Murphy v. Charlestown Sav. Bank

• Decision Date: 03 June 1980
• Citation: 380 Mass. 738,405 N.E.2d 954
• Parties: Corina MURPHY et al. 1 v. CHARLESTOWN SAVINGS BANK.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 954

405 N.E.2d 954

380 Mass. 738

Corina MURPHY et al. ¹ v. CHARLESTOWN SAVINGS BANK.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Feb. 4, 1980.

Decided June 3, 1980.

Sheldon H. Ganz, Boston, for plaintiffs.

James O. Peterson, Reading, for defendant.

Francis X. Bellotti, Atty. Gen., amicus curiae, John T. Montgomery, Susan H. Frey, and Louis A. Rizoli, Asst. Attys. Gen., Westwood, submitted a brief.

David A. White, Boston, for Massachusetts Urban Reinvestment Advisory Group, Inc., amicus curiae, submitted a brief.

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

LIACOS, Justice.

In this action, based on G.L. c. 93A, § 9, the plaintiffs, Corina and Thomas J. Murphy alleged that the defendant, Charlestown Savings Bank (bank), had committed unfair or deceptive acts or practices relating to the servicing and foreclosure of the bank's mortgage on the Murphys' residence. The plaintiffs sought a preliminary injunction forbidding the bank from conveying title to the premises. The Murphys also prayed that the title be returned to them and that they be awarded general, incidental and consequential damages for loss of the equity in their property. Finally, they sought multiple damages and the attorney's fees as permitted under c. 93A. On February 14, 1979, the defendant filed an answer. On February 27, a judge of the Superior Court denied the plaintiffs' request for a preliminary injunction. The defendants moved on April 19 for judgment on the pleadings. Treating the motion as one to dismiss pursuant to Mass.R.Civ.P. 12(b)(6), 365 Mass. 754 (1974), the judge allowed it on May 22. On May 23 he entered judgment for the defendants. The plaintiffs appealed from that judgment. We transferred the plaintiffs' appeal here on our own motion. We affirm the judgment. ²

For purposes of reviewing the ruling on the motion to dismiss, we take as true the allegations of the complaint and reasonable inferences that favor the plaintiffs. Lowell Gas Co. v. Attorney Gen., --- Mass. ---, --- - --- ^a, 385 N.E.2d 240 (1979). The facts alleged are these. On or about June 3, 1974, the Murphys, husband and wife, gave the bank a mortgage on their home at 197 Bunker Hill Street, Charlestown, Boston, to secure a loan of.$19,000. At that time the bank appraised the premises at $28,000. The mortgage payments were maintained for about three and one-half years, at the end of which time the Murphys were having marital difficulties. Corina filed for divorce, and Thomas was ordered to vacate their home. Thomas did not contribute to her support, the support of their minor child, or the upkeep of the home. In May, 1978, the Murphys were in arrears on their mortgage payments for March, April, and May. Corina contacted the bank, requested a temporary waiver of principal payments, and was led to believe that a waiver would be granted if her attorney submitted a formal request. Accordingly, on June 7, 1978, her counsel wrote to the bank, but, on June 12, the bank rejected Corina's request. On July 3, the bank sent notice to Corina's attorney and a copy to Thomas, at a Melrose address, that the Murphys' loan was scheduled for foreclosure on July 11, 1978. The bank on August 4 filed in the Land Court a complaint for authority to foreclose the mortgage by entry and possession and to exercise a power of sale. On September 1, Corina Murphy furnished her attorney with a check for $1,567.75, full payment of mortgage arrearage, including late charges, for May through September, 1978. On that day her attorney informed the bank by letter that he had the check. The bank did not reply, and on September 12 Corina's attorney forwarded the check to the bank. Three days later the bank returned the check, requested that it be certified and demanded that payment include attorney's fees of $369.85. According to the bank, if Mrs. Murphy did not comply with these demands by 12 noon, September 22, 1978, foreclosure proceedings would resume. On September 21 Corina mailed the bank a certified check for $1,567.75 and requested an extension for payment of the attorney's fees. The bank rejected her request. On October 10, she attempted to pay in cash $1,877.75, which included all arrearages and late charges. She also sought to make a partial payment of the attorney's fees and promised to pay the balance within a short time. The bank again rejected her request. ³

On November 15 the bank foreclosed the property by sale. The plaintiffs and their attorneys allegedly were unaware of the sale. The bank forwarded notice of sale to both plaintiffs at a Westford address even though bank officials allegedly had reason to know that Thomas lived in Melrose. The bank also had reason to know that the plaintiffs did not have actual notice of the sale because letters of notice were returned unopened. At the sale of November 15, the bank bought the property for $17,000. On the same date the bank entered into a purchase and sale agreement with tenants of the property, whereby the bank would sell the property for $24,000 and take back a $22,800 mortgage. ⁴ At that time the fair market value of the property allegedly exceeded $30,000, and the bank allegedly was aware of this. Furthermore, the plaintiffs contend that, before the foreclosure sale, the bank had entered into negotiations to sell the property for $24,000.

