These cases involve dueling actions regarding the validity of amendments to the master deed of a residential condominium in Worcester. Plaintiff in Case No. 15 MISC 000545, Kettle Brook Lofts, LLC, et al. (LLC), initially filed an action in Worcester Superior Court on August 3, 2015. [Note 2] Three days later, Plaintiffs in Case No. 15 MISC 000302, the Trustees of the Kettle Brook Lofts Condominium Trust (Trust), initiated a separate action in the Land Court against the LLC and others (First Land Court Case). Plaintiffs in both cases seek declaratory judgments, among other relief, regarding the validity (or lack thereof) of the recorded amendments and certain other documents, and each party sought preliminary injunctive relief.
Kettle Brook Lofts (Condominium) was created by master deed recorded with the Worcester County Registry of Deeds on July 22, 2008 (Master Deed). [Note 3] Section VIII of the Master Deed establishes a seven-year period in which the LLC, as declarant, was authorized to create five additional development phases, totaling 109 units. The Master Deed also contains a general amendment provision, Section XI, granting the declarant the right to amend the Master Deed without the consent of any other unit owners or trustees, so long as the declarant holds unexercised phasing rights or owns one or more units in the Condominium. If the declarant's phasing rights have expired, Section XI allows for the amendment of the Master Deed with the consent of unit owners holding at least 51 percent or 67 percent of the total votes in the Condominium, depending on the type of amendment at issue.
The two amendments here at issue, the Fifth and Sixth Amendments, both executed by Paul Saleba, as manager of Kettle Brook Lofts, LLC, on behalf of the declarant, were recorded on July 21, 2015. The Fifth Amendment extends, by seven years, the time during which declarant may add additional phases. The Sixth Amendment purports to phase into the Condominium 56 additional units (Class B Units) under Phase IV, reaching the maximum number of 109 units provided for in the Master Deed. The Trust argues, among other things, that the Fifth Amendment was ineffective to extend the phasing period because the LLC purported to extend the period under the general amendment provision of the Master Deed, in contravention of G. L. c. 183A, § 5(b)(1), and/or § 5(b)(2)(iii). The Trust further contends the Sixth Amendment also is invalid, and all subsequent action taken by LLC, pursuant to both amendments, such as the removal and appointment of new trustees, and creation of a "Class B" for the Phase IV Units, are also invalid.
On December 11, 2015, the Superior Court Case was transferred to the Land Court, pursuant to G. L. c. 212, § 26A, and assigned Case No. 15 MISC 000545 (Second Land Court Case). Due to the procedural posture of the two cases, and the fact that each party is both a Plaintiff and a Defendant depending on the case, the parties agreed to refer to Plaintiff in 15 MISC 000545 as "the LLC" and Plaintiff in 15 MISC 000302 as "the Trust" or "the Trustees." The LLC moved to amend its complaint on March 7, 2016, to add as Defendants, Commerce Bank and Trust Co. (Commerce) and Haymarket Capital, LLC (Haymarket), both mortgagees of record. The unopposed motion was allowed. The LLC and the Trust cross-moved for summary judgment in both cases on January 31, 2017.
First Land Court Case 15 MISC 000302
In the First Land Court Case, the Trust filed an eight-count verified complaint seeking declaratory judgments that various instruments executed and recorded by the LLC are invalid and did not have the effect of: extending the LLC's development rights; adding additional Phase
IV "Class B" Units to the Condominium; or removing Stacy Specht (Specht) and Sudhakar Teegavarapu (Teegavarapu) as Trustees of the Trust and appointing itself, the LLC, as trustee in their place. The Trust further seeks declarations that the LLC's development rights expired on July 22, 2015; Section 4.1.8(t) of the Declaration of Trust of the Condominium is invalid and unenforceable as a matter of public policy; and that the mortgages held by Haymarket and Commerce are subordinate to the Condominium Master Deed and Declaration of Trust. The LLC filed an Answer and two-count counterclaim, seeking a declaratory judgment that it properly exercised its right to amend under the Master Deed and for injunctive relief enjoining Specht and Teegavarapu from operating as Trustees. Commerce and Haymarket each filed an Answer but did not file counterclaims.
Second Land Court Case 15 MISC 000545
The LLC's two-count verified complaint originally filed in Worcester Superior Court mirrors the substance of the answer and counterclaim filed it in the First Land Court Case. In Count I, the LLC seeks a declaratory judgment that the amendments to the Master Deed, and actions taken pursuant to those amendments, were authorized and valid. In Count II, the LLC sought an injunction enjoining Specht and Teegavarapu from acting as Trustees. Both filed Answers, as did Marc Surette, d/b/a Empire Property Professionals. [Note 4]
Summary Judgment Standard
Summary judgment is appropriate where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. See Kourouvacilis v. General Motors Corp., 410 Mass. 706 , 716 (1991); Mass. R. Civ. P. 56(c), as amended, 436 Mass. 1404 (2002). ". . . [W]here both parties have moved for summary judgment, the evidence is viewed in the light most favorable to the party against whom judgment is to enter." Twomey v. Town of Middleborough, 468 Mass. 260 , 267 (2014) (citations omitted.)
The summary judgment record includes a two-volume joint appendix (Appendix) and a separate appendix filed by the LLC (LLC's Appendix). The following material facts, taken from the parties' statements of material facts, are not in dispute. [Note 5]
1. The LLC is a Massachusetts limited liability corporation with a principal place of business at 1511 Main Street in Worcester. The LLC was the Declarant of the Kettle Brook Lofts Condominium.
2. The Trust is the organization of unit owners of the Condominium. Defendants Specht and Teegavarapu were appointed trustees of the Trust on or about July 15, 2014; their written acceptances, each executed on July 15, 2014, are recorded in Book 52610, at Pages 171 and 172 respectively.
3. Defendant Commerce is a chartered banking institution with a place of business at 386 Main Street in Worcester. Defendant Haymarket is a Massachusetts limited liability company with a principal place of business at 12 Clock Tower Place, Suite 200, in Maynard.
4. The Condominium was created on July 22, 2008, when the LLC recorded a Master Deed and Declaration of Trust with the Worcester County Registry of Deeds in Book 43114, at Page 27, and Book 43114, at Page 54, respectively.
5. The Master Deed contemplated a maximum of 109 units in five phases. The land submitted to condominium status by the LLC when the Master Deed was recorded, as described in Schedule A of the Master Deed, and is shown on a plan of land dated July 2, 2008, recorded in Book of Plans 869, at Page 23 (Condominium Land).
6. The LLC had taken title to certain properties identified in the Master Deed as follows: Tract I was acquired by deed dated August 20, 2004, recorded in Book 35901, at Page 40; Tracts II and III were acquired by deed dated December 5, 2006, recorded in Book 40311, at Page 173; and Tract IV was acquired by deed dated July 2, 2008, recorded in Book 43071, at Page 297.
