Kunelius v. Town of Stow

United States Court of Appeals
For the First Circuit

No. 08-2393

MARILYN KUNELIUS,

Plaintiff, Appellant,

v.

TOWN OF STOW; THE TRUST FOR PUBLIC LAND;
CRAIG A. MACDONNELL, in his individual capacity,

Defendants, Appellees,

A PARTNERSHIP OF UNKNOWN NAME BETWEEN
TOWN OF STOW AND THE TRUST FOR PUBLIC LAND,

Defendant.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. George A. O'Toole, Jr., U.S. District Judge]

Before

Torruella, Lipez and Howard,
Circuit Judges.

Michael C. McLaughlin for appellant.
Richard A. Oetheimer, with whom Dahlia S. Fetouh and Goodwin
Procter LLP, were on brief, for appellees The Trust for Public Land
and Craig A. MacDonnell.
Deborah I. Ecker, with whom Deidre Brennan Regan and Brody,
Hardoon, Perkins & Kesten, LLP, were on brief for appellee Town of
Stow.

November 9, 2009
 HOWARD, Circuit Judge. Similar to other states,

Massachusetts provides tax relief to landowners of agricultural,

horticultural or forest land. When such land is converted to other

uses, the Commonwealth requires landowners to compensate their

respective municipalities. The compensation may be take the form

of, for example, payment of a conveyance tax when the land is sold,

or payment of roll-back taxes if the land otherwise ceases to

qualify for preferential tax treatment. In addition to these tax

features, Massachusetts law also provides that once a landowner

decides to sell the land for other than agricultural,

horticultural, or as relevant here, forest uses, the municipality

is entitled to a right of first refusal ("ROFR"). Mass. Gen. Laws

ch. 61. This ROFR provides the municipality with a 120-day period

in which to meet a bona fide offer to purchase the land. The

municipality thus has the right but not the obligation to preserve

salutary land uses by purchasing land that the landowner desires to

sell, and the landowner receives the compensation that a willing

buyer in an arm's-length transaction is prepared to pay.

In this case, plaintiff-appellant Marilyn Kunelius

accepted a bona fide offer to purchase a parcel of land, which

included acreage that had been certified under Mass. Gen. Laws ch.

61 as forest land. Pursuant to the statute, the Town of Stow chose

to exercise its ROFR. In addition, the Town assigned this right,

as also permitted by the statute, to the Trust for Public Land

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("TPL" or "Trust"), a nonprofit conservation organization. From

the beginning, it was clear that a number of circumstances had to

align in a precise constellation for the Trust and the Town to

consummate the transaction. Despite potential difficulties with

the transaction, the Town and TPL nevertheless went through with

the assignment of the ROFR. The Trust's optimistic hopes for

obtaining private philanthropy, state grants, and local zoning

relief, however, were not fulfilled. As a result, the Town and the

Trust failed to complete the transaction. In the interim,

Kunelius's previous buyer chose to develop other land.

Conceding that it had breached its obligations under its

contract with Kunelius, the Trust paid liquidated damages in the

amount specified in the purchase and sale contract that had been

negotiated between Kunelius and her original buyer. Kunelius,

however, believing that she was entitled to significantly more,

brought suit in the district court. The complaint sought several

species of relief, including the invalidation of the liquidated

damages clause, specific performance or full contract damages,

remedies for the Town and Trust's breach of the covenant of good

faith and fair dealing, relief under the business-to-business

provisions of Chapter 93A, and relief under the Contracts Clause of

the United States Constitution. On cross-motions for summary

judgment, the district court granted summary judgment to all of the

defendants: the Town, the Trust, an alleged partnership between

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the Town and Trust, and Trust employee Craig MacDonnell. Kunelius

now appeals.

I. Background

By and large, the facts are not in dispute, but to the

extent that they are, we recite them in the light most favorable to

the non-moving party, here, the appellant. See Essex Ins. Co. v.

BloomSouth Flooring Corp., 562 F.3d 399, 401 (1st Cir. 2009);

CoxCom, Inc. v. Chaffee, 536 F.3d 101, 108 (1st Cir. 2008).

A. The Original Transaction

Beginning in 2001, Kunelius sought to sell her horse farm

located at 142 and 144 Red Acre Road in Stow, Massachusetts. The

land abuts two conservation areas, the Red Acre Woods conservation

area and the Captain Sargent conservation area, and it sits atop

the Town's largest aquifer. The total land area of this parcel is

approximately 50.67 acres, 42.1 acres of which had been designated

as forest land since 1985, pursuant to Mass. Gen. Laws ch. 61 § 2.

Upon the remainder of the parcel (approximately 8.57 acres) sit a

main house and a caretaker's house, as well as the accouterments of

a horse farm, including a paddock, barn, and other improvements.

In mid-2002, Kunelius entered into negotiations with

Cohousing Resources LLC ("Cohousing"), a consulting company based

in the state of Washington that assists local communities in

forming and developing co-housing projects. Co-housing projects

like the one Cohousing contemplated here place an emphasis on open

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space and communal living. Because Cohousing requires the groups

on whose behalf it undertakes development to commit to a certain

threshold level of funding before Cohousing becomes involved,

Cohousing's projects have a relatively high probability of coming

to fruition. Through extensive negotiation and personal contact,

Kunelius, her attorney and her real estate agent came to trust

Cohousing and its principal representative, Chris ScottHansen. As

a result, Kunelius was comfortable offering terms to Cohousing that

she may not have offered to another counterparty.

Cohousing's initial offer was for a purchase price of

$1.1 million, with a deposit of $50,000 to be held in escrow

pending closing. In this first signed offer, the only contingency

was an evaluation of the property's suitability for the eventual

construction of a thirty-unit development. The offer contained a

provision that permitted the seller to select from a range of

remedies in the event of the buyer's breach:

Upon default by Buyer, Seller, at its sole
option, may (i) retain the deposit as
liquidated damages as its sole remedy, or (ii)
repay the deposit to the Buyer and
subsequently enforce this Agreement and pursue
any and all remedies available at law or
equity, including an action for specific
performance and damages.

This offer was not accepted, and negotiations continued.

Cohousing's next offer was for the same purchase price, but

contemplated that Kunelius would provide substantial seller

financing. In addition, the deposit amount was reduced to only

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$10,000 up front and a payment of $1,500 per month thereafter. The

record suggests that the monthly payment was to replace Kunelius's

horse farm income, because her customers would likely look

elsewhere to board their horses. After a period for the

feasibility study, Kunelius was free to make use of the deposits.

This revised offer also specifically contemplated the

probability that Cohousing would file an application for relief

from local zoning requirements, invoking the streamlined approval

process for affordable housing set forth in Chapter 40B of the

Massachusetts General Laws. See Mass. Gen. Laws ch. 40B §§ 20-23.

In view of the anticipated approval process, the time for closing

on this offer was approximately two years.

At Kunelius's request, this revised offer, although

written to include all of her property, contemplated the

possibility that "a significant portion of the undeveloped

land . . . not to exceed 42 acres may be encumbered by or deeded to

the Town of Stow," and that this encumbrance or transfer was to

occur after all 40B approvals had been made and before closing.

The upshot of this feature was to allow Kunelius to receive any tax

credit for the transfer or encumbrance.1 Finally, the liquidated

1
The record reflects that Kunelius intended to donate the 42.1
acres of forest land to the Town. We need not speculate about her
reasons for structuring her affairs in the way that she did, rather
than attempting to sell only the 8.57 acres in a transaction
separate from the contemplated land donation. See Mass. Gen. Laws
ch. 61 § 8 (2001) (providing that only land taxed under Chapter 61
is subject to the right of first refusal); see also Town of Sudbury

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damages provision in Cohousing's revised offer remained the same as

in the prior offer.

