Whitinsville Plaza, Inc. v. Kotseas

Decision Date15 May 1979
Citation378 Mass. 85,390 N.E.2d 243
PartiesWHITINSVILLE PLAZA, INC. v. Charles H. KOTSEAS et al. 1 (and a companion case) 2
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

David A. Talman, Worcester, for Whitinsville Plaza, Inc.

John M. Griffin and Harry P. Kotseas, Worcester, for Charles H. Kotseas & another.

Dennis Pojani, Worcester, for Whitinsville CVS, Inc.

Before HENNESSEY, C. J., and QUIRICO, KAPLAN, WILKINS and ABRAMS, JJ.

QUIRICO, Justice.

These are civil actions commenced by Whitinsville Plaza, Inc. (Plaza), against Charles H. Kotseas and Paul Kotseas (Kotseas) and against Whitinsville CVS, Inc. (CVS). In its further amended complaint against Kotseas, Plaza alleged imminent violations of certain anticompetitive deed restrictions and requested declaratory, injunctive, and monetary relief under theories of breach of contract and unfair acts or practices within the meaning of G.L. c. 93A, § 2. Plaza's amended complaint against CVS likewise alleged imminent violations of the deed restrictions, and it requested declaratory, injunctive, and monetary relief on theories of breach of contract, unfair trade practices, and interference with contractual relations. A judge of the Superior Court granted the defendants' motions to dismiss for failure to state a claim. See Mass.R.Civ.P. 12(b)(6), 365 Mass. 754 (1974).

Plaza appealed from the dismissal of its actions, and we granted its application for direct appellate review in both cases. See Mass.R.A.P. 11(a), 365 Mass. 854 (1974). We hold that dismissal for failure to state a claim was erroneous as to some counts of each complaint.

In ruling on a motion to dismiss, "the allegations of the complaint (and annexed exhibits), as well as such inferences that may be drawn therefrom in the plaintiff's favor, are to be taken as true." Nader v. Citron, 372 Mass. 96, --- - ---, 360 N.E.2d 870, 872 (1977). Accord, Dziokonski v. Babineau, --- Mass. ---, --- A, 380 N.E.2d 1295 (1978); Lantner v. Carson, --- Mass. ---, --- B, 373 N.E.2d 973 (1978). These are as follows. In 1968, Kotseas conveyed certain land identified as "Parcel A" to four individuals as trustees of the "122 Trust" (Trust), a wholly owned subsidiary of Plaza. The deed set forth numerous, detailed, reciprocal restrictions and covenants designed to assure the harmonious development of a shopping center on Parcel A and on abutting land retained by Kotseas. In particular, Kotseas promised (a) not to use the retained land in competition with the discount store contemplated by the grantee and (b) to use the retained land only for enumerated business purposes. 3 Among the permitted business uses of the land retained by Kotseas was a "drug store," defined in an appendix to the deed as a store selling prescribed types of merchandise. In addition, the deed recited that "(t)he foregoing restrictions shall be considered as covenants running with the land to which they are applicable and shall bind and inure to the benefit of the heirs and assigns of the respective parties to whom any part of the lands made subject to the above restrictions covenants and conditions shall at any time become or belong during the period hereinbefore set forth." 4

In 1975, the Trust conveyed Parcel A to Plaza and, thereafter, ceased operations. The deed to Plaza expressly made Plaza subject to, and gave it the benefit of, the restrictions and covenants in the 1968 deed from Kotseas to the Trust. At some later time, Kotseas leased a portion of its abutting land to CVS for use as a "discount department store and pharmacy." Plaza's complaints state that the lease to CVS, dated May 10, 1977, was expressly subject to the 1968 deed restrictions and that operation of the contemplated CVS store would violate those restrictions. Although the defendants controvert these allegations, we must, as we have said, accept them as true in ruling on the motion to dismiss. 5

As against Kotseas, Plaza sought (a) an injunction prohibiting the use of the retained land in violation of the restrictions and (b) damages suffered because of the alleged violations. In the alternative, Plaza prayed for a declaration that its own land was no longer subject to the anticompetitive restrictions. Plaza also requested the court to find that Kotseas had knowingly and wilfully violated G.L. c. 93A, § 2, and to award double or treble damages and counsel fees. As against CVS, Plaza requested similar relief and also requested damages on the theory that CVS had tortiously interfered with Plaza's contract by inducing Kotseas to violate its restrictions. The defendants filed motions to dismiss, stating as grounds that Plaza lacked standing to sue on the covenants and that the covenants were, in any event, unreasonable and in restraint of trade.

