GREENFIELD COUNTRY ESTATES TENANTS ASSOC., INC. v. DEEP, 423 Mass. 81 (1996)

666 N.E.2d 988

Supreme Judicial Court of Massachusetts. Franklin.January 9, 1996.
June 26, 1996.

Present: LIACOS, C.J., ABRAMS, LYNCH, O’CONNOR, JJ.

Manufactured Housing Community. Mobile Home. Consumer Protection Act, Consumer, Landlord and tenant. Constitutional Law, Taking of property. Regulation. Statute, Construction. Real Property, Specific performance, Bona fide purchaser, Right of first refusal.

Discussion of the statutory scheme set forth in G.L.c. 140, §§ 32A-32R, intended to protect tenants of manufactured housing communities (formerly known as mobile home parks). [82-84] General Laws c. 140, § 32R, as in effect in October, 1993, which requires an owner of a manufactured housing community who intends to sell the property on which the community is located to give notice to the tenants of the community and which further provides those tenants with a right of first refusal to purchase the property, does not amount to a regulatory “taking” burdening the free alienation of land, where the statute substantially advances a legitimate State interest, viz., to promote the continued existence of viable affordable housing for the tenants of such communities, and where the statute does not deprive the owner of economically viable use of such property. [85-87] In an action brought under G.L.c. 93A, a Superior Court judge correctly in the exercise of his discretion entered an order for specific performance compelling transfer of a manufactured housing community to its tenants for the former owner’s failure to comply with the notice provisions of G.L.c. 40, § 32R, with regard to the owner’s sale of the property, which deprived the tenants of their statutory right of first refusal, and the availability of money damages did not preclude the award of equitable relief. [87-91]

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CIVIL ACTION commenced in the Superior Court Department on May 11, 1994.

The case was heard by Francis X. Spina, J., on a motion for partial summary judgment.

The Supreme Judicial Court granted an application for direct appellate review.

James R. Loughman for Michael A. Deep.

John J. Stobierski for the plaintiff.

Richard A. Freedman for Elizabeth M. Zewinski.

Scott Harshbarger, Attorney General, Donna L. Palermino,
Assistant Attorney General, for the Attorney General, amicus curiae, submitted a brief.

LIACOS, C.J.

This case presents us with two issues for resolution: (1) the constitutionality of G.L.c. 140, § 32R (1994 ed.), and (2) the propriety of an order of specific performance as a remedy for a violation of that statute. On June 12, 1995, a judge in the Superior Court granted a final partial summary judgment pursuant to Mass. R. Civ. P. 54(b), 365 Mass. 820 (1974), to the plaintiff, Greenfield Country Estates Tenants Association, Inc. (association).[3] This judgment upheld the association’s right of first refusal to purchase the property on which the mobile home community (manufactured housing community) is situated. The judge further granted the association an order of specific performance to compel transfer of the property. We conclude that the statute is constitutionally valid and that the judge properly awarded the remedy of specific performance for a violation of the statute. Accordingly, we affirm the grant of partial summary judgment.[4]

A familiarity with the statutes involved in this case is helpful to an understanding of the factual discussion. General Laws c. 140, §§ 32A-32R, establishes a statutory scheme intended to protect tenants of manufactured housing communities,

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formerly known as mobile home parks.[5] Both the Legislature and the courts of the Commonwealth have recognized that manufactured housing communities provide a viable, affordable housing option to many elderly persons and families of low and moderate income, who are often lacking in resources and deserving of legal protection. See Commonwealth v. Gustafsson, 370 Mass. 181, 190-191 (1976); Commonwealth v. DeCotis, 366 Mass. 234, 238 (1974). In recognition of the importance of protecting the rights of tenants in manufactured housing communities, § 32L was amended in 1986, St. 1986, c. 317, § 1, and § 32R was rewritten in 1993, St. 1993, c. 145, § 19.[6] As in effect at the time of the sale of the manufactured housing community involved here, the statute (G.L.c. 140, § 32R) required an owner of a manufactured housing community who intended to sell the property on which the community was located to give notice to the tenants of the community and to provide the tenants with information regarding a bona fide offer of purchase received from a third party.[7] That section further provided the tenants with a right of first refusal to purchase the property.

