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POAH-MPTTA Joint Venture, LLC, et al. v. New Mass Pike Towers Limited Partnership, et al. (Lawyers Weekly No. 09-027-17)

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COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
No. 16-03282-BLS1
POAH – MPTTA JOINT VENTURE, LLC & another1
vs.
NEW MASS PIKE TOWERS LIMITED PARTNERSHIP & others2
MEMORANDUM OF DECISION AND ORDER ON
DEFENDANTS’ MOTION TO DISMISS
PLAINTIFFS’ SECOND SUBSTITUTE COMPLAINT
Plaintiffs, POAH – MPTTA Joint Venture, LLC (Joint Venture) and Mass Pike Towers
Tenants Association, Inc. (MPTTA), filed this action for declaratory judgment against
defendants, New Mass Pike Towers Limited Partnership, Trinity Financial, Inc., and Trinity
Mass Pike Towers, Inc (referred to collectively as “Trinity”). Trinity moves to dismiss plaintiffs’
“Second Substitute Complaint” (Complaint) for lack of jurisdiction under Mass. R. Civ. P.
12(b)(1), failure to state a claim under Mass. R. Civ. P. 12(b)(6), and for failure to add
indispensable parties under Mass. R. Civ. P. 12(b)(7) and Mass. R. Civ. P. 19. Count I is brought
solely by the Joint Venture, and Count II is brought solely by MPTTA. In both counts, plaintiffs
seek declaratory judgment relating to the potential purchase and sale of Mass Pike Towers. For
the reasons stated below, Trinity’s motion to dismiss is allowed.
1 Mass Pike Towers Tenants Association, Inc.
2 Trinity Mass Pike Towers, Inc., as general partner of New Mass Pike Towers Limited
Partnership, and Trinity Financial, Inc.
BACKGROUND
The facts as revealed by the Complaint are as follows.
Mass Pike Towers is a two hundred unit subsidized housing complex in the Chinatown
section of Boston, Massachusetts. Plaintiff MPTTA is a 501(c)(3) charitable association of the
tenants of Mass Pike Towers. Plaintiff Joint Venture is a Massachusetts limited liability
company, consisting of MPTTA and Preservation of Affordable Housing, Inc. (POAH).3 In this
action, the Joint Venture seeks a declaration for specific enforcement of an option it allegedly
received from the City of Boston to purchase Mass Pike Towers. As an alternative ground for
relief, MPTTA asserts in Count II that there is an actual controversy between the parties as to
whether MPTTA should be allowed to exercise the option on its own behalf. Plaintiffs request
that the court issue a declaration of their rights.
In 1999, defendant, Trinity Financial, Inc., a local for-profit development company,
submitted proposals seeking approval and support from the City of Boston, the Boston
Redevelopment Authority, the Massachusetts Housing Finance Agency, the U.S. Department of
Housing and Urban Development, and the Massachusetts Department of Housing and
Community Development to purchase Mass Pike Towers. Trinity proposed to purchase Mass
Pike Towers for a below-market price of $ 6.1 million. The appraised value of the property was
$ 7.8 million. Trinity proposed to purchase Mass Pike Towers without contributing any cash
itself. Trinity also proposed to receive a developer’s fee of $ 3.4 million. Public resources were to
finance the entire purchase price and the cost of rehabilitating Mass Pike Towers. Trinity
3 Plaintiffs assert that, “POAH and MPTTA, designated by the city of Boston to
implement the city’s exercise of its option to purchase the property, have formed the plaintiff and
have assigned to it their rights to pursue exercise of the option to purchase.” Complaint, ¶ 4.
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proposed that MassHousing provide a $ 10.3 million low-interest loan financed through private
activity “volume cap” tax-exempt bonds. This tax-exempt financing was to include an allocation
of $ 4.5 million in Low Income Housing Tax Credits under the Internal Revenue Code, 26 U.S.C.
§ 42. The Low Income Housing Tax Credit provides a subsidy through the federal tax code to
private developers who develop affordable housing. Trinity’s proposal also required a $ 500,000
loan from the City of Boston and another $ 500,000 loan from state funds.
In an effort to win approval of its proposal, Trinity proposed to include South Cove
Nursing Facilities Foundation, Inc. (South Cove), a non-profit organization in Chinatown, in the
transaction. In its application to the City in April, 1999, Trinity noted that South Cove “has a
long and deep history in Chinatown . . . and will hold a Right of First Refusal for any future sale
of the property anticipated at the end of the 15 year tax compliance period . . . .” Complaint, ¶ 13.
South Cove issued a letter of support of Trinity’s proposal and indicated its intention to become
the eventual permanent owner of the property. POAH is the successor to South Cove in
connection with the plaintiffs’ attempt now to purchase Mass Pike Towers.
On March 29, 2000, the parties signed the Purchase Option and Right of Refusal
Agreement. Trinity agreed to a use restriction that gave MPTTA, the City, and South Cove an
option to purchase or a right of first refusal, “to be exercised seriatim if the superior entity failed
to exercise its right to an option.” Complaint, ¶ 17. The Purchase Option Agreement, which is
attached to the Complaint as Exhibit 1, provides that at the end of the initial fifteen year tax
credit compliance period, the option holders could exercise their options.4 Plaintiffs allege in
4 The Purchase Option Agreement provides in Section 2:
The Owner hereby grants an option (the “Option”) to purchase the real estate,
fixtures, and personal property comprising the Property or associated with the
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their Complaint that all parties agreed that, ultimately, the proposal would eventually result in a
non-profit entity purchasing Mass Pike Towers for the benefit of the City and its low-income
residents in Chinatown.
