SOMERVILLE OFFICE ASSOCIATES LIMITED PARTNERSHIP v. CRESSET DEVELOPMENT, LLC, & Others.

NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule
23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28,
as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties
and, therefore, may not fully address the facts of the case or the panel's
decisional rationale. Moreover, such decisions are not circulated to the entire
court and, therefore, represent only the views of the panel that decided the case.
A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25,
2008, may be cited for its persuasive value but, because of the limitations noted
above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260
n.4 (2008).

COMMONWEALTH OF MASSACHUSETTS

APPEALS COURT

22-P-1213

SOMERVILLE OFFICE ASSOCIATES LIMITED PARTNERSHIP

vs.

CRESSET DEVELOPMENT, LLC, & others. 1

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

Somerville Office Associates Limited Partnership (SOA)

filed a complaint in the Superior Court against Cresset

Development, LLC, and affiliate CDNV Land, LLC (Cresset), as

well as BRE-BMR Middlesex LLC (BioMed). The complaint alleged

that the defendants owed a substantial "earnout" payment and

raised five counts: (1) breach of contract (Cresset); (2)

breach of implied covenant of good faith and fair dealing

(Cresset); (3) successor liability (BioMed); (4) violation of

G. L. c. 93A (Cresset and BioMed); and (5) declaratory relief

(Cresset and BioMed). Cresset and BioMed moved to dismiss the

claims, and a judge allowed the motions. We affirm.

1 CDNV Land, LLC, and BRE-BMR Middlesex LLC.
Background. In October 2016, SOA owned 5-7 Middlesex

Avenue in the Assembly Square neighborhood in the city of

Somerville. At that time, SOA and Cresset executed a letter of

intent for the sale of the property for $80 million. The

parties then executed a purchase and sale agreement on January

17, 2017 (Original PSA). Thereafter, the parties agreed to

split the transaction into two staggered sales, reduce the

purchase price to $65 million, and include an earnout provision

in connection with potential future development. Accordingly,

on March 23, 2017, the parties executed two new purchase and

sale agreements, one pertaining to an improved parcel containing

an existing office building, which would be sold first for $35

million (Improved PSA), and the second pertaining to an

unimproved parcel that would be sold later for $30 million

(Unimproved PSA).

The Unimproved PSA contained an earnout provision with a

formula for additional payments to SOA if building permits

issued within a five-year period to construct commercial space

that exceeded a certain square footage threshold. SOA

calculated the potential value of this earnout provision to be

nearly $20 million based on March 2016 master plans (Original

Master Plans) that it had previously commissioned and included

in the sale to Cresset. Although it retained discretion to

revise and edit the Original Master Plans, Cresset agreed to

2
provide monthly updates to SOA and to pursue municipal approval

of the Original Master Plans. Cresset purchased the improved

parcel in January 2018.

One month after the sale, Cresset presented SOA with new

master plans (Revised Master Plans). The Revised Master Plans

changed the development plan for both the improved and

unimproved parcels, reconfigured and redesigned the proposed

buildings, and substantially reduced the potential earnout to

just over $9 million. Despite the reduced earnout, SOA agreed

to amend the Unimproved PSA to incorporate the Revised Master

Plans. In June 2018, Cresset obtained municipal approval for

the Revised Master Plans. Cresset purchased the unimproved

parcel in January 2019.

Thereafter, Cresset ceased providing updates about the

development to SOA for several months. In November 2019,

Cresset unsuccessfully sought approval from SOA for a change in

the earnout provision relative to buildings that straddled the

improved and unimproved parcels. In the meantime, unbeknownst

to SOA, Cresset and BioMed developed, in March 2020, yet another

set of master plans (Final Master Plans) with an eye toward

demolishing the existing building and centering most development

on the improved parcel. In July 2020, municipal officials

approved the Final Master Plans. In January 2021, BioMed

purchased both the improved and unimproved parcels from Cresset

3
for nearly $200 million. On May 21, 2021, Cresset and BioMed

rejected SOA's demand for an earnout payment of more than $9

million and this civil action followed.