Although Kunelius did not accept the second offer,

negotiations continued, and the parties eventually reached an

agreement. The terms of the contract, which was drafted by

Kunelius's attorney, diverged in several ways from previous offers.

The slightly increased purchase price was to be paid in the same

fashion as before, with Kunelius holding a note for a portion of

the price. The time for performance was set at September 26, 2003,

although Cohousing had the opportunity to extend this period for a

year if "the Chap. 40B approval process is proceeding forward."

Among other changes were the inclusion of at least two

references to the possibility of the Town exercising its ROFR. One

provision stated flatly that "[i]n the event that the Town of Stow

exercises its right of first refusal pursuant to Mass. Gen. Laws

ch. 61, all monies deposited hereunder shall be forthwith returned

to BUYER without further recourse by either party in equity or

law." Another change involved a clarification of Kunelius's right

to transfer that portion of her land classified as forest land:

after the 40B development was approved and the seller received all

v. Scott, 787 N.E.2d 536, 542 & n.11 (Mass. 2003) (clarifying that
Mass. Gen. Laws ch. 61A § 17 should be interpreted to allow "the
municipality to exercise its first refusal rights as to the portion
of the land that is to be separated from the remainder, when sold
or converted, as set forth in [Mass. Gen. Laws ch. 61A § 14], while
the remainder of the land may remain in c. 61A"(emphasis added)).

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"purchase monies," the seller would transfer "all right, title, and

interest in the said 42.1 acre parcel currently under [sic.] Mass.

Gen. Laws ch. 61, as a charitable contribution."

For purposes of this action, however, the most important

change between the prior offers and the signed contract was the

clause specifying the remedies available to the seller in the event

of the buyer's breach. The revised clause reads:

If BUYER shall fail to fulfill the BUYER'S
agreements herein, all deposits made hereunder
by the BUYER shall be retained by the SELLER
as liquidated damages and this shall
constitute SELLER'S sole remedy in equity and
law.

Both Kunelius and Cohousing signed this agreement sometime in

October of 2002.

B. The Town Assigns Its ROFR to TPL

Within days of signing her agreement with Cohousing,

Kunelius provided notice to the Town, and other parties required to

be notified by statute, of her intent to sell all of her 50.67

acres. Spearheaded by a group known as the Friends of Red Acre

("FORA"), which included many of Kunelius's immediate neighbors on

Red Acre Road, opposition to the proposed co-housing development

sprouted quickly. This opposition eventually focused on alleged

excess costs the Town would have to bear as the result of the co-

housing development. Urging that the Town exercise its ROFR was

one of the principal arrows in the opposition's quiver.

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 By December 2002, FORA proposed an alternative to the

Cohousing's proposed development. The FORA plan provided that the

Town would contribute $100,000 from Community Preservation Act

funds and $300,000 from general town funds, as well as assign its

ROFR to a non-profit conservation group. Additional funds would be

raised by selling both homes on the property as affordable housing,

and selling the horse farm operations to Eye of the Storm, a non-

profit equine rescue organization. (These proposed sales

contemplated relief from various zoning regulations). All of the

remaining purchase price funding was to come through private

donations.

The Trust for Public Land was identified as the non-

profit conservation organization most likely to accept assignment

of the Town's ROFR. TPL expressed a strong interest in accepting

the assignment, but only if certain conditions were met. Those

conditions included the Town's appropriating $400,000 to support

the project, FORA and others raising the $22,000 in required

deposits under Kunelius's contract with Cohousing, TPL determining

that the project was feasible, and its governing board approving

the assignment. On January 13, 2003, the Town decided to borrow

and appropriate $305,000 from its general funds to support the

Town's exercise of the ROFR. (The remaining $95,000 was to come

from Community Preservation Act funds). But because the Town

wished to exempt the borrowing from the limitations of Proposition

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2 ½, see Mass. Gen. Laws ch. 59 § 21C, the vote was tentative,

pending confirmation in a Special Town Election. By a vote of 515

to 355, however, Stow voters declined to approve the project.

Undaunted, FORA and the Trust pushed ahead and convinced

the Town to extend consideration of the ROFR to the full 120-day

period specified in the statute. During that time, Craig

McDonnell, the TPL project manager for this transaction, prepared

a lengthy "Project Fact Sheet" to brief TPL's governing board on

the project and assist the board in arriving at a decision about

how to proceed. In this document, McDonnell explained that

Kunelius was planning to deed most of forest acres to the Town free

of charge, but that TPL's involvement in the project would result

in the conservation of three additional acres and provide the Town

access to a pond on the 8.57 acres that Cohousing was planning to

develop for fire suppression purposes.

As to the financing and risks of the proposal, McDonnell

noted that with the failure of the appropriation, TPL would have to

accept the assignment before the Town could replace the defeated

$300,000 appropriation with additional Community Preservation Act

funds, but that this risk was mitigated by the fact that he

believed that TPL's exposure was limited to liquidated damages in

the amount of $22,000, as provided in the contract between Kunelius

and Cohousing. (Concomitantly, with this candid private assessment

of TPL's obligations and exposure with respect to this transaction,

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McDonnell publicly made disparaging statements about developers and

touted TPL's commitment to complete the transaction and make

Kunelius "whole.") McDonnell further noted that Kunelius was upset

at the prospect of the Town assigning its ROFR to the Trust. He

suggested, however, that the litigation risk was "minimal" due to

the clarity of the liquidated damages clause, and he predicted that

the Trust would prevail on summary judgment after minimal discovery

in any suit brought by Kunelius. Eventually, TPL's governing board

approved the acceptance of the assignment, but the board

nonetheless withheld authority for TPL to close on the transaction.

Armed with this limited authority, McDonnell went ahead

with efforts to acquire an assignment of the ROFR. Without

disclosing to the Town the constraints placed on TPL, McDonnell

negotiated with the Town's Board of Selectmen regarding the terms

under which TPL would accept the assignment. By and large, the

negotiations did not reflect significant disagreement between the

Town and TPL, although TPL refused to indemnify the Town for

potential damages or defense costs in the event of potential

litigation. TPL did acknowledge that "the decided cases under

Chapter 61 do not explicitly resolve all of the potential issues

that arise when a municipality assigns its right of first refusal

to a nonprofit conservation organization, including which terms of

the underlying contract should obligate the assignee."

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 At a Board of Selectmen meeting on February 11, 2003,2

days before the Town's ROFR was scheduled to lapse, the Town

assigned the ROFR to the Trust on the terms described above. At

the meeting, McDonnell gave a presentation describing the benefits

of the transaction and urged approval of the assignment, but

McDonnell did not disclose the conditions that the Trust's

governing board placed on its acceptance of the assignment. By a

vote of three to one, the Town's Board of Selectmen voted to assign

the ROFR to the Trust, which the Trust accepted in writing the next

day. In due course, Kunelius was provided with written notice that

the Town had assigned the ROFR to the Trust, which provided notice

of its acceptance.

C. The Transaction Sours

About a month later, by March 19, 2003, McDonnell was

singing a different tune. On that date, McDonnell wrote in

confidence to members of FORA, "I recently have spent some time

thinking through this project in detail . . . and have a realized

that a number of key assumptions about structure and timing are

unworkable." In an attached confidential memorandum, McDonnell

explained that the TPL would require $1.154 million at closing and

2
The day before, on February 10, 2009, The Stow Community
Preservation Committee, the body that administers Community
Preservation Act Funds, heard a joint FORA/TPL plea to use funds to
support the Trust's planned exercise of the ROFR. The Committee
voted to recommend that the Town approve the necessary expenditures
at the Town's annual meeting in May 2009.

