City of Newburyport v. Woodman

• Decision Date: 17 March 2011
• Docket Number: No. 08–P–104.,08–P–104.
• Citation: 944 N.E.2d 1046,79 Mass.App.Ct. 84
• Court: Appeals Court of Massachusetts
• Parties: CITY OF NEWBURYPORTv.ELEANOR J. WOODMAN, trustee,1 & another.2

79 Mass.App.Ct. 84

944 N.E.2d 1046

CITY OF NEWBURYPORT

v.ELEANOR J. WOODMAN, trustee,1 & another.2

No. 08–P–104.

Appeals Court of Massachusetts, Suffolk.

Argued Nov. 10, 2009.Decided March 17, 2011.

Leonard M. Davidson, Newton, for Seaport Village, LLC.Jonathan M. Silverstein, Boston, for the plaintiff.Martin J. Arsenault, Georgetown, for Eleanor J. Woodman, was present but did not argue.Present: McHUGH, TRAINOR, & HANLON, JJ.HANLON, J.

Seaport Village, LLC (Seaport), appeals a Land Court judge's decision granting summary judgment to the city of Newburyport (Newburyport) on the ground that Seaport's offer to purchase certain agricultural land from a trustee did not constitute a bona fide offer for the purposes of G.L. c. 61A, § 14, as in effect prior to March 22, 2007. We reverse.

Background.³ Eleanor Woodman, as the trustee of the Eleanor J. Woodman Realty Trust (Woodman), owns two parcels of land in Newburyport that have been classified and assessed as agricultural or horticultural land pursuant to G.L. c. 61A.⁴ The property is fifty-five to sixty percent wetlands, and under the current zoning ordinance and subdivision regulations of Newburyport, the property may be divided as a matter of right into a maximum of two lots for use as single-family residences.

In March, 2005, Newburyport received a notice from Woodman indicating her intent to sell the two parcels of land to Seaport; she included a purchase and sale agreement that specified the terms of the proposed sale and treated the two parcels as one property of 21.93 acres. The agreement was “contingent upon the BUYER obtaining[,] at [its] expense, all necessary local, state and federal approvals including, but not limited to, conservation approvals and approvals from the City of Newburyport to develop the PROPERTY as a Residential Development under a Comprehensive Permit under [G.L. c.] 40B ⁵ from the Zoning Board of Appeal of the City of Newburyport, Housing Appeal Committee or court with competent jurisdiction....” ⁶ The purchase price was set at $1.8 million; however, if Seaport obtained fewer than 150 residential units the price would be reduced by $12,000 for each unit not approved, with a minimum sale price of $1.5 million.

In May, 2005, after receiving the notice from Woodman, Newburyport filed a verified complaint in the Land Court seeking a declaration of rights in connection with the notice of intent to sell the agricultural land, and a determination that the purchase and sale agreement was not a bona fide offer triggering its right of first refusal under G.L. c. 61A, § 14. Specifically, Newburyport argued that the “Purchase & Sale Agreement does not constitute a bona fide offer because among other reasons, the price is based on numerous contingencies ... [and] unlike conventional development schemes, it is impossible for [Newburyport] to assess the possible development yield on the site under the unpredictable procedures for review of c. 40B proposals.”

On June 22, 2005, a Land Court judge granted Newburyport's motion for a preliminary injunction, enjoining Woodman from conveying any portion of the property, or rights therein, and tolling the 120–day time period under § 14. In June, 2007, Seaport filed a motion for summary judgment, and according to Seaport, Woodman assented. Newburyport filed an opposition and requested summary judgment in its favor.

While the case was pending, the Legislature amended § 14. The version of G.L. c. 61A, § 14, that was in effect when Woodman sent her notice of intent to Newburyport stated that

“Land which is valued, assessed and taxed on the basis of its agricultural or horticultural use under an application filed and approved pursuant to this chapter shall not be sold for or converted to residential, industrial or commercial use while so valued, assessed and taxed unless the city or town in which such land is located has been notified of intent to sell for or convert to such other use.... For a period of one hundred twenty days subsequent to such notification, said city or town shall have, in the case of an intended sale, a first refusal option to meet a bona fide offer to purchase said land....”

G.L. c. 61A, § 14, as amended through St.1987, c. 95, § 3. Under that version of the statute, “a town's right of first refusal ripens into an option to purchase when the town receives notice of an intended sale of land under c. 61A for a nonagricultural use.” Sudbury v. Scott, 439 Mass. 288, 297–298, 787 N.E.2d 536 (2003). “The right of first refusal created by § 14 manifests a legislative intent to do more than help to make farming economically feasible by providing a tax incentive. The right of first refusal was intended to help preserve and protect the agricultural use of land by requiring notice to a town before land under G.L. c. 61A is converted or sold for nonagricultural use.” Id. at 301, 787 N.E.2d 536.

