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Kirin Produce Co. v. Lun Fat Produce, Inc.

Superior Court of Massachusetts, Suffolk, Business Litigation Session

February 6, 2017

Kirin Produce Co., Inc.
Lun Fat Produce, Inc. et al. as Trustee of Tam Realty Trust et al. No. 136587

          Filed February 7, 2017


          Kenneth W. Salinger, Justice of the Superior Court.

         Kirin Produce Co., Inc., alleges that it contracted with Lun Fat Produce, Inc., and its owner Peter Tam to purchase Lun Fat's assets and to lease for three years and then purchase the property where Lun Fat is located. Kirin asserts that Tam and Lun Fat refused to carry out their alleged contractual obligations to Kirin, and that Tam instead agreed to sell all shares of Lun Fat stock and the property in question to Richard Chen. Kirin seeks specific performance of its alleged contract, a declaratory judgment that Lun Fat and Tam entered into an enforceable agreement with Kirin, liquidated damages for breach of contract, and compensatory and punitive damages under G.L.c. 93A, § 11. Mr. Chen intervened to protect his interests, prompting Kirin to seek declaratory relief against him as well.

         Defendants have moved to dismiss all claims under Mass.R.Civ.P. 12(b)(6). Tam and Lun Fat argues that the facts alleged in the complaint make clear that they never entered into any enforceable contract with Kirin, and thus Kirin has not stated any claim upon which relief can be granted. Chen joins in Tam's arguments.

         The Court will ALLOW the motions to dismiss because Kirin has not alleged facts plausibly suggesting that Kirin, Tam, and Lun Fat entered into a contractual agreement that satisfies the Statute of Frauds. To the contrary, the detailed allegations in the amended complaint make clear that Kirin never entered into an enforceable agreement with Mr. Tam and Lun Fat. Since there is an actual controversy among the parties and Kirin has standing to bring this action, the Court will order that judgment enter declaring that Kirin and Defendants did not enter into an enforceable contract and dismissing all other claims with prejudice.

         1. Legal Standard

          To survive a motion to dismiss under Rule 12(b)(6), a complaint must allege facts that " plausibly suggest" the plaintiff has a viable claim. Lopez v. Commonwealth, 463 Mass. 696, 701, 978 N.E.2d 67 (2012), quoting Iannacchino v. Ford Motor Co., 451 Mass. 623, 636, 888 N.E.2d 879 (2008), and Bell A. Corp. v. Twombly, 550 U.S. 544, 557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). " Conclusory allegations" that a defendant has acted illegally are not enough; judges must disregard such assertions and " focus on whether the factual allegations plausibly suggest an entitlement to relief." Maling v. Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, 473 Mass. 336, 339, 42 N.E.3d 199 (2015), quoting Curtis v. Herb Chambers I-95, Inc., 458 Mass. 674, 676, 940 N.E.2d 413 (2011).

         When deciding a motion to dismiss under Rule 12(b)(6), a judge must " accept as true the facts alleged in the . . . complaint" --or that are apparent from documents attached to, referenced in, or otherwise relied upon in framing the complaint[1] --as well as any favorable inferences that reasonably can be drawn from them, " Partanen v. Gallagher, 475 Mass. 632, 635, 59 N.E.3d 1133 (2016), quoting Galiastro v. Mortgage Elec. Registration Sys., Inc., 467 Mass. 160, 164, 4 N.E.3d 270 (2014).

         But where a " complaint sets out with clarity and precision the detailed factual allegations [that] the plaintiff contends entitle him to relief), " dismissal is appropriate " if [those] allegations 'clearly demonstrate that plaintiff does not have a claim.'" Fabrizio v. City of Quincy, 9 Mass.App.Ct. 733, 734, 404 N.E.2d 675 (1980), quoting 5 Wright & Miller, Federal Practice and Procedure: Civil § 1357 at 604 (1969); accord Harvard Crimson, Inc. v. President and Fellows of Harvard Coll., 445 Mass. 745, 748, 840 N.E.2d 518 (2006).

