Court Opinion

ID: 9399194
Source: CourtListenerOpinion
Date Created: 2023-06-02 14:06:44.872971+00
Date Added: 2024-06-11T17:18:44.933348
License: Public Domain

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22-P-412                                              Appeals Court

   AIRPORT FUEL SERVICES, INC. vs. MARTHA'S VINEYARD AIRPORT
    COMMISSION & another1; JOHN KHEARY, third-party defendant.

                             No. 22-P-412.

        Dukes County.        December 9, 2022. – June 2, 2023.

           Present:   Wolohojian, Henry, & Hershfang, JJ.

Airport. Contract, Bidding for contract, Lease of real estate,
     Implied covenant of good faith and fair dealing, Unjust
     enrichment, Performance and breach. Unjust Enrichment.
     Municipal Corporations, Lease of property. Real Property,
     Lease. Uniform Procurement Act. Declaratory Relief.

     Civil action commenced in the Superior Court Department on
March 24, 2017.

     The case was heard by Mark C. Gildea, J., on motions for
summary judgment, and entry of final judgment was ordered by
Karen L. Goodwin, J.

     Dana Alan Curhan for the plaintiff.
     Christina S. Marshall (David S. Mackey also present) for
Martha's Vineyard Airport Commission.
     Marilyn H. Vukota for Depot Corner, Inc.

    1   Depot Corner, Inc.
                                                                    2

     HERSHFANG, J.   This appeal arises from a bidding process to

lease land controlled by defendant Martha's Vineyard Airport

Commission (MVAC).   Dissatisfied with both the conduct and the

outcome of the bidding process, the existing tenant, Airport

Fuel Services, Inc. (AFS), filed suit in the Superior Court

challenging MVAC's award of the bid to defendant Depot Corner,

Inc. (Depot Corner).    MVAC counterclaimed and brought a third-

party claim against John Kheary as guarantor of AFS's lease

obligations.2   MVAC also filed a separate summary process action

in the District Court when AFS failed to vacate the property at

the end of its lease.   While MVAC obtained an eviction order in

the summary process action, a Superior Court judge ruled against

both AFS and MVAC in each of their affirmative claims in this

action.

     AFS appeals from the final judgment in this action, arguing

that the Superior Court judge erred by allowing summary judgment

for MVAC on its claims for declaratory judgment, the implied

covenant of good faith and fair dealing, and violation of G. L.

c. 93A.   MVAC cross-appeals, arguing that summary judgment

     2 Depot Corner also counterclaimed against AFS for
interference with advantageous relations, unjust enrichment, and
civil conspiracy. The unjust enrichment claim was dismissed for
failure to state a claim. Subsequently, Depot Corner agreed to
a voluntary dismissal, with prejudice, of its remaining claims
for interference with advantageous relations and civil
conspiracy. Depot Corner did not cross-appeal, and this appeal
presents no questions regarding Depot Corner's claims.
                                                                     3

should have entered in its favor on its claims for breach of

lease, violation of G. L. c. 93A, and unjust enrichment, and

that it was entitled to a trial on its guarantee claim.     We

affirm the judgment as to AFS's claims.    As to MVAC's claims, we

conclude that summary judgment should have entered in its favor

on its breach of lease claim, that MVAC is entitled to a trial

on its guarantee and c. 93A claims, and that MVAC's unjust

enrichment claim was properly dismissed on summary judgment.

    Background.   We set forth the undisputed facts, reserving

additional facts for our discussion.   MVAC, as a county airport

commission, is responsible for the maintenance and operation of

the Martha's Vineyard Airport and is authorized to enter into

lease agreements for the property under its control.     See G. L.

c. 90, §§ 51E, 51F.   In 1997, MVAC entered into a twenty-year

lease with AFS for the use of property located at the airport.

The lease permitted AFS to construct improvements on the

property but did not include any renewal or extension rights and

required AFS to remove its improvements by the last day of the

lease term, March 9, 2017.   AFS built and operated a gasoline

station, service center, and car wash on the property.

    Leading up to the expiration of AFS's lease, MVAC issued a

request for proposals (RFP) soliciting bids to lease the land.