Cresset has conceded in its brief that while this appeal

was pending, building permits issued for construction on the

unimproved parcel. Because, in its view, the issuance of the

building permits triggered the earnout provision in the

Unimproved PSA, Cresset reports that it paid SOA $385,230.

Discussion. A motion to dismiss is properly allowed if a

complaint "[f]ail[s] to state a claim upon which relief can be

granted." Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 (1974).

We review the allowance of a motion to dismiss de novo, accept

as true the allegations in the complaint, and draw all

reasonable inferences in the plaintiff's favor. Curtis v. Herb

Chambers I-95, Inc., 458 Mass. 674, 676 (2011). When examining

the claims, we look beyond the conclusory allegations in the

complaint, examine the documents attached to the complaint, and

focus on whether the factual allegations plausibly suggest an

entitlement to relief. Iannacchino v. Ford Motor Co., 451 Mass.

623, 636 (2008); Schaer v. Brandeis Univ., 432 Mass. 474, 477

(2000).

1. Covenant of good faith and fair dealing. The covenant

of good faith and fair dealing provides that "neither party

shall do anything which will have the effect of destroying or

4
injuring the right of the other party to receive the fruits of

the contract." Druker v. Roland Wm. Jutras Assocs., 370 Mass.

383, 385 (1976), quoting Uproar Co. v. National Broadcasting

Co., 81 F.2d 373, 377 (1st Cir.), cert. denied, 298 U.S. 670

(1936). The complaint alleged that Cresset breached its duty of

good faith and fair dealing when it "abandoned" the project

outlined in the 2018 Revised Master Plans in favor of the Final

Master Plans crafted by Cresset and BioMed. Based on the

contractual provisions agreed on by SOA and Cresset as well as

their alleged conduct, the complaint fails to plausibly suggest

an entitlement to relief.

Contrary to SOA's contention, the complaint and attached

documents do not state that Cresset breached any duty owed to

SOA with respect to the Revised Master Plans. When SOA and

Cresset executed the Original PSA on January 17, 2017, they

agreed that the master plans could be modified during two

distinct time periods. Section 6.2 allowed SOA to change the

master plans under specified circumstances within forty-five

days of executing the Original PSA. At the expiration of that

forty-five day period, the "sole right" to change the master

plans shifted to Cresset under that same section. Section 6.1

provided additional language giving Cresset "the sole right to

determine what and when to develop" and the "sole discretion" to

"change or withdraw" the master plans. Cresset and SOA agreed

5
that these rights would survive the closing. This broad power

granted to Cresset continued to be included in the Unimproved

PSA executed on May 23, 2017, and survived the closing. The

conduct of the parties also suggested an understanding that the

master plans were never cast in concrete. As the complaint

alleges, prior to the closing, SOA and Cresset agreed in 2018 to

scrap the Original Master Plans in favor of the Revised Master

Plans. This significant change to the Original Master Plans

included both the improved and unimproved parcels and provided

for new buildings to straddle both parcels.

Thus, the complaint and supporting documents fail to

support SOA's contention that the master plans cabined Cresset's

business options and required Cresset (investing at least $65

million) to adhere to the Revised Master Plans come what may.

When Cresset created the Final Master Plans, it did so according

to a contractual right to exercise its "sole discretion" to

determine the scope of the development according to master plans

of its own choosing. "If the words of a contract are clear,

they are dispositive as to the meaning of the contract."

Columbia Plaza Assocs. v. Northeastern Univ., 493 Mass. 570,

581–582 (2024). Even if the Final Master Plans diminished the

value of SOA's earnout, the allegations of SOA's complaint do

not support an inference that Cresset failed to "remain faithful

to the intended and agreed expectations of the parties" as

6
documented. Uno Restaurants, Inc. v. Boston Kenmore Realty

Corp., 441 Mass. 376, 385 (2004).

