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WHDT Congress Holdings, LP v. Farnsworth Congress, LLC

Superior Court of Massachusetts, Suffolk, Business Litigation Session

May 16, 2017

WHDT Congress Holdings, LP
Farnsworth Congress, LLC


          Kenneth W. Salinger, Justice.

         WHDT Congress Holdings, LP has contracted to buy a ground-floor commercial condominium unit in a building that Farnsworth Congress, LLC is having constructed at 48 Congress Street in the Fort Point Channel neighborhood of Boston. The parties' purchase and sale agreement gives Farnsworth a " limited right of approval" of any proposed tenant to ensure that it " is of similar quality and class" as the " first class appearance and nature" of the building as a whole. Although WHDT is not required to lease the unit to a restaurant, if it wishes to do so, Farnsworth has the contractual right to withhold approval if the proposed tenant is not " of similar greater quality and appearance" to Row 34, Bastille Kitchen, Sportello, and Blue Dragon, which are all located within a few blocks of the new building.

         WHDT filed a complaint in January 2017 claiming that Farnsworth has unreasonably withheld approval of a franchise of the " & pizza" chain as a tenant, allegedly in violation of the parties' P& S. Almost three months later WHDH served, and has now filed, a motion for a preliminary injunction that would enjoin Farnsworth from withholding its approval of & pizza's, tenancy and also order Farnsworth to provide plans and other documentation regarding the disputed condominium. WHDT proposes that resolution of its preliminary injunction motion be consolidated with a bench trial on the merits to be held no later than forty-five days of the date it served its motion, i.e., by June 5, 2017.[1]

         The Court declines to consolidate the motion hearing with the trial and hold both in early June, because new issues raised by WHDT for the first time in its motion papers will require a reasonable time for discovery plus expert testimony. The Court will deny the preliminary injunction motion because WHDT has not shown that it is likely to prevail on the merits of its claims or that it will suffer any irreparable harm in the meantime. If WHDT had sought a prompt trial when it filed its complaint, it may have made sense to schedule the trial for early June. It is now too late for that. But the Court believes that the parties should be able to get this case ready for trial within the next two or three months. It will hold a scheduling conference next week to set a trial date and all intermediate deadlines.

         1. Request to Consolidate P.I. Hearing and Trial

         WHDT argues in its reply brief that there is no real need for discovery in this case, and thus trial can be scheduled almost immediately.

         That might be true if trial of this case were limited to the breach of contract claims in the complaint. The parties have already presented most of the relevant evidence on those claims in their preliminary injunction papers.

         But WHDT raises a new issue for the first time in its preliminary injunction memorandum, arguing that if Farnsworth was entitled under the terms of the P& S to withhold approval of & pizza then the P& S should be reformed to eliminate any requirement that a restaurant tenant be of a higher quality and class than & pizza. WHDT asserts that there are no better tenants in the market than & pizza. WHDT also reiterates an allegation in its complaint that the condo unit, which has only about 1, 500 square feet of space, is just too small to fit " a successful sit-down restaurant" that is similar in quality to the restaurant benchmarks specified in the P& S.

         Farnsworth is entitled to a reasonable amount of time to conduct discovery and procure expert testimony regarding this new contract reformation claim. It is entitled to understand exactly what WHDT has done to try to identify prospective restaurant or other commercial tenants, and pull together rebuttal evidence on this topic. It is also entitled to a reasonable period to rebut WHDT's assertion that no quality restaurant can survive such a small space.[2]

         The Court concludes that it would therefore be unfair to force Farnsworth to go to trial in early June, especially since WHDT chose to wait for several months after filing its complaint before asking for such an early trial date. Nonetheless, the Court believes it may be appropriate to schedule the trial in July or August. It will discuss the timing of the trial with the parties at next week's scheduling conference.

         2. Merits of Motion for Preliminary Injunction

         In the meantime, the Court will deny WHDT's request for preliminary injunctive relief.

         2.1. Legal Standards

          " A preliminary injunction is an extraordinary remedy never awarded as of right." Winter v. NRDC, Inc., 555 U.S. 7, 24, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). To the contrary, " the significant remedy of a preliminary injunction should not be granted unless the plaintiffs had made a clear showing of entitlement thereto." Student No. 9 v. Bd. of Educ., 440 Mass. 752, 762, 802 N.E.2d 105 (2004). " Trial judges have broad discretion to grant or deny injunctive. ...

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