The RFP made the following announcement:
                                                                   4

    "[T]he MVAC is seeking sealed proposals for the disposition
    by lease of 36,206 square feet of property . . . with an
    existing gas station, auto service facility, and car wash
    located on the Premises. For the purposes of this RFP
    only, the MVAC may waive its rights under . . . the
    underlying Master Lease noting that Lessee (currently
    [AFS]) shall, on the last day of the term, or on earlier
    termination and forfeiture of the lease, peaceably and
    quietly surrender and deliver the Premises to Lessor (the
    MVAC) at the Lessor's option free of subtenants, buildings,
    additions, and improvements constructed or placed thereon
    by Lessee and is disposing the UNDERLYING PROPERTY ONLY.
    The successful Proposer will have the opportunity to either
    negotiate a separate agreement for the purchase of the
    existing facilities with the current tenant/master lease
    holder or have the MVAC exercise its rights to have the
    facilities removed prior to the assumption of the
    Premises."

    The RFP stated that proposers were "directed to Chapter

30B, section 16 of the General Laws of the Commonwealth of

Massachusetts governing transactions involving real property"

and that qualifying proposals would be evaluated using the

following "comparative criteria":   the description of the

proposed operation and the proposer's statement of experience,

the proposer's financial data and business references, the

proposer's narrative information, MVAC's general impression of

the proposal, and the proposed lease rental amount.

    MVAC received five proposals, one after the proposal

deadline; the four timely proposals were opened by the airport

manager in private.   The parties agree that she did not tamper

with them.   Two of the timely proposals were from AFS and Depot

Corner.   AFS offered $3.01 per square foot for the property,
                                                                     5

while Depot Corner offered $3.49 per square foot.    During an

MVAC meeting on March 9, 2017, MVAC's members discussed the

proposals, focusing on rental rate, and unanimously agreed to

award the bid to Depot Corner.3   That same day, the last day of

AFS's twenty-year lease, MVAC notified both AFS and Depot Corner

of its decision.   MVAC also extended AFS's lease to May 15,

2017, to enable AFS to sell or remove its improvements.

     About two weeks later, AFS filed suit in the Superior

Court.   Depot Corner did not purchase AFS's improvements, and

AFS remained on the property after May 15, 2017.    MVAC brought a

summary process action on June 5, 2017, seeking possession of

the property and damages for AFS's overstaying the lease and not

timely removing its improvements.    MVAC also counterclaimed in

the Superior Court action on June 15, 2017, and brought a third-

party claim against Kheary, as guarantor of AFS's lease

obligations.

     On July 3, 2017, in the summary process action, the judge

ruled that AFS had wrongfully held over beyond its lease term

and that AFS's failure to remove its improvements constituted a

breach of its lease agreement.    A judgment for possession

entered in MVAC's favor, although execution of that judgment was

stayed until July 31, 2017, to give AFS time to remove its

     3 MVAC's chair, Myron Garfinkle, was not present at the
meeting and did not vote on the award of the bid.
                                                                        6

improvements.   No damages were awarded, however.       Instead, the

District Court judge said he was "declining jurisdiction over

the speculative cost to the [MVAC] for removal of [AFS's]

leasehold improvements.    The [MVAC's] rights are obviously

preserved for hearing before a jury in the Superior Court."       AFS

vacated the property and removed its improvements by the July

31, 2017 deadline.

    Discussion.    We review a grant of summary judgment de novo

to determine whether, viewing the evidence in the light most

favorable to the nonmoving party, "all material facts have been

established and the moving party is entitled to judgment as a

matter of law" (citation omitted).      Casseus v. Eastern Bus Co.,

478 Mass. 786, 792 (2018).      "The moving party bears the burden

of affirmatively demonstrating the absence of a triable issue."

Milliken & Co. v. Duro Textiles, LLC, 451 Mass. 547, 550 n.6

(2008).   If the moving party carries its burden, to defeat

summary judgment "the party opposing the motion must respond and

allege specific facts establishing the existence of a genuine

issue of material fact."     French King Realty Inc. v. Interstate

Fire & Cas. Co., 79 Mass. App. Ct. 653, 659-660 (2011).

