Damon v. Sun Co., Inc.

Decision Date07 December 1995
Docket Number95-1821,Nos. 95-1820,s. 95-1820
Citation87 F.3d 1467
Parties, 26 Envtl. L. Rep. 21,517 Roy R. DAMON and Eleanor M. Damon, Plaintiffs--Appellants, v. SUN COMPANY, INC., Defendant--Appellee. Roy R. DAMON and Eleanor M. Damon, Plaintiffs--Appellees, v. SUN COMPANY, INC., Defendant--Appellant. . Heard
CourtU.S. Court of Appeals — First Circuit

Brian R. Corey, Fall River, MA, with whom Law Offices of Brian R. Corey was on brief for Roy R. Damon and Eleanor M. Damon.

Michael A. Fitzhugh, Boston, MA, with whom Michael John Miguel, Cynthia S. Phelan and Fitzhugh & Associates were on brief for Sun Company, Inc.

Before TORRUELLA, Chief Judge, ALDRICH, Senior Circuit Judge, and SELYA, Circuit Judge.

TORRUELLA, Chief Judge.

Plaintiffs brought suit in this case claiming misrepresentation and violation of Mass.Gen.L. ch. 93A, § 11. For the reasons stated herein, we affirm the decision of the district court.

BACKGROUND

The parties stipulated to the following facts: Defendant Sun Oil Company, Inc. (R & M) ("Sun") owned property located at 225 Brockton Ave., Abington, Massachusetts, (the "property") from 1971 to 1979. In 1972, Sun built a gasoline station with underground storage tanks on the property and operated a retail gasoline station thereafter until November 1977. On or about December 19, 1974, a leaking underground pipe leading from the underground storage tanks to the pumps released approximately 2,000 gallons of gasoline. Sun's regional manager of operations, Robert Laubinger ("Laubinger"), was on the property after the leak was discovered. On November 21, 1979, the plaintiffs, Roy Damon ("Damon") and Eleanor Damon (together, the "Damons"), purchased the property from Sun for $90,000. The plaintiffs had a right to examine the property by terms of the Agreement of Sale. The Damons owned the property from 1979 to March 25, 1992 and operated a retail service station at the property from June 12, 1980 to January 31, 1991.

On January 31, 1991, the plaintiffs leased the property to K. Rooney, Inc. ("Rooney"). Since then, Rooney has operated a retail service station on the property. In November 1991, Rooney began upgrading the station by installing new pumps and Stage II of a vapor recovery system. As digging commenced, the Abington Fire Department observed petroleum product pooling in the surface excavations, shut down the construction and notified the Massachusetts Department of Environmental Protection ("DEP"). On December 19, 1991, the DEP sent a Notice of Responsibility to the plaintiffs and Rooney, requiring that a Phase I Limited Site Investigation Report and Preliminary Assessment Report be completed. A company hired by Rooney performed the investigation and issued a report dated October 1992. As part of the Phase I investigation, monitoring wells were installed and samples of groundwater were taken and analyzed. As a result of the discovery of the pollution, Rooney refused to pay rent from November 1991 to March 1992. The lease agreement between plaintiffs and Rooney granted Rooney an option to purchase the property for $600,000. Rooney did not exercise its lease option. On March 25, 1992, Rooney purchased the property from the Damons by assuming a first mortgage in the amount of $275,000 and a second mortgage in the amount of $50,000. Rooney also made a cash payment of $20,000 to plaintiffs.

The district court's additional findings of fact included the following. A rupture of an elbow joint in the pipe which connects the tanks and the pumps caused the 1974 spill, which closed the station for approximately six weeks. In June or July 1979, Damon attempted to reach Richard Bunzell ("Bunzell"), whose name was given on the "For Sale" sign at the station. After some unsuccessful attempts to reach Bunzell, a Sun telephone operator referred Damon to Laubinger, Sun's regional manager for service station maintenance. The questions Damon asked Laubinger about the property included an inquiry concerning the age of the building, and whether Sun had experienced any problems with the station, particularly with the underground tanks. Laubinger knew of the 1974 spill, but did not reveal it. Rather, he answered that it was a "good station" which just needed to be run by a good operator to be successful. After his phone conversation with Laubinger, Damon contacted Bunzell and, after some negotiation, accepted his offer of $90,000. In late August 1979, Damon and Bunzell met at the property to view the property. Damon asked about a depression he noticed in the blacktop near the pumps and Bunzell explained it was caused by the installation of the first stage of a vapor recovery system. In response to Damon's question of whether Sun had had any problems with the underground storage tanks, Bunzell stated, "No, we've had no problems with it. It's all good."