Section 3(b) of the Purchase Option Agreement provides that determination of the
purchase price upon exercise of the purchase option will be determined based on “One hundred
percent (100%) of the fair market value of the Property, appraised as low-income housing to the
extent continuation of such use is required under the Use Restrictions, taking into account all
relevant factors including without limitation the terms of this Agreement, any such appraisal to
be made by an independent appraiser.” To exercise the option, the party must give written notice
of its intent to the Owner and comply with the closing requirements of Section 8 of the Purchase
Option Agreement. The party exercising the option “shall specify a closing date within one
hundred twenty (120) days immediately following the date of exercise.” Purchase Option
Agreement, Section 4.
In addition, the parties entered into other agreements relating to use restriction issues.
More specifically, the owner of Mass Pike Towers is required to maintain, for seventy years, 190
units as affordable to households with incomes no higher than sixty percent of the area’s median
physical operation therefore, located at the Property and owned by Owner at the
time of purchase following the close of the compliance period (the “Compliance
Period”) as determined under Section 42(i)(1) of the Internal Revenue Code of
1986, as amended (the “Code”), first, to South Cove for a period of six (6)
months, then, if South Cove does not exercise the Option, then the Tenants
Association shall have the Option for a period of six (6) months, then, if the
Tenants Association does not exercise the Option within such period, then the
City shall have the Option for a period of six (6) months. The Option shall be on
the terms and conditions set forth in this Agreement and shall be subject to the
conditions precedent specified herein.
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income. The agreement also “required the owner to renew the existing Section 8 Project-Based
subsidy contract for 40 units throughout the 70-year restriction, for so long as renewals or
extensions were available, and required the owner throughout the 70 year period to retain the
entire premises as ‘affordable rental housing for occupancy by low income and homeless
households.’” Complaint, ¶ 20.
Trinity and MPTTA also entered into a Memorandum of Understanding (MOU) dated
March 23, 2000. The MOU provided that MPTTA will have minority representation in a new
ownership entity created to purchase Mass Pike Towers pursuant to the Right of Refusal
Agreement. The MOU acknowledged that MPTTA has a significant interest in the future
ownership, maintenance, and operation of Mass Pike Towers and its continued availability as
affordable housing. The MOU further provided that: “The parties will work toward an agreement
on defining a long term meaningful role for MPTTA in decision making on all decisions related
to the ownership, management and operation . . . of the Mass Pike Towers . . . .” Trinity also
agreed to give MPTTA support, guidance, and significant participation in management
operations in preparing MPTTA to acquire and operate Mass Pike Towers in the future.
The fifteen year compliance period expired at the end of 2014. The precise date is not
pleaded in the Complaint, but MPTTA concedes that in March, 2016, it learned that its
opportunity to exercise the option had passed. The option, by its terms, passed to the City. The
City gave timely notice that it intended to exercise the option. The City then, in September 2016,
designated MPTTA and POAH to exercise its option. The City’s letter to Trinity states that the
designated non-profit organization for the City’s option “shall close on the transaction by
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October 27, 2016, 120 days from the date of this notice as specified by the Agreement.”5
In preparation for the exercise of its option, the City had commissioned the preparation of
an appraisal to determine the appropriate purchase price of the property. The appraisal, dated
June 27, 2016, “concluded that the purchase price pursuant to the Option Agreement should be
$ 61 million.” Scibelli Aff. Ex. 5.
On September 13, 2016, plaintiffs, “having been designated by Boston to exercise its
option to purchase the property, offered Defendants $ 42 million to purchase Mass Pike Towers,
more than six times what Trinity paid for the property with government subsidies.” Complaint, ¶
27. There is no allegation in the Complaint that the offer by plaintiffs was pursuant to an
independent appraisal. Trinity responded that the offer was “unacceptable.”
Instead of tendering an independent appraisal, the Joint Venture argues that the appraisal
commissioned by the City, the entity whose option the Joint Venture was attempting to exercise,
was flawed. The Joint Venture alleges that the appraisal ignored the use restrictions on the
property and included in its calculations income from commercial activities on the property,
along with sources of income that the parties did not anticipate and could not have anticipated in
2000. The Joint Venture cites a “Section 8 PBV project-based voucher subsidy program of the
Cambridge Housing Authority” as one example of an income stream from an unanticipated
source that has a significant effect on the appraisal value of Mass Pike Towers because the
5 The letter is attached as Exhibit 3 to the Affidavit of Anthony A. Scibelli, submitted by
defendants. The court may consider materials not appended to the complaint, but referenced or
relied upon in the complaint. See Harhen v. Brown, 431 Mass. 838, 839-840 (2000), citing Shaw
v. Digital Equip. Corp., 82 F.3d 1194, 1220 (1st Cir. 1996); Marram v. Kobrick Offshore Fund,
Ltd., 442 Mass. 43, 45 n.4 (2004). This letter, and the other documents attached as Exhibits 1
