G.S. Enterprises, Inc. v. Falmouth Marine, Inc.

• Decision Date: 23 May 1991
• Parties: G.S. ENTERPRISES, INC. v. FALMOUTH MARINE, INC.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 1363

571 N.E.2d 1363

410 Mass. 262

G.S. ENTERPRISES, INC. v. FALMOUTH MARINE, INC.

Supreme Judicial Court of Massachusetts Norfolk.

Argued April 1, 1991.

Decided May 23, 1991.

Loyd M. Starrett (Matthew D. Baxter, with him), Boston, for plaintiff.

Thomas E. Peisch (Robert R. Pierce, with him), Boston, for defendant.

Before LIACOS, C.J., and ABRAMS, NOLAN, LYNCH and GREANEY, JJ.

GREANEY, Justice.

A judge of the Superior Court allowed the motion of the defendant, Falmouth Marine, Inc. (FMI), for summary judgment as to the two counts in the complaint. The judge concluded that the plaintiff, G.S. Enterprises, Inc. (GSEI), had failed to make a showing in support of its claims of intentional interference with contractual relations and violations of G.L. c. 93A (1988 ed.), claims based on FMI's alleged improper interference with GSEI's contract with a third party. GSEI appealed, and we transferred the case to this court on our own motion. We now reverse.

We summarize the facts in the light most favorable to GSEI, taking all the facts set forth in its supporting affidavits as true. See Graham v. Quincy Food Serv. Employees Ass'n & Hosp., Library & Pub. Employees Union, 407 Mass. 601, 603, 555 N.E.2d 543 (1990). See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986) ("The evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor"). FMI is a boat yard located on Falmouth Harbor. In 1985, FMI became interested in purchasing another boat yard, MacDougalls' Cape Cod Marine Service, Inc. (MacDougalls'), that was located on the other side of the harbor. FMI's principals wanted to purchase MacDougalls' in order to "protect" it from a local condominium developer who, it was rumored, was interested in buying MacDougalls'. In July, 1985, FMI principals met with an executive of Ferranti Ocean Research Equipment, Inc. (FOREI), the parent company of MacDougalls'. There was a discussion about the sale of the property, but no offers were made.

In August, 1985, a representative of FOREI met with representatives of FMI and a group of FOREI management personnel (inside management group) who had an informal oral right of first refusal to purchase MacDougalls'. Further discussions about the sale of MacDougalls' took place, and the president of FMI presented a written offer to purchase the assets of MacDougalls' for the net value of the assets plus $500,000. In response, the FOREI representative "made it clear to Falmouth Marine that I was not at that time authorized to complete any deal with regard to the sale of [MacDougalls']." Several issues of importance to the sale were discussed but not resolved, including the costs of environmental studies and investigations and liability for any hazardous waste on the MacDougalls' premises. FMI's offer was not accepted at this meeting, and the president of FMI admitted that neither he nor (to his knowledge) any other officer or director of FMI believed at that time that FMI had a contract with FOREI.

Two days after this meeting, FOREI's representative delivered to the president and treasurer of FMI a written response to the FMI purchase offer. In pertinent part, this response provided:

"I am ... able to make a qualified and provisional response to your offer, although I think you understand that this is not binding on [FOREI] until such time as a contract has been prepared, approved by the [FOREI] Board and signed on their behalf by an officer of the company....

[W]e would wish to sell you the stock of [MacDougalls'] rather than the assets.... Subject to these observations, I am authorized by the Chief Executive of the [FOREI] Group to give provisional acceptance to your offer which I shall transmit through our normal procedures to the [FOREI] Main Board with a recommendation that it be approved."

Both the FOREI representative who delivered this letter and the FMI treasurer agreed that, on delivery of the letter, there was no specific discussion of the terms of the FMI offer. The president of FMI, however, took the position that there had been a "line by line, item by item" discussion of FMI's offer. In any event, at the conclusion of this meeting, the parties understood that a detailed purchase and sale agreement would have to be prepared, and that final consummation of the sale depended on the approval of the FOREI board.

During August and into September, 1985, FMI's principals heard that the inside management group at MacDougalls' was still trying to purchase the property. On September 6, 1985, FOREI's representative wrote to FMI and stated that the inside management group had just made another proposal and that this proposal would be recommended to the FOREI board. The representative also stated in the letter that FOREI's counsel had been instructed to terminate negotiations with FMI and to commence negotiations with the inside management group.

