FROSTAR Corp. v. MALLOY

• Decision Date: 17 September 2010
• Docket Number: No. 09-P-1050.,09-P-1050.
• Citation: 933 N.E.2d 1002,77 Mass.App.Ct. 705
• Parties: FROSTAR CORP. & another v. Martin J. MALLOY, trustee, & others.
• Court: Appeals Court of Massachusetts

77 Mass.App.Ct. 705

933 N.E.2d 1002

FROSTAR CORP. ¹ & another ² v.Martin J. MALLOY, trustee, ³ & others. ⁴

No. 09-P-1050.

Appeals Court of Massachusetts,Suffolk.

Argued May 13, 2010.

Decided Sept. 17, 2010.

COPYRIGHT MATERIAL OMITTED.

Michael J. McHugh, Worcester (Stacey L. Coady with him) for the plaintiffs.

William E. Gens for Martin J. Malloy.

James R. DeGiacomo, Boston, for Michael S. Lapuck & others.

Present: TRAINOR, KATZMANN, & FECTEAU, JJ.

KATZMANN, J.

This is a case with a considerable history. It began in 1998 in Superior Court, and then came before us in Frostar Corp. v. Malloy, 63 Mass.App.Ct. 96, 823 N.E.2d 417 (2005) ( Frostar I ), where we granted a new trial. The instant appeal arises from the retrial and the judgment ordering specific performance of a contract to convey property. The parties cross-appeal on several issues. We conclude that the judge abused his discretion by denying a motion to intervene, pursuant to Mass.R.Civ.P. 24(a), 365 Mass. 769 (1974), brought by Michael and Kenneth Lapuck, the subsequent buyers of the property and real parties in interest. We vacate the judgment and remand for a new trial.

Background. As a preliminary matter, it is necessary that we retrace some of the prior proceedings and the evidence.

“On October 1, 1984, Frostar Corp. entered into a lease with [the defendant] Malloy of the premises at 16 Howard Street in the Roxbury section of Boston. The lease included a right of first refusal, pursuant to which Frostar Corp. held the right to match any bona fide offer by a third party to purchase the property.

“In 1996, Malloy listed the property for sale with a real estate agent.... On November 4, 1997, defendant Michael Lapuck, as trustee of the 1164 Washington Street Realty Trust, submitted to Malloy's agent a written offer to purchase the property.” (Footnotes omitted.)

Id. at 98, 823 N.E.2d 417. Frostar matched the bona fide offer by Michael Lapuck of $287,000 to purchase the premises at 16 Howard Street, which Frostar had leased from Malloy. This resulted in a purchase and sale agreement for the property between Frostar and Malloy with an effective closing date of March 2, 1998 (the agreement specified March 1, a Sunday).

On March 2, 1998, the transaction did not close. Frostar commenced suit, charging Malloy with breach of contract, breach of the implied covenant of good faith and fair dealing, misrepresentation, unfair and deceptive practices in violation of G.L. c. 93A, and seeking specific performance and damages, and injunctive relief. As against the Lapucks, Frostar alleged tortious interference with advantageous business relationship and violation of G.L. c. 93A. Frostar also obtained a lis pendens. Malloy sold the property to the Lapucks on May 7, 1998; the Lapucks agreed to indemnify Malloy against loss or damage resulting from Frostar's suit, and to defend Malloy in the suit. Id. at 102 & n. 14, 823 N.E.2d 417. ⁵

In Frostar I we remanded the case for a new trial on counts II and IV of the complaint, which claimed that Malloy breached the purchase and sale agreement and the implied covenant of good faith and fair dealing, respectively. Those counts did not name the Lapucks as defendants. In July and October, 2005, immediately after remand and leading up to the second trial, the Lapucks and Malloys submitted joint status memoranda. There they asserted that the Lapucks “are the true parties in interest in this matter as they are the ones directly affected if Frostar is awarded specific performance. The Lapucks legally and rightfully bought the property in issue in March[,] 1998 [,] and their business, Royal Fire Door Company, Inc., has occupied the property since that time. As such, the Lapucks have a right to continue to defend their interests.” The Lapucks did not, however, formally move to intervene under Mass.R.Civ.P. 24(a).

On January 27, 2006, as the trial approached before a different Superior Court judge, Frostar moved pursuant to Mass.R.Civ.P. Rule 19(a), 365 Mass. 765 (1974), to join as necessary parties Michael S. Lapuck and Kenneth M. Lapuck, as trustees of RFD Realty Trust. Frostar stated:

“As the owners of the property which is the subject matter of this action and to which the plaintiffs seek specific performance the Lapucks as Trustees are the real parties in interest.... [T]he plaintiffs are seeking specific performance of an agreement for the sale of property to it, property now owned by the Lapucks. Should the plaintiffs prevail and be awarded specific performance (as occurred at the first trial) the only remedy would be for this Court to order the Lapucks to disgorge the property, selling it directly to the plaintiffs (under the terms of the original purchase and sale agreement) or to order the rescission of the sale from Malloy to the Lapucks, then ordering Malloy to complete the terms of the purchase and sale agreement between him and Frostar. Unless the Lapucks are parties, subject to the orders of this Court, the plaintiffs will be unable to obtain complete relief. Therefore, the Lapucks are necessary parties pursuant to Mass.R.Civ.P. 19(a).”

