Opinion
No. 95-1753-G
July 23, 1996
MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT
Plaintiff Michael J. Capizzi ("Capizzi") initiated this action for fraud, tortious interference with advantageous business relations, and unfair or deceptive acts or practices in violation of G.L.c. 93A on March 29, 1995. This matter comes before the Court on consideration of the motions for summary judgment of defendants Robert Verrier ("Verrier"), Joseph Kelly ("Kelly"), Michael F. Groden ("Groden"), Planning Office of Urban Affairs, Inc. ("POUA") and St. Cecelia's House, Inc. ("St. Cecelia's"). For the following reasons, all defendants' motions for summary judgment are ALLOWED.
BACKGROUND
The facts as set out in the plaintiff's verified complaint, deposition testimony and the parties' affidavits, and viewed in the light most favorable to the plaintiff, are as follows. On July 2, 1987, Capizzi, a real estate developer, agreed to purchase two lots of unimproved land at 108 Kilmarnock Street and 74-78 Queensbury Street in Boston ("the sites") from Matthew Antell ("Antell"), seller and mortgagor of the sites, and the Home Federal Savings Bank of Worcester ("HFSB"), mortgagee, for the price of $4,000,000. Before the agreement between Capizzi, Antell and HFSB, architectural plans and permits had been used by Capizzi to obtain variances from the City of Boston and preliminary approval from the Boston Redevelopment Authority ("BRA") for the 116-unit condominium building that he planned to build on the sites. Capizzi's obligations under the real estate purchase agreement were contingent upon his obtaining final approval from the BRA for the condominium's construction. The real estate purchase agreement, as amended June 30, 1988, granted Capizzi the option of extending the closing date by as much as 120 days upon the payment of extension fees to the seller. Capizzi formed the Queensbury Court Realty Trust, of which he was the sole trustee, for the purpose of taking title and paid a $100,000 deposit to Antell.
Capizzi engaged The Architectural Team, Inc. ("TAT"), the architecture firm represented by Verrier and Kelly, to make adjustments to the condominium building plans in order to win final approval for the project from the BRA. Verrier and Kelly had enjoyed long-standing professional relationships with both Capizzi and POUA, a non-profit real estate development firm. Capizzi alleges on information and belief that, unbeknownst to him, Verrier and Kelly had informed Groden, the Director of POUA, of the work they were completing for Capizzi. Groden is also pastor of St. Cecelia's Church, which is located in Boston near the sites.
Capizzi entered into negotiations with New England Financial Resources ("NEFR") in order to secure $24,000,000 in financing for the condominium project: NEFR eventually signed a "financing commitment" with Capizzi. While awaiting BRA approval for the project, Capizzi spent $150,000 in extension fees and $200,000 in legal and engineering fees. In late 1988, however, the BRA and the City of Boston advised Capizzi that the project was unlikely to receive final approval. Capizzi alleges on information and belief that lobbying by Groden and POUA contributed to the BRA's decision to withhold approval.
In early 1989, TAT entered into an agreement with Capizzi regarding compensation for Verrier's and Kelly's work on the project. This agreement utilized a standard form contract prepared by the American Institute of Architects ("AIA"). The agreement included the following "abandonment clause":
In the event that the project does not go ahead as planned, it is agreed between both parties that there will be a settlement in an amount which will cover the bare costs expended by the architect to bring the documents to the level of completion at the time of abandonment. The agreed upon cost which the Owner (or "Trustee") abandonment buy out amount (sic) is set at $250,000.00.
The agreement between Capizzi and TAT also specified that, in the event the project did not go ahead as planned, the plans for the project would become property of the architects. Capizzi alleges in his complaint that, by operation of this clause, the architects thereby obtained a proprietary interest in the government permits required to build the project. The agreement further specified that, should a dispute occur between the parties, this dispute would be settled in binding arbitration.
