Discover Realty Corporation v. David, 2003 Mass. App. Div. 172 (Mass. App. Div. 10/14/2003)

• Decision Date: 14 October 2003
• Parties: Discover Realty Corporation <I>vs.</I> Stephen T. David and James Nassif, Jr.
• Court: Massachusetts Appellate Division

Page 172

2003 Mass. App. Div. 172

Discover Realty Corporation vs. Stephen T. David and James Nassif, Jr.

Massachusetts Appellate Division

Southern District.

October 14, 2003.

Present: Wheatley, P.J., Welsh & Williams, JJ.

Contract, Breach; Individual liability of trustee.

Consumer Protection, G.L.c. 93A.

Tort, Conversion; Fraudulent conveyance; Unjust enrichment; Tortious interference with contractual relations.

Practice, Civil, Dist./Mun. Cts. R. A. D. A., Rule 8C.

Opinion affirming judgment in defendants' favor except with respect to a G.L.c. 93A matter and remanding case to trial judge for a determination as to whether defendant Stephen T. David is liable individually under G.L.c. 93A. Case heard by James H. Wexler, J., in the Dedham Division.

Gregory M. Doyle for the plaintiff.

Barry S. Scheer for the defendants.

Williams, J.

The plaintiff, Discover Realty Corporation ("Discover"), filed this appeal pursuant to Dist./Mun. Cts. R. A. D. A., Rule 8C, claiming the trial judge erred in several respects in this action aimed at the alleged failure of the defendants, Stephen T. David ("David") and James Nassif, Jr. ("Nassif), to distribute money held under a trust agreement to Discover, knowing Discover claimed certain real-estate-sales commissions from that trust. Specifically, Discover claims the trial judge should have found that David and Nassif, in failing to pay the claimed commissions, converted Discover's property; fraudulently conveyed assets of DNR Realty Trust ("Trust"),¹ of which they were trustee and beneficiary, respectively; unjustly enriched themselves by taking money rightfully Discover's; and tortiously interfered with a contract between the Trust and Discover. Further, Discover claims David is individually responsible on the Trust's breached contract with Discover; and that David should have been found to have violated M.G.L.c. 93A. We affirm the judgment below, except as to the c. 93A claim against David, individually, which we remand to the trial judge for further action consistent with this opinion.

Discover is a corporation in the business of selling real estate. In 1994 Discover entered into an exclusive agency listing agreement to sell certain properties of the Trust, among them one in Hyde Park and one in Dedham. During the term of the agreement, the Hyde Park property sold, generating a commission for Discover of $8,000.00. Although the Dedham property did not sell because certain releases regarding a "paper street" were not obtained, Discover claimed a commission of $11,250.00 since Discover had produced a ready, willing and able buyer for that property. In 1995, Discover commenced an action in Norfolk Superior Court against David as trustee to recover commissions, and received on March 26, 1997, a favorable order as to these two commissions following trial.² Discover appealed two aspects of the Superior Court judgment to the Appeals Court.

The Appeals Court considered only Discover's c. 93A claim against David, as trustee, in Discover Realty Corp. v. David, 49 Mass. App. Ct. 535 (2000). The Appeals Court remanded the c. 93A count, noting that the Superior Court's finding that David, as trustee, had falsely misrepresented he had secured all necessary releases on a paper street and its concluding that that misrepresentation did not descend to the level of a c. 93A violation seemed inconsistent and left unexplained. The Appeals Court noted that not every unlawful act is automatically an unfair or deceptive one under c. 93A, but stated that if that were the Superior Court's rationale, further explication was needed. Upon remand, the Superior Court, in a decision of May 10, 2001, found that the misrepresentation about the releases for the paper street did constitute a c. 93A violation, but one warranting only an award of attorney's fees and not multiple damages.

Following the Superior Court's original trial, and during the pendency of the Appeals Court appeal, Discover filed this action in 1999 against David and Nassif individually on a variety of theories for, in essence, trying to evade paying Discover's commissions on these two properties.³ The trial was held and the decision rendered in 2001, after the appeal and the Superior Court's second look at the c. 93A claim.⁴

CHAPTER 93A VIOLATION

The trial judge here did not address Discover's c. 93A claim against David individually, possibly because he found no liability on any underlying claim. Potential 93A liability as to David individually does not depend, however, on liability under any of the other theories raised. Discover urges that David is liable individually under c. 93A under either of two theories: he is liable in that capacity having already been found liable as a trustee in Superior Court, and he is liable for his conduct here based on the Superior Court finding for persisting in unlawfully "trying to avoid a court judgment."

