Wildlands Trust of Southeastern Massachusetts, Inc., et al. v. Cedar Hill Retreat Center, Inc., et al. (Lawyers Weekly No. 12-174-16)
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
WILDLANDS TRUST OF SOUTHEASTERN MASSACHUSETTS, INC. &
JOHN AND CYNTHIA REED FOUNDATION,
CEDAR HILL RETREAT CENTER, INC. &
BALLOU CHANNING DISTRICT UNITARIAN UNIVERSALIST ASSOCIATION, INC.,
MEMORANDUM OF DECISION AND ORDER
ON DEFENDANTS’ MOTIONS TO DISMISS
This is an action seeking to enforce a Conservation Restriction imposed on real property located in Duxbury, Massachusetts (the Premises). Plaintiffs are the Wildlands Trust of Southeastern Massachusetts, Inc. (Wildlands Trust) and the John and Cynthia Reed Foundation (the Foundation). Plaintiffs allege that the current owner of the land, defendant Cedar Hill Retreat Center, Inc. (Cedar Hill), is engaging in commercial activities in violation of the Conservation Restriction. Also named as a defendant is the Ballou Channing District Unitarian Universalist Association, Inc. (Ballou Channing), the original owner of the land and the Grantor of the Conservation Restriction. Plaintiffs allege that the Foundation made a $ 3 million gift to Ballou Channing in exchange for Ballou Channing’s agreement to create the Conservation Restriction and to use the Foundation’s donation to preserve the Premises in conformity with that restriction (the “Gift Agreement”).
The case is now before this Court on the defendants’ motions to dismiss pursuant to Mass. R. Civ. P. 12(b) (1) and Mass. R. Civ. P. 12(b)(6). Ballou Channing moves to dismiss all
counts asserted against it; Cedar Hill moves to dismiss some but not all of the counts against it. The motions raise difficult questions, some of which would benefit from discovery and cannot be decided at this early stages in the case. Still, there are certain claims that are not supported by the facts alleged in the Complaint or the applicable law, and which must therefore be dismissed, for reasons set forth below.
The Complaint contains the following allegations which, for purposes of these motions, are assumed to be true. The Foundation is a private charitable foundation created by John and Cynthia Reed. The Reeds are abutters to the Premises, which consists of 12.23 acres of land. Ballou Channing is a nonprofit religious corporation organized pursuant to Chapter 180 of the General Laws. Ballou Channing acquired the Premises in 1980 through a Deed of Gift that imposed certain restrictions on its use. Located on the Premises are a building and improvements that have historically been known as the Cedar Hill Retreat Center. Ballou Channing would periodically permit the center to be used by its member congregations.
In 2007, the Reeds learned that the restrictions imposed on the Premises through the Deed of Gift were to expire within the next couple of years. Thee Reeds wished to preserve the Premises in conformity with those original restrictions; negotiations with Ballou Channing ensued. Ultimately, the Foundation and Ballou Channing entered into what the Complaint calls the “Gift Agreement,” whereby the Foundation would make a contribution of $ 3million in return for the creation of a Conservation Restriction. It was understood between the parties that the $ 3 million donation would alleviate the need to engage in any commercial activities on the Premises and cover what was anticipated to be Ballou Channing’s “annual operating expenses” in maintaining it. Ballou Channing had represented to the Foundation that those expenses were
about $ 100,000 to $ 150,000 per year. There is no allegation in the Complaint that the Gift Agreement was reduced to writing.
The Conservation Restriction was reduced to writing and is attached to the Complaint as Exhibit A. It is dated October 17, 2008 and was recorded with the Plymouth County Registry of Deeds. Ballou Channing is named as the Grantor in the Conservation Restriction; the Grantee was the plaintiff Wildlands Trust, a non-profit organization dedicated to conservation and preservation of land in Southeastern Massachusetts. The stated purpose of the Conservation Restriction is to preserve the Premises “in its predominately natural, scenic wooded and open space condition” and to prohibit any use of the Premises not in conformity with that purpose. Section III of the Conservation Restriction sets forth what uses are prohibited and what are permitted. Section VIII (entitled “Assignability”) makes it clear that the burden the Conservation Restriction imposes “shall run with the Premises in perpetuity” and “shall be enforceable against Grantor and the successors, licensees and assigns of the Grantor holding any interest in the Premises.” In January 2009, Ballou Channing created Cedar Hill, a 501(c) (3) organization, to own and operate the Premises. Ballou Channing transferred the Premises to Cedar Hill by a Quit Claim Deed which specifically references the Conservation Restriction. The Quit Claim Deed also states that the Premises are subject to an easement that granted each congregation that is a member of Ballou Channing the right to use the Premises so long as that use does not violate any term of the Conservation Restriction. The Quit Claim Deed is attached to the Complaint as Exhibit B. It was recorded with the Plymouth County Registry of Deeds on December 31, 2009.