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Section 32L (7) of the same statute provided that “[f]ailure to comply with the provisions of sections thirty-two A to thirty-two S, inclusive, shall constitute an unfair or deceptive practice under the provisions of paragraph (a) of section two of chapter ninety-three A. Enforcement of compliance and actions for damages shall be in accordance with the applicable provisions of section[s] four to ten, inclusive, of said chapter ninety-three A.” G.L.c. 140, § 32L (7).

The Commonwealth’s consumer protection statute, G.L.c. 93A (1994 ed.), regulates business practices for the purposes of providing proper disclosure of information to consumers and to encourage an equitable balance between consumers and businesses. See York v. Sullivan, 369 Mass. 157 (1975). Under the statute as originally enacted, only the Attorney General could bring actions on behalf of citizens to enforce the statute’s mandate. See G.L.c. 93A, § 4. Section 9 was added in 1969 and sets out a private right of action by an individual or individuals not engaged in trade or business who has or have been injured by unfair or deceptive practices. Such a person may seek monetary damages, including double and treble damage awards for knowing and wilful statutory violations, and such equitable relief as the court deems necessary and proper.[8] G.L.c. 93A, § 9 (1).[9]

The material facts are not in dispute. On October 9, 1993, Zewinski and Deep entered into an agreement for the purchase and sale of a parcel of land in Greenfield known as Brownie’s Mobile Home Park. Zewinski listed the property for sale in July, 1993. Neither Zewinski nor Deep gave notice of the sale to the tenants of the park until December, 1993, after completion of the transaction.[10] On learning of the sale, fifty-five of the sixty-six tenants sent a letter to Deep requesting

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information regarding the terms of the sale, pursuant to G.L.c. 140, § 32R (c), in order to tender Deep a purchase and sale agreement on substantially similar terms in an effort to exercise their statutory right of first refusal. The association further demanded that Deep sell the park to it. Deep contested the applicability of the statute and refused to provide the requested information. After additional unanswered correspondence, the association commenced this suit on May 11, 1994.[11] On March 8, 1995, a judge in the Superior Court granted the association’s motion for partial summary judgment, which became final on June 12, 1995. He ordered that, once the association complied with the statutory prerequisites, it was entitled to purchase the property on substantially the same terms and conditions as contained in the purchase and sale agreement between Deep and Zewinski. He further declared that the association was entitled to receive notice of those terms and conditions. Deep did not comply with the order, and the association sought and received an order of specific performance. Deep appealed to the Appeals Court, and we granted the association’s application for direct appellate review.

1. We first address Deep’s contention that G.L.c. 140, § 32R, creates a facially unconstitutional regulatory taking of property without just compensation in violation of the Fifth Amendment to the United States Constitution.[12] Deep, as the title owner of the affected property, has standing to raise the

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constitutional question. See Lopes v. Peabody, 417 Mass. 299, 303 (1994). The statute is constitutionally sound.

Deep does not allege that the government has physically “taken” his land, see Yee v. Escondido, 503 U.S. 519, 527 (1992), but rather contends that § 32R burdens the free alienation of the land so as to create a regulatory taking. A regulation amounts to a “taking” if it fails substantially to advance a legitimate State interest or deprives a landowner of economically viable use of the land. Nollan v. California Coastal Comm’n, 483 U.S. 825, 834 (1987), citing Agins v. Tiburon, 447 U.S. 255, 260 (1980) Lopes v. Peabody, supra at 304-305 n. 9.