On January 11, 1979, the plaintiffs sent the bank a demand letter, listing ten purported wilful and knowing violations of c. 93A. In essence, the letter asserted that the bank committed unfair or deceptive acts or practices (1) by twice refusing full payment of mortgage arrearage and late charges, refusing because the Murphys were in the process of obtaining a divorce, and foreclosing with only $369.85 legal fees in dispute; (2) by refusing to grant waiver of principal payments, and leading Corina to believe that a waiver would be granted; (3) by failing to afford either the Murphys or Corina's attorney adequate notice of the foreclosure sale; (4) by negotiating before the foreclosure sale to sell the property to a third party; purchasing the property, worth over $30,000, for $17,000, an amount less than the outstanding mortgage; and then agreeing to sell the property to the third party for $24,000 with a 90% purchase money mortgage. The bank answered each allegation individually and refused to offer settlement. After receiving the demand, the bank allegedly refused credit to the third party purchaser of the property. At the time the complaint was filed, the bank had retained title, but was seeking a buyer.

The Murphys argue that c. 93A applies generally to banks. They assert that their mortgage transaction with the bank made them purchasers of property within the meaning of G.L. c. 93A, § 9(1). They claim that their complaint adequately alleges that the bank's conduct caused them to lose the equity in their property, and this constituted the loss of money or property that § 9(1) requires, and that the bank behaved unfairly and deceptively.

We have reserved the question whether c. 93A applies generally to banks. Mechanics Nat'l Bank v. Killeen, --- Mass. ---, --- - --- n. 8 ^b, 384 N.E.2d 1231 (1979). The defendant argues that, even though banks engage in commerce, they are not covered under G.L. c. 93A, § 2(a). ⁵ Although the parties have briefed the issue of applicability of the statute based on their varied views of the meaning of the statutory language and the intent of the Legislature, the issue is not adequately briefed, nor is it one essential to decide for the determination of this appeal. ⁶ Thus, we do not decide the issue, but assume arguendo the applicability of G.L. c. 93A, § 2(a), to banks solely for purposes of considering the question whether the mortgage transaction of the plaintiffs with the bank made the plaintiffs purchasers of property within the meaning of G.L. c. 93A, § 9(1), as amended through St. 1978, c. 478, § 45. We conclude, for the reasons stated, it did not. This determination being dispositive, we need go no further.

At the time of the alleged unfair or deceptive act or practice in this case, a party seeking a private remedy under G.L. c. 93A, § 9(1), "was required to show: first, that he or she purchased or leased goods, services or property real or personal primarily for personal, family or household purposes." Linthicum v. Archambault, --- Mass. ---, --- ^c, 398 N.E.2d 482, 485 (1979). Dodd v. Commercial Union Ins. Co., 373 Mass. 72, 80-82, 365 N.E.2d 802 (1977).

The language "(a)ny person who purchases or leases goods, services or property, real or personal," has since been struck from § 9(1). Statute 1979, c. 406, § 1, effective October 18, 1979, amended c. 93A to afford a remedy to "(a)ny person, other than a person entitled to bring action under section eleven of this chapter (i. e., a person "who engages in the conduct of any trade or commerce"), who has been injured by another person's (unfair or deceptive act or practice)." Thus, § 9 may no longer contain limits based on the nature of the transaction or the plaintiff's status within that transaction. ⁷ However, the Murphys' cause of action arose in 1978, before the new amendment's effective date, and they must hurdle obstacles that for later plaintiffs may have been swept away. Thus, they must answer the question that we raised in Mechanics Nat'l Bank v. Killeen, supra at --- - --- n. 8 ^d, 384 N.E.2d 1231: they must demonstrate that a mortgagor in a home loan mortgage is a "purchaser" of property within the meaning of former § 9.

The plaintiffs argue in substance that a mortgagor is a purchaser of the use of money. They assert, in effect, that payment of interest is consideration for the use of money, and the right to use money is a valuable property right. A purchase is "the act of acquiring property by the payment of the price." Hunt v. Bassett, 269 Mass. 298, 302, 168 N.E. 783, 784 (1929). See also Howard v. Chicopee, 299 Mass. 115, 122,...