SJC Affirms Anti-SLAPP Protections, Clarifies Fiduciary Duty and 93A Questions as Well

Published on: July 22, 2002

If there were any lingering questions about the intent and force of the state’s anti-SLAPP statute, the Massachusetts Supreme Judicial Court (SJC) quashed them recently, with an opinion that endorses unambiguously the rights of petitioners to oppose private as well as public transactions they don’t like.

That decision, in Office One, Inc v. Lopez, also provides clear statements on two issues of peripheral interest in this case but of central concern to condominium associations: Whether a condominium board owes a fiduciary duty to individual unit owners, and whether Chapter 93A (the Massachusetts Consumer Protection Act) applies to association boards. The court responded to both questions with an emphatic “no.”

An Unwelcome Purchase

The underlying suit grew out of Office One’s purchase of four commercial units and 36 parking spaces at a luxury, mixed-use (residential and commercial) condominium. Office One planned to lease one of the units to a subsidiary, Pilgrim Telephone Inc., a telecommunications service that opponents described as a “telephone sex operation.”

Reaction to the planned purchase was less than enthusiastic, to say the least. The opponents included a real estate broker (and unit owner) who had bid unsuccessfully to purchase the same units on behalf of a client, as well as other unit owners and members of the condominium board, who objected to the nature of Pilgrim’s business, the loss of services from the existing businesses that Pilgrim would displace, security problems created by the company’s 24-hour business operation, and the potential overuse of common area facilities by Pilgrim employees. Office One Fights Back

Opponents launched an all-out effort first to prevent the transaction and then to reverse it. As part of that campaign, unit owners posted notices and circulated fliers within the community and board members asked their Congressional representatives to intervene.Office One filed suit against the condominium board and the unit owners who had led the effort against the company. The suit accused the real estate broker, individual owners, the board, and the board’s attorney, variously, of defamation, breach of fiduciary duty, interference with contractual relations, and civil conspiracy, among other allegations.

All of the defendants moved to dismiss the suit, arguing that their actions were protected under the anti-SLAPP statute. The law – an acronym for Strategic Lawsuit Against Public Participation – was enacted in the mid-1990s primarily to prevent developers from using lawsuits as a weapon to squelch local opposition to development plans. The statute creates an expedited procedure under which defendants can move to dismiss a lawsuit filed against them to counter protected petitioning activities.

The law defines those activities broadly to include “any written or oral statement made before or submitted to a legislative, executive, or judicial body, or any other governmental proceeding; any written or oral statement made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other governmental proceeding; any statement reasonably likely to encourage consideration or review of an issue by a legislative, executive, or judicial body or any other governmental proceeding; any statement reasonably likely to enlist public participation in an effort to effect such consideration; or any other statement falling within constitutional protection of the right to petition government.”A Superior Court judge initially granted summary judgment to the condominium defendants on all grounds, then reinstated the breach of fiduciary duty and 93A claims against the trustees. But another Superior Court judge subsequently ruled in favor of the trustees on those counts as well. Office One then appealed, and the SJC decided to hear the arguments directly, transferring the case on its own motion and skipping the Appeals Court review.

A Swat at SLAPP

Office One contended that the anti-SLAP statute did not apply to this dispute because it was not a “classic” SLAPP case, in which a developer or other entity was using the courts to intimidate or silence less powerful opponents. The opponents were neither defenseless nor disadvantaged, but “politically connected” individuals who, Office One alleged, used illegal means to block a totally private transaction, without any element of the public concern the anti-SLAPP statute was designed to protect. Allowing the condominium defendants to claim SLAPP protection “illustrates the potential for harm which can occur to the non-moving party through the misapplication [of the law],” Office One maintained.

The SJC disagreed completely and emphatically. To claim SLAPP protection, the court said, the moving parties must demonstrate that the claims against them are based solely on their petitioning activity. “It is not necessary that the challenged activity be motivated by a matter of public concern,” the court wrote. “The focus is solely on the conduct complained of and if the only conduct complained of is petitioning activity, there can be no other ‘substantial basis’ for a claim.” To pierce that protective shield, the court said, Office One would have to show “by a preponderance of the evidence” that the petitioning activity “is devoid of any reasonable factual support or any basis in law” — a very difficult standard to meet.

That is about as strong a reaffirmation of the statute as the court could have provided based on the facts in this case. The anti-SLAPP statute is intended to protect the right of all citizens to petition the government — a fundamental right, the court said, that does not require a broad public purpose. The law’s protection extends to individuals, like the broker and unit owners in this case, who were pursuing purely private interests. The court made it clear that the motivation for the petition doesn’t matter; the right to petition is absolute.

Fiduciary Duty

The court’s statements on the fiduciary duty and 93A issues were equally clear. Office One had claimed that the condominium board violated its fiduciary duty to the company, as a unit owner, by seeking to restrict its allotment of parking spaces. But according to the SJC, “As a matter of law, members of the governing board of a condominium association owe no fiduciary duty to individual condominium unit owners.” The board’s fiduciary duty runs, rather, to the condominium trust. Massachusetts courts have made that point in passing in other cases, but never as unequivocally as the SJC asserted it here.

93A Doesn’t Apply

The court was equally unequivocal on the 93A question. The protections of that law apply only to unfair or deceptive acts or practices “in the conduct of any trade or commerce,” the court noted. The trustees, as volunteers, “are not engaged in trade or commerce,” and thus cannot be sued under that law.

“It is evident from the complaint that the [93A] claim arises exclusively from the private relationship between the trustees and the plaintiffs as condominium unit owners,” the court explained, and “transactions that are principally private in nature do not fall within the purview of [93A].”

We’ve taken that position for years and the lower courts have always agreed, but now we have an SJC decision confirming that view. At least in theory, this should discourage plaintiffs from bringing 93A claims against condominium boards in the future. It certainly means that boards should be able to dispose quickly of any 93A suits that are filed against them.