In 1968, Charles and Paul Kotseas conveyed Parcel A to trustees of the 122 Trust, a wholly owned subsidiary of Whitinsville Plaza, Inc. The deed contained reciprocal restrictions intended to coordinate development of a shopping center on Parcel A and on adjoining land retained by the Kotseas defendants. Among other terms, Kotseas agreed not to use the retained land in competition with the discount store planned for Parcel A, although specified uses, including a defined type of drug store, were permitted. The deed stated that its covenants would run with the affected land and bind successors.
In 1975, the Trust conveyed Parcel A to Plaza, expressly subject to and with the benefit of the 1968 restrictions. Kotseas later leased part of the retained land to Whitinsville CVS, Inc., for a "discount department store and pharmacy." Plaza alleged that the lease was expressly subject to the deed restrictions and that CVS's proposed operation would violate them.
Plaza sued Kotseas for injunctive relief, damages, declaratory relief, and Chapter 93A remedies. It sued CVS for similar relief and for tortious interference with Kotseas's contractual obligations. The Superior Court dismissed both actions under Mass. R. Civ. P. 12(b)(6) for failure to state a claim. The Supreme Judicial Court granted direct appellate review, accepted the pleaded facts and favorable inferences as true, and held that dismissal was erroneous except as to the inadequately pleaded Chapter 93A counts.
Issue #1
Whether Plaza could plead alternative and inconsistent theories of relief without identifying a single controlling legal theory in its complaints.
Holding
Yes. The complaints could proceed if their factual allegations supported relief under any legally valid theory, even if Plaza pleaded alternatives that might ultimately be inconsistent.
Reasoning
Massachusetts Rule of Civil Procedure 8 permits alternative and inconsistent claims. Thus, at the pleading stage, Plaza could allege both that CVS was bound by the deed restrictions and, alternatively, that CVS induced Kotseas to breach those restrictions. The Court would assess each theory independently rather than require Plaza to select one before the facts were developed.
Modern notice pleading also does not require a plaintiff to state the precise legal theory on which it relies. A complaint need only provide a short and plain statement showing entitlement to relief. Accordingly, the Court considered whether Plaza's allegations could support recovery under real-covenant, contract, tortious-interference, or unfair-practices principles.
Issue #2
Whether a reasonable covenant against competition in a commercial deed may run with the land and be enforced by and against successors.
Holding
Yes. A reasonable anticompetitive covenant may run with the land when it serves the purpose of facilitating orderly and harmonious commercial development; the Court expressly overruled contrary portions of Norcross, Shade, and Ouellette.
Reasoning
Plaza adequately alleged several conventional requirements for a covenant to run with the land. The restrictions were in a signed writing, the deed expressly declared that they would run with the land and benefit successors, mutual easements supplied the required privity of estate, and CVS allegedly had actual notice while the recorded deed supplied constructive notice.
Earlier Massachusetts cases had held that a deed covenant against competition did not "touch and concern" land because it merely increased the benefited parcel's value by excluding a market competitor. The Court concluded that this reasoning was unduly formal and obscured what was likely the real concern in those cases: the substantive policy against unreasonable restraints of trade.
The modern and more practical approach is to assess the covenant's reasonableness and commercial-development function directly. Commercial developers may reasonably use restrictive covenants to protect investments and coordinate neighboring uses; separating land-use planning from a developer's interest in avoiding destructive next-door competition is often unrealistic.
The Court therefore held that reasonable covenants against competition may run with the land when they facilitate orderly and harmonious commercial development. This rule did not license unlimited boilerplate restraints: ordinary real-covenant requirements and statutory restrictions on land-use covenants still apply.
Because real-estate parties may have relied on the former rule, the Court limited its new rule to covenants executed after Shell Oil Co. v. Henry Ouellette & Sons, decided June 13, 1967. The covenant here was made in 1968 and clearly purported to bind successors, so Plaza was entitled to litigate enforcement under the new rule.
Issue #3
Whether Plaza stated viable claims based on contractual assignment and CVS's alleged tortious interference with Kotseas's contractual duties.
Holding
Yes. The deeds plausibly showed that the benefit of Kotseas's promises was assignable to Plaza, and factual questions concerning that assignment precluded dismissal of the interference claim against CVS.
Reasoning
The 1968 deed from Kotseas to the Trust and the 1975 deed from the Trust to Plaza indicated an intent that the benefits of Kotseas's promises be assignable. If Plaza proves that assignment, it may obtain contractual relief against Kotseas, potentially including an order requiring Kotseas to enforce the restrictions against CVS.
The same potential contractual obligation supplied a possible foundation for Plaza's claim that CVS intentionally interfered with Kotseas's agreement. Since whether the contractual benefit passed to Plaza involved factual issues, the court could not dismiss the interference count at the pleading stage.
Issue #4
Whether Plaza's allegations that the defendants breached a commercial agreement and engaged in unfair acts or practices stated a claim under G. L. c. 93A.
Holding
No, not as pleaded. The Chapter 93A counts were properly dismissed, but Plaza could seek leave to amend them within a reasonable time.
Reasoning
Plaza alleged essentially that the defendants violated a commercial agreement and that their conduct was unfair under Chapter 93A. The Court held that these conclusory allegations did not identify facts sufficient to transform an alleged contract violation into an actionable unfair or deceptive practice.
The Court declined to give a comprehensive definition of Chapter 93A liability on a sparse pleading-stage record. The statute and its business-to-business remedy were relatively new, and the Court considered it preferable to develop the doctrine from proved or agreed facts rather than from bare allegations. Because precedent was limited, however, Plaza was permitted an opportunity to amend.
Issue #5
Whether the alleged restrictive covenants were unenforceable as an unreasonable restraint of trade as a matter of law, requiring dismissal.
Holding
No. Their reasonableness could not be decided on the factually undeveloped record at the motion-to-dismiss stage.
Reasoning
Federal Trade Commission consent decrees and unpublished trial-court decisions cited by the defendants were not authoritative interpretations establishing that these restrictions were per se unlawful under federal antitrust law. The pleadings therefore did not permit dismissal on a federal antitrust theory.
Under Massachusetts common law, a covenant restraining competition is enforceable when reasonably limited in time and geographic scope and consistent with the public interest. The special limits imposed on employee noncompetition agreements did not control because these restrictions affected commercial land uses and business entities, not an individual's opportunity to earn a livelihood.
Whether the covenant was unreasonable in duration, territory, product line, or effect on the public raised factual questions for trial. Nor did Plaza violate antitrust law or Chapter 93A merely by bringing suit to enforce restrictions it reasonably believed lawful; resort to the courts is not unlawful absent oppressive or vexatious misuse of process.