through 5 to the Scibelli Affidavit, are referenced in the Complaint. Plaintiffs did not object to
consideration of these exhibits.
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enhanced vouchers could be used as collateral for loans. Complaint, ¶¶ 25 & 26. Moreover, the
Joint Venture asserts that, “Trinity based its assertion of value of the property on an appraisal that
was, as a matter of law, invalid, because the appraiser explicitly disregarded, as irrelevant, the
terms and restrictions of the Option to Purchase that required that the ‘Property’ be valued at fair
market value of low income housing.” Complaint, ¶ 29.
Count I is brought solely by the Joint Venture. In Count I, the Joint Venture requests a
declaratory judgment and injunctive relief as follows:
(a) Plaintiff, POAH-MPTTA Joint Venture, LLC, by virtue of the designation of
POAH and MPTTA by the City of Boston to exercise the Option to Purchase, and
assignment of such rights by POAH and MPTTA to the Plaintiff, has the authority
and standing to bring this action.
(b) The plaintiff, POAH-MPTTA Joint Venture, LLC, has the right to exercise, as
the designee of the City of Boston, the option to purchase.
(c) The parties shall engage an independent appraiser or, if they do not agree on an
appraiser, each shall engage an independent appraiser to appraise the property
using the standards of paragraph 3 (b) of the Purchase Option Agreement.
(d) The appraiser shall appraise the entire property as low income housing, subject
to all use restrictions that existed at the time the purchase option agreement was
executed, and without regard to later-created government programs, such as the
PBV subsidy program.
(e) The appraisals shall be made without including any income stream from
subsidies for Section 8 vouchers, including Project-based vouchers, vacant land
on the property, or the income stream from any retail establishments in the
building of the property, or income from units which are rented out at market
rates.
(f) The appropriate purchase option price shall be determined by the Court based
upon the appraisal(s) and argument of counsel, and Defendant shall be enjoined
from failing to convey Mass Pike Towers to Plaintiff POAH-MPTTA Joint
Venture, LLC, pursuant to the Purchase Option Agreement.
(g) A preliminary injunction requiring the defendants to refrain from taking any
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action that might impair full and fair relief for the plaintiff during the pendency of
this proceeding including but not limited to conveying, transferring, otherwise
impairing any interest in the property or encumbering the property with any
mortgage or lien or taking any action that might result in the foreclosure of an
existing mortgage or any action that might burden a conveyance of Mass Pike
Towers to plaintiff.
. . . .
Complaint at 7-8.
Count II is brought solely by MPTTA. MPTTA notes that the MOU states that:
Trinity shall involve the Tenants, through MPTTA, in any and all decisions
regarding the sale or transfer of the Mass Pike Towers to new or different owners,
or any decisions that will substantially change the subsidies, financing or the use
of the Mass Pike Towers. Trinity shall make good faith efforts to inform the
MPTTA in writing of any such proposals or plans, and to timely and fully disclose
information necessary to enable MPTTA to participate in any discussions
regarding such proposals.
Complaint, ¶ 30.
MPTTA alleges that Trinity failed to notify MPTTA of the date the fifteen year tax credit
compliance period began, or file documents that would have placed this information in the public
record, “which was essential to determining the beginning and end of MPTTA’s six month
period to exercise its option to purchase Mass Pike Towers under the Purchase Option
Agreement.” Complaint, ¶ 31. On March 10, 2016, through a letter to defendants’ counsel,
MPTTA attempted to obtain information to exercise its option to purchase, only to learn that the
option period had already expired. MPTTA asserts that Trinity breached the MOU through those
actions.
MPTTA states that its “failure to exercise its option to purchase by December 31, 2015,
was an honest mistake directly resulting from Trinity’s failure to provide to MPTTA necessary
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information to determine MPTTA’s proper option period . . . .” Complaint, ¶ 34. MPTTA seeks
to exercise late its option to purchase and argues that it would not prejudice or impose any
material harm to Trinity and further the public interest in preserving Mass Pike Towers as
affordable housing under the ownership of a local, Chinatown non-profit. Accordingly, MPTTA
seeks, “an order permitting MPTTA to exercise its purchase option under the Purchase Option
Agreement . . . .” Complaint at 9.
ANALYSIS
Count I
Standing
Trinity moves to dismiss the Complaint based on three grounds. First, as to Count I,
Trinity argues that the Joint Venture lacks standing to assert a claim under this count because the
City merely chose MPTTA and POAH as “designees” relating to the option to purchase Mass
Pike Towers. Trinity contends that while MPTTA and POAH were “designated” to receive an
assignment from the City of its option to purchase Mass Pike Towers, there are no allegations in
the Complaint to suggest that the option to purchase was actually assigned to MPTTA and
POAH.6 The City’s letter, dated September 9, 2016, to MPTTA and POAH, notes that it, “has
selected your team as the designee for the Assignment of the City’s Option to purchase The Mass
Pike Towers, as outlined in the RFP issued June 8, 2016.”7 The letter further notes that under the
Purchase Option Agreement, the transaction must be completed by October 27, 2016, unless all
6 It appears to be uncontested that the City never executed a formal assignment of its
option rights.
7 Scibelli Aff., Exhibit 4.