Capizzi alleges upon information and belief that Verrier, Kelly and Groden met secretly with Antell and HFSB and told them that Capizzi was not going to receive approval from the BRA and that Antell and HFSB would be better served dealing with Groden and POUA than with Capizzi. Capizzi then alleges upon information and belief that TAT invoked the "abandonment clause", and demanded payment of $250,000, while at the same time negotiating with Antell and HFSB to purchase the Queensbury Court sites. Antell also refused to permit Capizzi to further extend their agreement.
HFSB failed during 1989 and its assets became the property of the Resolution Trust Corporation ("RTC"). Verrier, Kelly and Groden then had to commence negotiations with the RTC in order to purchase the sites. On June 27, 1991, Verrier, Kelly and Groden formed St. Cecelia's, a Massachusetts corporation. St. Cecelia's purchased the sites from the RTC on May 24, 1992, for $500,000.
TAT filed suit against Capizzi to recover reimbursement for expenses incurred in four different development projects including Queensbury Court. This Court (Donovan, J.) referred TAT's contract claims into binding arbitration. In his answer to TAT's complaint, Capizzi raised two counterclaims based on alleged violations of G.L.c. 93A: first, Capizzi asserted that TAT violated G.L.c. 93A by contacting Antell and interfering with his pending contract with Capizzi; second, Capizzi asserted that TAT violated G.L.c. 93A by contacting HFSB and interfering with the real estate purchase negotiations. Arbitrators certified by the American Arbitration Association heard both TAT's and Capizzi's claims. On June 1, 1992, the arbitrators awarded $621,307 to TAT, a sum that included interest. $336,833 of the award relates to the expenses incurred by TAT in the Queensbury Court project. The award was by its terms "in full settlement of all claims and/or counterclaims submitted to this Arbitration." Capizzi admits in his deposition that he believed that he had raised before the arbitrators his claim that TAT interfered with his ability to bring the Queensbury Court project to fruition.
On March 29, 1995, Capizzi filed the complaint currently before the Court. The complaint contains counts of interference with advantageous business relations and violation of G.L.c. 93A against Groden, St Cecelia's and POUA and counts of fraud and negligence and violation of G.L.c. 93A against both Verrier and Kelly, respectively.
DISCUSSION
This Court allows summary judgment where there are no genuine issues of material fact and where the summary judgment record entitles the moving party to judgment as a matter of law. Cassesso v. Commissioner of Correction, 390 Mass. 419, 422 (1983); Community National Bank v. Dawes, 369 Mass. 550, 553 (1976); Mass.R.Civ.P. 56(c). The moving party bears the burden of affirmatively demonstrating both elements. Pederson v. Time, Inc., 404 Mass. 14, 16-17 (1989). A party moving for summary judgment who does not have the burden of proof at trial may demonstrate the absence of a triable issue either by submitting affirmative evidence that negates an essential element of the opponent's case or "by demonstrating that proof of that element is unlikely to be forthcoming at trial." Flesner v. Technical Communications Corp., 410 Mass. 805 (1991). "If the moving party establishes the absence of a triable issue, the party opposing the motion must respond and allege specific facts which would establish the existence of a genuine issue of material fact in order to defeat the motion." Pederson, supra at 17. The nonmoving party's failure to prove an essential element of its case "renders all other facts immaterial" and mandates summary judgment in favor of the moving party. Kourouvacilis v. General Motors Corp., 410 Mass. 706, 711 (1991) citing Celotex v. Catrett, 477 U.S. 317, 322 (1986).
1. Capizzi's claims against Verrier and Kelly
Verrier and Kelly assert in their answer the defense of res judicata against Capizzi's claims of violation of c. 93A, fraud and negligence.
The doctrine of [res judicata or] claim preclusion makes a valid, final judgment conclusive on the parties and their privies, and bars further litigation on all matters that were or should have been adjudicated in the action. . . This is so even though the claimant is prepared in a second action to present different evidence or legal theories to support his claim, or seeks different remedies.
Heacock v. Heacock, 402 Mass. 21, 23 (1988), quoting Franklin v. North Weymouth Coop. Bank, 283 Mass. 275, 279-280 (1933).
