Park Drive Towing, Inc. v. City of Revere, SJC-09224 (MA 6/11/2004)

Decision Date11 June 2004
Docket NumberSJC-09224
Citation442 Mass. 80
PartiesPARK DRIVE TOWING, INC. vs . CITY OF REVERE & others. 1
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

Present: Marshall, C.J., Greaney, Ireland, Spina, Cowin, Sosman, & Cordy, JJ.

Municipal Corporations, Contracts. Contract, Municipality, Validity. Statute, Construction. Consumer Protection Act, Unfair act or practice, Trade or commerce.

Civil action commenced in the Superior Court Department on November 27, 1998.

A motion for partial summary judgment was heard by Vieri Volterra, J., and the case was heard by Robert H. Bohn, Jr., J., on a motion for summary judgment.

After review by the Appeals Court, the Supreme Judicial Court granted leave to obtain further appellate review.

Bruce T. Macdonald for the plaintiff.

Ira H. Zaleznik for city of Revere & another.

Austin M. Joyce, for Roy Colannino, submitted a brief.

William T. Hogan, III, & Elizabeth D. Killeen, for Statewide Towing Association, Inc., amicus curiae, submitted a brief.

COWIN, J.

Park Drive Towing, Inc. (Park Drive), a Massachusetts corporation that provided vehicle towing services for law enforcement agencies and the general public, sued the city of Revere (city), and the former chief of police and his successor for breach of contract and unfair or deceptive acts or practices in violation of G. L. c. 93A, § 11. The defendants' motions for summary judgment were granted by the Superior Court,2 and the Appeals Court affirmed. See Park Drive Towing, Inc. v. Revere, 60 Mass. App. Ct. 173, 178 (2003). We granted the plaintiff's application for further appellate review and now affirm the judgments of the Superior Court.

The essential facts are not in dispute. At all times relevant to this appeal, the city maintained a "tow list." This list consisted of three towing companies authorized to perform police-ordered tows of vehicles, for example, towing vehicles that were obstructing snow removal. In return for collecting fees from the towed vehicles' owners, the towing companies were required to collect from the owner and remit to the city a $15 "administrative fee" for each car towed, provide certain services to city vehicles free of charge (such as jump starts and changing flat tires) and comply with other conditions.3 The record does not include evidence of any procedure by which a towing company is placed on the list, nor does it include any written rules governing the "tow list," or any written agreement between the city and any towing company on the list.

At some point before September, 1996, Park Drive's owner, Arthur Norris, arranged with Chief Russo to have Park Drive placed on the "tow list." On September 26, 1996, Norris sold Park Drive to two brothers, John and Michael Lentz, and Dante Spadoni. Prior to the sale, Norris represented to the buyers that Park Drive would remain on the tow list after the transfer of ownership. The contract for the sale of Park Drive refers to "a contract with the City of Revere to tow for the City" and provides that city approval would be secured for the new owners either to receive an assignment of that contract or enter into a new contract with the city. However, there is no evidence in the record that a written contract memorializing the arrangement between Park Drive and the city ever existed, nor is there evidence in writing that any city official approved or acknowledged the terms of the contract for the sale of Park Drive. Prior to the sale, the Lentz brothers and Spadoni twice met with Chief Russo to "review all documentation of the sale" and the city rules pertaining to towing.

Between September 26, 1996, and October 20, 1998, Park Drive derived approximately $150,000 per year from tows ordered by the city's police department. To retrieve their towed vehicles, owners paid directly to Park Drive a $75 tow charge, a $20 a day storage fee, and the $15 city administrative fee. Park Drive retained these monies except for the administrative fee, which it remitted to the city.

On October 20, 1998, Park Drive was orally notified of Chief Russo's decision to suspend Park Drive from the tow list because criminal complaints had been issued against the Lentz brothers.4 In early February, 1999, the charges against Michael Lentz were dismissed, and John Lentz was found not guilty after a jury trial. Meanwhile, without the revenues from police-ordered tows, Park Drive defaulted on its purchase money note to Norris, who repossessed Park Drive's tow trucks, and Park Drive filed for bankruptcy. Chief Russo refused to reinstate Park Drive to the tow list.5 Chief Russo retired on March 1, 1999, and his successor likewise refused to reinstate Park Drive.

