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22-P-630 Appeals Court
BOSTON CAPITAL FUNDING, LLC vs. BEK WINCHESTER WINNING FARM LLC & another.1
No. 22-P-630.
Middlesex. September 7, 2023. – November 29, 2023.
Present: Meade, Hershfang, & D'Angelo, JJ.
Contract, Performance and breach, Offer and acceptance, Misrepresentation. Consumer Protection Act, Unfair act or practice. Real Property, Attachment. Bond, To dissolve attachment. Practice, Civil, Summary judgment, Attachment.
Civil action commenced in the Boston Municipal Court Department on October 21, 2019.
Civil action commenced in the Superior Court Department on February 18, 2020.
After consolidation, the case was heard by Cathleen E. Campbell, J., on motions for summary judgment, and a motion to discharge a bond of dissolution was heard by Christopher K. Barry-Smith, J.
Shannon F. Slaughter for the plaintiff. Richard Joyce for the defendants.
1 Eric M. Katz. 2
D'ANGELO, J. This case arises from the efforts of
defendant BEK Winchester Winning Farm LLC (BEK) to obtain
financing to develop land in Winchester (project). In 2017, BEK
contracted with Newmark Real Estate of Massachusetts, LLC, doing
business as Newmark Grubb Knight Frank (Newmark), to procure
financing for the project. Then, in 2018, BEK signed an
agreement with the plaintiff, Boston Capital Funding, LLC (BCF),
purporting to grant BCF "exclusive authorization" to act on
BEK's behalf in procuring equity for the same project. Later in
2018, Newmark procured financing for the project, at which point
BEK informed BCF that its services were no longer needed. BCF
appeals from (1) a summary judgment dismissing its claims for
breach of contract, breach of the implied covenant of good faith
and fair dealing, and violation of G. L. c. 93A and (2) an order
discharging a surety bond. We conclude that BCF did not have a
binding, exclusive right to act on BEK's behalf in procuring
equity for the project, and that summary judgment properly
entered on BCF's contract-based claims. However, on BCF's
c. 93A claim, where there is evidence from which one could
conclude that BEK enticed BCF to work on its behalf by
intentionally misrepresenting the exclusivity of BCF's
authorization, summary judgment should not have entered. We
further conclude that there was no abuse of discretion in the
order discharging the surety bond. 3
Background.2 BEK was formed for the purpose of purchasing
and developing land in Winchester. Pursuant to an agreement
with the seller of the land, BEK had to provide proof of
financing by April 12, 2018, although that deadline was later
extended for several months. As noted, this case arises from
BEK's efforts to obtain the financing.
On April 4, 2017, BEK entered into a "Commercial Financing
Procurement Fee Agreement" with Newmark (Newmark agreement).
BEK granted Newmark "the exclusive right to arrange Commercial
Financing" for eighteen months, and Newmark agreed to "use its
commercially diligent efforts to procure Commercial Financing
from any Referral Source." BEK agreed to pay Newmark a flat fee
of $200,000 if it successfully procured financing.
By April 2018, Newmark had not acquired any financing for
the project. Thus, on April 30, 2018, before the expiration of
the Newmark agreement, BEK entered into a separate "Engagement
Agreement" with BCF (engagement agreement). BEK "grant[ed]
[BCF] exclusive authorization to act on [BEK's] behalf in the
procurement of Equity for the [project]." The "authorization
include[d] but [was] not limited to the sharing of personal and
business financial information of [BEK] with any proposed Equity
2 We take the facts, construed in the light most favorable to BCF, from the summary judgment record. See Epstein v. Board of Appeal of Boston, 77 Mass. App. Ct. 752, 756 (2010). 4
Participant deemed fit by [BCF]." BEK agreed to pay BCF three
percent "of the procured Equity amount," which was both "earned"
and "paid at Funding of the Equity." BEK also agreed to pay BCF
"a retainer fee in the amount of $2,500.00," which "[was to] be
credited to [BEK] . . . at the closing." In reliance on the
grant of "exclusive authorization," BCF forwent other
opportunities and exerted efforts to procure equity for the
project. On or about June 3, 2018, BEK sent BCF an "Offering
Document" stating that Newmark had been granted the right to
procure equity for the project, but Kevin Hern, the principal of
BCF, did not read the entire document and did not see the
provision about Newmark.