The granting of the motions to dismiss raises a number of complex and somewhat interrelated issues. Our analysis involves initial consideration of two principles of practice under the Massachusetts Rules of Civil Procedure. First, a complaint may demand relief in the alternative and may contain inconsistent allegations. Mass.R.Civ.P. 8(e)(2), 365 Mass. 749 (1974). Because it would be premature to consider whether Plaza could prevail against CVS both on the theory that CVS is bound to obey the 1968 restrictions and also on the theory that CVS tortiously induced Kotseas to violate those same restrictions, it is necessary for us to consider each of those claims independently. Second, adoption of the Rules abolished many obsolete rules of pleading and procedure in the interest of simplifying the conduct of civil litigation. In particular, there is no requirement that a complaint state the legal theory on which the pleader relies; rather, the complaint need only set forth "a short and plain statement of the claim showing that the pleader is entitled to relief . . . ." Mass.R.Civ.P. 8(a)(1), 365 Mass. 749 (1974). In Federal practice, this liberalization has been held to abolish the "theory of the pleadings" doctrine, to the end that a complaint is not subject to dismissal if it would support relief on Any theory of law. Thompson v. Allstate Ins. Co., 476 F.2d 746, 749 (5th Cir. 1973). See 2A J. Moore, Federal Practice par. 8.14, at 1713-1718 (2d ed. 1975); 5 C.A. Wright & A.R. Miller, Federal Practice and Procedure § 1219, at 141-146 (1969). See also Nader v. Citron, supra, 372 Mass. at --- C, 360 N.E.2d 870. We are, therefore, obligated to consider each of the alternative theories of law namely, that the covenants run with the land, that the covenants constitute contractual promises, and that the defendants have engaged in unfair trade practices on which Plaza's action might be maintained. E. g., Rollins Environmental Servs., Inc. v. Superior Court, 368 Mass. 174, 179-180, 330 N.E.2d 814 (1975). Underlying all the issues in this case, of course, is the question whether, notwithstanding Plaza's right to sue on one or more legal theories, the 1968 restrictions are unenforceable as unreasonable restraints of trade. With this understanding of the breadth of the present appeal, we turn to examination of the several issues.

I. THEORIES OF RECOVERY.

A. Real covenant analysis. Plaza has primarily sought to maintain its actions on the theory that the covenants contained in the 1968 deed run with the land. In our view, Plaza has alleged sufficient facts to be entitled to a hearing on its claims for legal and equitable relief on this theory. See generally 5 R. Powell, Real Property pars. 672-675, at 149-185 (Rohan rev. ed. 1979) (summarizing requirements for covenants to run with land). The covenants in question are evidenced by a writing signed by Kotseas, the covenantor. See Frank v. Visockas, 356 Mass. 227, 228-229, 249 N.E.2d 1 (1969) (equity action); Kennedy v. Owen, 136 Mass. 199, 203 (1884) (action at law); G.L. c. 259, § 1, Fourth (Statute of Frauds for interests in land). The language of the 1968 deed aptly expresses the intention of the original parties that the covenants run with the land. See Snow v. Van Dam, 291 Mass. 477, 480-481, 197 N.E. 224 (1935) (equity action); Savage v. Mason, 3 Cush. 500, 505 (1849) (action at law). The deed also grants mutual easements sufficient to satisfy the requirement that Plaza and CVS be in privity of estate. See, e. g., Morse v. Aldrich, 19 Pick. 449, 454 (1837) (action at law). Plaza's complaint alleges that CVS had actual knowledge of the restrictions and shows, in any event, that the restrictions were recorded with the deed. See, e. g., Whitney v. Union Ry., 11 Gray 359, 363-364 (1860) (notice required for existence of equitable servitude).

One additional prerequisite for either legal or equitable relief is, however, arguably lacking in this case on the present state of our case law. It is essential that both the benefit and the burden of a real covenant "touch and concern" the affected parcels of land before it will be considered to run. Orenberg v. Johnston, 269 Mass. 312, 316, 168 N.E. 794 (1929); Bronson v. Coffin, 118 Mass. 156, 163 (1875); Wheelock v. Thayer, 16 Pick. 68, 70 (1835). This court has long held that a covenant not to compete contained in a deed, such as is involved in this case, does not "touch and concern" the land to be benefited and that, in consequence, such a covenant does not run with the land. Shade v. M. O'Keefe, Inc., 260 Mass. 180, 183, 156 N.E. 867 (1927); Norcross v. James, 140 Mass. 188, 192, 2 N.E. 946 (1885). In Shell Oil Co. v. Henry Ouellette & Sons, 352 Mass. 725, 227 N.E.2d 509 (1967), we intimated that we might overrule Norcross and Shade in an appropriate case. Id. at 730-731 & n.8, 227 N.E.2d 509. We believe this is such a case.

It is essential to our task that we identify precisely the holding and rationale of the cases we propose to overrule. Norcross was an action seeking specific performance of a covenant not to quarry stone from a parcel of land. The covenant in question was contained in a deed...

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