Park Drive argues that the defendants' breach of contract occurred when the city summarily suspended Park Drive from its tow list with no notice and without "any procedure in place where a towing company would be entitled to a hearing to present [its] side of the story," and then refused reinstatement after the criminal charges against the Lentz brothers had been resolved in their favor. These actions, Park Drive asserts, breached the implied covenants of good faith and fair dealing. The defendants rely primarily on G. L. c. 43, § 29, which sets forth requirements for municipal contracts.6 That statute provides in pertinent part that "[a]ll contracts made by any department, board or commission where the amount involved is five thousand dollars or more shall be in writing, and no such contract shall be deemed to have been made or executed until the approval of the mayor . . . and also of the officer or the head of the department or of the chairman of the board . . . making the contract is affixed thereto." G. L. c. 43, § 29. The defendants contend, and we agree, that, because these requirements were not met, no enforceable contract existed.

It is a well-established principle that a party "dealing with a city or town cannot recover if statutory requirements [such as those contained in G. L. c. 43, § 29] have not been observed." Richard D. Kimball Co. v. Medford, 340 Mass. 727, 729 (1960). See United States Leasing Corp. v. Chicopee, 402 Mass. 228, 231 (1988); Quincy v. Brooks-Skinner, Inc., 325 Mass. 406, 412-413 (1950); McGovern v. Boston, 229 Mass. 394, 397 (1918); Lumarose Equip. Corp. v. Springfield, 15 Mass. App. Ct. 517, 519-520 (1983).7 In Central Tow Co. v. Boston, 371 Mass. 341, 344 (1976), in which we construed a statutory provision analogous to G. L. c. 43, § 29, we described these requirements as "elements, fixed by statutes, which were essential . . . to the formation of a contract casting liability on the city." See Urban Transp., Inc. v. Mayor of Boston, 373 Mass. 693, 696 (1977) ("A contract with the city is not formed until the necessary statutory requirements are fulfilled"). We have insisted on "precise[]" compliance with these requirements, United States Leasing Corp. v. Chicopee, supra at 232, and the party seeking recovery bears the burden of proving such compliance. Richard D. Kimball Co. v. Medford, supra at 729.

The specific requirements here at issue are not "mere ministerial" formalities, see Urban Transp., Inc. v. Mayor of Boston, supra at 697, but rather serve important public purposes. Among other things, they "limit the power of public officials in making contracts . . . so as to unify the control of the city's commercial transactions" (citations omitted), id., thus "placing cities and towns on a sound financial basis and preventing waste, fraud, and abuse." United States Leasing Corp. v. Chicopee, supra at 231.8 In other words, the purpose of requiring a written contract, with the signatures of certain city officials affixed thereto, is to attach a "paper trail" to the city's contractual commitments that is capable of being scrutinized by the public, and for which municipal officials are ultimately accountable.9

In this case, the requirements of G. L. c. 43, § 29, were not met, and the purposes behind the statute were frustrated. It is undisputed that no written agreement existed, and that the requisite written approval was absent.10 Therefore, inquiring whether the city breached a contract is pointless, because no enforceable contract existed. See id. at 231-232.

Park Drive argues, however, that by its own terms G. L. c. 43, § 29, does not apply to this case, because Park Drive's arrangement with the city was not one "where the amount involved [was] five thousand dollars or more." Park Drive suggests that we should construe "amount involved" to refer only to cases that involve the "obligation, appropriation, or expenditure of municipal funds." This reading of the statute would exclude the present situation, because the only money that changed hands between the parties were the administrative fees, which were not expended by the city but paid to the city. We do not agree with Park Drive's interpretation.11

We have stated that such statutes are broadly phrased and are of general application. Adalian Bros. v. Boston, 323 Mass. 629, 631 (1949). See Lumarose Equip. Corp. v. Springfield, supra at 519. Further, the plain language of G. L. c. 43, § 29, simply does not contain the restriction with which Park Drive wishes to burden it. We construe the phrase "amount involved" to be intentionally imprecise, and conclude that it refers to the value to the contractor, no matter the source. This interpretation is consistent with the statute's general purposes; the public's interest in the transparency of municipal contracting is no less important simply because money is not paid directly from the city treasury to the contractor. Rather, contracts at or above the minimum five thousand dollar value, however measured, and whichever way the money flows, are considered significant enough to warrant the formalities required by the statute.

Park Drive's claim of unfair or deceptive acts or practices in violation of G. L. c. 93A, § 11,12 is derivative of its breach of contract claim, in that it alleges "unfair...

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