Bortolotti v. Hayden

• Decision Date: 21 May 2007
• Docket Number: No. SJC-09882.,SJC-09882.
• Citation: 449 Mass. 193,866 N.E.2d 882
• Parties: Robert J. BORTOLOTTI, trustee,<SMALL><SUP>1</SUP></SMALL> v. Robert F. HAYDEN, Fourth.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

866 N.E.2d 882

449 Mass. 193

Robert J. BORTOLOTTI, trustee,¹ v. Robert F. HAYDEN, Fourth.

No. SJC-09882.

Supreme Judicial Court of Massachusetts, Barnstable.

Argued April 5, 2007.

Decided May 21, 2007.

Thomas F. Maffei, Boston (Scott McConchie with him) for the defendant.

Thomas P. Carpenter, Yarmouth, for the plaintiff.

Present: MARSHALL, C.J., GREANEY, IRELAND, SPINA, COWIN, & CORDY, JJ.

GREANEY, J.

In a deed recorded in 1981 at the Barnstable County registry of deeds, executors under the will of the defendant's father, Robert F. Hayden,² conveyed a parcel of subdivided land situated "in Barnstable (Cotuit)" to Albert Mattson. A restriction in the deed reserved to the grantor's heirs, executors, administrators, and assigns, a preemptive right to purchase the property on the same terms and conditions contained in any bona fide offer received by, and acceptable to, the grantee, his heirs, executors, administrators, and assigns. The restrictive covenant, which we shall refer to as the right of first refusal, was not limited to a term of years, but was of unlimited duration. The plaintiff filed a verified complaint in the Superior Court seeking a declaration that the right of first refusal violates the rule against perpetuities and is, therefore, void and unenforceable.³ The defendant contested the rule's applicability and challenged the plaintiff's standing to raise the issue. Considering cross motions for summary judgment, a judge agreed with the plaintiff and entered a judgment declaring the right of first refusal void and unenforceable. Separate and final judgment entered against the defendant. The defendant appealed from the judgment, and we transferred the appeal to this court on our own motion. We now reverse and direct entry of judgment for the defendant.

The following undisputed facts are drawn from the summary judgment record. The subject property, located at 3630 Falmouth Road, Marstons Mills, was part of a larger tract of land originally owned by Hayden. In 1976, Hayden had transferred his ownership in the tract of land to Hayden Land Development Co., Inc. (HLD). Hayden, Mattson, and Robert G. Kesten were partners in a joint venture to develop, operate, and manage a shopping center on a portion of the tract of land, which included the subject property. At the time of his death in 1980, Hayden held 565 shares of HLD stock. In order to facilitate the payment of estate taxes, the executors of his estate, in 1981, participated in a stock redemption plan with HLD, by which HLD conveyed four parcels of the subdivided land (lots 93, 94, 95, and 96) to the estate in exchange for 150 shares of HLD. The executors then sold and conveyed the four lots to Mattson. The sale was subject to the following restrictive covenant:

"The grantee of these premises and his heirs, executors, administrators and assigns shall not sell or otherwise dispose of said premises except after first offering the same for sale to the grantors, their heirs and assigns upon the same terms and conditions as those contained in a bona fide offer received by and acceptable to the grantee. In the event of the receipt of such an offer, the grantee shall notify said grantors and shall set forth in full in such notice all the terms and conditions of the said offer in detail and offer to sell the same to said grantors upon the same terms. Within twenty (20) days after the receipt of such notice, said grantors may accept such offer, and upon making the payments required thereby, purchase the premises upon such terms and conditions. In the event that within said 20-day period said grantors do not accept such offer (or shall indicate in writing their intention not to do so), the grantee shall be free to sell the premises to the person making such bona fide offer."

The deed was recorded as document no. 284,458 at the Barnstable County registry of deeds on August 4, 1981. The deed contained a second restriction, not at issue in this appeal, that, with certain stated exceptions, no future use could be made of the property that would in any manner compete with the normal and usual businesses associated with a shopping center. The restrictions contained in the deed were, in part, imposed to protect the value of the larger tract of land owned by HLD, which was subsequently developed as a shopping center, and in part to preserve the economic and sentimental value of the remaining land owned by the Hayden family under trusts created by Hayden's will and under HLD.⁴ In 1983, Mattson conveyed the four lots to Kesten. The recorded deed states that the property is "subject to the restrictions as set forth in Document No. 284,458."

