Anzalone v. Strand
| Decision Date | 18 June 1982 |
| Citation | 14 Mass.App.Ct. 45,436 N.E.2d 960 |
| Parties | Helen C. ANZALONE v. John K. STRAND, trustee. |
| Court | Appeals Court of Massachusetts |
Mark A. Borreliz, Boston, for defendant.
Martin H. Green, Boston, for plaintiff.
Before HALE, C. J., and CUTTER and ROSE, JJ.
The plaintiff commenced this suit against the trustee of the Dorvac Realty Trust alleging that he had misrepresented the square footage of a piece of real estate purchased from him by the plaintiff and that he had thereby engaged in an unfair and deceptive trade practice in violation of G.L. c. 93A, §§ 2 and 9. The trial court found a nonwilful violation of G.L. c. 93A, § 2, and of regulations promulgated thereunder by the Attorney General. The court awarded the plaintiff damages in the amount of $4,777.76 and attorneys' fees. The defendant appeals only from the part of the judgment assessing damages. We hold that the judge erred in his determination of damages and remand this case for a new hearing on damages.
The facts are not in dispute. On November 13, 1974, Strand, acting on behalf of the Dorvac Realty Trust, acquired a piece of residential property located in Hanover, Massachusetts. The property, consisting of a parcel of land with a house and garage, was subsequently advertised for sale through a broker, the House of Realty. On May 1, 1975, the plaintiff entered into a purchase and sale agreement with Strand, as trustee of Dorvac, to buy the property for a price of $21,500. The property, which contained about 21,200 square feet of land area, was described incorrectly in the broker's advertisement and in the purchase and sale agreement as containing about 27,000 square feet. The misrepresentation was not a wilful or knowing one on the part of Strand or Dorvac. A quitclaim deed which described the property by metes and bounds and which made no mention of square footage was given to the plaintiff on June 26, 1975.
Subsequent to acquiring the property, the plaintiff and her husband discovered the discrepancy between the actual and advertised areas of the property. On September 26, 1975, the plaintiff sent Strand a written demand for relief pursuant to G.L. c. 93A, § 9(3), in which she demanded the sum of $4,777.76, or two-ninths (2/9) of the purchase price of the property. (The 2/9 figure was obtained by dividing the square footage not conveyed (6,000 square feet) by the square footage that had been represented to be the size of the lot (27,000 square feet) ). After the defendant made a written reply denying any liability for the misstatement of the land area, the plaintiff commenced this suit. She sought multiple damages pursuant to G.L. c. 93A, § 9, in the amount of $14,333.28, i.e., treble the $4,777.76 alleged as her actual damages.
At trial, the defendant sought to introduce evidence to show the actual value of the property sold to the plaintiff, including testimony concerning the price paid by Strand when he acquired the property for Dorvac in late 1974, and Strand's opinion of the value of the property at the time of its sale to the plaintiff. Such evidence was excluded by the trial judge despite the objection by the defendant's counsel that it was relevant and admissible on the issue of damages.
The trial judge found that the defendant's misrepresentations concerning the square footage of the property were not wilful or knowing but that they did constitute a violation of G.L. c. 93A, § 2. The judge adopted the calculation of damages offered by the plaintiff, reasoning that Treble damages were not allowed. As the defendant appeals only from the award of damages, there is no occasion to consider whether any recovery under G.L. c. 93A is in order.
An award of damages will not be disturbed on appeal "unless to make it or to permit it to stand was an abuse of discretion on the part of the court below, amounting to an error of law." Bartley v. Phillips, 317 Mass. 35, 43, 57 N.E.2d 26 (1944). Worcester v. Eisenbeiser, 7 Mass.App. 345, 350, 387 N.E.2d 1154 (1979). While we recognize the broad discretion afforded the trial judge under this standard, see Bresnahan v. Proman, 312 Mass. 97, 101-102, 43 N.E.2d 336 (1942), we must nevertheless conclude, after reviewing the record in light of the applicable measure of damages, that there was an error of law.
