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Bay Colony Property Development Co. v. Headlands Realty Corp.

Superior Court of Massachusetts, Suffolk

June 19, 2019

BAY COLONY PROPERTY DEVELOPMENT COMPANY et al.
v.
HEADLANDS REALTY CORPORATION et al.

          MEMORANDUM AND ORDER ON DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

          Kenneth W. Salinger, Justice

         Plaintiffs have admitted, for purposes of Defendant’s motion for summary judgment, that Headlands Realty Corporation ("Headlands") retained Bay Colony Property Development Company ("Bay Colony") to supervise the development and construction of warehouse building projects on two properties located in Allentown and Carlisle, Pennsylvania. The plan was to construct two buildings at the Allentown site (known as "Allentown I" and "Allentown II") and one at the Carlisle site.

         Plaintiffs allege that Headlands promised to pay Bay Colony two percent of the development costs (the "Base Fee") plus ten percent of the profits (the "Incentive Fee") for its work on these projects. Bay Colony claims it has not been paid and is owed all of the Incentive Fees and part of the Base Fees for these projects. Plaintiffs seek damages for breach of contract or unjust enrichment, and a declaratory judgment concerning the enforceability and terms of Bay Colony’s contracts with Headlands.

         Headlands was a wholly-owned subsidiary of AMB Property II, L.P., which in turn was owned by AMB Property Corp. ("AMB"). In 2011, AMB merged with ProLogis, Inc.; though AMB was the surviving entity, it changed its name to ProLogis, Inc. In 2013, Headlands was merged into ProLogis Logistics Services, Inc. ("PLSI").

         Defendants have moved for summary judgment on all claims. The Court will DENY the motion with respect to the claims against Headlands and its successor PLSI because they turn on disputed issues of material fact. It will ALLOW the motion with respect to the claims against AMB Property II, L.P., AMB Property Corp., and Prologis, Inc., because Plaintiffs cannot establish that any of those entities may be held liable for the alleged malfeasance of Headlands.

         1. Choice of Law

         Though the properties at issue in this case are in Pennsylvania, and the alleged written contract between Headlands and Bay Colony provides that the contract "shall be governed by the laws of the state in which the Land is located," both sides rely on Massachusetts law in their summary judgment memoranda. Neither side has applied Pennsylvania law, suggested that the Court should do so, or shown that it would make any difference to the outcome if the Court were to apply the Pennsylvania law rather than Massaachusetts law.

         The Court will follow the parties’ lead and apply Massachusetts law in deciding this motion. "It is a fundamental choice of law principle that only actual conflicts between the laws of different jurisdictions must be resolved ... Choice of law analysis is unnecessary when that choice will not affect the outcome of the case." Kaufman v. Richmond, 442 Mass. 1010, 1012 (2004) (rescript) (applying Massachusetts law to dispute regarding Florida property, because the parties indicated the result would be the same under Massachusetts or Florida law); accord Cohen v. McDonnell Douglas Corp., 389 Mass. 327, 332 n.7 (1983).

         2. Claims against Headlands and Prologis Logistics Services

         2.1. Incentive Fees

         Headlands argues that it is entitled to summary judgment on the claims for Incentive Fees because the parties’ contracts purportedly provide that no such fees are owed until an Allentown or Carlisle property is sold, and the undisputed facts show that none of these properties has been sold.

         The Court cannot resolve these issues on a motion for summary judgment because the contract terms are in dispute.

         Headlands insists that the contract regarding the Allentown site is set forth in a written document dated April 7, 2008, which on its face appears to be a "Development Services Agreement" between Headlands and Bay Colony, and that "the Parties engaged in a course of conduct consistent with such terms for Carlisle."

         There is a material dispute as to whether the contract terms for either site are established in the written contract document. Locke has presented competent evidence that he and Boton Farkas, an AMB employee who was representing Headlands, had reached an oral agreement as to the terms under which Bay Colony would develop the Allentown site, that in April 2008 Farkas provided Locke with a written version of their agreement signed by Farkas on behalf of Headlands, that Locke told Farkas that this draft was inconsistent with the terms they had agreed upon orally, and that Farkas agreed make the further changes in the written document requested by Locke. According to Locke, he signed that document a year later, in the Spring of 2009, with the understanding that Farkas was still going to send Locke a corrected version of the written document. Locke did not provide Defendants with a copy of the contract bearing his signature until late October 2010. Three days later counsel for AMB wrote to Locke in response and stated that AMB "disputes that there is any binding agreement" with Bay Colony "with respect to either project." Farkas testified at his deposition that the version of the contract that Farkas signed in ...


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