Stein v. Chalet Susse Intern., Inc.

• Decision Date: 09 May 1986
• Citation: 22 Mass.App.Ct. 174,492 N.E.2d 369
• Parties: William STEIN v. CHALET SUSSE INTERNATIONAL, INC., et al. (and a companion case).
• Court: Appeals Court of Massachusetts

Page 369

492 N.E.2d 369

22 Mass.App.Ct. 174

William STEIN

v.

CHALET SUSSE INTERNATIONAL, INC., et al. (and a companion case).

Appeals Court of Massachusetts,

Middlesex.

Argued April 11, 1986.

Decided May 9, 1986.

Frank J. Ciano, Cambridge, for Harold L. Kravit.

W. Bradley Ryan, Boston, for William Stein.

Don M. Kennedy (Mark W. Pearlstein, Boston, with him), for Chalet Susse Intern., Inc., & others.

James Verner Moore, Boston, for Lionson, Ltd., & others.

Before GRANT, KASS and WARNER, JJ.

GRANT, Justice.

These are separate but consolidated actions brought in the Superior Court by which two licensed real estate brokers, William Stein and Harold L. Kravit (plaintiffs), seek to recover and share in a broker's commission in connection with the sale of a motel in Newton. The defendants in the action brought by Stein are: Lionson, Ltd. (Lionson), which was the owner and seller of the motel; Chalet Susse International, Inc. (CSI), which held and exercised a right of first refusal with respect to the motel; and Fred B. Roedel and William M. Weaver, Jr., who were the principals of CSI, the assignees of the right of first refusal, and (as trustees) the ultimate purchasers of the motel. The Kravit action was brought against the same defendants, as well as against Richard F. Lion and William C. Johnson, who are the principals of Lionson. The actions were heard and determined on cross motions for summary judgments. The plaintiffs' motions were denied. The defendants' motions were allowed, and the plaintiffs have appealed from the ensuing judgments of dismissal.

The material facts are not in dispute. The right of first refusal was created by and constituted one of the terms of a 1977 licensing agreement between CSI as licensor and Lion and Johnson as licensees. Under the agreement the licensees were granted the right (among others) to use the name "Susse Chalet Motor Lodge" in the operation of the motel. Paragraph 12 of the agreement provided in relevant part: "The [l]icensee shall not sell ... the [l]icensee's premises in whole or in part without ... offering the same to the [l]icensor upon the same terms as the [l]icensee shall previously have received as a bona fide written offer from a responsible fully disclosed party...." Lion and Johnson did not own the motel property at the time of the execution of the licensing agreement. They subsequently acquired it in November, 1982, taking title in the name of Lionson. ¹

In early 1983, Lionson listed the property for sale with the plaintiffs, who were not then aware of the right of first refusal. The plaintiffs produced an offer from one Gerald S. Fineberg to purchase the property for a substantial sum. The circumstances appear to have been such that if Lionson had accepted the offer and conveyed the property to Fineberg, it would have been liable to the plaintiffs for a broker's commission of $160,000 in accordance with the rules enunciated in Tristram's Landing, Inc. v. Wait, 367 Mass. 622, 629-630, 327 N.E.2d 727 (1975), and reiterated in Capezzuto v. John Hancock Mut. Life Ins. Co., 394 Mass. 399, 402, 476 N.E.2d 188 (1985). Negotiations commenced between Fineberg and Lionson in the course of which, not later than March 16, 1983, it was disclosed to all concerned (including the plaintiffs) that the property was subject to the aforementioned right of first refusal in CSI. Lionson demanded an additional $200,000.

At some point in the negotiations Fineberg's counsel took the plaintiffs aside (they were not represented by counsel of their own) and persuaded them to accept an arrangement comparable to a novation ² under which they would, in effect, discharge Lionson from any obligation it might have to pay a commission on a sale, would look solely to Fineberg for any such commission, and would accept a reduced commission of $120,000. ³ Fineberg then offered Lionson an additional $40,000 in cash and to assume sole responsibility for the payment of a commission to the plaintiffs. Lionson agreed to Fineberg's proposal, subject to CSI's right of first refusal.

Counsel for Fineberg utilized the 1978 version of the Greater Boston Real Estate Board standard form of purchase and sale agreement in reducing the Fineberg-Lionson agreement to writing. There was no change of substance in p 25 of the form: "The broker(s) named herein join in this agreement and become a party hereto, in so far as any provisions of this agreement expressly apply to (them), and to any amendments or modifications of such provisions to which (they) agree(s) in writing." Paragraph 19 was filled in to read as follows: "A broker's fee for professional services is due from the BUYER to William Stein and Harold L. Kravit only in the event the sale herein described is completed, the [p]urchase [p]rice paid at closing in accordance with the terms hereof and the deed to BUYER is recorded." Paragraph 20 read in material part: "The [b]rokers named herein William Stein and Harold L. Kravit ... agree to look solely to BUYER for the commission." The "BUYER" was defined in p 1 as "Gerald S. Fineberg ... or his designee." Paragraph 37 referred to the right of first refusal and conditioned Lionson's obligation to close on CSI's not exercising its right of first refusal within thirty days of Lionson's giving it notice of the agreement. The agreement was signed by Fineberg, Lionson and both plaintiffs.

The agreement was executed on May 18, 1983, which was slightly more than two months after the plaintiffs had learned of the right of first refusal. On the same date, the plaintiffs and Fineberg entered into a separate agreement in writing which read in material part as follows: "1. That [the plaintiffs] are the brokers in the transaction; 2. That [the plaintiffs] agree to look solely to the buyer and agree not to assert any claim against the seller for a brokerage commission in connection with the purchase and sale; 3. The brokerage commission payable to [the plaintiffs] shall be $120,000 payable in cash at the closing of the transaction in accordance with the [p]urchase and [s]ale [a]greement; ⁴ and 4. No portion of the commission shall be deemed earned nor be due or payable until the transaction closes and the [d]eed is recorded in accordance with the terms of the [p]urchase and [s]ale [a]greement." Compare MacGregor v. Labute, 14 Mass.App.Ct. 203, 205, 437 N.E.2d 574 (1982).

Lionson supplied a copy of the purchase and sale agreement to CSI, which, to the surprise of all concerned, exercised its right of first refusal by a letter of June 22, 1983, to Lion, Johnson and...