Union v. Bloomberg

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14-P-1719 Appeals Court
LAURI UNION & another1 vs. SAMUEL BLOOMBERG & others,2
trustees.3
No. 14-P-1719.
Norfolk. October 19, 2015. - December 2, 2015.
Present: Berry, Green, & Blake, JJ.
Contract, Settlement agreement. Condominiums, Common area,
Management of trust. Real Property, Condominium. Damages,
Attorney's fees. Practice, Civil, Attorney's fees, Trustee
of condominium management trust.
Civil action commenced in the Superior Court Department on
July 7, 2009.
The case was heard by Patrick F. Brady, J., on a motion for
summary judgment, and a motion for attorney's fees and costs was
heard by him.
Thomas O. Moriarty for the defendants.
Arthur P. Kreiger for the plaintiffs.
1
Stanley Rosenzweig.
2
Barbara Davis, William Karlyn, and Wayne Saker.
3
Of the Longyear at Fisher Hill Condominium Trust.
2
BERRY, J. This action concerns a settlement agreement
between a condominium trust, among others, and the owners of
property that abuts the condominium. The defendants, trustees
of the Longyear at Fisher Hill Condominium Trust (collectively,
the trust), appeal from summary judgment entered in favor of the
plaintiffs, Lauri Union and Stanley Rosenzweig, whereby a
Superior Court judge ruled that the settlement agreement
obligated the trust to plant and to maintain a number of trees
between the condominium buildings and the plaintiffs' property.4
On appeal, the trust claims that the settlement agreement is
invalid because it violates certain provisions of the
condominium statute, see G. L. c. 183A, §§ 1-23, and that the
attorney's fees awarded by the judge pursuant to the settlement
agreement are excessive. We affirm.
Background. The undisputed facts relevant to this appeal
are taken from the parties' joint statement of material facts,
which we supplement somewhat, from the record. In 1999,
Longyear Properties, LLC (Longyear), the condominium declarant
and developer, began construction of four condominium buildings
on an eight-acre parcel in Brookline (town), pursuant to a
4
Also signatories to the settlement agreement were Longyear
Properties, LLC; Cortland Properties, LLC; and Hayden Street,
LLC. Those entities, their two principals, Robert S. Roth and
John J. Sullivan, as well as the additional entity, CCCT, Inc.,
either were defaulted or are bankrupt.
3
special permit issued by the town board of appeals (the board).
CCCT, Inc. (CCCT), was established by Longyear as the initial
condominium trustee, pursuant to a June 28, 1999, declaration of
trust, recorded in the Norfolk County registry of deeds. Robert
S. Roth and John J. Sullivan controlled both Longyear and CCCT.
The plaintiffs own property across the street from two of the
condominium buildings, referred to as buildings C and D.
After completion of the first two buildings in the
development, Longyear began construction on building C. The
plaintiffs claimed that the location of building C was closer to
their property than allowed under the special permit, and they
filed a request for zoning enforcement with the town's building
commissioner. When their request was denied, the plaintiffs
appealed to the board.
On April 22, 2004, the plaintiffs entered into a settlement
agreement with Longyear and two Longyear affiliates, Cortland
Properties, LLC (Cortland), and Hayden Street, LLC (Hayden),
along with CCCT, as sole trustee of the trust.5 The plaintiffs
agreed to dismiss their zoning appeal, and Longyear agreed to
certain restrictions affecting buildings C and D. Longyear also
agreed to plant and to maintain a number of trees on the
5
Roth and Sullivan were officers and directors of CCCT, and
signed the settlement agreement on behalf of the trust. See
note 4, supra. Roth and Sullivan also controlled Longyear,
Cortland, and Hayden.
4
condominium property, as well as on property owned by the town
and by the plaintiffs, in order "to mitigate the visual impact
of Buildings C and D upon the [plaintiffs'] property."6 The
trust joined in the settlement agreement and agreed to be bound
by all of its provisions, including the landscaping obligations.