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proposed relying on Eye of the Storm, a fledgling non-profit with

little infrastructure, to raise $400,000 either through fundraising

or a loan secured by its interest in 144 Red Acre Road before

closing. In addition, McDonnell contemplated raising $450,000

through private philanthropy prior to closing.

FORA agreed with these observations but concluded that

McDonnell's proposed fund raising timetable was overly optimistic

and urged the Trust to close with borrowed funds. To that end,

FORA arranged for a line of credit for the Trust.

McDonnell replied with another confidential memorandum

dated March 27, after the assignment but before the Town provided

any funds. In this memorandum, for the first time, McDonnell

disclosed to FORA that "TPL's national board has given only a

tentative approval to this excellent adventure we are undertaking

together. . . . We have not received the go-ahead to actually

purchase the property. Our board is awaiting progress on both the

political and fundraising fronts. Unless we secure approval at the

May town meeting and make substantial progress on the remaining

finances, I do not believe we will get national approval for this

project."3 Although McDonnell did not foreclose the possibility of

TPL's obtaining "conservation financing," he made clear that it

3
There is no indication in the record that these limitations
on TPL's authority were disclosed to Kunelius or the Town at this
time.

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would have to be limited to $600,000, the combined value of the

main house and the horse farm/caretaker's house.4

Despite these doubts with respect to the financing of the

project, the Trust, FORA, and the Town pressed onward. The Trust

and the Town applied for state aid to rehabilitate the two homes on

the Kunelius property, and prepared for the Town meeting, which was

to confirm the Town's contribution of Community Preservation Act

funds. At the meeting, the funds were approved, but this approval

marked the high-water mark of the potential transaction.

Soon thereafter, in mid-June 2003, although contrary

indications were evident even before the Trust accepted the ROFR,

it became clearer that the Trust's plan of dividing the parcel in

order to sell the two homes on the Kunelius property was unlikely

to fare well in the zoning process. In another blow to the

project, in early July 2003, the State Department of Housing and

Community Development denied the grant application to renovate the

two houses on the property. The combination of these body blows

forced the Trust to ramp up planning for abandoning the

transaction, and to that end, McDonnell wrote to TPL colleagues "I

think the most important thing about the 'exit strategy' is not to

4
In April 2003, McDonnell represented to the Massachusetts
Department of Housing and Community Development that TPL had access
to a six million dollar line of credit from a bank and would
consider using this resource, even though internal TPL discussions
suggested that TPL's governing board was unlikely to approve the
use of financing in this project.

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be seen as TPL pulling the plug, but for a consensus to emerge from

all that the project has now got some fatal flaws . . . ."

The prediction of fatal flaws proved prescient, though

some of them were of TPL's own making. Peter Christiansen, a

leader of FORA, wrote that McDonnell's conduct led him to "feel

raped," and that McDonnell had told him that TPL would neither

engage in any fundraising nor supply any fundraising prospects.

Christiansen further claimed that the Trust solicited leads that

FORA members had identified for funding of other projects. This

alleged poaching, combined with TPL's threats to pull out of the

purchase altogether, made it difficult for FORA members to harness

their relationships with potential donors. Once it appeared likely

that TPL would withdraw from the transaction, that appearance would

bode ill for FORA-members' relationships with repeat players in the

conservation world.

By July 31, 2003, the Trust informed FORA that it was

"not particularly sanguine" that the transaction could close.

Indeed, TPL unequivocally stated that only price concessions from

Kunelius, who was forced to deal with TPL by virtue of the ROFR,

could save the transaction.5 TPL then requested $350,000 in price

concessions from Kunelius, which she refused. Although TPL and

FORA continued to trade arguments about the feasibility of

5
At this time, TPL received discouraging news on the zoning
front: outside counsel advised TPL that approval of the variances
was extremely unlikely.

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financing, the project was effectively dead. TPL unilaterally

withdrew its application for a zoning variance on September 25,

2003, and did not close on September 26, 2003.

D. Proceedings Below

Although further discussions occurred between TPL and

Kunelius (sometimes with the facilitation of Town officials),

resolution proved elusive. Kunelius filed the present suit against

the Town, the Trust, an alleged partnership between the Town and

Trust, and McDonnell in his individual capacity.6

After preliminary skirmishing, including the dismissal of one count

not at issue here, and after the conclusion of discovery, the

district court granted summary judgment to all defendants.7 This

appeal timely followed.

II. Discussion

We review summary judgment rulings de novo, and the

presence of cross-motions for summary judgment does not alter or

6
On appeal, Kunelius has not advanced any developed argument
in support of her claims against McDonnell in his personal
capacity, and therefore those arguments have been waived. Pomales
v. Celulares Telefonica, Inc., 447 F.3d 79, 85 n.4 (1st Cir. 2006)
7
We note that during the pendency of discovery, all defendants
jointly filed a motion to certify a central question of this suit
to the Massachusetts Supreme Judicial Court. The defendants argued
that "there is no controlling precedent in the decisions of the SJC
or the Massachusetts Appeals Court" regarding whether a liquidated
damages clause negotiated between the owner of Chapter 61 lands and
a willing buyer should, by operation of law, become a provision
that is applicable to a municipality or non-profit conservation
organization exercising an ROFR. This motion was eventually
withdrawn, subject to renewal.

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dilute this standard. Desrosiers v. Hartford Life and Accident

Ins. Co., 515 F.3d 87, 92 (1st Cir. 2008). We will affirm entry of

summary judgment if the record -- viewed in the light most

favorable to the nonmoving party, including all reasonable

inferences drawn in favor of the nonmoving party -- discloses no

genuine issue of material fact, and the moving party is entitled to

judgment as a matter of law. Arroyo-Audifred v. Verizon Wireless,

Inc., 527 F.3d 215, 218 (1st Cir. 2008).

We apply the substantive law of the forum state, here

Massachusetts, to claims invoking the court's diversity

jurisdiction, see Citibank Global Mkts., Inc. v. Rodriguez-Santana,

573 F.3d 17, 23 (1st Cir. 2009) (citing Erie R.R. Co. v. Tompkins,

304 U.S. 64, 78 (1938)), but we of course apply federal law to the

federal claims. Where no authoritative decision from the state

court of last resort resolves an issue of state substantive law, we

must predict, as best as we can, that court's resolution of the

issue before us. Essex Ins. Co., 562 F.3d at 404 (citation

omitted). Although we have no single Polaris to guide our

prediction of the state court's resolution of such questions, we

rely on analogous cases decided in the forum state, persuasive

reasoning in cases from other states, and other secondary sources,

such as Restatements and treatises. Id. (citing Trans-Spec Truck

Serv. v. Caterpillar Inc., 524 F.3d 315, 323 (1st Cir.), cert.

denied, 129 S. Ct. 500 (2008)).

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 We will first discuss the appellant's claims that the

original contract's liquidated damages provision does not apply to

the Town or to TPL, and that the liquidated damages clause is in

any event invalid. After that, we will address the Chapter 93A

claim, the claim based on the covenant of good faith and fair

dealing. Finally, we will briefly discuss Kunelius's remaining

claims.

A. Applicability of the Liquidated Damages Clause to the Town
and Trust

We begin with the question of whether the liquidated

damages clause in Kunelius's contract with Cohousing is a term that

inures to the benefit of the Trust and the Town. The district

court noted that all parties agree that TPL breached the purchase

and sale contract, but they disagree as to the proper remedy.

Kunelius sought specific performance or full benefit-of-the-bargain

damages, while the Trust claimed that Kunelius's remedy for breach

was limited to the $19,000 in deposits and monthly payments that it

had already paid and Kunelius has retained.

