T.W. Nickerson, Inc. v. Fleet Nat. Bank

• Decision Date: 05 January 2009
• Docket Number: No. 07-P-0554.,07-P-0554.
• Citation: 898 N.E.2d 868,73 Mass. App. Ct. 434
• Parties: T.W. NICKERSON, INC. v. FLEET NATIONAL BANK,<SMALL><SUP>1</SUP></SMALL> trustee,<SMALL><SUP>2</SUP></SMALL> & others.<SMALL><SUP>3</SUP></SMALL>
• Court: Appeals Court of Massachusetts

898 N.E.2d 868

73 Mass. App. Ct. 434

T.W. NICKERSON, INC. v. FLEET NATIONAL BANK,¹ trustee,² & others.³

No. 07-P-0554.

Appeals Court of Massachusetts, Barnstable.

Argued February 11, 2008.

Decided January 5, 2009.

Thomas F. Sullivan (Hrant H. Russian with him) for the plaintiff.

Peter S. Farber for Edmund Nickerson & others.

Robert A. Bianchi, Hyannis, for Fleet National Bank.

Present: CYPHER, ARMSTRONG, & RUBIN, JJ.

RUBIN, J.

This case involves a dispute about property in Chatham. We summarize the facts, relying on the findings made by the Superior Court judge following a jury-waived trial, and supplementing where necessary by undisputed record evidence.

A. Procedural background. T.W. Nickerson, Inc. (plaintiff), is a Massachusetts corporation, which operates a "stump dump" business on the subject property.⁴ The property on which the plaintiff operates its business was owned by defendant Fleet National Bank (Fleet), as trustee of the Theodore W. Nickerson Trust (trust). Lillian Nickerson, who was the wife of Theodore W. Nickerson, was the original beneficiary of the trust, and the children of Theodore,⁵ defendants Edmund Nickerson Kenneth Nickerson, Theodora Burson, and Diana Lapham, were the remainder beneficiaries (collectively, beneficiaries). The plaintiff brought this suit after the subject property was transferred to the beneficiaries and then sold to a third-party purchaser. At the time of sale, the plaintiff's leases on the property had not been renewed.

In its second amended six-count complaint, the plaintiff alleged that both Fleet and the beneficiaries breached the implied covenant of good faith and fair dealing and that the plaintiff consequently suffered injury in regard to its rights under an option to renew each of two leases it held on the property; that both Fleet and the beneficiaries breached the implied covenant of good faith and fair dealing and that the plaintiff consequently suffered injury in regard to its rights under a right of first refusal contained in each of those leases; and that both Fleet's and the beneficiaries' conduct constituted unfair and deceptive acts or practices, in violation of G.L. c. 93A.

After a bench trial, a Superior Court judge entered findings of fact, rulings of law, and an order for judgment. The judge found Fleet liable for breach of the implied covenant of good faith and fair dealing with respect to the plaintiff's rights under the option to renew the leases because of Fleet's lack of diligence throughout the lease renewal process, and found for both Fleet and the beneficiaries on the plaintiff's other claims. The judge required that, "[o]n the issue of damages," the plaintiff submit "an affidavit detailing the damages claimed" and that if Fleet disputed the amount of damages, she would hold a hearing.

Fleet filed a motion for amended findings, and the plaintiff filed a motion for reconsideration. The plaintiff also filed several affidavits as to damages, and the beneficiaries filed a memorandum in opposition to the plaintiff's claim for damages; Fleet filed a motion to strike the plaintiff's affidavits. After hearing, the judge reversed her previous conclusion with respect to the plaintiff's successful claim against Fleet, but retained the remaining rulings. This appeal by the plaintiff is from the resulting judgment. Some background is in order.

B. Factual background. 1. The leases. In 1991, Theodore sold the plaintiff corporation to his nephew Donald F. Nickerson, and in 1993, Donald sold all of the stock to Steven T. Clark, who was related to the Nickersons through his mother. As a result, Clark became the president and treasurer of the plaintiff. In 1993, Fleet and the plaintiff executed two leases, a "Business Premises Lease" and a "Stump Dump Commercial Lease." The business premises lease covered two parcels of land known as lot 5, which is itself part of a piece of land referred to as parcel A. The stump dump commercial lease covered another piece of land referred to as parcel B.

