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Dischino v. Delanson Circle Holding, LLC

Superior Court of Massachusetts, Norfolk

April 17, 2018

William DISCHINO et al.[1]
v.
DELANSON CIRCLE HOLDING, LLC et al.[2]

          File Date: April 19, 2018

          MEMORANDUM AND ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT

          Peter B. Krupp, Justice of the Superior Court

         Plaintiffs, who are children and grandchildren of Robert L. Dischino ("Robert L."), seek to undo Robert L.’s transfer of his interests in properties in Wellesley to defendants Delanson Circle Holding, LLC and Central Street Holding, LLC (together, the "LLCs") shortly before his death in 2009. The dispute turns on the enforceability of a Transfer Restrictions agreement signed in 1987 by all of the owners or holders of an interest in the properties. The case is before me on cross motions for summary judgment. Because I find the Transfer Restrictions agreement to be unenforceable, I must allow the LLCs’ motion and deny plaintiffs’ cross motion.

         BACKGROUND

         During their lifetime, Damiano G. Dischino ("Damiano") and Erminia A. Dischino owned the properties at 23-25 Central Street, 53-61 Central Street, 1-3 Delanson Circle, and 8 Delanson Circle, all in Wellesley (together, the "Properties").[3] Damiano had three children, Robert L., Louise B. Touhey ("Louise"), and Lawrence J. Dischino ("Lawrence"). Upon Damiano’s death in 1967, part of the ownership of the Properties passed to his three children, while half of the principal of his estate was placed in a testamentary trust ("Damiano’s Trust"), with Robert L., as its trustee. The assets in Damiano’s Trust were to be distributed to the surviving children of Robert L., Louise, and Lawrence-i.e., to Damiano’s grandchildren-upon the deaths of Robert L., Louise, and Lawrence. Twenty years later, the Properties were still owned by Damiano’s descendants (children and some grandchildren) as tenants in common, with each owning a percentage of the whole.

         In 1987, Robert L. had his attorney draft the now-disputed Transfer Restrictions agreement (the "TRA") with respect to the Properties. The TRA dated December 21, 1987, was prepared to "maintain[ ] the benefits derived from these properties among the decedents[4] of the late Damiano G. Dischino and Erminia A. Dischino." The TRA was signed by Robert L., and each of his children; Louise, and each of her children; and each of Lawrence’s children.[5] At that time, Robert L., Louise, and each of Lawrence’s children had a vested ownership interest in a percentage of the Property, and each of Robert L.’s and Louise’s children had a vested interest contingent upon their survival of their respective parent.

         The TRA is hardly a model of draftsmanship. It purports to give rights to "holders of an interest" in the Properties in one section, TRA ¶ 1, and to "owners" of the Properties in another, Id., ¶ 3; and seems to define an "owner" of an interest in the Properties as any person "having any property interest therein." Id. The order of the paragraphs is confusing, as are the mechanisms for implementation. The purpose of the TRA, however, is quite clear: to keep the Properties in the Dischino family as long as any family member is able and wants to own them. In relevant part, the TRA states:

In the event of any change in the ownership of any interest in any one of the above set forth properties (made or proposed) whether by the holder’s act or by death, legal disability, operation of law, legal processes, order of court, or otherwise except as to transfers by a holder of such interest to his or her spouse and/or issue, and/or between issue, including legally adopted children, the other holders of an interest in that said property or properties, as the case may be, shall have the right to purchase such interest in equal shares. If any one or more of the remaining holders of an interest in said property or properties elect not to participate in the acquisition the rest of the holders or holder, as the case may be, shall continue to have said rights to purchase as a group or individually if there be only one left desirous of acquiring the offered interest.

Id., ¶ 1 (emphasis added). "In any such event, "-presumably referring to "any change in the ownership of any interest in" the Properties, whether "made or proposed"-"the owner of the interest concerned therein ... shall give notice thereof in detail satisfactory to the rest of the owners." The "other owners" then have ten days to "elect whether or not to exercise their said rights in respect to said interest and, if they elect to exercise them, shall give notice of their election." Id., ¶ 3.

         The TRA sets the purchase price of any such interest at "the fair value thereof as determined by mutual agreement or, failing such agreement, by arbitration." Id., ¶ 2. The TRA provides a sparse procedure for arbitration before a panel of three arbitrators. Id., ¶ 3. While the arbitrators are to be named within 15 days, the TRA imposes no rules or schedule for the arbitrators to determine "fair value" other than that they are to "proceed promptly." Id. Once the parties agree, or the arbitrators determine, "fair value," the sale of the interest to an owner or holder of an interest in the Properties must be accomplished within 90 days. Id., ¶ 4. Only if all of "the remaining holder or holders of an interest in the property involved ... elect ... not to exercise their said rights, or fail[ ] to exercise them" within the 90 days, may the holder of the rights transfer his/her interest in the Properties to another purchaser or purchasers, "but only upon generally the same terms and conditions and at the same price as determined hereunder for a transfer to the parties in interest herein and if such transfer be consummated within ninety days thereafter any such event." Id., ¶ 5. Regardless of how the transfer is effectuated, or to whom, the TRA requires that "[a]ll transfers in any one of the above set forth properties shall be made only subject to these restrictions and any interest acquired therein shall be acquired only subject to these said restrictions." Id., ¶ 6.

         On or about November 9, 2009, Robert L. transferred his ownership interest in the Properties on Central Street to defendant Central Street Holdings, LLC and his ownership interest in the Properties on Delanson Circle to Delanson Circle Holding, LLC. When he did so, he and his wife, Dorothy ("Dorothy"), controlled the LLCs; and Robert L. was the manager of both of the LLCs.

         Robert L. died a month and a half later on December 20, 2009. Upon his death, the ownership portions of the Properties reserved in Damiano’s Trust for Damiano’s grandchildren through Robert L. passed to Robert L.’s surviving children or their issue, while the portion of the Properties Robert L. had owned continued to be owned by the LLCs.

         Less than three months later, Dorothy died. Upon Dorothy’s death, Robert L.’s prior ownership interest in the Properties continued to be held by the LLCs. Trusts set up by Robert L. and Dorothy are members of the LLCs.

         Plaintiffs have long known that Robert L. transferred his ownership interest in the Properties to the LLCs prior to his death. In September 2011, plaintiffs offered to purchase Robert L.’s interest in the Properties from the LLCs, asserting that Robert L.’s transfer of his interest in the Properties to the LLCs triggered certain rights under ...


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