By: John F. Nagle and Matthew C. Welnicki

Recently, the Massachusetts Business Litigation Session of the Superior Court (“BLS”) was asked to evaluate whether an “agreement to agree” in a letter of intent was binding.  A central issue in the dispute was the impact of the equitable doctrine of judicial estoppel – one of the parties sought to invalidate the terms of the letter of intent by arguing that the other party must be bound by allegedly inconsistent prior statements before an administrative agency. Ultimately, the court found that the terms of the letter of intent were binding while holding that judicial estoppel could not be applied under the circumstances because, among other things, the prior proceeding was not of a judicial nature and the party looking to invoke the doctrine had itself not acted equitably. 

The underlying dispute in the case involved the sale of a railroad and development of a rail yard. The owner had entered into a letter of intent with one party that granted a right of first refusal should they decide to sell the railroad in the future. In 2012 and 2013, those would-be buyers had submitted affidavits to the Federal Surface Transportation Board (“STB”), which other parties now claimed contained statements that were inconsistent with the purported buyer’s position in litigation.

The BLS was faced with a number of questions framed as a declaratory judgment action, including: When is an agreement to agree in the future a binding contract? What is the effect of making a statement under oath to an administrative body that contradicts a position taken in litigation? How can underhanded business tactics work against a party in equity? 

Judge Kenneth Salinger addressed each in turn. First, he found that although the letter of intent contained language regarding a more detailed agreement to come, it evidenced the parties’ intent to be bound to material terms. Even though the letter of intent contemplated other agreements that were never consummated (such as a detailed lease agreement), Judge Salinger found that the letter of intent’s right of first refusal – a key term in dispute – remained in force when they opted to exercise that right after a second group of buyers had reached an agreement to buy the railroad.

Next, Judge Salinger found that the statements before the STB did not result in judicial estoppel. Although the party seeking to invoke estoppel did not actually use that term, Judge Salinger looked to this doctrine as the most applicable theory under the circumstances (he did so noting that such an argument likely was waived by the party’s failure to address it properly). According to Judge Salinger, Massachusetts courts have only applied judicial estoppel where the statements were made in a prior “judicial” proceeding, not an administrative one. Additionally, because the STB did not adopt the statements previously made, estoppel was not appropriate.

Judge Salinger also pointed out that judicial estoppel is an equitable doctrine and the party seeking to invoke it cannot do so with unclean hands. For example, Judge Salinger found the estoppel-invoking parties had tried to obfuscate the existence of the right of first refusal to sneak through a sale. 

Although BLS decisions are not necessarily binding on other Massachusetts Superior Courts, this decision was well-reasoned and is likely to be influential should similar situations arise in the future. Key takeaways and lessons from the decision are as follows: 

  • Agreements to agree can be binding if there is evidence of intent to be bound as to material terms;
  • Judicial estoppel should only be invoked if all elements of the equitable doctrine are present.  See Spinosa v. Tufts, 98 Mass. App. Ct. 1, 5 (2020) (“A successful claim of judicial estoppel generally requires the showing of two core elements: (1) the party to be estopped is asserting a position that is directly contrary to a position asserted in a prior case, and (2) that party succeeded in convincing the court to accept its prior position.”) (internal quotations omitted). 
  • To get equity, one must do equity. Tramonte v. Colarusso, 256 Mass. 299, 301 (1926).  This concept is alive and well in Massachusetts.
  • The Business Litigation Session is an appropriate venue for complex business disputes and a valuable resource to the Massachusetts business community. The judges in the session are familiar with such disputes and willing to work with the parties to shape the litigation process to their case-specific needs. At Kenney & Sams, we frequently seek to litigate in the BLS when the circumstances warrant. 

The BLS decision can be found at Milanoski v. Priscoli, No. 2384CV00071-BLS2, 2024 WL 406937 (Mass.Super. Jan. 09, 2024)

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