We conclude that the statute substantially advances a legitimate State interest. Deep concedes that the government’s interest, the preservation of available property to accommodate manufactured housing communities, is legitimate. He argues, however, that the right of first refusal in favor of tenants of manufactured housing communities does not substantially advance that interest. A description of the difficulty faced by the Commonwealth regarding the continued existence of viable, affordable housing for the elderly and persons of low and moderate income is found in St. 1986, c. 317, § 1, the emergency preamble to the statutory enactment of § 32L, and St. 1993, c. 145, § 19, an amendment to § 32R. The goal of the statute is to avoid discontinuances of manufactured housing communities and to ensure that tenants of such communities are not left at the peril of their landlords due to a practical inability to relocate a manufactured housing unit. “Unless mobile home owners receive further protection in relocating their homes upon mobile home park discontinuances than the law now affords, this increasing shortage of mobile home park sites and increasing cost of relocation will generate serious threats to the public health, safety, and general welfare of the citizens of the commonwealth, particularly the elderly and persons of low and moderate income.” St. 1986, c. 317, § 1. The statute enables residents of manufactured housing communities to purchase the land on which their homes exist and thus avoid discontinuances of manufactured housing communities. This creates stability for those homeowners and promotes continued existence of affordable housing. It is difficult to imagine a more appropriate and close-fitting method to further the legitimate interest of the Commonwealth.

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Even a regulation enacted pursuant to a State’s legitimate exercise of its police power may constitute a taking if it deprives the owner of all economically viable use of the land Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1019 (1992). The statutory right of first refusal minimally limits an owner’s freedom to transfer property in that the owner must offer the property to the tenants on substantially the same terms and conditions as contained in a bona fide offer of purchase. The owner is not required to sell to the tenants on terms less favorable than he or she can receive from a third party. Further, the statute imposes no restriction on transfers of property by gift, devise, or operation of law. G.L.c. 140, § 32R (d). The statutory right of first refusal cannot be said materially to affect the marketability of the property so as to deprive it of economic value. We do not speculate as to the validity of Deep’s unsubstantiated assertions that the restriction results in a diminution in property value or reduces the pool of prospective purchasers. We note only that mere conditioning the sale of the property to a right of first refusal does not amount to a taking. See Andrus v. Allard, 444 U.S. 51, 66 (1979). The owner may continue to approve tenants, to collect rents, to promulgate rules of the park with the approval of the Attorney General, and to make improvements to the land.[13] Section 32R does not deprive an owner of economically viable use of the property.

2. Deep next claims that specific performance was an improper remedy for Deep’s violation of G.L.c. 140, § 32R. He states first that the judge erroneously believed he was required as a matter of law to award the remedy of specific performance. There is no evidence in the record that the judge felt constrained to award specific performance rather than monetary damages. Whether specific performance should be granted is within the sound discretion of the judge. Raynor v. Russell, 353 Mass. 366, 367 (1967). Indeed, the judge recognized that “[c.] 93A permits a wide array of relief, including specific performance.” The judge was aware of and properly exercised his discretion.

Deep further asserts that awarding an equitable remedy

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such as specific performance was inappropriate under G.L.c. 93A because an adequate remedy existed at law. It is the premise of his argument that G.L.c. 93A, which provides for monetary damages and such equitable relief as the judge deems appropriate in order to remedy an injury caused by unfair and deceptive acts, incorporates the common law preference for legal damages. It is true that the general common law rule was that equitable remedies are not available to one who can be fully and adequately compensated at law. The availability of money damages does not, however, bar a suit in equity for specific performance. This is particularly true where, as here, the interest is one in real property. See Leardi v. Brown, 394 Mass. 151, 159 (1985) Olszewski v. Sardynski, 316 Mass. 715, 717 (1944); Noyes v. Bragg, 220 Mass. 106, 109 (1915); 11 S. Williston, Contracts § 1418A (3d ed. 1968). It is well-settled law in this Commonwealth that real property is unique and that money damages will often be inadequate to redress a deprivation of an interest in land. We need not decide today the precise outer limits of a judge’s discretion to award equitable relief for violations of the consumer protection statute, as this award of specific performance was wholly consistent with both the common law and the mandates of c. 93A. There was no error.

