248 N.E.3d 647
Mass.2025Background
- The dispute centers on a limited partnership formed to develop and operate affordable housing in Boston, utilizing the federal Low Income Housing Tax Credit (LIHTC) program.
- Tenants' Development II Corporation (TDII), a nonprofit, served as managing general partner; AMTAX Holdings 227, LLC (AMTAX) was the investor limited partner with a 99.99% stake.
- The parties signed a partnership agreement and a separate right of first refusal (ROR) agreement, giving TDII the right to purchase the property after a 15-year compliance period, at a specified "debt plus taxes" price.
- After the compliance period ended, AMTAX forced the sale process, and TDII sought to exercise its ROR at the price calculated by the partnership, which excluded limited partners’ exit taxes.
- AMTAX asserted its consent rights, blocking the sale, and litigation ensued over consent requirements and the correct calculation of the ROR purchase price.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was AMTAX’s consent required for the ROR sale? | Consent not required for TDII's exercise of ROR; partnership design exempted ROR sale from such consent. | AMTAX consent was required for any sale under the partnership agreement. | No consent required for ROR sale to nonprofit partner. |
| Should exit taxes be included in the "debt plus taxes" ROR price? | Exit taxes not attributable to sale; only debt and taxes on sale itself are included. | Exit taxes arise from the sale and must be included in price calculation. | Exit taxes are attributable to sale and must be included. |
| Breach of contract and related torts by AMTAX? | Recording of notice of consent rights by AMTAX breached contract and caused damages. | No breach or damages; notice accurately reflected consent rights. | No breach or damages; claims fail. |
| Breach of good faith and fair dealing; slander claims | Conduct interfered with nonprofit's contractual rights. | Actions were proper under agreements and law; no false statements made. | No breach or slander; claims fail. |
Key Cases Cited
- Homeowner's Rehab, Inc. v. Related Corporate V SLP, L.P., 479 Mass. 741 (interpreted similar LIHTC partnership and right-of-first-refusal structure; held consent unnecessary for nonprofit’s exercise of ROR)
- Uno Restaurants, Inc. v. Boston Kenmore Realty Corp., 441 Mass. 376 (explained mechanics of right of first refusal under Massachusetts law)
- Allstate Ins. Co. v. Bearce, 412 Mass. 442 (reaffirmed that contract interpretation is a question of law subject to de novo review)
- Sherman v. Employers' Liab. Assur. Corp., 343 Mass. 354 (proper contract interpretation gives effect to all provisions)
- Singarella v. Boston, 342 Mass. 385 (articulated elements required for breach of contract action)
- Dulgarian v. Stone, 420 Mass. 843 (set standards for injurious falsehood and slander of title claims)
- Bank of Am., N.A. v. Casey, 474 Mass. 556 (effect of recording notice on constructive notice for title)