Contract – Conservation restriction – Intended beneficiaries

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Where plaintiffs have alleged that a defendant’s use of real property for commercial activities is in violation of a conservation restriction, the plaintiffs cannot enforce a “letter agreement” between the defendant and a codefendant, as the plaintiffs are not intended third-party beneficiaries of the agreement.

“… Plaintiffs are the Wildlands Trust of Southeastern Massachusetts, Inc. (Wildlands Trust) and the John and Cynthia Reed Foundation (the Foundation). Plaintiffs allege that the current owner of the Property, the defendant Cedar Hill Retreat Center, Inc. (Cedar Hill), is engaging in commercial activities in violation of the Conservation Restriction. Also named as a defendant is the Ballou Channing District Unitarian Universalist Association, Inc. (Ballou Channing), the original owner of the Property and the Grantor of the Conservation Restriction. Plaintiffs allege that the Ballou Channing induced the Foundation into making a $3 million gift in return for Ballou Channing’s promise to create the Conservation Restriction and to use the Foundation’s donation to preserve the Premises in conformity with that restriction (the ‘Gift Agreement’). …

“The Letter Agreement referenced in the Petition forms the basis of one of the new claims at issue and is attached to the Amended Complaint as Exhibit A. The parties to it are Ballou Channing and Cedar Hill. The Letter Agreement contains certain ‘Recitals’ which acknowledge, among other things, the Conservation Restriction with Wildlands Trust. The Letter Agreement states that $1.4 million is being transferred to Cedar Hill to be used ‘for the purpose of maintaining, operating and improving the Property in accordance with the Conservation Restriction and this Agreement.’ It gives member congregations of Ballou Channing permission to use the Property so long as they comply with the Conservation Restriction. Under a section entitled ‘Dispute Resolution,’ the Letter Agreement sets forth a procedure that Ballou Channing must follow in the event that it ‘becomes aware of or reasonably suspects’ that Cedar Hill is not operating the Property in compliance with the Conservation Restriction. If mediation fails, the parties to the Letter Agreement may bring their dispute to Land Court. …

“The parties to the Letter Agreement are the defendants Cedar Hill and Ballou Channing. Plaintiffs are not parties to the Letter Agreement nor are they identified as having any rights under it. Plaintiffs claim that they nevertheless have standing to enforce its terms because they are third party beneficiaries to it. This Court disagrees. …

“In the instant case, there is nothing in the language of the Letter Agreement or in the circumstances surrounding it (as described in the Amended Complaint) which suggest that either Wildlands Trust or the Foundation has the right to enforce its terms. … Although the plaintiffs may stand to benefit from the Letter Agreement, they are at best incidental beneficiaries, with no legal basis to pursue either Ballou Channing or Cedar Hill for a breach, assuming that one occurred. …”

Misrepresentation claim

“To state a claim for fraudulent misrepresentation, the complaint must allege facts showing that: ‘(1) the defendant made a misrepresentation of fact; (2) it was made with the intention to induce another to act upon it; (3) it was made with the knowledge of its untruth; (4) it was intended that it be acted upon, and that it was in fact acted upon; and (5) damage directly resulted therefrom.’ … Rule 9(b), Mass.R.Civ.P. requires that a claim of fraud must be alleged with particularity. The Amended Complaint fails to satisfy this heightened pleading standard or allege facts sufficient to support each of the requisite elements. Specifically, it fails to identify a misstatement of existing fact, or to allege that it was made by the defendant with knowledge as to its falsity at the time that it was made.”

Conclusion

“For the foregoing reasons, Ballou Channing’s Motion to Dismiss is allowed as to Count II (breach of Conservation Restriction), Count III (breach of Letter Agreement) and Count VI (intentional misrepresentation). It is denied as to Count I (breach of the Gift Agreement) and as to Counts III and IV to the extent that these counts are based on the Gift Agreement. As to Cedar Hill’s Motion to Dismiss, it is allowed as to Counts III through V, so that only Count II remains as to Cedar Hill and then only to the extent that Count II is asserted by Wildlands Trust.”

Wildlands Trust of Southeastern Massachusetts, Inc., et al. v. Cedar Hill Retreat Center, Inc., et al. (Lawyers Weekly No. 09-046-17) (12 pages) (Sanders, J.) (Suffolk Superior Court) (Docket No. SUCV2016-01432-BLS2) (Nov. 10, 2017).