The district court observed, as the parties had, that it

is unclear whether Massachusetts courts would find that an exercise

of an ROFR requires the purchaser to "literally meet every last

detail of the prior offer or only the essential terms, such as, for

instance, the identity of the subject property, the price, the time

for performance and the like, but not subsidiary agreements, such

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as, for instance, mortgage contingencies, rights to inspect . . .

or pertinent to this controversy, provisions regarding remedies for

breach." Kunelius v. Town of Stow, No. 05-11697-GAO, 2008 WL

4372752 at *2 (D. Mass. Sept. 23, 2008) (footnote omitted). The

district court determined that it did not need to answer this

question because the parties agreed that the purchase and sale

agreement "set[] forth the terms of their contract." As evidence

of this agreement on the part of plaintiff, the district court

cited paragraph 58 of her complaint which states, "The P & S is a

valid and enforceable contract between Kunelius and Stow and TPL."

Id.

Unlike the district court, we are not persuaded that

Kunelius has admitted that the liquidated damages provision applied

to the Town and the Trust. Paragraph 55 of her complaint

specifically states that "The obligations of Stow and TPL under

Mass. Gen. Laws ch. 61 could not be avoided by relying on the

liquidated damage[s] clause . . . since such liquidated damage[s]

clause . . . was applicable only to Cohousing since it sought

certain permits and approvals in connection with its [Chapter] 40B

. . . Development." (emphasis added). In light of this paragraph,

we think that the complaint is best read as asserting that the Town

and the Trust's joint exercise of the ROFR, by operation of law,

obliged them to purchase the property identified in the contract at

the price stated.

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 The district court is, of course, correct that the Trust

has consistently taken the position that it assumed the role of

Cohousing in the contract and that the liquidated damages provision

inured to its benefit. The plaintiff, however, claims that through

her then-counsel, she communicated to the Town attorney her belief

that the liquidated damages clause did not apply to the Town and

the Trust. Moreover, the record also reveals that the Trust, in a

communication to the Town, acknowledged that the question of which

provisions of the P & S apply to the exercisor or assignee of an

ROFR under Chapter 61 remains an open question. Ultimately,

therefore, we are satisfied that the plaintiff adequately preserved

this question below, and has properly raised it on appeal.

Ordinarily, in Massachusetts "contract interpretation is

for the court, unless disputed issues of fact bear upon the

interpretation of ambiguous language." Liberty Mut. Ins. Co. v.

Greenwich Ins. Co., 417 F.3d 193, 197 (1st Cir. 2005) (citing

Fishman v. LaSalle Nat'l Bank, 247 F.3d 300, 303 (1st Cir. 2001)).

We have explained that "judges construe contracts, if only the

words need be considered, and the jury does the job under

instructions if evidentiary issues have to be resolved." Fishman,

237 F.3d at 303 (citations omitted). Here, there are no

evidentiary questions to resolve; rather, we must decide, as a

matter of law, whether the liquidated damages provision, by

operation of law, was made applicable to the Town and the Trust.

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 For the reasons that follow, we believe that the Supreme

Judicial Court ("SJC") would hold that the liquidated damages

provision inures to the benefit of the Trust and the Town.

Although there is scant case law interpreting Mass. Gen. Laws ch.

61 § 8, we may look to case law decided under the nearly

identically-worded ROFR provision of agricultural and horticultural

lands, Mass. Gen. Laws ch. 61A § 14. See Comm. v. Smith, 728

N.E.2d 272, 276 (Mass. 2000) (noting that it is most appropriate to

use construction of one statute to inform construction of another

when the two statutes relate to the same class of things or share

a similar purpose) (citation omitted).

At the time that Kunelius entered into the transaction

with Cohousing, the SJC had not decided any cases under either

statute, but that court has since decided at least two cases under

ch. 61A § 14. In Town of Sudbury v. Scott, a divided SJC, after

reviewing the various features of Chapter 61A, including the

conveyance tax, the roll-back tax, and the ROFR, held that in order

for parties to the sale of lands certified under Chapter 61A to

avoid a municipality's ROFR, the putative purchaser must not have

the intent to convert the land to non-agricultural or non-

horticultural purposes at the time of purchase. 787 N.E.2d at 544.

The court therefore vacated summary judgment in favor of the

purchaser and remanded the case for a determination of the

purchaser's intent at the time of the purchase. Id. at 546-47. In

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Town of Franklin v. Wyllie, a unanimous SJC held that a developer's

offer to purchase undeveloped land subject to Chapter 61A was bona

fide, even though the final purchase price was contingent on the

number of lots ultimately approved for development. 819 N.E.2d

943, 948 (Mass. 2005). The court went on to conclude that since

the offer was bona fide, had the Town of Franklin chosen to

exercise its ROFR it would have been obliged to determine how many

lots would be approved for development to fix the purchase price,

in order to purchase the property "on substantially the same terms

and conditions" as those struck between the non-municipal buyer and

the seller. Id. at 950 (citing Stone v. W.E. Aubuchon Co., 562

N.E.2d 852 (Mass. App. Ct. 1990)).8

8
The Massachusetts legislature has since abrogated the rule in
Wyllie, and Mass. Gen. Laws ch. 61A § 14 and C. 61 §8 now require
that in order to be "bona fide," an offer must not be "dependent on
potential changes to current zoning or conditions or contingencies
relating to the potential for or the potential extent of
subdivision of the property for residential use or the potential
for, or the potential extent of development of the property for
industrial or commercial use, made by a party unaffiliated with the
landowner for fixed consideration payable upon delivery of the
deed." St. 2006 C. 394 §§ 18, 31.
We apply the law as it was before the legislature amended it,
effective March 22, 2007. See Fleet Nat'l Bank v. Comm'r of
Revenue, 852 N.E.2d 22, 28-29 (Mass. 2007) (noting that retroactive
application of statutes adjusting substantive rights, as opposed to
remedies, is disfavored and thus the court employs a presumption
against retroactive application that it uses to resolve uncertain
cases)(citing Austin v. Boston Univ. Hosp., 363 N.E.2d 515 (Mass.
1977)); see also City of Newburyport v. Woodman, No. 309692, 2007
WL 3256964, at *3-4 (Mass. Land Ct. 2007) (noting that General
Court enacted C. 394 to overturn the decision in Wyllie, but that
this enactment was not to be applied retroactively).

-22-
 Thus, neither Scott nor Wyllie addresses the precise

question at issue here. Nevertheless, the appellees make much of

the fact that in both decisions the SJC suggested more broadly that

the statutory ROFR conferred on a municipality under C. 61A § 14

and C. 61 § 8 "ripen[s] into an option to purchase according to the

terms of the offer." Wyllie, 819 N.E.2d at 949 (citing Greenfield

Country Estates Tenants Ass'n v. Deep, 666 N.E.2d 988, 993 n.14

(Mass. 1989)); see also Wyllie, 819 N.E.2d at 949 ("There is no

indication, however, that the Legislature intended that a

municipality's 'first refusal option' to purchase would encompass

the right to purchase such land on different terms and conditions

than [those] set forth in the 'bona fide offer.'" (emphasis added)

(citing Scott, 787 N.E.2d at 544 n. 14))). From this language, the

appellees argue that they should be obliged to take on no more risk

or offer no more certainty that their transaction would close than

Cohousing offered in its bona fide offer.

The plaintiff's position is that she was able to offer a

streamlined liquidated damages clause to Cohousing because she had

established a considerable amount of mutual trust and understanding

with ScottHansen, and because she felt comfortable that Cohousing's

development was properly financed and Chapter 40B approvals would

be forthcoming. Consequently, the argument goes, it would be

grossly unfair to give the Town and the Trust these same

concessions, particularly in light of the fact that the Trust's

-23-
ability to close was tenuous from the beginning and its statements

to the contrary were disingenuous. Embedded in this argument is

the policy concern that granting municipalities and nonprofits

added leverage to disrupt transactions involving certified land

would tilt the statutory structure too far toward the municipality

and would therefore reduce the number of landowners willing to

participate in the scheme.

