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S.M. v. M.P.

Appeals Court of Massachusetts, Bristol

July 14, 2017

S.M. & another[1]
v.
M.P. & another. [2]

          Heard: April 12, 2016.

         Complaint in equity filed in the Bristol County Division of the Juvenile Court Department on July 14, 2014, The case was heard by Siobhan E. Foley, J.

          Harold N. Robertson for the defendants.

          Green, Trainor, & Milkey, JJ.

          TRAINOR, J.

          The plaintiffs are the biological parents of two children whom the defendants have adopted. At the time the plaintiffs (biological parents) surrendered their parental rights, they entered into open adoption agreements with the defendants (adoptive parents) that allowed for continued visitation on certain specified terms.[3]After the adoptive parents notified the biological parents that they were terminating visitation under the agreements, the biological parents filed an equity complaint for noncompliance with the adoption agreements, seeking their specific performance. Following a hearing, a Juvenile Court judge ruled in the biological parents' favor, while at the same time ordering them to discontinue a particular practice that the adoptive parents opposed. On the adoptive parents' appeal, we vacate the judge's order and remand the matter for further proceedings.

         Background.

         The older child, Abby, [4] was born on June 2, 2008. From about two weeks after her birth until thirteen months old, she lived with a cousin. At age thirteen months, she was placed with her now parents, who adopted her when she was about three and one-half years old. She has diagnoses of fetal alcohol syndrome, neurosensory hearing loss, and anxiety. She uses hearing aids; she has had physical therapy and occupational therapy services; she is followed by a speech therapist; and she has been involved with a counselor at school.

          The child was subject to a care and protection petition brought by the Department of Children and Families (DCF) in the Bristol County Division of the Juvenile Court Department. That matter was ultimately concluded with the biological parents and the adoptive parents executing an open adoption agreement.

         On January 1, 2012, the biological parents had a second child, Betsy[5]She was born with neonatal abstinence syndrome and was hospitalized following birth in the neonatal intensive care unit (NICU). She was placed directly with the adoptive parents upon discharge from the NICU, and at no point did the biological parents provide care for her. There was another care and protection petition brought by DCF on behalf of this child. She was also adopted by the adoptive parents. Open adoption agreements were executed identically for each biological parent, which declared the prior agreements to be null and void, became the governing agreements for both children, and provided for four supervised visits per year. Because the substantive terms of these agreements are identical, we will refer to them as "the agreement."

         As pertinent here, the agreement provides that, in the event a visit "causes undue stress or anxiety to the Child, " the adoptive parents "have the sole ability to modify visitation to conform to what they believe is in that child's best interest, including the ability to terminate the visit." Further, "[t]he visits will be considered unduly stressful if either as a result of a visit, or in anticipation of one, the Child demonstrates, either verbally or behaviorally, that the visit is detrimental to the [child's] welfare." The agreement also requires the biological parents to provide a working telephone number to the adoptive parents, and further provides that failure to do so "may result in this agreement becoming null and void at the discretion of [the adoptive parents]." Lastly, the agreement provides that either party may seek specific performance of its terms.

         In June, 2014, the adoptive mother sent the biological parents a letter purporting to terminate all future visits. As reasons therefor, she stated that the biological parents had failed to provide a working telephone number; they had "failed to stop referring to [themselves] as 'mom and dad' as agreed upon";[6] and the visits were causing "undue stress, anxiety and confusion to the children, "[7] and thus, "[w]e do not feel that it is in the best interest of the children to continue visits."

          After a hearing on the biological parents' petition for specific performance of the agreement, the judge found that their failure to provide a telephone number was not a material breach of the agreement, and that there was no indication that their use of the term "mom and dad" had caused undue stress or anxiety to Abby. The judge issued an order reinstating visitation pursuant to the terms of the agreement, and further ordering the biological parents to provide a working telephone number to the adoptive parents, and to refrain from engaging the children in conversation as to their status as biological parents.

