Mongeau v. Boutelle

• Decision Date: 11 July 1980
• Citation: 10 Mass.App.Ct. 246,407 N.E.2d 352
• Parties: Eugene F. MONGEAU v. Robert BOUTELLE.
• Court: Appeals Court of Massachusetts

Page 352

407 N.E.2d 352

10 Mass.App.Ct. 246

Eugene F. MONGEAU v. Robert BOUTELLE.

Appeals Court of Massachusetts, Worcester.

Argued March 13, 1980.

Decided July 11, 1980.

Albert I. Gould, Clinton, for plaintiff.

Douglas J. Rowe, Marlborough, for defendant.

Before GRANT, GREANEY and DREBEN, JJ.

DREBEN, Justice.

In this action against a real estate broker grounded on common law fraud and on deceptive acts under G.L. c. 93A, §§ 2 and 9, ¹ the defendant broker moved to dismiss under Mass.R.Civ.P. 12(b)(6) (failure to state a claim), under 12(b)(7) (failure to join a party under rule 19), and under 12(b)(9) (pendency of a prior action), 365 Mass. 755 (1974). The motion to dismiss, brought after the defendant's answer was filed, claimed, inter alia, that a prior action brought by the plaintiff for fraud against the sellers of the property barred the present action. An affidavit and papers filed in the prior action were appended to the motion to dismiss. A Superior Court judge entered a judgment dismissing the action without stating his reasons. Since material in addition to the pleadings was presented to and not excluded by the judge, we treat the judgment of dismissal in so far as it may have been granted under rule 12(b)(6) as a summary judgment. Mass.R.Civ.P. 56(b), 365 Mass. 824 (1974). See Brookline v. Medical Area Serv. Corp., 7 Mass.App. ---, --- - --- & n. 7 ^a, 392 N.E.2d 1070 (1979). We hold that judgment should not have been entered for the defendant and that the action should not have been dismissed.

Since the defendant's answer, his affidavit and the papers relating to the prior action do not purport to refute the allegations of the complaint, we take those allegations, and all inferences which can be drawn therefrom favorable to the plaintiff, to be true. See Nader v. Citron, 372 Mass. 96, 98, 360 N.E.2d 870 (1977); Whitinsville Plaza Inc. v. Kotseas, 378 Mass. ---, --- ^b, 390 N.E.2d 243 (1979); Mass.R.Civ.P. 56(c), 365 Mass. 824 (1974). We summarize the facts as alleged by the plaintiff. Prior to the execution of a purchase and sale agreement by the plaintiff as purchaser of a certain parcel of land, the defendant broker misinformed the plaintiff as to the acreage of the parcel and failed to disclose that the property was encumbered by a right of way. The defendant knew or should have known of these facts. He induced the plaintiff, by telling him it was a standard form agreement, to sign an agreement which bound the purchaser to take the land subject to all restrictions of record. When the plaintiff discovered the defects, he refused to proceed with the purchase ² and forfeited his deposit.

These allegations, contrary to the defendant's contention, are sufficient to state a claim under c. 93A, §§ 2 and 9. An act may be "deceptive" under § 2(a ) if it "could reasonably be found to have caused a person to act differently from the way he otherwise would have acted." Purity Supreme, Inc. v. Attorney Gen., --- Mass. ---, --- ^c, 407 N.E.2d 297 (1980), quoting from Lowell Gas Co. v. Attorney Gen., 377 Mass. ---, --- ^d, 385 N.E.2d 240 (1979). See 20 Code Mass.Reg., Title 940, § 3.16(2) (1978). ³ Failure to disclose a material fact which may influence the buyer is actionable under § 9. Slaney v. Westwood Auto, Inc., 366 Mass. 688, 702-703, 322 N.E.2d 768 (1975). Heller v. Silverbranch Constr. Corp., 376 Mass. ---, --- - --- & n. 3 ^e, 382 N.E.2d 1065 (1978). See York v. Sullivan, 369 Mass. 157, 159-160, 161-162, 338 N.E.2d 341 (1975). Cf. Commonwealth v. DeCotis, 366 Mass. 234, 241 n. 6, 316 N.E.2d 748 (1974).

The defendant claims, however, that the prior action for fraud brought by the plaintiff against the sellers precludes the present action under c. 93A and for fraud on several grounds: (1) by reason of Mass.R.Civ.P. 12(b)(9), i. e. pendency of a prior action, (2) by reason of the prior judgment for the plaintiff buyer under principles of res judicata, and (3) by reason of the satisfaction of the judgment pursuant to G.L. c. 231B, § 3(e). ⁴ The defendant also argues that the action should be dismissed because of failure to join a necessary party under Mass.R.Civ.P. 19(a). Since judgment had been entered in the prior action before the filing of the motion to dismiss, that action was not then pending and was not a proper ground for dismissal of the action under rule 12(b)(9). See generally, Manufacturers' Bottle Co. v. Taylor-Stites Glass Co., 208 Mass. 593, 595-596, 95 N.E. 103 (1911); Reporters' Notes to Rule 12(b)(9), Annotated L.Mass. (Lawyers Co-Op. 1974). With regard to the effect of the prior action, we need, therefore, consider only whether either the consent judgment for the buyer in the amount of $2,500 or the satisfaction of that judgment is a bar to the plaintiff's claim.

