Heller v. Silverbranch Const. Corp.

• Decision Date: 14 November 1978
• Parties: James N. HELLER et al. v. SILVERBRANCH CONSTRUCTION CORPORATION et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 1065

382 N.E.2d 1065

376 Mass. 621

James N. HELLER et al. v. SILVERBRANCH CONSTRUCTION CORPORATION et al.

Supreme Judicial Court of Massachusetts, Norfolk.

Argued Sept. 15, 1978.

Decided Nov. 14, 1978.

Robert D. Epstein, Braintree, for plaintiffs.

Frederick T. Iddings, Jr., Foxboro, for Silverbranch Const. Corp.

Before HENNESSEY, C. J., and QUIRICO, BRAUCHER, KAPLAN and LIACOS, JJ.

HENNESSEY, Chief Justice.

The plaintiffs, James and Ileen Heller, brought this action under G.L. c. 93A, §§ 2, 9, against Silverbranch Construction Corporation (Silverbranch) and Gordon and Lena Earle, doing business as Earle and Earle Realty (brokers). The complaint alleged defects in a parcel of real property sold by Silverbranch to the plaintiffs and misrepresentations made by the brokers and Silverbranch which induced the plaintiffs to purchase the property. After trial without a jury, the trial judge entered judgment for the brokers as against the plaintiffs and for the plaintiffs as against Silverbranch in the amount of $11,080, plus $1,000 attorney's fees, interest, and cost.

Silverbranch appeals, arguing (1) that it cannot be held liable under G.L. c. 93A for defects in the lot conveyed when the buyers have accepted a deed in full satisfaction of a purchase and sale agreement, when Silverbranch has committed no fraud, and when there is insufficient evidence to support a finding of negligence; (2) that, even if Silverbranch is liable, it is not liable for multiple damages under c. 93A, § 9(3); and (3) that the judge erred in awarding attorney's fees in the absence of evidence concerning the amount of time expended by the attorney and the rate and reasonableness of his charge. This court, on its own motion, ordered direct appellate review. We find no merit in the contentions Silverbranch sets forth on appeal. Accordingly, we affirm the lower court's judgment.

We summarize the facts as found by the judge. The Hellers came to Massachusetts from Illinois in the summer of 1973 for the purpose of purchasing a home. Someone referred them to a real estate firm known as Earle and Earle Realty. Their contact with the firm was supposedly through a Mrs. Glazer, whose position with the firm, if any, the evidence did not disclose. Mrs. Glazer escorted the Hellers through several different communities and showed them various houses which were being offered for sale. On arriving at one site, the Hellers observed running water on the property and informed Mrs. Glazer that they were not interested in property that had any water on it whatsoever.

The next piece of property that the Hellers visited is the subject matter of the present suit. The property was owned, and the house had been constructed, by Silverbranch. The Hellers' first visit to the property took place in late August of 1973, at which time the property was dry. Within a few days, they decided to enter into a purchase and sale agreement. Immediately before signing the agreement, Mrs. Heller asked Robert Silberzweig, president of the defendant corporation, if there was good drainage on the land. He replied that there was. After executing the agreement, the Hellers returned to Illinois.

On October 3, 1973, James Heller returned to Massachusetts for the purpose of closing the transaction. Prior to attending the closing, he visited the property to see if everything was in order. As far as he could determine, the property was dry and appeared "pretty much the same" as it had in late August.

On December 10, 1973, the Hellers moved to Massachusetts. On their arrival, they noticed standing water beginning approximately twenty feet from the rear of the house and extending the length between the sidelines of their lot. The diameter of the water varied between twenty and thirty feet, its deepest portion being approximately one foot. The Hellers immediately called Silberzweig for an explanation. He came to the property, acknowledged that there was a drainage problem, and informed the Hellers that he did not intend to do anything about it as they had already purchased the property. When asked why he did not mention the water at the time that the agreement was signed, he expressed his unwillingness to discuss the matter further and left. The Hellers attempted to contact him sometime later, but again he refused to talk.

There was no evidence to suggest that Mrs. Glazer was aware of the drainage problem until told of it by the plaintiffs on December 10, 1973. Nor was there any evidence that the brokers knew of the problem. However, Silberzweig had been aware that water was not draining from the property since at least the early part of 1973. At that time, he spoke with one Vincent Mirabile, a contractor, concerning the work that would be necessary to correct the problem and the cost that the correction would entail.

Early in 1974, the Hellers contacted Mirabile. His familiarity with what needed to be done stemmed not only from his prior conversation with Silberzweig, but from his having filled in the lot before the house was constructed. The Hellers retained Mirabile to install the requisite drainage pipes. The fair value of his services is $5,540.

