In this assessment, a judge is to consider “the relative merits of the appeal and the relative financial means of the plaintiff and the defendant.”  G.L. c. 40A, § 17.  

Potential zoning plaintiffs, project proponents, lawyers, land use professionals, and perhaps even some judges wondered what costs could be covered as well as what procedures must be followed. The Supreme Judicial Court in December 2022 has provided answers in a case challenging the grant of a comprehensive permit in Salisbury, MA. 

The case is Terrence Marengi, Jr. et al. v. 6 Forest Road LLC, et al. (491 Mass. 19 (2022)). Two direct abutters and two non-direct abutters filed a complaint in Superior Court pursuant to G.L. c. 40A, § 17 and G.L. c. 40B, § 17 against the Salisbury Zoning Board of Appeals for granting a 40B permit to 6 Forest Road LLC, the developer of a proposed 56-unit condominium project.

Plaintiffs’ complaint alleged that the ZBA erred in granting the permit when (1) the developer lacked a valid purchase and sale agreement to establish site control; (2) the developer lacked economic justification for seeking to construct sixteen units in addition to the forty specified in the purchase and sale agreement; (3) the town had already exceeded the statutory  minimum requirement to have 10 percent of its housing subsidized; and (4) the board failed to fully scrutinize the project’s impacts on plaintiffs’ abutting properties. 

In response to the Plaintiffs’ complaint, the defendant developer filed a motion for the plaintiffs to post a $50,000 surety or cash bond pursuant to the new provision in G.L. c. 40A, § 17 “to secure the payment of costs owing to the harm to the public interest” and to the developer “caused by the delays occasioned by this appeal”.  The developer said that the bond was needed to the public interest of additional affordable housing and counterbalance the costs of the appeal, estimated at $25,000. This figure included increased costs of lumber and framing materials; increased interest rates; estimated attorney’s fees; and costs of traffic, engineering, and environmental experts.   

Specifically, G.L. C 40A, § 17 provides:

The court, in its discretion, may require a plaintiff in an action under this section appealing a decision to approve a special permit, variance or site plan to post a surety or cash bond in an amount of not more than $50,000 to secure the payment of costs if the court finds that the harm to the defendant or to the public interest resulting from delays caused by the appeal outweighs the financial burden of the surety or cash bond on the plaintiffs. The court shall consider the relative merits of the appeal and the relative financial means of the plaintiff and the defendant.

The Superior Court in part granted the developer’s motion by reducing the bond amount from $50,000 to 35,000, citing a November 9, 2021 Land Court decision [Anderson v. Community Housing Resources, Inc., 21 MISC 000324] that was one of the first cases to address this issue.  A single justice of the Appeals Court granted plaintiffs leave to file an interlocutory appeal and the SJC transferred the case to itself, primarily to address whether the bond provision in G.L. c. 40A, § 17 applied to an appeal of comprehensive permit under G.L. c. 40B, § 21. 

The SJC ruled that the bond provision applies to 40B permit appeals, noting that Section 21 incorporates G.L. c. 40A, § 17 explicitly by reference as the procedure by which a comprehensive permit is appealed. The SJC also reasoned that because appeals of site plans are within the ambit of Section 17’s bond provision, and a comprehensive permit “invariably” include a site plan as a component of a comprehensive permit, a plaintiff appealing a comprehensive permit issued under 40B is subject to the bond provision.  

The SJC helpfully reviewed the legislative history to bolster its interpretation, finding that it is intended to protect developers from frivolous appeals to encourage construction of affordable housing throughout the state.  

The SJC next addressed the plaintiffs’ argument that the trial court erred in requiring the bond without a finding that their appeal was brought in bad faith or with malice.  The SJC agreed with plaintiffs on this point. The Court noted that the language in Section 17 that a judge must “consider the relative merits of the appeal” reflected a legislative intent to focus on the “relative merits” of the case rather than the specific intent of the plaintiffs, which is difficult to prove.  Even so, the SJC went on to establish a clear rule that incorporates the concepts of bad faith or malice: “Thus, the Court should not require a bond unless the appeal appears to be so devoid of merit as to allow the reasonable inference of bad faith or malice.” That is an important takeaway from this case.

Finally, the SJC determined which kinds of costs and expenses are to be secured by the bond. Considering the $50,000 maximum amount permitted, the SJC concluded that more than just “taxable costs” (filing fees, witness fees, and travel fees) were intended, as taxable costs “almost never come close to $50,000” and thus would render the cap superfluous.  Seeing the bond provision as one component of the Legislature’s goal to increase affordable housing, in part by deterring frivolous appeals and the delays they bring, the SJC felt the bond provision was an exception to the usual rule that “costs” mean just “taxable costs.”  

Even so, the SJC did not agree with the developer’s expansive idea of what “costs” should include. The SJC noted that the statute does not say “all costs” or authorize attorney’s fees or damages due to the delay caused by the appeal, like some other statutes do.  Relying on its interpretation of a similar provision in Chapter 93A, the Consumer Protection Act, the SJC ruled that “costs” under Section 17 are the “actual, reasonable costs” directly related to the litigation. Examples provided are expert witness fees (except jury consultants), but not attorney’s fees or carrying costs, or other delay damages. The SJC noted that such expansive costs could easily amount to or exceed $50,000. 

Procedurally, as the trial court had not had the benefit of its decision, the SJC remanded the matter back to the trial court to determine whether a bond should be posted, and, if so, in what amount. The SJC said it was not clear on what costs the judge even considered.  On remand and after a hearing, the Superior Court found each of the four counts in the plaintiffs’ appeal so devoid of merit that it may be reasonably inferred to have been brought in bad faith.  The Court ordered plaintiffs to post bond or surety in the amount of $35,000 to be used to secure payment of expert witness costs and fees. In deciding whether to require a bond, the court weighed the harm to the public interest against the financial burden to the plaintiffs, noting the collective assessed value of their homes is in excess of $2.5M. 

Potential zoning plaintiffs and their counsel should consider the SJC’s decision in Terrence Marengi, Jr. et al. v. 6 Forest Road LLC. It may give them pause before filing suit. Developers and other permit holders now have a first level of protection against frivolous suits with the option of moving for the plaintiff to post the bond. In any event, everyone gets the benefit of the SJC’s clarity on application of the Zoning Act’s new bond provision.