SUPERIOR COURT

FARGO MANAGEMENT, LLC v. CITY OF WORCESTER, MASSACHUSETTS

Docket: DOCKET No. 12-CV-1028-C
Dates: September 4, 2016
Present:
County: WORCESTER, ss.
Keywords: MEMORANDUM OF DECISION AND ORDER

      Procedural Background

      Fargo Management, LLC has sued the City of Worcester, Massachusetts because it alleged that the City had breached their contract, the details of which will be discussed below. The case was heard on cross-motions for summary judgment before a different session judge who found that Worcester had indeed breached the contract. He allowed Fargo's motion for summary judgment for liability, but denied it as to the City's. (See paper no. 10, Memorandum of Decision and Order on Cross-Motions for Summary Judgment as to Liability.)

      On July 30, 2015, Fargo moved for summary judgment on the issue of damages, seeking specific performance as a remedy for the breach as had been specifically spelled out in the contract. The City of Worcester opposed that motion and asked for additional' time to conduct discovery. That motion was allowed by another session judge on September 21, 2015. The City was granted an additional 90 days to gather evidence as to the various elements of damages and the feasibility of specific performance. However, that 90-day period yielded little to nothing to rebut Fargo's motion.

      The present procedural posture of the case is that both parties agree the case is properly before the Court on Fargo's renewed motion for partial summary judgment on the issue of damages. In short, Fargo seeks specific performance; the City opposes that effort and instead, requests that the court enter a judgment of money damages against it.

      A hearing has been held on the motion at which each party was represented by highly-respected and accomplished counsel[1].

      This case raises significant concern because any decision would have a major impact on the City's finances (a result which gives this Court pause); it is also troubling because it would appear —at first blush — that the Court would be wading into the political arena, an area into which it is loath to intervene. Upon reading the facts of this case, however, it is clear that this is anything but a political case, but rather, a case appropriate for judicial resolution: i.e., it calls for the interpretation of a legal contract — an agreement into which the City (and its then-officials) freely entered some 13 years ago. As the City's attorney candidly[2] admitted during oral argument, essentially, no matter what decision the Court enters, the City faces a "lose-lose" quandary. The only remaining question is by how much.

Factual Background

      Fargo and the City entered into a contract on June 3, 2003. The City was valiantly trying to revitalize the present DCU Center site, its surrounding area and encourage hotel development.

      The contract was formally entitled a "Land Disposition and Development Agreement," to which was eventually added an Amendment I. The Agreement called for Fargo to buy certain land at the corner of Major Taylor[3] Boulevard and Martin Luther King Junior Boulevard and build a hotel there. Fargo bought the land and built the Hilton Garden Inn Hotel, a 200-room facility, which it continues to own. In exchange, the City agreed to construct an elevated pedestrian walkway (i.e., a "skywalk") connecting the hotel to both the Major Taylor Boulevard Municipal Parking Garage and the Worcester Convention Center Facility (now the DCU Center). Moreover, Fargo agreed, as part of the deal, to build the footing required for the skywalk. The express terms of the contract required the city to construct the skywalk when the hotel was complete and received its certificate of use and occupancy.

      Fargo upheld its end of the bargain by completing the hotel in October 2006 (almost a decade ago), and fulfilled its additional contractual obligation by building the required footing for the skywalk at a cost of $400,000.[4] The City issued the hotel its certificate for use and occupancy on October 13, 2006, but reneged on its deal to provide the elevated pedestrian walkway. The hotel opened for business four days later.

      The work for the construction of the elevated pedestrian walkway was put out to bid in 2005, after a professional estimate totaled $4,065,202. The City rejected the bid. The next year, two companies competed for the work, and submitted bids of $6,507,000 and $7,488,277, respectively. The City rejected these bids as well. The price increase from the previous year was attributed to the rise in the pric8 of steel.

      The next year, bids were invited anew, and this time, came in at $7,975,000 and $8,251,000, respectively. The City rejected these two bids as well. By this time, the City had not accepted any one of the five submitted bids.

      It is now ten years (and several City administrations) later, and the money the City set aside for the construction of the walkway is largely gone.[5] The Worcester City Manager has testified that he informed the City Council to forget about the construction of the skywalk due to its high cost, and recommended that the City divert what is left of the funds for other uses.

DISCUSSION

      Fargo is entitled to either specific performance as set forth in the contract, or money damages representing the cost to construct the skywalk.[6]

      The Agreement specifically provides that if the City failed to construct the skywalk:

"Fargo shall be entitled to institute proceedings to compel specific performance by Fargo (sic) of its obligations." See Agreement, section 1201 (b). (Emphasis added.)

Such remedy clauses are enforceable unless unconscionable or against public policy. Danieli v. C. Officine Meccaniche SPA v. Morgan Construction, Co., 190 F. Supp. 148, 155 (D. Mass. 2002).

      Specific performance here is neither against public policy nor unconscionable. Although it is admittedly an extraordinary equitable remedy, what distinguishes this case is that the parties expressly bargained for, and agreed upon, this provision if the contract were to be breached.

      Moreover, equity demands this relief.