Neither the Quit Claim Deed nor the Conservation Restriction mention the Foundation’s $ 3 million gift. The plaintiffs contend, however, that the parties intended that the money would
be transferred over to any subsequent owner of the premises so as to maintain the land in conformity with the limitations on its use. Ballou Channing knew this, but when it conveyed the Premises to Cedar Hill, Ballou Channing kept $ 1.6 million of the $ 3 million gift for itself and only conveyed $ 1.4 million to Cedar Hill.
Cedar Hill used a portion of the $ 1.4 million to renovate a structure on the Premises and proceeded to use the building as a rental property, advertising its availability to the public for overnight stays at a fee. In collecting fees for this use and permitting activities on the Premises such as food preparation, alcohol consumption, weekend family reunions, and other social uses, Cedar Hill has (according to the Complaint) violated the terms of the Conservation Restriction. The Complaint alleges that Ballou Channing is aware of Cedar Hill’s violations and has refused to take steps to end them. The Complaint does not allege that Ballou Channing has through the use of its easement itself violated the Conservation Restriction.
The standard that this Court applies to the instant motions is well established. This Court is required to accept as true the allegations contained in the Complaint, drawing all inferences in favor of the plaintiff. This deference to the nonmoving party, however, is not unbounded. To withstand a motion to dismiss under Mass. R. Civ. P. 12(b) (6), the Complaint must contain “allegations plausibly suggesting (not merely consistent with) an entitlement to relief . . . .” Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008), quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-557 (2007). Although a Complaint need not set forth detailed factual allegations, a plaintiff is required to present more than labels and conclusions and must raise a right to relief “above the speculative level.” Id.
The Complaint in the instant case alleges the following counts, each of them brought by both plaintiffs and asserted against both defendants: breach of the Gift Agreement (Count I); breach of the Conservation Restriction (Count II); promissory estoppel (Count III); unjust enrichment (Count IV); breach of Chapter 93A (Count V). Ballou Channing’s Motion targets all five counts, whereas Cedar Hill seeks to dismiss all counts except for Count II. Because there is substantial overlap in the arguments that each defendant makes, this Court’s discussion will focus on each count rather than divide the discussion up between the two motions.
A. Breach of the Gift Agreement (Count I)
According to the Complaint (as read in the light most favorable to the plaintiffs), the Foundation entered into an agreement with Ballou Channing whereby Ballou Channing would create the Conservation Restriction and would use a $ 3 million donation by the Foundation to maintain the land so as “to preserve the ecological and aesthetic condition of the Premises in perpetuity.” Although Ballou Channing did indeed create the Conservation Restriction, it did not use the $ 3 million donation as promised, instead creating a separate entity (Cedar Hill) to hold title to the land and keeping at least $ 1.6 million of the donated funds to use for its own purposes unrelated to conserving the Premises. This Court concludes that, notwithstanding Ballou Channing’s numerous arguments to the contrary, this does state a claim against Balllou Channing. It does not state a claim as to Cedar Hill, however, who is not alleged to be a party to the Gift Agreement and cannot be sued on the theory that it was a third party beneficiary. By way of explanation, this Court addresses each of the arguments made by the defendants as to why this claim should be dismissed.
