MISC 17-000713

May 31, 2018

Suffolk, ss.



On May 5, 2017, Plaintiffs entered into an agreement for the purchase of a two-family dwelling located at 154 Poplar Street in Roslindale owned by Defendants (Premises). The closing never took place because the tenants living in the Premises had not yet vacated, and the Premises were supposed to be vacant by the time for closing. Plaintiffs initiated this action seeking, among other things, a court order requiring Defendants to sell the Premises to Plaintiffs, fashioning their claim primarily as a suit for specific performance. Reaching the main issue on summary judgment, this court rules Defendants did not breach the parties' contract, and accordingly rules that Plaintiffs are not entitled to the relief they seek. The case will be dismissed.

Following the approval of an endorsement of lis pendens, this court denied Defendants' Special Motion to Dismiss under G. L. c. 184, § 15(c), finding on the record then presented that Plaintiffs' claims were not frivolous under the stringent provisions for dismissal and other sanctions set forth in the statute. The parties made several attempts to settle the dispute, both with the assistance of an ADR neutral and on their own. Ultimately, they were unable to settle.

At that point, Defendants filed a Motion to Dismiss Pursuant to Mass. R. Civ. P. 12(b)(1) and (6) or, Alternatively, a Motion for Summary Judgment under Mass. R. Civ. P. 56, which the court converted to a motion for summary judgment at the hearing. [Note 1]

Standard of Review

Summary judgment may be entered if the "pleadings, depositions, answers to interrogatories, and responses to requests for admission . . . together with the affidavits . . . show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Mass. R. Civ. P. 56(c). The court views the facts "in the light most favorable to the non-moving party." G.S. Enterprises, Inc. v. Falmouth Marine, Inc., 410 Mass. 262 , 263 (1991). The undisputed material facts, based on the parties' statements of facts, verified pleadings, documents, and copies of e mails are as follows:

1. On April 19, 2017, Defendants, through a real estate broker, listed the Premises for sale for a price of $799,000.00. On April 23, 2017, Plaintiffs, through their broker, presented an Offer to Purchase the Premises for the price of $760,000.00, with the following relevant terms: the Property was to be delivered vacant of the tenants in both units and the closing was to take place on July 31, 2017 (Closing Date). Defendants accepted Plaintiffs' offer on April 24, 2017.

2. In accordance with the Offer, Plaintiffs and Defendants entered into a Purchase and Sale Agreement (Agreement), which set forth July 31, 2017, at noon, as the date on which delivery of the deed would take place and further, the parties agreed "time is of the essence[.]"

3. The agreement regarding Sellers' tenants was memorialized in Paragraph 9 of the Agreement as "[f]ull possession of said Premises free of all tenants and occupants is to be delivered at the time of the delivery of the deed. . . ."

4. Paragraph 10 of the Agreement provides "if the SELLER shall be unable to give good title . . . , or to deliver possession of the Premises, all as stipulated, or if at the time of delivery of the deed the Premises do not conform with the provisions hereof, the SELLER shall use reasonable efforts . . . to deliver possession as provided herein, or to make the said Premises conform to the provisions hereof, as the case may be, in which event . . . the Closing shall be extended. . . for a period of up to thirty (30) calendar days." It also provides the SELLER shall use "reasonable efforts" during this time to conform to the provisions of the Agreement, but specifies "Reasonable efforts shall not require SELLER to expend more than $2,000.00 pursuant to this Paragraph. . . ."

5. The Agreement also set forth the parties' rights in the event Defendants failed to remove any defects in title or deliver possession of the Premises as stipulated on the extended date set for Closing as "any payments made under this Agreement shall be forthwith refunded and all other obligations of the Parties hereto shall cease without recourse to either Party. Plaintiffs shall have the option to receive any payments made and the Agreement would be voided."