7. On June 23, 2006, the LLC executed a mortgage deed granting and conveying to WA Funding I, Inc. certain land and improvements thereon located at 1511 Main Street in Worcester recorded on June 26, 2006, in Book 39245, at Page 366, later assigned to Haymarket by assignment dated April 23, 2009, recorded on April 28, 2009, in Book 44153, at Page 39.
8. On July 30, 2007, the LLC executed a mortgage deed granting and conveying to Commerce (Construction Mortgage) certain land and improvements thereto located at 1511 and 1541 Main Street in Worcester, recorded in Book 41570, at Page 174.
9. On June 2, 2008, the LLC executed a mortgage deed to grant and convey certain land and improvements thereto located at 1511 Main Street to Haymarket, recorded on March 25, 2009, in Book 43984, at Page 1.
Partial Releases
10. WA Funding I, LLC executed two "Partial Release of Mortgage" instruments for the following Condominium units: B-104, B-201, B-203, B-305, B-204, B-PH5, C-201, C-203, C-206, C-301, C-303, C-305, C-402, C-408, C-409, C-PH4, C-PH5, B-304, B-PH2, C-401, G-200A and C-202.
11. Commerce executed several Partial Releases of Construction Mortgage, Assignment and Security Agreement and Assignment of Leases and Rents, some with a Scrivener's Affidavit and UCC Financing Statement, for the following units: B-104, B-201, B-203, B-204, B-305, B-PH5, C-201, C-203, C-206, C-301, C-303, C-305, C-402, C-408, C-409, C-PH4, C-PH5, B-PH2, B-304, C-401, G-200A, C-202, B-101, B-301, C-204, C-205, C-306, C-PH3, C-PH9, B-302, C-308, B-PH1, B-PH3, C-406, C-403, C-302, C-407, B-202, B-PH4, C-404, C-PH2, C-PH7, B-102, C-PH1, B-303, and C-307.
12. Haymarket executed several "Partial Release of Mortgage" instruments for the following units: B-101, C-204, C-205, C-306, C-PH3, C-PH9, B-301, B-PH1, B-PH3, B-302, C-308, C-302, C-403, C-406, C-407, B-202, B-PH4, C-404, C-PH2, C-PH7, B-102, B-304, B-303, C-PH1, C-PH6, G-200B, B-101, C-204, C-205, C-306, C-PH3, C-PH9, B-301, C-307, and C-408.
Master Deed
13. The first paragraph of the Master Deed provides, in part, as follows:
The undersigned, KETTLE BROOK LOFTS, LLC, a Massachusetts Limited Liability Company having a principal office at 390 Main Street, Suite 901, Worcester, Massachusetts, (hereinafter "Declarant") being the sole owner of the land with the buildings thereon more commonly known as 1511 Main Street, Worcester, Worcester County, Massachusetts, ("Land"), by duly executing and recording this Master Deed, does hereby submit said Land, together with the buildings and improvements erected thereon, and all easements, rights and appurtenances belonging thereto, (hereinafter collectively called the "Property"), to the provisions of Massachusetts General laws, Chapter 183A (hereinafter "Chapter 183A"), and does hereby state that it proposes to create, and does hereby create, a condominium (hereinafter referred to as the "Condominium") with respect to the Property, to be governed by and subject to the provisions of said Chapter 183A.
14. Section III.A of the Master Deed provides, in part, as follows:
The land upon which the buildings and improvements of the Condominium is located consists of the land situated at 1511 and 1541 Main Street, Worcester, Massachusetts, as shown on the Site Plan to be recorded herewith and is more particularly described in "Exhibit A" attached hereto.
15. Section III.B of the Master Deed provides, in part, as follows:
There is one (1) structure on said Land (the "Buildings") which consists of six (6) adjoining wings which share party walls all of which are shown on the Plans.[. . .]
The structure which includes Wing C, and the additional wings shown on the Plans a Wing A, Wing B, Wing C, Wing D, Wing E, and Wing G which presently constitute common areas and which may be completed as additional phases, is constructed primarily of brick, including the exterior walls, and has a stone and masonry foundation
Said wings are hereinafter collectively called the "Building," and shall individually be referred to in this Master Deed, in the Trust and in any subsequent amendment to either of those documents as the "Wing" followed by the letter designation of the respective wings thereof which is shown on the Floor Plans.
16. Section VI of the Master Deed provides, in part, as follows:
The common area and facilities of the Condominium consist of the entire property described on Exhibit "A" of this Master Deed and all parts of the building as described in Part III of this Master Deed, other than the Units described on Exhibit "C" hereto, which specific Units include the appurtenant storage Units and parking spaces as described herein: [. . .]
(b) The foundations of the buildings and all portions thereof, and all structural columns, structural lintels, girders, beams, slabs, supports, and floor, ceiling, and roof beams and joists and all structural members appurtenant to such floor, ceiling and roof beams and joists, and exterior walls which shall include all bricks form the exterior plan of the interior-most brick, any and all wall studs in partition-walls between Units, the sub-flooring below the upper surface thereof, elevators and all apparatus, controls, and writing appurtenant thereto, roofs, building entrances and exits, and all structural portions of the buildings[.]
17. Exhibit A, attached to the Master Deed, contains descriptions of the four tracts of property.
Master Deed Phasing Provisions
18. Section IV of the Master Deed, titled "Phasing," states, in part, as follows:
The Declarant specifically reserves the right, but not the obligation, to complete construction of the Condominium, or any part thereof, by amending this Master Deed, which right is also specifically reserved, in order to add up to five (5) additional phases, including sub phases of the Condominium, all as provided in the Master Deed [. . . ]
In the event that all additional phases are completed and added to the Condominium, it is anticipated that there will be a total of 109 Units included in and comprising the Condominium [. . .]
All improvements intended for each future phase will be substantially complete prior to the addition of the phase at issue, and all such additional phases shall be of the same quality of construction and materials as the portions of common area and facilities and Units presently comprising the Condominium which is specifically described herein and is now substantially complete. (italics added.)
19. Section IV of the Master Deed further provides, in part, as follows:
The Declarant hereby expressly reserves to itself, and to is successors in title, for a period ending 7 years from the date on which this Master Deed is recorded, or the completion of all phases of the Condominium, whichever occurs first, the easement, license, right and privilege to store equipment and materials and to pass and re-pass by vehicle and on foot in, upon, over and to any and all of the common area and facilities of the Condominium for purposes, including but not limited to transportation of construction equipment and materials in order to complete construction work on the Condominium, or any subsequent part or subsequent phase thereof, including but not limited to any of the amenities or utilities associated therewith, provided that in the exercise of the rights reserved by the Declarant in this paragraph, the Declarant will not unreasonably affect the use and enjoyment of the common area and facilities.
20. Section VIII of the Master Deed, titled "Declarant's Reservation of Development Rights," provides, in part, as follows:
The Declarant reserves the right to construct additional Units and to improve common areas in the buildings shown on the Plans which will upon substantial completion be submitted to and added into the condominium pursuant to Part XI upon an amendment to this Master Deed being recorded[.]