On June 18, 2018, Newmark procured four million dollars in
financing for the project from Novaya Real Estate Ventures
(Novaya).3 The next day, BEK sent BCF an e-mail message stating
that BEK had secured financing for the project, requesting the
return of the $2,500 retainer, and suggesting that the parties
"find something else we can do together." BCF did not return
the $2,500, and no commission was ever paid to BCF.
3 The parties dispute whether the financing was in the form of equity. BEK argues that the financing actually procured was debt financing in the form of a loan, and that the summary judgment on BCF's contract-based claims could be affirmed on this alternative basis. BCF argues that the funding was effectively equity financing. We need not, and do not, address these arguments. 5
BCF asserted claims against BEK and BEK's principal, Eric
M. Katz, for breach of contract, breach of the implied covenant
of good faith and fair dealing, and violation of G. L. c. 93A.
The parties submitted cross motions for summary judgment, and a
Superior Court judge denied BCF's motion but allowed BEK's
motion. A summary judgment entered, and BCF appeals.4
Discussion. 1. Standard of review. "Summary judgment is
appropriate where there is no material issue of fact in dispute
and the moving party is entitled to judgment as a matter of
law." HSBC Bank USA, N.A. v. Morris, 490 Mass. 322, 326 (2022).
See Mass. R. Civ. P. 56 (c), as amended, 436 Mass. 1404 (2002).
"Our review of a decision on a motion for summary judgment is de
novo" (citation omitted). HSBC Bank USA, N.A., supra. "In
4 We note that, prior to this proceeding, Katz filed an action in the Boston Municipal Court (BMC) against BCF and Hern seeking $2,500 in damages for the retainer not returned. BCF requested that the two actions be consolidated in the Superior Court, and that motion was allowed. The BMC case was transferred to the Superior Court and closed. Katz's claim against BCF and Hern, and a counterclaim originally filed in the BMC action, appear to remain pending. In these circumstances, under our case law, the summary judgment on BCF's claims against BEK was not a final, appealable judgment. See Trenz v. Family Dollar Stores of Mass., Inc., 73 Mass. App. Ct. 610, 613 (2009). But see Hall v. Hall, 138 S. Ct. 1118, 1131 (2018) (cases consolidated under Fed. R. Civ. P. 42 [a] "retain their separate identities at least to the extent that a final decision in one is immediately appealable by the losing party"). However, where "[d]ismissal of the appeal would serve no purpose and might require the parties to return to reargue issues already briefed and argued" (citation omitted), Commercial Wharf E. Condominium Ass'n v. Boston Boat Basin, LLC, 93 Mass. App. Ct. 523, 532 n.20 (2018), we exercise our discretion to turn to the merits. 6
instances of cross motions, the appellate court assesses the
factual materials in the light most favorable to the
unsuccessful opposing party." Epstein v. Board of Appeal of
Boston, 77 Mass. App. Ct. 752, 756 (2010). "The court will draw
all permissible inferences and resolve any evidentiary conflicts
in that party's favor." Id.
2. Breach of contract. BCF argues that BEK committed a
breach of contract, entitling BCF to expectation damages
equaling three percent of the amount of the financing procured
by Newmark. We conclude that the engagement agreement between
BEK and BCF was in the form of a revocable offer that BEK would
pay BCF a commission if BCF procured equity for the project.