Both defendants contend that the plaintiffs do not have standing to bring this claim which arises from the allegations that Ballou Channing failed to use the Foundation’s $ 3 million donation as promised. In support, plaintiffs rely on G.L.c. 12 §8, which states that the Attorney General “shall enforce the due application of funds given or appropriated to public charities within the commonwealth and prevent the breaches of trust in the administration thereof.” That statute has been interpreted to bar individual plaintiffs from challenging the manner in which a charitable institution has managed or used its money. See e.g. Garland v. Beverly Hospital Corp., 48 Mass.App.Ct. 914 (1999) (plaintiff who had donated funds to defendant hospital had no standing to claim that defendant misused funds); Weaver v. Wood, 425 Mass. 279 (1997) (individual members of Christian Science church had no standing to contest decision of the defendant to expand its publishing activities into electronic media and use church funds in connection therewith); Dillaway v. Bulton, 256 Mass. 568 (1926) (trustees under a will that bequeathed money to defendant had no standing to bring claim that money was being used contrary to the purposes set forth in the will itself); Judkins v. Hyannis Public Library Association, 302 Mass. 425 (1939) (same). In each of those cases, the appellate courts held that only the Attorney General can bring an action alleging the misuse of charitable assets. The courts reasoned that G.L.c. 12 §8 conferred exclusive power on the Attorney General to represent those who assert a beneficial interest in a charity. “It has not left it to individuals to assume this duty, or even to the court to select a person for its performance.” Weaver v. Wood, 425 Mass. at xx.
The Supreme Judicial Court has recognized an exception to this rule, however, where the individual plaintiff asserts a special interest distinct from the more general public interest
protected by the Attorney General. That exception was most clearly defined by the Supreme Judicial Court in Maffei v. Roman Catholic Archbishop of Boston, 449 Mass. 235 (2007), which arose from the defendant’s decision to close a church in Wellesley. The plaintiffs there were members of a family that had provided land on which the church was built. The land had been given to the defendant on the specific condition that it be used as the site of a church. Joining in the case as a co-plaintiff was a parishioner who had given money to the defendant based on its representation that it would use the money for that same purpose. Although the SJC ultimately agreed with the lower court that the case had to be dismissed because it challenged decisions protected by the First Amendment, it nevertheless concluded that all of the plaintiffs did have standing. It reasoned that the plaintiffs’ claims were “readily distinguishable from those of the general class of parishioner-beneficiaries” in that each of the plaintiffs had made contributions to the defendant – land in one case and money in another – which they would not have made had they known that the defendant would close the church. “These claims are personal, specific and exist apart from any broader community interest in keeping [the church] open.” 449 Mass. at 245.
In the instant case the Complaint (read generously) alleges that the Foundation made the $ 3 million donation for the specific purpose of maintaining the Premises in a certain way. Ballou Channing breached that agreement by failing to use the donation as promised. Had the Foundation known that Ballou Channing would keep a large portion of that money for itself to use for purposes unrelated to conserving the land, that donation would not have been made. The Foundation thus has a specific interest that is unique to it and distinct from the interests of the public or of Ballou Channing’s congregation members. That is enough in this Court’s view to confer the Foundation with standing. If the funds were intended for Wildland Trust, then it can
join with the Foundation as a plaintiff in asserting a claim against Ballou Channing for breach of the Gift Agreement, provided that sufficient facts surface in the course of discovery to show that it was the intended (as opposed to incidental) third party beneficiary of the Gift Agreement.1
This Court does not reach the same conclusion on Count I insofar as it is asserted against defendant Cedar Hill, however. Cedar Hill was not a party to the Gift Agreement. It therefore made no promises that could be breached. That it is bound by the Conservation Restriction as a result of purchasing the land does not mean that it was obligated to spend money it received from Ballou Channing in any particular way. Although plaintiffs contend that Cedar Hill is properly named as a party because it was a third party beneficiary of the Gift Agreement, they rely on case law that permits a person who is the intended beneficiary of a contract entered into by others to maintain an action where he or she has been deprived of that benefit. See James Family Charitable Foundation v. State Bank and Trust Co., 80 Mass.App.Ct. 720, 724-725 (2011) (discussing intended beneficiary theory as set forth in Restatement (Second) Contracts 302-315.) Here, the plaintiffs attempt to use that doctrine to bring Cedar Hill in as a defendant. This Court sees no legal basis for such a claim and accordingly orders that Count I be dismissed as to Cedar Hill.
2. Statute of Frauds
Even if the plaintiffs have standing, the Foundation contends Count I must be dismissed because the Complaint contains no allegation that the Gift Agreement was in writing so that it does not comply with the Statute of Frauds. G.L.c. 259 1. That statute requires a writing, signed by the party to be charged, if the contract cannot be performed in one year. Here, the
1 This issue should be revisited by way of a motion for summary judgment when more details about the Gift Agreement have been revealed. In contrast to an intended beneficiary, an incidental beneficiary obtains no right to enforce a contract. Restatement (Second) contracts 315.To determine whether a beneficiary is intended, rather than merely incidental, the court must look to the intent of the parties, taking into account the language of the contract and the circumstances surrounding its formation. See James Family Charitable Foundation v. State Street bank and Trust co., 80 Mass.App.Ct. 720 (2011) and cases cited therein.