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parties agree to an extension.
“A defendant may properly challenge a plaintiff’s standing to raise a claim by bringing a
motion to dismiss under Mass. R. Civ. P. 12 (b)(1) or (6).” Ginther v. Commissioner of Ins., 427
Mass. 319, 322 (1998). In considering dismissal under Mass. R. Civ. P. 12 (b)(1) or (6), this
Court accepts the factual allegations in the plaintiffs’ Complaint, as well as any favorable
inferences reasonably drawn from them, as true. Id. Moreover, “[a]s a component of subject
matter jurisdiction, a party may challenge, or a judge may consider, sua sponte, standing under
rule 12 (b)(1) at any time.” Abate v. Fremont Inv. & Loan, 470 Mass. 821, 828 (2015).
Count I should not be dismissed based on lack of standing. Under the RFP, MPTTA and
POAH, which combined to form the Joint Venture, were unquestionably designated by the City
to pursue the potential purchase of Mass Pike Towers by the exercise of the City’s option.
Essentially, MPTTA and POAH were intended beneficiaries of the City’s right to exercise the
option to purchase Mass Pike Towers. See Miller v. Mooney, 431 Mass. 57, 61-62 (2000)
(recognizing that enforcement of contract rights in Massachusetts is limited to those who qualify
as intended beneficiaries). It is reasonable to infer that the City would have completed the formal
assignment of its option to MPTTA and POAH, as a joint venture, when the transaction
proceeded to closing. If the Joint Venture had complied with the applicable terms timely to
effectuate the City’s offer, the formal assignment of the City’s rights to the Joint Venture may be
logically assumed. Cf. Modern Continental Constr. Co. v. Lowell, 391 Mass. 829, 835-836
(1984) (concluding that company that unsuccessfully bid on public building contract for sewage
infrastructure had standing to challenge compliance with bidding procedures and noting that
“challenging party need show only that it possessed the potential to obtain the award”). Thus, I
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conclude that the Joint Venture has a direct interest in the outcome of the instant dispute, and
standing to pursue Count I. See Sullivan v. Chief Justice for Admin. & Mgt. of the Trial Court,
448 Mass. 15, 21 (2006) (recognizing that to have standing in any capacity, litigant must show
that challenged action has caused litigant injury and complained-of injury must be a direct and
ascertainable consequence of challenged action).
Failure to State a Claim
Next, Trinity moves to dismiss Count I based on failure to state a claim upon which relief
can be granted under Mass. R. Civ. P. 12(b)(6). To survive a motion to dismiss, the plaintiff’s
“[f]actual allegations must be enough to raise a right to relief above the speculative level . . .
[based] on the assumption that all the allegations in the complaint are true (even if doubtful in
fact) . . . .” Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008), citing Bell Atl. Corp. v.
Twombly, 127 S. Ct. 1955, 1964-1965 (2007). In other words, “[w]hile a complaint attacked by a
. . . motion to dismiss does not need detailed factual allegations . . . a plaintiff’s obligation to
provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions . .
. .” Iannacchino, 451 Mass. at 636, quoting Bell Atl. Corp., 127 S. Ct. at 1966. Dismissal under
Mass. R. Civ. P. 12(b)(6) is proper where a reading of the complaint establishes beyond doubt
that the facts alleged do not support a cause of action which the law recognizes, such that the
plaintiff’s claim is legally insufficient. Nguyen v. William Joiner Center for the Study of War
and Social Consequences, 450 Mass. 291, 295 (2007).
Trinity argues that even if the Joint Venture is entitled to pursue the City’s rights to the
option, the Joint Venture never exercised the City’s option to purchase in a timely manner and in
strict accordance with the terms of the Purchase Option Agreement. Thus, Trinity contends that
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Count I fails to state a claim upon which relief can be granted.
Section 3(b) of the Purchase Option Agreement provides that determination of the
purchase price upon exercise of the purchase option will be determined based on “(100%) of the
fair market value of the Property, appraised as low income housing to the extent continuation of
such use is required under the Use Restrictions, taking into account all relevant factors including
without limitation the terms of this Agreement, any such appraisal to be made by an independent
appraiser.” The City commissioned an independent appraisal that valued the property at $ 61
million. The Joint Venture does not allege in its Complaint that it was ready to close the
transaction by the required date based on the appraisal offered by the City (the holder of the
option). Moreover, the Joint Venture fails to allege in the Complaint that its offer of $ 42 million
for Mass Pike Towers was based on an appraisal made by an independent appraiser. See
Complaint, ¶ 27. Instead, the Complaint merely alleges what the Joint Venture believes are
errors or miscalculations in the $ 61 million appraisal relied upon by Trinity. See Complaint, ¶
28. In short, the Joint Venture never made an offer to purchase at a price based upon an
independent appraisal.
Section 4 of the Purchase Option Agreement addresses the exercise of the option and
states:
The Option may be exercised by the holder of the Option by (a) giving prior
written notice of its intent to exercise the Option (the “Option Notice”) to the
Owner and each person listed in Section 11 and in compliance with the
requirements of this Section 4, and (b) complying with the contract and closing
requirements of Section 8 hereof. The notice of intent shall specify a closing date
within one hundred twenty (120) days immediately following the date of exercise.
