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Angevine v. Giuffrida Sports Center, LLC

Superior Court of Massachusetts, Suffolk, Business Litigation Session

August 8, 2018


          File Date: August 9, 2018


          Janet L. Sanders, Justice of the Superior Court

          The defendant Guiffrida Sports Center, LLC (GSC) is a Massachusetts limited liability company (LLC) formed to develop a sports complex on certain real property located at 725 Broadway in Saugus (the Property). The plaintiff Harry Angevine is a member of GSC with a 25 percent ownership in it. In a Verified Complaint, Angevine seeks declaratory relief pursuant to G.L.c. 231A, § 1 (Count I) and asks that damages be awarded for breach of contract (Count II) and a violation of G.L.c. 93A (Count III). GSC together with other defendants now move to dismiss the Complaint pursuant to Rule 12(b)(6), Mass.R.Civ.P.[1] This Court concludes that the Motion must be ALLOWED, except that this Court will give plaintiff a chance to cure deficiencies in the Complaint by filing an amended complaint on or before August 31, 2018.


         The Complaint is bare bones and relies primarily on GSC’s Operating Agreement (OA), attached to it as Exhibit A. The OA was executed and signed by all GSC members on May 3, 2016 and states that GSC was formed in order to "construct, develop, own, operate, and/or sublease" a recreational sports center to be built at the Property. Section 1.2 of OA. Each member made a capital contribution to GSC upon its formation. Section 3.3 of OA and Schedule 1 attached thereto. The single largest contribution was Sioux City, LLC (Sioux City) which owned the Property, valued at the time at $3 million. Angevine and the other named defendants contributed $100 each. There is no allegation that any member made any additional contributions. The OA provides that no member shall have the right to the return of his/her capital contribution "except as provided upon dissolution and liquidation of the Company." Section 4.4 of OA.

         Although the Complaint is not entirely clear on this point, it appears that Angevine (together with Scott Rouisse, named as a defendant in this action) claimed to have certain expertise in construction and finance and agreed to provide certain development and design services to GSC. The Complaint, however, does not allege that Angevine actually performed any such services. Rather it alleges only that Angevine has "reimbursable design professional claims" from three entities in the amount of $177, 810.51. See ¶ 29 of Complaint. There is no allegation suggesting that these entities actually provided any services to GSC nor does the Complaint explain why these costs would be "reimbursable" to Angevine under the OA.

         The Complaint also makes reference to "Final Design and Development Fees" owed to Angevine. The only reference to this fee in the body of the OA is in Section 4.4, which deals with how GSC assets are to be distributed "upon liquidation." Reference to these fees is also made in Schedule 1 to the OA defining certain terms. In that schedule, "Final Design and Development Fees" is defined as a fee to Angevine in the amount of $500, 000 which becomes due in full 120 days after the execution of the OA, and: "if a Certificate of Occupancy is issued to the Company by the Town of Saugus, Massachusetts at any time before or after the expiration of such one hundred and twenty (120) day period, the full amount of the HA Design and Development Fees shall be owed to HA under section 4.4(v)."

          According to the Complaint, Irene Giuffrida, manager of Sioux City, wrote to GSC members on October 26, 2017 stating that "none of the contemplated goals of the company had been achieved to date" and that the Property is in fact declining in value as a result of a lien placed on it for nonpayment of taxes.[2] See Exhibit B to Complaint. The letter suggests that "the most prudent course of action would be to unwind the LLC and return all capital contributions to the original members of the LLC." Section 6.1 of the OA deals with how GSC could be unwound or dissolved. Specifically, it provides that dissolution occurs if: a) GSC’s assets are disposed of; b) the members unanimously vote for dissolution; or c) there is a judicial decree of dissolution. The Complaint does not allege that any of these three events has occurred, or that any of the defendants has engaged in any conduct to cause any of those events to take place. In the event GSC is dissolved, Section 6.2 deals with how liquidation is to occur and how to allocate members’ capital contributions, with specific reference to Section 4.4 of the OA (the section that references the Final Design and Development Fee).