[. . . ]
In the event that additional phases are to be included in the Condominium, the Units to be added shall be substantially completed, and the amendment to the Master Deed submitting those Units to the condominium shall be recorded on or before 7 years from the date of the recording of this Master Deed. (italics added.)
21. Section VIII of the Master Deed also provides, in part, as follows:
In the event that any such phase has not been completed and any such amendment has not been recorded during the period specified in the preceding sentence, the Declarant shall be deemed to have waived the right to complete said phase[,] to record such an amendment[,] to submit additional Units to the Condominium, or to execute documents pursuant to Part XI(c) hereof.
Master Deed General Amendment Provisions
22. Section XI(a) of the Master Deed provides, as follows:
While the Declarant owns any Unit in the Condominium or during any time in which the Declarant retains the right to add in additional Units pursuant to unexercised development or phasing rights, the Declarant shall have the right, at any time, to amend this Master Deed, without the consent of any other Unit Owners or any of the Trustees of the Condominium Trust, provided, however, that any such amendment shall not substantially increase the burdens of any Unit Owner, or substantially decrease the benefits conferred upon any Unit Owner (underline added).
23. Section XI(b)(iv) provides as follows:
No instrument of amendment that alters this Master Deed in any manner contrary to or inconsistent with the provisions of Massachusetts General Law, Chapter 183A, shall be of any force of effect[.]
24. Section XI(b)(v) provides as follows:
Notwithstanding any other provision of this Section, no amendment of this Master Deed shall be made if such amendment would contravene the provisions of the By-laws of the Trust[.]
25. Section XI(c) provides, in part, as follows:
Notwithstanding any of the provisions of this Master Deed, the Trust, including the By-laws, or of Chapter 183A, the Declarant reserves for itself, its successors and assigns, the right, power, authority, and ability to construct additional Units and common areas in additional phases and sub-phases of the Condominium, and when such improvements are substantially completed, to amend this Master Deed to include said additional phases and sub-phases in the Condominium, all without the consent of the then existing Unit Owners or their applicable mortgage holders. (italics added).
Declaration of Trust
26. Article III of the Declaration of Trust pertains to "Unit Owners." Subsection 3.10, titled "Action by Writing," provides as follows:
Any action to be taken by the Unit Owners may be taken without a meeting if all Unit Owners entitled to vote on the matter consent to the action by writings filed with the records of the meetings of the Unit Owners. Such consents shall be treated for all purposes as a vote at a meeting.
27. Article IV of the Declaration of Trust pertains to "Trustees and Officers." Subsection 4.1.2, "Vacancies; Appointment and Acceptance of Successor Trustees," provides, in part, as follows:
Except as provided in section 4.1.1, if and whenever any Trustee's term is to expire or a trustee is removed as stated in Section 4.1.6, the resulting vacancy or vacancies may be filled at any time by an instrument in writing which sets forth (i) the appointment of a natural person to act as Trustee signed by any three Unit Owners who certify under oath that Unit Owners entitled to a majority of the Beneficial Interest have voted to make such appointment and (ii) the acceptance of such appointment signed and acknowledged by the person appointed.
28. Subsection 4.1.6 of the Declaration of Trust provides, in part, as follows:
Subject to the rights of the Declarant recited in section 4.1, any trustee may be removed (a) in the event of a material breach of the trustee's fiduciary duty by vote of Unit Owners entitled to a majority of the beneficial interest hereunder and (b) for other cause or without cause by vote of Unit Owners entitled to 75% of the Beneficial Interests hereunder. [
]
Any removal shall become effective upon the recording with the Registry of Deeds of a certificate of removal signed by a majority of the remaining trustees in office, or by three Unit Owners, who certify under oath that the requisite number of Unit Owners have voted such removal in accordance with the requirements of this Section.
29. Subsection 4.1.8(t) provides, as follows:
Engaging in such litigation in the name of and on behalf of the Trust as they deem necessary and proper to further the purposes of this Trust, provided, however, that the filing of any litigation involving or reasonably expected to involve the expenditure of legal fees, costs and related expenses in excess of $10,000.00 (and not assessable to a particular Unit Owner pursuant to M.G.L. Chapter 183A) shall require the prior written approval of Unit Owners representing 50% in number and percentage interest[.]
30. Article V of the Declaration pertains to "Operation of the Property." Section 5.1, "Determination of Common Expenses and Fixing of Common Charges," provides as follows:
At least thirty (30) days prior to the commencement of each fiscal year of this Trust, the Trustees shall estimate the Common Expenses expected to be incurred during the next fiscal year together with a reasonable provision for contingencies and reserves, and after taking to account any undistributed surplus accumulations from prior years not set aside for reserve or contingent liabilities, shall determine the assessments to be made for the next fiscal year.
31. Section 5.1.1 provides, in part, as follows:
The Trustees shall set aside from the regular monthly payments of Common Charges an amount adequate and appropriate to provide a reserve for the periodic repair and/or replacement of the Common Elements and other capital purposes and may, to the extent consistent with these purposes, use the funds so set aside for the reduction of indebtedness of other lawful capital purpose, or subject to the provisions of these By- Laws and the provision of Chapter 183A, for the repair, replacement, rebuilding, restoration or improvement of the Common Elements.
32. Section 5.2, "Payment of Common Charges," provides, in part, as follows:
All Unit Owners shall be obligated to pay the Common Charges assessed by the Trustees pursuant to the provisions of Section 5.1, monthly, in advance or on such other regular installment basis as the Trustees shall determine.
33. Section 5.6, "Insurance," provides, in part, as follows:
The Trustees shall be required to obtain and maintain, to the extent obtainable at reasonable cost, and permitted by applicable law, master policies or insurance of the following kinds:
(1) Causality or physical damage coverage insuring the buildings and all other insurable improvements forming part of the Condominium (including all of the Common Elements and all of the Units and excluding only personal property of the Unit Owners therein), now existing or as they may from time to time be increased by amendment to the Master Deed[.]
Master Deed Amendments
34. On July 29, 2008, the LLC recorded the "First Amendment to Master Deed of the Kettle Brook Lofts Condominium Amendment of Master Deed to Add Phase II," purporting to add units constructed in Wing B.
35. On September 4, 2008, the Declarant recorded the "Third Amendment to Master Deed of the Kettle Brook Lofts Condominium Amendment of Master Deed to Add Phase III," purporting to add units constructed in Wing G.
Fifth Amendment
36. On July 14, 2015, the LLC executed the "Fifth Amendment to Master Deed of the Kettle Brook Lofts Condominium to Add Organization of Unit and Lengthen Development Period," which was recorded on July 21, 2005, in Book 54039, at Page 288 (Fifth Amendment).
37. The Fifth Amendment contains seven "WHEREAS" clauses. The fifth "WHEREAS" clause of the Fifth Amendment provides:
the Units in Phase IV will require additional work before certificates of occupancy will be issued by the City of Worcester.