Such party shall deliver copies of the Option Notice to any subsequent holders of
the Option at the same time it is delivered to the Owner.
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The Joint Venture does not allege that it scheduled a closing for the sale of the property by
October 27, 2016, the deadline for the City’s designation and 120 days after the City first gave
the Option Notice to Trinity. The Joint Venture does not allege that it tendered performance on
the option to purchase. Accordingly, the Joint Venture failed to comply with the terms of the
Purchase Option Agreement. The attempted exercise of the City’s option by the Joint Venture
fails as a matter of law. Cadillac Auto. Co. of Boston v. Stout, 20 Mass. App. Ct. 906, 906-907
(1985) (recognizing that “manner in which an option may be exercised is to be determined by the
language of the option provision” and noting that one “who stumbles in exercising an option is
generally not entitled to equitable relief”) (citations omitted). See also, Lafayette Place Assocs. v.
Boston Redevelopment Auth., 427 Mass.509, 519-520 (1998), cert. denied, 525 U.S. 1177 (1999)
(“Any material failure by a plaintiff to put a defendant in breach bars recovery . . . unless the
plaintiff is excused from tender because the other party has shown that he cannot or will not
perform . . . Even if a potential buyer notifies the seller of the buyer’s intention to tender on a
certain date and appears at the registry of deeds on that date with the required consideration, there
may not be the ‘readiness to perform’ that is a necessary condition of placing the defendant in
breach.”).
Count II
Trinity moves to dismiss Count II under Mass. R. Civ. P. 12(b)(6) for failure to state a
claim upon which relief can be granted. In Count II, MPTTA alleges that Trinity failed to advise
it as to when the fifteen year tax compliance period began to run, and when the period ended.
MPTTA points only to the MOU between MPTTA and Trinity dated March 23, 2000 in support
of its claim that Trinity was obligated to provide MPTTA with notice of the option deadlines.
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While the MOU acknowledged that MPTTA has a significant interest in the future ownership,
maintenance, and operation of Mass Pike Towers and its continued availability as affordable
housing, nothing in the MOU required defendants to notify MPTTA about any deadlines related
to the Purchase Option Agreement. Under the Purchase Option Agreement, the option to
purchase was triggered by the close of the compliance period as determined under Section
42(i)(1) of the Internal Revenue Code of 1986. Section 42(i)(1) states that the “compliance
period” means, “the period of 15 taxable years beginning with the 1st taxable year of the credit
period with respect thereto.” 26 U.S.C. § 42(i)(1). Trinity purchased Mass Pike Towers in 2000,
and under the language of Section 42(i)(1), MPTTA should have known that the compliance
period began in 2000 and ended on December 31, 2014. Nothing prevented MPTTA from
independently seeking the advice of legal counsel or other advisors in preparing for a potential
timely offer to purchase Mass Pike Towers. MPTTA cannot be granted declaratory or injunctive
relief based on its alleged “honest mistake” related to its failure to act in a timely fashion with
respect to the unambiguous terms of the Purchase Option Agreement. Accordingly, Count II fails
to state a claim upon which relief can be granted and is dismissed.
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CONCLUSION
Defendants’ Motion to Dismiss Plaintiffs’ Second Substitute Complaint is ALLOWED.
By the Court,
______________________________
Edward P. Leibensperger
Justice of the Superior Court
Dated: October 30, 2017
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Everest National Insurance Company v. Berkeley Place Restaurant Limited Partnership (Lawyers Weekly No. 12-155-16)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
No. 2011-1470
EVEREST NATIONAL INSURANCE COMPANY
vs.
BERKELEY PLACE RESTAURANT LIMITED PARTNERSHIP
ORDER ON POST-VERDICT ISSUES AND FOR JUDGMENT
This action was commenced by Everest National Insurance Company as subrogee of three
persons: Timothy J. Barletta (“Timothy”), Barletta Engineering Corporation (“Barletta Corp.”)
and Osprey Equipment Corporation (“Osprey”). The action is one for contribution under G.L. c.
231B, § 1(d ). Everest, as insurer for all three persons, paid a settlement amount to a state trooper
who was seriously injured in a car accident when he was struck from behind by a car driven by
Timothy. Everest asserted in this case that defendant, Berkeley Place Restaurant Limited
Partnership, d/b/a Grill 23 (“Grill 23″), is jointly liable to the state trooper as a result of
negligently serving Timothy alcohol in the hours before the accident. Following a jury verdict in
favor of Everest that determined that Grill 23 is liable as a joint tortfeasor and that the settlement
reached by Everest with the state trooper and his wife was reasonable, the parties address two
issues: (1) how many tortfeasors bear responsibility for a pro rata share of the settlement, and (2)
what amount is Everest entitled to receive as contribution from Grill 23? Both questions involve
application of the contribution statute. For the first question, the court must determine whether
“if equity requires, the collective liability of some as a group shall constitute a single share.” G.L.
1
c. 231B, § 2(b). The second question is whether, under G.L. c. 231B, §1, Everest may obtain
contribution for more than a pro rata share of what it paid in settlement?
FACTS
On Saturday night, September 27, 2008, Timothy attended a private birthday party at the
Grill 23 restaurant in Boston. The person being celebrated was Timothy’s sister-in-law, Laura