         On appeal, the adoptive parents allege that the judge erred by not following the requirements of G. L. c. 210, §§ 6C-6E (statute), which governs the enforcement of an open adoption agreement.[8] The adoptive parents claim that the judge substituted her judgment for that of the adoptive parents, thereby abrogating their statutory and contractual rights. The adoptive parents also claim that the judge erred by finding that the biological parents' admitted breach of the provision in the agreement requiring them to provide a telephone number was an insufficient basis for the adoptive parents to exercise their explicit right to terminate visitation based on that breach. We discuss each argument in turn.

         Discussion.

         1. The Juvenile Court's equity powers.

         While the Juvenile Court Department has jurisdiction in equity in all matters arising under the provisions of chapters 119 and 210 of the General Laws, see G. L. c. 218, § 59, the sole remedy for the breach of a court-approved agreement (an open adoption agreement) for postadoption contact is a court order for specific performance. See G. L. c. 210, § 6D; Adoption of Tammy, 416 Mass. 205, 210 (1993) (law of adoption is entirely statutory and governing statute must be strictly followed). See also Beloin v. Bullett, 310 Mass. 206, 210 (1941). The agreement here explicitly mirrors the statute and requires that any enforcement of "the agreement [be pursued] by commencing a civil action for specific performance."[9] In addition to the unequivocal statutory mandate, the general rule for the exercise of equity jurisdiction is that no adequate and complete remedy exists at law.[10]See Bank of America, N.A. v. Diamond Financial, LLC, 88 Mass.App.Ct. 564, 567 (2015), quoting from Cadigan v. Brown, 120 Mass. 493, 494 (1876) ("Our courts . . . have limited even express grants of equitable authority to situations where there is no 'plain, adequate and complete remedy at law'").

         The prescribed statutory and contractual procedure mandates that "[i]n an enforcement proceeding, the court may modify the terms of the agreement i_f the court finds that there has been a. material and substantial change in circumstances and the modification is necessary in the best interests of the child" (emphasis added). G. L. c. 210, § 6D, inserted by St. 1999, c. 3, § 21. See the similar contract provision in article IV, § 3(d) of the agreement. The Juvenile Court judge correctly stated this standard in her findings and noted that "[t]he court finds no material and substantial change in circumstances in the present case." The judge, however, then modified the terms of the agreement by ordering that the biological parents "shall not intentionally engage the minor children in conversation as to their status as their Biological Parents."

         The fact that the judge did not follow the requirements of the statute or the agreement when she modified the agreement suggests that she believed that she was exercising her general equitable powers. As we have already observed however, the court's general equitable powers are not available for use in matters controlled by the provisions of G. L. c. 210, §§ 6C & 6D, or in contradiction of the applicable and specific contract provisions. Equity cannot be used when there is a prescribed and adequate remedy at law. See Bank of America, N.A., 88 Mass.App.Ct. at 567. Instead, the judge must follow the requirements of the statute and the agreement. As we have observed, under the statute the judge's ability to modify the terms of the agreement rests on her finding of a material and substantial change in circumstances.[11] However, the judge made no such finding here.[12]Therefore, the judge's order must be vacated and the matter remanded to the Juvenile Court. This will afford the judge the opportunity to comply with the controlling provisions of the statute and the agreement by entering the appropriate findings and an order of modification if "a material and substantial change of circumstances" is found, and the judge determines that "the modification is necessary in the best interests of the child[ren]."

         2. Discretion to terminate visitation.

         Under the agreement, the adoptive parents and the biological parents had agreed that "[the adoptive parents] or their designated agent (visitation center staff or monitor) retain[] sole discretion to terminate the visit if it is determined that either one of the Child(ren) is suffering from undue stress or anxiety either due to the actions or behavior of the biological parent or due to the Child[ren]'s special needs emotionally and/or medically." The agreement further states, "In the event that a visit with [the biological parent] causes undue stress or anxiety to the child[ren], [the adoptive parents] have the sole ability to modify visitation to conform to what they believe is in that child's best interest, including the ability to terminate the visit. "

         When a party to a contract is given sole discretionary power as to the occurrence of a condition, the exercise of such right is measured by whether the party has acted honestly and in good faith. See 1A Corbin, Contracts § 165, at 86-87 (1963) ("Even if the promisor is himself to be the judge of the cause or condition [in a contract], he must use good faith and an honest judgment"). See also Murach v. Massachusetts Bonding & Ins. Co., 339 Mass. 184, 187 (1959) (insurer must exercise discretionary power to settle claims in good faith).

