Kohl v. Silver Lake Motors, Inc.

• Decision Date: 02 March 1976
• Citation: 369 Mass. 795,343 N.E.2d 375
• Parties: , 90 A.L.R.3d 1342 John W. KOHL v. SILVER LAKE MOTORS, INC.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 375

343 N.E.2d 375

369 Mass. 795, 90 A.L.R.3d 1342

John W. KOHL

v. SILVER LAKE MOTORS, INC.

Supreme Judicial Court of Massachusetts, Middlesex.

Argued Dec. 3, 1975.

Decided March 2, 1976.

Kenneth E. Karger, Boston (Donald J. O'Bell, Boston, with him), for plaintiff.

John W. Gahan, III, Gardner, for defendant.

Before HENNESSEY, C.J., and QUIRICO, KAPLAN and WILKINS, JJ.

WILKINS, Justice.

This case presents further questions arising under G.L. c. 93A, the consumer protection act. See YORK V. SULLIVAN, --- MASS. ---, 338 N.E.2D 344 (1975)^A, where our earlier opinions are collected. Here we consider the consequences, under G.L. c. 93A, § 9(3), of a written tender of settlement made and filed by Silver Lake Motors, Inc. (Silver Lake), which sold a 1973 Dodge Dart automobile to the plaintiff (buyer).

In his appeal, the buyer challenges the judge's conclusion that Silver Lake's tender of settlement was 'reasonable in relation to the injury actually suffered' by the buyer and that, as a result, the buyer's maximum recovery from Silver Lake for its violation of the consumer protection act was limited to the amount of that offer. G.L. c. 93A, § 9(3). The buyer argues additionally that, even if Silver Lake's settlement offer was reasonable, its conduct constituted a wilful and knowing violation of G.L. c. 93A, § 2, and that, therefore, he is entitled to multiple damages. We hold that the record adequately supports the judge's conclusion that Silver Lake's tender of settlement was reasonable under G.L. c. 93A, § 9(3), and that, if a judge makes such a determination, a buyer's recovery in an action under G.L. c. 93A may not exceed the relief tendered (plus attorney's fees incurred prior to the date of the buyer's rejection of the tender (G.L. c. 93A, § 9(4))), even if the seller's conduct was a wilful or knowing violation of the act. Thus we need not consider the buyer's challenge to the judge's finding that Silver Lake's violations of G.L. c. 93A, § 2, were not 'willful or knowing.' See G.L. c. 93A, § 9(3).

In July, 1973, the buyer entered into an agreement to purchase a specific, new 1973 Dodge Dart which was in stock, with delivery to be made at a later date. For reasons which do not appear in the record, Silver Lake then sold that vehicle to someone else. On September 10, 1973, without advising the buyer, Silver Lake sold a different 1973 Dodge Dart to the buyer. That vehicle looked much like the original vehicle which the buyer had agreed to purchase, but it lacked certain optional features which had been represented to be on the original vehicle. ¹ In addition, the original automatic transmission on the vehicle actually delivered had been replaced by Silver Lake because it was defective. The buyer became aware of the substitution of vehicles in the latter part of October 1973.

The judge found that the delivered vehicle required 'excessively frequent and extensive repairs' but that Silver Lake had done its best to make requested repairs without charge. Although the buyer continued to use the vehicle, he was forced to rent other automobiles for short periods of time, while Silver Lake was attempting to repair his vehicle.

On November 2, 1973, the buyer sent a written demand for relief to Silver Lake. ² Silver Lake responded with a written tender of settlement, which the buyer rejected and which the judge has found to be 'reasonable in relation to the injury actually suffered by the . . . (buyer.)' ³

The judge ruled that the substitution of the vehicle and the absence of the optional features represented to be on the first vehicle were violations of G.L. c. 93A, § 2(a), but that these were not wilful or knowing violations. He assessed damages of $500 for these violations and allowed the buyer $250 as reasonable attorney's fees and costs incurred on or before November 30, 1973, the date of the letter tendering the offers of settlement. See G.L. c. 93A, § 9(4). He ruled that the replacement of the original, defective transmission was not a violation of G.L. c. 93A and that the unsatisfactory performance of the vehicle was a breach of contract but not a violation of G.L. c. 93A. He assessed damages of $300 for breach of contract.