    1.    AFS's claims.    a.   Declaratory judgment.   AFS maintains

that MVAC did not comply with statutory bidding procedures under

the Uniform Procurement Act, G. L. c. 30B (procurement act),

because it did not follow the procedures under either § 6, which
                                                                    7

governs the acquisition of a supply or service, or § 16, which

governs the disposal of real property, or, in the alternative,

that summary judgment was inappropriate because of a material

dispute of fact as to whether the bidding process was governed

by § 6 or § 16.   The judge concluded that MVAC sought to dispose

of real property and, therefore, that § 16 of the procurement

act governed, and that, although MVAC improperly opened the bids

in private in violation of § 16 (f), under the undisputed

circumstances, failure to comply with the statute did not

require rebidding of the project nor a declaration that MVAC

violated G. L. c. 30B.   We agree and explain.

    "The procurement act is designed to prevent favoritism, to

secure honest methods of letting contracts in the public

interest, to obtain the most favorable price, and to treat all

persons equally" (quotation and citation omitted).    Marchese v.

Boston Redev. Auth., 483 Mass. 149, 158 (2019).   In the absence

of an exemption, the procurement act applies "to every contract

for the procurement of supplies, services or real property and

for disposing of supplies or real property by a governmental

body."   G. L. c. 30B, § 1 (a).   See Marchese, supra.

    The procurement act sets forth different procedures for

acquiring a supply or service and disposing of real property.

Section 6 governs competitive sealed proposals for procurement

contracts –- meaning contracts to acquire a supply or service --
                                                                       8

over a specified dollar amount.4    See G. L. c. 30B, § 2 (defining

procurement as "acquiring a supply or service").     Under § 6, the

governmental body's chief procurement officer must determine "in

writing that selection of the most advantageous offer requires

comparative judgments of factors in addition to price."5      G. L.

c. 30B, § 6 (a).   The RFP must specify the criteria that will be

used to evaluate the proposals, the chief procurement officer

must designate individuals to evaluate the proposals based on

those criteria, and the evaluations must give a rating of highly

advantageous, advantageous, not advantageous, or unacceptable

for each criterion.   See G. L. c. 30B, § 6 (b) (2), (e) (1).     As

relevant here, under § 6, "[t]he chief procurement officer shall

not open the proposals publicly."    G. L. c. 30B, § 6 (d).

Section 16 governs when a governmental body authorized to do so

"determines that it shall rent, convey, or otherwise dispose of

real property."    G. L. c. 30B, § 16 (a).   Section 16, unlike

     4 When MVAC issued the RFP, § 6 governed competitive sealed
proposals for procurement contracts in the amount of more than
$50,000. The section has since been amended, effective November
24, 2022, to specify that, where municipal and regional school
districts are concerned, the procurement contract must be more
than $100,000. See St. 2022, c. 198, § 4.

     5 If selection of the most advantageous offer does not
require comparative judgments of factors in addition to price,
§ 5 of the procurement act sets forth alternative competitive
sealed bidding procedures for procurement contracts. There is
no argument that MVAC should have followed the procedures set
forth in § 5.
                                                                     9

§ 6, does not specify how proposals shall be evaluated but does

require that they be opened in public.   See G. L. c. 30B,

§ 16 (f).

     To determine whether § 6 or § 16 applied, "we examine the

character of the RFP" (quotation and citation omitted).    Andrews

v. Springfield, 75 Mass. App. Ct. 678, 683 (2009).   Here, the

RFP sought bids "for the disposition by lease of 36,206 square

feet of property," and provided that "[t]he successful Proposer

will have the opportunity to either negotiate a separate

agreement for the purchase of the existing facilities with the

current tenant/master lease holder or have MVAC exercise its

rights to have the facilities removed" before taking possession.

Although the RFP noted that "an existing gas station, auto

service facility, and car wash [are] located on the Premises,"

it did not specify that the winning bidder had to continue in

this (or any) line of business.   A sample lease attached to the

RFP left blank a line for the property's permitted uses.     The

RFP specifically directed interested parties to the section of

the procurement act that governs the renting of real property,

§ 16.6   We conclude that because the RFP involved the renting of

     6 AFS's counsel was permitted to review the RFP before its
issuance and raised no questions or objections to this reference
to § 16, rather than § 6.
                                                                  10

real property, MVAC had to follow the procedures set forth in

§ 16.7   Contrast Andrews, supra.8

     Because we conclude that § 16 governed, we next address

AFS's argument that MVAC's opening of the proposals in private,

instead of in public as § 16 requires, was fatal to MVAC's bid

decision.   "The general rule in this Commonwealth is that

failure to adhere to statutory bidding requirements makes void a

contract entered into without such compliance."   Phipps Prods.