Barletta, and the person throwing the party was her husband, Timothy’s brother, Vincent
Barletta. Approximately 40 people attended the party and the guests were, generally, friends and
family of Laura Barletta. The party was held in a function room, separate from the rest of the
restaurant.
There was evidence before the jury sufficient to show that at the party Timothy was
served alcohol after it had been recognized by the Grill 23 manager on duty that Timothy was
visibly intoxicated. Timothy left the party with his girlfriend, got into a motor vehicle, and drove
west on the Mass Pike. Several minutes later, Timothy, while operating under the influence of
alcohol, smashed into the rear of a state police vehicle parked on the edge of the Pike to assist a
stopped car. State Trooper Christopher Martin was inside the state police vehicle. As a result of
the collision, Trooper Martin suffered serious personal injuries. Subsequently, Timothy pleaded
guilty to the criminal charge of operating under the influence of alcohol.
On September 18, 2009, Trooper Martin and his wife commenced a lawsuit against
Timothy, Barletta Corp. and Osprey. The lawsuit alleged the negligence of Timothy as the driver.
The lawsuit also alleged that the vehicle Timothy was driving at the time of the accident was
“owned, controlled and maintained by” Barletta Corp. “and/or” Osprey. Therefore, “as owner(s)
of the vehicle, [the companies] were responsible for the negligent operation, ownership, control
2
and maintenance of the motor vehicle.” Complaint, ¶s 12 and 15.1
On May 3, 2010, the lawsuit commenced by Trooper Martin and his wife was settled. In
connection with the settlement, a Settlement Agreement and Release (the “Release”) was
executed. Exhibit 3. Pursuant to the Release, Everest and Travelers Insurance Company, as
liability insurers of all three of Timothy, Barletta Corp. and Osprey, agreed to pay a total of
$ 3,750,000, present value, to the Martins as part of a structured settlement to be paid over twenty
years. In return, the Martins released Timothy, Barletta Corp. and Osprey from any and all claims
arising out of the accident.2
The evidence at the trial of this case established that at the time of the accident, Timothy
was employed by Barletta Corp. Barletta Corp. was a family business. The president of Barletta
Corp. was Vincent Barletta.
Osprey was a wholly-owned subsidiary of Barletta Corp. Osprey owned the vehicles and
equipment used by Barletta Corp. Certain employees of Barletta Corp., including Timothy, were
provided with cars owned by Osprey. Pursuant to company policy, employees provided with
company cars were allowed to utilize the cars for personal use as well as for company business.
There was no restriction on the use of a company car. Vincent Barletta had no direct involvement
1 The Complaint also alleged that “[u]pon information and belief, at all relevant times
hereto, Timothy Barletta was acting in furtherance of his companies’ business.” Complaint ¶ 7.
Neither party in this lawsuit asserts that Timothy was acting in furtherance of the companies’
business on the night of the accident. The Complaint was not marked as an exhibit to be
submitted to the jury. Instead, the Complaint has been provided to the court by Grill 23, without
objection, for the purpose of its argument regarding how the court should exercise its equitable
discretion under G.L. c. 231B, § 2(b).
2 The Release also released any and all claims against Grill 23 arising from the accident,
and all claims against the insurers under G.L. c. 93A.
3
in supervising the use of company cars. On the night of the accident, Timothy was driving a car
owned by Osprey and provided to him by his employer.
Vincent Barletta testified that, at the birthday party, he had very little contact with
Timothy. He did not see Timothy show any signs of intoxication. To the extent he did observe
Timothy, nothing in his behavior stood out. The testimony from several witnesses confirmed that
Timothy was seated at a table for six to eight people, away from the head table where Vincent
Barletta was seated with his wife. Vincent Barletta had no memory of observing Timothy
consume alcohol. I find Vincent Barletta’s testimony to be credible.
Before the settlement, counsel for Trooper Martin wrote two demand letters to the
insurers. In the first letter (Exhibit 28), counsel stated that “I understand from our conversations
that liability in this matter is admitted (at least for purposes of mediation).” The letter focused
upon the damages suffered by Trooper Martin and requested $ 7,500,000 to settle. The second
letter (Exhibit 29), stated more specifically that “[t]he evidence of clear liability against
[Timothy] Barletta is undisputed.” The rest of the letter focused on damages and the additional
claim that the insurers were acting in violation of G.L. c. 93A and c. 176D by not yet agreeing to
settle. A demand for settlement of $ 11,000,000 was asserted. Neither letter asserted a theory of
liability against Barletta Corp. or Osprey, other than that Timothy was allegedly a “principal” of
those companies.
At trial, Everest called as a witness Robert A. DeLello. Mr. DeLello was counsel on the
Complaint filed for the Martins to commence the lawsuit against Timothy, Barletta Corp. and
Osprey. He continued as counsel to the Martins in connection with the negotiation of the
settlement. As a result of the determination that the question of pro rata shares of tortfeasors is an
4
issue to be decided based upon principles of equity (see G.L. c. 231B, § 2(b)), Mr. DeLello gave
the following testimony to the court, outside of the hearing of the jury.
Mr. DeLello testified that the theory of the Martins’ case against Barletta Corp. and
Osprey was to hold the companies liable under G.L. c. 231, § 85A; that is, as the owner of the
vehicle Timothy was driving on the night of the accident. Mr. DeLello testified that the police
