Grossman v. Murray, 94-634

• Decision Date: 07 August 1996
• Docket Number: No. 94-634,94-634
• Citation: 141 N.H. 265,681 A.2d 90
• Parties: Stewart F. GROSSMAN, Trustee of the Murray Creditors' Trust v. David W. MURRAY, Individually and David W. Murray d/b/a Erin Realty Company, d/b/a Second Leasing Company, d/b/a Charming Fare Country Club, d/b/a Leased Restaurant Equipment Company.
• Court: New Hampshire Supreme Court

Page 90

681 A.2d 90

141 N.H. 265

Stewart F. GROSSMAN, Trustee of the Murray Creditors' Trust v. David W. MURRAY, Individually and David W. Murray d/b/a Erin Realty Company, d/b/a Second Leasing Company, d/b/a Charming Fare Country Club, d/b/a Leased Restaurant Equipment Company.

No. 94-634.

Supreme Court of New Hampshire.

Aug. 7, 1996.

Hoefle & Phoenix, P.A., Portsmouth (Daniel C. Hoefle, on the brief and Lawrence B. Gormley, on the brief and orally), for plaintiff.

Wadleigh, Starr, Peters, Dunn & Chiesa, Manchester (Charles J. Dunn and William S. Gannon, on the brief, and Robert E. Murphy, Jr., orally), for defendant.

THAYER, Justice.

The plaintiff, Stewart F. Grossman, as trustee of the Murray Creditors' Trust (trust), brought a plea of assumpsit in Superior Court (Sullivan, J.) to recover the amount of real estate taxes paid on certain real property held in the trust. The defendant, David W. Murray, conceded liability for the taxes but filed a counterclaim seeking damages for breach of a right of first refusal to purchase the property. The superior court granted summary judgment for the plaintiff on grounds of res judicata and collateral estoppel. We reverse and remand.

On April 6, 1989, an involuntary chapter 11 bankruptcy petition was filed against the defendant in the United States Bankruptcy Court for the District of Massachusetts, Eastern Division (bankruptcy court). Pursuant to a stipulation of settlement dated April 30, 1991, the trust was created for the benefit of "holders of allowed claims in Murray's Chapter 11 case." Under a reorganization plan approved by the bankruptcy court on December 4, 1991, title to a parcel of land at Long Point in Moultonborough (the Long Point property) on Lake Winnipesaukee was transferred to the trust. The property passed directly to the trust and was never part of the bankruptcy estate.

In a terms letter dated April 26, 1991 (terms letter), the defendant was granted "the exclusive and irrevocable right of first refusal ... to purchase the Long Point property on the same terms and conditions and for the purchase price as provided for in any agreement to purchase the Long Point property between the [plaintiff] and any third-party purchaser." The terms letter further provided that the right must be exercised within thirty days of receipt by the defendant of a copy of an executed purchase and sale agreement between the plaintiff and a third-party purchaser. The defendant was also granted exclusive possession of the property prior to any sale, "[i]n consideration of payment of all real estate taxes ... owing as of the date of the transfer."

In October 1992, the plaintiff executed with SVD Corp. (SVD) a purchase and sale agreement (the SVD agreement) for the Long Point property. Shortly thereafter the defendant assigned his interest in the right of first refusal to First Express, Inc. (FEI). In November 1992, FEI delivered a Notice of Exercise of Right of First Refusal to the bankruptcy court. Appended to this notice was a copy of a purchase and sale agreement (the FEI agreement) which FEI asserted "mirrors in all material respects" the SVD agreement, other than the purchaser's name.

The plaintiff filed a motion with the bankruptcy court "for determination of whether right of first refusal was timely exercised, and for order regarding sale of [the Long Point property]." A hearing on the motion was held on November 23, 1992, and on December 16, 1992, the bankruptcy court issued an order permitting the plaintiff to sell the Long Point property "free and clear" to SVD. The court held that FEI's attempted exercise of the right of first refusal was ineffective because the FEI agreement materially differed from the SVD agreement.

