MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
The plaintiff, Paula Vancini, filed this action to dissolve a corporation she formed with the defendant, Matthew Martino. During the pendency of the action, the parties drafted and executed a settlement agreement (agreement or settlement agreement). A dispute regarding the agreement subsequently arose, and both parties filed motions to enforce the settlement agreement. Following a hearing, a Superior Court judge denied Vancinis motion, granted Martinos motion, and entered a judgment of dismissal. Vancini then filed a motion to alter or amend the judgment, pursuant to Mass. R. Civ. P. 59 (e), 365 Mass. 827 (1974). The motion was denied. Vancini now appeals from the judgment and the denial of the motion to alter or amend the judgment. We affirm.
Background. The material facts are undisputed. In 2016, the parties, in an effort to take advantage of a mayoral initiative within Somerville to promote “work-live” arrangements for artists, formed a corporation called Studio Ablisteaso, Inc., each being a fifty percent shareholder.
2
The sole asset of the corporation was property located at 545 McGrath Highway in Somerville (property), which was purchased by the corporation to be rented as a multiuse residential and artist workspace. Before the property could be rented, it required substantial renovations. To finance the renovations, the parties, as coborrowers in their individual capacities, obtained a home equity line of credit (HELOC) in the amount of $250,000, secured by Vancinis personal residence. Vancini also asserts that she loaned $67,208 to the company (direct loan).
3
The parties’ relationship began to deteriorate over time, and in August 2019, Vancini filed a complaint for dissolution of the corporation. Several months after the action commenced, Vancini, through counsel, offered Martino a proposed settlement agreement, which, after negotiations, the parties executed on October 24, 2019. The settlement agreement provides both parties with an option to purchase the others interest in the corporation, but it gave Martino the first right to exercise the option. The agreement, in relevant part, states:
“3. From the date of delivery by the appraiser of his/her opinion of value, [Martino] would have 60 days ․ to buy out [Vancinis] equity and creditor interests ․ in the corporation, time being of the essence. The buyout price would be determined as the sum of the following:
“a. One-half the value of the [p]roperty;
“b. The accrued interest, as of the end of the 60-day period, charged by Rockland Trust on the [HELOC] with Rockland Trust Co. that [Vancini] accessed as the source of funds loaned by her to the corporation (this would exclude any interest payments previously paid to [Vancini] on that obligation).
“c. Interest on all advances made by [Vancini] to the corporation from any source other than the HELOC, with such interest to be calculated as the Federal Reserve Prime Rate-minus-1. The parties work cooperatively in good faith to make such calculations. If they cannot agree, they shall jointly designate an accountant to make such calculations.
“d. One-half the average cash balance in the corporations operating account for the month of October, 2019.
“4. The parties shall thereafter enter into and execute a purchase and sale agreement for the purchase by [Martino of Vancinis] [i]nterests. The P&S shall provide that the corporation shall pay all expenses and liabilities as they accrue, until the closing date.”
Of note here, the agreement does not expressly address the parties’ obligations with respect to payment of the principal balance of the HELOC. Nor does it require that the direct loan be paid off prior to the purchase of either partys interest in the corporation.
Shortly after the agreement was executed, Martinos counsel sent an e-mail to Vancinis counsel inquiring whether Vancini would use the proceeds from the sale of her interest in the corporation to pay off the principal balance of the HELOC. Vancinis counsel responded via e-mail, confirming that, upon the buyout of Vancinis interest, she would “seasonably repay her HELOC account in the amount equal to: (a) the amount that was borrowed and (b) any interest on the borrowing charged by her HELOC lender and that is reimbursed to [Vancini] by Mr. Martino in connection with the buyout.”