The doctrine of res judicata is "based on the idea that the party to be precluded has had the incentive and opportunity to litigate the matter fully in the first lawsuit." Id. at 24, quoting Foster v. Evans, 384 Mass. 687, 696 n. 10 (1981). In order to prevail at summary judgment on a theory of res judicata, Verrier and Kelly must show first that no issues of material fact remain and second that they are entitled to judgment as a matter of law. Verrier and Kelly must show that: (1) a previous action took place between the same parties or their privies; (2) the same subject-matter was involved in both actions and; (3) the prior action was decided against the party attempting to litigate the same subject matter again. Hopkins v. Holcombe, 308 Mass. 54, 57 (1941).
Res judicata applies with equal effect to matters litigated in court and matters determined in binding arbitration. Bailey v. Metropolitan Property and Liability Insurance Co., 24 Mass. App. Ct. 34 (1987), quoting Louison v. Fischman, 341 Mass. 309 (1960) and Restatement (Second) of Judgments § 84 (1982). The doctrine does not require identity of the parties concerned; instead, the parties need only be in privity or in a relationship, such as that between agent and principal and employer and employee, in which one party is vicariously liable for the acts of the other. Restatement (Second) of Judgments § 51 (1982).
The Restatement (Second) of Judgments (1982) states in pertinent part at section 51:
If two persons have a relationship such that one of them is vicariously responsible for the conduct of the other, and an action is brought by the injured person against one of them, the judgment in the action has the following preclusive effects against the injured person in a subsequent action against the other.
(1) A judgment against the injured person that bars him from reasserting his claim against the defendant in the first action extinguishes any claim he has against the other party responsible for conduct unless:
(a) the claim asserted in the second action is based upon grounds that could not have been asserted against the defendant in the first action; or
(b) the judgment in the first action was based on a defense that was personal to the defendant in the first action.
None of the facts offered by either party indicate that either of the defenses set out in (a) or (b) is applicable to this action.
Although Capizzi contends that the defendants have not offered sufficient facts to show an agency or employment relationship among Verrier, Kelly and TAT, this claim is not supported by the facts. Capizzi admits in his deposition testimony that Verrier and Kelly acted as representatives of TAT during his negotiations with them. Furthermore, in his verified complaint, Capizzi stated that Verrier and Kelly "do business under the firm style and name as [TAT]." This statement amounts to an admission, for res judicata purposes, that Verrier and Kelly are in privity with TAT. None of the facts supplied the Court by Capizzi in his verified complaint or deposition testimony causes the Court to doubt or dispute the privity among Verrier, Kelly and TAT.
Verrier and Kelly have shown that the same subject matter was involved in the binding arbitration between Capizzi and TAT and in the c. 93A claim currently before the Court. In his original answer, Capizzi alleged that "[TAT], by contacting directly the owner of the real estate, interfered with [Capizzi and Queensbury Court Realty Trust's] ability to bring [the Queensbury Court] project to fruition." Capizzi repeated these alleged facts in a second counterclaim, this time basing his claim upon TAT's contacts with the "Mortgagee Bank": HFSB. These allegations form the basis for Capizzi's present complaint against Verrier and Kelly for c. 93A violations.
Capizzi's complaint alleges upon information and belief that: (1) Groden and the Architects in late 1988 or early 1989 made an Agreement . . . to purchase the development from Antell for themselves; (2) Verrier, Kelly, Groden and others . . . visited Antell and his mortgagee bank and told them that the plaintiff would not be able to perform his obligations under the Agreement . . . and that Antell would be better served dealing with the said defendants; and (3) Antell's refusal to extend the plaintiff's rights under the Agreement was caused by the defendants' interference with plaintiff's advantageous business relationship with Antell (Complaint at ¶ 14, 17, 20). These facts set out in extended form the identical case that was made in Capizzi's counterclaim.
Finally, Verrier and Kelly have shown that the prior action was decided against Capizzi. After the arbitration hearing, the arbitrator ordered Capizzi to pay funds to TAT in settlement of the claims in TAT's complaint, but failed to order TAT to pay Capizzi any funds recompensing Capizzi for the injuries alleged in his counterclaims. As the arbitrator did not order TAT to compensate Capizzi, the Court concludes that the prior c. 93A action was decided against Capizzi and that this judgment bars counts III and IV of Capizzi's current complaint.
