Lynn v. Nashawaty

• Decision Date: 05 October 1981
• Citation: 12 Mass.App.Ct. 310,423 N.E.2d 1052
• Parties: John E. LYNN v. Charles A. NASHAWATY et al. 1
• Court: Appeals Court of Massachusetts

Page 1052

423 N.E.2d 1052

12 Mass.App.Ct. 310

John E. LYNN v. Charles A. NASHAWATY et al. ¹

Appeals Court of Massachusetts, Middlesex.

Argued Dec. 14, 1979.

Decided July 31, 1981.

Further Appellate Review Denied Oct. 5, 1981.

Joseph C. Delcore, Everett, for defendants.

Kenneth A. Behar, Boston, for plaintiff.

Before ARMSTRONG, PERRETTA and DREBEN, JJ.

ARMSTRONG, Justice.

By this action the plaintiff seeks recovery of damages from the defendants on three counts alleging, respectively, breach of contract, deceit, and violation of G.L. c. 93A, the Regulation of Business Practice and Consumer Protection Act. The defendants appeal from a judgment for the plaintiff for $6,300 contract damages, plus interest and costs, and $1,887.50 as an attorney's fee under G.L. c. 93A, § 11.

We summarize the facts as found by the trial judge, who heard the case without a jury. In 1974 the plaintiff, who had not previously engaged in retail business, answered a newspaper advertisement with regard to the purchase of a Belmont stationery store owned by the defendants. The defendants, who are brothers, also owned and operated a stationery store in Brookline. The plaintiff discussed the purchase of the Belmont store with the defendants and at one point was told by the defendant Antoun that the wholesale value of the inventory on the premises of the store was approximately $13,000. The parties eventually agreed to the plaintiff's purchase of the business for the price of $21,000, signing a purchase and sale agreement which provided, among other things, that "the Seller represents that there will be approximately $13,000.00 worth of merchandise at wholesale cost price on the premises at the time of the consummation of the sale."

Shortly after assuming management of the store, the plaintiff took a physical inventory of all the merchandise on the premises. He found that the retail value of the existing inventory was $13,415.20. The wholesale value of the inventory, calculated at 50% of the retail value, was approximately $6,700. The plaintiff immediately notified the defendants of the discrepancy between the value of the inventory actually on hand and the value as set forth in the purchase and sale agreement but obtained no satisfaction.

On these facts, the trial judge concluded that the defendants misrepresented the value of the inventory and that this misrepresentation was both a breach of the purchase and sale agreement and an unfair or deceptive act or practice violative of G.L. c. 93A, §§ 2(a) and 11. He declined to find that the misrepresentation was knowing or willful.

The facts found by the judge were amply supported by the evidence and require the conclusion that, as simple matter of contract law, the plaintiff was entitled to the award of $6,300 to compensate him for the difference between the inventory warranted and the inventory received. The award of an attorney's fee, however, requires us to consider the applicability of c. 93A, without which the fee could not stand. Chartrand v. Riley, 354 Mass. 242, 243-245, 237 N.E.2d 10 (1968). Bournewood Hosp., Inc. v. Massachusetts Commn. Against Discrimination, 371 Mass. 303, 311-313, 358 N.E.2d 235 (1976).

General Laws c. 93A, read literally, seems to apply. Section 2(a) bars unfair or deceptive acts or practices in the conduct of any trade or commerce. Section 1(b ), as appearing in St.1972, c. 123, defines "trade" and "commerce" to include "the sale ... of any property, tangible or intangible, real, personal or mixed ...." Section 2(c) authorizes the Attorney General to make rules interpreting the concept of unfair or deceptive acts or practices (which c. 93A leaves undefined), and the Attorney General has promulgated a regulation, § VIIB, 940 Code Mass.Regs. § 3.08(2) (1978), which was put in evidence and which states that "(i)t shall be an unfair and deceptive act or practice to fail to perform or fulfill any promises or obligations arising under a warranty." ² That regulation was enforced in Slaney v. Westwood Auto, Inc., 366 Mass. 688, 702, 322 N.E.2d 768 (1975), which held that it was not necessary that a misrepresentation, to violate § 2(a) of the Act, be knowledgeably or intentionally false. Id. at 703-704, 322 N.E.2d 768. The literal reading supports the judge's conclusion that the Act applies and that the plaintiff was therefore entitled to the attorney's fee under § 11.