The president of FMI responded to FOREI by letter several days later. He stated that he was disappointed that FMI's offer would not be presented to the FOREI board, and he made clear that the offer remained open if the inside management group did not complete the purchase. The FMI president also stated that FMI was prepared to enhance its original offer by pledging to FOREI a substantial percentage of any profit that might be realized from the resale of the property, and by adding a balloon cash payment to FOREI.

At roughly the same time as these events, James L. Gesner, a local condominium developer (apparently not the one who FMI originally was concerned would purchase MacDougalls'), learned that MacDougalls' might be for sale. He made some inquiries of the FOREI representative with whom FMI had been dealing, and he was told that no contract for the sale of MacDougalls' had been made, and that he should submit a $250,000 deposit to FOREI's counsel if he wished to bid on the property. Soon thereafter, negotiations between Gesner and FOREI began. Gesner subsequently joined forces with James M. Salah, a contractor, and the two formed the plaintiff corporation, GSEI.

On September 16, FMI submitted to FOREI a "Revised Offer to Purchase" that included a cash payment beyond net asset value of $800,000 ($300,000 higher than that originally offered), assurances regarding the continued employment of MacDougalls' employees, and a promise to share with FOREI a percentage of profits realized on any resale of the property for use other than as a boat yard. Several days after this revised offer was submitted, FMI's president learned from counsel that its offer had not been accepted. Assuming that the inside management group had succeeded in purchasing the property, FMI's president contacted an individual whom he knew to be a part of that group and congratulated him. He was told, however, that the inside management group's offer had been rejected, and that Gesner had purchased the property. Within days of this conversation, the treasurer of FMI contacted FOREI's representative, who confirmed that FOREI was dealing with Gesner. FMI's treasurer became upset, and said, "You'll be sorry for this!"

In its edition dated September 20, 21, and 22, a Falmouth newspaper, The Enterprise, confirmed in an article that Gesner, a condominium developer, and Salah, a contractor, had purchased MacDougalls', and stated that there were reports that Gesner intended to build waterfront condominiums on the site. Both the president and treasurer of FMI saw this article. Consultation between FMI and its counsel began on September 23. ¹

On September 26, after consultation with counsel, FMI commenced an action in the Superior Court against FOREI, MacDougalls', and the FOREI representative with whom FMI had dealt. FMI alleged that the correspondence between it and FOREI's representative in July and August of 1985 constituted an enforceable agreement, and prayed for specific performance, injunctive relief, and damages. FMI also recorded a lis pendens covering the MacDougalls' property.

On September 30, the principals of GSEI were ready with payment in hand to close the sale of MacDougalls' with FOREI. They learned, however, that FMI had recently filed suit against FOREI, MacDougalls', and FOREI's representative. Therefore, the closing was postponed and GSEI and FOREI entered into the first of a series of extension agreements.

In November, FMI's complaint was ordered dismissed as to all three defendants pursuant to Mass.R.Civ.P. 12(b)(6), 365 Mass. 754 (1974), for failure to state a claim upon which relief could be granted. There was no request made to amend the complaint. The lis pendens also was ordered dissolved, but FMI took no immediate action to record the order of dissolution. FMI appealed from the judgment of dismissal and separately from the order dissolving the lis pendens.

While these appeals were pending, in February, 1986, counsel for FOREI notified counsel for GSEI in writing that FOREI would enter into no further extension agreements beyond February 19. Counsel for GSEI responded in essence that, because of the pendency of the FMI lawsuit, FOREI could not comply with certain terms of the purchase and sale agreement, including those relating to pending claims and litigation and material adverse changes in the business of MacDougalls'. Therefore, counsel for GSEI stated, GSEI was willing to enter into another extension agreement, and also was willing to perform if FOREI would agree to a price modification or an escrow arrangement, but GSEI would not close on February 19 under the existing conditions. On February 28, 1986, FMI finally recorded the dissolution of the lis pendens.

FOREI subsequently sold MacDougalls' to another group with which (apparently) it had not previously negotiated. After that sale was closed, FMI, in an April 10, 1986 letter signed by its president, vice president, and treasurer, made contact with the new ownership of...