Williamson v. Barlam

230 N.E.3d 425

103 Mass.App.Ct. 727

Mark W. WILLIAMSON, trustee,¹

v.Tamar BARLAM² & others.³

No. 22-P-985

Appeals Court of Massachusetts, Suffolk.

Argued November 6, 2023

Decided February 15, 2024

Real Property, Purchase and sale agreement, Restrictions, Condominium. Condominiums, Management of trust, Derivative suit. Contract, Interference with contractual relations, Implied covenant of good faith and fair dealing. Consumer Protection Act, Sale of condominium unit. Fiduciary. Waste. Trust, Breach of trust. Declaratory Relief. Practice, Civil, Dismissal, Amendment of complaint, Trustee of condominium management trust, Consumer protection case.

Civil action commenced in the Superior Court Department on November 5, 2021.

A motion to dismiss was heard by Kenneth W. Salinger, J., and a motion for reconsideration was considered by him.

Gregory J. Aceto, Boston, for the plaintiff.

James P. Lucking, Boston, for the defendants.

Present: Green, C.J., Blake, & Henry, JJ.

BLAKE, J.

₇₂₉This ease involves five commercial condominium units on Massachusetts Avenue in Cambridge and a condominium trust that contains a use restriction providing that no business conducted in any of the units shall "substantially compete" with a business operating in any other unit unless four of the five trustees assent in wilting (noncompete clause). The term "substantially compete" is not defined by the condominium trust. The plaintiff, Mark Williamson, filed suit in the Superior Court alleging, in pertinent part, that the defendants wrongly interfered with his efforts to sell his unit. Following a hearing on the defendants’ motion to dismiss Williamson’s complaint pursuant to Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 (1976), the judge allowed the motion, entered a judgment of dismissal with prejudice, and denied Williamson’s motion for reconsideration and renewed motion for leave to amend. On Williamson’s appeal, we affirm in part, and reverse in part.

Background. Mark Williamson is the trustee of the 902 Mass Ave Realty Trust, which owns a commercial condominium unit located at 902-904 Massachusetts Avenue in Cambridge (unit). The unit is one of five units in a commercial condominium, which are managed through the 902-912 Massachusetts Avenue Condominium Trust (trust), created by a declaration of trust dated February 20, 20.07, and pursu- ant to G. L. c. 183A. Unit 906 houses the Mass Ave Diner (which serves breakfast, brunch, and lunch, and, after the trust was created, obtained a liquor license), and is owned by defendant David Barlam, the son of defendant Tamar Barlam (owner of 908 Massachusetts Avenue and trustee). Unit 912 houses The Plough and Stars (a full-service Irish bar and restaurant, which serves lunch and dinner, has live music and a liquor license) and is owned by Gabriel O’Malley, who also is a trustee. The remaining defendants include Padraig O’Malley (owner of 912 Massachusetts. Avenue and uncle to Gabriel), Georgia Mamakos (owner of 912 Massachusetts Avenue), and Stephanie Mamakos (trustee and daughter of Georgia).⁴

The trust bylaws include a noncompete clause that is set forth in 'Article V, Section 5, of the trust and provides:

₇₃₀"It is hereby agreed that no business conducted in any of the Units shall substantially compete with a business conducted in any other Unit unless four (4) Trustees assent thereto in writing. For purposes hereof it is hereby acknowledged that the businesses that exist at the time of recording this Declaration of Trust do not violate this provision."⁵

The term "substantially compete" is not defined by the trust. Because the Mass Ave Diner and The Plough and Stars existed at the time that the trust was recorded, they "do not Violate" Article V, Section 5, but the trust does not indicate whether these businesses do not "substantially compete" or whether they had sufficient trustee votes if they do "substantially compete." The trust does not otherwise give examples of what businesses would or would not, substantially compete with each other such that if relationships between owners soured, there would be no governing standard.⁶

Williamson purchased his unit in 2007 after the creation of the trust. The Atomic Bean Cafe operated in the unit owned by Williamson from 2008 until it closed in the fall of 2020. In March 2021, Williamson entered into a purchase and sale agreement (P&S) with Christopher Willis to sell his unit. Willis intended to open a fine dining Italian restaurant with a full liquor license. Under the P&S, Willis could terminate the contract if he was unable to obtain the express written consent of four trustees if required by the noncompete clause. Willis’s attempts to negotiate with the trustees failed; as was his right under the P&S, Willis cancelled the contract.