In particular, paragraph 27 of the settlement agreement provided
as follows:
"To the extent that the consent of [the trust] is
needed to ensure that Longyear has the authority to perform
all of the legal obligations set forth herein, [the trust]
hereby provides such consent, and agrees to promptly
execute such documents as may be necessary to effectuate
such consent. Without limiting the generality of the
foregoing, [the trust], agrees that it is bound by all
provisions of this Agreement as the successor of Longyear,
including but not limited to the restrictions on the
location and height of Building D as set forth in
paragraphs 1-2, the limitations on the use of Hayden Road
to access Building C as set forth in paragraph 3, and the
ongoing landscaping obligations set forth in paragraphs 7-
16."
Paragraph 28 further states, in relevant part: "This
agreement is binding upon all parties signing this agreement
below and their respective heirs, successors and assigns for a
period of fifty years." A memorandum of agreement, which
provided notice of the settlement agreement and stated that a
6
The landscaping is difficult to quantify from the plans
attached to the settlement agreement, but according to the
trust's brief, it consisted of fifty-one Norway spruce trees and
eight arborvitae to be planted and maintained in the common
areas between buildings C and D and the plaintiffs' property.
5
copy was available for inspection at the office of the trust,
was recorded at the Norfolk County registry of deeds.
The trust notified the board of the parties' settlement and
petitioned for the requisite modifications to the special permit
in order to implement the terms of the settlement agreement.
The plaintiffs thereafter dismissed their zoning appeal.
Longyear proceeded to plant trees in front of building C, but
failed to complete the landscaping called for in the settlement
agreement and eventually filed for bankruptcy.
On July 7, 2009, the plaintiffs filed suit for breach of
contract against Longyear, Cortland, Hayden, CCCT, and the
trust. On September 9, 2009, control of the trust was turned
over to trustees elected by the unit owners.7 CCCT was removed
as trustee soon after, and the plaintiffs amended their
complaint to include the new trustees. Roth and Sullivan were
added as third-party defendants. As the litigation proceeded,
various parties filed for bankruptcy or were defaulted, see note
4, supra, leaving the trust to defend the action.
On April 18, 2013, the trust moved for summary judgment,
challenging the enforceability of the settlement agreement under
c. 183A. The judge denied the motion and entered summary
judgment for the plaintiffs. Following dismissal of the
7
In addition to CCCT, the new trustees were Samuel
Bloomberg, Barbara Davis, William Karlyn, and Wayne Saker.
6
remaining cross claims and counterclaims, final judgment
entered, declaring that the trust was obligated to perform the
landscaping obligations set out in the settlement agreement.
Attorney's fees and costs, as provided in paragraph 24 of the
settlement agreement, were awarded to the plaintiffs in the
amount of $132,140.96. The trust filed this appeal.
Discussion. 1. Limits on declarant's use of trust funds.
The trust maintains that requiring the trust to complete
Longyear's landscaping obligation is a violation of c. 183A,
§ 10(j), which prohibits a declarant from using trust funds
toward the initial construction, development, and marketing of
the condominium.8 It is the trust's position that the
landscaping is related to the initial construction of the
condominium development, and § 10(j) prohibits the use of trust
funds for that purpose.
We will assume, without deciding, that funding the
landscaping required under the settlement agreement is related,
in a broad sense, to the project's initial construction by
virtue of the fact that by agreeing to install the landscaping,
8
Section 10(j), inserted by St. 1963, c. 493, § 1,
provides: "The declarant shall not use any funds of the
organization to fund expenses relating to the initial
construction, development, and marketing of the project, to pay
the declarant's share of common expenses, or to pay for any
costs that are not directly related to the operation of the
condominium."
7
Longyear was able to proceed unfettered with construction of
buildings C and D. Even so, the plain language of c. 183A,
§ 10(j), does not prohibit the trust's use of trust funds to
comply with its own obligations, as the statute prohibits only
the declarant, here Longyear, from using those funds.9 "The
statutory language, when clear and unambiguous, must be given
its ordinary meaning." Beaconsfield Towne House Condominium
Trust v. Zussman, 401 Mass. 480, 483 (1988).
The plaintiffs' appeal to the board, following the building
commissioner's denial of their request for zoning enforcement,
involved a dispute concerning the condominium's common areas and
facilities and therefore implicated the trust's rights under
c. 183A, § 10(b)(4). Moreover, the trust had an obvious
interest in the potential adverse effect the plaintiffs' request
for zoning enforcement (if successful) could have on portions of
the common areas, particularly those included as a part of
building C. Section 10(b)(4), inserted by St. 1963, c. 493,
§ 1, provides the trust with the right and the power to "conduct
litigation and to be subject to suit as to any course of action
involving the common areas and facilities or arising out of the
enforcement of the by-laws, administrative rules or restrictions
9
The declarant is the person or entity who records a master
deed that submits the property to the provisions of c. 183A.
