Simon v. Simon

• Decision Date: 01 March 1994
• Docket Number: No. 92-P-815,92-P-815
• Citation: 625 N.E.2d 564,35 Mass.App.Ct. 705
• Parties: Saul SIMON & another, 1 v. Harold SIMON & others. 2
• Court: Appeals Court of Massachusetts

Page 564

625 N.E.2d 564

35 Mass.App.Ct. 705

Saul SIMON & another, ¹ v. Harold SIMON & others. ²

No. 92-P-815.

Appeals Court of Massachusetts Suffolk.

Argued Jan. 12, 1993.

Decided Jan. 5, 1994.

Further Appellate Review Denied March 1, 1994.

Robert D. Cohan, Boston, for Saul Simon & another.

Morris M. Goldings, Boston (Ellen S. Shapiro, with him), for Harold Simon & others.

Before BROWN, JACOBS and IRELAND, JJ.

JACOBS, Judge.

A family business dispute caused Saul Simon and his wife Zelda to file a complaint in the Superior Court against Saul's brother Harold Simon, his wife Jeannine and Back Bay Clothing Company, a corporation controlled by Harold. The complaint, as amended, alleges violation by the defendants of an agreement to purchase certain commercial real estate as partners (the partnership claim) and of a contract giving Saul and Zelda the option to rent a portion of that property once purchased (the option claim). The plaintiffs also allege fraud, breach of fiduciary duty, unjust enrichment, negligent misrepresentation, and, inevitably, violation of G.L. c. 93A.

In the cross appeals before us, Saul and Zelda essentially seek review of the allowance of the defendants' motion for partial summary judgment on the partnership and c. 93A claims and from the direction of verdicts against them with respect to their claims of fraud and breach of fiduciary duty. ³ Harold and Jeannine appeal from a judgment on a jury verdict on the option claim assessing damages in favor of Saul and Zelda in the amount of $453,000 for loss of profits. ⁴

1. The factual background. When Harold and Jeannine had an opportunity to purchase, under a right of first refusal in their lease, the building in which they operated a men's clothing store at the corner of Newbury and Clarendon Streets in Boston, they sought financial assistance from Saul and Zelda. In exchange for that assistance, they agreed that Saul and Zelda would be equal partners with them in the ownership of the real estate to be purchased and that Saul and Zelda would have an option to lease the basement of that property for use as a women's clothing store upon the expiration of the lease of the present occupant, the Hope Chest.

Saul and Zelda helped to arrange interim financing for the purchase and actively participated in the acquisition by supplying $50,000 of the initial cash deposit of $150,000 and co-signing a $735,000 promissory note which was partially secured by a mortgage on their home. They allege that on May 31, 1983, the day before they signed the note, Harold told them that he did not want to be partners with them. Harold testified the partnership concept foundered because Saul was unwilling to make additional necessary contributions to the operation and maintenance of the building as the need arose. In any event, the parties agreed in writing, on May 31, 1983, that Harold and Jeannine would pay to Saul and Zelda a total of $250,000 by August 15, 1985, in repayment of the monies advanced by them and in appreciation for their assistance. This agreement, which the plaintiffs testified they entered into in order to maintain family harmony, was intended to supersede the partnership arrangement. Less than a week later, Harold complained to Saul and Zelda that his two-year commitment to pay $250,000 was making him ill with heart palpitations; he thought he was going to have a heart attack. Explaining they "did not want him to die over this," Saul and Zelda entered into a substitute arrangement, in writing, whereby Harold agreed to arrange for the release of the mortgage on Saul's and Zelda's home, repay to them their $50,000 advance, and give them $45,000, as a "finder's fee," by August 31, 1983. The repayment and mortgage release were accomplished on time, but the $45,000 finder's fee remained unpaid for over a year. On February 9, 1985, the parties entered into yet another agreement which provided for payment of the $45,000 fee by March of 1986, and for the payment of past and future interest on that amount. Their handwritten agreement also contained the following language:

"Saul & Zelda get the option to rent the lower level of the Hope Chest store when their (the Hope Chest's) lease expires. If they do take it, they will pay the same rate of rent per square foot that Harold is paying for his store. Saul & Zelda will do all the fixing up at their expense. Entrance to upper level has to be maintained from Newbury Street--similar to how it is now. Saul and Zelda have to let Harold know six month[s] ahead of time: (lease expires by May 31, 1987 so that Saul and Zelda have to let Harold know by Nov. 31, 1986.) Saul and Zelda cannot use the name Simon or Simon's on anything with the Simon name as a name for their store. Too confusing."

