Opinion
10-P-1125
02-21-2012
DARRIN FRIEDMAN & another v. ROBERT E. BONDS.
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
After a jury-waived trial, a Superior Court judge dismissed all counts of the plaintiff's complaint in an action for specific performance of an offer to purchase real estate. Both sides have appealed. We affirm.
After a second showing of the property at issue, which is located at 45 Milford Street in Boston's South End, the parties met and discussed the terms of sale. The purchase price was firm at $1,060,000; all four units were occupied by tenants, and the defendant owner, Bonds, was not willing to disrupt them as a condition of the sale. Bonds informed the plaintiffs of defects in the building, including needed roof repair; in addition, he told them that there was an attachment on the property, although he did not believe that the attachment would prevent a sale. Bonds insisted that the plaintiffs present a purchase and sale agreement (P&S), by-passing the need for a formal offer, as he had received several previous offers that had not come to fruition; in his view, the agreement should contain all terms discussed and the current tenants should not be notified of a potential sale.
Several days later, the plaintiffs presented to Bonds an offer to purchase (OTP), a draft standard form P&S, a deposit check for $1,000, and a letter from Countrywide Home Loans pre-approving a loan for $945,000, conditioned upon an 'owner-occupied' building. The terms of the OTP included the identity of the property, the purchase price, closing date and expiration date of the offer. Bonds 'expressed his disappointment that the deal did not reflect the deal they had discussed in three respects: the percentage of the purchase price to be borrowed; the submission of a written offer rather than a complete [P&S] with all requirements and contingencies spelled out, and the requirement of a vacant unit.' Anxious to lock in an interest rate, Piccini urged Bonds to sign the OTP, even though there were outstanding issues; Bonds did so after adding additional terms. The form stated that 'time [was] of the essence.'
Bonds set a closing date of December 10, 2003; inserted language stating that the OTP was subject to a mutually satisfactory purchase and sale agreement; added language requiring inspection of the property by a 'professional engaged in home inspection business'; and changed to 90% (rather than 95%) the provision regarding financing.
Although the OTP was open until October 20, 2003, the inspection of the property was set for October 21, due to a scheduling conflict. The trial judge found that, because the parties proceeded with the inspection after the OTP expiration date, and without any written extension, 'that conduct indicates an implicit agreement to extend the deadline, at least briefly, and with it an implicit commitment by the seller not to accept another offer while engaged in such further negotiation.' We agree. See McCarthy v. Tobin, 429 Mass. 84, 88- 89 (1999).
The dispute crystallized at the next step. Piccini left Bonds a message on October 22, reporting the results of the inspection and stating that repairing the roof would require perhaps $40,000 to $50,000, and that the repairs needed to be done immediately. 'Bonds, hearing the message later that day, understood it as an effort either to renegotiate the price or to require him to undertake substantial work. That understanding was entirely reasonable and [the judge found] it was accurate.' After Piccini left a second message, 'hoping everything [was] OK,' Bond returned the call and told Piccini that he wanted a 'specific proposal in writing,' contemplating the cost of the roof repair, by the close of business on October 27. None came.
Piccini suggested that he arrange for bids from contractors, 'Or, the other option, we could . . . come to a new price that we're both happy with and that's reasonable and everything can get, you know held off until the closing, and we'll take the part in that. But, . . . it is just something that we have to do right away . . . . But, we know you're not looking to do the work, so, why don't you give us a call back.'
Piccini, however, called again on October 27, and left another message, asking that Bond 'issue a notice to quit within the next couple of days' to one of the tenants in an attempt to create a vacant unit, or the prospect of one, and appease the plaintiffs' lender who was demanding 'owner occupancy.' Bonds did not agree and did not respond to the call. There was no further communication between the parties for two days. In the meantime, on or about October 30, Bonds received an offer from another party who wished to purchase the property, fully occupied, at a higher price.
On October 30, after Bonds's discussion with the new prospective purchaser, Piccini delivered to Bonds a second P&S agreement, changing the vacancy language to include '[f]ull possession of said premises according to the Exhibit A attached hereto'; Exhibit A is a blank tenant list. Negotiations continued thereafter, through the parties' attorneys. In Bonds's view, which the judge accepted, the plaintiffs never offered him an agreement that was acceptable to him. Instead, he accepted the offer of the second purchaser; the plaintiffs forestalled that sale by initiating this action for specific performance of the OTP and filing a lis pendens.