      The traffic intersection involved here is bounded by two main and very busy thoroughfares — Martin Luther King Junior Boulevard[7] and Major Taylor Boulevard.

      The former boulevard has three lanes proceeding in a southerly and three more lanes heading in a northerly direction; the latter has three lanes channeling cars and trucks northerly, and three more southerly, for a total of twelve lanes of vehicular traffic converging on downtown Worcester. The Worcester Convention Center (now called the "DCU Center") is a major convention and conference center with a seating capacity of 14,800. All sorts of events are held there[8] on a regular basis; many such events appeal to families with young children[9], as well as to those from the 3 other cities and 50 outlying towns in Worcester County, the largest geographical county in the state. It is likely that many DCU patrons are unfamiliar with the area, and, in particular, with the intersection and the public safety threat presented by its traffic pattern. Most hotel guests, too, may be unfamiliar with the area. Additionally, on one corner of the same intersection is Saint Vincent Hospital which has a 919-bed capacity, had 35,350 admissions, and 82,390 emergency room visits recorded for its most-recently reported year (See www.health.us.news.com) (Last visited September 4, 2016). Two other corners of the intersection have street-level restaurants. The Worcester Palladium (a concert hall and performance venue which features, among other strains, "rock and shock" music, and also serves alcohol)[10] is but a stone's long throw away. Finally, this intersection lies nearly in the shadow of the Worcester Regional Judicial Center (in which the Worcester Superior Court is located) where many workers and others need to cross those busy intersections every weekday to use the services of four trial court departments: Superior, District, Probate and Family, and Juvenile. In short, thousands of people are compelled to navigate a very wide, very busy and treacherous intersection with fast moving vehicles every day and many evenings. This confluence of factors portends tragedy.

      The City contends that construction of the agreed-upon walkway is now financially difficult. But the City bound itself to a pedestrian walkway — obviously out of public safety concerns — to protect the anticipated thousands of (now) "DCU Center" patrons, hundreds of Hilton Garden Inn guests and visitors, and the endless stream of litigants and others who walk daily to the Worcester Courthouse or patronize other neighboring venues.

      The court's selection of a specific performance over a money award is based upon the fact that the remedy was specifically written into the contract, and that specific performance with land is not an uncommon remedy. See Raynor a Russell, 353 Mass. 366, 367 (1967). There is, of course, a reasonable range of discretion in this regard; the Supreme Judicial Court has declared that specific performance rests in the sound discretion of the judge. Exchange Realty Co. a Bines, 302 Mass. 93, 100 (1939).

      This Court hardly exercises such discretion lightly, and not for "want of power" as cautioned by Widebeck v. Sullivan, 327 Mass. 429, 434 (1951), but rather, because of the danger to public safety presented by the particular facts of this unusual case. Indeed, the City must concede that it contemplated such a danger from the very inception of the project and indeed, for the five years thereafter (as evidenced by the continued invitations for bids for the walkway though 2008).

      The remedy called for is equitable in nature. The City can hardly claim "dean hands" in avoiding specific performance by repeatedly and continuously, for over a decade, dishonoring its contractual obligation to the point where it now claims it would suffer a financial hardship. (See paper no. 16.4, City of Worcester's Memorandum of Opposition to the Motion for Partial Summary Judgment as to Damages, at page 12.) The City's present hardship is entirely of its own making; and it is not "undue." The City knew, as early as 11 years ago, by the bids it received what the cost of the --Construction of the skywalk would be. It knew it again in 2007 with the two bids submitted; and it knew it again in 2008. The City could have constructed the pedestrian walkway for fax less money in 2005, 2007 or 2008. It chose not to pursue any of these opportunities.

      In sum, Worcester's plaint that it lacks sufficient funds in unavailing.[11]

      This is not a case akin to Charles River Park, Inc. v. Boston Redevelopment Authority, 28 Mass. App. Ct. 795, 816 n. 27 (1990) where specific performance was excused by the passage of 20 years and an astronomical increase in value for the last remaining parcel in the West End redevelopment project, which had skyrocketed from $100,000 to between $5 million and $15 million.

      As to Worcester's attempts to elude its responsibility because it claims Fargo engaged in "questionable activity" two years after the City breached the contract, what is alleged is that Fargo withdrew a special discounted parking rates for its hotel patrons. This is a matter of only ancillary and minor effect on the main deal.

      Finally, Worcester raises the specter of "on-going court supervision." Nothing could be further from the truth. The Order that follows contemplates only that that the City place the project out to bid and sign the necessary legal documents to proceed with construction.

      This dispute has gone on for far too long, it is time to put an end to it. The City must honor its contractual responsibility — an agreement that was freely negotiated, at arms' length, with each side likely represented by attorneys. The City knew what it was doing when it entered into this contract; and its foot-dragging[12] for the past decade has been inexcusable. Instead of serving as an example to its citizenry of keeping its word, the City has dodged and weaved to avoid its legal responsibility. Were its citizens to adopt such a cavalier disregard toward their own tax responsibilities and other civic obligations to the City (eq., the payment of parking tickets comes to mind as but a minor example), there is little doubt that the City government would employ its legal authority to ensure full compliance.

