889 F. Supp. 2d 178
D. Mass.2012Background
- August 29, 2008: Lease for 4,742 sf at 227-275 Washington St to Banco do Brasil for a high-quality retail branch.
- Lease §3.2 ties Commencement to regulatory approvals (OTS FDIC FRB CCS considerations) with a latest criteria including June 1, 2009.
- Lease §6.5 provides one-year termination option if Regulatory Approval not obtained within one year; August 29, 2009 deadline.
- Bank pursued approvals from OTS, FDIC, and FRB to establish a de novo federal savings bank; CCS determinations were involved.
- FDIC April 2, 2009 letter returning deposit insurance application and concerns led to withdrawal of OTS/FRB filings on April 30, 2009.
- Court recommends denying both parties’ summary-judgment motions, leaving fact-finder to assess whether Bank’s efforts were reasonable under the Lease.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bank’s regulatory efforts satisfied the lease’s condition | Banco argues efforts were diligent and reasonable | Trust contends efforts were insufficient or misdirected | Questions of reasonableness for fact-finder; summary judgment denied |
| Effect of withdrawal of applications on the condition precedent | Banco contends withdrawal did not bar pursuit within period | Trust argues withdrawal hindered fulfillment of condition | Genuine factual disputes; not appropriate for resolution on summary judgment |
| Impact of FDIC April 2, 2009 letter on continuation of pursuit | Bank reads letter as possible path to refile with FRB/OTS approval | Letter discouraged renewed submissions and emphasized environment | Fact-specific; not resolvable as a matter of law |
| Whether the Trust is entitled to summary judgment or Bank is | Bank seeks judgment re: lease obligations | Trust seeks judgment that Bank breached or failed to act in good faith | Courts should not grant summary judgment; issues of fact remain for trial |
Key Cases Cited
- Stabile v. McCarthy, 336 Mass. 399 (Mass. 1957) (reasonableness of efforts to obtain approvals is a fact question)
- In re President Casinos, Inc., 419 B.R. 381 (E.D. Mo. 2009) (prevention doctrine where hindering approvals may excuse failure of condition)
- Ne. Drilling, Inc. v. Inner Space Servs., Inc., 243 F.3d 25 (1st Cir. 2001) (prevention doctrine applied in contract performance contexts)
- Sechrest v. Safiol, 383 Mass. 568 (Mass. 1981) (buyer’s failure to pursue permits not automatically excused; duty to act diligently)
- Huang v. BP Amoco Corp., 271 F.3d 560 (3d Cir. 2001) (diligence to obtain approvals is a fact question; not issue of law)