         Count I of the Complaint seeks a declaratory judgment that the OA is valid, that any liquidation of GSC must be in accordance with the OA and that upon liquidation, Angevine is entitled to $1, 665, 310.51-what the Complaint labels as the "Entitled Payment." That amount consists of the sum of the following: a) 25 percent of the appraised value of the Property; b) a $500, 000 Final Design and Development Fee; and c) $177, 810.51 in design costs. Counts II alleges that the GSC members’ "attempts to unwind GSC as suggested by Giuffrida’s October 26 letter is [sic] inconsistent with" the OA and in breach of it, causing Angevine unspecified harm. Count III alleges unfair and deceptive practices in violation of G.L.c. 93A based on the defendants’ "attempts to deprive him of the Entitled Payment." Count IV is a reach and apply count asserted against Toll Brothers, Inc. which allegedly owes money to the defendants for an easement on the Property.


         Two sets of legal principles guide this Court’s analysis. The first is that, in considering the sufficiency of the Complaint under Rule 12(b)(6), this Court applies the standard set forth in Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008). That is, the Complaint must contain "allegations plausibly suggesting (not merely consistent with) an entitlement to relief ..." Id., quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-57 (2007). Although a Complaint need not set forth detailed factual allegations, a plaintiff is required to present more than labels and conclusions and must raise a right to relief "above the speculative level." Id. Dismissal is proper when a fair reading of the Complaint establishes that the facts alleged do not support a cause of action which the law recognizes. Nguyen v. William Joiner Center for the Study of War and Social Consequences, 450 Mass. 291, 295 (2007). The second set of principles pertains most particularly to Count I of the Complaint seeking declaratory relief. A petition for declaratory relief may be sought only if "an actual controversy has arisen and is specifically set forth in the pleadings." G.L.c. 231A, § 1. Declaratory relief is not available to resolve hypothetical controversies or to seek advisory opinions from the Court on matters that have not ripened into live disputes. Bunker Hill Distributing, Inc. v. District Attorney for Suffolk County, 376 Mass. 142, 144 (1978) (affirming dismissal of lawsuit by film distributor seeking injunction against district attorney where the latter had not brought or threatened to bring criminal or civil proceedings). That is, there must be the assertion of antagonistic interests which, unless resolved, "will almost immediately and inevitably lead to litigation." Id., quoting School Comm. of Cambridge v. Sup’t of Schools of Cambridge, 320 Mass. 516, 518 (1946). Applying these two sets of principles, this Court concludes that plaintiff has not stated a claim that is ripe for adjudication.

          The Complaint makes essentially two claims. The first is that the defendants are attempting to unwind GSC contrary to the OA and that this has somehow harmed Angevine. The only factual basis for this claim, however, is the October 2017 letter from Irene Giuffrida which says only that, because of a lack of progress in the project, "the most prudent course of action would be to unwind the LLC and return all capital contributions to the original members of the LLC." There is no allegation in the Complaint that she or other members actually pursued this course of action. Section 6.1 of the OA states how GSC could be dissolved, yet there is no allegation that the defendants have actually engaged in conduct that would lead to dissolution under that section. And although it is true that Section 3.4 of the OA prevents members from receiving back their capital contributions unless there is a dissolution of the LLC, the Complaint does not allege facts showing that these capital contributions have been returned in violation of Section 3.4.

         The second claim that the Complaint makes is that the defendants are refusing to pay Angevine what the Complaint describes as his "Entitled Payment" of $1.6 million. That amount includes 25 percent of the value of the Property which belonged to Sioux City but which Sioux City gave to the GSC as its capital contribution. It also includes a Final Design and Development Fee of $500, 000. Defendants contend that the $500, 000 fee did not become due unless and until a certificate of occupancy for the sports center was issued for the Town of Saugus; because no sports center was ever built, no fee is owed. As to Angevine’s assertion that he is entitled to a quarter of the value of the Property, defendants argue that because the project never got off the ground, it is simply impossible to perform under the terms of the OA as written, since all parties assumed in agreeing to those terms that financing would in fact be obtained and the project built; the OA should therefore not be enforced under the doctrine of "frustration of purpose." These arguments may have merit, although they may not be enough to justify dismissal on the Complaint at this early stage.[3] The fact remains, however, that quite apart from these arguments, the Complaint fails to state claim upon which relief may be granted.

         The Complaint does not identify the specific provision of the OA which could support a claim that Angevine (who contributed only $100 to the project) is nevertheless entitled to receive back 25 percent of the appraised value of the Property that Sioux City had contributed to GSC as its own capital contribution (the value at the time of that contribution being $3 million). But as the Complaint states, Angevine’s "Entitled Payment" is due only upon liquidation of GSC. ¶ 30 of Complaint. See also Section 6.2 of OA. That provision of the OA that deals with liquidation, however, necessarily contemplates that GSC will first be dissolved. Section 6.1 lists the three events that would ...

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