The language purporting to grant BCF "exclusive authorization"
did not alter the nature of the transaction. Where BEK
permissibly revoked its offer before BCF procured any equity,
summary judgment properly entered on BCF's breach of contract
claim.5
The issue presented turns on the distinction between
unilateral and bilateral contracts. "Traditionally, contract
law divides offers into one of two categories: (1) offers
5 BCF's claim is based on the idea that BEK's alleged breach deprived BCF of the opportunity to find a ready and willing investor, entitling BCF to expectation damages under Huang v. Ma, 491 Mass. 235, 241-242 (2023), not that BCF actually produced a ready and willing investor, see Tristram's Landing, Inc. v. Wait, 367 Mass. 622, 629 (1975). 7
looking to a bilateral contract, and (2) offers looking to a
unilateral contract." H.J. Alperin, Summary of Basic Law § 5:12
(5th ed. 2014) (Alperin). "[A]n offer for a bilateral contract
requires a promise from the offeree in order to form a binding
contract," and the promise operates as a manifestation of mutual
assent and consideration. 2 R.A. Lord, Williston on Contracts
§ 6.2 (4th ed. 2023). With respect to an offer for a unilateral
contract, the offeree must perform an act to form a binding
contract, and the act operates as the manifestation of mutual
assent and consideration. See id. Until the offeree performs
the act, thereby providing mutual assent and consideration, the
offeror may revoke the offer at any time. 1 R.A. Lord,
Williston on Contracts § 5.15 (4th ed. 2022).6
An offer for a unilateral contract can work a hardship to
the offeree, who may expend resources to perform the act only to
have the offer revoked. See 1 Williston on Contracts, supra at
6 In some jurisdictions, the offeror is bound once the offeree partially performs. See 1 Williston on Contracts, supra at § 5.15. However, BCF does not argue that we should apply that rule here, and the argument is therefore waived. See Mass. R. A. P. 16 (a) (9) (A), as appearing in 481 Mass. 1628 (2019). Regardless, the Supreme Judicial Court has held that "an acceptance of an offer must be in accordance with its terms, that is, by full performance by the offeree, in order that a contract may come into existence." Northampton Inst. for Sav. v. Putnam, 313 Mass. 1, 7 (1943). See Alperin, supra at § 5:11 ("Massachusetts does not recognize [the rule that commencement of performance makes the offer irrevocable] . . . because an offer for a unilateral contract may be accepted only by the offeree's full performance"). 8
§ 5.15. To mitigate the possibility of hardship, offerees
sometimes seek the exclusive right to perform the act, as BCF
did here. However, the mere statement that the offeree has the
exclusive right to perform the act does not alter the
fundamental revocable nature of an offer for a unilateral
contract. See Des Rivieres v. Sullivan, 247 Mass. 443, 446-447
(1924). See also Bump v. Robbins, 24 Mass. App. Ct. 296, 303-
304 (1987). To make the exclusivity binding, the parties must
enter into a bilateral contract whereby the offeree makes a
promise. See Samuel Nichols, Inc. v. Molway, 25 Mass. App. Ct.
913, 913 (1987). See also Bump, supra.
Under our case law, the above principles have often been
discussed in the context of brokerage agreements involving
commissions for the sale of property. In Des Rivieres, 247
Mass. at 445, the parties signed an agreement stating that (1)
the broker was the "exclusive agent to sell [the owner's]
houses," (2) the owner "agree[d] to pay [the broker] a regular
broker's commission, in any event, when a sale [was]
consummated," and (3) the broker was "to do his advertising and
showing of the property at his own expense." Because the broker
did not promise to do anything in exchange for the right to be
the exclusive agent, and therefore did not provide any
consideration for that right, the owner's offer to pay the
broker a commission was construed as a revocable offer. See id. 9
at 448. See, e.g., Bartlett v. Keith, 325 Mass. 265, 267
(1950); Huang v. RE/MAX Leading Edge, 101 Mass. App. Ct. 150,
163-164 (2022), S.C., 491 Mass. 235 (2023).
In contrast, in Samuel Nichols, Inc., 25 Mass. App. Ct. at
914, the owner agreed that, "[i]n consideration of [the
broker's] listing for sale and undertaking to find a purchaser
for the real estate," the owner gave the broker "the sole and
exclusive right to sell the same." Through this language, the
broker promised to list the real estate for sale and undertake
to find a purchaser. See id. That promise served as
consideration for the right to be the exclusive agent, and the
parties successfully entered into a bilateral contract. See id.
See also, e.g., John T. Burns & Sons, Inc. v. Brasco, 327 Mass.
261, 261-263 (1951) ("in consideration of [broker's] agreement
to use all reasonable efforts," brokerage agreement was
exclusive); Upper Cape Realty Corp. v. Morris, 53 Mass. App. Ct.