In 1980 Damon had the three 6,000 gallon underground gasoline tanks tested for tightness by Getty Oil, Co., his first gasoline supplier: they tested tight, as they did in May 1984 and again in January 1991. In 1992, no holes were observed in any of the underground gasoline tanks or oil tanks. The southern end of the pit dug around the three gasoline tanks yielded the highest level of contamination; 101 cubic yards of contaminated soil were eventually removed for off-site treatment. Finally, samples of contaminated water collected and examined by the company conducting the 1992 Phase I study indicate that the contamination contained the gasoline additive MTBE ("MTBE"), which was not added to Sunoco gasoline until 1984.

The Damons brought suit against Sun, alleging common law misrepresentation and violation of chapter 93A, § 11. The district court, after a four day bench trial, found for the Damons on both the misrepresentation and the chapter 93A counts, awarding them $245,000 plus reasonable attorney's fees and costs. In its appeal, Sun now challenges the three rulings of the district court--its denial of Sun's motion for entry of judgment at the close of plaintiffs' case in chief, see Fed.R.Civ.P. 52(c); the district court's judgment and findings pursuant to trial; and its denial of Sun's post-trial motions to alter and amend the judgment and findings and for a new trial, see Fed.R.Civ.P. 59.

CAUSATION AND DAMAGES
A. The Legal Framework

The Damons charged Sun with the tort of misrepresentation, also referred to as fraud or deceit. See Bond Leather Co. v. Q.T. Shoe Mfg. Co., 764 F.2d 928, 935 (1st Cir.1985). The elements of misrepresentation are well established: in order to recover, plaintiff

must allege and prove that the defendant made a false representation of a material fact with knowledge of its falsity for the purpose of inducing the plaintiff to act thereon, and that the plaintiff relied upon the representation as true and acted upon it to his [or her] damage.

Barrett Assocs., Inc. v. Aronson, 346 Mass. 150, 190 N.E.2d 867, 868 (1963) (quoting Kilroy v. Barron, 326 Mass. 464, 95 N.E.2d 190, 191 (1950)); see Metropolitan Life Ins. Co. v. Ditmore, 729 F.2d 1, 4 (1st Cir.1984). "The party making the representation need not know that the statement is false if the fact represented is susceptible of actual knowledge." VMark Software, Inc. v. EMC Corp., 37 Mass.App.Ct. 610, 642 N.E.2d 587, 593 n. 9 (1994). Here, the alleged false representations are the statements made by Sun's representatives that it was a "good" station, upon which Damon relied in his purchasing decision. The alleged harm suffered was that the Damons bought a gas station in 1979 that would have been worth more in 1992 if what the defendant's representatives stated had in fact been true. The damages were measured by the difference between the value of the property if it had been uncontaminated, as the defendant represented, and the actual value of the property as contaminated.

Appellant questions the district court's findings related to two of these elements: causation and damages. The causation element requires that the misrepresentation be a substantial factor in the plaintiff's actions, such that it "tend[s] along with other factors to produce the plaintiff's [harm]." O'Connor v. Raymark Indus., Inc., 401 Mass. 586, 518 N.E.2d 510, 513 (1988). The defendant's conduct need not be the sole cause of the injury: " 'It is enough that [plaintiffs] introduce evidence from which reasonable men [and women] may conclude that it is more probable that the event was caused by the defendant than that it was not.' " Mullins v. Pine Manor College, 389 Mass. 47, 449 N.E.2d 331, 339 (1983) (quoting Carey v. General Motors Corp., 377 Mass. 736, 387 N.E.2d 583, 585 (1979)). Damages, in turn, must be proven "with a fair degree of certainty." Pearl v. William Filene's Sons Co., 317 Mass. 529, 58 N.E.2d 825, 827 (1945); see Squeri v. McCarrick, 32 Mass.App.Ct. 203, 588 N.E.2d 22, 26 (1992) ("While proof of damages does not require mathematical precision, it must be based on more than mere speculation.").

"Following a bench trial, the court of appeals reviews the trier's factual determinations for clear error, but affords plenary review to the trier's formulation of applicable legal rules." Smith v. F.W. Morse & Co., 76 F.3d 413, 420 (1st Cir.1996) (citations omitted); see Fed.R.Civ.P. 52(a); Dedham Water Co. v. Cumberland Farms Dairy, Inc., 972 F.2d 453, 457 (1st Cir.1992). Of course, "to the extent that findings of fact can be shown to have been predicated upon, or induced by, errors of law, they will be accorded diminished respect on appeal." Id. However, as we have noted in regards to causation,

[a]pplication of the legal cause standard to the circumstances of a particular case is a function ordinarily performed by, and peculiarly within the competence of, the factfinder. The SJC has consistently held questions of causation to be for the factfinder.

Swift v. United States, 866 F.2d 507, 510 (1st Cir.1989); see Dedham Water Co., 972 F.2d at 457 ("As a general rule, causation...

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