There were other provisions in the second draft that were unacceptable to Bonds, including a requirement that he make reasonable efforts to rectify any defects in title, incurring an expense of up to $2,000; permission to speak with the current tenants; language disclaiming any outstanding lawsuits involving the property; and a requirement that he maintain insurance as presently insured, or at least sufficient to cover replacement cost. In addition, the judge explicitly disbelieved Piccini and Friedman's testimony that Piccini had delivered with the agreement a required check for $52,000.
Piccini's argument on appeal is that the first, standard form OTP, signed by the parties, was binding, as it contained the essential terms of the purchase and sale agreement; he further maintains that, because the issue of requiring a vacant unit was not addressed in that OTP, it was not a material term to the parties' agreement. He insists that the form is 'identical' to the form found binding in McCarthy v. Tobin, 429 Mass. 84, 85 (1999).
As the McCarthy court noted, however, '[t]he controlling fact is the intention of the parties.' Id. at 87. See also Situation Management Systems, Inc. v. Malouf, Inc., 430 Mass. 875, 878 (2000) ('It is axiomatic that to create an enforceable contract, there must be agreement between the parties on the material terms of that contract, and the parties must have a present intention to be bound by that agreement'). Here, the trial judge rightfully concluded that a vacant unit was material to the agreement, based on Bonds's consistent statements throughout the parties' dealings that he would not evict any of his tenants to effect the sale, combined with the fact that the plaintiffs' loan qualification was contingent upon 'one vacant unit prior to closing.' The contradiction between these two requirements clearly evinces 'imperfect negotiations and evidence [of] the parties' lack of agreement at the time the OTP was executed.' See Blomendale v. Imbrescia, 25 Mass. App. Ct. 144, 147 (1987).
The fact that the OTP in McCarthy contained a provision, similar to that relied upon by the defendant here, that the offer was ''Subject to a Purchase and Sale Agreement satisfactory to Buyer and Seller" is not controlling. McCarthy, 429 Mass. at 85. In McCarthy, '[t]he remaining terms covered by the purchase and sale agreement were subsidiary matters which did not preclude the formation of a binding contract.' Id. at 86. Cases decided subsequent to McCarthy illustrate the correctness of the judge's analysis in this case that the question of the vacant unit was material. See, e.g., Coldwell Banker/Hunneman v. Shostack, 62 Mass. App. Ct. 635, 639-640 (2004); Walsh v. Morrissey, 63 Mass. App. Ct. 916, 917 (2005).
Even were the vacant unit not a material term, in McCarthy, the court agreed with McCarthy's argument that, 'the OTP adequately described the property to be sold and the price to be paid.' McCarthy, 429 Mass. at 86 (emphasis added). In the present case, as the judge noted, the plaintiffs' effort 'to renegotiate the price . . . was, in substance, an exercise of the inspection contingency. Its effect was to terminate whatever obligations the parties had under the offer to purchase, and to start the negotiations anew.' While Bonds's response that they should make him an offer implicitly promised to continue the negotiations until the deadline he set, the plaintiffs' failure to respond within that time meant that 'the deal was over.' Thereafter, Bonds was free to accept the October 30 offer and enter into a P&S with the second purchaser for the higher purchase price. We see no error in the judge's decision that Bonds's actions 'breached no duty and gave rise to no right to relief on the part of the plaintiff.'
Prior to accepting the new offer, Bonds also gave the plaintiffs the opportunity to match the new offer of $1,200,000; they declined to pursue the sale at that price. Thereafter, Bonds's attorney sent a letter to the plaintiffs' attorney formally terminating the OTP; he also returned the plaintiffs' $1,000 deposit check.
Finally, Bonds argues in his cross-appeal that the trial judge erred in denying his request for attorney's fees based on the plaintiffs' abuse of process. A party may be awarded attorney's fees and the question as to what constitutes reasonable fees is left to the judge. Northern Sec. Ins. Co. v. R.H. Realty Trust, 78 Mass. App. Ct. 691, 697 (2011). See also G. L. c. 231, § 6F. Such an award is within the sound discretion of the judge and 'may be presumed to be right and ordinarily ought not to be disturbed.' Silverman v. Spiro, 438 Mass. 725, 730 (2003). In this case, the judge found that the plaintiffs had a genuine belief that their claim for specific performance on the OTP had merit. We are not persuaded that she was mistaken.
The Clerk of the Appeals Court shall also enter an order affirming the denial of attorney's fees in Appeals Court docket 2010-J-293.
Judgment affirmed.
By the Court (Green, Hanlon & Carhart, JJ.),