$20M verdict may not end marathon developer battle

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In brief

• Suffolk County jury awarded $5.8 million in abuse-of-process claim, later doubled to $11.6 million under Chapter 93A
• With 11 years of statutory interest and attorneys’ fees, total exposure could approach $20 million
• Defendants expected to appeal, citing First Amendment right to petition and constitutional defenses
• Case revisits anti-SLAPP law, Noerr-Pennington doctrine and recent SJC precedent

The case is already notable for several reasons, including how long it has been pending, its two pre-trial trips to the Supreme Judicial Court, and what may be the largest judgment ever seen in a Massachusetts abuse-of-process case.

But 477 Harrison Ave., LLC v. JACE Boston, LLC, et al. may not be over yet. The lawyer for the defendants, who with statutory interest could be on the hook for $20 million, said he expects his clients to file a notice of appeal.

The case raises significant issues, including “those concerning the constitutional right to petition the government,” defense attorney Mark S. Furman of Boston believes.

For now, however, the plaintiff’s attorney, Andrew E. Goloboy of Beverly, can look forward to the end of an odyssey that began nearly 15 years ago when his clients first began to formulate plans to convert a structure in Boston’s South End — built 100 years earlier to house delivery horses for the Jordan Marsh department store — into a six-story, 18-unit condominium development.

From the outset, 477 Harrison Ave., LLC, faced resistance from the owner of an abutting property at 1234 Washington St., JACE Boston, LLC, and its principal, Arthur Leon, who had an interest in developing his parcel, too — either as residential units or a mixed-use project also including business space.

JACE demanded that 477 Harrison Ave. push pause on its plans until JACE could develop its property first, and that the 477 Harrison Ave. project be redesigned so that it did not have any windows or balconies overlooking JACE’s project.

“When my clients resisted, they began an extensive campaign of opposition,” Goloboy said.

That campaign began with JACE appealing zoning variances the city of Boston granted 477 Harrison, which Goloboy noted was contrary to JACE’s goal to develop 1234 Washington St. “to the highest and best use.”

In the ensuing years, the campaign came to include not only multiple zoning appeals but Leon filing an application of criminal complaint against one of the principals of 477 Harrison, John Holland, alleging a trespass on JACE’s property.

Last May, after a two-week trial, a Suffolk County jury decided that there was an improper ulterior motive to all that activity and awarded 477 Harrison $5.8 million on its abuse-of-process claim.

Then, on Jan. 13, Superior Court Judge James Budreau concurred that “defendants’ unethical, unscrupulous and unfair trade practices injured plaintiff and caused it to substantially delay and redesign the 477 Harrison development to its financial detriment.”

Based on the defendants’ willful violation of G.L.c. 93A, Budreau doubled the jury’s award to $11.6 million in damages, plus 11 years’ worth of statutory interest and attorneys’ fees.

The next battle

While the criminal complaint could have had serious repercussions on the project’s financing, according to Goloboy, the focus of the appeal in 477 Harrison is likely to be constitutional defenses grounded in what the defendants say was a legitimate exercise of their constitutionally protected right to petition the government.

In the context of the case, that petitioning activity came to be known as the “2012 zoning appeal,” the “2015 zoning appeal” and the “wall case.” The zoning appeals were unsuccessful. However, the wall case ended with a judgement in JACE’s favor, which precluded 477 Harrison from demolishing an area of the wall between the two properties.

The parties offered a preview of what could form the core of their briefs to the Appeals Court or SJC in filings related to the defendants’ “motion in limine regarding constitutional defenses,” which Budreau denied.

The defendants argued that they should be “immunized” from liability for exercising two of their fundamental constitutional rights: the “natural, essential and unalienable right” to possess and protect property, as recognized by Article 106 of the Massachusetts Declaration of Rights, and their right to petition the government for redress.

While Furman declined to comment, citing the pending litigation, First Amendment lawyer Jeffrey J. Pyle said that the defendants are raising an “interesting and important” issue.

I’ve for a long time been skeptical of the notion that an abuse-of-process claim can be proved simply by showing an ulterior motive to factually and legally supported petitioning activity. And it appears that this case will squarely present that issue.

— Jeffrey J. Pyle, Boston

Pyle noted that the abuse-of-process tort in Massachusetts has only three simple elements: that process was used, that it was for an ulterior motive or illegitimate purpose, and that it resulted in damage.

“Nothing in the elements of abuse of process says anything about the merits of the process used,” the Boston lawyer said. “And that, it seems to me, raises a significant First Amendment issue because there is a fundamental First Amendment right to petition the courts for redress of grievances.”

Where the First Amendment right to petition ends and tort law begins is a question that has confronted the U.S. Supreme Court in many different circumstances, according to Pyle.

“But the underlying guiding principle ought to be that tort liability cannot be imposed for conduct that is protected by the United States Constitution, period,” Pyle said.

Pyle drew an analogy to the Supreme Court’s landmark libel decision New York Times v. Sullivan, in which Alabama law enforcement officials sued the New York Times for an advertisement placed by civil rights leaders. To get to its holding that public officials could not sue for defamation and recover damages for criticism of their official behavior, the court “engrafted” rules derived from the First Amendment onto the defamation tort, Pyle said.

Pyle posited that a court could decide to apply a similar principle to the questions, “Can tort liability or civil liability under Chapter 93A be applied for filing of a lawsuit, and if so, under what circumstances?”

