Petricca Development Ltd. v. Pioneer Develop. Co.

• Decision Date: 24 March 1999
• Docket Number: No. Civ.A. 96-30071-FHF.,Civ.A. 96-30071-FHF.
• Citation: 40 F.Supp.2d 49
• Parties: PETRICCA DEVELOPMENT LIMITED PARTNERSHIP and Berkshire Concrete Corp., Plaintiffs, v. PIONEER DEVELOPMENT COMPANY, Tamarack Investors Co., Inc. and Pioneer Berkshire Crossing Company, Defendants.
• Court: U.S. District Court — District of Massachusetts

Page 49

40 F.Supp.2d 49

PETRICCA DEVELOPMENT LIMITED PARTNERSHIP and Berkshire Concrete Corp., Plaintiffs, v. PIONEER DEVELOPMENT COMPANY, Tamarack Investors Co., Inc. and Pioneer Berkshire Crossing Company, Defendants.

No. Civ.A. 96-30071-FHF.

United States District Court, D. Massachusetts.

March 24, 1999.

James R. DeGiacomo, John W. Gahan, III, Roche, Carens & DeGiacomo, P.C., Boston, MA, for Petricca Development Limited Partnership, plaintiffs.

Robert J. Muldoon, Jr., Sherin & Lodgen, Boston, MA, Rhonda B. Parker, Sherin & Lodgen, Boston, MA, Michael S. Bloom, Sherin and Lodgen, Boston, MA, for Pioneer Development Company, defendants.

MEMORANDUM AND ORDER

FREEDMAN, Senior District Judge.

I. INTRODUCTION

On June 23, 1992, Pioneer Development Company ("Pioneer"), a New York partnership, entered an option contract to buy a parcel of land in Pittsfield, Massachusetts from Petricca Development Limited Partnership ("Petricca"), a Massachusetts limited partnership.¹ Pioneer never exercised its option to buy the land, instead purchasing another parcel of land about one half mile away and developing a Wal-Mart anchored shopping center on that parcel.

In May of 1996, Petricca sued Pioneer in a five-count complaint which sought a declaratory judgment that a joint venture existed between the parties (Count I) and alleged a breach of fiduciary duty (Count II), breach of contract (Count III), deceit (Count IV), and a violation of Mass.Gen. Laws ch. 93A (Count V). On December 11, 1996, the Court dismissed Count V. See Petricca Development Ltd. Partnership et al. v. Pioneer Dev. Co. et al., C.A. No. 96-30071-FHF, slip op. at 9 (D.Mass. Dec.11, 1996). At oral argument on the present motion on October 10, 1998, the Court granted Petricca's voluntary motion to dismiss Count IV and Petricca also voluntarily withdrew Count III.

Pioneer now moves for summary judgment on Counts I and II, contending that because it never exercised its option to buy Petricca's land, no joint venture ever existed and, consequently, no fiduciary duty to Petricca could have arisen. Petricca opposes the motion.

II. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, 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." Fed.R.Civ.P. 56(c). An issue is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party" and a fact is "material" if it is one which "might affect the outcome of the suit under the governing law." See Hayes v. Douglas Dynamics, Inc., 8 F.3d 88, 90 (1st Cir.), cert. denied, 511 U.S. 1126, 114 S.Ct. 2133, 128 L.Ed.2d 863 (1994). "`[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.'" Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir.1990) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (citations omitted)). Moreover, summary judgment may be appropriate "[e]ven in cases where elusive concepts such as motive or intent are at issue ... if the non-moving party rests merely upon conclusory allegations, improbable inferences, and unsupported speculation." Medina-Munoz, 896 F.2d at 8. In addition, Fed.R.Civ.P. 56(c) "mandates the entry of summary judgment ... upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "[T]o defeat a properly supported motion for summary judgment, the nonmoving party must establish a trial-worthy issue by presenting `enough competent evidence to enable a finding favorable to the non-moving party.'" LeBlanc v. Great Am. Ins. Co., 6 F.3d 836, 842 (1st Cir.) (quoting Goldman v. First Nat'l Bank of Boston, 985 F.2d 1113, 1116 (1st Cir.1993)), cert. denied, 511 U.S. 1018, 114 S.Ct. 1398, 128 L.Ed.2d 72 (1994). In deciding a motion for summary judgment, the Court "state[s] the facts in the light most favorable to the nonmoving party, indulging all inferences in that party's favor." Dykes v. Depuy, Inc., 140 F.3d 31, 33 (1st Cir.1998).

