Buffalo Water 1, LLC v. Fidelity Real Estate Co., LLC, SUCV2017-1584-BLS 2
| Decision Date | 21 July 2017 |
| Docket Number | 137677,SUCV2017-1584-BLS 2 |
| Parties | Buffalo Water 1, LLC v. Fidelity Real Estate Company, LLC |
| Court | Massachusetts Superior Court |
Filed July 24, 2017
This is an action challenging an independent appraisal of property as provided by an agreement between the parties, two sophisticated entities with experience in owning and leasing real estate. The plaintiff, Buffalo Water 1, LLC (Buffalo) is the owner of the property, located at 7 Water Street in downtown Boston (the Property). The defendant Fidelity Real Estate Company, LLC (Fidelity) occupied the Property under a long-term lease with an option to purchase the property in the final year of the lease as set forth in an Option Agreement. The Option Agreement sets the purchase price at 95 percent of the " fair market value" (FMV) or $16 275, 000, whichever is greater. If the parties could not agree upon the FMV, the Option Agreement set forth the specific appraisal process that the parties were to follow. Fidelity timely exercised its option to purchase and, with the parties unable to agree to the FMV, complied with the appraisal process, which included an independent appraisal. The Verified Complaint attacks the validity of the independent appraisal, contending among other things that the entity that employed the individual appraiser did not disclose a prior business relationship that it had with Fidelity.
The case is now before the Court on Fidelity's Motion to Dismiss. In support, it relies on the Massachusetts common law rule that severely limits the scope of judicial review regarding appraisals contractually authorized by the parties. Pursuant to that rule, the Court may invalidate an appraisal only where the appraiser plainly exceeded the scope of his authority or where the appraisal was the result of " fraud, corruption, dishonesty or bad faith." Nelson v. Maiorana, 395 Mass. 87, 89, 478 N.E.2d 945 (1985) citing Eliot v. Coulter, 322 Mass. 86, 91, 76 N.E.2d 19 (1947). " The premise of the rule of restricted reviewability is that the contracting parties' assignment of a valuation to an appraisal embodies their shared desire for finality." State Room, Inc. v. MA-60 State Assoc., LCC, 84 Mass.App.Ct. 244, 249, 995 N.E.2d 807 (2013). Applying that rule to the allegations in the Verified Complaint, this Court agrees with the defendant that the Complaint fails to state a claim upon which relief may be granted. Rule 12(b)(6), Mass.R.Civ.P.
The independent appraisal was performed by Robert Skinner. Skinner worked for Cushman & Wakefield (Cushman), which was selected in compliance with the terms of the Option Agreement. The Engagement Letter pursuant to which Cushman was hired stated that the appraisal would be performed in accordance with certain standards, including the Code of Ethics of the Appraisal Institute. That Code of Ethics (an Exhibit to the Verified Complaint) states: " It is unethical to...
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