G. L. c. 183A, §§ 1 & 2.
8
in the master deed." Pursuant to the grant of authority under
§ 10(b)(4), it was well within the trust's power to join in the
settlement of the plaintiffs' zoning appeal involving the
condominium's common areas. "The power of trustees '[t]o
conduct litigation . . . involving the common areas and
facilities' includes the power to settle claims prior to or in
the course of litigation." Golub v. Milpo, Inc., 402 Mass. 397,
401 (1988), quoting from c. 183A, § 10(b)(4).
Accordingly, on our reading, § 10(j) serves to preclude the
declarant's use of trust funds for its own purposes in the
initial phases of the project, as specified therein. Contrary
to the trust's view, we are not enforcing an obligation under a
settlement agreement that is otherwise forbidden by statute.
The settlement agreement here specifically acknowledged the
trust's role in managing the affairs and the common areas of the
condominium, and § 10(j) does not prohibit the trust from
settling a claim and committing trust funds to carry out its own
distinct obligations under the settlement agreement.10
10
The trust suggests that the public policy that favors
settlement of litigation should not trump the legislative intent
implicit in the statutory prohibition against the declarant's
use of trust funds to pay for its own initial costs. Compare
Scully v. Tillery, 456 Mass. 758, 771 (2010). Because we read
the plain language of § 10(j) as permitting the trust to expend
funds to settle a claim concerning the common areas, we see no
conflict in that regard.
9
The trust complains that the owners of Longyear, i.e., Roth
and Sullivan, also controlled CCCT, the trustee at the time of
the settlement agreement's execution, as the settlement
agreement was signed before the unit owners replaced CCCT as
trustees. According to the trust, the individuals in control of
the corporate declarant should not be permitted to take
advantage of their simultaneous control of the corporate trustee
to shift the burden of funding construction-related expenses to
the trust, in contravention of § 10(j). Such an arrangement, in
the trust's view, would lead to all manner of abuse.
We discern no danger that enforcement of the settlement
agreement would encourage a declarant's misuse of trust funds,
under the guise of dual roles as developer and trustee, by
applying them towards initial construction in the ordinary
course. The events here occurred in the context of a zoning
appeal, and the trust, as a separate entity, took part in the
settlement of that dispute pursuant to its role in managing the
common areas. Section 10(b)(4) gives the trust the right to
settle claims concerning the common areas, and nothing therein
limits that right to the period after the unit owners are
appointed as trustees. Indeed, the Supreme Judicial Court has
observed that developer-controlled trusts are commonplace in the
development and the marketing stages of condominiums and do not
contravene public policy. See, e.g., Barclay v. DeVeau, 384
10
Mass. 676, 682-684 (1981) (declaration of condominium trust that
permitted developer to appoint majority of members to board of
trustees comported with public policy if limited to a reasonable
time). It has been recognized as a matter of practical
necessity that the developer may retain control of the
condominium trust during the building and the marketing phases.
See id. at 683 ("The developer and its mortgagee risk a great
deal undertaking a condominium and, to protect their large
investment, may need to maintain control of the project for a
specific period of time").
Section 10(b)(4) places no express restraints on the
authority of the initial trustee to settle claims involving the
common areas, and we reject the trust's argument that the
initial trustee, when controlled by the same individuals as the
declarant, should not be permitted to bind subsequent trustees
in settling those disputes.11 We are mindful that the "statute
11
Individuals wearing different corporate hats in the
context of related entities is commonplace in business
transactions, and the courts, barring unusual circumstances,
generally accept the so-called "corporate fiction" of their
separate legal existence. See, e.g., Gordon Chem. Co. v. Aetna
Cas. & Sur. Co., 358 Mass. 632, 638 (1971) (ownership of all
stock in several corporations by one person does not create
single unit; "[d]ifferent corporations usually are distinct
entities in law"), quoting from New England Theatres, Inc. v.
Olympia Theatres, Inc., 287 Mass. 485, 493 (1934); Beaupre v.