Complaint alleges that the $ 3 million donation was to be used to preserve the land in “perpetuity;” the Gift Agreement could not be performed within one year so that the Statute of Frauds does indeed apply. The question is whether it is appropriate at this early stage in the case to dismiss Count I on this basis. This Court concludes that it is not.
In so concluding, however, this Court is not persuaded that the writing necessary to satisfy the Statute of Frauds is the Conservation Restriction, as plaintiffs seem to suggest. Ballou Channing, in compliance with its promise to the Foundation, did create the Conservation Restriction; the breach of the Gift Agreement consisted of the manner in which Ballou Channing used the $ 3 million donation. The Conservation Restriction makes no mention of that donation much less that any amount of money was earmarked for use in connection with it. In opposing Cedar Hill’s Motion, the plaintiffs maintain that discovery will indeed turned up documents sufficient to satisfy the Statute of Frauds and that they should at least be given an opportunity to conduct that discovery, particularly since the Gift Agreement as described in the Complaint was “extensively negotiated” over a period of months. Whether they will be successful or not can be tested by way of a motion for summary judgment.
Cedar Hill argues that the Chapter 93A claim in Count V should be dismissed because the plaintiffs have not alleged that Cedar Hill was a party to any transaction with either plaintiff and because Cedar Hill was not involved in trade or commerce with the plaintiffs. In their Complaint, the plaintiffs allege that, in contravention of its 501(c) (3) tax exempt status, Cedar Hill has and continues to operate a commercial, revenue-generating enterprise on the Premises
and that its conduct in knowingly using a portion of the Foundation’s $ 3 million gift for unintended uses in conjunction with its refusal to comply with the Conservation Restriction is conduct that comes within the purview of Chapter 93A. This Court disagrees.
Under G.L. c. 93A, “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.” G.L. c. 93A, § 2(a). Consumer plaintiffs may bring a 93A claim provided they first make a pursuit demand on the defendant. No demand letter is necessary under G.L. c. 93A, § 11 but then that section applies only to those plaintiffs who are themselves engaged in trade or commerce. Because there is nothing to indicate that plaintiffs made any pre-suit demand as required by G.L.c. 93A 9, this Court must assume that the plaintiffs are bringing their Chapter 93A claim under Section 11.2 There are no facts in the Complaint, however, to suggest that Wildlands Trust or the Foundation were engaged in the conduct of any trade or commerce.
In determining whether a party is engaged in trade or commerce, this Court may consider the character of the party, the nature of a transaction, the activities engaged in by the party, and also whether the transaction was motivated by business or personal reasons. Begelfer v. Najarian, 381 Mass. 177, 191 (1980). ). As described in the Complaint, the Foundation is a private charitable foundation and that Wildlands Trust is a non-profit organization dedicated to conserving land and preserving the natural heritage of Southeastern Massachusetts. There are no facts in the Complaint to suggest that the Foundation or Wildlands Trust have conducted any trade or commerce. Accordingly, the 93A claim must be dismissed.
2 Nothing in the Complaint, including Exhibit C, a letter from the plaintiffs to the defendants dated February 26, 2016 (entitled “Cedar Hill Conservation Restriction” and authored by sophisticated legal counsel), suggests that the plaintiffs sent the defendants a Chapter 93A demand letter. See G.L. c. 93A, § 9(3) (“At least thirty days prior to the filing of any such action, a written demand for relief, identifying the claimant and reasonably describing the unfair or deceptive act or practice relied upon and the injury suffered, shall be mailed or delivered to any prospective respondent”). Notably, the plaintiffs never referenced Chapter 93A or described specific “unfair or deceptive” acts or practices in the February 26, 2016 letter.
Ballou Channing’s Motion to Dismiss
Ballou Channing separately moves to dismiss Counts I through V of the plaintiffs’ Complaint pursuant to Mass. R. Civ. P. 12(b)(6). Ballou Channing’s arguments in support of its motion are similar to some of the arguments Cedar Hill raised, and are resolved in line with the court’s reasoning as explained above, with the following offered by way of brief explanation.