Each lease gave the plaintiff the right to use the property described from July 1, 1991, through June 30, 2001. Both leases provided the plaintiff with an option to renew for an additional ten-year term "at a rental to be agreed upon between the parties." The leases both provided that if the parties could not "agree upon a rental, then [the] same shall be determined by arbitration," and provided a mechanism for each side to choose an arbitrator, with the third chosen by the first two. The leases further stated that:

"This option to renew shall be deemed to have been exercised upon receipt by LESSOR from LESSEE no later than six months prior to expiration of the term of said lease written notice of LESSEE's intent to exercise said option. It is agreed that negotiation regarding a new rental amount will commence upon receipt of said written notice from LESSEE. In the event LESSOR and LESSEE have not agreed upon a new rental amount in accordance with the terms of this paragraph by the expiration date of said lease it is agreed that LESSEE will pay to LESSOR the current rental amount until a new amount has been agreed upon. It is also agreed that said new rental amount will be retroactive to the date of the commencement of the renewed lease and that at the time the amount is determined a one time adjustment will be made between the current rental amount and the new rental amount."

The leases also each contained similar language regarding a right of first refusal to purchase:

"The LESSOR grants to the LESSEE the right of first refusal to purchase the entire leasehold premises at a price equal to any bona fide offer received by the LESSOR for the property, said right of first refusal to expire upon the termination of this lease. In the event premises are conveyed as part of a larger parcel within which is included the leasehold premises, the LESSOR grants to the LESSEE the right of first refusal to purchase the entire parcel at a price equal to any bona fide offer received by the LESSOR for the property, said right of first refusal to expire upon the termination of this lease. In the event of a sale of the leasehold premises to a party other than LESSEE said sale shall be subject to the leasehold interest hereby created. The LESSOR shall notify the LESSEE by Certified Mail, Return Receipt Requested, of any bona-fide offer and the LESSEE shall have thirty (30) days from receipt thereof in which to notify the LESSOR of its intent to exercise its right of first refusal as set forth above. The LESSEE shall then have sixty (60) days subsequent thereto in which to purchase said property in accordance with the terms of any said bona-fide offer."

The leases provided that their terms ran with the premises, and "that they shall extend to and be binding upon the heirs, executors, administrators, successors and assigns of the respective parties hereto, and any and all persons, firms and corporations holding through or under them, the same as if they were in every case named and expressed."

2. Clark's offer. In 2000, Clark made an offer to purchase the subject property for $300,000⁶: $30,000 cash and a note for the balance of $270,000. In June, 2000, Fleet's attorney, Russell Haddleton, sent Clark's attorney a draft purchase and sale agreement, but Clark did not sign it because of a title issue involving the land. In late 2000, a new trust officer at Fleet, Timothy Hannon, was assigned to the trust. He met with Clark, who told him the beneficiaries had agreed to the sale price of $300,000, but that there was a title problem relating to the description of the premises. Hannon placed a memorandum on file at Fleet describing the oral agreement between Clark and the beneficiaries. He then wrote to Edmund, one of the remainder beneficiaries, who was handling the affairs of his mother Lillian, stating that Fleet was concerned about the purchase price, and that it might need the beneficiaries "to execute some type of hold harmless agreement" to protect Fleet, prior to selling the property. Edmund sent Hannon an impatient electronic mail message (e-mail) that said, in part, "You know it amazes me the lawyer[s] are having such a problem with the sale to [Clark]." Edmund said that there should be no problem with creating a deed, and that "[a]s for the selling price, the [beneficiaries] will be willing to sign whatever papers are needed to keep Fleet harmless. You have been informed why it is important to expedite the sale. (Age and liability.)"

Clark also spoke with Edmund to get his assistance with the title problem. Edmund told him that in his opinion there was no such problem and that Clark and Fleet should get going. Clark then called Hannon, told him about the conversation, and requested a meeting of all concerned.

By letters dated November 9, 2000, from the plaintiff's attorney, Hrant Russian, the plaintiff timely exercised its right to renew the leases. Each letter said the notice was being given pursuant to the respective lease, and each letter said, "[I]f no agreement is reached [as to the rental amount], then, we should proceed to [arbitration]."

Attorney Haddleton hired a title examiner to confirm the record title. There were questions about possible defects in the title because of vague deed descriptions and references to boundary markers that no longer existed. Meanwhile, Edmund sent an e-mail to Hannon telling him not to discuss lease renewal with Clark until May, 2001 (i.e., one month before the expiration date of the leases), because he thought ultimately Clark was going to buy the property, rather than renew the leases.

In December, 2000, Attorney Russian sent a draft purchase and sale agreement to Attorney Haddleton. While Haddleton was informed that Clark would take the property if the title search confirmed that clear title could be taken through adverse possession, Fleet never acted on the draft purchase and sale agreement.

Hannon told Clark in...