         2. Contract Claims

          To state a viable claim to enforce a contract, or to obtain damages for alleged breach of contract, a plaintiff's complaint must allege facts plausibly suggesting that the parties entered into a binding contract. " Except in circumstances not relevant here, 'the formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.'" Kirkpatrick v. Boston Mut. Life Ins. Co., 393 Mass. 640, 652, 473 N.E.2d 173 (1985), quoting Restatement (Second) of Contracts § 17 (1981). " [T]he element of agreement or mutual assent is often referred to as a 'meeting of the minds.'" I& R Mech., Inc. v. Hazelton Mfg.. Co., 62 Mass.App.Ct. 452, 455, 817 N.E.2d 799 (2004), quoting Restatement (Second) of Contracts § 17 comment c (1981). " The manifestation of mutual assent between contracting parties generally consists of an offer by one and the acceptance of it by the other." Id. ; accord Restatement (Second) of Contracts § 22(1) (1981).

         Kirin's amended complaint alleges the following facts. Kirin and Lun Fat both sell produce on a wholesale and retail basis. In May 2015 these companies began to discuss the possibility of Kirin purchasing Lun Fat's business assets as well as the property where Lun Fat is located, which is owned by the Tam Realty Trust (the " Trust Property"). The negotiations went nowhere for fifteen months. In August 2016 Kirin learned that a group of investors from New York had expressed interest in buying Lun Fat and the Trust Property. This prompted Kirin to make a series of three proposals regarding terms under which it would be willing to buy Lun Fat's assets, to lease the Trust Property for three years, and to purchase the Trust Property at the end of that three-year period. Kirin laid out the terms of these proposals in spreadsheets that it sent to Peter Tam on August 22, September 7, and September 12, 2016. Several days later (September 15), a lawyer for Mr. Tam and Lun Fat (Ted Wong) responded in an email specifying nine terms in Kirin's most recent proposal that Tam wanted to change. The next day (September 16) Kirin replied by email, stating that it was " OK" with five of the proposed changes, and proposing new terms with respect to the other four items.[2] Two days later (September 18) Kirin's principals had dinner with Tam. That evening Mr. Tam made an oral offer to sell Lun Fat and the Trust Property if Kirin would agree to all nine of the terms outlined in Mr. Wong's September 15 email. Several days later (September 23) Mr. Wong sent an email stating that Mr. Tam is still " NOT ready to accept the latest Offer on the table, " and further explaining Tam's position with respect to the four issues as to which the parties were still negotiating and that Wong had addressed in his prior email. The next day (September 24) Mr. Chan sent an email stating that Kirin " accepted" all nine of the terms that Lun Fat had proposed in Mr. Wong's September 15 email, and also stating that Kirin wanted to add a new " item #10" that would revise the liquidated damage terms previously listed in Kirin's spreadsheet.

         The first three proposals by Kirin (on August 22, September 7, and September 22) were not offers capable of being accepted by Lun Fat and Mr. Tam. All three of the spreadsheets proposing Kirin's terms of a possible deal stated that they were " Draft Only, Subject to Confirmation, Verification & Change by both Seller & Buyer." The term sheets also stated that " All dates, $$ and Terms are estimated ONLY, to be finalized by both parties!! Subject to change[.]" Since Kirin made clear in all three of these proposals that it had no " present intention to be bound" by the terms it had outlined, these proposals were insufficient " to create an enforceable contract." See Lambert v. Fleet Nat. Bank, 449 Mass. 119, 123, 865 N.E.2d 1091 (2007), quoting Situation Mgt. Sys., Inc. v. Malouf, Inc., 430 Mass. 875, 878, 724 N.E.2d 699 (2000).

         The September 15 email from Lun Fat's lawyer does not appear to express any intent to be bound either. This email identifies nine specific items in the last term sheet from Kirin that Mr. Tam would " like to change." But nothing in the email clearly states that Tam was offering to ...

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