In 1996, the plaintiff purchased lots 95 and 96 from Kesten. At that time, the defendant and his sisters (as Hayden's heirs) signed two documents entitled "Assent to Sale," which were recorded at the Barnstable County registry of deeds, and which expressly waived the right of first refusal, pursuant to document no. 284,458, with respect to the sale of each lot.

In December, 2004, Kesten and the plaintiff entered into a purchase and sale agreement concerning lot 94. The agreement makes no mention of the right of first refusal contained in document no. 284,458. The time for performance under the agreement originally was January 31, 2005, but Kesten and the plaintiff extended the closing to March 18, 2005. On February 14, the plaintiff's attorney, on behalf of the plaintiff, notified the defendant of the purchase and sale agreement and of the twenty-day period in which he could respond and match the terms and provisions set forth in the agreement. The letter requested, should the defendant choose not to match the offer, that an enclosed "Assent to Sale" be signed and returned to the plaintiff. On or about March 7, the defendant's attorney hand delivered a letter to Kesten's attorney, notifying Kesten of the defendant's intention to purchase the property. Enclosed in the letter was a check for the deposit amount required by the purchase and sale agreement. Kesten accepted the letter and check. The closing, which had been scheduled for March 18, however, never took place. On March 17, the plaintiff commenced this action, and a judge in the Superior Court (a different judge from the one who allowed the plaintiff's motion for summary judgment) allowed the plaintiff's ex parte motion for a memorandum of lis pendens to be recorded against the subject property.

1. We first address the issue of standing. The defendant asserts that the plaintiff may not challenge his proposed purchase of lot 94 from Kesten because the plaintiff is privy neither to that purchase and sale agreement nor to the agreement, recorded as document no. 284,458, in which the right of first refusal is recited. We disagree. The plaintiff had entered into a purchase and sale agreement to purchase the property from Kesten at the time that the defendant attempted to exercise his right of first refusal. The resolution of the contested point presented by his verified complaint, and any resulting declaration, will have a significant impact on his rights. See Bonan v. Boston, 398 Mass. 315, 320-321, 496 N.E.2d 640 (1986); Massachusetts Ass'n of Indep. Ins. Agents & Brokers, Inc. v. Commissioner of Ins., 373 Mass. 290, 292-293, 367 N.E.2d 796 (1977), and cases cited.

A decision of the Supreme Court of Rhode Island relied on by the defendant, Brough v. Foley, 525 A.2d 919 (1987), is distinguishable. Like the plaintiff in this case, the Brough plaintiffs had a fully executory purchase and sale agreement to purchase property that was not honored by the seller due to the exercise of a third-party's right of first refusal. See id. at 921. The purchase and sale agreement in the Brough case, however, was expressly subject to the condition that the defendant seller would honor the right of first refusal that had previously been granted, and, if the third party chose to purchase the subject property, the seller's agreement with the plaintiffs would become "null and void." Id. There was no such contractual provision here.

The record supports the defendant's assertion (and the plaintiff does not argue otherwise) that, regardless of the absence of any express reference to document no. 284,458 in the purchase and sale agreement between the plaintiff and Kesten, the plaintiff was fully aware of the right of first refusal in connection with lot 94 before entering into the agreement. We reject the suggestion that the plaintiff, who proceeded with his plans to purchase the property without regard to his prior knowledge of the right of first refusal, by implication abandoned, or lost, his standing to challenge the restriction's validity. To so hold would discourage third-party offers on property that may be affected by preemptive restrictions of this type and place a would-be purchaser "in the precarious position of being unable to vindicate its contractual rights, while allowing a seller to rely on any spurious claim so long as it implicated a third party's rights, in order to avoid a contract with impunity." National Land & Bldg. Corp. v. Kazim, 25 A.D.3d 513, 514, 810 N.Y.S.2d 132 (2006). The plaintiff has a cognizable legal interest in the validity of the restriction he challenges, and that is enough to confer standing. See G.L. c. 231A, § 9 (purpose of G.L. c. 231A is to enable court "to remove, and afford relief from, uncertainty and insecurity with respect to rights, duties, status and other legal relations, and it is to be liberally construed and administered"). See Stuart Kingston, Inc. v. Robinson, 596 A.2d 1378, 1383 (Del.1991) (prospective purchasers challenging third party's exercise of first refusal right "have a concrete and distinct claim and if not permitted to assert it will suffer a direct injury"). We now consider the merits.

2. There are no Massachusetts cases directly addressing whether a right of first refusal contained in a deed, which grants the right to...