Commw. v. Chatham Dev. Co., Inc.

• Decision Date: 07 January 2000
• Docket Number: P-694
• Parties: (Mass.App.Ct. 2000) COMMONWEALTH, vs. CHATHAM DEVELOPMENT CO., INC., No.: 98- Argued:
• Court: Appeals Court of Massachusetts

Page 89

731 N.E.2d 89 (Mass.App.Ct. 2000)

COMMONWEALTH, vs. CHATHAM DEVELOPMENT CO., INC.,

No.: 98-P-694.

Massachusetts Court of Appeals, Middlesex

Argued: January 7, 2000.

Decided: June 30, 2000

Howard I. Rosen for the defendant.

Diane L. Szafarowicz, Assistant Attorney General, for the Commonwealth.

Present: Greenberg, Kaplan, & Rapoza, JJ.

GREENBERG, J.

This is an appeal by Chatham Development Co., Inc. (Chatham), which owns and manages a large apartment complex in Auburndale, from a permanent injunction entered on March 18, 1997, by a Superior Court judge. After consideration of the parties' submissions under Mass.R.Civ.P. 56, 365 Mass. 824 (1974), the judge enjoined Chatham from including in its leases a provision that requires tenants to pay a constable fee as a consequence of late payment of rent.¹ On the Commonwealth's motion for assessment of damages, the judge ordered Chatham to pay civil penalties and attorneys' fees pursuant to G. L. c. 93A, 4.

Chatham has utilized the Greater Boston Real Estate Board's "Standard Form Agreement Lease" for all tenants, including those of low to moderate income, who rent residential units within the eight buildings of the "Woodland Park" apartment complex. Appended to the lease form is a typewritten series of "Rules and Regulations" prepared by Chatham. The first paragraph of the "Rules and Regulations" contains the provisions requiring tenants to pay a constable fee if the rent payment is late. The Commonwealth's case against Chatham is premised on the theory that the constable fee provision is unfair and deceptive under G. L. c. 93A, 2(a), in that it transgresses G. L. c. 186, 15B(1)(c),² and 940 Code Mass. Regs. 3.17(6) (1993),³ by exacting a twenty-five dollar penalty from any tenant if the unit in which the tenant lives has to be served a fourteen-day notice to quit under G. L. c. 186, 11.

The provisions of G. L. c. 93A do not contain a definition of the word "unfair." They leave the possible existence of such to be determined on a case-by-case basis. See Commonwealth v. DeCotis, 366 Mass. 234, 241-242 (1974); Purity Supreme, Inc. v. Attorney Gen., 380 Mass. 762, 771 (1980); Levings v. Forbes & Wallace, Inc., 8 Mass. App. Ct. 498, 503-504 (1979). The judge, in finding that Chatham had committed an unfair act by imposing the constable fee as part of the lease arrangement, rejected Chatham's reliance upon G. L. c. 261, 1, which permits a prevailing party to recover costs incurred in connection with civil actions. She reasoned that the constable provision allows Chatham to telescope the cost of serving the notice prior to entry of any judgment in its favor. To exact those costs prior to the time the prevailing party could be determined by the court runs contrary to the statute. The judge properly rejected Chatham's claim that the fee is not a penalty but rather recovery of a necessary expenditure when a tenant breaches a lease by not making the lease payment on or before the first day of the month. We share the judge's view that the exaction of a constable fee, prior to the entry of a judgment in an eviction action was both unfair and deceptive. To say that costs may be assessed by agreement and awarded before the close of proceedings is more than a stretch. It is the function of the court, not the litigants, to make that determination on the basis of statutory authority. See Linthicum v. Archambault, 379 Mass. 381, 390 (1979) ("where it is the statutory policy to award reasonable costs incurred, the trial judge has discretion to set the amount to be awarded even if the plaintiff is personally obligated to pay the amount billed" [emphasis added]).

Nor do we find error in the judge's conclusion that Chatham jumped the gun by imposing a late fee for payments not yet thirty days overdue, thereby committing a deceptive act within the meaning of G. L. c. 93A, 2(a). General Laws c. 186, 11 and 12, permit tenants the opportunity to cure their nonpayment and continue their tenancies.⁴ Section 11, which is applicable only to written leases, as opposed to tenancies at will, which in turn are addressed in 12, "has its foundation at common law that courts of equity will grant relief from forfeiture of the leasehold estate due to the failure to pay rent if the tenant pays what is owed by the time of the [summary process] hearing." Warshaw, Massachusetts Landlord-Tenant Law 3.8, at 121 (1987). "The process [action] cannot be brought," however, "until fourteen days' notice to quit has been given. Until then, the forfeiture is at most conditional, and may be purged and saved by the payment or tender of the rent due." Hodgkins v. Price, 137 Mass. 13, 18 (1884). See G. L. c. 186, 11.⁵ If the tenant pays rent within those fourteen days, the eviction action is averted entirely; there is no suit and hence no cost of suit owed under 11. Thus, Chatham's imposition of the fee with knowledge that it could not initiate an action within the fourteen-day period amounts to an unfair and deceptive practice.

Neither of Chatham's remaining claims requires lengthy discussion. There is no force to the argument that the judge mistakenly assessed $2,000 as a civil penalty. The portion of G. L. c. 93A, 4, as inserted by St. 1985, c. 468, upon which the Commonwealth relies provides: "If the court finds that a person has employed any method, act or practice which he knew or should have known to be in violation of said section two, the court may require such person to pay to the commonwealth a civil penalty of not more than five thousand dollars for each such violation and also may require . . . reasonable attorneys' fees." Chatham contends that civil penalties under G. L. c. 93A, 4, should not be imposed in a case of "first impression" and where there is no allegation that any tenant was actually harmed by its attempt to impose a constable fee under the lease. Chatham argues that its corporate behavior, in this instance, did not involve the kind of blatant, intentional violation of a judgment that invited civil penalties in Commonwealth v. Fall...