Opinion
10-P-2025
02-23-2012
10-P-2243 MOTHER BROOK, LLC, & others v. RICHARD FLIER & others (and a companion case).
NOTICE: Decisions issued by the Appeals Court pursuant to its rule 1:28 are primarily addressed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, rule 1:28 decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28, issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
These companion cases arise out of a joint real estate venture between entities owned and controlled by Richard Flier, Neil Farmer, and Harold Brown. In docket no. 10-P-2025, Farmer and Flier appeal from a Superior Court judgment, entered after a bench trial, primarily insofar as it (1) declares that Brown is not barred from reducing a management fee owed to Farmer & Flier Associates Partnership under the parties' 'Operating Agreement,' and (2) dismisses Farmer's and Flier's counterclaim for rescission based on fraudulent inducement. In the companion case, docket no. 10-P-2243, they appeal from a summary judgment rendered by a different Superior Court judge, in favor of Brown on their claim that Brown breached his duty to Farmer and Flier by failing to make distributions available to them. We affirm.
For the sake of clarity, Flier and entities owned and controlled by Flier will hereinafter be collectively referred to as 'Flier,' Farmer and entities owned and controlled by Farmer will collectively be referred to as 'Farmer,' and Brown and entities owned and controlled by Brown will collectively be referred to as 'Brown.'
Background. Flier, Farmer, and Brown created and are members of Mother Brook, LLC (Mother Brook). On September 13, 2000, Mother Brook purchased property located at One Westinghouse Plaza in Hyde Park (the property). Farmer and Flier were designated as the exclusive leasing agent for the property. Unbeknownst to Farmer and Flier, Brown entered into a 'Management Agreement' with The Hamilton Company, Inc., prior to executing Mother Brook's Operating Agreement. The Management Agreement is inconsistent with the Operating Agreement only with respect to the payment of commissions on leases.
Carl Valeri and Enrique Darer are also members.
An entity owned and controlled by Brown.
After the relationship between Farmer, Flier, and Brown deteriorated, Brown instituted an action against Farmer and Flier alleging breach of contract, breach of the obligation of good faith and fair dealing, breach of fiduciary duty, fraudulent inducement, and misrepresentation. Farmer and Flier filed amended counterclaims for breach of the Operating Agreement, breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, breach of the Management Agreement, and fraudulent inducement, and seeking injunctive relief. Farmer's and Flier's intra-trial motion to amend, insofar as it sought to add a counterclaim under G. L. c. 93A, was denied by the Superior Court judge. In an extremely thorough, sixty-eight page decision, the same judge found in favor of Farmer and Flier on all of the claims in Brown's complaint, as well as on their amended counterclaims for breach of fiduciary duty and breach of the Operating Agreement. The judgment awarded damages for Farmer and Flier, nullified the provisions of the Management Agreement that are inconsistent with the Operating Agreement, ordered that Farmer and Flier be returned to their position as on-site manager for the property, and awarded Farmer and Flier statutory costs. Judgment also entered for Brown on Farmer's and Flier's remaining counterclaims, and on Farmer's and Flier's request for attorneys' fees.
Farmer and Flier then commenced an action against Brown and Mother Brook alleging, in their third amended complaint, breach of fiduciary duty, four counts of breach of contract, and tortious interference with contractual relations, based in part upon Brown's and Mother Brook's failure to make distributions to cover Farmer's and Flier's tax obligations. A different judge in the Superior Court partly allowed Brown's and Mother Brook's motion for summary judgment on these claims.
Final judgment entered after a trial on two contract counts that survived the motion and are not at issue on appeal.
On appeal, Farmer and Flier argue that the judge in the first case erred in failing to rescind the Operating Agreement, in rejecting their proposed c. 93A counterclaim, and in ruling that the Operating Agreement allowed Brown to modify the overall management fees. They also ask this court to remand the matter for consideration of their entitlement to attorneys' fees, Brown's obligation to repay Mother Brook for fees and expenses incurred in prosecuting Brown's unsuccessful claims, and whether Farmer and Flier are entitled to one-half of commissions on sales by Mother Brook. In the second case, Farmer and Flier ask for reversal of the summary judgment on their claim that Brown breached the Operating Agreement by failing to make funds available to them to pay taxes.