In Franklin v. Wyllie, 443 Mass. 187, 819 N.E.2d 943 (2005), the Supreme Judicial Court, interpreting that same provision of § 14, addressed the situation where the “purchaser's obligation under the agreement [was] conditioned on the receipt of municipal approvals of a proposed residential subdivision plan, as well as all necessary permits, and the purchase price ... [was] not fixed but [was] dependent on the number of subdivision units approved.” Id. at 188, 819 N.E.2d 943. The court concluded that “a fully executed and enforceable purchase and sale agreement” constituted a bona fide offer, despite the fact that the agreement contained contingencies. Id. at 196, 819 N.E.2d 943.

The town of Franklin had argued that the agreement was not a “bona fide offer to purchase” because “the purchase price of the trust's land [could] only be determined after completion of the entire approval process for the purchasers' planned subdivision, including obtaining approval from the town planning board under G.L. c. 41K, § 81, as well as approvals for individual building lots from the town conservation commission under G.L. c. 131, § 40, and local bylaws, and approvals for the onsite septic disposal systems from the town board of health under G.L. c. 111” (footnote omitted). Id. at 192, 819 N.E.2d 943.

The court rejected that argument, holding that the offer was a “bona fide offer” and noted that the “existence of contingencies concerning obtaining approvals are common in real estate transactions and do not make the agreement any less than a bona fide offer.” Id. at 194, 819 N.E.2d 943, and cases cited. The court's holding “obligate[d] the town, if it [was] to exercise its right of first refusal, to ‘meet a bona fide offer to purchase.’ G.L. c. 61A, § 14. In [ Wyllie, that] meant accepting, within 120 days, the terms of the purchase and sale agreement, including the ‘agreed purchase price’ of $2,275,000 ... [which] would have necessitated expense by the town in determining, through its own officials and experts, the ultimate number of permissible lots in the proposed subdivision.” Id. at 196–197, 819 N.E.2d 943. The court noted that “this [was the] consequence stemming from the nature of the obligation imposed by the statute, until such time as the Legislature chooses to amend the statute to state differently.” Id. at 197, 819 N.E.2d 943. In a final aside, the court observed, “In enacting [§ 14] in 1973, the Legislature may not have directly contemplated the type of purchase and sale agreement executed here.” Id. at 196, 819 N.E.2d 943.

The Legislature did amend G.L. c. 61A, § 14, very shortly after the holding in Wyllie was announced.⁷ The statute now defines a bona fide offer to purchase as

“a good faith offer, not dependent upon potential changes to current zoning or conditions or contingencies relating to the potential for, or the potential extent of, subdivision of the property for residential use or the potential for, or the potential extent of development of the property for industrial or commercial use, made by a party unaffiliated with the landowner for a fixed consideration payable upon delivery of the deed” (emphasis added).G.L. c. 61A, § 14, as amended through St.2006, c. 394, § 31. Here, both parties agree that, had the amended version of the statute been in effect at the time of the notice of intent, Seaport's purchase and sale agreement would not have constituted a bona fide offer.

Summary judgment motion. After a hearing in the Land Court, in November, 2007, the judge granted summary judgment in favor of Newburyport. First, the judge ruled that the amendments to § 14, which had taken effect in March, 2007, did not apply retroactively. The judge then distinguished this case from Wyllie, finding that the contingencies in the purchase and sale agreement, including the requirement for c. 40B approval, would extend the holding in Wyllie too far. The judge concluded that, due to the “highly speculative” nature of Seaport's offer, it was not a bona fide offer that would trigger Newburyport's right of first refusal under § 14. Seaport appealed. ⁸

Discussion. a. Standard of review. “[T]he standard of review of a grant of summary judgment is whether, viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to a judgment as a matter of law.” Siebe, Inc. v. Louis M. Gerson Co., 74 Mass.App.Ct. 544, 548, 908 N.E.2d 819 (2009), quoting from Nelson v. Salem State College, 446 Mass. 525, 530, 845 N.E.2d 338 (2006). “Our review is de novo.” Id. at 549, 908 N.E.2d 819. “Rule 56(c) [of the Massachusetts Rules of Civil Procedure, as amended, 436 Mass. 1404 (2002),] provides that summary judgment shall be granted if the ‘pleadings, depositions, answers to interrogatories, and responses to requests for admission ..., together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.’ ” Bardige v. Performance...