Scofield v. Berman & Sons, Inc.

• Decision Date: 03 October 1984
• Citation: 393 Mass. 95,469 N.E.2d 805
• Parties: Lana J. SCOFIELD et al. 1 v. BERMAN & SONS, INC. et al. 2
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 805

469 N.E.2d 805

393 Mass. 95

Lana J. SCOFIELD et al. ¹ v. BERMAN & SONS, INC. et al. ²

Supreme Judicial Court of Massachusetts Suffolk.

Argued April 6, 1984.

Decided Oct. 3, 1984.

Harvey S. Shapiro, Boston, for plaintiffs.

James B. Fox, Boston, for defendants.

Before HENNESSEY, C.J., and WILKINS, LIACOS, LYNCH and O'CONNOR, JJ.

LIACOS, Justice.

The defendants appeal from a judgment entered in the Housing Court of the City of Boston declaring that the defendants violated c. 15, § 9(a ), of the Boston Ordinances of 1975 (c. 15), and Boston Rent Board Regulation 11, § 12(A) (Regulation 11), by unlawfully increasing the rent charged to the plaintiffs, tenants in rent-controlled apartments. The defendants also claim error in the judge's award of treble damages, costs, and attorneys' fees, pursuant to c. 15, § 9(a ), to those members of the plaintiff class who had paid the unlawful increase. The plaintiff class, as cross appellants, appeal from that aspect of the judgment which denied their claim for multiple damages under G.L. c. 93A, § 9(1). The plaintiff Scofield appeals from the denial of her individual claims for damages resulting from the defendants' refusal to allow her to remain as a tenant at will following the expiration of her lease. See G.L. c. 186, § 18. The appeals were transferred here on our own motion. We affirm the judgment as to the class action, and reverse as to the individual Scofield claim. ³

1. Prior Proceedings.

Scofield instituted this class action in May, 1977, seeking injunctive and declaratory relief, as well as monetary damages. ⁴ In June, 1977, the Housing Court judge certified the class ⁵ and enjoined the defendants from demanding, collecting, or pursuing any legal remedies against the plaintiffs to collect an increase in their rent. Subsequently, the judge found the defendants Berman & Sons, Inc. (Berman & Sons), and William J. Allen in contempt of court for violating the injunction.

In January, 1979, following extensive discovery, the plaintiffs moved for partial summary judgment on their class claims. See Mass.R.Civ.P. 56(a), 365 Mass. 824 (1974). Following hearings on the motion, the judge granted summary judgment and damages to the plaintiff class. ⁶ A trial on Scofield's individual claims then was held before the judge. In November, 1981, the judge denied Scofield's individual claims and ordered the entry of final judgment in accordance with his earlier rulings on the summary judgment motion. At the parties' request, the judge made supplemental findings of fact and entered an amended judgment from which both parties appealed.

2. Class Action Claims.

A. Facts. The defendant Berman & Son is the managing agent of apartment buildings involved in these actions. The defendant William J. Allen is the property manager for Berman & Sons. The defendants Martin S. Berman and Lila Gross are general partners of Berman Central Realty, a Massachusetts limited partnership and owner of the properties. The apartments occupied by the plaintiffs were, at all relevant times, subject to c. 15 of the ordinances.

In 1975, the plaintiffs Scofield and Berren signed form leases with the defendants for a term of one year and from year to year thereafter unless terminated by either party as provided for by the lease. The form lease contained the following clause (hereinafter clause 33), which provided: "[I]f during the term of this lease or any extension or renewal thereof, rent control laws or laws regulating rents remain in effect or become applicable to the demised premises, and the Lessor is authorized or permitted to increase the maximum rent for the demised premises, then the rent to be paid by the lessee hereunder, commencing with the effective date of such authorization or permission shall be the maximum rental so authorized or permitted."

On November 24, 1976, the Boston rent board (Rent Board) authorized a general rent adjustment for housing subject to rent control in Boston. Regulation 11, § 12A, of the Rent Board, promulgated on December 16, 1976, to implement the general adjustment, provided in relevant part as follows: "Subject to the provisions of this Regulation the new maximum rent as established by this regulation may not be charged until the expiration of any lease or tenancy existing on the effective date of this Regulation, or unless the tenant is given the option of terminating the tenancy under a provision of the lease agreement."

The office manager of Berman & Sons called the Rent Board to inquire about the forthcoming adjustment. She was advised that the adjustment would take effect on January 1, 1977, and that only leases containing a "rent control clause" could immediately implement the increase. Otherwise, a landlord could not implement the adjustment until the termination of the existing leases.