Cliff Smith & Assocs., 50 Mass. App. Ct. 480, 494 n.22 (2000)
(discussing notion of corporate fiction and longstanding
principle that corporation is "a single and separate legal
11
sets forth certain minimum requirements for the establishment of
condominiums, but 'those matters that are not specifically
addressed in the statute are to be worked out by the involved
parties.'" Scully v. Tillery, 456 Mass. 758, 769 (2010),
quoting from Queler v. Skowron, 438 Mass. 304, 312-313 (2002).
See Barclay v. DeVeau, supra at 682 (c. 183A is enabling
statute, and matters that are not "expressly prohibited by clear
legislative mandate," may be worked out by unit owners and
developers). Barring an express statutory limitation on the
trustees' authority to settle claims involving the common areas,
we will not invalidate the settlement agreement provisions
binding the trust on the ground that the same individuals who
controlled the declarant also controlled the trust at the time.12
We agree with the plaintiffs that the trust's remedy for
any alleged breach of fiduciary duty on the part of the former
trustees regarding the obligations it undertook in the
settlement agreement is an action against the former trustees.
being"), quoting from Gardiner v. Treasurer & Recr. Gen., 225
Mass. 355, 370 (1916).
12
We refer as well to the principle that a "statute is not
to be interpreted as effecting a material change in or a repeal
of the common law unless the intent to do so is clearly
expressed." Queler v. Skowron, supra at 312, quoting from Pineo
v. White, 320 Mass. 487, 491 (1946). Unless expressly
prohibited, we will not interpret c. 183A as representing a
departure from the authority CCCT would otherwise possess to
bind the successor trustees to the settlement agreement
obligations.
12
As to the plaintiffs, however, we see no basis to rule that the
disputed provision of the settlement agreement is invalid due to
CCCT's involvement at the time it was signed.
2. Unit owner consent for improvements. The trust
additionally argues that the trust's power to bind the unit
owners to funding common area improvements is constrained by the
requirements of c. 183A, § 18. Section 18, inserted by
St. 1963, c. 493, § 1, provides, to begin, that "[i]f fifty per
cent or more but less than seventy-five per cent of the unit
owners agree to make an improvement to the common areas and
facilities, the cost of such improvement shall be borne solely
by the owners so agreeing." The section goes on to provide,
among other things, that seventy-five percent or more of unit
owners may agree to make improvements to the common areas and
assess the costs to all as a common expense, though for certain
costly improvements, a unit owner can petition the Superior
Court for an order directing a condominium trust to purchase his
or her unit.
The trust maintains that unit owner consent is thus
required, under the statute, in order to fund common area
improvements such as the landscaping called for in the
settlement agreement, whether the improvements are undertaken in
13
the ordinary course or in settling potential litigation.13 In
the absence of such consent, the argument continues, the trust
was without authority to bind the unit owners to fund the
landscaping, rendering that provision of the settlement
agreement ultra vires. See, e.g., Golub v. Milpro, Inc., 402
Mass. at 401-402 (portion of settlement agreement pertaining to
individual condominium unit invalid because trustees lacked
authority to settle litigation that did not involve common areas
and facilities).
As previously explained, the authority to settle claims
regarding the common areas of the condominium rests with the
trust. "Only the trustees have the right to conduct litigation
concerning 'common areas and facilities.'" Strauss v. Oyster
River Condominium Trust, 417 Mass. 442, 445 (1994) (citation
omitted). See also Sea Pines Condominium III Assn. v. Steffens,
61 Mass. App. Ct. 838, 842 (2004) ("authority to litigate
matters concerning the condominium common areas in fact resides
exclusively in the condominium unit owners organization").
Section 10(b)(4) does not contain language requiring unit owner
consent to the trust's various efforts in settling claims that
13
The parties dispute whether the landscaping called for in
the settlement agreement constituted an improvement to the
common areas or, instead, mere maintenance, for which unit owner
consent would not be needed. For purposes of this discussion,
we again will assume, without deciding, that the landscaping
here is an improvement.