38. The Fifth Amendment further provides:
NOW, THEREFORE, the Kettle Brooks Lofts, LLC by duly executing and recording this Fifth Amendment to Master Deed, does hereby declare that all Units to be created by and in Phase IV shall be designated Class B Units to be governed, except for voting by and under the Kettle Brook Lofts Class B Condominium Trust, under declaration of trust to be recorded herewith,* an organization of Unit Owners whose original Trustee shall be the Kettle Brook Lofts, LLC, which Trust is designed specifically for the maintenance, control, upkeep and operation of all Class B Units. When Declarant or any successor Declarant (hereinafter referred to as "Declarant" as well as the Declarant) no longer owns any of the Class B Units the Class B Units shall automatically lose their Class B status and thereafter be governed by and under the Kettle Brook Lofts Condominium Trust. All references to Class B Units shall also be to the common areas appurtenant to the Class B Units and Buildings. In the event of the Recoding at some time in the future of a Plan with an amendment further phasing Class B Units, all the land in the Phase in which a Class B unit is located shall be considered to be the "land appurtenant" to that Class B Unit.
*in Book 54039, Page 293[.]
39. The Fifth Amendment further provides:
To that end, should there be any cost of expense related to the use and upkeep of the roads and ways within the Kettle Brook Lofts Condominium or any other expense not paid for or absorbed by the owners of the Class B Units which are deemed to be common to both the Class B Units and the rest of the Condominium (hereinafter referred to as the Special Common Expenses), the Class B Units shall be assessed their relative pro-rata share of said costs and expenses based on relative percentage interests as set forth in Schedule C to the Sixth Amendment to the Master Deed.
40. The Fifth Amendment further provides:
The Class B Units shall be members of the Kettle Brook Lofts Condominium Trust solely for voting purposes as already described in the Master Deed as recorded and amended and as it shall be amended further until such time as they no longer have Class B status but shall otherwise be members of and governed by the Kettle Brook Lofts Class B Condominium Trust for all other purposes, all until they lose their Class B status. To that end, the percentage interest changes set forth in Schedule C to the Sixth Amendment to the Master Deed to be recorded hereinafter shall be effective for voting purposes and for assessment of such charges as set forth in the immediate preceding Paragraph only so long as a Unit is a Class B Unit. When a Unit ceases to be a Class B Unit, said Unit's percentage set forth in Schedule D of the Sixth Amendment to the Master Deed shall be added to the percentages in the Condominium for all purposes and all others' percentages shall be adjusted accordingly when said unit ceases to be a Class B Unit.
41. The Fifth Amendment also provides:
The Fourth Paragraph of Article IV of the Master Deed and the First Paragraph of Article VIII of the Master Deed are hereby amended such that any reference therein to seven (7) years is/are hereby deleted and the words fourteen (14) years are simultaneously substituted therefore and any other reference(s), if any in the Master Deed to said seven (7) year period shall now be taken to mean a fourteen (14) year period and all other elated [sic] rights such as easements for development and access are also so extended.
Declaration of Class B Trust
42. On July 14, 2015, the LLC executed a Declaration of Trust creating the "Kettle Brook Lofts Class B Condominium Trust," recorded with the Registry on July 21, 2015 in Book 54039, at Page 293.
43. Article I, Section 1.1 of the Declaration of Trust, titled "Declaration of Trust and Purposes," states:
The Class B Trustees hereby declare that they hold all of the rights and power in and with respect to the common areas and facilities of the Condominium insofar as Class B Units as defined in the aforesaid Fifth Amendment to the Master Deed of the KETTLE BROOK LOFTS CONDOMINIUM (hereinafter referred to as the "Common Elements") as hereinafter defined, which are by virtue of the provisions of Chapter 183A of the Massachusetts General Laws conferred upon or exercisable by the organization of unit owners of said Condominium[.]
44. Article II, Section 2.8 of the Declaration of Trust, "Definitions," defines "Common Elements" as "the common areas and facilities of the Class B Units of the Condominium in Phase IV as so described and designated in the Master Deed and/or amendments.
45. The Master Deed contains no reserved right or other power vesting in the Declarant the right to remove from the Condominium any portion of the common area.
Sixth Amendment
46. On July 16, 2015, the LLC executed the "Sixth Amendment to Master Deed of the Kettle Brook Lofts Condominium Trust Amendment of Master Deed to Add Phase IV," which was recorded on July 21, 2015, in Book 54039, at Page 344.
47. Article I, "Description of Buildings in Phase IV," of the Sixth Amendment purports to submit to condominium status 43 units in Wings A, 10 residential units in Wing D, and 3 residential units in Wing E, all of which are also listed and described in Exhibits C and D attached to the Sixth Amendment.
48. Article III, "Common Areas and Facilities," states:
[t]he common areas and facilities of the Condominium for the Units being added, comprise and consist of the land described in Article VI of the Master Deed, together with the benefit of and subject to the rights and easements referred to in said Master Deed, and all parts of the Building now existing as part of the Condominium other than the units themselves, in all phases of the Condominium now existing and improvements thereon, except that the common areas being added herewith are subject to the provisions of the Fifth Amendment of even date to the Kettle Brook Condominium Master Deed recorded herewith but prior hereto, Book 54039, Page 288.
49. The LLC recorded no other separate Master Deed in connection with the creation of the Kettle Brook Lofts Class B Condominium Trust.
Removal Instrument
50. The LLC executed a "Removal of Trustees and Appointment of Trustees" on July 16, 2015, recorded with the Registry on July 21, 2015 in Book 54039, at Page 357 (Removal Instrument).
51. The Removal Instrument states that the LLC, at the time of the execution on July 26, 2015, owned units holding "in excess of seventy-five (75%) percent of the beneficial interest" in the Condominium.
52. Until the recording of the Sixth Amendment, the LLC did not hold seventy-five percent of the beneficial interest in the Condominium.
Extension of Development Rights
53. The LLC executed and recorded with the Registry an "Extension of Development Rights" on July 16, 2015, in Book 54039, at Page 360 (Extension of Development Rights).
54. The Extension of Development Rights states, in part, as follows:
The Trustees of the KETTLE BROOK LOFTS CONDOMINIUM TRUST, said Declaration of Trust having been dated July 17, 2008 and recorded at the Worcester District Registry of Deeds on July 22, 2008 in Book 43114, at Page 54 do hereby with the consent in writing [of] Unit Owners holding in excess of seventy-five (75%) percent of the beneficial interest therein and mortgage holders holding in excess of fifty-[one] (51%) of the mortgages on Units in the Condominium do hereby grant unto the KETTLE BROOK LOFTS, LLC an extension of development rights for up to fourteen years form the date the Master Deed was first recorded with the Worcester County Registry of Deeds, a revival of any development rights and rights reserved* to Declarant that may have expired and the right to withdraw any and all property from the Condominium and the provisions of Massachusetts [General Laws] Chapter 183A § 5(b)(1)(iii) and § 19 along with the right to amend the MASTER DEED OF THE KETTLE BROOK LOFTS CONDOMINIUM . . . in order to comply with said Chapter 183A § 5(b)(1)(iii) including but not limited to altering the schedule of beneficial interest in accordance with said Master Deed.