report listed both companies as the owner of the vehicle. While he acknowledged that if the
litigation had not settled he would have taken discovery regarding possible other theories of
liability of the companies such as negligent entrustment or negligent maintenance, his intent was
to hold the companies vicariously liable as the owner(s) of the vehicle. In fact, the Martins’ case
settled before any discovery was taken.
ANALYSIS
Pro Rata Shares
General Laws c. 231B, § 2 provides as follows:
In determining the pro rata shares of tortfeasors in the entire liability (a)
their relative degrees of fault shall not be considered; (b) if equity
requires, the collective liability of some as a group shall constitute a
single share; and ( c) principles of equity applicable to contribution
generally shall apply.
Accordingly, I must decide, using principles of equity, whether Timothy, Barletta Corp. and
Osprey constitute three tortfeasors and, if they do, whether they should be grouped into a single
share. The consequences of that determination are significant to the parties. If Timothy, Barletta
Corp. and Osprey constitute a single share then the pro rata apportionment is 50% for Everest’s
insureds and 50% for Grill 23. Grill 23 argues that Everest’s share is on behalf of three
tortfeasors so that Grill 23’s liability for contribution is 25% (as one tortfeasor among four).
5
The parties take disparate positions with respect to which party bears the burden of proof
on this issue. While it is clear that Everest bears the burden to prove that Grill 23 was a
tortfeasor, and that the settlement Everest reached with the Martins was reasonable, the parties
cite no authority with respect to which party has the burden to prove how the court should
exercise its equitable authority under § 2(b). Grill 23 says that Everest must prove a negative; i.e.,
that Barletta Corp. and Osprey were not directly liable for their own active negligence. Logic
suggests, on the other hand, that if Grill 23 wishes the court to find that the corporations are
liable as direct tortfeasors (and not merely liable vicariously as the owner(s) of the vehicle), then
Grill 23 should prove their liability. For purposes of my conclusion based on the evidence in this
case, I assume that Everest bears the burden of proof..
The first question is whether there was sufficient evidence to conclude that Barletta Corp.
and Osprey were tortfeasors. As described above, Mr. DeLello testified that the theory of the
action he commenced on behalf of the Martins against the two corporations was that the
corporations were vicariously liable under G.L. c. 231, § 85A. Under that statute, an evidentiary
presumption is imposed to make the owner of a vehicle liable. “[E]vidence of a [owner’s] ownership of a motor vehicle shifts the burden of persuasion to the [owner] to show that the
driver was not a person for whose conduct the [owner] was legally responsible.” Thompson v.
Auto Credit Rehabilitation Corp., 56 Mass. App. Ct. 1, 5 (2002). The statute “is a rule of
evidence that makes no change in the substantive law of negligence.” Id. The substantive law is
that the driver’s actions may be imputed to the owner if, at the time of the accident, the owner
had the authority and means to control the driver’s conduct. Id. “Like the responsibility of a
principal for the negligence of his agent, or a master for that of his servant, the liability of the
6
registered owner is not joint and several, but derivative.” Gangl v. Ford Motor Credit Co., 37
Mass. App. Ct. 561, 563 (1994). In sum, absent evidence in rebuttal, § 85A makes an owner
vicariously liable for the conduct of the driver. As a practical matter, the statute provides a good
faith basis for a plaintiff to sue the owner of a vehicle involved in an accident caused by the
driver of the vehicle.
Consequently, Grill 23’s argument that the existence of the Martin’s Complaint against
Barletta Corp. and Osprey demonstrates that the corporations were tortfeasors is rejected. The
fact that the corporations were sued was, according to Mr. DeLello, based on vicarious liability.
A party held vicariously liable is not a party who is “jointly liable in tort” as required by G.L. c.
231B, § 1 to be classified as a tortfeasor. Lastly, Mr. DeLello’s testimony that he would have,
absent settlement, pursued discovery to determine if there was a basis to hold the corporations
directly liable as tortfeasors proves nothing.3 He did not conduct discovery and he offered no
evidence to support a claim that the corporations were directly liable.
At the trial of this action there was no evidence, offered by either side, to support a
conclusion that Barletta Corp. or Osprey were directly negligent for their own conduct. Grill 23
argues that Vincent Barletta, as president of Barletta Corp., the parent company of Osprey,
should have stopped Timothy from operating a company vehicle that evening. I am not
persuaded. As described above, there was insufficient evidence to suggest negligence by Vincent
Barletta, and therefore insufficient evidence to find that Barletta Corp. and/or Osprey were
3 Similarly, the fact that the corporations were included as released parties in the
settlement Release does not help Grill 23. Having been named as defendants in the Martin
lawsuit, a lawyer would be guilty of malpractice if he or she did not name the defendants as
parties to be released.
7
tortfeasors.
Under § 2(b), the court may apply equitable principles to “group” tortfeasors into a single
share. I could find little authoritative guidance regarding the exercise of that equitable authority.
The authority apparently applies to the situation where an alleged tortfeasor is only vicariously
liable. See Comment to § 2, Uniform Contribution Among Tortfeasors Act (1955 Revised
