Com. v. DeCotis

• Citation: 316 N.E.2d 748,366 Mass. 234
• Parties: , 89 A.L.R.3d 387 COMMONWEALTH v. Michael DeCOTIS et al.
• Decision Date: 12 September 1974
• Court: United States State Supreme Judicial Court of Massachusetts

Page 748

316 N.E.2d 748

366 Mass. 234, 89 A.L.R.3d 387

COMMONWEALTH v. Michael DeCOTIS et al.

Supreme Judicial Court of Massachusetts, Essex.

Argued May 8, 1974.

Decided Sept. 12, 1974.

James T. Ronan, Salem, for defendants.

Sarah L. Wasserman, Asst. Atty. Gen., for the Commonwealth.

Before TAURO, C.J., and REARDON, KAPLAN and WILKINS, JJ.

WILKINS, Justice.

In August, 1971, the Attorney General in the name of the Commonwealth filed a bill in equity under the authority of G.L. c. 93A, § 4, against the defendants who were alleged to be engaged in the business of renting lots for mobile homes and managing a mobile home park in Peabody under the name of Pine Grove Mobile Park (Pine Grove). The bill sought, with other relief, an injunction prohibiting the defendants from imposing any fee on occupants of mobile homes in Pine Grove on the resale of those mobile homes. The Attorney General also sought an order for restitution of certain resale fees paid to the defendants by persons who had sold mobile homes in Pine Grove. ¹

The defendants appeal from a final decree which enjoined them from requiring or receiving any resale fee except for a reasonable services rendered at the request of the seller of a mobile home. The decree also enjoined them from imposing certain restrictions on the resale of mobile homes in Pine Grove ² and required the defendants to repay with interest all resale fees received since 1965. That decree further imposed an affirmative obligation on the defendants to pay costs incurred in ascertaining the whereabouts of persons who had paid resale fees and required that any funds which could not be repaid be placed in an escrow account for one year and, if not claimed within that year, be paid to the Commonwealth. ³

The case was tried in March, 1972. The judge voluntarily filed a report of findings in December, 1972, which the parties have treated as a statutory report of material facts. G.L. c. 214, § 23. The evidence is reported. In this circumstance the findings of fact made by the judge must stand unless they are plainly wrong, and we may find facts not expressly found by the judge. All Stainless, Inc. v. Colby, --- Mass. ---, --- ^a, 308 N.E.2d 481 (1974) and cases cited. There was ample support in the evidence for the findings made by the judge.

We set forth the following facts found by the judge or by us. The defendants are engaged in the business of renting lots in Pine Grove on which mobile homes are placed by their owners. Since 1970 the defendants have also been in the business of selling mobile homes. A mobile home owner who becomes a tenant of the defendants is subjected to the terms of a rental agreement. The first form of rental agreement used by the defendants made no reference to any obligation of the tenant to pay a fee to the defendants on the sale of his mobile home. From September, 1969, to about May, 1970, the defendants used a form of rental agreement which stated that mobile homes must be removed on resale although 'exceptions might be made if a mobile home is sold to respectable adults with no children or pets.' The agreement stated further that '(t)he management must interview the new tenant before accepting a deposit' and added '(f)or this concession and service rendered there will be a $250 service charge to the seller.' A third form of agreement, adopted about May, 1970, changed the service charge to ten per cent of the selling price. It is clear that some tenants did not receive rental agreements prior to committing themselves to the installation of their mobile homes in Pine Grove and that some tenants did not learn of the practice of imposing a resale fee until long after they had moved into Pine Grove.

The Attorney General asserts that the imposition and collection of the so called 'service charge' or resale fee is an unfair and deceptive trade practice under G.L. c. 93A. Although the final decree directs the repayment of any resale fee paid since 1965, the first resale fee was collected by the defendants in October of 1968. Eighteen people paid a resale fee of $250, and twenty-one paid a resale fee of ten per cent of the sales price, an amount which was generally larger than $250. One fee was $1,200. In these instances no services were rendered by the defendants in connection with the sale, although the prospective purchaser was interviewed and approved as a new tenant by the defendants or their representative. The judge found that the fee, unrelated to services rendered or the length of tenancy, was arbitrary.

Many of the prospective tenants are retired or near retirement age, living on fixed incomes. Once a mobile home has lost a substantial portion of its mobility by its placement on a foundation with utility connections and associated landscaping, the expense of moving the home for the purposes of sale are substantial in relation to its market value. The market value of such a home in place is significantly greater than its market value as a mobile home to be moved. Finding a nearby location acceptable under local zoning regulations presents significant problems to a person seeking to move a mobile home from Pine Grove. Few mobile homes have been moved from Pine Grove.