These arguments are not without some appeal, although the

most obvious response is that Kunelius understood herself to be

bargaining in the shadow of the Town's ROFR. She therefore also

should have understood the desirability of accounting for the fact

that any deal she struck would be available to the Town, or to any

non-profit conservation organization to which the Town might choose

to assign the lease. She may well have been able to negotiate

terms that would have better protected her in the event that less

reliable counterparties, such as the Town and the Trust, would

become parties to this transaction. Whether or not such terms

ultimately would have protected her, we must decide the case on the

facts as they are. Despite her knowledge that the ROFR lurked in

the weeds, Kunelius in fact did not include any language in the

contract to limit her risk in the event of the exercise of the

known ROFR.

In addition to Kunelius's control over the drafting of

her contract, the cases at common law (which applies to statutory

-24-
ROFRs, see Scott, 787 N.E.2d at 543 n.12), cut against her legal

position. Most common law courts do not appear to have focused

carefully on this question, and thus have not addressed the

specific concerns that the appellant identifies, but most have

generally stated that once a seller receives a bona fide offer, the

ROFR ripens into an option to purchase the property "at the price

and otherwise on the terms stated in the offer." T.W. Nickerson,

Inc. v. Fleet Nat. Bank, 898 N.E.2d 868, 878 (Mass. App. Ct. 2009)

(quoting Frostar Corp. v. Malloy, 823 N.E.2d 417 (Mass. App. Ct.

2005) (emphasis added)); see also Gleason v. Norwest Mortgage,

Inc., 243 F.3d 130, 139 n. 5 (3d Cir. 2001) (applying Minnesota

law) (citing Allison v. Agribank FCB, 949 S.W.2d 182, 186 (Mo. Ct.

App. 1997)); Henry Simons Lumber Co v. Simons, 44 N.W.2d 726, 727

(Minn. 1950). As a result, the holder of an ROFR must have

knowledge of the terms and conditions of the entire offer so that

the holder may decide if she wishes to meet the offer. T.W.

Nickerson, 898 N.E.2d at 878 (citing Gyurkey v. Babler, 651 P.2d

928 (Idaho 1982)); see also Uno Rest., Inc. v. Boston Kenmore

Realty Corp., 805 N.E.2d 957, 962-63 (Mass. 2004); Miller v. LeSea

Broadcasting, Inc., 87 F.3d 224, (7th Cir. 1996) (applying

Wisconsin law) (noting that requirement that holder of ROFR exactly

match a bona fide offer is in fact a protection for the grantor of

the ROFR). Requiring that the holder of an ROFR have access to

-25-
such terms would serve little purpose if the holder of the ROFR

were not required to meet them.

Thus, the decisions interpreting the statutory ROFR at

issue in this case (or more precisely, its twin), as well as

decisions dealing with common law rights of first refusal more

generally, all suggest that the holder of an ROFR must meet all of

the terms and conditions of the offer, including subsidiary terms

such as the liquidated damages clause at issue here. Many courts

do, however, make an exception for immaterial terms with which the

holder of an ROFR need not comply,9 e.g., W. Tex. Transmission,

L.P. v. Enron Corp., 907 F.2d 1554, 1556 (5th Cir. 1990); John D.

Stump & Assocs., Inc. v. Cunningham Mem'l Park Inc., 419 S.E.2d

699, 705 (W. Va. 1992); Brownies Creek Collieries, Inc. v. Asher

Coal Mining Co., 417 S.W.2d 249, 252 (Ky. 1967), and even those

that do not make a materiality exception generally make three

exceptions to the rule of exact matching. First, the grantor can

waive exact matching by agreeing that certain terms should not

apply to the holder of an ROFR. Miller, 87 F.3d at 227; see also

State Dept. of Transp. v. Providence and Worcester R.R. Co., 674

A.2d 1239, 1243-44 (R.I. 1996) (state, acting pursuant to a

statutory ROFR, did not void the ROFR by pointing out that seller

9
Alternatively, these courts permit the exercise of an ROFR
even if there are insubstantial variations between the bona fide
offer and the holder of the ROFR's offer, which is essentially the
same thing. See Miller, 87 F.3d at 226.

-26-
was not required to undertake onerous action that would have been

required had the bona fide offer been accepted). Second, it is of

course clear that the names of the parties will not exactly match

the proper names contained in the bona fide offer when the holder

of an ROFR exercises it. Miller, 87 F.3d at 227; Providence and

Worcester R.R. Co., 674 A.2d at 1243-44 (noting that name of buyer

should be changed to "the state"). Finally, courts will relax the

rule of perfect matching in the presence of bad faith. Wyllie, 819

N.E.2d at 949 n. 8; Miller, 87 F.3d at 228 (citing Or. RSA No.6,

Inc. v. Castle Rock Cellular of Or., L.P., 76 F.3d 1003, 1007 (9th

Cir. 1996)). Aside from these exceptions, however, most courts

hold that the terms of the bona fide offer become binding on the

holder of an ROFR. This authority persuades us that the SJC likely

would adopt a similar rule.

In an argument faintly reminiscent of the third exception

noted above, the appellant asserts that the Trust acted in bad

faith such that the Trust should not be entitled to rely on the

liquidated damages provision. As examples of that bad faith, the

appellant points to the Trust's unwillingness to allow her to make

a charitable donation of the 42.1 acres, its refusal to proceed

under Chapter 40B, and its attempt to lower the purchase price.

While declining to proceed with a Chapter 40B application was

entirely proper, the Trust's other actions may suggest the

possibility of a violation of Chapter 93A, a breach of the implied

-27-
covenant of good faith and fair dealing, or the Trust's

anticipatory breach of its contract with the appellant (the first

two of which we address later, and the last being a cause of action

that has not found much hospitality under Massachusetts law, see

generally Daniels v. Newton, 114 Mass. 530 (1874)). We fail to

see, however, in what way these action support an argument for

varying the terms under which the Trust could accept the contract.

Accordingly, this argument does not disturb our conclusion that the

liquidated damages provision applies to the Trust and the Town.

B. Validity of the Liquidated Damages Provision

Having determined that the liquidated damages provision

of Kunelius's contract with Cohousing formed a part of her

relationship with the Town and the Trust, we turn to her argument

that the provision is nevertheless invalid. In Massachusetts,

whether a liquidated damages clause is valid and enforceable is a

question of law, and therefore we review the issue de novo. NPS

LLC v. Minihane, 886 N.E.2d 670, 673 & n.5 (Mass. 2008). Although

it was once unsettled, it is now clear that in Massachusetts, the

party resisting the enforcement of the liquidated damages provision

bears the burden of persuasion. Id. (citing TAL Fin. Corp. v. CSC

Consulting, Inc., 844 N.E.2d 1085, 1092 (Mass. 2006)); see also

Honey Dew Assocs., Inc. v. M&K Food Corp., 241 F.3d 23, 27 (1st

Cir. 2001).

