Nei v. Burley

• Decision Date: 04 March 1983
• Citation: 388 Mass. 307,446 N.E.2d 674
• Parties: Philip NEI et al. 1 v. Justin W. BURLEY et al. 2
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 674

446 N.E.2d 674

388 Mass. 307

Philip NEI et al. ¹ v. Justin W. BURLEY et al. ²

Supreme Judicial Court of Massachusetts,

Essex.

Argued Sept. 16, 1982.

Decided March 4, 1983.

James A. Frieden, Boston, for plaintiffs.

Brian T. Callahan, Medford, for Justin W. Burley & another.

Robert S. Kutner, Boston, for Milldam Associates, Inc.

Philip S. Lapatin, Boston, for Massachusetts Ass'n of Realtors, amicus curiae, submitted a brief.

Before WILKINS, ABRAMS, NOLAN, LYNCH and O'CONNOR, JJ.

NOLAN, Justice.

The plaintiffs (buyers) purchased a house lot in Carlisle from the defendants Justin and Beatrice Burley (sellers) who had engaged the defendant Milldam Associates, Inc. (broker), to market the lot. In their complaint, the buyers allege that the sellers and the broker represented to them that the land was suitable for a house and that it passed percolation and high water tests which were taken in August, 1978; that both the sellers and broker knew but did not disclose that earlier tests taken in the spring of 1978 revealed a lot unsuitable for house building and that a catch basin or storm drain of the town of Carlisle spilled water onto the land when it rained. The complaint also alleges that a prospective purchaser had earlier terminated an agreement to buy because of wetness in the springtime, but that this fact was not disclosed to the buyers and, finally, that the presence of a high water table forced the buyers to truck considerable amounts of fill to the lot to raise its level so that the septic system would meet the requirements of the applicable sanitary code. The complaint avers that the increase in construction costs represents the buyers' damages.

The buyers' complaint seeks recovery against all defendants on three bases: (1) breach of warranty; (2) fraud; and (3) violation of G.L. c. 93A, § 2, the Massachusetts Consumer Protection Act. To complete the pleadings' picture, the defendants filed an answer and a counterclaim charging defamation. To the dismissal of the counterclaim no appeal has been taken. The defendant also filed a third-party complaint against Edmund H. Campbell, Inc. (Campbell), a real estate brokerage company which represented the buyers and against the town of Carlisle which had issued a permit or license for the septic system. Prior to trial the third-party complaint against Carlisle was dismissed and no appeal was claimed. During trial, a motion for directed verdict in favor of Campbell was allowed. No appeal has been taken from that action.

The counts for breach of warranty and fraud were tried to a jury. The judge allowed motions for directed verdicts at the close of the plaintiffs' case on these counts.

The buyers' count for violation of G.L. c. 93A, § 2, was tried by the judge without jury. However, to assist the judge in her determination of the questions of fact, two special questions were submitted to the jury: 1. Whether the buyers received information orally from a registered land surveyor employed by the sellers that a seasonal stream ran through a pipe or culvert onto the property; and 2. Whether written information prepared by the surveyor consisting of the results of percolation tests, deep hole tests, and the existence of a water table was given to the buyers prior to their meeting with the surveyor at the locus. The jury answered, "No," to the first question and, "Yes," to the second. Judgment was entered on findings for the defendants. We allowed the buyers' application for direct appellate review.

The appeal raises four issues: (1) the sufficiency of the evidence of fraud; (2) the denial of a jury trial for the count under G.L. c. 93A, § 2; (3) the sufficiency of evidence as to the broker's violation of G.L. c. 93A, § 2; and (4) the determination that the sellers were not engaged in trade or commerce as that phrase is used in G.L. c. 93A, § 2(a). ³ We shall treat these issues de suite. We discern no error and we affirm the judgments.

1. Fraud. We examine the evidence and all reasonable inferences which may be drawn from the evidence in the light most favorable to the plaintiffs when evaluating the allowance of a motion for directed verdict. Kelly v. Railway Express Agency, Inc., 315 Mass. 301, 302, 52 N.E.2d 411 (1943). The broker for the sellers furnished the buyers with the results of the percolation and other tests conducted by the land surveyor and engineer employed by the sellers. These results contained no interpretive data or conclusions. The seller and the broker knew of the seasonal stream but they did not reveal this information to the buyers. Under the circumstances, there was no duty to make such revelation. This failure is mere nondisclosure and fails to reach the watermark of fraud. See Brockton Olympia Realty Co. v. Lee, 266 Mass. 550, 561, 165 N.E. 873 (1929). The sellers and broker did not convey half truths nor did they make partial disclosure of the kind which so often requires a full acknowledgment to avoid deception. See and contrast Kannavos v. Annino, 356 Mass. 42, 48-49, 24 N.E.2d 708 (1969); Kidney v. Stoddard, 7 Met. 252, 254-255 (1843). Accordingly, the provisions of Restatement (Second) of Torts § 551(2)(b) (1977) are not apposite because they refer to partial and ambiguous statements.