First, Ballou Channing claims that both plaintiffs, Wildlands Trust and the Foundation, have no standing to bring Counts I (breach of contract related to the gift agreement), III (promissory estoppel), and IV (unjust enrichment) and that those claims must be dismissed.3 Like Cedar Hill, Ballou Channing , argues that the Attorney General has the exclusive authority to enforce the proper application of funds by a public charity and that the plaintiffs’ claims in this action do not fall under certain limited exceptions to this general rule. See Ballou Channing’s Memorandum at 5-6. As discussed above, this Court concludes that, taking the allegations in the the Compalint as true, the plaintiffs have a personal and specific interest in this dispute against both defendants so as to have standing to pursue their claims, at least at this juncture. Indeed, Ballou Channing appears to concde as much in fottnote 3 of it memorandum; whether the personal nature of that interest and the use fot eFoudnation fundt to prtect that interest violates the INternanl Revuenue Code is (ate least for the purposes of standing) irrelevant.
Second, Ballou Channing argues that Counts I (breach of contract related to the Gift Agreement), III (promissory estoppel), and IV (unjust enrichment), should be dismissed because the claims are barred by the Statute of Frauds. Ballou Channing argues that the Conservation Restriction does not address Ballou Channing’s use of the $ 3 million donation and that no
3 Cedar Hill argues that only the Foundation lacks standing to bring its claims in this action.
writing memorializes the purported Gift Agreement, which Ballou Channing states was never documented by a writing. AS explained above, discovery is necessary to determine wheehr that is indeed true,, howeve.r
Third, Ballou Channing moves to dismiss Count II (breach of contract related to the Conservation Restriction) on the grounds that it cannot be compelled to comply with the Conservation Restriction because it no longer owns the land, having transferred the Premises to Cedar Hill. The Compalint alleges, hwoever, that Ballou Channing is bound by the terms of the Conservation Restriction and remains obligated to ensure that it is complied with. Palintiffs also ntoed that Ballou Channing maintains an easement interest in the Premises, reinforcing this ongoing obligation of compliance. They contend that Ballou Channing’s failure to enforce the terms of the Conservation Restriction and enter into mediation to potentially resolve the instant disputes are in breach of these obligations.
This Court declines to dismiss Count II against Ballou Channing at this time. Ballou Channing is the “Grantor” of the Conservation Restriction, which is attached to the Complaint as Exhibit A. The Conservation Restriction states that, “The burdens of this Conservation Restriction shall run with the Premises in perpetuity, and shall be enforceable against Grantor and the successors, licensees and assigns of Grantor holding any interest in the Premises.” Conservation Restriction at Section VII.A. The dispute resolution provision of the Conservation Restriction also specifically requires the parties (Grantor and Grantee) to “participate in at least three hours of mediation” if prior negotiations of any disputes are unsuccessful; Ballou Channing is the named Grantor of the Conservation Restriction. Whether Count II should be dismissed against Ballou Channing cannot be resolved without a more developed factual record regarding
Ballou Channing’s actions or inactions thus far related to the instant dispute. Accordingly, Ballou Channing’s request to dismiss Count II is denied.
Finally, Ballou Channing moves to dismiss Count V, a claim under Chapter 93A, arguing that it was not acting in a business context or conducting any trade or commerce such that Chapter 93A should apply to it in this action. This Court agrees. As discussed above, this Court concludes that the plaintiffs’ Chapter 93A claim in Count V is based on G.L. c. 93A, § 11 because there are no factual allegations in the Complaint suggesting that the plaintiffs sent the defendants a Chapter 93A demand letter, which is required under G.L. c. 93A, § 9(3). Section 11 requires the plaintiffs to be engaged in the conduct of trade or commerce, and as discussed above, there are no facts in the Complaint to suggest that Wildlands Trust or the Foundation were engaged in the conduct of any trade or commerce. As a consequence, Count V must also be dismissed as to Ballou Channing.
CONCLUSION AND ORDER
For all of the foregoing reasons, Defendant Cedar Hill Retreat Center, Inc.’s Motion to Dismiss is ALLOWED as to Count V (violation of Chapter 93A) and is otherwise DENIED, and Defendant Ballou Channing District Unitarian Universalist Association, Inc.’s Motion to Dismiss is ALLOWED as to Count V (violation of Chapter 93A) and is otherwise DENIED.
Janet L. Sanders
Justice of the Superior Court
Dated: December 12, 2016