         Similar to a contract in which the promisor agrees to perform on the condition that the promisor is personally satisfied, the occurrence of the condition present in this case, as to the adoptive parents' ability to modify the children's visitation with the biological parents, "is dependent on the . . . individual judgment of [the adoptive parents as] the party to be satisfied." 2 Corbin, Contracts § 31.8, at 102 (rev. ed. fall supp. 2016) .[13] In circumstances where a promise is conditioned solely on one party's personal satisfaction, the promisor's determination "even on the witness stand, is not conclusive." 2 Corbin, Contracts § 5.33, at 187 (rev. ed. 1995). Instead, "the promisor is subject to the requirement of good faith." Ibid. See 2 Corbin, Contracts § 5.32, at 177 n.5 (rev. ed. 1995), citing California Lettuce Growers v. Union Sugar Co., 45 Cal. 2d 474 (1955) ("[W]here a contract confers on one party a discretionary power affecting the rights of the other, a duty is imposed to exercise that discretion in good faith and in accordance with fair dealing"); 8 Corbin, Contracts § 31.8, at 102 (rev. ed. fall supp. 2016) ("[T]he party's dissatisfaction cannot be given in bad faith, dishonestly, insincerely, or fraudulently").

          The agreement provides that the adoptive parents "retain[] sole discretion to terminate the visit[ation] if it is determined that either one of the Child(ren) is suffering from undue stress or anxiety." The adoptive parents have the sole ability to modify visitation to what they believe is in the child's best interest and, in making this determination, they "shall rely upon the input and observations made by the person(s) supervising the visit." The agreement further provides that "[the adoptive parents] or their designated agent . . . retains sole discretion to terminate the visit[ation] if it is determined that either . . . child[] is suffering from undue stress or anxiety" (emphasis added) . The particular party supervising the visit is given the sole discretion to make that determination. But here, where Abby's symptoms manifested themselves after the actual visits, the adoptive parents retained the sole discretion to make that determination.

         The adoptive parents' sole discretionary power is also similar to an option to terminate[14] that is contractually provided to a party when "supervening events or new information makes the original bargain unsatisfactory to the holder of the power." 2 Corbin, Contracts § 6.10, at 291 (rev. ed. 1995) . Here, the adoptive parents have the discretionary right to modify or terminate, if they so desire, the biological parents' visitation with the children if such visitation causes the children undue anxiety or stress.[15] See ibid. ("[T]he . . . 'option to terminate' is not generally made conditional upon dissatisfaction with the results[;] [i]t is a power to terminate [the contract] if the contractor so wills and desires"). However, a party may not exercise its power to terminate a contract without exercising such discretion in good faith. See 2 Corbin, Contracts § 6.14 (rev. ed. 1995).

         Therefore, the judge's review, upon remand, should be primarily focused on, and limited to, a determination of whether the adoptive parents exercised their sole discretion to terminate the children's visitation with the biological parents honestly and in good faith.

         "[E]very contract in Massachusetts is subject to an implied covenant of good faith and fair dealing." Robert & Ardis James Foundation v. Meyers, 474 Mass. 181, 188 (2016). Here, the judge, as the finder of fact, must make an explicit determination as to whether the adoptive parents exercised their discretion in good faith. See Bay Colony R.R. v. Yarmouth, 470 Mass. 515, 524 (2015) (jury reasonably concluded party failed to act in good faith under contract). See also 2 Corbin, Contracts § 5.33, at 187 (rev. ed. 1995) ("[T]he honesty of the promisor's assertions and testimony [as to his personal satisfaction] is a matter of fact to be determined by the trier of fact"). In determining whether a party has breached the implied covenant of good faith and fair dealing, the judge may "look to the party's manner of performance." Weiler v. PortfolioScope, Inc., 469 Mass. 75, 82 (2014), quoting from T.W. Nickerson, Inc. v. Fleet Natl. Bank, 456 Mass. 562, 570 (2010).[16] While "[t]here is no requirement that bad faith be shown . . . [t]he lack of good faith can be inferred from the totality of the circumstances." Weiler, supra, quoting from T.W. Nickerson, Inc., supra.