     7 AFS's argument that § 6 applies focuses on the RFP's
statement that MVAC would evaluate responsive proposals using
"comparative criteria," the language of § 6. While it is true
that the RFP imported language from § 6, the process under § 16
does not appear inconsistent with using such criteria. Where
the RFP itself referred to § 16, we decline to rule that
including the language from § 6 transformed the nature of this
bid. AFS also argues that MVAC should have followed the
procedures set forth in both § 6 and § 16. We find that
argument unavailing, as some of those procedures are inherently
inconsistent with each other. For example, § 6 (d) requires
that proposals be opened in private, whereas § 16 (f) requires
that proposals be opened in public. The cases cited by AFS in
support of this proposition do not persuade us otherwise, as
they involved situations in which it was held that the
governmental bodies were not leasing land. See, e.g., Brasi
Dev. Corp. v. Attorney Gen., 456 Mass. 684, 685 (2010) (lease
agreement was for construction and maintenance of student
dormitory); Andrews, 75 Mass. App. Ct. at 679.

     8 In Andrews, 75 Mass. App. Ct. at 679, the city of
Springfield entered into an agreement with Monarch Enterprises,
LLC (Monarch), whereby Monarch agreed to build a regional animal
control center which Springfield would lease for up to twenty-
five years. Where the RFP included detailed specifications for
the construction of the center, we concluded that the underlying
RFP, "while styled as a lease, was in reality a construction
project subject to the bidding procedures set forth in [G. L.]
c. 149." Andrews, supra. Here, in contrast, the RFP did not
prescribe any particular use for the land.
                                                                     11

Corp. v. Massachusetts Bay Transp. Auth., 387 Mass. 687, 691

(1982).      In some cases, however, even in the absence of strict

compliance with bidding requirements, a bid or contract may be

allowed to stand; "[t]he question is whether invalidation is

necessary in order to fulfill the legislative purpose."        Id. at

692.       Here, it is not.   The opening of the bids in private

appears to have been an honest mistake,9 and it is undisputed

that no one tampered with the proposals.       In the absence of any

dispute that the nonpublic opening of the bids altered the bids,

or the process, or the outcome, we see the violation here as

"technical rather than substantive," a "minor deviation not

requiring invalidation of" the contract.       Id.   We conclude that,

in these circumstances, no purpose would be served by

invalidating the bid decision on the basis that the proposals

were opened in private.10

       b.    Implied covenant of good faith and fair dealing and

violation of G. L. c. 93A.       AFS argues that, by failing to

follow the procedure set out in § 6 of the procurement act when

       The MVAC employee who opened the proposals stated under
       9

oath that she "was unaware that bids for real estate, as opposed
to competitive sealed proposals for goods or services, were
required to be opened in public."

       The cases on which AFS relies are inapposite as they
       10

involved substantive violations. See, e.g., Majestic Radiator
Enclosure Co. v. County Comm'rs of Middlesex, 397 Mass. 1002,
1003 (1986) (plaintiffs did not follow bidding procedures "in
any respect").
                                                                   12

considering the advertised comparative criteria, MVAC

manipulated the bidding process to remove AFS from the property,

thus committing a breach of the implied covenant of good faith

and fair dealing or violating G. L. c. 93A.   In support of this

argument, AFS cites evidence showing that MVAC's chair disliked

AFS's owner and that, after awarding the bid to Depot Corner,

MVAC agreed to lease terms that "erase[d] many of the perceived

advantages" of the Depot Corner bid.   AFS maintains that this

evidence, if proved, would support a finding that MVAC's failure

to follow the appropriate bidding procedures was evidence of

MVAC's efforts to manipulate the bidding process.   Even were we

to accept these claims as true, they relate to the bidding

process, which we have concluded was acceptable, although MVAC's

actions, including its opening of the proposals in private, are

not beyond reproach.   Given our conclusion that MVAC's RFP was

governed by § 16, and that the opening of the bids in private

did not require invalidating the bid decision, these claims were

properly dismissed on summary judgment.11

     2.   MVAC's counterclaims and third-party claim.   a.   Breach

of lease and guarantee.   The parties agreed that the ruling in

the summary process action resolved the claim for breach of the

     11Because we conclude that any potential claim under G. L.
c. 93A was extinguished by our ruling on the procurement act
claim, we need not reach the issue whether MVAC, as a government
actor, could properly be the subject of an action under c. 93A.
                                                                    13

