id. This rule is a softening of the older common law rule that might render an option void ab initio if it failed to vest within the time required by the common law Rule Against Perpetuities. Peterson v. Tremain, 35 Mass. App. Ct. 422 , 425 (1993) ("[U]ltimately determinative is the contention that a reasonable time should be imputed to limit the exercise of the option.") See also, Certified Corp. v. GTE Products Corp., 392 Mass. 821 , 825-826 (1984) (where option does not state a date for exercise within rule, "the period of perpetuities is twenty-one years, commencing from the time of the execution of the option contract."); English v. Longo, 16 LCR 126 , 129 (Mass. Land Ct. 2008) (Sands, J.) (option contract reformed to allow exercise within reasonable time and avoid violation of Rule Against Perpetuities).
However, this common law reasonable-time limitation, argued by the parties here, and applied by the courts in the cases cited above, notably Tristram's Group, Inc. v Morrow, supra, and Peterson v. Tremain, supra, does not apply in the present action, as the option at issue in this case was created in 2005, after the effective date of the Uniform Statutory Rule Against Perpetuities, as adopted in Massachusetts. The Uniform Statutory Rule Against Perpetuities, adopted as G.L. c. 184A, provides in relevant part as follows:
(a) An option in gross with respect to an interest in land or minerals or a preemptive right in the nature of a right of first refusal in gross with respect to an interest in land or minerals becomes invalid if it is not exercised within thirty years after its creation.
G.L. c. 184A, § 5(a). This provision was adopted as part of St. 1989, c. 668 and was effective as of June 30, 1990. As such, this provision governs "as to options entered into after June 30, 1990." Peterson v. Tremain, supra, 35 Mass. App. Ct. at 426, n. 2. See also Bortolotti v. Hayden, 449 Mass. 193 , 199 (2007) ("The USRAP applies to interests in land created after June 30, 1990."). The statutory modification of the Rule Against Perpetuities embodied by G.L. c. 184A, § 5(a) supersedes the "reasonable-time limitation" test applied by the courts in Tristram's Group, Peterson and other cases cited to the court by the parties. The Peterson court acknowledged as much, as did the Supreme Judicial Court in Bortolotti. In Petersen, the Appeals Court confronted the problem posed by an option that failed to provide a time limit, for if considered unlimited in time, such an option would violate the Rule Against Perpetuities; in applying the reasonable-time limitation rule, the court stated, "We note that the perpetuities problem encountered in this case is resolved by statute, as to options entered into after June 30, 1990." Peterson v. Tremain, supra, 35 Mass. App. Ct. at 426, n. 2. Similarly, while addressing whether the Rule Against Perpetuities applied to a right of first refusal created in 1981, the Supreme Judicial Court noted that had the right being discussed been created after June 30, 1990, "there is no disagreement" that it would have remained valid for thirty years pursuant to G.L. c. 184A, § 5(a). Bortolotti v. Hayden, supra, 449 Mass. at 199. Therefore, where an option in gross, such as the option here, [Note 29] contains no express limitation on the time for its exercise, it remains valid so long as it is exercised within thirty years of its creation.
Here, the Pielechas purchased Lot 29 from Pinewood, subject to the previously recorded Declaration, including the option to repurchase, on October 6, 2005. The option was thus created with respect to Lot 29 on October 6, 2005. Pinewood, through its attorney, sent a letter dated October 20, 2015, explicitly exercising the option to repurchase Lot 29 pursuant to the terms of Paragraph 6 of the Declaration. [Note 30] The defendants acknowledge receipt of the letter on October 26, 2015. [Note 31] By sending the October 20, 2015 letter, Pinewood "turned its corners squarely" in exercising the option in accordance with its terms. Tristram's Grp., Inc. v. Morrow, supra, 22 Mass. at 891. I find and rule that the option to repurchase Lot 29 as provided for in Paragraph 6 of the Declaration was exercised by the sending of the October 20, 2015 letter by Pinewood's attorney. Accordingly, it was exercised "within thirty years after its creation" on October 6, 2005, and did not run afoul of the limitation in G.L. c. 184A, § 5(a). The objective test of the statute having been met, the option was valid and was validly exercised before it would have become invalid by the expiration of thirty years from its creation.