On March 17, 2020, pursuant to the agreement, a court-appointed appraiser delivered the appraisal of the property to the parties, thereby triggering the beginning of Martinos sixty-day buyout option. On April 3, 2020, Vancini, now represented by different counsel, sent an e-mail to Martinos counsel disputing the meaning of certain terms contained in the settlement agreement. As a result, Martino filed a motion to stay his sixty-day buyout period, as well as a motion to enforce the settlement agreement. Vancini cross-moved to enforce the agreement, primarily claiming that the HELOC principal is a corporate liability that, under the agreement, must be satisfied prior to closing. In the alternative, Vancini argued that the parties mistakenly omitted terms addressing the payment of the HELOC principal and the direct loan, and that the agreement should therefore be reformed.
Following a hearing, a Superior Court judge determined that the settlement agreement did not address the parties’ obligations with respect to the principal balance of the HELOC. Specifically, he concluded that the HELOC principal is not included in the formula for calculating the buyout price, and that the HELOC principal is not an accruing liability that must be paid prior to closing. Further, because the parties did not reach an agreement regarding the HELOC principal prior to the execution of the settlement agreement, the judge concluded that there was no basis for reformation. See Caron v. Horace Mann Ins. Co., 466 Mass. 218, 223 (2013). Thus, Martinos motion was allowed, Vancinis was denied, and a judgment of dismissal entered.
Vancini subsequently filed a motion to alter or amend the judgment, arguing that (1) the settlement agreement is not a valid contract because the terms are incomplete; (2) she did not vest authority in her counsel to impose on her all liability for the HELOC principal; (3) the term “all expenses and liabilities” is too indefinite for enforcement; and (4) there was sufficient evidence that Martino materially breached the agreement. The motion was denied. Vancini timely appealed from the judgment, as well as the denial of her motion to alter or amend the judgment.
Discussion. 1. Enforceability of settlement agreement. “A settlement agreement is a contract and its enforceability is determined by applying general contract law.” Duff v. McKay, 89 Mass. App. Ct. 538, 541 (2016), quoting Sparrow v. Demonico, 461 Mass. 322, 327 (2012). An enforceable settlement agreement “requires (1) terms sufficiently complete and definite, and (2) a present intent of the parties at the time of formation to be bound by those terms.”
4
Duff, supra at 543, quoting Targus Group Intl, Inc. v. Sherman, 76 Mass. App. Ct. 421, 428 (2010). Whether contract terms are sufficiently complete and definite is a question of law, which we review de novo. See Duff, supra at 544.
a. Completeness. Vancini argues that the terms of the settlement agreement are not sufficiently complete because the agreement does not address the manner in which the principal balance of the HELOC or the direct loan will be paid. She contends that these are material terms whose absence renders the agreement unenforceable. We disagree.
While the parties must agree on the “significant, material terms” to create an enforceable agreement, “[i]t is not required that all terms of the agreement be precisely specified.” Situation Mgmt. Sys., Inc. v. Malouf, Inc., 430 Mass. 875, 878 (2000). Where a term absent from the agreement is a “ ‘subsidiary matter[ ]’ that [does] not alter the essential nature of the bargain,” there is an agreement that can be enforced. Duff, 89 Mass. App. Ct. at 544, quoting Rosenfield v. United States Trust Co., 290 Mass. 210, 216-217 (1935). The question “whether an absent term renders an agreement fatally indeterminate ․ is to be addressed based on the status of things at the time the parties signaled that an agreement had been reached.” Duff, supra. Further, “seeming indeterminacy can be resolved by reference to professional norms in the practice area.” Id.
