Anthony's Pier Four, Inc. v. HBC Associates

• Citation: 583 N.E.2d 806,411 Mass. 451
• Parties: ANTHONY'S PIER FOUR, INC., et al. v. HBC ASSOCIATES et al. (and a consolidated case).
• Decision Date: 30 December 1991
• Court: United States State Supreme Judicial Court of Massachusetts

Page 806

583 N.E.2d 806

411 Mass. 451

ANTHONY'S PIER FOUR, INC., et al. v. HBC ASSOCIATES et al. (and a consolidated case).

Supreme Judicial Court of Massachusetts,

Suffolk.

Argued Sept. 4, 1991.

Decided Dec. 30, 1991.

Joel A. Kozol, Lee H. Kozol, Boston, with him, for plaintiff.

Gael Mahony, John A.D. Gilmore, Frances S. Cohen, Martha Born, Anita S. Lichtblau, William B. Forbush and Timothy B. Tomasi, Boston, with him, for HBC Associates et al.

Francis C. Lynch, Boston, was present but did not argue, for Channel Parking & Development, Inc., et al.

Before LIACOS, C.J., and ABRAMS, NOLAN, O'CONNOR and GREANEY, JJ.

ABRAMS, Justice.

This case arises from two agreements (agreements), dated August 1, 1983, between Anthony's Pier Four, Inc. (Anthony's), ¹ and HBC Associates (HBC), ² providing for HBC's acquisition and development of Fan Pier. ³

The development was halted in May, 1987, as a result of a dispute between Anthony's and HBC. In January, 1988, Anthony's sued HBC. On the same day, HBC brought suit against Anthony's. Each claimed contract violations against the other (as well as other claims). The cases were consolidated for trial. After a jury-waived trial, the judge ruled that Anthony's violated the express terms of the agreements and the implied covenant of good faith and fair dealing. The judge rejected HBC's claim that Anthony's was liable to HBC under G.L. c. 93A (1990 ed.). Thereafter, there was a trial on damages. The judge ruled in favor of HBC in the sum of $42.6 million, plus postbreach expenses incurred by HBC and monies owed by Anthony's and others for the cost of joint development consultants. ⁴ Both parties appeal.

Anthony's argues that we should (1) vacate the proceedings; (2) not accord the judge's findings and rulings any deference (3) conclude that the inconsistencies in the judge's findings and rulings preclude appellate review; (4) reject the judge's determination that there was a material breach of the express contract; (5) reject the judge's conclusion that Anthony's had violated the implied covenant of good faith and fair dealing; (6) affirm the judge's holding that Anthony's is not liable to HBC under G.L. c. 93A; (7) reverse the determination on liability for evidentiary errors; (8) determine that the judge erred in using an improper measure of damages, making erroneous evidentiary rulings on damages, committing a mathematical error, and awarding postbreach expenditures; (9) determine that the judge erred in holding a number of Athanas family ventures jointly and severally liable for environmental consultants' fees; and (10) reverse the judge's partial final judgment and enter a judgment for Anthony's. HBC cross-appealed the denial of its claims for violation of G.L. c. 93A. Both sides filed applications for direct appellate review. We allowed the applications. We affirm the award of expectancy damages, postbreach rent and taxes paid by HBC to Anthony's, and consultants' fees. We set aside the award of postbreach expenditures not attributable to rent or taxes. We reverse so much of the judgment as denied G.L. c. 93A damages to HBC. We remand the matter to the trial judge for further proceedings consistent with this opinion.

The judge found the following facts. Fan Pier is a parcel (approximately eighteen and one half acres) of undeveloped land located in South Boston. Fan Pier abuts Pier Four to the east. HBC's development plans for Fan Pier included a high-rise hotel, office towers, luxury condominiums, and a marina. At the time that HBC was developing Fan Pier, Anthony's was developing Pier Four. Anthony's was planning a smaller but similar development on Pier Four, which was also to include a hotel, condominiums, and office and retail space.