53, 55, 58 (2001) (similar); Julius Tofias & Co. v. John B.
Stetson Co., 19 Mass. App. Ct. 392, 392 & n.1 (1985) (similar).
Cf. Coan v. Holbrook, 327 Mass. 221, 223 & n.1 (1951) (bilateral
contract formed where broker paid one dollar and promised to use
"efforts").7
7 In other States, similar language has been held sufficient to form a bilateral contract. See, e.g., Charles B. Webster Real Estate v. Rickard, 21 Cal. App. 3d 612, 615 (1971) (consideration consisted of promise to use "diligence" in 10
The difference between the language used in Des Rivieres
and Samuel Nichols, Inc., may appear subtle but turns on whether
the offeree was a passive recipient or whether the offeree made
an affirmative promise. See Samuel Nichols, Inc., 25 Mass. App.
Ct. at 913 (to form exclusive agency, "broker must be more than
a passive recipient of the grant of exclusive agency; the broker
must agree to do something"). In Des Rivieres, 247 Mass. at
445, while the broker agreed that any of his "advertising and
showing of the property" would be at his own expense, he did not
actually promise to advertise or show the property. He could
have entirely forgone the opportunity to find a buyer and secure
the commission. In Samuel Nichols, Inc., supra at 914, the
language that the broker had the exclusive right to sell the
property "in consideration" of the broker's listing the real
estate and undertaking to find a buyer required the broker to
perform those acts.
Applying the above principles to the facts of this case,
the engagement agreement between BEK and BCF was in the form of
procuring buyer); Century 21 Associated Realty v. Hoffman, 503 N.W.2d 861, 866 (S.D. 1993) (consideration consisted of promise to use "best efforts" to sell property); McDonald v. Davis, 389 S.W.2d 494, 496 (Tex. Civ. App. 1965) (consideration given where broker "agreed as a part of the consideration for [principals]' giving him the exclusive right to sell . . . that he would list the property"). See also, e.g., Dixie Mill Supply Co. v. H.B. Smith Mach. Co., 128 N.J.L. 242, 245 (1942) (where plaintiff disclosed name of prospective customer in exchange for exclusive agency, bilateral contract was formed). 11
a revocable offer. Only BEK made a promise, viz., that BCF's
commission would be "earned" and "paid at Funding of the
Equity." In exchange, BCF did not make any promises regarding
what it would do to procure the equity, and it could have
entirely forgone the opportunity to procure the equity and
secure the commission.8 It is true, as BCF notes, that the
agreement specified that BCF's "authorization include[d] but
[was] not limited to the sharing of personal and business
financial information of [BEK] with any proposed Equity
Participant deemed fit by [BCF]." However, BCF was a passive
recipient of that authorization; BCF did not affirmatively
promise that it would share BEK's personal and business
financial information with a proposed equity participant.9 In
these circumstances, BCF had to perform the act (i.e., procure
the equity) to form a binding contract. Where BCF never
8 Construing the facts in the light most favorable to BCF, it did not sit on the opportunity to procure equity for the project. There is evidence that BCF produced six potential investors, and that BEK was aware of BCF's efforts. We do not opine on whether these facts would support a claim for quantum meruit, as that issue is not before us.
9 To the extent BCF relies on the fact that BEK paid a $2,500 retainer, the argument is unavailing because, again, BCF did not promise to do anything in exchange for receipt of the retainer. 12
procured any equity, summary judgment properly entered on BCF's
breach of contract claim.10
3. General Laws c. 93A. The summary judgment on BCF's
breach of contract claim is not determinative of whether BCF has
a viable claim for violation of G. L. c. 93A. It is true that,
even had there been a breach of contract, that alone would not
have amounted to a violation of c. 93A. See Brewster
Wallcovering Co. v. Blue Mountain Wallcoverings, Inc., 68 Mass.
App. Ct. 582, 605 (2007). However, BCF's c. 93A claim is based
on other conduct: namely, that BEK intentionally misrepresented
that BCF had "exclusive authorization" to act on BEK's behalf in
procuring equity for the project. See, e.g., Kitner v. CTW
Transp., Inc., 53 Mass. App. Ct. 741, 742, 748 (2002) (defendant
liable for violation of c. 93 but not breach of contract).
