Hamed v. Fadili

Decision Date18 July 1990
Citation408 Mass. 100,556 N.E.2d 1020
PartiesSalam HAMED v. Adel A. FADILI et al. 1
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

Paul W. Shaw (Harvey A. Schwartz, with him), for plaintiff.

Peter B. Ellis (Richard d'A. Belin, with him), for defendants.

Before LIACOS, C.J., and WILKINS, LYNCH and O'CONNOR, JJ.

LYNCH, Justice.

The plaintiff, Salam Hamed, commenced this action in the Superior Court against the defendants, Adel A. Fadili, Site Development Corp. (Site), and Fadili Construction Company, Inc. (Fadili Construction), seeking damages in connection with an unsuccessful real estate development project initiated by Fadili. After a trial which resulted in a jury verdict for the plaintiff in the amount of $648,000, the defendants appealed and the Appeals Court reversed. Hamed v. Fadili, 27 Mass.App.Ct. 234, 537 N.E.2d 167 (1989). The Appeals Court ruled that the trial judge had erred in allowing the plaintiff's belated motion to amend his complaint to include a claim alleging fraud in the inducement. 2 We granted the plaintiff's application for further appellate review and, since we are in agreement with the opinion of the Appeals Court, we affirm in part and reverse in part.

There was evidence at trial that in 1981 Fadili owned and controlled Site. At that time, Fadili informed the plaintiff that Site planned to develop an office building on land it owned in North Reading and invited him to invest in the project. On July 15, 1981, the parties signed a contract in which Fadili agreed to sell, and the plaintiff agreed to buy, a one-half interest in Site for $180,000. The contract also provided that the plaintiff had the option to resell his stock to Fadili for a price equal to the plaintiff's entire investment in Site. The contract stated that the plaintiff could exercise his option "at the expiration of eleven (11) months from the date of the execution of this Agreement and upon written notice to [Fadili]." Another provision of the contract stated that "[n]otwithstanding the provisions hereof, [the plaintiff] shall not be entitled to demand the repurchase of his stock after expiration of eleven (11) months from the execution of this Agreement."

The plaintiff argues that the only logical interpretation of the agreement, reading the two clauses together, is that the plaintiff could exercise his option only on the final day of the eleven-month period. On June 15, 1982, eleven months from the date that the contract was signed, the plaintiff, through his attorney, sent a letter to Fadili demanding repayment of all money which he had paid under the contract. The letter was received by Fadili on June 17, 1982. Fadili refused the plaintiff's demand for repayment of the money on the ground that the request was untimely because it was received after the expiration of eleven months.

The plaintiff's initial two-count complaint alleged, first, that the defendants' refusal to refund his investment constituted a breach of contract and, second, that the defendants had defrauded him in the operation of Site. At a pretrial conference the trial judge dismissed the fraud claim on the ground that it did not state the alleged fraudulent acts with sufficient particularity, as required by Mass.R.Civ.P. 9(b), 365 Mass. 751 (1974).

At the close of all the evidence, Fadili moved for a directed verdict on the contract claim on the ground that the plaintiff's notice for a refund was untimely as a matter of law. The judge allowed the motion. Also at the close of evidence the plaintiff filed a motion to amend his complaint to add a claim of fraud in the inducement. The plaintiff sought treble damages against the defendants pursuant to G.L. c. 231, § 85J, inserted by St.1971, c. 450. 3 The judge allowed the motion over the defendants' objection.

The jury returned a treble damage verdict in favor of the plaintiff in the amount of $648,000 on the new claim alleging fraud in the inducement. The judge ordered that prejudgment interest of $309,342.24 be added to the verdict. Judgment was therefore entered for the plaintiff in the total amount of $957,342.24. 4 With regard to Site's counterclaim that it had an equitable interest in certain real estate purchased by the plaintiff in Lynnfield, the judge found for Hamed.

The Appeals Court reversed the decision of the trial judge allowing the motion to amend. The Appeals Court concluded that Fadili was prejudiced by the belated insertion of the new claim and also that the new claim was futile because the evidence at trial was legally insufficient to support a verdict for the plaintiff on a theory of fraud in the inducement.

1. The record on appeal. This case involves a threshold issue involving the content of the record on appeal. After his application for further appellate review was allowed, the plaintiff filed a motion in the trial court to "correct and modify" the trial record. After a hearing at which the defendants were not represented, the trial judge signed the following findings and rulings drafted by plaintiff's counsel:

"1. If as the Appeals Court concluded, the record shows that 'at a pretrial conference, the trial judge dismissed, sua sponte, the second count of the complaint that had alleged fraud,' then the record is incorrect and does not accurately reflect the rulings of the court following a lobby conference with counsel for the plaintiff and defendants. As the docket indicates, the plaintiff's fraud count was not dismissed by the Superior Court nor was it ever my intention to dismiss the plaintiff's fraud count.

"2. If as the Appeals Court concluded, 'the record demonstrates from the comments of the plaintiff's counsel and the judge ... that the parties believed that the matters on trial involved only a breach of contract claim and some counterclaims, none of which involved fraud,' then the record is incomplete and does not accurately reflect what occurred in the lower court. As the trial progressed, it was clear that there was substantial evidence of fraud by the defendants. In several lobby conferences this fact was discussed by counsel for both parties and the court. On or about the third day of trial, I made it clear in a lobby conference that the plaintiff would be able to proceed with his fraud case and that an appropriate amendment should be filed. The allegations of fraud as alleged in the plaintiff's amended Count II were discussed by counsel for both parties and the court in lobby conference prior to the actual amendment of the complaint. Despite these discussions, at no time during the course of the trial did defendants' trial counsel raise the issue of prejudice with regard to this amendment."

The defendants' motion to vacate these findings and rulings was denied after a hearing.

The plaintiff then filed a motion here to supplement the record on appeal with the trial judge's postappeal revised findings and rulings.

It is explicitly provided in the Massachusetts Rules of Appellate Procedure that the trial judge shall settle any difference as to whether the record truly discloses what occurred in the lower court. Mass.R.A.P. 8(e), as amended, 378 Mass. 932 (1979). That rule has never been applied in this jurisdiction subsequent to an appeal in what amounts to a collateral attack on the appellate decision. It is implicit in the rule and in the very nature of the appellate process that any correction to the record must take place before the appeal has been decided. Therefore the trial judge could not amend the record in this case after the decision of the Appeals Court. See United States v. Jones, 204 F.2d 745, 751 (7th Cir.), cert. denied, 346 U.S. 854, 74 S.Ct. 67, 98 L.Ed. 368 (1953). This rule is necessary to preserve the integrity of the appellate process. Further appellate review will proceed on the same record on which the Appeals Court based its decision. 5

2. Allowance of the plaintiff's motion to amend the complaint. The defendants claim that the judge abused his discretion in allowing the plaintiff's motion to amend his complaint. The motion stated that it was filed pursuant to both Mass.R.Civ.P. 15(a) (amendments) and (b) (amendments to conform to the evidence), 365 Mass. 761 (1974). The judge, however, at the time that he allowed the motion, did not indicate the particular section upon which he based his decision. We conclude that it was error for the judge to allow the motion under either section.

This court has stated that "Mass.R.Civ.P. 15(a) ......

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