The agreements between Anthony's and HBC to develop the Fan Pier site, among other things, confer on Anthony's limited rights of approval of changes in HBC's basic development plan. ⁵ Specifically, the 1983 development agreement provides that changes in the development team and the basic development plan shall be subject to the approval of Athanas. In the agreement, "Athanas acknowledges that the [b]asic [d]evelopment [p]lan was flexible and tentative since it was prepared before extensive engineering studies of the property were made and before HBC commenced the public process of obtaining permits and approvals. Therefore, Athanas's approval of a change in the [b]asic [d]evelopment [p]lan will be required only if such change would have a materially adverse effect on the factors set forth in (i), (ii), or (iii) below [the review conditions]." The factors are: "(i) ensuring that the changes are consistent with the [b]asic [d]evelopment [p]lan as previously approved; (ii) ensuring that a hotel is located reasonably close to [Anthony's] remaining property to the extent consistent with its being a waterfront hotel, it being understood that HBC shall not be required to construct the hotel closer than Pier 2; and (iii) ensuring that the design of such hotel integrates with and is not detrimental to [Anthony's] property adjacent to the [Fan Pier site]...."

The agreements also stipulate that "HBC shall submit a reasonable explanation" of any changes in the basic development plan. Anthony's covenants that "approval shall not be unreasonably withheld or delayed and shall be deemed given if Athanas has failed to respond with specified objections within fourteen days after receipt by Athanas of HBC's request and the requisite information."

Anthony's and HBC's development efforts were cooperative, with shared consultants, coordinated planning, and joint filings for public approvals. Their goal was to develop projects which would be fully integrated and compatible with each other. Representatives of Anthony's, including Athanas himself, appeared along with HBC representatives before numerous groups--from public agencies to the Boston Globe newspaper--to promote the Fan Pier and Pier Four projects. ⁶ The Fan Pier project director met with Athanas regularly in order to keep him informed of HBC's progress and to review with him decisions HBC faced as it proceeded. ⁷

In 1984, HBC changed architects for the Fan Pier project. Athanas and his sons travelled to Chicago with HBC representatives to interview the new architectural firm (the second architects). The second architects began work on a new master plan for Fan Pier that fall. They met with Anthony's architects to coordinate the development of the Fan Pier and Pier Four master plans. ⁸ The second architects presented their preliminary master plan to Athanas at two meetings in November, 1984.

In March, 1985, Athanas convened a meeting with the Fan Pier project director to express his concern that the Fan Pier project was moving ahead of the Pier Four project, and reiterated his desire to have the two projects proceed in tandem through the government permitting process. In response, the Fan Pier project director advised Athanas to hire a development adviser in order to ensure that the Pier Four development proceeded apace and in tandem with the Fan Pier project. A few months later, Anthony's hired such an adviser.

Through the spring and summer of 1985, the second architects worked on developing a "lesser scale alternative," a refinement of their first development scheme. In the fall of 1985, HBC learned that Anthony's had, like HBC, dismissed its first architect and retained a new architectural firm. The replacement firm was instructed to prepare a new master plan for the Pier Four development that would integrate with the Fan Pier plan. In late 1985 and early 1986, architects for HBC and Anthony's made a series of joint presentations of the Fan Pier and Pier Four plans to public and government agencies.

In January, 1986, just before the filing for the first round of applications for governmental approvals, Athanas, his development adviser, and counsel met with HBC, its counsel, and project manager to review the Fan Pier plans in order to ensure that the plans for which public approval would be sought had the approval of Anthony's under the agreement. At the meeting, an HBC architect presented the design features of the plan, and other HBC representatives presented various development aspects of the plan, including the distribution of uses and the vehicular parking provisions for each use. HBC representatives also fielded questions about the plans. At another meeting held later that month, Anthony's counsel said that Athanas approved of the lesser scale alternative which had been discussed at the meeting. ⁹

In 1986, HBC prepared a video to show to potential Fan Pier development investors. The video included an interview with Athanas, in which he praised the second architects' design and its integration with the Pier Four design. That same year, Anthony's development adviser printed an informational brochure about the Pier Four project. The brochure, intended to enlist support for the project, was shown to potential investors and governmental and community groups. Athanas reviewed the brochure. The brochure spoke glowingly of the Fan Pier project and its integration with the Pier Four project. ¹⁰

In early 1987, Anthony's counsel, responding to HBC's request for written approval of HBC's revised development team and basic development plan, drafted a letter to HBC saying, "We see very little problem other than our concern of allocation between residential and commercial, which we reserved on approval of the original [b]asic [d]evelopment [p]lan."

In the fall of 1986, Athanas and his development adviser learned that another harborfront deal had been far more lucrative for the landlord than the Fan Pier deal promised to be for Anthony's. They began to grumble about the price terms of the deal with HBC and to pressure HBC to increase the compensation to Anthony's. Initially, their demands focused on a claim that HBC was only entitled to purchase the area beneath the footprints ...