Budreau operated under the common law assumption that, if you show an ulterior motive, the petitioning activity is not protected, Pyle said. But there have been quite a few Supreme Court and lower federal court decisions that say petitioning — so long as it is not sham petitioning — is protected and cannot be the foundation of any liability, he noted.

“I’ve for a long time been skeptical of the notion that an abuse-of-process claim can be proved simply by showing an ulterior motive to factually and legally supported petitioning activity,” Pyle said. “And it appears that this case will squarely present that issue.”

Can ‘Noerr-Pennington’ be ignored?

In sparring over the motion in limine, the parties in 477 Harrison sharply disagree about the importance of a key aspect of the SJC’s 2024 decision in Bristol Asphalt Co., Inc. v. Rochester Bituminous Products, Inc., in which the court reversed course on the standard for assessing special motions to dismiss under the state’s anti-SLAPP law and abandoned the “augmented Duracraft framework” it had adopted seven years earlier in the case Blanchard v. Steward Carney Hospital, Inc.

Within the Bristol Asphalt decision, the SJC cited the Supreme Court’s decision in Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., in which the court outlined a two-part definition of “sham” litigation in the context of an antitrust claim.

“First, the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits,” Justice Clarence Thomas wrote for the court.

If an objective litigant could conclude that the suit is reasonably calculated to elicit a favorable outcome, the suit would be immunized under what has become known as the “Noerr-Pennington doctrine,” Thomas explained.

In the defendants’ view, the SJC’s citation to Thomas’ opinion “makes clear that the SJC views Professional Real Estate Investors, Inc., as providing the framework for assessing whether petitioning activity should be granted immunity in general, not only in the antitrust context,” they argued in support of their motion in limine.

But to the plaintiff, that is a “blatant mischaracterization” of what the SJC said in Bristol Asphalt. In his opposition, Goloboy noted that there is existing SJC precedent — including Bristol Asphalt itself — that makes clear that the Noerr-Pennington doctrine is limited to antitrust cases. The defendants did not cite a single Massachusetts case that said otherwise, he wrote.

The purpose of the SJC citing Professional Real Estate Investors was simply to remind litigants that there are other avenues, outside of the anti-SLAPP statute, which provide protection to petitioners, Goloboy argued.

“The SJC certainly did not, as the Defendants suggest, import the Noerr-Pennington doctrine into abuse of process cases in Massachusetts,” Goloboy wrote. “The Defendants’ position is nothing more than fantasy.”

Pyle agreed that the Noerr-Pennington doctrine is an “antitrust creature.”

But the issue raised in the Professional Real Estate Investors case “is a question of constitutional law that’s been applied in lots of different contexts, and there’s no logical reason why the First Amendment principles of Noerr-Pennington should apply only in the antitrust context,” he said.

Other lingering issues

While the clash of the right to petition and the abuse-of-process tort may be the most legally significant feature of further review, the defendants on appeal may also seek to revive their argument that the plaintiff’s damages were mitigated by the fact that the real estate market appreciated more than the plaintiff’s costs rose due to the delay the defendants had caused.

“I refer to that as the ‘please thank us’ defense,” Goloboy quipped.

The jury and the court did not buy that defense, but the defendants continued to press it in their motion for a new trial, which Budreau denied on Jan. 30, calling the verdict “just and reasonable.”

As he looks back on the trial, Goloboy said some of the most compelling evidence came from the testimony of Holland, whom Budreau found credible on all issues. The judge reached the opposite conclusion about Leon on multiple fronts, starting with his claim that he was not involved in real estate development, an assertion “overwhelmingly contradicted” by the evidence at trial.

Leon had also tried to claim that he was unaware he was filing an application for a criminal complaint against Holland, even though that was the title on the form he had filled out, Goloboy noted.

The plaintiff also benefited from testimony of Leon’s cousin, who had been tasked by Leon to investigate the financing for 477 Harrison. Leon believed that Holland and his partners had overpaid for the building, and that if he could help along a process through which they might lose the building to the bank, he might be able to buy it from the bank for roughly half of what 477 Harrison had paid.

“That provided some additional color to the motivations besides just trying to block our development for his ability to develop,” Goloboy said. “It was actually to potentially force 477 into bankruptcy and acquire the property.”

Goloboy added that the plaintiff also had a “smoking gun” e-mail between JACE’s development manager and its attorney at the time, essentially saying, “If you talk to the city, tell them Mr. Leon is going to file an appeal, and the project’s going to be tied up in court for years.”

“Then we argued to the jury that’s exactly what they did,” Goloboy said.

Both times the 477 Harrison case went to the SJC, in 2017 and 2019, it did so in tandem with the Blanchard case. The court’s second 477 Harrison ruling did announce a rule that, if a party brings a counterclaim in which their only damages are the alleged attorneys’ fees in defending against the lawsuit, that will always be a SLAPP claim that should be dismissed, Goloboy said.

But more than creating new law, what will be satisfying for Goloboy will be getting compensation for his clients — four brothers who had all personally guaranteed a multi-million-dollar construction loan — only to see the project be delayed by years and have its cost increase significantly.

Even after the base of the building — the first five floors — was nearing completion, and the brothers went back in 2015 to try to get the variances to build the penthouses, the defendants sent a letter to the Zoning Board of Appeals opposing the variances and noting that all work that had been done on the building was still under appeal.

That was a “very scary proposition,” given the brothers’ personal guarantee of the $12-million-plus loan, Goloboy said.

“There was a lot of risk hanging over their head for a lot of years, and they had to work really hard to get this building built,” Goloboy said. “I think it’s a testament to their commitment to their project.”