The prior consent judgment is not a bar to the action under c. 93A. The defendant argues, based on the fact that the prior complaint alleged similar misrepresentations by the sellers with regard to the same parcel of land, that he is in privity with the sellers in the first-action and that the previous judgment extinguished the plaintiff's claim. However, the rules of prior adjudication apply to nonparties only where a person's interest was represented by a party to the prior litigation. See, for example, Morganelli v. Building Inspector of Canton, 7 Mass.App. ---, --- - --- ^f, 388 N.E.2d 708 (1979). See generally, Restatement (Second) of Judgments § 85 (Tent. Draft. No. 2, 1975). There has to be a "sufficient legal identity" between the interest of the person allegedly represented and the prior litigant for the later claim to be precluded. Rudow v. Fogel, 376 Mass. ---, --- ^g, 382 N.E.2d 1046 (1978). Boyd v. Jamaica Plain Co-op. Bank, 7 Mass.App. ---, --- - ---, --- - --- ^h, 386 N.E.2d 775 (1979).

A similar claim of privity between a broker and a seller was made in McCarthy v. Daggett, 344 Mass. 577, 183 N.E.2d 502 (1962), where a real estate broker sued a seller for a commission with respect to a sale. The buyer had, in a previous action, obtained a judgment for specific performance. After the seller claimed in a paragraph of his answer that he had been insane and therefore incapable of entering into a valid contract, the broker moved to strike the paragraph on the ground that the issue of capacity had been litigated in the prior action and that the defendant was precluded from retrying that issue. The Supreme Judicial Court rejected the argument, finding that its "fatal flaw" was the assumption that the broker and the seller were parties in privity with respect to the contract and the seller's capacity. Id. at 580, 183 N.E.2d 502. The court pointed out that the broker was not a party and could not have insisted on being a party in the earlier case, that he was not an agent of the seller, and that he had neither controlled nor had a proprietary interest in the previous litigation. Stating that the broker would not have been bound by a determination that the seller was incompetent, the court held that the broker could not take advantage of a determination in the prior proceeding that the seller was competent. Similarly, we think that the broker in the instant case may not take advantage of the prior litigation to preclude trying the c. 93A claim.

In the present case, the broker is, moreover, attempting to stretch the cloak of privity beyond the claim made in McCarthy v. Daggett, 344 Mass. at 579-580, 183 N.E.2d 502. There, the claim of competency had once been litigated, and the broker sought only to preclude litigation of that one issue. Here, the c. 93A claim against the broker has not been litigated. In fact, the c. 93A claim could not have been raised against the defendants in the prior action, as c. 93A does not afford relief against individual sellers. Lantner v. Carson, 374 Mass. ---, --- ⁱ, 373 N.E.2d 973 (1978). See also Hayes v. Solomon, 597 F.2d 958, 984 (5th Cir.), cert. denied --- U.S. --- ^j, 100 S.Ct. 1028, 62 L.Ed.2d 761 (1980). This is not a case where "there has been a judicial inquiry into the subject matter in which the person to be affected by the judgment has had an opportunity either personally or by representative to be heard fully." McCarthy v. William H. Wood Lumber Co., 219 Mass. 566, 569, 107 N.E. 439, 440 (1914). See Rudow v. Fogel, 376 Mass. at --- - --- ^k, 382 N.E.2d 1046. Since the c. 93A claim was not adjudicated, that aspect of the law of prior adjudication referred to as "issue preclusion" is inapplicable. See generally on issue preclusion, Restatement (Second) of Judgments § 68 (Tent. Draft No. 4, 1977).

What the broker must rely upon here, therefore, is the prohibition against claim splitting, or what is sometimes called "claim preclusion." This principle provides that "a valid and final judgment . . . extinguishes . . . all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose." Restatement (Second) of Judgments, § 61(1) (Tent. Draft No. 5, 1978). Trustees of the Stigmatine Fathers, Inc. v. Secretary of Admn. & Fin., 369 Mass. 562, 564-567, 341 N.E.2d 662 (1976). Boyd v. Jamaica Plain Co-Op. Bank, 7 Mass.App. at --- - --- ^l, 386 N.E.2d 775.

The argument on the basis of claim preclusion is that the buyer, by failing to join the broker in the first action for the purpose of asserting against him a c. 93A claim, is now barred, even though the c. 93A claim could not have been asserted against the individual sellers in that action. In order to succeed on this theory, the broker would have to establish not only that there is a "sufficient legal identity" between the interest of the sellers and the broker, Rudow v. Fogel, 376 Mass. at --- ^m, 382 N.E.2d 1046, as discussed above, but also a matter related thereto, namely, that the c. 93A claim is so closely allied with the claims of the previous litigation that a separate action would "split" the...