Chapter 93A, which was inserted by St.1967, c. 813, § 1, is designated as the 'Regulation of Business Practice and Consumer Protection Act.' St.1967, c. 813, § 2. This act is one of several legislative attempts in recent years to regulate business activities with the view to providing proper disclosure of information and a more equitable balance in the relationship of consumers to persons conducting business activities. See, e.g., G.L. c. 140C, inserted by St.1969, c. 517, § 1 (consumer credit cost disclosure); G.L. c. 255D, inserted by St.1966, c. 284, § 1 (retail installment sales act); G.L. c. 140, § 32J, as appearing in St.1973, c. 1007, § 1, and §§ 32L-32Q, inserted by St.1973, c. 1007, § 2 (regulating the operation of mobile home parks).

1. The defendants first argue that G.L. c. 93A does not apply to their activities occurring during the period dealt with at trial because they were not engaged in 'any trade or commerce' as defined in G.L. c. 93A, § 1, as then amended. The unfair or deceptive acts or practices which are declared unlawful by G.L. c. 93A, § 2(a), are acts or practices 'in the conducts of any trade or commerce.' As initially enacted, and until an amendment in 1972 (see St.1972, c. 123), 'trade' or 'commerce' was defined in G.L. c. 93A, § 1, to 'include the advertising, offering for sale, sale, or distribution of any services and any property, tangible or intangible, real, personal or mixed . . . and shall include any trade or commerce directly or indirectly affecting the people of this commonwealth.' See St.1967, c. 813, § 1.

The statutory definition of 'trade' and 'commerce' recites certain activities which are included within those terms and concludes by incorporating within the statutory words 'any trade or commerce directly or indirectly affecting the people of this commonwealth.' Clearly the leasing of lots for mobile homes is a 'trade' or 'commerce.' A wide range of activities has been included within the word 'commerce' as used in § 5(a)(1) of the Federal Trade Commission Act. See, e.g., Branch v. Federal Trade Commn., 141 F.2d 31, 34 (7th Cir. 1944) (correspondence school); United States Retail Credit Ass'n Inc. v. Federal Trade Commn., 300 F.2d 212 (4th Cir. 1962) (collection agency). General Laws c. 93A, § 2(b), states that '(i)t is the intent of the legislature that in construing paragraph (a) of this section the courts will be guided by the interpretations given by the Federal Trade Commission and the Federal Courts to section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1) (1970)), as from time to time amended.' ⁴ The 1972 amendment to the definition of trade or commerce, adding express reference to the renting and leasing of services or property, did not expand, but only clarified, the scope of the words 'trade' or 'commerce.' St.1972, c. 123. Cf. Kagan v. United Vacuum Appliance Corp., 357 Mass. 680, 683, 260 N.E.2d 208 (1970).

2. The defendants next argue that their activities are exempt transactions under § 3 of G.L. c. 93A. Section 3 states that G.L. c. 93A shall not apply, among other things, to 'transactions or actions otherwise permitted under laws as administered by any regulatory board or officer acting under statutory authority of the commonwealth or of the United States.' The defendant assert that the terms of their rental agreements were subject to regulation by the local board of health under G.L. c. 140, §§ 32A-32L. Without intimating that the Peabody board of health had authority to regulate the financial aspects of a mobile park lease agreement, we conclude that the defendants have failed to meet their statutory burden (G.L. c. 93A, § 3 (2)) of proving the availability of the exemption. The defendants have not shown that under laws 'as administered' by the Peabody board of health the imposition and collection of a resale fee was permitted.

3. The defendants next contend that they engaged in no deception or unfair act or practice. In light of the facts found by the judge and by us such an argument can succeed only if as matter of law their conduct was not an unfair or deceptive act or practice within the meaning of those words in G.L. c. 93A, § 2(a).

The defendants argue that their actions were not deceptive or unfair because resale charges were uniformly collected by mobile home park operators in the Commonwealth. Such as fact was not proved and, even if it had been, the existence of an industry-wide practice would not constitute a defense to unlawful conduct. Minter v. Federal Trade Commn., 102 F.2d 69, 70 (3d Cir. 1939); International Art Co. v. Federal Trade Commn., 109 F.2d 393, 397 (7th Cir. 1940), cert. den. 310 U.S. 632, 60 S.Ct. 1078, 84 L.Ed. 1402 (1939); P. F. Collier & Son Corp. v. Federal...