-28-
 Massachusetts courts have long accepted contracts with

liquidated damages provisions, particularly those involved in the

purchase and sale of real estate. Kelly v. Marx, 705 N.E.2d 1114,

1116 (Mass. 1999). Generally, a contract containing a provision

awarding liquidated damages to the seller of real property in the

event of a buyer's breach will be enforced so long as "at the time

the agreement was made, potential damages were difficult to

determine and the [liquidated damages provision] was a reasonable

forecast of damages expected to occur." Perroncello v. Donahue,

859 N.E.2d 827, 831 (Mass. 2007) (quoting Kelly, 705 N.E.2d at

1115). Under this rubric, Massachusetts courts have specifically

eschewed the "second look" approach and evaluate both of these

factors only at the time of contract formation. Kelly, 705 N.E.2d

at 1116. Nevertheless, liquidated damages clauses will not be

enforced if they provide for an amount that is "'grossly

disproportionate to a reasonable estimate of actual damages' made

at the time of contract formation." Id. (quoting Lynch v. Andrew,

481 N.E.2d 1383, 1386 (Mass. App. Ct. 1985).

Interestingly, most cases challenging liquidated damages

provisions do so on the theory that overly large liquidated damage

awards impermissibly function as a penalty.10 See, e.g., NPS LLC,

10
There are good reasons to wonder whether worrying about
whether liquidated damages take on a penal aspect is wise as a
matter of contract law or economic policy. See generally, Charles
J. Goetz and Robert E. Scott, Liquidated Damages, Penalties, and
the Just Compensation Principle, 77 Colum. L. Rev. 554, 556 (1977)

-29-
886 N.E.2d at 673. In this case, the appellant complains that the

liquidated damages provision was inadequate because it vastly

underestimated her damages and therefore functions as a penalty

against her.11

This theory is relatively novel, and the weight of

authority is against it. E.g., Margaret H. Wayne Trust v. Lipsky,

846 P.2d 904, 910 (Idaho 1993); Mahoney v. Tingley, 529 P.2d 1068,

1070-71 (Wash. 1975) ("Except where extraordinary circumstances are

involved such as fraud or serious overreaching by the purchaser, a

seller who chooses to utilize the device of liquidated damages in

an earnest money agreement . . . cannot avoid the effect of that

agreement."); see also Nasco Inc. v. Pub. Storage, Inc., No. 92-CV-

12731-RCL, 1995 WL 337072 (D. Mass. May 20, 1995). Nevertheless,

it appears that in Kelly, and the cases decided thereafter, the SJC

has left open the possibility that a liquidated damages clause will

be set aside if it grossly overestimated or underestimated a

(arguing that uncritical application of the penalty doctrine
"frequently induces a costly reexamination of the initial
allocation of risks and may also deny the non-breaching party
either adequate compensation for the harm caused by the breach or
the opportunity to insure more optimally against such harm").
11
In this regard, we note that the record suggests that the
current, less favorable liquidated damages provision was not
included among Cohousing's original offers but was made a part of
the agreement that Kunelius's attorney ultimately drafted. While
this fact is not dispositive of her claim, it is clear that the
appellant was not stuck with this clause as the result of an
adhesion contract, and the record further suggests that the
appellant did not arrive at this particular clause due to a
substantial inequality in bargaining power.

-30-
party's damages at the time of contract formation. See Kelly, 705

N.E.2d at 1116 (liquidated damages provision will not be enforced

if it provides for an amount "grossly disproportionate to a

reasonable damages made at the time of contract formation"); Howard

v. Wee, 811 N.E.2d 1050, 1052 (Mass. App. Ct. 2004) (noting that

$1,000 in liquidated damages was not "unreasonably low," but not

questioning that unreasonably low liquidated damages can be set

aside under Kelly).

We must therefore determine whether the liquidated

damages provision at issue in this case was, as a matter of law,

grossly disproportionate to a reasonable estimate of the damages

Kunelius would incur in the event that the sale of her $1.16

million property was not successful.12 Massachusetts courts have

held that an earnest money deposit of 5% of the purchase price in

a contract for the purchase and sale of real estate is reasonable

as a matter law. Kelly, 705 N.E.2d at 1117; see also NRT New

England, Inc. v. Moncure, 24 Mass. L. Rptr. 599, 2008 WL 4739794,

at *5 (Mass. Super. 2008); Old Oxford Realty Partners LLC v. Shea,

No. 305754, 2005 WL 1323110, at *5 (Mass Land Ct. 2005). Although

we have found one reported decision in which a Massachusetts court

12
In order to uphold the liquidated damages provision, we also
need to conclude that Kunelius's damages were difficult to measure
at the time of contract formation. In light of the Kelly court's
observation that such damages are often hard to value in
transactions involving the purchase and sale of real estate, this
is an easy threshold to clear.

-31-
blessed a lower amount of liquidated damages, it was in a factual

circumstance that differs materially from this case. In Howard,

the court of appeals found that liquidated damages in the amount of

$1000 was not "unreasonably low" considering that this amount was

to cover damages incurred over a period of about eleven days. 811

N.E.2d at 1052.

Here, Kunelius was to receive $19,000 in liquidated

damages.13 This amount is approximately 2% of the total purchase

price of $1.16 million, obviously less than the 5% that

Massachusetts courts have upheld. But Kunelius failed to produce

evidence or argue in the district court that the 2% liquidated

damages clause was "grossly disproportionate" to a reasonable

estimate of her actual damages at the time of contract formation,

and therefore, this argument has been waived. CoxCom, Inc., 536

F.3d at 110 n.11. As a result, like the district court we too must

13
The Town and the Trust had six months to close. Closing had
to occur on or before September 26, 2003 because the contract term
granting an extension of the closing date was contingent on the
"Chap. 40B approval process . . . proceeding forward." Although it
could be argued that the pertinent time of contract formation for
purposes of evaluating the liquidated damages clause was the time
Kunelius negotiated the bona fide offer, evaluating the propriety
of the damages clause at the time the Trust exercised its
assignment is not a "second look" in the classic sense, because it
was at that point that the Trust accepted the contract, and an
agreement was formed between Kunelius and the Trust. See T.W.
Nickerson, Inc., 898 N.E.2d at 878. Rather, a second look occurs
when a court evaluates the propriety of a damages provision at the
time of breach. See Kelly, 705 N.E.2d at 1116 (explaining that
under a so-called "second look" analysis, a court looks to the
actual damages resulting from the breach) (emphasis added).

-32-
conclude that the liquidated damages provision is enforceable in

this case.

C. The Chapter 93A Claim

The appellant also presses a claim under the business-to-

business provisions of the consumer protection statute, Mass. Gen.

Laws ch. 93A, § 11. It is helpful here to review briefly the

structure of the Massachusetts consumer protection statute.

Section 2 of this statute prohibits unfair and deceptive acts and

practices, see Mass. Gen. Laws ch. 93A § 2(a), and sections 9 and

11 provide consumers and "businessmen" with private causes of

action to enforce this prohibition. Id. §§ 9, 11; see also Lantner

v. Carson, 373 N.E.2d 973, 975-76 (Mass. 1978).14

In order for a defendant to be liable under the statute

for damages from unfair or deceptive practices, the transaction at

issue must have occurred in the conduct of "any trade or commerce,"

see Mass. Gen. Laws ch. 93A §§ 9, 11, which the statute defines as

including "the advertising, [or] offering for sale . . . of

14
We note that appellant's complaint did not specify whether
she was proceeding under the consumer or business protection
provisions of Chapter 93A. At summary judgment, counsel for the
appellant specified for the first time that she was proceeding
under the business-to-business provisions. We note that had the
plaintiff proceeded on the consumer prong of Chapter 93A, summary
judgment for the defendants would have been appropriate because the
plaintiff did not serve the defendants with a demand letter as
required by that section. See Mass. Gen. Laws ch. 93A § 9.

-33-
[selling] any property . . . real, personal, or mixed." Id.

§(1)(b). Recognizing the potentially broad ambit of this statute,

the SJC, relying on the statute's creation of a separate cause of

action for "businessmen" who are harmed by unfair and deceptive

practices, has made clear that "the proscription in [Mass. Gen.

Laws ch. 93A § 2] of 'unfair or deceptive acts or practices in the

conduct of any trade or commerce' must be read to apply to those

acts or practices which are perpetrated in a business context."

Lantner, 373 N.E.2d at 976.