The relief available under c. 93A is sui generis. Buster v. George W. Moore, Inc., 438 Mass. 635, 650 (2003), citing Kattar v. Demoulas, 433 Mass. 1, 12 (2000). A cause of action under c. 93A, therefore, is "neither wholly tortious nor wholly contractual in nature, and is not subject to the traditional limitations of preexisting causes of action." Buster, supra, quoting Kattar, supra, quoting in turn Slaney v. Westwood Auto, Inc., 366 Mass. 688, 693 (1975). See Kattar, supra, at 13 quoting Nei v. Burley, 388 Mass. 307, 313 (1983) ("[A]nalogies between common law claims for breach of contract, fraud, or deceit and claims under c. 93A are inappropriate because c. 93A dispenses with the need to prove many of the essential elements of those common law claims").

Discover asserts, correctly, that David as trustee, by the time of this trial, which followed the Appeals Court's remand on the c. 93A issue, had already been found by Superior Court to have violated c. 93A because of misrepresentations about releases for the "paper street" in the Dedham transaction. That specific conduct is not encompassed by any of the other theories asserted here — conversion, fraudulent conveyance, breach of contract, tortious interference with contract, or unjust enrichment, all of which are addressed below. Discover's theme was and remains that the trial court should have seen through the diaphanous barrier separating David as trustee of a nominee trust⁵ and David as individual, and thus affixed c. 93A liability to him individually, since Superior Court had already done so to him as trustee. This theory is not unworthy of consideration since the trial court might have inferred that the Trust was a nominee trust. "When there is a parallel identity of trusteeship and ownership in connection with the holding of title to real estate by trustees, it may be inferred that the trust vehicle is a "nominee trust," a common device for holding title to real estate in Massachusetts and one which affords certain tax advantages.'" Federal Dep. Ins. Corp. v. Porter, 46 Mass. App. Ct. 241, 244 (1999), quoting Apahouser Lock & Security Corp. v. Carvelli, 26 Mass. App. Ct. 385, 388 (1989). Trustees of nominee trusts may be held liable because M.G.L.c. 203, §14A does not apply to them. Apahouser, supra. In short, protections generally afforded trustees might be lacking in a nominee-trust situation, which can partake more of the characteristics of an agency relationship than of a "true" trust. E.g., Zaroff v. First Wisconsin Trust Co., 41 Mass. App. Ct. 491, 493 & n.3 (1996). The trial judge's decision here does not address the c. 93A claim against David individually, either on that theory or as to his subsequent conduct, to the extent that was revealed at trial.⁶ It should have done so. As to the c. 93A liability of David individually, then, this Court remands the case to the trial judge for consideration of the issue of whether the Trust is a nominee trust — if that may be inferred from the evidence — and whether David can be and should be held individually liable for any c. 93A violation.

We go on to address the other claimed errors, none of which requires any result other than our affirming the actions of the trial judge.

CONVERSION

Discover claims that although the trial judge recognized that Nassif converted Discover's "intangible broker's commission," the judge erred in finding that the claim failed because the money that was distributed from the Trust to David and Nassif did not belong to Discover "at the time of the conversion."⁷ Discover infers that the trial judge deemed that "time" to have been the original 1997 Superior Court decision rather than when the commissions were earned, in 1994 and 1995. There seems scant reason to assume that the trial judge focused upon the 1997 decision rather than those earlier years, but this Court discusses Discover's assertion in light of such an assumption.

To prevail on the theory of conversion, a plaintiff must demonstrate that a defendant has intentionally or wrongfully exercised ownership of, or control or dominion over, personal property to which he has no right of possession at the time. Grand Pacific Finance Corp. v. Brauer, 57 Mass.App. Ct. 407, 412 (2003). Discover, however, did not demonstrate at trial, nor does it now, that an owed commission or similar debt is the kind of "personal property" required to support this theory. See Third Nat'l Bank of Hampden County v. Continental Ins. Co., 388 Mass. 240, 244 (1983). Although it has long been "elementary" that a claim for conversion of money, "either in the form of specie or notes," will lie, e.g., Morrin v. Manning, 205 Mass. 205, 211 (1910), such a theory does not extend to claims to intangible personal property that does not merge with or is not evidenced by any sort of document, such as a bankbook. In such circumstances, the right of possession and dominion so inheres in the physical document that possession of that document governs exercise of the right itself. Conversion of a bankbook, for example, not only...