The bankruptcy court identified several discrepancies between the FEI and SVD agreements. First, the FEI agreement recited a purchase price $76,300 lower than in the SVD agreement. This difference was in part explained by a clause in the FEI agreement providing that FEI would pay the trust $76,300 at closing "for the purpose of reimbursing [the trust] for any fee owed to any broker employed by [the trust]." The bankruptcy court interpreted this clause to mean that FEI would pay broker's fees, up to $76,300, only to the extent the trust actually incurred such fees in connection with the SVD agreement. The court observed that "[n]o evidence was offered regarding the payment of a fee or commission to a broker," leaving open the possibility that no broker was involved in the SVD agreement.

Second, the bankruptcy court noted that an addendum to the FEI agreement (addendum) not found in the SVD agreement granted the defendant "the right to extend the closing date for a period not to exceed thirty days in order to cure title defects or to otherwise make the Premises conform to the terms of the Purchase and Sale Agreement." The addendum also provided for a supplemental agreement to be executed by November 23, 1992, "whereby [FEI] waives any objections to taking title to the [Long Point property] subject to the conditions and restrictions imposed ... in a Warranty Deed dated September 5, 1964 ... to the extent such conditions and restrictions apply." In the event this supplemental agreement was not executed by November 23, 1992, the FEI agreement was to become "null and void." The bankruptcy court observed that this agreement never came into being. The court characterized both of these provisions found in the addendum as "relevant and material deviations" from the SVD agreement.

The defendant and FEI filed a joint motion to reconsider, which the bankruptcy court denied. The defendant, but not FEI, filed an appeal in the United States District Court for the District of Massachusetts. The parties agree that the plaintiff finally sold the Long Point property to SVD on February 24, 1993. On April 8, 1993, the defendant's appeal in the United States District Court was dismissed for failure to file a brief. On August 16, 1993, the plaintiff filed a plea of assumpsit in superior court alleging that the defendant was liable for $4,481.35 in real estate taxes due on the property as of the February 24, 1993, closing. The defendant conceded liability for this amount, and this issue is not on appeal.

The defendant's counterclaim alleged that FEI had initially delivered an agreement without the addendum found by the bankruptcy court to contain "relevant and material deviations," that the plaintiff had refused to sign this agreement without the addendum, that the addendum operated solely for the benefit of the trust, and that the plaintiff's "requiring the addendum ... materially breached the Right of First Refusal solely and proximately causing Long Point to be conveyed to SVD, thereby entitling [the defendant] to damages he would have realized had Long Point been sold to FEI."

The plaintiff moved to dismiss the counterclaim on grounds of res judicata and collateral estoppel. The defendant then amended his counterclaim to include four additional counts. Count II alleged that the defendant was entitled to damages as a third-party beneficiary for a finder's fee in the amount of $186,300 that he would have received from FEI had the plaintiff not breached the right of first refusal. Count III alleged that the plaintiff tortiously interfered with the fee agreement between the defendant and FEI, resulting in a loss of the $186,300 fee. Count IV claimed that the plaintiff breached the right of first refusal "by failing to grant FEI the same extension as that granted SVD." Count V alleged that the plaintiff's "insisting on the addendum to the [FEI agreement] and failing to grant FEI the same extension as that granted to SVD constitute a breach of the covenant of good faith and fair dealing."

The "extension" mentioned in Counts IV and V is an apparent reference to the February 24, 1993, date of sale of the Long Point property. The bankruptcy court found that the SVD agreement provided for a closing date of November 30, 1992. This extension from November 30 to February 24, according to the defendant, constituted either a material alteration of the SVD agreement or the formation of a new purchase and sale agreement with SVD. In either case, the defendant maintains that he was entitled to notice and a new right of first refusal pursuant to the terms letter. Although the defendant does not spell out the legal theory under which he seeks relief for this alleged second breach of the right of first refusal, we assume that he again claims breach of contract as a third-party beneficiary.

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