At a pretrial hearing on January 30, 2006, the judge stated that the request for a necessary party determination was premature since, if the jury determined that the Malloy defendants were not in breach of contract, then specific performance would not be ordered.

On January 31, 2006, counsel for the Lapucks indicated that they would file a motion to intervene, arguing that “this case, no matter what the finding is, has one impact, and that's against the Lapucks, not Malloy.” Counsel for the Lapucks also noted that there was an indemnification agreement with the Malloys, stating that “he can't represent Malloy and [counsel for Malloy] can't represent the Lapucks.” “The Malloys were the parties to the agreement. We bought the property and indemnified Malloy as a result of the purchase. That's basically why I'm here.” Counsel further stated: “[A]ll I'm asking is that I be given the opportunity as I had in the first trial to participate, not to duplicate, but to participate in the trial by examining the witnesses.” ⁶

The judge denied the motion to intervene and made clear to the Lapucks' counsel that any similar motion on their behalf would also be denied. ⁷ In the judge's view, “[counsel for the Lapucks] won all of his counts on appeal. There's nothing against the Lapucks in this case.” The judge noted that the defendant was Malloy, not the Lapucks, and there was no indication that the Lapucks had “anything to do with the formation of the contract between Malloy and Frostar.” Expressing a concern that participation by counsel for the Lapucks would be duplicative of counsel for the Malloys, the judge denied counsel's request to make an opening statement. Moreover, stating that he was “not going to cover the same ground twice with a witness by both defendants,” the judge said that “[i]f there is anything that I think [counsel for the Lapucks] has a right to cross-examine on, I'll let him in. If not, I won't.” When counsel for Malloy said that in the first trial he and counsel for the Lapucks had “divided things up,” the judge said that would not be done in the retrial. The judge stated that “[counsel for the Lapucks] would have a very limited role. I'm not going to cover the same ground twice with a witness.” The next day, the Lapucks filed a motion to intervene as of right pursuant to Mass.R.Civ.P. 24(a)(2), which was denied. ⁸ At trial, counsel for the Lapucks, who was present throughout the proceedings, was not permitted to give an opening or closing statement or participate in the examination of any witness other than Michael Lapuck. After trial, the judge entered judgment against Malloy and ordered the Lapucks to specifically perform the contract and transfer title to Frostar.

Discussion. a. Mass.R.Civ.P. 24(a)(2). Upon timely application, a judge should grant a party's motion for intervention of right when “(1) the applicant claims an interest in the subject of the action, (2) he is situated so that his ability to protect his interest may be impaired as a practical matter by the disposition of the action, and (3) his interest is not adequately represented by the existing parties.” Johnson Turf & Golf Mgmt., Inc. v. Beverly, 60 Mass.App.Ct. 386, 389, 802 N.E.2d 597 (2004). See Bolden v. O'Connor Café of Worcester, Inc., 50 Mass.App.Ct. 56, 61, 734 N.E.2d 726 (2000). We review a judge's decision to deny the motion under an abuse of discretion standard. See Cosby v. Department of Social Servs., 32 Mass.App.Ct. 392, 395, 589 N.E.2d 349 (1992); Bolden, supra.

b. Timely application. Rule 24(a) furnishes clarity on the role and interest of an intervener, so that persons who have no formal role to play are not allowed to participate in a trial without a determined interest. The Lapucks did not file a written motion to intervene until the second day of trial. ⁹ Mass.R.Civ.P. 7(b), 365 Mass. 748 (1974) (motions “shall be made in writing”). However, it is clear from the record that the Lapucks (whose counsel had been the lead attorney in the first trial) believed, and the court was on notice that they believed, that they were parties to this action. This understanding was made clear in March, 2005, in the defendants' first submission to the Superior Court after the remand in Frostar I.

Furthermore, there would have been no prejudice to any existing parties to allow the motion, as it was undisputed that Lapucks' counsel was prepared for trial on that day and no delay would have actually occurred. See Peabody Fedn. of Teachers, Local 1289, AFT, AFL-CIO v. School Comm. of Peabody, 28 Mass.App.Ct. 410, 413, 551 N.E.2d 1207 (1990) (considering whether intervention would have caused delay in trial). Because the Lapucks acted promptly in protecting their interest and there would have been no delay and no prejudice to any party, the motion should not have been deemed untimely....