To avoid that conclusion the defendants rely on Lantner v. Carson, 374 Mass. 606, 373 N.E.2d 973 (1978), in which it was held that § 9 of the Act did not apply to the sale of a house from one private individual to another. "(T)he proscription in § 2 of 'unfair or deceptive acts or practices in the conduct of any trade or commerce' must be read to apply to those acts or practices which are perpetrated in a business context." Id. [12 Mass.App.Ct. 313] at 611, 373 N.E.2d 973, quoting from G.L. c. 93A, § 2(a), as appearing in St.1967, c. 813, § 1. The defendants give Lantner an expansive reading: It held, they urge, that the Act does not apply to isolated transactions but only to transactions which occur in the ordinary course of the seller's trade or business. The sale of the business itself, the defendants point out, was not part of the "ordinary course" of their business of selling stationery.

Subsequent to arguments in this case the Supreme Judicial Court decided Begelfer v. Najarian, --- Mass. --- ^a, 409 N.E.2d 167 (1980), which held that it is not a requirement of § 11 "that a commercial transaction must take place only in the ordinary course of a person's business or occupation before its participants may be subject to liability under G.L. c. 93A, § 11." Id. at --- ^b, 409 N.E.2d 167. What is required is that the isolated transaction take place "in a business context." Id. at --- ^c, 409 N.E.2d 167, quoting from Lantner v. Carson, 374 Mass. at 611, 373 N.E.2d 973. That determination, it was held, must turn on the circumstances of each case, with emphasis on the following factors: "the nature of the transaction, the character of the parties involved ..., the activities engaged in by the parties ..., whether the similar transactions have been undertaken in the past, whether the transaction is motivated by business or personal reasons (as in the sale of a home), and whether the participant played an active part in the transaction." Id. at --- - ---, 409 N.E.2d 167, 1734-1735.

In the Begelfer case the defendants sought to be charged with violating c. 93A were pharmacists who were among several persons or groups that lent varying sums of money to the principals in a large real estate transaction. The defendants' participation was as private individuals making an isolated financial investment, and they had no role in arranging the underlying real estate transaction. It was thus held that their lending activity did not take place in a business context. The stated factors, however, suggest that the transaction involved in the case at bar is more susceptible to being characterized as occurring "in a business context" than those in Lantner and Begelfer. The sale of a business or business assets by a businessman is not the same as the sale of a home by an individual homeowner (as in Lantner), and the defendants in the present case were fully involved in every aspect of the transaction (unlike the defendants in Begelfer), including the false representation which is the core of the alleged c. 93A violation. ³ In view of the position taken in the Begelfer case that an isolated transaction, one that does not take place in the ordinary course of business, may constitute a violation of § 11, so long as it takes place in a business context, it is difficult to avoid the conclusion reached by the finder of fact that the transaction at bar violated that section. We cannot say that the judge was required as matter of law to reach the conclusion that the sale of the stationery store did not take place "in a business context." The question in a close case is doubtless largely one of fact, and the judge's finding here was not clearly erroneous.

The defendants next contend that the judge erred by failing to act upon their requests for rulings of law. His inaction, they assert, constituted an implied denial of each requested ruling, and certain of the requests stated correct principles of law and were not rendered immaterial by findings. The cases cited by the defendants in support of this line of argument were all actions at law tried without a jury prior to the adoption of the Massachusetts Rules of Civil Procedure in 1974. The pre-rules practice in actions at law did not require a judge to make express findings of fact. Matter of Loeb, 315 Mass. 191, 196, 52 N.E.2d 37 (1943). His judgment was treated as "import(ing) a finding of every fact necessary to sustain it not expressly negatived." Id. He was required, however, to pass upon requests for rulings of law, for the reasons stated in Hetherington & Sons v. William Firth...