Glickman v. Brown

• Decision Date: 31 January 1986
• Parties: Stephen GLICKMAN et al., trustees, 1 v. Harold BROWN et al. 2
• Court: Appeals Court of Massachusetts

Page 737

486 N.E.2d 737

21 Mass.App.Ct. 229

Stephen GLICKMAN et al., trustees, ¹ v. Harold BROWN et al. ²

Appeals Court of Massachusetts Norfolk.

Argued Oct. 10, 1985.

Decided Dec. 16, 1985.

Further Appellate Review Denied

Jan. 31, 1986.

Steven M. Brody (Richard A. Freedman, Boston, with him), for defendants.

Gerald H. Abrams, Newton, for plaintiffs.

Before GRANT, ARMSTRONG and SMITH, JJ.

GRANT, Justice.

This case is concerned with the conversion of the apartment building at 19 Winchester Street, Brookline, into condominium units. The event which chilled the relationship between the unit owners on the one hand and the developer (Brown) and his marketing agent (Keezer) on the other was the failure of the building's common heating system shortly after Brown and Keezer lost control of the management of the condominium. The plaintiffs, who are the trustees of the condominium management trust (G.L. c. 183A, § 8[i ] ), brought this action against Brown and Keezer (G.L. c. 183A, § 10[b ] ) in six counts, only four of which are still viable. The plaintiffs sought to recover the total cost of repairing the common heating facilities. Count one, brought under G.L. c. 93A, §§ 9 and 11, as amended through St.1979, c. 72, §§ 1 and 2, respectively, alleged that the defendants had engaged in unfair and deceptive marketing practices by misrepresenting the condition of the heating system to prospective purchasers of condominium units. Counts two, three and four alleged fraud and deceit, reckless and negligent misrepresentations under the common law, and breaches of contract and warranties, respectively. After a bench trial, the judge found for the plaintiffs on counts one through four and a single judgment was entered for actual damages in the amount of $247,386, plus interest, costs and $35,000 in attorney's fees (under count one). ³

The defendants have appealed. The plaintiffs have cross-appealed from the denial of multiple damages on their c. 93A claim.

1. The Factual Background and the Findings and Rulings of the Trial Judge.

(a) The Evidence.

The judge could have found the following facts. Brown purchased the building in February of 1979 for the purpose of reselling the existing apartments as condominium units. In April of 1979 he recorded a master deed and a declaration of trust (including a set of bylaws) in accordance with the provisions of G.L. c. 183A, §§ 8 and 10 through 12. He appointed trustees who, in turn, hired him to manage the common areas and facilities until such time as substantially all the units should be sold. Most of the units (c. 183A, § 1) were sold by August of 1979. The successor trustees, elected by the unit owners (c. 183A, § 1), continued to contract with Brown for his management services until early in 1981, shortly after the full extent of the defects in the common heating system was revealed to the unit owners.

That system, which is part of the common facilities of the condominium (c. 183A, §§ 1, 8[e ] ), provides forced hot water to each of the building's nine floors by way of centrally located iron pipes called risers. The hot water is then distributed to each unit via smaller pipes located inside the walls. There are two supply risers and approximately eighteen return risers. The supply risers can be visually inspected through access doors, one of which is located on each floor. The building once had a central air conditioning system which was designed to use the same risers as the heating system. The air conditioning was disconnected well prior to Brown's ownership in an attempt to stop widespread leaks. Based on the observed condition of the risers when they were replaced in 1981, severe corrosion and deterioration had been present for at least ten years. The corrosion could have been seen visually, and an inspection would have indicated the possibility of leaks. The risers may have been inadequate for their intended purpose for as long as ten years prior to their replacement in 1981. Brown's own heating repairmen concluded that the corrosion had started well prior to 1980 because of the original design, which combined the air conditioning and heating systems.

Brown made a personal inspection before purchasing the building but did not view any of the risers. Two of Brown's employees also inspected the building but did not view the risers. One of Brown's employees received an engineering report shortly after Brown purchased the building which stated that the heating system had not been well maintained. Brown, through various heating repairmen, attempted to keep the system functioning but made no effort to repair the risers, claiming that no repairs were necessary.