*in said Master Deed
55. The Extension of Development Rights further states:
The Declarant may reserve the right to create Phases for Units already added to the Condominium for purposes of delineating which areas are common areas appurtenant to which Units.
56. On August 3, 2015, the Declarant, purportedly acting on behalf of the Condominium Trust, initiated litigation in Worcester Superior Court, seeking, among other things, declaratory relief that it had duly declared a new condominium phase and properly removed and appointed new trustees. See Kettle Brook Lofts, LLC, et al. v. Specht, et al., Worcester Superior Court, Civil Action No. 15-1255 (August 3, 2015).
57. Craig Parkhill (Parkhill), a registered architect hired by the LLC, signed and stamped the as-built plans recorded on June 21, 2015, stated in a deposition taken November 8, 2016 that none of the units he inspected had doors, complete electrical or plumbing systems, sheetrock, or other finishes. At the time of Parkhill's inspection of the units, he observed framing, stud framing and rough wiring. He observed there was no sheetrock, no finished floors, no ceilings or paints, and no built kitchens or bathrooms. Parkhill inspected the Condominium on one occasion in June 2015 for approximately two to three hours.
* * * * * *
The Condominium is set up under the Master Deed as a phased development. The Condominium Act, G. L. c. 183A, is "essentially an enabling statute, setting out a framework for the development of condominiums . . . while providing developers and unit owners with planning flexibility. Such flexibility is particularly important with respect to phased condominium developments where long-term financial and market conditions may be uncertain." Queler v. Skowron, 438 Mass. 304 , 312 (2001), citing Barclay v. DeVeau, 384 Mass. 676 , 682 (1981). In recognition of the rights of unit owners and the need for flexibility in phased condominium regimes, G. L. c. 183A, § 5(b)(1), as amended by St. 1998 c. 242, § 5, provides:
[t]he percentage of the undivided interest of each unit owner in the common areas and facilities as expressed in the master deed shall not be altered without the consent of all unit owners whose percentage of the undivided interest is materially affected, expressed in an amendment to the master deed duly recorded; provided however, that the acceptance and recording of the unit deed shall constitute consent by the grantee to the addition of subsequent units or land or both to the condominium and consent to the reduction of the undivided interest of the unit owner if the master deed at the time of the recording of the unit deed provided for the addition of units or land and made possible an accurate determination of the alteration of each unit's undivided interest that would result therefrom[.]
The Condominium Act explicitly protects unit owners whose percentage of undivided interest is materially affected, by mandating their consent to the alteration of their undivided interests in the common areas. Any such alteration can be achieved only by an amendment to the master deed. G. L. c. 183A, § 5(b)(1); Lallo v. Szabo, 75 Mass. App. 1, 5 (2009), citing Kaplan v. Boudreaux, 410 Mass. 435 , 438 (1991); Strauss v. Oyster River Condo. Trust, 417 Mass. 442 , 445446 (1994). The statute, however, contains an exception to the requirement that approval from all unit owners is needed in order to alter the percentage interest of each unit owner in the common areas: That exception applies in the case of phased condominium projects like the one at issue here. In a phased development, the percentage interest held by pre-existing units decreases when new units are added by a phasing amendment. Unit owner approval is not required for a phasing amendment, if the master deed, at the time the unit deeds were recorded, provided for the addition of phased units and made possible an accurate determination of each unit's undivided interest that would result. Thus, the Condominium Act both protects unit owners from changes to their undivided percentage interests in the common areas without their consent, and presumes consent in situations where the master deed properly and expressly provides for the phasing.
A phased condominium development completes groups or stages of units over a period of years, and the units become part of the condominium by successive amendments to the master deed. "Phasing," while not a statutory term, has grown out of the general enabling provisions of G. L. c. 183A. Queler, 438 Mass. at 304, n.15. In this case, the Master Deed reserves to the LLC, as Declarant, certain rights, including the right to add additional land, buildings and units in up to five additional phases, by means of one or more phasing amendments to the Master Deed.
Several different sections in the Master Deed address phasing rights and their implementation. Sections IV and VIII reserve phasing rights for a period of seven years from the date of the Master Deed's recording, which was July 22, 2008. Section XI(a) allows the Declarant, while it owns any unit in the Condominium or during any time in which it holds unexercised phasing rights, to amend the Master Deed without the consent of any other Unit Owners, "provided, however[,] that any such amendment shall not substantially increase the burdens of any Unit Owner, or substantially decrease the benefits conferred upon any Unit Owner." The Fifth Amendment at issue, in part, purports to extend the LLC's phasing rights for an additional seven years. The Fifth and Sixth Amendments together purport to create Phase IV, adding 56 units to the Condominium.
I. The Trust Does Not Lack Standing
As a preliminary matter, the LLC argues that it is entitled to summary judgment because the Trust lacks standing and authority to bring the First Land Court Case. The LLC argues specifically that the Trust lacks standing because the issues are particular to the Unit Owners of the Condominium and not to the Trust itself. The LLC further argues that the Trust lacks authority because the Trustees were never properly elected, nor did they put the issue of this litigation to a vote of all Unit Owners, as required under the Master Deed. The court finds these arguments unavailing.
General Laws c. 183A, § 10(b)(4) states that a trust or association provided for in a master deed shall have, among other powers, the ability to "conduct litigation and to be subject to suit as to any course of action involving the common areas and facilities or arising out of the enforcement of the by-laws, administrative rules or restrictions in the master deed." This authorization aims to avoid the "[p]iecemeal litigation by individual unit owners" that would otherwise "frustrate the statutory scheme, in which the association acts as the representative of all owners in common." Cigal v. Leader Dev. Corp., 408 Mass. 212 , 218 (1990). The Declaration of Trust also grants to the Trust the authority over the operation and care of the common areas, the same powers granted in the statute. Because the claims in this case concern the Condominium common areas, the Trust has standing to bring this action.
The LLC also challenges the appointment of the purported current Trustees: Specht and Teegavarapu. Section 4.1.2 of the Declaration of Trust allows for trustee vacancies to be filled by appointment, and Specht and Teegavarapu were appointed on July 15, 2014. Their acceptances were recorded in the Registry in Book 52610, at Pages 171-72, on July 29, 2014. To the extent that any procedural errors occurred in their appointment, which the Trust disputes, those deficiencies do not render their appointments void, pursuant to § 4.1.3 of the Declaration of Trust ("[n]otwithstanding any other provisions in this Declaration of Trust contained, the failure to record such appointment and acceptance in the Registry shall in no way affect the validity of such Trustees' election").
The LLC further alleges that the Trust violated the Condominium's Declaration of Trust § 4.1.8(t) by initiating this litigation without a proper vote from the Unit Owners. That subsection allows trustees to
[engage] in such litigation in the name of and on behalf of the Trust as they deem necessary and proper to further the purposes of this Trust, provided, however, that the filing of any litigation involving or reasonably expected to involve the expenditure of legal fees, costs and related expenses in excess of $10,00.0.00 (and not assessable to a particular Unit Owner pursuant to [G. L.] c. 183A) shall require the prior written approval of Unit Owners representing 50% in number and percentage interest[.]
