Reem Property, LLC v. Engleby

Filing 84

Chief Judge Patti B. Saris: MEMORANDUM and ORDER entered. The Court ALLOWS Englebys motion for summary judgment with regard to Counts II through V. Docket No. 62 . With respect to Englebys counterclaim and motion for fees under Massachusetts Gener al Laws ch. 184 § 15(c), the Court ALLOWS the motion for summary judgment and for attorney's fees and costs. An affidavit should be filed in 14 days making the appropriate deductions. The Court DENIES Reem's motion for summary judgment. Docket No. 65 . (Geraldino-Karasek, Clarilde)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
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REEM PROPERTY, LLC,
Plaintiff,
v.

ROBERT T. ENGLEBY,
Defendant.
______________________________

Civil Action
No. 15-40127-PBS

MEMORANDUM AND ORDER
April 21, 2017
INTRODUCTION
This case involves a dispute over real estate in Newton,
Massachusetts. Plaintiff Reem Property, LLC, (“Reem”) which
entered into an agreement to purchase the property, brings this
diversity action against the seller Robert Engleby alleging
breach of contract (Count I), breach of implied covenant of good
faith and fair dealing (Count II), unjust enrichment (Count
III), conversion (Count IV), and violation of Massachusetts
General Laws ch. 93A (Count V).
In April 2016, Engleby brought a special motion to dismiss
the complaint under Massachusetts General Laws ch. 184, § 15(c)
and Federal Rule of Civil Procedure 12(b)(6), and a motion to
dissolve the memorandum of lis pendens.
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On July 20, 2016, Magistrate Judge Bowler issued a report
and recommendation to dismiss Count I, breach of contract, under
Massachusetts General Laws ch. 184, § 15(c), but recommended the
denial of the motion to dismiss the remaining counts and to
dissolve the lis pendens. Docket No. 32. After hearing, this
Court adopted Judge Bowler’s Report and Recommendation on
September 21, 2016, and assumes familiarity with it.
After an opportunity for discovery, Engleby moved for
summary judgment on Counts II through V and his counterclaim for
breach of contract. Docket No. 62. Reem moved for summary
judgment as to Engleby’s counterclaim. Docket No. 65. After
hearing, the Court requested additional briefing on the
counterclaim –- the request for an award of attorney’s fees and
costs of $41,628.00 pursuant to Massachusetts General Laws ch.
184, § 15(c). The Court dissolved the memorandum of lis pendens
on March 1, 2017. Docket No. 79.
The Court ALLOWS Engleby’s motion for summary judgment on
Counts II through V. With respect to Engleby’s counterclaim and
motion for attorney’s fees, Docket No. 81, the Court ALLOWS
Engleby’s motion for summary judgment and request for attorney’s
fees, with certain deductions. The Court DENIES Reem’s motion
for summary judgment. Docket No. 65.

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FACTUAL BACKGROUND
For the purposes of the motion for summary judgment, the
facts are taken in the light most favorable to the non-moving
party and are undisputed except where stated.
The highest bidder for the property at the foreclosure sale
submitted a bid of $430,000, but defaulted on the terms of the
Memorandum of Sale. Reem was the next highest bidder with a bid
of $275,000. Engleby was the third highest bidder at $250,000.
On June 10, 2015, Reem and Engleby entered into a Memorandum of
Sale of Real Estate. The agreement stated that Reem would buy
the Property from Engleby for $275,000 with an initial deposit
of $10,000 and that “TIME IS OF THE ESSENCE IN THIS AGREEMENT AS
TO BUYERS OBLIGATIONS HEREUNDER.” Docket No. 1, ex. 1 at 14.
Reem paid the $10,000 deposit. The balance was due on July 10,
2015 on or before 1:00 p.m.
On July 9, 2015, Reem paid an additional $10,000 to obtain
a 30-day extension of the time for payment. Engleby also
informed Reem that he was only willing to extend for an
additional 30 days if Reem expressly agreed that if it did not
tender the balance of the purchase price on or before the
closing date, for any reason, Engleby is entitled to “retain the
$20k paid as a deposit, without argument, challenge or any
demand that it be refunded.” Docket No. 24, ex. 3 at 2. Reem
agreed to these terms and the extension agreement was signed the
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next day. The “time is of the essence” clause was carried over
in the extension.
Although Reem attempted to wire the amount prior to the due
date, he was unsuccessful. Reem did not make a payment until
August 13, 2015, three days after the extension expired. The
failure to meet the deadline was caused by a review by U.S.
authorities under the money laundering and bank regulations
because the money was wired internationally from Lebanon, where
the sole manager of Reem was located at that time.
After receiving Reem’s payment, Engleby immediately
informed Reem of its default and advised Reem its funds would be
returned. The funds were returned on August 20, 2015. However,
Engleby kept the $20,000.
As the third highest bidder at $250,000, Engleby sold the
property to Dornoch Equity Services, LLC on August 20, 2015 for
$250,000, the same amount as his bid. Engleby is the manager and
sole member of this company.
DISCUSSION
I.