Sellers and brokers who represent sellers are not liable in fraud for failing to disclose every latent defect known to them which reduces materially the value of the property and of which the buyer is ignorant. Cf. Kannavos v. Annino, supra, 356 Mass. at 48, 247 N.E.2d 708. Contrast, McDonough v. Whalen, 365 Mass. 506, 511-512, 313 N.E.2d 435 (1974), in which the court, for the first time, recognized the liability of a building contractor to persons who are not in contractual relation with him for a negligently completed building. There existed no fiduciary duty between the sellers and buyers and none between the broker and buyers. They dealt at arm's length with each other and there was no peculiar duty to speak. There were no material misrepresentations on which the buyers relied. See Nei v. Boston Survey Consultants, Inc., 388 Mass. 320, 446 N.E.2d 681 (1983).

The buyers make much capital out of the description of the land in the Multiple Listing Service (MLS) book to the effect that the lot was a "nice, wooded building site. Tested, surveyed and approved by the Planning Board ... ready to go!" The obstacle in the path of the buyers' recovery based on these descriptive phrases is the knowledge which they had of excessive water on the lot before they executed the purchase and sale agreement. Mrs. Nei (a buyer) testified that she had seen the report of the tests conducted on the lot and that she met Corbin, the registered land surveyor who performed the tests, on the lot before she or her husband had signed the purchase and sale agreement. Corbin told her of the existence of excessive water. She had the opportunity of asking Corbin to interpret the significance of his report but she did not ask him. All of these admissions by Mrs. Nei tend to demonstrate that the buyers did not rely on any representation of the defendants or on the defendants' silence. Reliance is an element of actionable fraud. Kilroy v. Barron, 326 Mass. 464, 465, 95 N.E.2d 190 (1950). Restatement (Second) of Torts § 537 (1977).

For these reasons, there was no error in directing verdicts for the defendants on the count charging fraud. The buyers have advanced no argument on the propriety of the directed verdict as to breach of warranty and, therefore, we do not reach it. See Mass.R.A.P. 16(a)(4), as amended, 367 Mass. 921 (1975).

2. Trial by jury under G.L. c. 93A. As originally written, G.L. c. 93A, § 9(1), provided that an aggrieved consumer might bring "an action ... in equity for damages and such equitable relief, including an injunction, as the court deems to be necessary and proper." St.1969, c. 690. In 1978, the Legislature struck the words "in equity" in response to the procedural merger of law and equity engendered by the adoption of the Massachusetts Rules of Civil Procedure. G.L. c. 93A, § 9(1), as amended through St.1978, c. 478, § 45. The plaintiffs argue that we should descry from the elimination of these words a legislative intent to confer a trial by jury. This argument is less than compelling because the Legislature left undisturbed multiple references to the "court" in § 9. See, e.g., § 9(2), (3), (4). In these sections the language is "if the court finds ..." When first enacted, the word "court" obviously referred to a judge and not a jury.

It is beyond doubt that the Legislature may grant a right to a trial by jury to one who is aggrieved by a violation of a statute. See, e.g., G.L. c. 224, § 19, as amended by St.1974, c. 414, § 5. Cf. Stockbridge v. Mixer, 215 Mass. 415, 418, 102 N.E. 646 (1913). That there was no such right in 1780 when the Massachusetts Constitution was adopted is not entirely responsive because the power to grant a jury trial reposes in the Legislature which can confer a right to a jury trial in connection with a newly recognized cause of action. See Parker v. Simpson, 180 Mass. 334, 344-346, 62 N.E. 401 (1902).

It may be argued that, if the claim is for a deceptive act or practice, a right to a jury trial should be recognized whereas if the averment raises only a claim of unfairness no such right exists. See Montgomery and Wald, The Right To Trial By Jury in c. 93A Actions, 67 Mass.L.Rev. 79 (1982), in which the authors contend for a dichotomy between the issue of deception on which they assert a right to a jury trial and the issue of unfairness on which there is probably no such right.

In Commonwealth v. DeCotis, 366 Mass. 234, 244 n. 8, 316 N.E.2d 748 (1974), the primordial case under c. 93A, the court quoted with approval the statement in the Attorney General's brief "that the statutory words '[u]nfair and deceptive practices' [in G.L. c. 93A, § 2,] are not limited by traditional tort and contract law...