The Trust argues primarilyand indeed requests such a declaration in count seven of its complaintthat § 4.1.8(t) is void as it is against public policy because it exists to prevent the Trust from suing the LLC. Alternatively, the trust argues that the LLC has waived its right to challenge the Trust's authority to pursue this litigation.
The SJC, in Trustees of Cambridge Point Condominium Trust v. Cambridge Point, LLC, 478 Mass. 697 (2018) (Cambridge Point), states "a bylaw provision requiring unit owner consent to initiate litigation is not per se void[.]" Id., at 703. However, the court went on to find that "it is overreaching for a developer to impose a condition precedent that, for all practical purposes, makes it extraordinarily difficult or even impossible for the trustees to initiate any litigation against the developers regarding the common areas and facilities of a condominium. Such a provision has all the same flaws as a waiver of liability provisionwhich we would find void as contravening public policybut without the transparency of such a provision." Id., at 709.
The disputed bylaw provision in Cambridge Point required the written consent of at least eighty percent of all unit owners in order for the trustees to initiate litigation. Id., at 698-99. The court noted that under that facts of that case, where the developer retained an ownership interest of at least twenty percent of the units, it was effectively impossible for the trustees to sue the developer. Id., at 703-704. Further, the court found that "[e]ven if the developers
did not retain a twenty percent ownership interest, the provisions . . . in their entirety, make it extraordinarily difficult for the trustees to sue the developer for defective construction and design of common areas or facilities." Id., at 704. The court based this conclusion on four features of the disputed bylaw provision: 1) that because the bylaw required consent of all unit owners, any ownership interest retained by the developer would have the effect of increasing the required percentage of approval of unit owners not affiliated with the developer; 2) because the bylaw required the trustees to seek affirmative written consent of all unit owners, non-responsive unit owners are counted as though they refused consent; 3) the bylaw provided "the entirety of the legal fees and costs to be incurred from litigation must be 'separately assessed as a special assessment effective forthwith' upon consent, even though the legal fees and costs would be incurred and billed during the life of the litigation;" and 4) that the bylaw provided the trustees only sixty days to obtain the necessary consent. Id., at 704-05.
In contrast to the bylaw provision in Cambridge Point, here, § 4.1.8(t) sets a lower threshold for unit owner consent of only fifty percent (of Unit Owners representing 50% in number and percentage interest), does not require a prospective special assessment, and does not limit the time in which the trustees may seek the requisite consent. While it similarly would treat non-responsive unit owners as having withheld consent, this effect is somewhat mitigated by the absence of a time limitation on the Trust's acquisition of the necessary level of consent. Section
4.1.8(t) is infected with the problem of defining the necessary level of consent as a function of all unit owners which increases the relative burden on the trustees depending on the level of unit ownership of the LLC. However, this burden is significantly and meaningfully lower where the requisite level of consent is only fifty percent. While the barriers to the Trust initiating litigation found in § 4.1.8(t) are not insubstantial, they are far more reasonable than those at issue in Cambridge Point, and are not so great as to make it extraordinarily difficult or effectively
impossible for the Trust to sue the LLC. This court therefore determines that Section 4.1.8(t) is not void for contravening public policy.
This conclusion notwithstanding, the Trust does not lack standing because the LLC has waived its right to dispute the Trust's authority to litigate these related cases. The LLC filed the Second Land Court case in the first instance in Worcester County Superior Court on August 3, 2015, naming the record Trustees, three days prior to the Trust's filing of the First Land Court Case. The Superior Court Case was subsequently transferred to the Land Court where both cases have been heard together and where the Trust and the LLC are each parties, each seeking relief which is at once the same, and diametrically opposed, as flip sides of the declaratory judgments in issue. Had the Trustees not filed the First Land Court Case, it would have had the authority, and the responsibility under the Rules of Civil Procedure, to seek identical relief by way of counterclaim as a Defendant in the Superior Court Case. Section 4.1.8(t) does not require unit owner approval for the trustees to defend against a lawsuit expressly challenging the Trustees. As these two actions were heard together and the Trust could have pursued the relief it seeks as a defendant in the first filed action, the LLC's argument that the trust lacks authority is without merit. It is clear that the positions taken by the Trust in the First Land Court Case would have been deemed compulsory counterclaims in the Superior Court Case first filed by the LLC.
II. The Purported Extension of the LLC's Phasing Rights in the Fifth Amendment is Invalid
The Trust and the LLC dispute whether the LLC properly had the authority under the Master Deed to extend the LLC's development rights. The LLC purports to have extended its phasing rights from seven to fourteen years under its power to amend the Master Deed found in Section XI(a) which reads:
While the Declarant owns any Unit in the Condominium or during any time in which the Declarant retains the right to add in additional Units pursuant to unexercised development or phasing rights, the Declarant shall have the right, at any time, to amend this Master Deed, without the consent of any other Unit Owners or any of the Trustees of the Condominium Trust, provided, however, that any such amendment shall not substantially increase the burdens of any Unit Owner, or substantially decrease the benefits conferred upon any Unit Owner.
The LLC's attempted amendment however is directly in conflict with Section VIII of the Master Deed, which reads in relevant part:
In the event that additional phases are to be included in the Condominium, the Units to be added shall be substantially completed, and the amendment to the Master Deed submitting those Units to the condominium shall be recorded on or before 7 years from the date of the recording of this Master Deed. In the event that any such phase has not been completed and any such amendment has not been recorded during the period specified in the preceding sentence, the Declarant shall be deemed to have waived the right to complete said phase[,] to record such an amendment[,] to submit additional Units to the Condominium, or to execute documents pursuant to Part XI(c) hereof.
"The principles governing interpretation of a deed are similar to those governing contract interpretation. In the case of the latter, '[a]n interpretation which gives a reasonable meaning to all of the provisions of a contract is to be preferred to one which leaves a part useless or inexplicable.'" Estes v. DeMello, 61 Mass. App. Ct. 638 , 642-643 (2004), quoting Jacobs v. United States Fid. & Guar. Co., 417 Mass. 75 , 77 (1994); Barclay, 384 Mass. at 684 (applying contract law to master deed interpretation). Here, Section VIII of the Master Deed expressly provides that the LLC's phasing rights, if unexercised, are waived upon the expiration of the development period which ran for seven years from the date of the recording of the Master Deed. Consistent with this provision the LLC's phasing rights were to expire on July 22, 2015. The LLC argues that the extension of the phasing rights was a permissible use of the amendment power which it reserved in Section XI(a) of the Master Deed.
Section XI(a) cannot be read in isolation but must be interpreted in the context of the entire Master Deed. Where it expressly provides that any unexercised development rights are waived after the seven-year period expires, it cannot be the case that such waiver can be avoided by the unilateral action of the very party to the contract which the provision constrains. To conclude otherwise would be to render the waiver provision meaningless. The amendment rights reserved to the LLC in Section XI(a) exist in parallel with the seven-year period of development rights, not superior to them. The unilateral amendment rights serve to facilitate the anticipated phasing of additional units into the Condominium, not to augment the parameters of that phasing. [Note 6] In the facts presented here, the LLC had no right or authority under the Master Deed to amend the same to extend the period of its development rights.
