Tag Archives: #commercialrealestate

Courts Force Abutters to Take Appeal Bond Seriously

Plaintiffs Dealt Seatback in Salisbury 40B Case
By Christopher R. Vaccaro
Special to Banker & Tradesman

A recent Supreme Judicial Court ruling imposes new requirements on abutters challenging the approval of housing developments.

The 2021 amend­ment to the Mas­sachusetts Zoning Act was intended to encourage multifamily housing production by  making it easier for mu­nicipalities to change local laws to allow higher density housing projects and for de­velopers to obtain special permits for such projects, and by requiring communities with MBTA service to establish zoning districts permitting multifamily housing as of right.

The amendment also changed Section 17 of the Zoning Act, which allows “persons aggrieved” to appeal local zoning decisions in court. Such appeals often impose finan­cial hardships on developers and prevent housing projects from going forward.

But now judges hearing appeals of spe­cial permits, variances and site plan ap­provals may require plaintiffs to post surety or cash bonds of up to $50,000 to secure payment of developer’s costs, when poten­tial harm to developers or the public inter­est resulting from delays outweighs the fi­nancial burden of the bond on the plaintiffs. Recent decisions by the Supreme Judicial Court and the Superior Court in Marengi vs. 6 Forest Road LLC offer in­sight into how courts will apply this bond­ing requirement.

Abutters Challenged 40B Development

The developer in Marengi obtained a comprehensive permit under Chapter 40B from the Salisbury Board of Appeals for a 56-unit project with 14 affordable units in 2021. Abutters appealed to the Superior Court, arguing that the comprehensive per­mit should not have been issued because the developer lacked a valid purchase and sale agreement, there was no economic jus­tification for the project, the town already exceeded the statutory minimum of 10 per­cent subsidized housing units under Chap­ter 40B and the Zoning Board failed to fully consider the project’s impacts.

The developer moved for a court order requiring the abutters to post a $50,000 bond to cover some of the developer’s esti­mated $250,000 in costs caused by the ap­peal, including increased construction costs, consultant fees, higher interest rates and attorney’s fees. The Superior Court judge ordered the abutters to post a $35,000 bond, without conducting a hearing. The abutters appealed, claiming that the bond requirement does not apply to appeals of comprehensive permits; that the bond order was improper because their appeal was not brought in bad faith or with malice; that the bond impermissibly included costs outside of the scope of the statute; and that the Su­perior Court judge abused his discretion. The SJC took up the appeal, and issued its decision last December.

Superior Court Gets the Last Word

The SJC noted that the bond requirement specifically applies to appeals of site plan approvals, which are a necessary compo­nent of applications for comprehensive per­mits. Therefore, the bond requirement can be imposed when abutters appeal compre­hensive permits. However, the SJC noted that the Zoning Act only allows costs to be awarded against plaintiffs who “acted in bad faith and with malice in making the ap­peal.” The Superior Court cannot order a bond without a specific finding that the abutters’ appeal “appears so devoid of merit that it may be reasonably inferred to have been brought in bad faith.”

As to what costs are properly covered by the bond, the SJC found a middle ground between the developer’s argument that the bond should cover all of its costs caused by the appeal, including expert fees, attorney’s fees, carrying costs and delay damages, and the abutters’ argument that the bond should only cover “taxable costs” such as filing fees, travel costs and nominal witness fees.

The SJC ruled that the bond could cover expert fees, but not attorney’s fees, carrying costs, and other delay damages. Because the Superior Court’s order lacked specific findings of bad faith or malice by abutters and discussion of what costs can be cov­ered by the bond, the SJC was unable to de­termine if the Superior Court judge properly exercised his discretion. The SJC vacated the bond order and remanded the case to the Superior Court.

Last month the Superior Court got the final word on this, issuing a harsh decision against the abutters. The court ruled that the abutters’ arguments against the compre­hensive permit were so devoid of merit that they could be reasonably inferred to have been brought in bad faith. The court issued a new order, reinstating the $35,000 bond requirement. The abutters accepted a dis­missal of their appeal.