The defendants decided that clause 33 of their lease form was a valid rent control clause, and, accordingly, sent notices to their tenants in January and February, 1977, advising them that the authorized rent increase took effect as of January 1, 1977. ⁷ Several tenants in the apartments in issue refused to pay the increase, and the Rent Board advised certain tenants that the increase was unlawful. Scofield and another tenant informed Berman & Sons that an employee at the Rent Board had told them that clause 33 was invalid. A Rent Board compliance investigator also informed Berman & Sons by letter that their rent control clause was invalid and that, if they had any questions, they should call him. Subsequently, the defendants commenced small claims actions against at least twenty tenants who had not paid the increase. The defendants also sent them notices to quit for nonpayment of rent. Some of the tenants agreed to pay the increase after being sued. ⁸

B. Regulation 11. The judge found that Regulation 11 was validly promulgated pursuant to the Rent Board's enabling legislation, which allowed the board to make regulations effecting general rent adjustments and to condition such adjustments so as to "remove hardships or to correct other inequities." See c. 15, §§ 2(a ), 5(a ), 6(b ). Moreover, the judge concluded that Regulation 11 provided an equitable solution to the problem of tenants who might not be able to afford the 11% increase, by delaying implementation of the adjustment until the expiration of the lease unless it contained an opt-out provision.

The defendants maintain that the judge erred in concluding that Regulation 11 was validly promulgated. The defendants argue that c. 15 enables the Rent Board only to establish a general adjustment of the maximum rent. It is a well-settled principle that a regulation is to be judged by the same standard as a statute, ordinance, or by-law. See Druzik v. Board of Health of Haverhill, 324 Mass. 129, 138, 85 N.E.2d 232 (1949). "All rational presumptions are made in favor of the validity of [the] enactment." Id. Furthermore, an agency has much flexibility in interpreting a statute which it is charged with enforcing. Grocery Mfrs. of America, Inc., v. Department of Pub. Health, 379 Mass. 70, 75, 393 N.E.2d 881 (1979). When the agency is vested with broad authority, as is the Rent Board, to promulgate regulations which fulfil the purposes of its enabling legislation, such a regulation is not considered invalid if it relates reasonably to the objectives of that enabling legislation. See Consolidated Cigar Corp. v. Department of Pub. Health, 372 Mass. 844, 855, 364 N.E.2d 1202 (1977). Thorpe v. Housing Auth. of Durham, 393 U.S. 268, 280-281, 89 S.Ct. 518, 525-526, 21 L.Ed.2d 474 (1969).

In St. 1969, c. 797, as amended by St. 1970, c. 863, § 1, the Legislature declared "that a serious public emergency [exists] in the city of Boston ... which emergency continues to be marked by a substantial shortage of rental housing accommodations; that, unless residential rents continue to be regulated and controlled and unless evictions of tenants are regulated and controlled, such emergency ... will produce serious threats to the public health, safety and general welfare of the citizens of [Boston]." The statute further provided that to improve such an emergency shortage of rental housing, the city may, by ordinance, control the rents of certain housing. See id. at c. 863, § 2. The ordinance, which was enacted by the city council as c. 15, provided in § 5(a) that the Rent Board "shall, by order or regulation ... make such individual or general adjustments ... of the maximum rent ... as may be necessary to remove hardships or to correct other inequities." Chapter 15 further provided that the Rent Board may promulgate regulations to establish a general adjustment of maximum rent "subject to such conditions ... as the board shall determine." Id. at § 6(b ).

Based on the foregoing provisions we conclude that the judge correctly held that Regulation 11 relates reasonably to the objectives of the statute and the ordinance. Cf. McGrath v. Mishara, 386 Mass. 74, 76, 81-82, 434 N.E.2d 1215 (1982). Implicit in the Rent Board's power to establish a general rent adjustment is the authority to set certain conditions on when and how rent increases are to take effect. Cf. Flynn v. Cambridge, 383 Mass. 152, 158, 418 N.E.2d 335 (1981) (grant of express power to municipality carries with it all unexpressed, incidental powers necessary to effectuate express authority); 3 C. Sands, Sutherland Statutory Construction § 64.02 (4th ed. 1974). By requiring that the adjustment not take effect until the end of the current lease unless the tenant has the option to terminate the lease agreement, Regulation 11 reasonably accommodated the competing equities of both landlord and tenant.

The judge also denied the defendants' claim that Regulation 11 violated the contract clause of the United States Constitution by retroactively applying to deprive them of rights under a contract that was executed before the effective date of the regulation. See art....