Here, we conclude that the parties’ settlement agreement is sufficiently complete and contains the material terms necessary for enforcement. The essential nature of the parties’ bargain was to sell one of the parties’ interest in the corporation to the other, and the settlement agreement spells out exactly what is necessary for that to happen. Specifically, the agreement, which was drafted by Vancinis counsel, calculates the amount that Martino must pay to Vancini to purchase her interest in the corporation by the sum of one-half of the value of the property, the accrued interest on the HELOC, the interest on any loans made by Vancini, and one-half of the average cash balance in the corporations operating account in October 2019. By including the HELOCs interest as part of the buyout calculation, it is apparent that the parties considered the HELOC when negotiating the agreement, but excluded its principal from the buyout price. We must “construe the contract with reference to the situation of the parties when they made it and to the objects sought to be accomplished.” Shea v. Bay State Gas Co., 383 Mass. 218, 223 (1981), quoting Bryne v. Gloucester, 297 Mass. 156, 158 (1937). The fact that, subsequent to the agreement, Vancini raised a dispute about whether the HELOC principal was, or should have been, included in the buyout calculation does not, on its face, render the term material to the parties’ bargain. See Duff, 89 Mass. App. Ct. at 544 (“The fact that the negotiations eventually were scuttled over an issue does not mean that it necessarily was an essential term of the settlement”).
Further, contrary to Vancinis contentions, the agreement is not fatally incomplete simply because it does not address how the HELOC principal or the direct loan was to be paid; the agreement can be enforced in the absence of such terms. To begin, Vancini and Martino obtained the HELOC as coborrowers in their individual capacities, and, pursuant to the terms of their credit agreement, they -- not the corporation -- are jointly and severally liable for its payment. Moreover, even assuming that the HELOC, along with the direct loan, is a corporate debt as Vancini contends, a shareholders interest in a corporation can undoubtedly be sold to another shareholder without the corporation disposing of all its liabilities. See Spaneas v. Travelers Indem. Co., 423 Mass. 352, 354 (1996) (corporation is “independent legal entity, separate and distinct from its shareholders, officers, and employees”). See also Kraft Power Corp. v. Merrill, 464 Mass. 145, 148 (2013) (corporation, not shareholders, liable for its own acts). As a result, because the settlement agreement here clearly lays out what is required for the purchase of Vancinis interest in the corporation, and terms concerning the HELOC principal and the direct loan are not essential to the parties’ bargain, the settlement agreement is sufficiently complete.
b. Definiteness. Vancini argues that the term “expenses and liabilities as they accrue” in the agreement is ambiguous and too indefinite for enforcement. The argument is unavailing.
“Ambiguous or indeterminate material terms can render an attempted agreement too uncertain for enforcement.” Targus Group Intl, Inc., 76 Mass. App. Ct. at 431. “However, an ambiguity is not created simply because a controversy exists between parties, each favoring an interpretation contrary to the other.” Lumbermens Mut. Cas. Co. v. Offices Unlimited, 419 Mass. 462, 466 (1995). “A term is ambiguous only if it is susceptible of more than one meaning and reasonably intelligent persons would differ as to which meaning is the proper one.” Citation Ins. Co. v. Gomez, 426 Mass. 379, 381 (1998).
The judge, looking to the plain and ordinary meaning of the term “expenses and liabilities as they accrue,” concluded that the term is unambiguous and refers to “liabilities presently coming due on a rolling basis into the future.” See Websters Third New Intl Dictionary 13 (2002) (defining accrue as “to come into existence as an enforceable claim”). We agree. Vancini contends that the term is ambiguous solely because it fails to specifically delineate the expenses and liabilities to which it is referring. The law, however, “does not demand impracticable precision from contracting parties.” Targus Group Intl, Inc., 76 Mass. App. Ct. at 431.
It is also important to view the term in context. See Dorchester Mut. Ins. Co. v. Krusell, 485 Mass. 431, 438 (2020). After Martino tendered the buyout price to Vancini, the settlement agreement required the parties to draft and execute a purchase and sale agreement, and it is that future agreement that must include the term “expenses and liabilities as they accrue.” “If parties specify formulae and procedures that, although contingent on future events, provide mechanisms to narrow present uncertainties to rights and obligations, their agreement is binding” (quotation and citation omitted). Basis Technology Corp. v. Amazon.com, Inc., 71 Mass. App. Ct. 29, 39 (2008). We accordingly conclude that the settlement agreement was sufficiently complete and definite for enforcement.