There was testimony (either live or by deposition) from twelve unit owners, some of whom had been tenants in the building prior to its conversion to condominiums. The former tenants reported periodic failures of the heating system, accompanied by water leaking through the walls, prior to Brown's ownership. Those same problems continued after Brown purchased the building. In the summer of 1979, as the condominium units were being marketed, Brown's representatives continually assured tenants in the building who were reluctant to buy because of unreliable heat that it would be fixed. Similar representations were made to prospective purchasers of units who had not been tenants. In addition, Brown's people refused to include anything about the heating system in individual purchase and sale agreements. One buyer asked for a copy of the engineering report Brown had received but was refused. Another buyer, when she noted the absence of any reference to the heating system in a list of proposed capital improvements in the building, was told that the heating system was fine.

The problems with the heating system continued during the first heating season (1979-1980) after the marketing period. There were leaks from walls, ceilings and floors. One of Brown's employees learned in February or March of 1980 that there were leaks in the walls. Brown's servicemen acknowledged that it was good practice to check the risers any time a leak was discovered. Brown did some repair work on parts of the heating system in the summer of 1980 but did not check the risers and never had any repair work performed on them. During the next heating season (1980-1981) the situation worsened, despite repeated service calls by Brown's repairmen. When the riser corrosion was finally revealed to the unit owners, in October of 1980, they elected to delay major repair work until the following spring. In May of 1981 the full extent of the damage to the risers was known for the first time. After the risers were replaced in 1981, there were no further problems with the heat or with leaks in the building.

(b) The Judge's Findings and Rulings.

The judge found that Brown, through his employees and agents "either represented to potential buyers that the heating system ... was in good repair, or that problems in the heating system would be resolved ... [but] that these representations were contrary to the true state of affairs." The judge also stated that Brown "had to be aware of the problems in the [heating] system," apparently referring to the corroded risers which, when replaced, ultimately proved to be the major cause of the lack of heat and the leaks. Thus, the decision initially appears to be based on fraud. However, the judge stated that the misrepresentations made by Brown had not been "willful" as that word is used in c. 93A, but had been made negligently. The judge also found that "the defendants in some instances negligently represented that the heating system was in good repair; in other instances they negligently represented that steps would be taken to place the system in good repair. It was clearly foreseeable that such negligence would result in the injury sustained by plaintiffs here, i.e., the necessity of assuming the financial burden of total replacement of the risers in the heating system." We think it apparent from the evidence already summarized, from the findings just quoted, and from the finding against the plaintiffs on the question of multiple damages that the judge's determination of damages is based on negligence rather than fraud.

(c) Liability Under G.L. c. 93A on a Negligence Theory.

In considering the defendants' appeal, the first question to be answered is whether, under c. 93A, liability can rightfully be imposed for negligent misrepresentations. The plaintiffs' claim is governed by the versions of c. 93A, §§ 9 and 11, which were in effect at the time Brown made the misrepresentations. See Murphy v. Charlestown Sav. Bank, 380 Mass. 738, 743, 405 N.E.2d 954 (1980); Swanson v. Bankers Life Co., 389 Mass. 345, 346 n. 3, 450 N.E.2d 577 (1983). As the relevant language of c. 93A, § 9, as in effect prior to St.1979, c. 406, § 1, was substantially the same as that still appearing in c. 93A, § 11, the claims under each section need not be treated separately. ⁴ The sine qua non, of course, is a violation of c. 93A, § 2.

Liability under § 2 is determined by analysis of the circumstances and facts of each case to determine whether the practice in question is "within any recognized conception of unfairness" or is "immoral, unethical, oppressive or unscrupulous" or "causes substantial injury to consumers (or competitors or other businessmen)." PMP Associates, Inc. v. Globe Newspaper Co., 366 Mass. 593, 596, 321 N.E.2d 915 (1975). Although a negligent act, standing by itself, does not amount to a violation of § 2, a deceptive act which is the result of a defendant's negligence is actionable without more. Linthicum v. Archambault, 379 Mass. 381, 388, 398 N.E.2d 482 (1979). Swanson v. Bankers Life Co., 389 Mass. at 349, 450 N.E.2d 577. MacGillivary v. W. Dana Bartlett Ins. Agency of Lexington, Inc., 14 Mass.App. 52, 58-61, 436 N.E.2d 964 (1982). The circumstances of this case fall within the ambit of the question left open...