Notwithstanding this conclusion, the amendment purporting to extend the LLC's development rights violates the very provision in which the LLC grounds its authority to make the amendment. The LLC's amendment power under Section XI(a) is limited by the requirement that "any such amendment shall not substantially increase the burdens of any Unit Owner, or substantially decrease the benefits conferred upon any Unit Owner." An amendment by the LLC extending its phasing rights by another seven years would do exactly that.
In Suprenant v. First Trade Union Sav. Bank, FSB, 40 Mass. App. Ct. 637 (1996), the Appeals Court found that where a seven-year development period for a condominium had expired, "the [unit owner's] percentage interest became fixed
[and any] subsequent attempt by the bank to add phases affecting the unit owners' percentage interests required, under G. L. c. 183A, §5(b), one hundred percent approval of all owners whose percentage interests were affected." Id. at 641. This case sits on slightly different footing than did Suprenant, however the
logic of the Appeals Court's decision bears on the facts of this case. At the time, G. L. c. 183A, § 5(b) had not yet been amended to include the present language:
provided however, that the acceptance and recording of the unit deed shall constitute consent by the grantee to the addition of subsequent units or land or both to the condominium and consent to the reduction of the undivided interest of the unit owner if the master deed at the time of the recording of the unit deed provided for the addition of units or land and made possible an accurate determination of the alteration of each unit's undivided interest that would result therefrom
G. L. c. 183A, § 5(b)(1), as amended by St. 1998 c. 242, § 5. The Suprenant Court was limited to its interpretation of a statute which was silent on phasing rights, and was considering the validity of an amendment, to revive expired phasing rights, which had seventy percent of unit owner approval. Suprenant, 40 Mass. App. Ct. at 640-41.
Here, the LLC's rights had not yet expired and the amendment was made under the LLC's unilateral amendment power, rather than with any approval of the unit owners. Notwithstanding the differences in posture, the holding in Suprenant, that once the unit owners' percentage interests in the condominium become fixed, the proper percentage of unit owner approval is required to revive or extend them, is still applicable. Id., at 641. Considering this holding in the light of the 1998 amendment to G. L. c. 183A, § 5, it is clear that while a developer's phasing rights are protected by § 5 and any notice of phasing provided to unit owners in a master deed, these rights are not unlimited but rather are meaningfully limited by the scope of the rights which were reserved by the developer. Any use of those reserved rights which serves to expand them beyond the scope of the reservation of which the Unit Owners had notice when they took their unit deeds impermissibly circumvents G. L. c. 183A, § 5(b)(1), and in the context of Section XI(a) of the Master Deed, substantially increases the burdens and decreases the benefits conferred upon the Unit Owners.
Here, the Unit Owners of the Condominium took their units deeds subject to a seven-year phasing period which would potentially add units up to a total of 109. The Unit Owners had the right to expect that their interests in the Condominium would be fixed after that seven-year period had elapsed and further, as discussed infra, that the organization of unit owners would have full control of the affairs of the Condominium after that time had passed. In Barclay, albeit in the context of a dispute with a developer arising out of G. L. c. 183A, § 10, the Appeals Court opined that, "it is arguable
that an agreement designed to protect the developers' interests during the development and marketing phase of a condominium implicitly contains limitations of time on such a phase." Id., 384 Mass. at 684.
"A reasonable period of time is the period necessary to carry out the supposed intention of the parties, i.e., protect the developer while it is at risk. Such a view would be consistent with the basic concept of condominium, i.e., that unit owners will be afforded a proportionate voice in the management of common areas and facilities." Id. (citation omitted). In the context of that case, the Appeals Court ultimately found that "the inquiry is not whether a particular number of units remain unsold, but whether the developer is actively engaged in a bona fide effort to sell the units, and whether, in any event, the circumstances, considered as a whole, require a conclusion that control must pass to the unit owners." Id., at 686.
Here, the reasonable period of time, of which all parties had notice, for the development and phasing of the Condominium was seven years. The extension of the development rights in the Fifth Amendment seeks to circumvent the intent of G. L. c. 183A, § 5(b)(1) by fundamentally altering the circumstances under which Unit Owners own their units and the Trust operates. Moreover, so much of the Fifth Amendment as purports to extend the LLC's phasing rights is invalid because it unreasonably strips the Trust of its anticipated control over the Condominium and doubles the period of time in which the Unit Owners are subject to unilateral changes in their percentage interests in the Condominium. [Note 7]
Also, and critically, nothing in the Master Deed put any Unit Owners on notice that there would or could be a condominium within the Condominium, as proposed by the creation of the Class B Units and the recording of the Kettle Brook Lofts Class B Condominium Trust, creating a completely unanticipated second condominium. Together these effects serve to substantially increase the burdens and decrease the benefits conferred upon the Unit Owners in violation of Section XI(a) of the Master Deed. For all of the foregoing reasons the LLC lacked authority to extend its development rights and such rights are deemed to have been waived as of July 22, 2015.
III. The Phase IV Units Were Not Validly Phased into the Condominium
The Trust and the LLC further dispute whether the Fifth and Sixth Amendments were a valid exercise of the LLC's authority for the purpose of adding the Phase IV units to the Condominium. The Fifth and Sixth Amendments, recorded one day prior to the expiration of the LLC's development rights, purport to add 56 Phase IV units to the Condominium as "Class B Units" and provide that such units would be a part of the Condominium for voting purposes only but would not pay any common fees unless they cause some "expense or burden." [Note 8] The Fifth Amendment further provides that the Class B Units would lose their "Class B" status and be entirely governed by the Trust only after the LLC no longer owned any Class B Units.
The addition of Phase IV increases the number of units in the Condominium from 53 to 109, the maximum allowed in the phasing provisions of Section VIII of the Master Deed. The Class B Units pay no common area fees to the Trust but still entitle their unit owners, nominally the LLC, to voting rights under the Trust. According to Exhibit C of the Sixth Amendment, the Phase IV units increased the LLC's voting power in the Trust by more than 69 percent. [Note 9] The effect of the Fifth and Sixth Amendments is to add 56 units to the Condominium, the owner of which will not contribute common area fees to the Trust, but will hold a majority of the voting interest of the Condominium. In fact, the LLC, after the addition of Phase IV purports to hold in excess of 75 percent of the interest in the common areas of the Condominium.
Despite the Class B Units' purported enjoyment of the existing common areas, the original 53 Unit Owners, or those not part of the Class B Trust, are responsible for paying all of the common expenses necessary to maintain those common areas. The Declaration of Trust makes clear that Unit Owners paying monthly expenses completely fund, among others, the following expenses: operation, care, upkeep, and maintenance of the common elements, [Note 10] employment and dismissal of employees and agents of the Trust, including property managers and legal counsel, [Note 11] and establishment of a reserve fund to provide for the periodic repair of the common areas. [Note 12] Because the original Unit Owners will be compelled to pay one hundred percent of the expenses relating to the common areas, while allowing the Class B Unit owners the enjoyment of those common areas without contributing to the expenses, the Fifth and Sixth Amendments unequivocally effect a substantial increase in the burden on the original Unit Owners in violation of Section XI(a) of the Master Deed.