We do not consider this issue, raised for the first time on appeal. Royal Indem. Co. v. Blakely, 372 Mass. 86, 87-88 (1977).
Discussion. The first judge's thoughtful and thorough findings were based upon the evidence. We accept his findings unless they are clearly erroneous, and review his legal conclusions de novo. T.W. Nickerson, Inc. v. Fleet Natl. Bank, 456 Mass. 562, 569 (2010). We also examine his imposition of equitable remedies for an abuse of discretion. Demoulas v. Demoulas, 428 Mass. 555, 589 (1998).
There was no abuse of discretion in refusing to rescind the Operating Agreement. As the judge pointed out, '[t]he passage of time has made the [2000] position of the parties difficult, if not impossible, to restore.' Coggins v. New England Patriots Football Club, Inc., 397 Mass. 525, 536 (1986). Rescission would be inappropriate in these circumstances because the Operating Agreement specifically prohibits Farmer and Flier from bringing any action to dissolve Mother Brook, and Farmer and Flier must be 'held to the express terms of their contract.' TAL Fin. Corp. v. CSC Consulting, Inc., 446 Mass. 422, 430 (2006). While Farmer and Flier seek to avoid this result by arguing that they were fraudulently induced to sign the Operating Agreement, they presented no evidence that Brown intentionally concealed the Management Agreement from them. See Roadmaster Indus. v. Columbia Mfg. Co., 893 F. Supp. 1162, 1179 (D. Mass. 1995). Farmer and Flier are experienced real estate developers who were represented by counsel when they negotiated the Operating Agreement, and 'where sophisticated parties choose to embody their agreement in a carefully crafted document, they are entitled to and should be held to the language they chose.' Anderson St. Assocs. v. Boston, 442 Mass. 812, 819 (2004). The parties neither provided for nor intended that Mother Brook would be dissolved by anyone other than Brown, and the judge properly declined to undo the Operating Agreement merely because it does not presently give Farmer and Flier 'the favorable treatment they anticipated.' Ibid.
Remand for consideration of Farmer's and Flier's entitlement to commission on sales by Mother Brook is unnecessary, as nothing in the Operating Agreement or the record appendix supports an inference that the parties either intended or expected that Farmer and Flier would receive such commissions. There was no error in the judge's refusal to award attorneys' fees, as Brown's claims were based upon what he believed to be Farmer's and Flier's failure to find tenants as required by the Operating Agreement. See G. L. c. 231, § 6F. The judge correctly rejected Farmer's and Flier's G. L. c. 93A claim in light of evidence that Farmer, Flier, and Brown had committed to the joint venture well before the Operating Agreement was executed. See Goldbaum v. Weiss, 50 Mass. App. Ct. 554, 558-559 (2000). We can discern no error in the judge's conclusion that Brown was not precluded under the Operating Agreement from lowering the overall management fee. The Operating Agreement is silent as to Brown's power to do so, and the judge, who heard the evidence and was in the best position to determine the parties' intent, was entitled to conclude that the parties did not understand Brown's power to be limited in that respect. See Mass.R.Civ.P. 52(a), as amended, 423 Mass. 1402 (1996). 'On appeal, we are bound by a judge's findings of fact that are supported by the evidence, including all inferences that may reasonably be drawn from the evidence.' Twin Fires Inv., LLC v. Morgan Stanley Dean Witter & Co., 445 Mass. 411, 420 (2005).
Finally, there was no error in the second judge's order allowing summary judgment on Farmer's and Flier's claim that they are entitled under the Operating Agreement to distributions to cover tax liabilities. The Operating Agreement clearly allows such distributions only '[s]o long as funds are available.'
Judgments affirmed.
By the Court (Grasso, Cohen & Carhart, JJ.),