Marengi vs. 6 Forest Road LLC shows that Massachusetts courts are mindful of the purposes behind the recent amendment to the Zoning Act, and they are prepared to require hostile abutters to put up serious money if, without good reason, they chal­lenge zoning relief granted to housing devel­opers.

Download the article as seen in  Banker & Tradesman on March 27, 2023. Learn more about Christopher R. Vaccaro.

How a Smart Growth District Changed Downtown Reading

Housing Production Follows Zoning Updates
By Christopher R. Vaccaro
Special to Banker & Tradesman

Reading’s smart growth district zoning attracted projects such as Oaktree Development’s 30 Haven, which includes 53 apartments and 22,000 square feet of retail space steps from an MBTA commuter rail station.

The Smart Growth Zoning and Housing Production Act, codified at Chapter 40R of the Massachusetts General Laws, is intended to promote multifamily housing developments.  The results have been mixed, as many communities balk at these developments. But the town of Reading, located along Interstates 93 and 95 and served by the MBTA’s commuter rail and buses, has embraced Chapter 40R, with positive outcomes.

Chapter 40R encourages cities and towns to establish smart growth zoning overlay districts, where higher density residential developments are allowed as of right, near public transit facilities and town centers. The Massachusetts Department of Housing and Community Development oversees this program.

To obtain DHCD approval, proposed smart growth districts must allow at least eight units per acre for single-family dwellings, 12 units per acre for two- and three-family dwellings, and 20 units per acre for multi-family dwellings. At least 20 percent of units must be affordable – that is, available for families earning less than 80 percent of area-wide median income. Chapter 40R enables municipalities to direct high-density developments to better suited locations, unlike Chapter 40B of the Massachusetts General Laws, which lets developers circumvent local zoning restrictions in communities lacking sufficient affordable housing.

Payments Offer Incentives for Density

Participating municipalities qualify for one-time zoning incentive payments under Chapter 40R, based on the number of additional housing units permitted as of right in their smart growth districts. Zoning incentive payments can be as high as $600,000 for smart growth districts allowing over 500 additional housing units. Chapter 40R also provides for one-time density bonus payments of $3,000 per housing unit upon issuance of building permits.

Reading has established two smart growth districts. Its Gateway Smart Growth District is on the former campus of Addison-Wesley Publishing near I-95. Housing developments there added 424 dwelling units, of which 200 are within the smart growth district and 43 units are affordable.

Reading’s Downtown Smart Growth District, in the commercial center, has five completed projects that added 192 units, including 43 affordable units. An additional 42 units are approved for construction in that district.

The two smart growth districts earned Reading $700,000 in zoning incentive payments, and over $1 million in density bonus payments. Projects on the drawing board are expected to generate another $123,000 in density bonus payments. Reading also recently approved three significant Chapter 40B products. The Metropolitan and Schoolhouse Commons projects, both located near the commuter rail station, added 88 rental units. The Eaton Lakeview project added 12 ownership units and 74 rental units.

A Faster Path to Compliance

Some of Reading’s Chapter 40R and Chapter 40B projects set aside 25 percent of their rental units as affordable, instead of the usual 20 percent. This increased percentage provides a noteworthy advantage.  As mentioned above, Chapter 40B enables developers to avoid local zoning laws in communities with insufficient affordable housing. But municipalities whose subsidized housing inventory (SHI) exceeds 10 percent of its total inventory, qualify for a “safe harbor.”

Under this safe harbor, if the local zoning board of appeals denies a comprehensive permit application for a proposed Chapter 40B project, the developer cannot successfully appeal to DHCD. Affordable units are included in municipalities’ SHI when determining whether they qualify for the safe harbor.