6. After the Agreement was executed, Sellers contacted their tenants and informed them they needed to vacate their units by the end of July. Sellers also hired a lawyer (in addition to the lawyer handling the Agreement for them) to advise them about what else they should do to insure the tenants would move by the closing date (Eviction Lawyer). On his advice, both sets of tenants were served with notices to quit on May 15, 2017. During the next several weeks, there were a series of notices and corrective notices to quit delivered to the tenants and discussions between Defendants' counsel and lawyers for the tenants, as well as communication between the parties' brokers. [Note 2] During this period of time, Plaintiffs came to understand that the Premises might not be vacant by the Closing Date.

7. On July 18, 2017 (two weeks before the Closing date under the Agreement), Buyers' attorney sent a written request to Sellers' lawyer for a sixty-day extension of the Closing Date "to allow time for the eviction process to proceed," enclosing a draft Extension to the 30th of September. On July 28, 2017, Sellers rejected the requested 60-day extension, and, referring to Paragraph 10 of the Agreement, stated the closing would be extended for thirty days to August 30, 2017 (Extended Closing Date), to enable Sellers to deliver the Property "free of all tenants."

8. In response to an inquiry from Buyers' counsel regarding the status of the Property, Sellers' counsel responded, on August 15th, that the tenants in Unit 1 had vacated, but the tenants in Unit 2 remained. Sellers' counsel further stated once the Unit 2 tenancy expired on September 1st, 2017, he would initiate eviction proceedings.

9. The closing did not take place on August 30, 2017. Neither side attempted to tender performance, nor requested a further extension.

10. On September 5, 2017, the lawyer handling Buyers' purchase requested a status update on the eviction process from Defendants' Eviction Lawyer, who responded that a court date in the eviction against the Unit 2 tenants was scheduled for September 28th.

11. On September 6, 2017, Sellers' attorney handling the sale notified Plaintiffs in writing of her clients' intent to cancel the Agreement, due to their inability to deliver the Property free of tenants as required. Buyers' attorney responded they would be willing to extend the closing for an additional sixty days, but Defendants did not agree to extend the closing.

12. On September 7, 2017, Sellers hired a broker who listed for rent the vacant Unit 1. Defendants cancelled this listing on September 18, 2017.

13. On September 27, 2017, Plaintiffs told Defendants they were willing to purchase the Property with the tenants still residing in Unit 2, so long as there was a sufficient holdback to cover costs to complete the eviction process.

14. Defendants did not accept Plaintiffs' offer.

I. Plaintiffs Are Not Entitled to Specific Performance

Plaintiffs fashion their claim against Defendants as one seeking specific performance of the Agreement. Specific performance, however, is an appropriate remedy for a breach of a purchase and sale agreement only if the buyer demonstrates that the seller materially breached the contract, and the buyer was "ready, willing, and able to perform" his or her obligations hereunder. Lafayette Place Assocs. v. Boston Redev. Auth., 427 Mass. 509 , 519 (1998); Coviello v. Richardson, 76 Mass. App. Ct. 603 , 610 (2010). The Agreement at issue contained a clause that the Property was to be delivered at closing free of tenants. On the Closing Date, the tenants had not yet vacated. In anticipation of that eventuality, Buyers had requested an extension of sixty days, but Sellers declined to extend for sixty days, invoking instead the thirty-day extension called for in Paragraph 10 of the Agreement. While Sellers had taken steps to begin eviction proceedings, the Premises were not vacant on the Extended Closing date either.

Under the Agreement, if Sellers were unable to deliver the Premises by the closing date or Extended Closing Date, Buyers were entitled to either purchase the Premises "as is" or take their deposit back and walk away from the deal. Plaintiffs did not want to take either of those routes and sought instead to engage in further negotiations with Defendants. No agreement was ever reached between the parties, though their representatives negotiated past the Closing Date and the Extended Closing Date. Accordingly, this court is left only with the terms of the Agreement as the contract Plaintiffs seek to specifically enforce. Through that lens, Plaintiffs are not entitled to specific performance, as they never pursued the relief to which they were entitled under the Agreement until well after the Extended Closing Date. It was not until then that Plaintiffs even offered to buy the Premises, with only one unit vacant, asking for a holdback for eviction of the second unit's tenants. That offer was not accepted by Defendants, who had determined the Agreement had lapsed by its own terms.