In interpreting section 11, Massachusetts courts have

looked not only at whether defendants were sufficiently involved in

trade or commerce to be held liable under the statute, but also at

whether plaintiffs were engaged in trade or commerce. This

distinction is important because Massachusetts courts have

understood that the private rights of action found in sections 9

and 11 are mutually exclusive. Frullo v. Landenberger, 814 N.E.2d

1105, 1112 (Mass. App. Ct. 2004) (citing Divenuti v. Reardon, 637

N.E.2d 234, 239 (Mass. App. Ct. 1994)); see also Milliken & Co. v.

Duro Textiles, LLC, 887 N.E.2d 244, 259 (Mass. 2008) (noting that

ch. 93A § 11 is only available after satisfaction of dual threshold

inquiries of whether a transaction was commercial in nature, and

whether the parties to the transaction were engaged in trade or

commerce "such that they were acting in a business context")

(citing Linkage Corp. v. Trs. of Boston Univ., 679 N.E.2d 191, 206-

-34-
07 (Mass. 1997))). Thus, in order for Kunelius to move past the

threshold on her Chapter 93A claim, she must show (1) that the sale

of the entire parcel, including her home and a horse farm, was a

commercial transaction, and (2) that both she and the Trust were

engaged in trade or commerce, such that this transaction occurred

in a business context.

It is true that the Massachusetts courts have held that

Chapter 93A does not "reach strictly private transactions such as

the isolated sale of a private home." Begelfer v. Najarian, 409

N.E.2d 167, 175 (Mass. 1980). In that case, the court noted that

whether an isolated transaction takes place in a "business context"

must be determined from the circumstances in each case, such as the

frequency of similar transactions, the motivation behind the

transaction, and the role of the participant in the transaction.

Id. at 176. The SJC has made clear, however, that a commercial

transaction need not "take place only in the ordinary course of a

person's business or occupation before its participants may be

subject to liability." Id.

Considering these factors, the record can be read to

support, at least in the summary judgment posture of this case, an

inference that the sale of the property was a commercial

transaction. Whether a party is engaged in trade or commerce is a

question of fact, see Feeney v. Dell Inc., 908 N.E.2d 753, 770

(Mass. 2009), and thus our review on summary judgment is de novo,

-35-
with all inferences drawn in favor of the non-movant (here, the

plaintiff). The record includes testimony from the appellant's

real estate agent that he met Kunelius as a result of the need to

move his horses to her farm. He further testified that as of May

24, 2007, the date of his deposition, his horse remained boarded on

the appellant's property. The agent testified that Kunelius agreed

to permit Cohousing (and eventually the Trust) to substitute a

$50,000 deposit for a $10,000 deposit plus monthly payments of

$1,500 to replace income she feared she would lose because "her

boarding tenants would begin to leave" once they learned that her

horse farm was for sale.15 This evidence, combined with Kunelius's

own affidavit stating that she rented stalls for horses on her

property, harvested firewood, and was the barn manager, could

permit a reasonable factfinder to conclude that Kunelius was not

merely selling her home, but her business and the principal source

of her livelihood.

Massachusetts courts have held that the sale of a

business or substantially all of the assets of a business can be a

commercial transaction subject to the proscriptions of Chapter 93A.

Rex Lumber Co. v. Acton Block Co., Inc., 562 N.E.2d 845, 850 (Mass.

App. Ct. 1990). In Rex Lumber, the defendant, Acton Block Co.,

15
The agent testified that he paid the appellant about $250 per
month to board his horse at her farm. Thus, the record supports
the inference that appellant likely received payment for boarding
five horses at her farm at the time she entered the contract.

-36-
proposed to sell the land and building on which its former

business, which had been discontinued for two years, had once

operated, in order to fund the retirement of the defendant's owner.

Id. at 846. The appeals court nonetheless held that the

transaction was a commercial one made in a business context, under

Lantner and Begelfer, despite the fact that it was not made in the

ordinary course of business. Rex Lumber, 562 N.E.2d at 850. Thus,

while it is a close question, we believe that at this summary

judgment stage it is possible to conclude that the sale of

appellant's horse farm and other property, from which she derived

significant income, was a commercial transaction. Similarly, there

is enough evidence in the record to support the conclusion that

Kunelius was engaged in trade or business with respect to the

transaction in which she disposed of all of the assets that she

harnessed to produce her income, and fund her retirement, if Rex

Lumber is good law. Therefore, the district court was on shaky

footing in determining that Kunelius was not engaged in trade or

commerce generally or with respect to this particular transaction.

Relying on our authority to affirm the decision of the

district court on any basis made manifest in the record, States

Res. Corp. v. The Architectural Team, Inc., 433 F.3d 73, 80 (1st

Cir. 2005) (citing Uncle Henry's, Inc. v. Plaut Consulting Co., 399

F.3d 33, 41 (1st Cir. 2005)), the Trust urges that summary judgment

was appropriate because the Trust was not engaged in trade or

-37-
commerce, based on its status as a nonprofit corporation.16 We

agree. In Massachusetts, a defendant's nonprofit status is not

dispositive of whether it can be liable under Chapter 93A. Compare

Linkage Corp. v. Trs. of Boston Univ., 679 N.E.2d 191, 207 n.34

(Mass. 1997) (noting that Massachusetts courts have held nonprofit

corporations liable under Chapter 93A) (citing Miller v. Risk Mgmt.

Found. of the Harvard Med. Insts., Inc., 630 N.E.2d 304 (Mass. App.

Ct. 1994))), with Poznik v. Mass. Med. Prof'l Ins. Ass'n., 628

N.E.2d 1, 3-4 (Mass. 1994) (holding that MMPIA was not engaged in

trade or commerce because of its character as a "statutorily

mandated, nonprofit association" that was "motivated by legislative

mandate not business or personal reasons" (citing Barrett v. Mass.

Insurers Insolvency Fund, 592 N.E.2d 1317, 1319 (Mass. 1992))), and

All Seasons Servs., Inc. v. Comm'r of Health and Hosps. of Boston,

620 N.E.2d 778,779-80 (Mass. 1993) (finding that hospital operated

by Boston Board of Health and Hospitals, a municipal entity, was

16
The district court dismissed the Chapter 93A claim against
the Town because the Town assigned the ROFR to the Trust and never
became a party to the appellant's contract with the Trust.
Kunelius, 2008 WL 4372752 at *4 n.7. The appellant has not
challenged this ruling on appeal and it is therefore waived. Stamp
v. Metro. Life Ins. Co., 531 F.3d 84, 88 (1st Cir. 2008). The
district court, however, did not have occasion to determine whether
a partnership between the Town and the Trust existed because it
found that any such partnership was entitled to summary judgment
for the same reasons that the Trust was entitled to summary
judgment. Kunelius, 2008 WL 4372752 at *1 n.1, *5. As we, like
the district court, conclude that the Trust was entitled to summary
judgment on this count, we need not decide whether any such
partnership existed because it too would be entitled to summary
judgment.

-38-
not engaged in trade or commerce when it sought bids for operation

of vending machines and canteen facility, as this operation was

incidental to its charitable mission of providing medical

services).

Determining whether a nonprofit defendant is beyond the

reach of Chapter 93A is a "fact-specific . . . inquiry," but a

nonprofit defendant will not be considered engaged in trade or

commerce when it "undertakes activities in furtherance of its core

mission." Linkage Corp., 679 N.E.2d at 209. Nevertheless, when

"an institution's business motivations, in combination with the

nature of the transaction and the activities of the parties,

establish a 'business context' as contemplated in [Begelfer v.

Najarian, 409 N.E.2d 167 (Mass. 1980)], G.L. c. 93A will apply

because the institution has inserted itself into the marketplace in

a way that makes it only proper that it be subject to rules of

ethical behavior and fair play." Id.