Summary Judgment Standard of Review
Summary judgment is appropriate when there is “no genuine

dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). To succeed
on a motion for summary judgment, the moving party must
demonstrate that there is an “absence of evidence to support the
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nonmoving party’s case.” Sands v. Ridefilm Corp., 212 F.3d 657,
661 (1st Cir. 2000) (citing Celotex Corp. v. Catrett, 477 U.S.
317, 325 (1986)). Once such a showing is made, “the burden
shifts to the nonmoving party, who must, with respect to each
issue on which [it] would bear the burden of proof at trial,”
come forward with facts that demonstrate a genuine issue. Borges
ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 5 (1st Cir. 2010)
(citing Celotex, 477 U.S. at 324).
II.

Reem’s Claims
For the reasons stated by Magistrate Judge Bowler, the

Court has already dismissed the breach of contract claim.
However, the Court declined to dismiss the remaining claims
based primarily on inadequate briefing.
Count II: Breach of Covenant of Good Faith and Fair Dealing
Initially, Reem pressed a claim of breach of the covenant
of good faith and fair dealing. Reem’s theory was that Engleby
sought to avoid the contract because he had already negotiated
to sell the property to a third person at a higher figure.
Massachusetts law implies a covenant of good faith and fair
dealing in every contract. FAMM Steel, Inc. v. Sovereign Bank,
571 F.3d 93, 100 (1st Cir. 2009). Contracts are subject to an
implied covenant of good faith and fair dealing so to “guarantee
that the parties remain faithful to the intended and agreed
expectations” of the contract. Uno Restaurants, Inc. v. Boston
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Kenmore Realty Corp., 805 N.E.2d 957, 964 (Mass. 2004). It also
ensures that “neither party shall do anything that will have the
effect of destroying or injuring the right of the other party to
receive the fruits of the contract.” Anthony’s Pier Four, Inc.
v. HBC Assocs., 583 N.E.2d 806, 820 (Mass. 1991) (quoting
Drucker v. Roland Wm. Jutras Assocs., 348 N.E.2d 763, 765 (Mass.
1976)).
After an opportunity for discovery, Reem presented no
evidence that Engleby breached the covenant of good faith and
fair dealing. The only evidence in the record submitted to
suggest Engleby engaged in unfair dealing is an interrogatory
answer by Reem’s owner: “Mohammed Abouchlieh was contacted by
potential buyers prior to the sale. He was told the people
contacted Engleby directly to purchase the property.” Docket No.
63, ex. A, interrogatory no. 11. Reem does not provide any nonhearsay information about these potential buyers -– no names,
addresses, or otherwise. Moreover, Reem does not allege Engleby
did anything wrong. Pivoting from its initial position before
the magistrate and this Court that Engleby was shopping the
property around for a higher price, Reem took a new tact: “The
Defendant purposely sought to avoid this contract with Reem
Property in order to purchase the property several weeks after
and for less than Reem Property, LLC paid.” Docket No. 63, ex.
A, interrogatory no. 13. Again, as the highest remaining bidder,
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Engleby had the right to buy and resell the property after Reem
failed to make a timely payment. There is no support for the
claim of bad faith.
Count III: Unjust Enrichment
“Massachusetts law does not allow litigants to override an
express contract by arguing unjust enrichment.” Platten v. HG
Bermuda Exempted Ltd., 437 F.3d 118, 130 (1st Cir. 2006) (citing
Zarum v. Brass Mill Materials Corp., 134 N.E.2d 141, 143 (Mass.
1956) (“The law will not imply a contract where there is an
existing express contract covering the same subject matter.”).
An express contract precludes quasi contract claims. Cooper v.
Charter Commc’ns Entm’ts I, LLC, 760 F.3d 103, 112 (1st Cir.
2014) (citing Platten, 437 F.3d at 130).
The only argument Reem submits to support the unjust
enrichment claim is that Engleby was unjustly enriched because
he kept Reem’s deposit and then purchased the property for less
money. While this does seem unjust because the delay was minimal
and not Reem’s fault, the express agreement between the parties
precludes the unjust enrichment claim.
Count IV: Conversion
Reem claims that Engleby held the purchase price for a week
despite sending a termination letter. A person “who
intentionally or wrongfully exercises acts of ownership, control
or dominion over personal property to which he has no right of
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possession at the time” is liable for conversion. Abbington
Nat’l Bank v. Ashwood Homes, Inc., 475 N.E.2d 1230, 1233 (Mass.
App. Ct. 1985) (citing J.R. Nolan, Tort Law § 35 (1979)). The
elements of the tort of conversion are as follows:
(1) the defendant intentionally and wrongfully exercised
control or dominion over the personal property;
(2) the plaintiff had an ownership or possessory interest
in the property at the time of the alleged conversion;
(3) the plaintiff was damaged by the defendant’s conduct;
and
(4) if the defendant legitimately acquired possession of
the property under a good-faith claim of right, the
plaintiff’s demand for its return was refused.
Evergreen Marine Corp. v. Six Consignment of Frozen Scallops, 4
F.3d 90, 95 (1st Cir. 1993).
There is no factual basis to support the claim that Engleby
intentionally and wrongfully exercised control or dominion of
Reem’s personal property. Engleby did not receive the required
payment until August 13, 2015. On that same day, Engleby
informed Reem it was in default of the agreement, that the wire
transfer “will be promptly returned[,]” and asked whether it
should be returned “in the form of check or wire transfer.”
Docket No. 24, ex. 5 at 2. A week later, after hearing nothing
from Reem regarding the means of the transfer, Engleby returned
the $255,000 via wire transfer.
Count V: Chapter 93A
Chapter 93A precludes “unfair or deceptive acts or
practices in the conduct of any trade or commerce” and penalizes
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“willful or knowing” violations with awards of multiple damages.
Mass. Gen. Laws ch. 93A, §§ 2, 9, 11. As stated in the
discussion of the claim of the breach of the covenant of good
faith and fair dealing, the record contains no evidence that
Engleby engaged in unfair or deceptive practices within the
meaning of Chapter 93A.
III. Attorney’s Fees
Section 15(c) of chapter 184 of the Massachusetts General
Laws provides that any party aggrieved by the issuance of a
memorandum of lis pendens “may move at any time for dissolution
of the memorandum.” The statute states:

The special motion to dismiss, unless heard at the
time the claimant first applied for a judicial
endorsement under subsection (b), shall be heard at
the same time as the hearing on the motion to dissolve
the memorandum of lis pendens. If the court determines
that the action does not affect the title to the real
property or the use and occupation thereof or the
buildings thereon, it shall dissolve the memorandum of
lis pendens. The special motion to dismiss shall be
granted if the court finds that the action or claim is
frivolous because (1) it is devoid of any reasonable
factual support; or (2) it is devoid of any arguable
basis in law; or (3) the action or claim is subject to
dismissal based on a valid legal defense such as the
statute of frauds. In ruling on the special motion to
dismiss the court shall consider verified pleadings
and affidavits, if any, meeting the requirements of
the Massachusetts rules of civil procedure. If the
court allows the special motion to dismiss, it shall
award the moving party costs and reasonable attorneys
fees, including those incurred for the special motion,
any motion to dissolve the memorandum of lis pendens,
and any related discovery.

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“General Laws c. 184, § 15(c), mandates the award of costs
and attorney’s fees if the court allows a special motion to
dismiss.” Galipault v. Wash Rock Invs., LLC, 836 N.E.2d 1123,
1134 (Mass. App. Ct. 2005); see also RFF Family P’ship, LP v.
Link Development, LLC, 849 F. Supp. 2d 131, 137 (D. Mass. 2012)
(special “motion to dismiss is directed to the claim or action
and not the lis pendens itself”).
If the court allows a special motion to dismiss with
respect to one of the several claims as opposed to all of the
claims in a complaint, the movant may still be entitled to
attorney’s fees. See Russell & Assocs., LLC. v. RFF Family
P’ship, LP, 958 N.E.2d 1181, at *2 (Mass. App. Ct. 2011)
(unpublished summary opinion) (denying appeal that attorney’s
fees were improperly awarded because not all of the claims were
dismissed, noting that the statute was “designed to provide
protection from certain types of suits”). “The moving party need
not prevail on all counts to qualify for an award. As in other
fee award situations, however, the judge may make an appropriate
adjustment to account for the prevailing party’s limited
success.” Giuffrida v. High Country Inv’r, Inc., 897 N.E.2d 82,
99 (Mass. App. Ct. 2008) (in the analogous context of the antiSLAPP statute, Mass. Gen. Laws ch. 231, § 59H).
The breach of contract claim (Count I) was a frivolous
claim. While the Court adopted the magistrate judge’s
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recommendation not to dismiss the remaining counts, including
breach of the covenant of good faith and fair dealing, after
discovery, these counts turned out to be frivolous as well.
Engleby pressed the motion for summary judgment on the remaining
claims and to dissolve the memorandum of lis pendens after
discovery. Section 15(c) provides that the motion to dissolve
can be filed “at any time,” and permits an opportunity for
discovery. After the parties had the opportunity for discovery,
the Court concludes that defendant prevails on its motion for
summary judgment and that all claims are without any reasonable
basis in law and fact. No more reams of paper should be wasted
on this litigation. Only one of the counts (conversion of the
deposit) plainly did not involve a claim supporting the lis
pendens. Accordingly, the Court awards attorney’s fees and costs
except for settlement and mediation and for the conversion
claim.
ORDER
The Court ALLOWS Engleby’s motion for summary judgment with
regard to Counts II through V. Docket No. 62. With respect to
Engleby’s counterclaim and motion for fees under Massachusetts
General Laws ch. 184 § 15(c), the Court ALLOWS the motion for
summary judgment and for attorney’s fees and costs. An affidavit
should be filed in 14 days making the appropriate deductions.

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The Court DENIES Reem’s motion for summary judgment. Docket No.
65.

/s/PATTI B. SARIS_________________
Patti B. Saris
Chief United States District Judge

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