The option to repurchase Lot 29 as provided for in Paragraph 6 of the Declaration remained valid at the time of its exercise on October 20, 2015, and was validly exercised by Pinewood. Accordingly, Pinewood is entitled to repurchase Lot 29 in accordance with the terms of Paragraph 6 of the Declaration.
[Note 1] Typically, the addition of a plaintiff to an existing case necessitates a motion to intervene by that party under Mass. R. Civ. P. 24. Here, the motion to add MHB was submitted by Pinewood, not MHB, as a motion to amend the complaint pursuant to Mass. R. Civ. P. 15(a). Nonetheless, this motion could as a practical matter be considered to function as a motion to intervene by MHB, as MHB and Pinewood are owned and controlled by the same three individuals, John, Mark, and Cynthia Manganaro. The Appeals Court has previously considered amendment to be appropriate in such a situation. See Alcan Aluminum Corp. v. Carlton Aluminum of New England, Inc., 35 Mass. App. Ct. 161 , 162 n.2 (1993).
[Note 2] Exh. 1 ¶ 2.
[Note 3] Tr. at p. 68.
[Note 4] Exh. 6.
[Note 5] Exh. 7.
[Note 6] Exh. 8.
[Note 7] Exh. 17, no. 5.
[Note 8] Mark Manganaro testified that he and his mother Cynthia discussed the restrictions with the Pielechas, including the requirement that construction commence within a year. Tr. at pp. 52-53. Walter Pielecha testified first that he was made aware when he bought the lot of the need to begin construction within one year; however, he then testified that he was not aware of the restrictions and did not know that he was required to construct a home on the lot. Tr. at p. 130. I do not credit his testimony that he was unaware of the requirement at the time of the original purchase of the lot.
[Note 9] Tr. at p. 57.
[Note 10] Tr. at pp. 56-57.
[Note 11] Exh. 17.
[Note 12] Exh. 17.
[Note 13] Exh. 4.
[Note 14] Exh 19.
[Note 15] Tr. at p. 62-63.
[Note 16] Exh. 25.
[Note 17] Exh. 13, 14.
[Note 18] Tr. at p. 64-5; Exh. 13, 14.
[Note 19] Exh. 9.
[Note 20] Statement of Agreed Facts, no. 22; Tr. at p. 143. I do not credit other, inconsistent testimony of Walter Pielecha that he "never, ever" received "any letters from any lawyer" for the Manganaros. Tr. at p. 132.
[Note 21] Tr. at p. 65.
[Note 22] Tr. at p. 165.
[Note 23] The permit application lists Walter and Janina Pielecha as the owners of record. It is unclear why they are listed as the owners, instead of the defendant Trustees.
[Note 24] Exh. 12.
[Note 25] Indeed, the plaintiff's invocation of Paragraph 22 as a basis for enforcing the repurchase right would lead to a wholly unworkable result, as it would potentially implicate an absurd entanglement of mutual repurchase obligations. Paragraph 22(A) empowers all lot owners as well as Pinewood's successors; were Paragraph 22 to serve as the means of acquiring rights to the option, it would result in not only MHB but every lot purchaser in the subdivision holding the ability to exercise a repurchase option over every other lot.
[Note 26] This language in a deed is typically included so as not to trigger a requirement to obtain a release of tax lien from the Massachusetts Department of Revenue, but of course it would be inappropriate to include such language if it was not a true statement. In any event, the statement in the deed that the conveyance "does not constitute a transfer of all or substantially all of the assets of the corporation", is directly contradicted by the testimony of Mark Manganaro that, "[t]he purpose of [the conveyance to] Amboy Realty, Inc. was to transfer all the remaining assets of Pinewood Road, Inc. into Amboy Realty " Tr. at p. 70. If that was the purpose of the conveyance, it was not successfully accomplished.