In October 2021, Williamson entered into a P&S with Yandi Huang, who intended to open a Japanese Asian cuisine restaurant in the unit, with a purchase price that was $175,000 less than Willis had offered. The P&S contained the same terms as the Willis P&S including the non-compete clause and the right to ₇₃₁cancel if, Huang did not secure the written assent of four trustees. Williamson alleges that "[a]s a result of the defendant’s [sic] unreasonable conduct," this sale was never consummated.

Williamson brought suit in his individual capacity against all defendants for tortious interference with a contract, civil conspiracy, and violation of G. L. c. 93A (93A claim). He also brought suit in his capacity as trustee of the 902, Mass Ave Realty Trust against Tamar, Gabriel, and Stephanie for breach of fiduciary duty, and waste, mismanagement, and misappropriation of trust assets.⁷ The verified complaint also contained, a count for declaratory relief seeking multiple declarations including that the noncompete clause be declared unenforceable. Williamson also asked, albeit in a prayer for relief, for a declaration that the businesses owned by David and Gabriel and the businesses proposed by Willis and Huang are substantially different such that the trustees’ assent is not legally necessary under the noncompete clause.⁸

The defendants filed a motion to dismiss contending that the complaint failed to state a claim upon which relief could be granted, and failed to set forth any facts supporting Williamson’s requests for declaratory relief. They requested that the complaint be dismissed with prejudice and without leave to replead. Williamson filed an opposition, and asked in the alternative for leave to amend the complaint, though he did not attach a proposed amended complaint. The judge allowed the defendants’ motion and a judgment of dismissal with prejudice entered. The judge denied Williamson’s motion to reconsider and renewed motion for leave to amend the complaint, again without a proposed amended complaint, but with a summary of the additional allegations he would include in an amended complaint. This' appeal followed.

[1] ₇₃₂Discussion. The judge dismissed Williamson’s complaint with prejudice "for the reasons stated in Defendants’ initial and reply memoranda." This margin notation, without further explanation, gives us pause as to whether the judge construed the complaint in the light most favorable to Williamson, as he was required to do. See Buffalo-Water 1, LLC v. Fidelity Real Estate Co., LLC, 481 Mass. 13, 17, 111 N.E.3d 266 (2018). Nonetheless, we review a motion to dismiss de novo, see A. L. Prime Energy Consultant, Inc. v. Massachusetts Bay Transp. Auth., 479 Mass. 419, 424, 95 N.E.3d 547 (2018), and "[w]e limit our consideration to the factual allegations in the plaintiff's complaint, taking them as true and drawing all reasonable inferences in the plaintiff's favor." Porter v. Board of Appeal of Boston, 99 Mass. App. Ct. 240, 248, 164 N.E.3d 911 (2021).⁹

Williamson, individually and as a trustee, contends that dismissal of the complaint was erroneous, premature, and inequitable, and that the judge abused his discretion in denying Williamson’s requests for leave to amend and motion for reconsideration. Generally speaking, Williamson claims that the noncompete clause was not intended to prevent a broad category of businesses from opening in the unit, and that the defendants interfered with the sale of his unit. Williamson further, contends that, among other things, he is entitled to a declaration that the proposed restaurant use of the unit did not violate the noncompete clause. We address each claim in turn.

[2–5] 1. The noncompete clause. Although at this stage of the proceedings we do not have the occasion to construe the noncompete clause at issue, we begin with a brief discussion of it as it is the underlying basis for most of Williamson’s claims. Among other things, Williamson sought a declaration that the noncompete clause was unenforceable in these circumstances and was an unreasonable restraint on alienation facially and as applied, that the trustees’ assent was not necessary, and that the noncompete clause was inapplicable to the proposed buyers. Massachusetts has long recognized that restrictions may be imposed on the uses that may be made of condominium units. See Franklin v. Spadafora, 388 Mass. 764, 774, 447 N.E.2d 1244 (1983). See also G. L. c. 183A, §§ 8 (g) and 11 (e). "The most common standard [for reviewing provisions that restrict certain condominium uses] is equitable reasonableness" (citation omitted)." Noble v. Murphy, 34 Mass. ₇₃₃App. Ct. 452, 457, 612 N.E.2d 266 (1993). When a noncompete clause appeals in originating documents, which predate the purchase of a unit, the review is "even more liberal".as here Williamson knew of and accepted the noncompete clause when he purchased the unit. Id. at 458, 612 N.E.2d 266. Thus, a non-compete clause "will not be invalidated absent a showing that [it is] wholly arbitrary in [its] application, in violation of public policy, or that [it] abrogate[s] some fundamental constitutional right" (citation omitted). Id. at 459, 612 N.E.2d 266. Though...