In view of its conclusion that Kunelius was not engaged

in trade or commerce, the district court did not evaluate whether

the Trust was so engaged. In our view, the record viewed in the

light most favorable to Kunelius, nonetheless requires the

conclusion that TPL, undisputably a not for profit organization,

was acting in pursuit of its core nonprofit charitable mission of

preserving and conserving land. The fact that it planned to

purchase Kunelius's property, renovate both houses, and resell one

-39-
or possibly both of them on the open market was merely a means to

an end, and not intended to turn a profit -- like a hospital

providing limited commissary services -- and therefore not

actionable under Chapter 93A. See All Seasons Servs., Inc., 620

N.E.2d at 780. In that vein, we note that even in its commercial

transactions, the Trust planned to promote its core charitable

mission of land conservation by including conservation covenants

that ran with the parcels it sold on the open market. Thus, while

it may be true that the record supports an inference that the Trust

acted sharply in its dealings with Kunelius, the SJC has

nonetheless made clear that where a nonprofit defendant is acting

in furtherance of its core mission, Chapter 93A is not designed to

reach such conduct. Accordingly, summary judgment as to this count

was properly granted to the Trust, the Town, and a partnership

between the Town and Trust, if any such partnership existed.

D. Covenant of Good Faith and Fair Dealing

The district court found that the plaintiff did not plead

a violation of the covenant of good faith and fair dealing in her

complaint, but instead raised it for the first time in connection

with cross motions for summary judgment. Kunelius, 2008 WL 4372752

at *1 n.2. The appellant argues that her complaint sets forth

sufficient facts to state a claim for breach of the covenant and

that the summary judgment record permits the inference that the

covenant was breached; therefore, she should be permitted to pursue

-40-
this claim. In support of this argument, Kunelius cites a number

of Massachusetts cases explaining Massachusetts state pleading

standards, but as we are in federal court, federal pleading

standards apply. Jerry Smith and Jeffrey Parness, 2 Moore's Fed.

Practice § 8.04[1][A] at 8-23 (3d ed. 2007); see also In re Tower

Air, Inc., 416 F.3d 229, 236-38 (3d Cir. 2005) (noting that

district court mistakenly applied heightened requirements for state

notice pleading standard in federal case).

In federal court, when a plaintiff raises a claim for the

first time in response to a summary judgment motion, it is possible

to treat the claim as a motion to amend the complaint under Rule

15(a) of the Federal Rules of Civil Procedure. Sover v.

Hattiesburg Pub. Sch. Dist., 549 F.3d 985, 989 n.2 (5th Cir. 2008).

The plaintiff, however, made no such argument to the district court

and has not advanced one here. Therefore, we need not linger over

this question. See Cook v. Gates, 528 F.3d 42, 62 n.13 (1st Cir.

2008); Nieves-Vega v. Ortiz-Quiñones, 443 F.3d 134, 137 n.1 (1st

Cir. 2006) (finding that claim raised for the first time at oral

argument is, at best, forfeit). In any event, it was not likely an

abuse of discretion -- and certainly not plain error -- for the

district court to deny such a circuitous request for an amendment

after summary judgment motions had been docketed. See Brooks v.

AIG SunAmerica Life Assur. Co., 480 F.3d 579, 590 (1st Cir.

2007)(noting that party urging amendment of complaint at the

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eleventh hour to fend of summary judgment must demonstrate that the

proposed amendments are supported by the record) (citing Adorno v.

Crowley Towing & Transp. Co., 443 F.3d 122, 126 & n.3 (1st Cir.

2006))); but see González-Pérez v. Hosp. Interamericano de Medicina

Avanzada, 355 F.3d 1, 5-6 (1st Cir. 2004) (declining to find that

district court abused discretion in permitting defendant to

interpose timeliness defense supported by the record for the first

time at summary judgment). Consequently, we affirm the district

court's refusal to consider the appellant's claim for relief under

the covenant of good faith and fair dealing. We express no opinion

whether this claim would have been meritorious if adequately pled,

but we note that the covenant of good faith and fair dealing is

implied in every contract, including those involving rights of

first refusal. Uno Rests., Inc., 805 N.E.2d at 964.

E. Remaining Claims

In addition to these claims, the appellant has advanced

a number of others, accusing the Town and the Trust of fraud and

misrepresentation, intentional interference with her contractual

relations with Cohousing, and through 42 U.S.C. § 1983, a violation

of the Contracts Clause of the U.S. Constitution. We have reviewed

these claims and find them to be without merit.

1. Fraud and Misrepresentation

As to the fraud and misrepresentation claim, the district

court correctly noted that Kunelius had produced enough evidence to

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permit an inference that TPL misrepresented both its ability and

intent to purchase the property. Kunelius, 2008 WL 4372752 at *6.

The court, however, also correctly concluded that Kunelius did not

prove her reliance on any material misrepresentations made by the

Trust. The appellant's brief on appeal identifies no legally

cognizable reliance. Accordingly, summary judgment was appropriate

as to that count.

2. Intentional Interference with Contractual Relations

Kunelius's argument on appeal regarding the intentional

interference claim is that it was "erroneous for the [district

court] to apply the more traditional intentional interference

requirements, as the [district court] did in the instant case."

The appellant has cited no case law or other indication that the

SJC would modify these causes of action in her favor to account for

the wrinkle of the statutory ROFR. Accordingly, we, like the

district court, are powerless to modify them. We discern no error

in the district court's application of the traditional standards

for intentional interference with contractual relations in this

case, see Kunelius, 2008 WL 4372752 at *5 (citing Draghetti v.

Chmielewski, 626 N.E.2d 826, 868 (Mass. 1994)), and therefore that

decision is affirmed.

3. Contracts Clause Claim

In perhaps her most ambitious and overreaching claim,

Kunelius claims that Mass. Gen. Laws ch. 61, § 8 impermissibly

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impairs a contractual obligation and therefore violates the

Contracts Clause of the U.S. Constitution. U.S. Const. art. I, §

10 cl. 1. ("No state shall . . . pass any . . . Law impairing the

Obligation of Contracts."). We need not grapple with the question

of whether a violation of the Contracts Clause is actionable under

§ 1983, or as the district court did, with whether the Trust's

actions constituted state action, because we conclude that under

the circumstances of this case the exercise of the ROFR, even with

the Trust's subsequent default, was not a violation of the

Contracts Clause.

It has long been understood that the seemingly absolute

prohibition in the Contracts clause "must be accommodated to the

inherent police power of the State 'to safeguard the vital interest

of its people.'" Energy Reserves Group v. Kan. Power & Light Co.,

459 U.S. 400, 410 (1983) (quoting Home Bldg. & Loan Ass'n v.

Blaisdell, 290 U.S. 398, 434 (1934)). Therefore, as the Supreme

Court has made clear, the Contracts Clause is not implicated unless

a change in state law impairs a contractual obligation, and such

impairment is substantial. Alliance of Auto. Mfrs. v. Gwadosky,

430 F.3d 30, 42 (1st Cir. 2005). In the present case, there was no

change in state law, and further the ROFR at issue here, which

allows a municipality -- or its chosen nonprofit -- to purchase

land on the same terms as those in a bona fide offer, is not an

impermissibly substantial impairment of a contractual right, if it

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is an impairment at all. Id. (citing McGrath v. R.I. Ret. Bd., 88

F.3d 12, 16 (1st Cir. 1996) (noting that even an impairment of

contract that is substantial will be upheld if it is reasonable and

necessary to fulfill an important public purpose). Accordingly,

the grant of summary judgment as to the Contracts Clause claim was

proper.

III. Conclusion

The district court's grant of summary judgment is

affirmed.

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