If a municipality increases the required percentage of affordable rental units from 20 percent to 25 percent, it can include all rental units at those projects in its SHI, not only the affordable units. This benefit helped Reading increase its SHI by 334 units since 2013, resulting in a 10.49 percent SHI and safe harbor protection under Chapter 40B. Reading now has better control over locations and densities of future housing developments.

However, SHI percentages can fall below 10 percent if market-rate units are added to the inventory by new construction or conversion of affordable units to market-rate units. Reading’s planning department continually monitors its SHI.

Andrew MacNichol, the town’s community development director, is also focused on the 2021 Massachusetts Zoning Act amendment, requiring that MBTA communities like Reading to have at least one zoning district where multifamily housing is permitted as of right. The Massachusetts attorney general warned this month that MBTA communities that fail to comply risk liability under federal and state fair housing laws.

MacNichol is confident that Reading will comply, noting that the town “has prioritized working with stakeholders and engaging in a robust public process for all housing developments. Support from the public at large and governing bodies has been an immense benefit. We will continue with these efforts for all future opportunities and needs.”

One town alone cannot solve the housing shortage in Massachusetts, but Reading is doing its part.

Download the article as seen in  Banker & Tradesman on March 27, 2023. Learn more about Christopher R. Vaccaro.

Future of Rent Acceleration Clauses in Doubt

Appeals Court: Landlord Can Collect Actual, Not Liquidated, Damages
By Christopher R. Vaccaro
Special to Banker & Tradesman

Commercial leases typically give landlords several rights and remedies when tenants default, including lease termina­tion, eviction and suits for contract damages. But for some landlords these remedies are not enough, so they add rent acceleration as an additional remedy.

Rent acceleration clauses let landlords evict defaulted tenants, and also demand that tenants immediately pay as liquidated damages all remaining unpaid rent through the end of the lease term. Tenants get no offsets for the fair rental value of the va­cated premises or rents received from new tenants if the premises are relet.

Rent acceleration clauses let landlords evict defaulted tenants, and also demand that tenants immediately pay all remaining unpaid rent through the end of the lease term.

Despite the harshness of this remedy, Massachusetts appellate courts have upheld rent acceleration clauses. For example, in 2007, the Supreme Judicial Court ruled in Cummings Properties, LLC v. National Communications Corp. that a tenant had to pay more than $500,000 in accelerated rent. The Appeals Court in 2019 enforced a rent acceleration clause in Cummings Proper­ties, LLC v. Calloway Laboratories, Inc., requiring a tenant to pay over $1.8 million as liquidated damages.

A tenant narrowly escaped a rent acceler­ation clause in SpineFrontier, Inc. v. Cum­mings Properties, LLC, a 2019 Appeals Court decision. The tenant’s lease in that case automatically renewed for five years unless the tenant sent the landlord a termi­nation notice. The tenant emailed its land­lord a termination notice, but the lease re­quired that notices be sent by constable, certified mail, or courier service. The land­lord claimed that the lease renewed auto­matically because the emailed termination notice was ineffective, and demanded more than $1.7 million in accelerated rent for the unused renewal term. Fortunately for the tenant, the Superior Court and the Appeals Court ruled that the emailed notice and the tenant’s other communications with the landlord were sufficient to terminate the lease, rendering the landlord’s accelerated rent claim academic.

Last December, the appeals court directly ruled on the validity of a rent acceleration clause in Cummings Properties, LLC v. Hines. Plaintiff Darryl Hines organized the Massachusetts Constable’s Office Inc. (MCO) as a civil process service firm. The firm developed a reputation for using ag­gressive tactics to serve process and make arrests, which earned Hines and MCO un­wanted attention in the local media.