SOA contends that Cresset's broad discretion with respect

to modifying the master plans was limited to addressing

municipal concerns in the permitting process and terminated on

Cresset's purchase of the unimproved parcel. There is nothing,

however, in the language of the Original PSA or the Unimproved

PSA, or any other document, that supports this contention.

Because SOA and Cresset did not include such language in their

various agreements, we are not at liberty to impose it on them

now. See Ayash v. Dana-Farber Cancer Inst., 443 Mass. 367, 385

(2005) ("[t]he scope of the covenant is only as broad as the

contract that governs the particular relationship"). "It is not

the role of the court to alter the parties' agreement." Rogaris

v. Albert, 431 Mass. 833, 835 (2000).

2. Application of the earnout provision. Failure to pay

money owed under the earnout provision could constitute a breach

of contract, but the complaint must indicate the earnout was due

and left unpaid. The complaint alleges that the earnout

provision applied to both parcels and was not paid according to

the Final Master Plans. Resolution of this claim turns on

whether the earnout applied to both parcels. Once again,

neither the complaint nor the attached documents support SOA's

claim.

7
The complaint does not show that Cresset breached the

earnout provision because the supporting documents show the

earnout provision applied only to the unimproved parcel.

"[W]here sophisticated parties choose to embody their agreement

in a carefully crafted document, they are entitled to and should

be held to the language they chose." Anderson St. Assocs. v.

Boston, 442 Mass. 812, 819 (2004). Here, SOA and Cresset split

the transaction into the Improved PSA and the Unimproved PSA on

May 23, 2017, and included the earnout provision only in the

Unimproved PSA. "In interpreting a written contract, such as a

purchase and sale agreement, the court gives full effect to all

the terms expressed by the parties." Rogaris, 431 Mass. at 835.

By including the earnout provision in the Unimproved PSA and

excluding the earnout provision in the Improved PSA, Cresset and

SOA expressed a clear intent that the earnout would be limited

to the unimproved parcel.

On appeal, SOA contends that the earnout provision, though

contained only in the Unimproved PSA, implicitly references both

the improved parcel and the unimproved parcel. While there is

no explicit reference to the improved parcel in the Unimproved

PSA, SOA argues that the various definitions and uses of the

terms "Property," "Land," "Project," and "on the Property"

throughout the agreements lead to the "inescapable conclusion"

8
that the earnout provision applies to both the unimproved and

improved parcels. We disagree.

SOA's interpretation, which would require reading "on the

Property" in the earnout provision to refer to something other

than real property, is not a reasonable one and cannot be

squared with the contractual language. Furthermore, beyond the

absence of any reference to the earnout provision in the

Improved PSA, we note that SOA, a sophisticated business

organization represented by counsel, missed a significant

opportunity to expressly include a reference to the improved

parcel in an amended earnout provision. This opportunity arose

after Cresset purchased the improved parcel. At that point,

Cresset and SOA agreed to the Revised Master Plans and executed

an amendment to the Unimproved PSA. In that amendment, the

terms of the earnout were modified, but no language linked the

earnout to the improved parcel. To the contrary, the amendment

referenced the "unimproved real property" and required a notice

of earnout to be recorded "just following the recording and

filing of the Deed for the Land" -- a clear reference to the

unimproved parcel that had not yet been conveyed. We also note

that the notice of earnout was recorded immediately following

the recording of the deed to the unimproved land. Especially

after the Revised Master Plans resulted in structures straddling

both parcels, SOA could have struck a more advantageous deal

9
that expressly extended the earnout to the improved parcel, but

it did not do so. As previously discussed, we cannot, in

hindsight, alter the parties' agreement. Rogaris, 431 Mass. at

835.

3. Other claims. Finally, we discern no basis for

successor liability, a 93A cause of action, or declaratory

relief. These claims are based on the same set of alleged facts

10
and fail under the same analysis. See Iannacchino, 451 Mass. at

635.

Judgment affirmed.

By the Court (Shin, Brennan &
Hodgens, JJ. 2),

Assistant Clerk

Entered: May 29, 2024.

2 The panelists are listed in order of seniority.

11