         When considering whether the implied covenant of good faith and fair dealing was violated in the context of one party's discretion as the sole determinant of a condition, the Supreme Judicial Court has held that, in the totality of the circumstances, there was no breach where the party acted in good faith within its sole discretion as provided by the terms in the contract. See Eigerman v. Putnam Invs., Inc., 450 Mass. 281, 287-290 (2007). "[T]he implied covenant of good faith and fair dealing cannot create rights and duties that are not already present in the contractual relationship." Id. at 289. See Merriam v. Demoulas Super Mkts., Inc., 464 Mass. 721, 731 (2013), quoting from Uno Restaurants, Inc. v. Boston Kenmore Realty Corp., 441 Mass. 376, 386 (2004) (stating that covenant does not "provide[] a specific form of protection that is not mentioned in the parties' contract"). Thus, the judge must look to the duties and terms provided in the agreement when determining whether the adoptive parents' discretionary action was within the scope of the covenant of good faith and fair dealing. See Eigerman, supra ("The covenant concerns the manner in which existing contractual duties are performed"); 2 Corbin, Contracts § 6.10, at 295 (rev. ed. 1995) ("The extent of the reserved power [to terminate a contract] depends upon the expressions in the agreement and the reasonable implications to be drawn therefrom").

         Further, a party breaches the covenant of good faith and fair dealing when the party exceeds its contractual discretion or uses its discretionary power in a pretextual manner. See Anthony's Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 473 (1991) (party's use of discretionary right as pretext justified judge's finding of breach of good faith and fair dealing); Robert & Ardis James Foundation, 474 Mass. at 191 (breaching party "had taken an extreme and unwarranted view of his rights under the contract"). The party may also be in breach of the covenant of good faith and fair dealing as a result of the party's motivations. See T.W. Nickerson, Inc., 456 Mass. At 574 (looking to whether party's motive was "to affect negatively the plaintiff's rights" under the contract); Weiler, 469 Mass. At 84 (considering party's desire to enrich another at expense of plaintiff in determining breach of covenant of good faith and fair dealing).

         In viewing the totality of the circumstances and terms provided by the adoption agreement, the judge may review not only the adoptive mother's testimony, but also, to the extent appropriate, the conclusions of the guardian ad litem (GAL) and the assigned supervisor's notes in determining whether the adoptive parents exercised good faith in making their discretionary determination.[17] Paragraph 13 of the agreement clearly states that the adoptive parents maintain "the sole ability to modify visitation to conform to what they believe is in th[e] child's best interest" (emphasis added). In making this determination they shall rely upon input and observations made by the person supervising the visit.[18] The judge may consider, therefore, the GAL's conclusions and the assigned supervisors' observations only when determining if the adoptive parents' discretionary decision to terminate the children's visitation with the biological parents was made in good faith. See Uno Restaurants, Inc., 441 Mass. at 385 ("[T]he purpose of the covenant [of good faith and fair dealing] is to guarantee that the parties remain faithful to the intended and agreed expectations of the parties in their performance"); Eigerman, 450 Mass. at 289 (scope of breach of covenant of good faith and fair dealing is within contract).

         3. Contact information requirement.

         Finally, paragraph 25 of the agreement states that "[f]ailure on the part of [the biological parents] to provide [the adoptive parents] with a current address and working telephone number at all times may result in this agreement becoming null and void at the discretion of [the adoptive parents]." This language is sufficient to create an express condition, which means, simply stated, that in the event that the plaintiffs fail to provide a working telephone number at all times, the adoptive parents, in their discretion, may terminate the agreement.[19]

         Even if we were to determine that this provision was not an express condition and that the manner of enforcing the condition was discretionary (a question we do not decide), the exercise of the adoptive parents' subjective discretion would have appropriate limitations in contract law. The covenant of good faith and fair dealing would be applicable in such a situation. "Where a party to a contract makes the manner of its performance a matter of its own discretion, the law does not hesitate to imply the proviso that such discretion be exercised honestly and in good faith. See 3A Corbin, Contracts, § 644, pp 78-84." Burkhardt v. City Natl. Bank of Detroit, 57 ...


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