"[T]he finding of intentional misrepresentation . . . is
sufficient foundation for a finding of a c. 93A violation in a
business context." Brewster Wallcovering Co., supra.
10Likewise, there was no breach of the implied covenant of good faith and fair dealing. The covenant of good faith and fair dealing requires "that neither party shall do anything that will have the effect of destroying or injuring the right of the other party to the fruits of the contract" (citation omitted). Anthony's Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 471 (1991). Here, BEK had the right to revoke its offer, and that revocation therefore did not "destroy[] or injur[e] the right of [BCF] to the fruits of the contract." Id. 13
BCF made a sufficient showing of an intentional
misrepresentation to survive summary judgment. Construing the
facts in the light most favorable to BCF, as we must, BEK was
under a deadline to obtain financing. As that deadline
approached -- and Newmark still had not procured the financing -
- BEK reached out to BCF. However, instead of being upfront
about the circumstances and disclosing that BCF was in a race
with Newmark, BEK enticed BCF to work on BEK's behalf by signing
an agreement misrepresenting that BCF had "exclusive
authorization" to act on BEK's behalf in procuring equity for
the project.11 Relying on BEK's misrepresentation, BCF forwent
other opportunities and exerted efforts to procure equity for
the project.12 These facts, if proven at trial, could support a
judgment of liability on BCF's c. 93A claim. See Brewster
Wallcovering Co., 68 Mass. App. Ct. at 604-605.
11While it is true that BEK later sent BCF an offering document stating that Newmark had been granted the right to procure equity for the project, which may support the idea that BEK was not trying to hide anything from BCF, the timing and circumstances of this disclosure present an issue of fact that we do not resolve on summary judgment. See Bulwer v. Mount Auburn Hosp., 473 Mass. 672, 689 (2016) ("at the summary judgment stage a court does not resolve issues of material fact, assess credibility, or weigh evidence" [quotation and citation omitted]).
12At oral argument, BEK suggested that there are no damages on BCF's c. 93A claim but did not address whether BCF forwent other opportunities or exerted efforts to procure equity for the project, either of which could serve as a basis for damages. 14
4. Real estate attachment. The final issue pertains to a
real estate attachment that BCF obtained against property owned
by BEK. BEK dissolved the attachment by filing a surety bond
pursuant to G. L. c. 223, § 120 (bond of dissolution). Then,
after prevailing on summary judgment, BEK moved for an order
discharging the bond of dissolution. A Superior Court judge
allowed the motion, citing G. L. c. 223, § 114, which provides
that a judge may "reduce or dissolve" an "excessive or
unreasonable" attachment.
BCF's sole argument is that, as a matter of law, a judge
may not order the discharge a bond of dissolution during the
pendency of an appeal. BCF points to G. L. c. 223, § 120, which
provides that a bond of dissolution must be "conditioned to pay
the plaintiff, within thirty days from the expiration of the
time to appeal such final judgment, or within thirty days of the
entry of an order of the supreme judicial court or the appeals
court affirming such final judgment." This language goes to the
required terms of a bond of dissolution and does not address
whether a judge may decide that the underlying real estate
attachment is excessive or unreasonable pursuant to G. L.
c. 223, § 114. The judge's decision on this point was
discretionary, see Foster v. Evans, 384 Mass. 687, 695 (1981),
and nothing before us demonstrates that the judge abused his
discretion in deciding that the underlying real estate 15
attachment was excessive or unreasonable, and that the resulting
bond therefore should have been discharged.13
Conclusion. Based on the foregoing, we vacate the summary
judgment on BCF's claim for violation of G. L. c. 93A and remand
for further proceedings on that claim. In all other respects,
the summary judgment is affirmed. The order discharging the
surety bond is affirmed.
So ordered.
13Where we vacate the summary judgment on BCF's c. 93A claim and remand for further proceedings on that claim, nothing herein should be interpreted to preclude BCF, on remand, from moving for a new real estate attachment.