Res judicata also bars Capizzi's fraud and negligence claims against Verrier and Kelly. These claims arise out of the same transactions and occurrences as the c. 93A claims Capizzi raised in his prior counterclaims against TAT. As such, these claims are compulsory counterclaims that Capizzi had to raise in his original answer or lose forever. Mass.R.Civ.P. 13 (a); Chuang Invs. v. Eagle Inns, Inc., 893 F. Supp. 102, 104 (D.Mass. 1995) (c. 93A claims that plaintiff could have raised but failed to barred under res judicata); Restatement (Second) of Judgments § 22.
The Restatement (Second) of Judgments states at § 22:
(2) A defendant who may interpose a claim as a counterclaim in an action but fails to do so is precluded, after the rendition of a judgment in that action, from maintaining an action on the claim if:
(a) the counterclaim is required to be interposed by a compulsory counterclaim, statute or rule of court. . .
Because I allow defendants' motion for summary judgment on their res judicata theory, the Court does not reach defendants' arguments concerning the statute of limitations and Mass.R.Civ.P. 56 (e).
The Court notes, however, that the arguments set out infra concerning the inadequacy of the plaintiff's factual record apply to the claims against Verrier and Kelly with the same force that they apply to the claims against Groden, St. Cecelia's and POUA.
2. Capizzi's claims against Groden, St. Cecelia's and POUA
In Count I of his complaint, Capizzi asserts a claim of interference with advantageous business relations against Groden, St. Cecelia's and POUA. In his verified complaint, Capizzi supports his claim with various factual allegations that he offers "upon information and belief". Capizzi admits in his deposition testimony that the sole basis for his "information and belief" rests in comments made to him in a conversation he had with one Robert Farrell at a political fundraising dinner. Groden has supplied the Court with a sworn affidavit that denies, on personal knowledge, that Groden interfered or directed POUA or St. Cecelia's to interfere in any way with Capizzi's business relationship with Antell.
The allegations supplied in Capizzi's affidavit are insufficient to create a material issue of fact and therefore fail to prevent summary judgment. Statements contained within an affidavit based on information and belief are inappropriate for summary judgment purposes and will not be considered by the Court. Mass.R.Civ.P. 56 (e); Jackson v. Hogan, 388 Mass. 376, 378 (1983). Statements based on inadmissible hearsay, such as the reported comments of Robert Farrell, are similarly inappropriate and cannot serve to frustrate defendants' motion for summary judgment. Symmons v. O'Keefe, 419 Mass. 288, 295 (1995); Madsen v. Erwin, 395 Mass. 715, 721 (1985). Here, not only has Capizzi failed to provide any legitimate facts that would be admissible at trial to support his claim, but the allegations he has provided are also contradicted by the facts of Groden's affidavit.
In Count II of his complaint, Capizzi asserts a claim under c. 93A against the same three defendants. This claim is unsupported by facts: the only basis for it lies in the allegations of Capizzi's verified complaint, made on information and belief, and in the statements of Farrell and others, all of which would be inadmissible as hearsay if offered at trial. For the same reasons as those governing Capizzi's intentional interference claim, the c. 93A claim fails to withstand summary judgment.
The fact that POUA and St. Cecelia's are nonprofit corporations does not, as defendants contend, insulate all their activities from the purview of c. 93A. Unlike the transactions determined not to be part of "trade or commerce" in Planned Parenthood Federation of America, Inc. v. Problem Pregnancy of Worcester, Inc., 398 Mass. 480, 493-494 (1986), the transactions alleged here were for consideration, involved the for-profit construction business, and are actionable under c. 93A if they were performed in an unfair or deceptive manner.
ORDER
For the foregoing reasons, defendants' motions for summary judgment under Mass.R.Civ.P. 56 are ALLOWED on all counts of plaintiff Michael J. Capizzi's verified complaint.
Margaret R. Hinkle Justice of the Superior Court
DATED: July, 1995