The Hellers sent written demands for relief to both Silverbranch and the brokers pursuant to G.L. c. 93A, § 9(3). The letters described the unfair acts and practices relied on by the Hellers and the damages they suffered. Silverbranch admitted at trial that it made no offer or counteroffer of settlement. Sometime thirty days after their demands were sent, the Hellers brought the instant action.

1. Silverbranch's Liability under c. 93A.

Chapter 93A of the General Laws is a statute of broad impact whose basic policy is to ensure an equitable relationship between consumers and persons engaged in business. Dodd v. Commercial Union Ins. Co., --- Mass. --- ^A, 365 N.E.2d 802 (1977). Commonwealth v. DeCotis, 366 Mass. 234, 316 N.E.2d 748 (1974). Section 2, the substantive heart of c. 93A, makes "unfair or deceptive acts or practices in the conduct of any trade or commerce" unlawful. ¹ G.L. c. 93A, § 2(A ), inserted by St.1967, c. 813, § 1. The Legislature directed courts of this Commonwealth to two sources for guidance in interpreting this language: first, Federal Trade Commission (FTC) and Federal court interpretations of § 5(a)(1) of the Federal Trade Commission Act (FTCA), 15 U.S.C. § 45(a)(1) (1970); and, second, rules and regulations promulgated by the Attorney General of this Commonwealth, which are consistent with FTC and Federal court interpretations of the FTCA. G.L. c. 93A, § 2(B ) and (C ).

Silverbranch contends, at the outset of its argument, that c. 93A should not automatically render a buyer's disappointment the source of an enforceable legal right. Noting the Legislature's intention to have c. 93A interpreted in a manner consistent with the FTCA, Silverbranch relies on dicta in FTC v. Sinclair Ref. Co., 261 U.S. 463, 43 S.Ct. 450, 67 L.Ed. 746 (1923), to support its contention. In that case, the Supreme Court stated that the Federal statute gives "no general authority to compel competitors to a common level, to interfere with ordinary business methods or to prescribe arbitrary standards for those engaged in the conflict for advantage called competition." Id. at 475-476, 43 S.Ct. at 454. Although we feel compelled to point out that Sinclair is a fifty-five year old opinion having nothing to do with the case before us, ² we do not necessarily dispute its broad observations. However, we are unpersuaded by the defendant's suggestion that affording the Hellers relief in the instant case would render c. 93A a repository of legal rights arising from no more than disappointment of consumers.

The defendant's entire theory of nonliability is predicated on arguments relevant exclusively to the common law. As a result, the defendant points out that it committed no fraud, violated no warranties, is free from contractual liability because of a "waiver by acceptance of deed" clause in the purchase and sale agreement, and cannot be found negligent because there is no evidence to support such a finding. However, whether Silverbranch would be liable under any of these theories is not the question before this court. The plaintiffs claim a violation of c. 93A and, in directing its attention solely to common law theories, Silverbranch has ignored years of precedent pertinent and unfavorable to its present appeal. Both this court and the Supreme Court have consistently held that consumer protection statutes created new substantive rights by making conduct unlawful which was not previously unlawful under the common law or any prior statute. The statutory language is not dependent on traditional tort or contract law concepts for its definition. See Dodd v. Commercial Union Ins. Co., supra; Slaney v. Westwood Auto, Inc., 366 Mass. 688, 322 N.E.2d 768 (1975); Commonwealth v. DeCotis, supra; Reilly v. Pinkus, 338 U.S. 269, 70 S.Ct. 110, 94 L.Ed. 63 (1949); FTC v. Algoma Lumber Co., 291 U.S. 67, 54 S.Ct. 315, 78 L.Ed. 655 (1934). Thus, our determinations are not aided by the defendant's review of the various common law theories under which it might have escaped liability. Rather, the existence of unfair or deceptive acts or practices must be determined in light of the policy surrounding c. 93A and from the circumstances inhering in each case. With this in mind, we now turn to the relevant issues before us.

The judge concluded that Silberzweig was authorized by Silverbranch to enter into an agreement with the Hellers for the sale of the property in question and to make representations concerning that property. The judge also concluded that Silberzweig's failure to disclose the drainage problem violated par. XV of the Attorney General's Rules and Regulations, 20 Mass.Code of Regs., Part 5, at 39-40, ³ and G.L. c. 93A, § 2. We have reviewed the record and find ample support for the judge's conclusions. Consequently, we affirm the...