Act)(“[I]t invokes the rule of equity which requires class liability, including the common liability
arising from vicarious relationships, to be treated as a single share”). Of course, if a company is
held liable based solely on vicarious liability, the company is not a tortfeasor at all and cannot be
held liable for contribution. Elias v. Unisys Corporation, 410 Mass. 479, 481 (1991)(vicarious
liability arises only by operation of law; it is derivative of the wrongful act of the agent; employer
is not, therefore, a joint tortfeasor under c. 231B). Nevertheless, the Comment makes clear that
vicariously liable parties should be grouped with the actual tortfeasor as a single share.4
In this case, I find that the evidence compels the conclusion that Barletta Corp. and
Osprey were not negligent actors. As a result, as a matter of equity, I group Timothy Barletta,
Barletta Corp. and Osprey as representing a single share of the entire liability for the accident
based upon the negligence of Timothy.
Everest’s Right to Contribution
In order to obtain contribution, the settling tortfeasor must have “agreed while action is
pending against him to discharge the common liability and has within one year after the
4 The Comment also suggests that it is appropriate to “group” tortfeasors into a single
share where, for example, there is allocation of liability between several actors (such as owners
of a building), on the one hand, and a tortfeasor having no connection with the actors, on the
other hand.
8
agreement paid the liability and commenced his action for contribution.” G.L. c. 231B, § 3(d)(2).
The Release (Exhibit 3) indicates that the “Insurers” agreed to pay the Martins in a
structured settlement over twenty years amounts having a present value of $ 3,750,000. “Insurers”
is defined as both Everest and Travelers Insurance Company.
Grill 23 does not challenge the calculation of the present value of what the Insurers
agreed to pay. The agreement to pay the amounts with a present value of $ 3,750,000 triggers the
Insurers right to contribution. LeBlanc v. Logan Hilton Joint Venture, 78 Mass. App. Ct. 699,
711 (2011)(“To preserve a right to contribution against codefendants, that provision [§ 3(d)] requires a settling party either to make payment discharging the common liability of all
defendants, or to agree to make such a payment, and then to pursue the claim for contribution
within a year after the payment”). It was the agreement to pay amounts with a present value of
$ 3,750,000 to the Martins that was put in evidence before the jury, by agreement, for the jury to
determine whether the settlement was “reasonable” under G.L. c. 231B, § 1(c).
Grill 23 does challenge, however, whether Everest may obtain contribution for the
portion of the $ 3,750,000 that was paid by Travelers, not Everest. According to Everest, its
portion of the present value payment, as the excess carrier for the liability of Timothy, Barletta
Corp. and Osprey, was $ 2,787,000. Travelers’ portion was $ 963,000. Grill 23 agrees with that
description of the Insurers respective shares. Bench Memorandum Regarding Legal Framework,
submitted by Grill 23, p.2 (September 13, 2016).
It is readily apparent that Travelers is not a party to this action. Everest presented no
evidence to support an argument that it is an assignee or otherwise the holder of Travelers’ right
of contribution. Indeed, at this late date, Travelers has waived any claim for contribution.
9
The statute, G.L. c. 231B, §1(d), could not be more clear that the right of contribution
runs “to the extent of the amount it has paid in excess of the tortfeasor’s pro rata share of the
common liability.” (Emphasis added). The “it” in that phrase refers to the insurer seeking
contribution. Here, Everest is the only insurer with a claim. Everest paid $ 2,787,000, 50% of
which is in excess because it proved that Grill 23 was jointly liable and that the amount paid in
settlement was reasonable. As a result, Grill 23 is liable to Everest for 50% of $ 2,787,000, or
$ 1,393,500.
CONCLUSION
Based on the verdict returned by the jury, and my findings described herein regarding pro
rata share and the amount recoverable by Everest, judgment shall enter in favor of Everest
against Grill 23 in the amount of $ 1,393,500, plus prejudgment interest.
By the Court,
Edward P. Leibensperger
Justice of the Superior Court
Date: November 7, 2016
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Posted by Massachusetts Legal Resources - December 6, 2016 at 12:36 am

Categories: News   Tags: , , , , , , , , , , ,

MBTA Will Have Limited Subway and Bus Service Sunday

MBTA will be closed through Sunday.

 

Looking to take Silver Line service out of the South End on Sunday? Well, you may want to keep shoveling out that car (or call a cab).

As crews continue to dig out from the blizzard, MBTA service will remain suspended Sunday.

Starting at 2 p.m., limited subway and bus service will run on the Red, Orange and Blue lines between Orient Heights and Government Center, and the Green Line between Kenmore and Lechmere, according to MBTA.com/weather.

Limited bus service will also operate on the 1, 23, 28, 39, and Silver Line Washington Street only.

Customers are encouraged to stay home and “use service sparingly,” if possible, the website said.

Commuter rail routes will remain suspended through Sunday.

The MBTA weather update says regularly scheduled MBTA service will resume Monday morning.

“Customers should expect significant delays and plan extra time for their Monday morning commute as MBTA service recovers from the impacts of the storm. Due to significant snow accumulations, customers are encouraged to use caution at station platforms and bus stops,” the site says. read more

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Posted by Massachusetts Legal Resources - February 10, 2013 at 7:35 pm

Categories: Arrests   Tags: , , , ,