[Note 27] Even if it had acquired the option, it is unlikely that MHB would be entitled to relief in this action, as it has not demonstrated any actual exercise of the option. By the terms of the recorded declaration, to exercise the option, the holder must give notice that it is doing so. There is no indication in the record that MHB has itself demanded reconveyance at any time. The only demand in the record is the letter sent by Pinewood on October 20, 2015. Pinewood is a separate entity, and if the option is owned by MHB, a demand by Pinewood would not be sufficient to satisfy the notice requirements of the option.
[Note 28] Under G.L. c. 156B, the previous business corporation statute, a corporation could only operate for three years following its dissolution. See G.L. 156B, § 102. Passed in 2004, G.L. c. 156D has superseded Chapter 156B, and includes a new section on dissolution that, unlike Section 102, does not contain a time limit. See G.L. c. 156D, §§ 14.05, 17.01; St. 2003, c. 127, §?17; 2. Massachusetts Corporation Law and Practice §§ 2.5, 14.1 ("On its effectiveness on July 1, 2004, Chapter 156D replaced Chapter 156B in its entirety "); Boyle v. Zurich Am. Ins. Co., 31 Mass. L. Rep. 396 (Super. Ct. 2013) (Salinger, J.).
[Note 29] While the Supreme Judicial Court's only direct reference to the nature of an "option in gross" circumspectly defined it as "an option not annexed to another document," it is clear that the option at issue here is one within the intended meaning of Section 5(a). See Certified Corp. v. GTE Prods. Corp., 392 Mass. 821 , 824 (1984). In Certified Corp., the Court referred to it as such within the context of addressing whether the option was separate from, or connected to, a lease. See id. This is in keeping with the traditional definition of an option in gross as any option that is not contained within a lease. See William Berg Jr., Long-Term Options and the Rule against Perpetuities--Part I, 37 Cal. L. Rev. 1, 21 (1949) ("The term 'option in gross' will refer to the type of option which does not originate in a lease."); Jesse Dukeminier, Perpetuities: The Measuring Lives. 85 Colum. L. Rev. 1648, 1707 (1985); Johnson v. Cohan, 11 Mass. L. Rep. 425 (Super. Ct. 2000) (Fabricant, J.) (collecting Massachusetts cases suggesting that options are not "in gross" only when connected to a lease); Pathmark Stores v. 3821 Assocs., L.P., 663 A.2d 1189, 1192 (Del. Ch. 1995). See also Restat 3d of Prop: Servitudes, § 1.5 (3rd 2000) (describing an interest "in gross" as one not tied to the holder's "ownership or occupancy of a particular unit or parcel of land."). Moreover, in Bortolotti v. Hayden, when addressing the applicability of Section 5(a) to an option contained within a restrictive covenant that was in turn incorporated into a deed, the lower court noted that "[t]he term 'option in gross' appears infrequently and often obscurely in the case law and legal treatises. As best understood, the term applies to an option situated in an agreement other than a lease."; on appeal, the Supreme Judicial Court then explicitly recognized that G.L. c. 184, § 5(a) would indeed apply to this type of option (though because of the statute's effective date, the Court nonetheless applied the common law rule rather than the statute). See Bortolotti v. Kesten, No. 05152, 2005 WL 3670420, at *3 (Mass. Super. Ct. Dec. 6, 2005), vacated sub nom. Bortolotti v. Hayden, 449 Mass. 193 (2007). Here, the option is not part of a lease, and is not appurtenant to any other land. It thus falls within the purview of the statute.
[Note 30] Exh. 9.
[Note 31] Statement of Agreed Facts, no. 22. Tr. at p. 143.