Cummings Files for Further Review

After MCO secured a contract with the Massachusetts Department of Revenue in 2016, it rented space in Woburn from Cum­mings Properties under a five-year lease. Hines personally guaranteed the lease. Like many of Cummings’s commercial leases, MCO’s lease had a rent acceleration clause. Less than a month into the lease, DOR sus­pended its contract with MCO, whereupon MCO defaulted on the lease. Cummings sued MCO in District Court for eviction and $74,000 of accelerated rent. Hines signed an agreement for judgment on behalf of MCO, without an attorney’s assistance, awarding Cummings possession and $74,000 in dam­ages. A year later, Cummings signed a new lease with a different tenant. One might think that the new lease would have ended Cummings’s desire to collect accelerated rent, but it did not.

Years after Cummings and MCO signed the agreement for judgment and Cummings secured the new tenant, Cummings sued Hines under his lease guaranty in Superior Court for the accelerated rent. At trial, for reasons that are unclear, Cummings dis­avowed the agreement for judgment against MCO in District Court when MCO did not have an attorney. Cummings stated that it was pursuing rights against Hines under the lease and the guaranty only. A Superior Court judge entered a judgment against Hines for $82,000, concluding that the accel­erated rent clause was enforceable because it was a reasonable estimate of Cummings’s anticipated damages. Hines appealed.

The Appeals Court noted that rent accel­eration clauses may be enforceable as liqui­dated damages provisions as long as they are not punitive, and Hines had the burden of proving that the clause was unenforce­able. However, the court observed that Cummings’s acceleration clause allowed it to recover possession of the leased prem­ises, relet it and collect rent from a new ten­ant, and still claim accelerated rent from MCO, without accounting for the rent re­ceived from the new tenant. Therefore, the accelerated rent clause bore no reasonable relationship to Cummings’s expected dam­ages, rendering it an unenforceable penalty. The Appeals Court ruled that under these circumstances, Cummings could only col­lect its actual damages, not liquidated dam­ages, from Hines under his guaranty.

Cummings has applied to the Supreme Judicial Court for further appellate review of this decision. Many commercial land­lords and tenants, and their lawyers, will be watching with interest as to how the SJC rules on that application.

Download the article as seen in  Banker & Tradesman on February 27, 2023. Learn more about Christopher R. Vaccaro.

Economic Disruptions Threaten Financing for Salem Wind Project

Former Power Plant Property Eyed for Staging
By Christopher R. Vaccaro
Special to Banker & Tradesman

In his introduction to “The Scarlet Let­ter,” Nathaniel Haw­thorne wrote, “And yet, though invariably hap­piest elsewhere, there is within me a feeling for Old Salem, which, in lack of a better phrase, I must be content to call affection.”

Tourists and historians share Haw­thorne’s affection for Salem. Salem’s 400- year history has some blemishes, such as the 1692 witch trials. But it also has note­worthy successes, such as its involvement in global maritime trade during the 18th and 19th centuries and in manufacturing during the 20th century. Today, renewable energy firms eye Salem as a staging area for off­shore wind turbine projects.

Whether this Gateway City ultimately serves this role depends on Avangrid Inc. and its Commonwealth Wind project. Avan­grid is a foreign-owned utility company that delivers electricity and natural gas to mil­lions of ratepayers in New England and New York. Through its subsidiary Avangrid Renewables, it promises to generate clean energy using offshore wind turbines. With its Vineyard Wind project already under construction, Avangrid also plans to de­velop other offshore wind turbine projects known as Commonwealth Wind and Park City Wind on the continental shelf south of Martha’s Vineyard.

Developers Signed Purchase Agreements with Utilities

Commonwealth Wind is the largest off­shore wind project on the drawing board for New England. It is expected to gener­ate 1,200 megawatts of clean energy, enough for 700,000 Massachusetts homes. The project will reduce greenhouse gas emissions by 2.35 million tons per year, the equivalent of removing 460,000 gasoline-powered cars from the road. Park City Wind is expected to generate another 800 megawatts for ratepayers in Connecticut.

A major industrial investment in a Gateway City north of Boston could come undone thanks to economic disruptions and a dispute between a major multinational company and state power regulators.