lease but disagreed on the legal consequences.    AFS contended

that, because the summary process judge had not awarded damages,

no damages could be awarded in this action.     MVAC asserted that

the summary process ruling in its favor entitled it to damages.

We agree with MVAC that it may seek damages.     The District Court

judge who decided the summary process action explicitly reserved

for this action the question of MVAC's damages.     We therefore

remand that claim for entry of a judgment of liability and a

hearing on damages, if any, as it is not clear on the record

before us whether any remain outstanding; the record establishes

that AFS made a payment to MVAC for its holdover period, but the

parties disagree as to whether this was "rent,"12 and AFS removed

its improvements before the court-ordered deadline of July 31,

2017.     As to MVAC's guarantee claim, it was not addressed in the

summary process action and MVAC acknowledges that Kheary has

affirmative defenses on which there are genuine issues of

material fact, so that claim is remanded for trial.13

     b.    Violation of G. L. c. 93A.   The judge dismissed MVAC's

G. L. c. 93A claim because it was "derivative of the barred

breach of contract claim and therefore cannot stand."     For the

     12By "damages," we mean breach of contract damages; we do
not mean disgorgement of profits, which MVAC seeks in its unjust
enrichment claim, but not its contract claim.

     13   Kheary has not filed an appellate brief in this matter.
                                                                   14

reasons discussed above, dismissal of the breach of contract

claim was error.   However, both AFS and MVAC maintain that there

are no genuine issues of material fact, and that we may resolve

the c. 93A claim on the summary judgment record.    While we are

sympathetic to the parties' mutual desire to end the matter, we

conclude that there are genuine issues of material fact, as the

summary judgment record leaves open the possibility that AFS may

have engaged in unfair or deceptive acts or practices in

violation of G. L. c. 93A.

    Although "the mere breach of a contract, without more, does

not amount to a c. 93A violation," Madan v. Royal Indem. Co., 26

Mass. App. Ct. 756, 762 (1989), "conduct 'in disregard of known

contractual arrangements' and intended to secure benefits for

the breaching party constitutes an unfair act or practice for c.

93A purposes," Anthony's Pier Four, Inc. v. HBC Assocs., 411

Mass. 451, 474 (1991), quoting Wang Labs., Inc. v. Business

Incentives, Inc., 398 Mass. 854, 857 (1986).   A breaching

party's conduct rises to the level of a c. 93A violation if the

breach was used "as a lever to obtain advantage for the party

committing the breach in relation to the other party; i.e., the

breach of contract has an extortionate quality that gives it the

rancid flavor of unfairness."    Atkinson v. Rosenthal, 33 Mass.

App. Ct. 219, 226 (1992).    On the other hand, a deliberate
                                                                   15

breach committed "for reasons of self-interest, does not present

an occasion for invocation of c. 93A remedies."    Id.

     On the summary judgment record before us, there are genuine

issues of material fact regarding AFS's liability.    One could

infer that AFS remained on the property because it believed, in

good faith, that MVAC's bid decision was invalid where MVAC

engaged in a flawed bidding process.14   Or one could infer that

AFS remained on the property and filed suit to pressure MVAC to

withdraw its bid decision, or to obtain an advantage from MVAC,

or for reasons of self-interest (for example, to exploit the

opportunities of the busy summer season).    We cannot say, as a

matter of law, whether either of these propositions is true.       In

sum, MVAC's c. 93A claim presents questions of fact that cannot

be resolved on this record.    Thus, we remand the claim for

trial.

