St. John's Holdings, LLC v. Two Elecs. LLC

Citations: 94 N.E.3d 880; 92 Mass. App. Ct. 1114; 2017 Mass. App. Unpub. LEXIS 1009Docket: 16–P–1701

Court: Massachusetts Appeals Court; November 15, 2017; Massachusetts; State Appellate Court

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St. John's Holdings, LLC filed a verified complaint in the Land Court against Two Electronics LLC, alleging breach of contract and seeking declaratory relief and specific performance based on a binding letter of intent for the purchase of property at 2 Electronics Drive, Danvers. A bench trial was conducted to determine if Two Electronics's broker had the authority to bind the company to the sale. The judge ruled in favor of Two Electronics, concluding that the broker lacked such authority, leading St. John's to appeal the dismissal of its complaint.

The judge's findings included a December 2015 meeting between Matthew Piccione (manager of Two Electronics) and Frederick McDonald (manager of St. John's), where they discussed leasing the property, with brokers Timothy Barry and Stephen Cefalo also present. Piccione instructed Cefalo and McDonald to negotiate through Barry. In January 2016, it became clear that Two Electronics would not lease the property but was open to selling it. Following two meetings initiated by McDonald, where he felt direct discussions were more efficient, Piccione requested a signed offer after expressing that they were close to a deal.

Cefalo sent an initial 'Binding Letter of Intent' (first LOI) to Barry on January 27, 2016, which was not signed by St. John's. Barry forwarded the LOI to Piccione, who provided feedback. A second 'Binding Letter of Intent' (second LOI) was sent on January 29, 2016, also unsigned, and again received comments from Piccione. On February 1, 2016, Barry indicated that Piccione was ready to proceed but had concerns about the terms, describing the situation as "encouraging." Cefalo later expressed concerns about discrepancies between Barry's and Piccione's positions regarding the sale.

Cefalo's email indicated that the seller was unwilling to assist in what was perceived as the best deal for his property. On February 2, 2016, McDonald sent a ‘Binding Letter of Intent’ (final LOI) to Cefalo, which was then forwarded to Barry, but it was unsigned by St. John's representatives. Issues raised in a previous email from Barry to Cefalo were not included in this final LOI. The final LOI required Two Electronics to accept the offer by signing and returning it by February 4, 2016. Piccione did not review the LOI's content because it lacked St. John's signature, asserting no offer existed until signed. 

On February 3, 2016, in response to text messages from Barry, Piccione expressed frustration over the lack of a signed offer, emphasizing the importance of a signed LOI. Barry communicated that Two Electronics wanted St. John's to sign first before they would sign, which is contrary to typical practice. Later that day, McDonald signed four copies of the final LOI and provided them, along with a check, to Cefalo for delivery to Barry for Piccione's signature. However, Piccione accepted an offer from a third party on the same day. 

On February 5, Piccione informed McDonald that he would not enter a purchase and sale agreement with St. John's due to the third-party agreement. In the subsequent appeal, the court upheld the trial judge's factual findings and legal conclusions, determining the key issue was whether Barry had actual or apparent authority to act on behalf of Two Electronics in the proposed sale. St. John's argued that Barry's text indicating Piccione would sign constituted a binding commitment. However, the court disagreed, noting that agency issues are typically fact-based and found that there was no actual authority for Barry to make decisions regarding the sale, as Piccione had not explicitly granted such authority, nor did Barry believe he had it.

The judge found Piccione's testimony credible, determining that St. John's failed to demonstrate any specific words or conduct indicating Piccione's consent for Barry to accept an offer. The judge noted that there was no actual authority granted to Barry, and their relationship remained that of a typical real estate broker and client. The judge's conclusions were well-supported by the trial record, with no errors identified. St. John's claim of Barry's apparent authority was also dismissed, as apparent authority arises solely from the principal's conduct, not the agent's. St. John's argued that recent trends in agency law indicated a broader relationship between Barry and Two Electronics, citing Fergus v. Ross. However, the Supreme Judicial Court reaffirmed traditional agency principles, which were applied in this case. The judge highlighted that McDonald was aware Piccione was the ultimate decision-maker, especially after receiving communication indicating Barry could not represent Piccione effectively. The judge concluded that Piccione's instruction to "work through Barry" did not imply authority for Barry to bind Two Electronics in the sale. Additionally, the judge allowed St. John's motion for a preliminary injunction against Two Electronics regarding the property, while Two Electronics' motion to dismiss a memorandum of lis pendens was denied. The judge found there was no written agreement authorizing Barry to market the property, and Piccione did not wish to be bound to any offer without reviewing its terms first.

Cefalo testified that Piccione was the sole decision maker regarding the deal's terms and that Barry, as a real estate broker, lacked authority to represent Piccione. McDonald similarly acknowledged Piccione's role as the decision maker for Two Electronics in the sale of the property. Two Electronics, in its cross appeal, argued that the judge wrongly concluded that Barry's text message met the requirements of the Statute of Frauds, leading to an improper denial of the special motion to dismiss St. John's complaint. However, the court determined that Barry did not have the authority to bind Piccione, thus not addressing the Statute of Frauds issue. Additionally, the court rejected St. John's argument that Two Electronics forfeited its right to appeal the denial of the special motion to dismiss due to not pursuing an interlocutory appeal, clarifying that General Laws c. 184, § 15(d) allows but does not mandate such appeals. The court adhered to the statute's clear language, and St. John provided no contrary authority.