      What possible rationale could justify the City of Worcester's belief that it was above the law? The answer is none.

ORDER

      For these reasons, this Court is left with little choice: Fargo's renewed motion for summary judgment as to the issue of damages must be ALLOWED.

      To this end, the City of Worcester is ORDERED FORTHWITH to specifically perform its obligations under the "Land Disposition & Development Agreement" and "Amendment I" executed with Fargo over 13 years ago. Further, the City shall immediately construct an elevated pedestrian walkway connecting the Hilton Garden Inn Hotel to both the Major Taylor Boulevard Parking Garage and the Worcester Convention Center Facility (i.e., the "DCU Center.") [13]

      The City shall provide substantive progress reports to this Court every thirty days up until the point that the bid for the construction project of the sky-walk has been awarded and the construction contracts have been signed relating to that project. Such reports shall be sent to the attention of the judge then-presiding in the Civil "C" session, with the first such report due thirty days from the date of this Memorandum as to what specific, concrete measures have been undertaken to effectuate this Order. No delay will be tolerated.

By the Court,

Dennis J. Curran
Associate Justice

footnotes

      [1] Fargo was ably represented by Attorney Louis M. Ciavarro of Bowditch & Dewey, LLP and the City of Worcester was vigorously defended by relatively newly-retained counsel, Attorney William D. Jalkut of Fletcher Tilton, P.C.

      [2] Such candor is rare, refreshing and appreciated.

      [3] So named for Marshall Walter "Major" Taylor (November 26, 1878 June 21, 1932), an American cyclist who won the world 1 mile (1.6 km) track cycling championship in 1899 after setting numerous world records and overcoming racial discrimination. Taylor was the first African-American cyclist to achieve the level of world champion and only the second black man at the time to win a world championship in any sport.

      Major Taylor won his first significant race in 1895 at age 16. The 75 miles road race, near his hometown of Indianapolis, Indiana, "came amid the racial threats of his white competitors." Shortly afterward, he relocated to Massachusetts.

      As an African-American, Taylor was banned from bicycle racing in Indiana once he started winning and made a reputation as "The Black Cyclone." In 1896, when he moved from Indianapolis to Worcester, Massachusetts, which was then a center of the United States bicycle industry with half a dozen factories and 30 bicycle shops. He worked as a bicycle mechanic in the Worcester Cycle Manufacturing Company factory.

      Taylor turned professional in 1896 at the age of 18 and soon emerged as the "most formidable racer in America." One of his biggest supporters was President Theodore Roosevelt, who kept track of Taylor throughout his 17-year racing career.

      Worcester newspapers called Mr. Taylor "The Worcester Whirlwind"; he married here and had a daughter, although his career required him to spend a large amount of time traveling in America, Australia, and Europe.

      In 1899, he won the world championship, preceded only by boxing bantamweight George Dixon as a black world champion in any sport. (See www.wikipedia.com.) (Last visited September 4, 2016.)

      [4] The City disputes this figure and says that Fargo is only entitled to a credit of $200,000.

      [5] The City's funding sources were to be a loan guarantee appropriated by the Worcester City Council from the "DCU Special District Improvements" account, a $1,875,000 loan guarantee supported by bonds based on anticipated garage revenue, $1,260,000 from the DCU Naming Rights Fund, and finally, a cash contribution of $625,000 from Fargo.

      [6] Either way, Fargo is also entitled to additional damages caused by the City's 10-year delay in complying with its obligations under the contract

      [7] This boulevard originates directly from exit 12 from the Massachusetts Interstate Route 290.

      [8] Public events are held at the DCU Center on an almost nightly basis: a small sample of upcoming programs include the 2016 Worcester Fall Home Show, Holy Cross's ice hockey games, the Massachusetts Senior Care Association Senior Care Meeting and Trade Show and many dance shows and musical concerts. See www.dcucenter.com. (Last visited September 4, 2016.)

      [9] Other upcoming events include the "Disney on Ice — Follow Your Heat?' Ice Show and Disney's "Ice Age on Id' programs.

      [10] See www.thepalladium.net. (Last visited September 4, 2016.)

      [11] Given the financial constraints confronting the City, perhaps an appeal to the highest state constitutional officers would assist in alleviating Worcester's putatively local concern — an issue that extends not just to its city residents, but to the 3 other cities in Worcester County and its 50 towns.

      [12] In this regard, the Court in no way means to include the City of Worcester's present attorney.

      [13] Moreover, Fargo is also entitled to recover as additional damages its losses sustained because of the City's ten-year delay in constructing the elevated pedestrian walkway. Such damages are to be determined by a finder-of fact, but at a preliminary glance only, may include the Fargo's additional costs to contract the hotel to accommodate the walkway, the costs to provide valet parking in lieu of the walkway, and any lost profits caused by decreased hotel occupancy because no walkway was in place. Whether all or simply some of these issues are in play is for trial judge to determine, but they are simply a starting (and hardly binding) point for a trial agenda on the additional damages issue. Expert testimony will be required to prove these damages.

      I do specifically find that additional damages (the scope and agenda of which are reserved for the trial judge) are indeed available as a matter of law.