The buyer argues that the judge was wrong as matter of law in ruling that the relief tendered by Silver Lake was 'reasonable in relation to the injury actually suffered' by the buyer. A determination of reasonableness normally is a question of fact. We think that a seller asserting the protection of the statutory limitation of damages appearing in § 9(3) has the burden of proving the reasonableness of the settlement tendered. Cf. Slaney v. Westwood Auto, Inc., --- Mass. ---, --- - --- ^b, 322 N.E.2d 768 (1975); Commonwealth v. DeCotis, --- Mass. ---, --- ^c, 316 N.E.2d 748 (1974). In any analysis of the tender of settlement in relation to the buyer's injury, we must consider (1) whether, as the buyer argues, damages sustained because of the defective transmission (which were treated as contract damages by the judge) should be regarded as an injury suffered because of Silver Lake's violation of G.L. c. 93A and (2) whether, as the buyer argues further, attorney's fees incurred by a buyer prior to the date on which a reasonable settlement offer is rejected must be considered in determining the reasonableness of a settlement offer. ⁴

The record does not show that the buyer's damages resulting from the defective transmission were attributable to Silver Lake's violation of the consumer protection act, and the judge correctly excluded them in determining the 'injury actually suffered' by the buyer under G.L. c. 93A. A seller who violates G.L. c. 93A, § 2, is not thereby a guarantor against defects in the item sold which are unrelated to the deceptive act or practice. Under G.L. c. 93A, § 9(1), a seller is liable for damages if the buyer suffered 'any loss of money or property . . . as a result of' the seller's use of a deceptive act or practice. This language indicates that there must be a casual connection between the seller's deception and the buyer's loss. Only those losses sustained by the buyer which were the foreseeable consequence of the seller's deception should be recoverable. In this case, the defective transmission was unrelated to any deception by the seller. Not only was the seller not trying to pass off a defective transmission, but the seller replaced the original, defective transmission in the substitute vehicle before it was sold. It is true that, even with the replacement transmission, the vehicle remained defective, but that fact, standing alone, does not make the sale in 'unfair or deceptive act or practice.' G.L. c. 93A, § 2(a). ⁵

In measuring the reasonableness of a tender of settlement under § 9(3) the judge should not treat attorney's fees as part of the 'injury actually suffered by the petitioner.' Counsel fees generally are not recoverable in this Commonwealth in the absence of statutory authorization. See C. J. Hogan, Inc. v. Atlantic Corp., 332 Mass. 322, 327, 124 N.E.2d 905 (1955). We are unaware of any instance where the words 'injury' or 'injury actually suffered' have been used by our Legislature to include counsel fees. The reference in § 9(3) to 'injury actually suffered' is no different. Counsel fees are covered explicitly by the language in § 9(4), quoted in note 4 above. If 'injury actually suffered' included counsel fees, there would have been no need to make separate provision for the recovery of counsel fees.

The buyer points out that even where a buyer rejects a reasonable offer of settlement, he is entitled to counsel fees incurred to the date of his rejection of that offer in any successful suit he may bring to recover for a violation of § 2 of G.L. c. 93A. His argument that he should be entitled to consideration of his reasonable attorney's fees in measuring the reasonableness of an offer of settlement is not without its appeal as a matter of legislative policy, at least if the maximum amount of the attorney's fees is limited by some objective standard. However, the Legislature has allowed counsel fees only if suit has been brought, and we see no justification for this court ignoring that statutory restriction. The buyer does not seriously contest the amount of the judge's allowance for counsel fees on any other ground. ⁶ Considering Silver Lake's tender of settlement in relation to the damages actually suffered by the buyer, the judge was warranted in ruling that Silver Lake's offer of settlement was reasonable and in awarding c. 93A damages of $500. Although the judge made no finding of the value of the offer of settlement (and the buyer did not move for additional findings under Mass.R.Civ.P. 52(b)), there was evidence that the offer which permitted the buyer to exchange his 1973 vehicle for a similar 1974 vehicle was worth at least $700. The offer to give the buyer his money back in exchange for the vehicle called for a balancing of (a) the buyer's loss of the sales tax ($99.18), the motor vehicle registration fee, and any other possible G.L. c. 93A damages against (b) the advantage of getting a full refund of the price paid for his vehicle, which was then second hand. The judge was warranted in ruling that the buyer was offered a settlement which would have compensated him reasonably for any loss sustained, including the consequences of Silver Lake's failure to give him the benefit of the bargain which he thought he was making. Cf. York v. Sullivan, --- Mass. ---, ---, ^d 338 N.E.2d 344 (1975), and cases cited. When any damages due to the sale of the defective transmission...