14
may result in committing trust funds to improving the common
areas. Moreover, § 10(b)(6), inserted by St. 1963, c. 493, § 1,
states, at its conclusion, that the "expenses incurred in and
proceeds accruing from the exercise of the aforesaid rights and
powers shall be common expenses and common profits." Reading
§ 18 alongside the framework of § 10(b), we are not persuaded
that the trust's obligations under the settlement agreement
should be invalidated because of a lack of unit owner consent to
fund a settlement reached by the trust in response to the
plaintiffs' zoning appeal. See, e.g., Scully v. Tillery, 456
Mass. at 771 (setting aside settlement agreement between
condominium trust and developer would "subvert the well-
established public policy of respecting and enforcing litigation
settlement agreements").
We conclude that the statutory provisions relied on by the
trust pose no obstacle to enforcing the settlement agreement in
this case. In light of the foregoing, we also reject the
trust's argument that the plaintiffs were not entitled to
specific performance, as specific performance was expressly
authorized as a remedy pursuant to the settlement agreement.
3. Attorney's fees. As a final matter, the trust
complains that the attorney's fees award was excessive. The
settlement agreement provided that the prevailing party was
entitled to its costs and reasonable attorney's fees, including
15
expert witness fees, in an action alleging breach of the
settlement agreement. The judge awarded attorney's fees and
costs to the plaintiffs in the amount of $132,140.96.
The trust argues that the judge abused his discretion by
according undue weight to the amount requested by the
plaintiffs. See Berman v. Linnane, 434 Mass. 301, 303 (2001).
The trust maintains that the judge, instead, should have applied
the multifactor analysis set out in Linthicum v. Archambault,
379 Mass. 381, 388-389 (1979). The judge's detailed memorandum
indicates that he carefully reviewed plaintiffs' counsels'
affidavits concerning their qualifications, rates, and itemized
invoices and properly "considered those factors on which
evidence was presented, as well as his experience from the
trial." Berman v. Linnane, supra. See Margolies v. Hopkins,
401 Mass. 88, 93 (1987) (Though helpful, "[w]e have never
required a judge to make a factor by factor analysis in findings
and rulings in an attorney's fee action"). "The judge making
the firsthand observation of the quality and necessary quantity
of the parties' preparation and performance is uniquely situated
to assess the reasonable value of those services." City
Rentals, LLC v. BBC Co., 79 Mass. App. Ct. 559, 566-567 (2011).
We believe the judge properly took into account the appropriate
16
factors in evaluating the plaintiffs' submissions and in
considering his own involvement with this lengthy litigation.14
As to the trust's arguments concerning specific charges,
the judge's explanations for allowing them were well reasoned,
and his findings supported in the record. The trust's principal
complaint is that the plaintiffs' attorneys "block billed"
certain items, thereby grouping several tasks under a single
time entry. The trust relies on Haddad v. Wal-Mart Stores, Inc.
(No. 2), 455 Mass. 1024 (2010), in which block billing was
described as disfavored but permissible if the work was clearly
described. Id. at 1026-1027. Here, the judge referenced his
many years of experience as a practicing attorney and trial
judge, in addition to his firsthand experience with the case, in
finding that there was nothing unreasonable about grouping a
number of activities under one time entry.
The trust additionally contends that the judge overlooked
several irregularities in the materials submitted, when in fact
14
The plaintiffs' attorney's and expert fees originally
totaled $361,078.96, but $225,000 was recovered as a result of
attachment of a unit owned by the developers, which later was
sold. The judge also reduced the amount requested by $2,300 for
the mediator's fee, which the parties had agreed would be
assessed per party, and by $1,638 for "unrelated tasks." As to
the amount of the award, our observation in City Rentals, LLC v.
BBC Co., supra at 568, seems apt: "While at first glance, the
fees tail may appear to be wagging the damages dog, both the
complexity of a case -- factual or legal -- and the intensity of
the defense may drive the claimant's legal fees well beyond the
level of its damages figure."
17
the judge discussed each of those items and explained his
reasoning. "What constitutes a reasonable fee is a question
that is committed to the sound discretion of the judge," Berman
v. Linnane, supra at 302-303, and it was for the judge to
determine the appropriate activities to be included in the fees
awarded, as well the reasonableness of time billed for who the
trust characterizes as inexperienced counsel, the judge
specifically finding that her time spent on the summary judgment
motion was warranted and her submissions excellent. The judge
addressed each of the trust's objections in turn and adequately
explained his resolution, and we are satisfied that there was no
error.
Judgment affirmed.
Order allowing costs and
attorney's fees of
$132,140.96 affirmed.