Hamed v. Fadili

• Decision Date: 27 April 1989
• Docket Number: No. 87-1197,87-1197
• Citation: 27 Mass.App.Ct. 234,537 N.E.2d 167
• Parties: Salam HAMED v. Adel A. FADILI & et. al. 1
• Court: Appeals Court of Massachusetts

Page 167

537 N.E.2d 167

27 Mass.App.Ct. 234

Salam HAMED v. Adel A. FADILI & et. al. ¹ No. 87-1197.

Appeals Court of Massachusetts,

Middlesex.

Argued Oct. 6, 1988.

Decided April 27, 1989.

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

Robert A. Griffith (Dale C. Schneider, Boston, with him), for plaintiff.

Before GREANEY, C.J., and SMITH and FINE, JJ.

SMITH, Justice.

The plaintiff, Salam Hamed, brought a two-count complaint in the Superior Court against the defendants, Adel Fadili, Site Development Corp. (Site) and Fadili Construction Company, Inc. (corporation). In the first count, the plaintiff sought the return of $180,000 which he had paid to Fadili for a one-half interest in Site. He claimed that the contract between the parties contained a provision giving him the right to obtain a full refund of his purchase price and any additional monies that he may have contributed to Site if he gave written notice at the end of eleven months. He alleged that he had given such notice but that Fadili had refused to return his money. In the second count the plaintiff claimed that the defendants had defrauded him in their operation of Site and he sought damages in the amount of $46,000, the sum he alleged that he had contributed to Site after his initial investment.

Fadili and the other defendants denied the allegations contained in the plaintiff's complaint and also brought four counterclaims against him. In the first counterclaim, Fadili alleged that under the contract the plaintiff had agreed to contribute to Site one-half of all development and mortgage expenses but had refused to make such contributions. Fadili claimed that, as a result, in order to protect his and the plaintiff's interest in Site, he had to make additional contributions totaling $50,000, an amount beyond that required by the agreement. In the second counterclaim, Fadili claimed that the plaintiff had borrowed from him "monies and credit" in the amount of $200,000 and that the plaintiff had refused to repay him that amount. The corporation, in a third counterclaim, alleged that the plaintiff had failed to pay for some construction work that the corporation had performed at the plaintiff's home. Finally, in a fourth counterclaim, Site alleged that the plaintiff had purchased real estate in Lynnfield with money given to him by Site. It alleged that title to the property was placed in the plaintiff's name for Site's benefit. Site requested that the judge order the plaintiff to convey the property to Site. The plaintiff filed answers to all the counterclaims denying the allegations.

At a pretrial conference, the trial judge dismissed, sua sponte, the second count of the complaint that had alleged fraud, on the ground that the pleadings failed to comply with Mass.R.Civ.P. 9(b), 365 Mass. 751 (1974). ² The case then proceeded to trial before a jury on the breach of contract count, along with the counterclaims. ³

We summarize the evidence presented on the contract claim. In 1981, the plaintiff approached Fadili and asked him for suggestions on ways to invest between $900,000 and $1,000,000 that he had been given by his father for investment purposes. Fadili owned and controlled Site. The plaintiff was told by Fadili that Site planned to develop an office building on land in North Reading. Fadili recommended that the plaintiff invest in the project. Because he was interested in the proposal, the plaintiff hired an attorney to negotiate a contract with Fadili. On July 15, 1981, the parties signed a contract.

In the contract, Fadili agreed to sell to the plaintiff a one-half interest in Site for $180,000 and, if the parties could not obtain sufficient financing for the project, both would contribute the necessary funds themselves on an equal basis. 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 must 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 in 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."

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. He 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 parties filed several motions 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 matter of law. The judge allowed the motion.

The plaintiff filed a motion "to amend count II of his complaint concerning the count pertaining to fraud and deceit to conform to the evidence introduced at trial and further particularize the allegations of fraud and deceit." ⁴ In his proposed amended count, the plaintiff alleged that he had entered into an agreement whereby Fadili would sell to him 50 shares of stock in Site for $180,000 and the plaintiff would "contribute 50% of all expenses of the project incurred after June 1, 1981." The plaintiff claimed that Fadili and Site "misrepresented to [the plaintiff] facts concerning the viability of the project and the financing for the project ... the availability of financing, the value of the property and the expenses incurred in the project." He contended that he had relied upon the misrepresentations and suffered damages as a result. The plaintiff sought treble damages against the defendants pursuant to G.L. c. 231, § 85J, inserted by St.1971, c. 450. ⁵ The judge allowed the motion over the defendants' objection. As a result of the judge's decisions on the plaintiff's motion to amend the complaint and Fadili's motion for a directed verdict, the only matters submitted to the jury were the plaintiff's amended count seeking treble damages for fraud and deceit, and three of the four counterclaims. See note 3, supra.

The jury returned a treble damage verdict in favor of the plaintiff in the amount of $648,000 on the amended count. The judge ordered that prejudgment interest of $309,342.24 be added to the verdict. Therefore, judgment was entered for the plaintiff in the total amount of $957,342.24. On the first counterclaim, in which Fadili alleged that the plaintiff had failed to contribute to Site one-half of all development and mortgage expenses, the jury returned a verdict in favor of the plaintiff. On the second counterclaim, alleging that the plaintiff owed "monies and credit" to Fadili, the jury returned a verdict in favor of Fadili in the amount of $31,693.01. The jury also awarded the corporation the sum of $4,836.89 on its counterclaim for nonpayment of construction work. After the jury verdicts were recorded, the judge found for the plaintiff on Site's counterclaim that alleged it had an equitable interest in certain real estate in Lynnfield.

The parties have raised various issues on appeal. Fadili and the other defendants contend that the judge erred in (1) allowing the plaintiff's motion to amend, (2) instructing the jury on the amended complaint, (3) awarding prejudgment interest on the entire treble damage verdict, and (4) refusing to deduct the amounts that the jury found that the plaintiff owed on the counterclaims from the amount awarded to the plaintiff on the amended complaint. Site claims error by the judge in deciding the equitable counterclaim adversely to it. The plaintiff, in turn, has appealed the judge's action in allowing Fadili's motion for a directed verdict on his contract claim.

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

A motion for leave to amend filed under either (a) or (b) of rule 15 is addressed to the discretion of the judge. Castellucci v. United States Fid. & Guar. Co., 372 Mass. 288, 289, 361 N.E.2d 1264 (1977) (rule 15[a] ). Hall v. Horizon House Microwave, 24 Mass.App.Ct. 84, 88, 506 N.E.2d 178 (1987) (rule 15[b] ). Prejudice to the opposing party is a factor to be considered in regard to a motion to amend filed under both subsections. "It is well-settled that prejudice to the non-moving party is the touchstone for the denial of an amendment." Goulet v. Whitin Mach. Works, Inc., 399 Mass. 547, 550 n. 3, 506 N.E.2d 95 (1987), quoting from Cornell & Co. v. Occupational Safety & Health Review Comm'n., 573 F.2d 820, 823 (3d. Cir.1978). See Smith & Zobel, Rules Practice § 15.7, at 444 (1974 & 1988 Supp.). Also see William Inglis & Sons Baking Co. v. ITT Continental Baking Co., 668 F.2d 1014, 1053 (9th Cir.1981) (party may be permitted to alter legal theory through late pleading amendments only if other party is not prejudiced in its defense upon the merits). Here, Fadili was prejudiced by the allowance of the motion. ⁶

After the judge had dismissed the fraud count prior to trial, the case expressly proceeded only on the contract count and the counterclaims, none of which was based on fraud. ⁷ The contract claim presented a narrow...