We have stated that c. 93A “granted full authority to the courts to use their traditional equity power to fashion decrees to remedy the wrong complained of and to make the decree effective.” Commonwealth v. DeCotis, 366 Mass. 234, 245 (1974), and cases cited. Section 9(1) of G.L.c. 93A allows a consumer to bring an action for damages “and” such equitable relief as the court deems necessary and proper. General Laws c. 93A is a statute of broad impact that created new substantive and procedural rights previously not available at common law. See Leardi v. Brown, supra at 159; Heller v. Silverbranch Constr. Corp., 376 Mass. 621, 626 (1978); Slaney v. Westwood Auto, Inc., 366 Mass. 688, 693 (1975). “[I]t was not designed to limit their pre-existing rights and remedies, or to create obstacles to their pursuit.” York v. Sullivan, 369 Mass. 157, 164 (1975), citing Commonwealth v. DeCotis, supra
at 244 n. 8. Cf. Calimlim v. Foreign Car, Inc., 392 Mass. 228, 236 (1984) (c. 93A recovery intended to supplant traditional remedies). Rather, the Legislature sought to ensure latitude in the manner, be it legal or equitable, in which the statute is

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enforced to protect consumers. Further, tenants are among those intended to benefit from the statute. Leardi v. Brown, supra. It is a central theme of the statute that the Attorney General have the power to restrain and prevent unfair and deceptive acts, and not simply to redress wrongs already committed. To this end, the awarding of injunctive relief is a common and effective tool. So, too, is specific performance often an appropriate “remedy of enforcement” which furthers the preventive goal of the statute.

Specific performance is a proper remedy to enforce a valid option to purchase real property.[14] Allen v. Rakes, 359 Mass. 1, 6 (1971). Raynor v. Russell, supra. Curley v. Mobil Oil Corp., 860 F.2d 1129, 1135 (1st Cir. 1988) (applying Massachusetts law). On notice of receipt of a bona fide offer from a third party, a right of first refusal ripens into an option to purchase according to its terms. Roy v. George W. Greene, Inc., 404 Mass. 67, 70-71 (1989), S.C., 408 Mass. 721 (1990). The right is not extinguished by sale to a third party with actual or constructive notice of the right. A holder is entitled to injunctive protection against sale to a bona fide purchaser, and may enforce the right in an action of specific performance against a third party who purchased with notice of the option. The third-party purchaser holds legal title, subject to the equitable obligation to convey the property to the holder of the right on receipt of payment of the required purchase price. That the transfer of the property is contingent on the payment of the purchase price adequately protects the interests of the third-party purchaser who takes with notice of the right. Tucker v. Connors, 342 Mass. 376, 382 (1961). Parkhurst v. Maynard, 285 Mass. 59, 62-63 (1933).

Deep purchased the property on which the manufactured housing community is located subject to the association’s

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right of first refusal. Deep had at least constructive notice of the statute, and was thus not a bona fide purchaser.[15] The sale by Zewinski did not cut off the right of first refusal held by the association, which on learning of the transaction timely notified Zewinski and Deep of its intention to exercise its right. Deep, as holder of legal title subject to the equitable right of the association, became obligated to comply with the statutory requirement to disclose to the association the terms and conditions of the sale. On the association’s tender of a purchase and sale agreement substantially in accord with the terms and conditions of the sale from Zewinski to Deep, Deep will become obligated to transfer the property to the association.

Finally, Deep contends the award of specific performance was improper because the judge failed to engage in an equitable balancing of interests. Specific performance is an equitable remedy, and thus is not appropriately granted in those special circumstances where it would impose an undue hardship on one party or allow the other to obtain an inequitable advantage Freedman v. Walsh, 331 Mass. 401, 406 (1954). Curley v. Mobil Oil Corp., supra. Cf. Hawthorne’s, Inc. v. Warrenton Realty, Inc., 414 Mass. 200, 208-209 (1993). Deep has shown no facts to support a finding that he will be unduly harmed by an award of specific performance. The association’s payment of the purchase price of the property is a prerequisite to Deep’s obligation to transfer the property, and adequately protects his interests.[16]

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The award of summary judgment in favor of the association is affirmed.

So ordered.

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