Even if there had been an implicit agreement that altered the original Agreement, Sellers did not breach any such agreement. "The general rule is that when performance under a contract is concurrent one party cannot put the other in default unless he is ready, able, and willing to perform and has manifested this by some offer of performance." Lafayette Place, 427 Mass. at 519, quoting Leigh v. Rule, 331 Mass. 664 , 668 (1954). "[A] buyer must manifest that he is ready, able, and willing to perform by setting a time and place for passing papers or making some other concrete offer of performance." Id. Here, Plaintiffs never made a concrete offer of performance while the Agreement was extant, nor did they ask for return of their deposit in accordance with their right under the Agreement. Accordingly, there was no breach by Defendants.

"[P]arties will be held to the deadlines they have imposed upon themselves when they agree in writing that time is to be of the essence." Owen v. Kessler, 56 Mass. App. Ct. 466 , 469 (2002); see also Lafayette Place, 427 Mass. at 527 (where neither party tendered performance, neither was in breach or default). Plaintiffs never presented a tender and did not represent themselves as being ready, willing and able to perform in accordance with the Agreement.

Plaintiffs never pursued their remedies under the Agreement. The written communications from Plaintiffs show that what they wanted was a different agreement, not an enforcement of the one they had actually signed.

Despite Sellers' efforts to convince their tenants to leave (and the legal steps Sellers took), one set of tenants did not cooperate and chose to remain. The Agreement called for Defendants to expend only $2,000 to deliver the Premises free of tenants. Defendants, while unsuccessful in their efforts to remove their tenants in a timely manner, complied with what was called for under the Agreement. Plaintiffs' actions here do not support a claim for specific performance unless they can establish that Defendants breached their contract by failing to perform their obligations. The Agreement provided remedies for the parties in the event of Defendants' inability to deliver good title or possession of the Premises as stipulated. Defendants' unwillingness to reach an accommodation after the Extended Closing Date when the Agreement was no longer extant in their view, does not retroactively create a breach. Accordingly, Plaintiffs are not entitled to specific performance of the Agreement, which was the only contract between the parties.

II. Plaintiffs' Claim for Breach of the Implied Covenant of Good Faith and Fair Dealing Will be Dismissed

Every contract in Massachusetts is subject to the implied covenant of good faith and fair dealing, which provides "neither party shall do anything that will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract." Anthony's Pier Four, Inc. v. HBC Assocs., 411 Mass. 451 , 471–472 (1991) (citations omitted). Importantly, however, the covenant of good faith and fair dealing may not . . . be invoked "to create rights and duties not otherwise provided for in the existing contractual relationship, as the purpose of the covenant is to guarantee that the parties remain faithful to the intended and agreed expectations of the parties in their performance." Uno Restaurants, Inc. v. Boston Kenmore Realty Corp., 441 Mass. 376 , 385 (2004). The covenant does not supply terms that the parties were free to negotiate, but did not. Id. at 388.

The Land Court's equity jurisdiction over cases involving right, title or interest in land includes "actions for specific performance of contracts." G. L. c. 185, § 1(k). In this case, because the court has concluded that Defendants did not breach the Agreement and Plaintiffs are not entitled to specific performance, there no longer is an issue involving right, title or interest in land in an action for specific performance of contracts. Plaintiffs' claim that Defendants breached the implied covenant of good faith and fair dealing no longer "implicate(s) any special expertise of the Land Court," Steele v. Kelley, 46 Mass. App. Ct. 712 , 725 (1999).

Plaintiffs' count for breach of the implied covenant of good faith and fair dealing, like the count brought under G. L. c. 93A, will be dismissed without prejudice.

Defendants' motion for summary judgment hereby is ALLOWED.

Judgment to enter accordingly.


[Note 1] Also at the hearing, the court informed the parties it would dismiss Plaintiffs' count brought under G. L. c. 93A, without prejudice, for lack of subject matter jurisdiction.

[Note 2] There is disagreement about the precise substance of some of those discussions, but those disagreements about exactly what happened are not material to the disposition of this motion.