Avangrid entered into long-term power purchase agreements (PPAs) with several utility companies at set prices for Com­monwealth Wind.

Crowley Maritime, a specialist in port management and logistics, purchased the site last October for $30 million through a public-private partnership with the city of Salem. Avangrid will be its anchor tenant. The terminal will be used for turbine pre-assembly and component storage, trans­portation, and staging activities. Common­wealth Wind is expected to create thousands of jobs and attract millions of dollars of state investment to Salem. Ter­minal construction is scheduled to begin this year, with completion in 2025.

Utilities Dispute Terms of Agreements

Plans for Commonwealth Wind and the Salem Harbor Wind Terminal look promis­ing, but there is a catch. Avangrid recently sought to renegotiate the PPAs with the utility companies, to improve the return on its anticipated investment. When the utility companies balked, Avangrid filed a motion with DPU in December to stop DPU’s re­view of the PPAs and dismiss the utility companies’ petitions. Avangrid claimed that Commonwealth Wind cannot be fi­nanced or built under the current PPAs for several reasons, including the Ukraine war, inflation, higher interest rates, supply chain problems and other economic dis­ruptions.

The utility companies urged DPU to re­ject Avangrid’s attempt to stop DPU’s ap­proval process, arguing that if DPU were to dismiss their petitions at this late stage, offshore wind projects in Massachusetts would be undermined. The attorney gen­eral and Department of Energy Resources reaffirmed their support for the PPAs.

DPU approved the PPAs over Avangrid’s objections on Dec. 30. DPU found that Commonwealth Wind satisfied eligibility criteria for offshore wind energy genera­tion, the PPAs will facilitate project financ­ing, and the project will enhance the elec­trical grid’s reliability while stabilizing winter electricity pricing. It also found that the PPAs ensure that cost overruns will not be borne by ratepayers, the project can be completed in a reasonable time­frame, and the project will be properly paired with energy storage systems. DPU noted that Commonwealth Wind will miti­gate environmental impacts and produce economic benefits in a cost-effective man­ner that will further the public good. Given these benefits, it is unsurprising that DPU approved the PPAs.

Regardless of this approval from DPU, the future of Commonwealth Wind and the Salem Harbor Wind Terminal depends on whether Avangrid can secure financing and materials in a changing economic en­vironment. If Avangrid cannot do so, the goal of weaning Massachusetts ratepayers off fossil fuels over the next few decades will be at risk. That setback would be a challenge for Gov. Maura Healy’s nascent administration.

Download the article as seen in  Banker & Tradesman on October 31, 2022. Learn more about Christopher R. Vaccaro.

A Tale of Two Turnpike Air Rights Developments

As Parcel 12 Rises, 1000 Boylston Descends into Legal Battle
By Christopher R. Vaccaro
Special to Banker & Tradesman

Boston is an attractive city with many desirable attributes, but it remains scarred by the 20th century public transportation project known as the Massachusetts Turnpike, an urban canyon that separates the Back Bay and South End.

Decades ago, turnpike air rights developments for the Hynes Convention Center, Prudential Center, John Hancock garage and Copley Place bridged some of this gap, but no similar projects have been completed since the 1980s. This is not surprising, given the engineering, permitting and financial challenges involved when constructing buildings over an eight-lane interstate highway and adjacent railroad tracks.

The city of Boston and the then-Massachusetts Turnpike Authority tried to facilitate air rights developments in 1997 with a memorandum of understanding that gave the city a role in approving those projects.  The city published “A Civic Vision for Turnpike Air Rights in Boston,” which offered project guidelines on 23 air rights parcels delineated by the Turnpike Authority, but the 2008 financial crisis and subsequent Great Recession stalled development.