III. FACTUAL AND PROCEDURAL HISTORY

On June 23, 1992, Pioneer and Petricca executed a one-year extendable option contract that in essence granted Pioneer the right to purchase land from Petricca on which Pioneer wished to develop a Wal-Mart store or similar large commercial facility. The option contract provided that in consideration for this right, Pioneer would pay Petricca set fees on certain dates. Section thirteen of the option contract entitled Petricca to return those option fees, and thereby enter a future "joint venture" with Pioneer to develop and own the site.

The fourth section of the option contract explained the mechanics of the option contract:

4. Exercise of Option. [Pioneer] may exercise its option to purchase any one or more of the parcels comprising the Premises at any time during the Option Term by giving written notice to [Petricca] ....

In the event [Pioneer] does not exercise its Option to purchase any Parcel of the Premises during the initial term or any extensions thereof ... this Agreement shall expire and terminate and neither party shall have any liability to the other under or pursuant to this Agreement.

The next three sections of the option contract, which detailed the purchase of the land, all began: "In the event [Pioneer] exercises its Option...." The following five sections defined the respective responsibilities of Pioneer and Petricca if Pioneer bought the land.

Section twenty-one provided that in the event of Pioneer's breach of the option contract's obligations, Petricca's "sole and exclusive remedy, [would be to] terminate this Agreement, in which case neither party shall have any further liability or obligation to the other hereunder."

Initially, Petricca chose to accept the option fees, but in early October, elected to forego the option fees and enter the "joint venture." On October 7, 1992, after more negotiations between Pioneer and Petricca, the two parties executed an addendum to the option contract. The Preliminary Statement of the addendum stated that Petricca had "exercised its option ... to participate as a joint venture partner, with [Pioneer] in the development of [the site]."

The addendum explained the potential formation of a joint venture called Pioneer/Petricca Associates. This joint venture would arise through the sequential creation of several business entities by Pioneer with Petricca joining after Pioneer exercised its option to buy Petricca's land. First, Pioneer would join a straw partner to form a general partnership called Tamarack Plaza Company ("TPC"), which would be responsible for the "right-to-build development phase" allowing construction on Petricca's land. To allow TPC to perform this phase, Pioneer would assign its rights under the option contract to buy Petricca's land to TPC, a company it controlled. Importantly, the addendum established that obtaining the right-to-build "will be in the sole discretion of Pioneer and may be discontinued at any time and for any reason." In addition, if Pioneer chose to stop the right-to-build phase, Petricca would pay 32.5% of Pioneer's "Development Costs and Overhead."

The next paragraph of the addendum read:

2. Upon exercise of the Option to purchase any portion of the Land, Petricca will be admitted as a partner of [TPC], the straw partner will withdraw as a partner, and the partnership will change its name to Pioneer/Petricca Associates.

On October 9, 1992, Pioneer gave written notice to the escrow agent holding the option payments for Petricca that "[Petricca] and [Pioneer] have elected to participate in a joint venture" and instructed the agent to return the option payments to Pioneer. In December 1992, Pioneer filed two rezoning petitions with the Pittsfield City Council to get Petricca's land rezoned to allow commercial development. On March 23, 1993, the Pittsfield City Council tabled the rezoning petitions after they failed to receive sufficient votes for approval.

Several days later, without notifying Petricca, Pioneer began negotiations with another property owner in Pittsfield to obtain an option on his land, located about half a mile from Petricca's site. On April 7, 1993, Pioneer signed an option for that property. On April 8, Pioneer's counsel requested that the City Council take no action on the Petricca rezoning petitions. Between April 8, and the end of April, Pioneer inquired whether the city councilors would support rezoning petitions for the second property.

On May 19, 1993, Pioneer informed Petricca that it was withdrawing the rezoning petitions for Petricca's land and stated that Petricca's election to join the joint venture was no longer effective due to impossibility of performance. As a result, Pioneer tendered option payments to Petricca. Petricca, however, refused to accept the offered payments insisting that it had already joined the joint venture. On May 25, 1993, Pioneer withdrew the rezoning petitions for Petricca's land and later developed a WalMart-anchored shopping center on the alternative site. This lawsuit ensued, with Petricca's claims now reduced to the issue of the existence of a joint venture and Pioneer's alleged breach of an ensuing fiduciary duty.

IV. DISCUSSION

Pioneer asserts that the Court should grant summary judgment on the counts alleging existence of a joint venture and breach of a fiduciary duty because no genuine issue of material fact exists, and that as a matter of law no joint venture...