Further, because the Class B Units are granted voting rights in the Trusts' affairs, just like the original 53 units, the benefit of participation in the governance of the Condominium conferred upon the original Unit Owners is impermissibly and substantially decreased in violation of Section XI(a) of the Master Deed. This is not merely because of the dilution of the original Unit Owners' common area interests or voting power, indeed such dilution is entirely noticed and anticipated by the various phasing provisions contained within the Master Deed.
That a new block of Class B Units which contribute no common area expenses to the Trust, but upon their addition have a controlling majority voting interest in the affairs of the Trust itself substantially decreases the benefits conferred upon the original Unit Owners.
The new Class B Units contribute nothing to the operation of the Condominium or its maintenance, yet alone constitute more than 69 percent of the voting ownership interest. This effectively gives the non-contributing units (Currently owned by the LLC) complete control over the operation of the Trust. The Declaration of Trust provides that: quorum for a meeting of unit owners is met with two thirds, approximately 66.67 percent, of the beneficial interest being present; [Note 13] determining the number of trustees requires the votes of not less than 51 percent; [Note 14] appointing a trustee requires the votes of a majority of the voting beneficial interest; [Note 15] removal of trustees for cause or without cause requires the votes of at least 75 percent; [Note 16] quorum for a meeting of trustees requires only a majority of trustees to be present; [Note 17] and "[w]hen a quorum is present at any meeting, a majority of the trustees present may take any action, except when a larger vote is required by law or by this Declaration of Trust and except for actions requiring approval of First Mortgagees as heretofore provided." [Note 18] With 69 percent of the voting interest in the Condominium, the Class B Units have enough representation alone to take almost any action other than removing a trustee. The Class B Units alone constitute a quorum for unit owners meetings, can dictate the number of trustees, and have sufficient votes to control the selection of each trustee. While it does not necessarily bear on the validity of the Fifth or Sixth Amendments, this concern is more than merely theoretical. Indeed, the LLC with the addition of the 69 percent voting interest of the Class B Units possessed the necessary 75 percent interest to remove all of the trustees, did so, and appointed itself as the sole trustee of the Trust.
The Fifth and Sixth Amendments by vesting this disproportionate voting power in units which are not required to contribute financially to the operation of the Condominium substantially decrease the benefits conferred upon the original 53 Unit Owners who would be forced to contribute one hundred percent of the funds for the Condominium's operation but would potentially have no say in how it actually operates.
Together the burden on the original Unit Owners of supporting the common areas enjoyed by the non-contributing Class B Units and the original Unit Owners' loss of the benefit of representation in the Trust's affairs substantially alter the rights and responsibilities of the original Unit Owners in violation for Section XI(a) of the Master Deed. Therefore, the Fifth and Sixth Amendments are invalid and do not have the effect of adding any additional units to the Condominium.
IV. As the Fifth and Sixth Amendments are Invalid the LLC's Phasing Rights Have Expired and Any Actions Taken Under the Purported Rights Contained Within Those Amendments are Invalid and of No Effect
As the Fifth and Sixth Amendments are invalid, the attempts to add the Phase IV units to the Condominium as the Class B Units and extend the LLC's phasing rights were also ineffective. Therefore, the LLC's phasing rights expired on July 22, 2015, and no additional units can now be phased into the Condominium without the vote of the current owners of the existing 53 units, consistent with the requirements of the Master Deed and G. L. c. 183A, § 5(b). Further, as the validity of the instruments purporting to remove the trustees of the Trust, name the LLC as sole trustee, and extend the LLC's development rights was contingent on the LLC having the additional voting interests created by the addition of the Class B Units in the Fifth and Sixth Amendments, those instruments are invalid and have no force or effect. [Note 19] Finally, in the absence of the Fifth and Sixth Amendments, the disputed Kettle Brook Lofts Class B Condominium Trust has no force or effect on the existence or operation of the Condominium.
V. The Issues with Respect to the Status of the Mortgages are not Ripe for Summary Judgment
Material facts are in dispute with respect to the status of the mortgages held by Commerce and Haymarket, the understanding of the parties to those mortgages, and the circumstances relating to the various releases executed in connection therewith, such that summary judgment on the eighth count of the Trust's complaint is inappropriate at this time. While it is possible that a thorough review of the summary judgment appendices and record might provide the court with sufficient undisputed facts to rule on the legal issue of whether the mortgages are subordinate to the Master Deed, this court is concerned that there are facts in dispute regarding the behavior of the mortgagees and the Declarant and Trust which might be material to the resolution of that question. Under these circumstances, the court has discretion to deny summary judgment on this issue. See Phelps v. MacIntyre, 397 Mass. 459 , 461 (1986). That said, this court does not understand the parties to dispute the validity and binding nature of any of the recorded partial releases issued by Commerce or Haymarket, or WA Funding I, LLC. The recorded partial releases listed in fact paragraphs 10- 12 above release the units and each unit's undivided percentage interest in the Condominium's common area from the applicable mortgages as a matter of law.
Conclusion
For the reasons discussed above, the Fifth and Sixth Amendments are invalid and did not have the effect of extending the period of the LLC's phasing rights or adding the Phase IV units to the Condominium, and the LLC's development rights expired July 22, 2015. Consequently, documents executed and recorded by the LLC, the authority for which relied on the validity of those amendments, are also invalid. Finally, this court has determined that Section 4.1.8(t) of the Declaration of Trust is valid, however, the LLC may not challenge the Trust's standing or authority because the LLC waived that right by bringing the original Superior Court Case. The complaint in that case was brought by the LLC in its name and also in its purported capacity as Trustee of the Kettle Brook Lofts Condominium Trust, naming as Defendants the individual Trustees Specht and Teegavarapu; challenging their authority as trustees; and seeking declaratory relief relevant to control of the Trust.
As discussed above, this court declines to enter summary judgment with respect to the question of whether (or to what extent) the mortgages held by Commerce or Haymarket are subordinate to the Master Deed. That issue remains extant, though the mortgagees' positions are informed to a large extent by the issues resolved above.
Accordingly, the LLC's motion for summary judgment is denied, and the Trust's motion for summary judgment is allowed in part and denied in part.
SO ORDERED.
KETTLE BROOK LOFTS, LLC, KETTLE BROOK LOFTS CONDOMINIUM TRUST, and KETTLE BROOK LOFTS CLASS B CONDOMINIUM TRUST v. STACY S. SPECHT, SUDHAKAR TEEGAVARAPU, and MARC SURETTE, d/b/a EMPIRE PROPERTY PROFESSIONALS and ALL OTHER UNIT OWNERS of UNITS at KETTLE BROOK LOFTS CONDOMINIUM. [Note 1]