The amount of actual damages sought by the plaintiff and allowed by the trial judge was arrived at by prorating the purchase price in direct proportion to the diminution in square footage resulting from the misrepresentation. This formula for damages is premised on the belief that the value of such property varies in direct proportion to its square footage, even though the property consists not only of land but also of certain improvements (i.e., a house and garage). The plaintiff cites no authority for this method of assessing damages; 1 rather, she contends that the prorating formula is an appropriate measure for determining her "benefit of the bargain" damages, i.e., the difference between the value of the property as represented and its actual value at the time of misrepresentation. See Rice v. Price, 340 Mass. 502, 507, 164 N.E.2d 891 (1960). Putting aside for a moment the question whether a strict prorating formula is a valid measure for assessing the plaintiff's "benefit of the bargain" damages, we note that the plaintiff's assumption that the "benefit of the bargain" rule governs this case is itself open to question. The Massachusetts cases involving misrepresentation which have followed the "benefit of the bargain" rule typically have involved a situation where the misrepresentation was intentional and fraudulent. The cause of action in such cases has sounded in deceit. 2 See, e.g., Stiles v. White, 11 Met. 356 (1846); Thomson v. Pentecost, 210 Mass. 223, 96 N.E. 335 (1911); Lefevre v. Chamberlain, 228 Mass. 294, 117 N.E. 327 (1917); Rice v. Price, 340 Mass. 502, 164 N.E.2d 891 (1960). Until recently, no Massachusetts case discussed the applicable measure of damages in actions for negligent misrepresentation. In Danca v. Taunton Savings Bank, 385 Mass. 1, 9, 429 N.E.2d 1129 (1982), however, the court concluded that the "benefit of the bargain" rule was not the proper measure of damages where the misrepresentation involved was negligent rather than fraudulent. It adopted instead the rule set forth in § 552B of the Restatement (Second) of Torts. Under § 552B(1), the plaintiff would be entitled to recover damages equal to the difference between the value of what she received and the purchase price, plus any other pecuniary loss suffered as a consequence of her reliance on the misrepresentation. This rule essentially restates the traditional "out of pocket" measure of damages which is more consistent with the restitutional nature of tort remedies. See Rice v. Price, 340 Mass. at 507 n.4, 164 N.E.2d 891; Danca v. Taunton Sav. Bank, 385 Mass. at 8, 429 N.E.2d 1129; Nolan, Tort Law § 116 (1979). See also Restatement (Second) of Torts § 552B, Comment b, at 141; § 552C, Comment f, at 145 (1977).
In determining that the defendant's misdescription of the square footage of the property was not wilful or knowing, the trial judge effectively concluded that this was not a case of deceit, 3 but rather involved a negligent or innocent misrepresentation. Therefore, the proper method for assessing damages is to calculate the plaintiff's "out of pocket" losses, i.e., the difference between the purchase price and the actual value of the property. Unfortunately, the trial record is devoid of any evidence of the property's actual value. Surely, it is not enough for the plaintiff to state in conclusory fashion that the value of the property she received was 2/9 less than what she paid simply because the property's square footage was 2/9 less than had been represented by the defendant. Such a calculation has no basis in fact, ignoring, for example, the value of the house and other improvements of the lot which were included in the purchase price. It was error for the trial court to adopt such a prorating formula as a measure for determining the actual value of the property.
The defendant argues that because the plaintiff failed to introduce evidence bearing on the actual value of the property, and thereby did not satisfy her burden of proof on damages, this court should set aside the award of damages without requiring a further hearing on the issue. See Marshall v. Holbrook, 276 Mass. 341, 348, 177 N.E. 504 (1931); Melvin v. H. J. Nassar Motor Co., 355 Mass. 692, 692, 246 N.E.2d 679 (1969). In deciding that a remand for a new hearing on the issue of damages is warranted in this case, we note that the plaintiff did in fact attempt to present testimony, through co...
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