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Columbia Plaza Associates v. Northeastern University

Superior Court of Massachusetts, Suffolk

December 15, 2016

Columbia Plaza Associates et al.
Northeastern University No. 135850


          Janet L. Sanders, Justice

         This case arises from a series of agreements between the defendant Northeastern University (Northeastern) and the plaintiff Columbia Plaza Associates (CPA), a minority owned general partnership. The agreements related to the development of land known as Parcel 18 adjacent to Northeastern's main campus. Northeastern owned the parcel, and plaintiffs held certain development rights. Plaintiffs allege that Northeastern reaped unbargained for benefits in developing the parcel without adequately compensating them, and also convinced the 45 Boston Redevelopment Authority (BRA) to approve plans needed to allow that development by misrepresenting to the BRA that it had the plaintiffs' participation. This matter came before the Court in October 2016 for jury-waived trial on the sole remaining count of the Verified Complaint, Count VII, alleging a violation of Chapter 93A. This Court concludes that judgment should enter for the defendant.

         FINDINGS OF FACT [1]

         Parcel 18 is located in the Roxbury neighborhood of Boston next to Northeastern's main campus. It consists of five sub parcels: 18-1A, 18-1B, 18-2, 18-3A and 18-3B. The BRA designated Parcel 18 as a Planned Development Area (PDA), specifically PDA 34. A PDA is a zoning overlay district and is one of the tools used by the BRA to impose certain controls on commercial development. Those tools include Cooperation Agreements, Sales and Construction Agreements, Master Plans and Development Plans.

         In June 1989, the BRA adopted a Master Plan and a Development Plan for Parcel 18. The Master Plan provided for the development of multiple buildings on four of the sub parcels, 18-1A, 18-1B, 18-3A, and 18-3B (collectively the " Development Parcels"). The remaining sub parcel, 18-2, was to be the site of a parking garage (the " Garage Parcel"). At the time, Parcel 18 was owned by various government entities, although Northeastern would ultimately become the owner of all of Parcel 18.

         CPA was formed for the purpose of participating in Boston's " linkage plan, " a program created to promote development in areas of Boston in need of revitalization by linking together a commercial developer with a minority partner. CPA held certain development rights on Parcel 18. The commercial developer with whom CPA was paired was Metropolitan Structures, an Illinois-based general partnership.

         From its inception until December 2008, CPA had two general partners: plaintiff Ruggles-Bedford Associates Limited Partnership (Ruggles-Bedford LP) comprised primarily of investors from the Roxbury neighborhood; and Chinese Investment Limited Partnership (Chinese Investment LP) which consisted of investors from Boston's Chinese community. Ruggles Bedford LP held a sixty percent interest in CPA, whereas Chinese Investment LP held a forty percent interest. Ruggles Bedford LP had 25 limited partners and one general partner, plaintiff Ruggles Bedford Associates, Inc. (Ruggles Bedford, Inc.) The fourth plaintiff in this case is Columbia Ruggles Associates (CRA), a limited liability corporation created by CPA to participate in the development of the parking garage.[2] In 2008, Ruggles Bedford LP bought out Chinese Investment LP's interest.

         The identity of those who held positions in CPA or purported to act on its behalf is important to the resolution of many of the issues in this case. Chief among them was Kenneth Guscott, a businessman who was the chairman of Ruggles Bedford LP. William Chin served as CPA's legal counsel; Robert Gunderson, a Boston attorney, also provided legal advice to CPA. CPA's President was John Cruz, the founder of a company that develops real estate and oversees construction projects. Beginning in 1994 or 1995, Kevin Cohee, Chief Executive Officer of One United Bank, served as CPA's treasurer. Up until 2007, Northeastern dealt exclusively with Guscott, Chin, and Gunderson from the Ruggles Bedford wing of CPA; neither Cruz nor Cohee had any communications with Northeastern before then. Paul Chan, the treasurer of Chinese Investment LP, acted on behalf of that group and was also in regular communication with Northeastern until it was bought out by the Ruggles Bedford group.