On September 13, 1985, Harold delivered to Saul and Zelda a check in the amount of $45,000 which contained a statement generally releasing the defendants of all liability to the plaintiffs. Saul and Zelda endorsed the check, and at the same time, signed and returned to Harold, typewritten general release forms which Harold had submitted to them. Saul was then suffering from severe hearing and vision limitations and when Zelda attempted to "lip read" the release language to him, Harold assured Saul and Zelda that they merely were signing a receipt for the $45,000 payment and that the option remained in effect. A year later, Saul and Zelda unsuccessfully sought to exercise the option. This suit followed.

2. The defendants' appeal. Having preserved the issue in their answer and during trial by their motion for a directed verdict, Harold and Jeannine argue that the option agreement does not comply with the Statute of Frauds ⁵ and, therefore, is unenforceable as matter of law. They contend that the option claim should not have been submitted to the jury. While we agree that the option agreement does not comply with the Statute of Frauds, we conclude that, in the circumstances, a jury should be given an opportunity, in a new trial, to determine whether it nevertheless should be enforced.

Saul and Zelda correctly do not contest the general applicability of the Statute of Frauds to the option claim. See G.L. c. 259, § 1, Fourth; Schwanbeck v. Federal-Mogul Corp., 412 Mass. 703, 709, 592 N.E.2d 1289 (1992) ("[a]ny promise involving real property is enforceable only if that promise meets the requirements of the Statute of Frauds...."). See also First Natl. Bank of Boston v. Fairhaven Amusement Co., 347 Mass. 243, 245, 197 N.E.2d 607 (1964). Nor do they resist the general proposition that in order for a writing to satisfy the Statute of Frauds it must contain directly, or by implication, all of the essential terms of the parties' agreement. See Michelson v. Sherman, 310 Mass. 774, 775, 39 N.E.2d 633 (1942).

Whether a writing satisfies the Statute of Frauds is a question of law. Schwanbeck v. Federal-Mogul Corp., supra, 412 Mass. at 709-710, 592 N.E.2d 1289. It is a court's function, therefore, to determine what provisions are essential to an agreement sought to be enforced and whether an omitted provision can be supplied by implication. In the absence of a mutual mistake permitting reformation, the omission of an essential term, not supplied by reasonable implication, renders the memorandum insufficient. Restatement (Second) of Contracts § 131 comment g (1979).

In the case of a lease or an agreement to lease, the duration of the leasehold interest is central to that undertaking. "It is an essential element in a lease for a term that there be a demise for a period definitely fixed or at least capable of definite ascertainment." Farris v. Hershfield, 325 Mass. 176, 177, 89 N.E.2d 636 (1950). The writing offered to satisfy the Statute of Frauds must set forth that essential element with reasonable certainty. Restatement (Second) of Contracts § 131(c) (1979). Moreover, this essential term cannot be provided by implication. See 4 Williston on Contracts § 575 at 80 n. 11 3d ed. 1961), citing Williams v. Pittsfield Lime & Stone Co., 258 Mass. 65, 154 N.E. 572 (1927) ("where the contract is for a term of years but fails to define the term, no implication can be made in its favor....") By contrast, when an agreement for the sale of land does not state the time for performance, a reasonable time will be implied. See Cousbelis v. Alexander, 315 Mass. 729, 731, 54 N.E.2d 47 (1944). The option before us is similar in all relevant respects to an agreement to execute a lease. Among other deficiencies, the parties' option document fails to define the time period over which the rental was to extend.

During the trial, the judge permitted Saul to testify, over objection, to discussions concerning the length of the contemplated lease and instructed the jury that it was their responsibility to determine its term. ⁶ While attendant circumstances and oral communications may be shown by parol evidence to interpret and apply language used in a writing, Tzitzon Realty Co. v. Mustonen, 352 Mass. 648, 652-653, 227 N.E.2d 493 (1967), and cases cited, where a memorandum of agreement for a lease does not satisfy the Statute of Frauds because it does not state or touch upon the term or duration of the lease, that deficiency cannot be supplied by parol evidence. Parker v. Tainter, 123 Mass. 185, 187 (1877). See Michelson v. Sherman, 310 Mass. at 777, 39 N.E.2d 663; A.B.C. Auto Parts, Inc. v. Moran, 359 Mass. 327, 330, 268 N.E.2d 844 (1971). Compare Hook Brown Co. v. Farnsworth Press, Inc., 348 Mass. 306, 310-311, 203 N.E.2d 681 (1965) (where writing reflected the essential terms of an oral agreement to renew a lease, sufficient to satisfy the Statute of Frauds, but was not a formal integrated document, parol evidence was admissible to interpret its terms); Schwartz, Lease Drafting in Massachusetts § 5.2 at 108 (1961). "Unless the writing, considered alone, expresses the essential terms with sufficient certainty to constitute an enforceable...