     c.   Unjust enrichment.   The judge ruled in favor of AFS on

MVAC's unjust enrichment claim, reasoning that the relationship

     14Assuming that AFS knew it had to vacate the property, the
summary judgment record also leaves open the question whether
AFS was dilatory in doing so. MVAC notified AFS on March 9,
2017, that it had until May 15, 2017, to sell its improvements
to Depot Corner or to remove them. The summary process judge
found that AFS began to prepare for the removal of its equipment
by seeking the necessary permits and contracts in April 2017,
presumably after it became apparent that AFS and Depot Corner
would not reach mutually agreeable terms. Based on the record
and argument before us, we cannot determine whether the May 15,
2017 deadline gave AFS sufficient time to remove its
improvements.
                                                                   16

between AFS and MVAC was controlled by a contract, so recovery

in quantum meruit was not available.    MVAC maintains that this

was error because its unjust enrichment claim related to the

time after AFS's lease had expired, when there was no contract.

MVAC acknowledges that it may recover only once for lost rent,

and seeks disgorgement of profits, an equitable remedy, for

AFS's claimed unjust enrichment at MVAC's expense.15    We conclude

that the disgorgement of AFS's profits to MVAC would not be fair

or just, and we affirm the dismissal of MVAC's unjust enrichment

claim on that alternative basis.

     Where a tenant becomes a tenant at sufferance, we have held

that the proper measure of damages is the current fair rental

value of the premises, absent a provision in the lease requiring

lease payments beyond the lease term.   See Kobayashi v. Orion

Ventures, Inc., 42 Mass. App. Ct. 492, 502 (1997).     See also

G. L. c. 186, § 3.   MVAC does not address this rule directly but

argues that, in addition to lost rent damages, AFS's profits

should have been disgorged because AFS was a conscious wrongdoer

who "ma[d]e profitable, unauthorized use of [MVAC's] property."

Restatement (Third) of Restitution and Unjust Enrichment § 3

     15As noted, we have reservations that the summary judgment
record establishes, as a matter of law, that AFS was a conscious
wrongdoer, but for purposes of addressing MVAC's unjust
enrichment claim, we may assume that AFS knew it had to vacate
the property and chose not to do so.
                                                                 17

comment c (2011).    MVAC reasons that if AFS only had to pay "the

objective value of the assets taken or the harm inflicted, the

anomalous result would be to legitimate a kind of private

eminent domain (in favor of a wrongdoer)."    Id.

     We are not persuaded.    First, this is not a case where AFS

earned its profits through the unauthorized use of MVAC's

property alone.     AFS, at its own expense, permissibly built the

improvements on the property, and those improvements were

necessary to the earning of the profits.    Second, this is not a

case where MVAC was the only one with an interest in the

property.   MVAC agreed to lease the property to Depot Corner,

and AFS's refusal to vacate the property therefore interfered

with Depot Corner's ability to earn profits, not MVAC's ability

to earn profits.16    Disgorgement of profits is an equitable

remedy, equitable remedies are tools to be applied with a "focus

on fairness and justice," Demoulas v. Demoulas, 428 Mass. 555,

580 (1998), and we conclude that it would not be fair or just to

require AFS to disgorge its profits to MVAC where (1) MVAC did

not contribute to the necessary improvements, (2) to the extent

AFS's profits should have been disgorged, another entity had a

better claim to the money, and (3) MVAC undisputedly did not

     16Indeed, Depot Corner counterclaimed against AFS, also
seeking the disgorgement of AFS's profits, but no longer pursues
those claims. See note 2, supra.
                                                                  18

follow the correct procedure for opening bids, opening the

question of whether the bid process needed to be redone.17

     3.   Conclusion.   We vacate so much of the judgment as

dismissed MVAC's breach of contract claim and remand that claim

for entry of a judgment of liability in MVAC's favor and further

proceedings regarding damages.    We also vacate so much of the

judgment as dismissed MVAC's guarantee and c. 93A claims, and

those claims are remanded for trial.   In all other respects, the

judgment is affirmed.

                                     So ordered.

     17Notably, MVAC has not brought to our attention –- nor
have we found -- any case where a landlord awarded a commercial
lease to a new tenant over a current tenant, the current tenant
refused to vacate the property, and profits earned during the
tenancy at sufferance were disgorged to the landlord on an
unjust enrichment theory.