2. Material breach. In the alternative, Vancini contends that she presented sufficient evidence that Martino materially breached the agreement by failing to “engage in good faith efforts to try to rent [the studio portion of the property] to third parties,” and that as a result, the issue should have been given to a jury. The claim is without merit.
“A party to a contract generally is relieved of [its] obligations under that contract only when the other party has committed a material breach.” Dalrymple v. Winthrop, 97 Mass. App. Ct. 547, 556 (2020), quoting Duff, 89 Mass. App. Ct. at 547. “When a party to an agreement commits an immaterial breach of that agreement, the injured party is entitled to bring an immediate action for damages; it may not stop performing its obligations under the agreement.” Duff, supra, quoting Lease-It, Inc. v. Massachusetts Port Auth., 33 Mass. App. Ct. 391, 396 (1992). A breach of a contract is material only where “it involves ‘an essential and inducing feature of the contract.’ ” EventMonitor, Inc. v. Leness, 473 Mass. 540, 546 (2016), quoting Anthonys Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 470 (1991). While materiality is ordinarily a question of fact, where “the evidence on the point is either undisputed or sufficiently lopsided[,] ․ the court must intervene and address what is ordinarily a factual question as a question of law.” EventMonitor, Inc., supra, quoting Teragram Corp. v. Marketwatch.com, Inc., 444 F.3d 1, 11 (1st Cir. 2006).
Here, the salient facts on this point are largely undisputed. Since June 2019, two of the residential rooms in the property were occupied by tenants and generated rental income for the corporation. However, as of October 2019, when the settlement agreement was executed, the studio portion of the property was vacant. The settlement agreement required Martino “to engage in good faith efforts to try to rent [the] studio to third parties.” To do so, Martino placed several online advertisements on popular websites. His efforts were unsuccessful, and in March 2020, the COVID-19 pandemic prevented him from renting the studio to third parties.
Notably, Vancini has failed to present any evidence that Martinos efforts to rent the studio were not made in good faith. Instead, she asserts that, because Martinos efforts were unsuccessful and the studio did not generate any rental income, he necessarily failed to engage in good faith efforts to try to rent the property. Such assertions are insufficient. See Polaroid Corp. v. Rollins Envtl. Servs., 416 Mass. 684, 696 (1993) (bare assertions and conclusions “are not enough to withstand a well-pleaded motion for summary judgment”); Duff, 89 Mass. App. Ct. at 542 (treating motion to enforce settlement as motion for summary judgment). Even if we were to assume that Martino breached the agreement by failing to engage in good faith efforts, that term was not “an essential and inducing feature” of the settlement agreement. EventMonitor, Inc., 473 Mass. at 546. As stated, the primary purpose of the agreement was to sell one of the parties’ interest in the corporation to the other, and whether Martino did or did not engage in good faith efforts to rent the property would not materially affect the substance of that agreement. See G4S Technology LLC v. Massachusetts Technology Park Corp., 479 Mass. 721, 734 (2019) (“Essential and inducing features of a contract are provisions that are ‘so serious and so intimately connected with the substance of the contract[ ]’ that a failure to uphold the provision would justify the other party walking away from the contract and no longer being bound by it” [citation omitted]). As a result, even if Martino committed a breach, it was not a material breach and Vancini would not be relieved of her obligations under the settlement agreement. See Duff, supra at 547-548. The judge properly denied Vancinis motion to enforce the settlement agreement, as well as her motion to alter or amend the judgment.
Judgment affirmed.
Order denying motion to alter or amend judgment affirmed.
FOOTNOTES
2
. Vancinis professional background is in finance and accounting, while Martinos career has focused on lighting design and its installation.
3
. Martino asserts that both parties invested over $100,000 in the corporation as capital contributions. However, for the purpose of reviewing the judges ruling on the parties’ cross motions, “we examine the record in the light most favorable to the losing party.” Suffolk Constr. Co. v. Illinois Union Ins. Co., 80 Mass. App. Ct. 90, 93 (2011).
4
. Vancini does not argue that she did not intend to be bound by the terms of the settlement agreement.