In 2018, Weiner Ventures placed a major project on the drawing board involving parcel 15, an 11,000-square-foot air rights parcel near the Hynes Convention Center. The Weiner project would have combined parcel 15 with adjacent properties for a mixed-use project holding 108 condominium units, a 175-space parking garage and a 45,500 square-foot retail component. To satisfy Boston’s inclusionary development policy, the Weiner project would have created at least 51,000 square feet of affordable housing at locations to be negotiated with the Boston Planning & Development Agency.

Teaming Up with Suffolk Construction

Weiner formed a joint venture with an entity controlled by John Fish, the president of Suffolk Construction Co., to develop parcel 15. Suffolk was engaged as general contractor.  State and local government did their part to support the Weiner project. The BPDA successfully petitioned the Boston Zoning Commission to establish parcel 15 as a planned development area, and the state legislature passed a law specifically authorizing the Massachusetts Department of Transportation to double the maximum air rights lease term for parcel 15 from 99 years to 198 years.

By summer 2018, most of the permitting for the Weiner project was in place or forthcoming, leaving Weiner to negotiate financing.  Suffolk mobilized a construction team  to start site work. But the deal abruptly fell apart in 2019, after Weiner and Fish had already invested over $80 million in project costs. Weiner’s principal, Stephen Weiner, became uncomfortable with project risks.  He refused to sign a personal guaranty for the project, and was reluctant to pledge liquid collateral to secure a limited recourse guaranty.

In August 2019, Weiner announced that the parcel 15 project would not proceed.  Fish scrambled to find substitute investors for Weiner and structure a financial arrangement that would enable Weiner and him to recover their investments, but without success.  MassDOT terminated the development agreement for parcel 15 in October 2019.

At a topping-off ceremony in September, Samuels & Assoc. marked the completion of vertical framing for an office and life science tower anchored by CarGurus’ headquarters on Massachusetts Turnpike air rights parcel 12. Photo courtesy of Samuels & Assoc.

Fish filed suit in Superior Court against Weiner for breach of contract, intentional misrepresentation, tortious interference and unfair and deceptive business practices.  Weiner answered with the expected denials, affirmative defenses and counterclaims.  Discovery by the parties is ongoing and is expected to be completed next year.  A once-promising collaboration between Weiner and Fish has degenerated into nasty litigation.

CarGurus HQ and Hotel Rise on Boylston Street

Meanwhile, a few hundred feet down Boylston Street to the west of parcel 15, there is good news to report. Samuels & Assoc. is making steady progress developing the 1.8-acre Mass Pike air rights plot known as parcel 12 with MassDOT.  Suffolk, which lost work when Weiner’s parcel 15 project was abandoned, is handling construction at parcel 12.

Samuels and Suffolk reached a significant milestone this year when they completed the decking over the Mass Pike. The decking will support a 657,000 square foot mixed-use project containing office, life science and retail space, together with a half acre public plaza. The office building will serve as corporate headquarters for CarGurus, and another building will accommodate a citizenM Hotel. Public benefits include improved access for pedestrians, cyclists and commuters. Samuels is also expected to make housing and jobs exaction payments to the city totaling over $5 million under a development impact project agreement with the BRA.

The parcel 12 project is an overdue step toward healing the urban wound caused by the Mass Pike. Contrast this with the abandoned parcel 15 project, which failed to heal the urban wound, and instead inflicted a wound on the relationship between two of Boston real estate’s biggest players.

Download the article as seen in  Banker & Tradesman on October 31, 2022. Learn more about Christopher R. Vaccaro.

A Serial Plaintiff Gets Another Day in Court

Court Favors ADA “Tester” in Maine Inn Lawsuit
By Christopher R. Vaccaro
Special to Banker & Tradesman

Deborah Laufer is a severely disabled Florida resident.  She needs a wheelchair to get around, and has limited use of her hands and impaired vision.  Her disabilities require numerous accommodations, such as accessible parking, wheelchair ramps and widened passageways.

She is also a self-described Americans with Disability Act “tester” – an individual who seeks out businesses that are noncompliant with the ADA and its regulations, but does not intend to actually use the businesses’ services.