         In 1991, CPA and Metropolitan Structures formed the Ruggles Center Joint Venture for the purpose of building on the Development Parcels. Guscott, Chin and Chan represented CPA in connection with that joint venture. An office building was constructed on sub parcel 18-1B which briefly became the home for the Registry of Motor Vehicles. Sometime in the mid-1990s, the building was condemned, and the bank that had financed the construction foreclosed on the property, acquiring all four Development Parcels. In November 1997, Northeastern acquired the Development Parcels from the entity that had held title to them following the foreclosure.

         Around that same time, Northeastern entered into discussions with CPA and the BRA about developing Parcel 18. Guscott and Chan represented CPA in these discussions. On November 12, 1997, both Guscott and Chan, on behalf of CPA, signed a Letter of Intent with Northeastern setting forth a framework for an agreement among the parties regarding that development. In late June 1999, Northeastern, CPA and the BRA (whose approval was needed for any development) formally entered into the arrangement contemplated by that Letter of Intent. The arrangement was memorialized in several contemporaneous agreements.

         Three of those agreements related to acquisition and development of the Garage Parcel and are not directly relevant to the issues presented at trial. A fourth agreement dated June 29, 1999 (the Master Agreement) set forth the obligations of the parties with respect to both the Garage Parcel and future development on the Development Parcels. See Trial Exhibit 1. A fifth agreement (the Cooperation Agreement) documented the parties' plan to develop the Garage Parcel and further stated that " Northeastern, individually and/or in partnership with CPA" planned to develop the remaining parcels. See Trial Exhibit 15. CPA was represented in the negotiation of these agreements by two attorneys, Chin and Gunderson. The agreements were all signed by Guscott and Chan on behalf of CPA and were approved by CPA's board of directors.

         Together, these agreements provided the following. Northeastern and CPA would form a limited liability company, Renaissance Park Garage LLC (the Garage LLC), with Northeastern as its manager. Northeastern would make an initial contribution of $380, 000 to the Garage LLC, which funds would be used to acquire Parcel 18-2 (the Garage Parcel) from the BRA after the BRA acquired the parcel from the MBTA. Northeastern would pay CPA $320, 000 in cash in return for what the Master Agreement described as CPA's " Personal Property." That was defined to include " Garage Plans" and certain " Intangible Property" consisting of " all contract rights, licenses, permits and warranties" related to Parcel 18-2. Northeastern would make an additional payment of $100, 000 as CPA's capital contribution toward any joint venture formed between Northeastern and CPA to develop a building on Parcel 18-3A Section 6.3 of the Master Agreement describes that contemplated joint venture and lies at the heart of the dispute now before the Court.

         Significantly, neither Section 6.3 nor any other provision in the Master Agreement actually created a joint venture, nor did the Master Agreement require that either party actually enter into one. It did require that the parties work " diligently and in good faith" to negotiate terms " mutually satisfactory to both parties." See Section 6.3.1 of Master Agreement. The Master Agreement also set forth a list of issues that any joint venture agreement should include. See Section 6.3.3 of Master Agreement. For example, although it was contemplated that Parcel 18-3A would be developed as a hotel or office building, the joint venture could decide to develop it for the " institutional purposes" of Northeastern, provided that Northeastern pay the joint venture the fair rental value of the building. Negotiations regarding the terms of any joint venture agreement was to commence within six months of the Closing Date on the Master Agreement, although that date could be extended by either party. Finally, the Master Agreement provided that Section 6.3 was to survive the Closing " until full execution of the Joint Venture Agreement." Any notices to CPA in relation to the Master Agreement were to be sent to Chin, CPA's legal counsel.

         As it turned out, no joint venture agreement was ever entered into among the parties. Indeed, neither Northeastern nor CPA submitted a draft proposal for such an arrangement. Over the next six years, however, Northeastern did explore the possibility of developing a hotel on Parcel 18-3A, even hiring an outside development firm, Newcastle, to look into its economic feasibility. Northeastern directed Newcastle to work with CPA as a partner in that development. Both Newcastle and Mel Shuman, outside counsel for ...

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