Under the ADA, “no individual shall be discriminated against on the basis of disability in the full and equal enjoyment … of
any place of public accommodation by any person who owns … or operates a place of public accommodation.”

Hotels are public accommodations subject to this law. ADA regulations require that hotel reservations systems describe accessible features in hotel facilities “in
enough detail to reasonably permit individuals with disabilities to assess independently whether a given hotel or guest room meets his or her accessibility needs.” These regulations are designed to help disabled individuals efficiently determine from hotel online reservation systems whether a hotel can accommodate them.

Surfing for Online Violations

Whether testers like Laufer have “standing” to file lawsuits is a threshold issue in discrimination cases. Courts developed the standing doctrine to ensure that plaintiffs
have concrete injuries, and that they are not merely concerned bystanders seeking to vindicate their value interests. In order to have such standing, plaintiffs must suffer actual injury, traceable to the defendants’ misconduct, which can be redressed by the courts.

Plaintiffs without standing cannot maintain lawsuits, and courts must dismiss their cases. In 1982, the United States Supreme Court ruled in Havens Realty Corp. v. Coleman that a Black tester had standing to sue a real estate company that refused to show her available housing. However, many federal courts have dismissed ADA lawsuits filed by serial testers, ruling that the testers lack standing.

Laufer surfs the internet looking for hotels nationwide whose online reservation systems lack information on accessibility.  When she finds them, she engages lawyers
to sue hotel operators in federal court for ADA violations, seeking declaratory judgments, injunctive relief and attorney’s fees. The ADA does not allow private parties to collect monetary damages, but it does require violators to pay their attorney’s fees, thus creating a lucrative industry for lawyers that work with testers like Laufer. With such lawyers’ assistance, Laufer has filed over 650 lawsuits involving non-compliant ORS.

Some federal courts have ruled that Laufer lacks standing to maintain her lawsuits.  But she persists, despite occasional setbacks.

Hotels that fail to comply with ADA requirements for online reservation systems face increased risk of liability in the wake of a recent court filing

Who Has Standing?

In 2020, she discovered that the online reservation system for the Coast Village Inn and Cottages of Wells, Maine lacked information on accessibility. She filed suit in the federal court in Maine, claiming that the inn’s online reservation system caused her “humiliation and frustration at being
treated like a second-class citizen.” The district court dismissed her suit, ruling that she lacked standing to sue the inn because, as an ADA tester, she did not suffer an actual injury, and no injury to her was imminent.

Last month, the U.S. Court of Appeals for the First Circuit, which hears federal appeals from Maine, Massachusetts, New Hampshire and Rhode Island, overruled the Maine federal district court. While acknowledging the division among federal appeals courts on Laufer’s standing to file suits as an ADA tester, the First Circuit appeals court ruled that Laufer had standing to sue the Maine inn.

The appeals court acknowledged Laufer’s claim that the inn’s online reservation system lacked accessibility information required by ADA regulations. This denial of information to Laufer, a disabled individual, was actionable under the ADA. Laufer’s status as a tester, with no intent to actually use the accessibility information, did not change this. The deficient reservation system
caused Laufer a concrete injury, because the lack of information put her “on an unequal footing to experience the world in the same way as those who do not have disabilities.” For these reasons, the First Circuit appeals court reversed the district court’s judgment, allowing Laufer’s lawsuit to proceed.

Because of the split among federal appeals courts on ADA testers’ standing, the U.S. Supreme Court may eventually decide this issue. For now, hotels and inns, especially those located in Maine, Massachusetts, New Hampshire and Rhode Island, should make sure their websites and reservations systems, including those operated by outside services, disclose the availability of accommodations for disabled individuals. They should also spread the word that testers like Laufer are out there looking to start lawsuits when they discover violations of ADA regulations.

Download the article as seen in Banker & Tradesman on October 31, 2022. Learn more about Christopher R. Vaccaro.

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