Sheehy v. Lipton Industries, Inc.

• Decision Date: 01 July 1987
• Citation: 507 N.E.2d 781,24 Mass.App.Ct. 188
• Parties: Augustine P. SHEEHY v. LIPTON INDUSTRIES, INC. & another. 1
• Court: Appeals Court of Massachusetts

Page 781

507 N.E.2d 781

24 Mass.App.Ct. 188

Augustine P. SHEEHY v. LIPTON INDUSTRIES, INC. & another. ¹

Appeals Court of Massachusetts,

Middlesex.

Argued March 19, 1987.

Decided May 20, 1987.

Further Appellate Review Denied July 1, 1987.

James F. Freeley, Jr., Boston, for plaintiff.

James D. St. Clair, Boston, for Lipton Industries, Inc.

Donald L. Conn, Jr., Woburn, for Algonquin, Inc.

Before GREANEY, C.J., and CUTTER and SMITH, JJ.

GREANEY, Chief Justice.

The plaintiff's second amended complaint sets forth ten claims in separate counts and seeks to recover damages stemming from the presence of hazardous material on his property in Woburn. Named as defendants are Lipton Industries, Inc. (Lipton), the seller of the property, and Algonquin, Inc. (Algonquin), the real estate brokerage company involved in the sale. A judge of the Superior Court allowed the defendants' motions for summary judgment as to all ten counts and entered a separate judgment for each defendant. We hold that summary judgment was improper on four of the six counts against Lipton and two of the four counts against Algonquin.

The record made in connection with the summary judgment proceedings discloses the following. Early in 1979, a real estate broker from Algonquin made contact with the plaintiff, a businessman and licensed real estate broker, about the purchase of approximately sixty acres of industrial land in Woburn. Lipton, the owner of the land since 1977, had recently closed a cat-food manufacturing plant on the premises. The plaintiff decided to buy the property and made an offer of $1.6 million, contingent upon financing and upon lease commitments. Several months later, Lipton made a counter offer. In the counter offer, the price was dropped to $1.1 million and three changes were proposed: first, the buildings on the property were to be transferred in "as is" condition, second, the sale was not to be contingent on the plaintiff's obtaining financing, and, third, the leasing contingency was to be dropped. The plaintiff agreed to these terms, a purchase and sale agreement was signed, and the transaction was ultimately closed.

Before the sale, possible contamination of the land by hazardous material became an issue. Contamination by hazardous material had become acknowledged in certain areas of Woburn and had been widely reported by the news media as prevalent in those areas. It was also well known that serious contamination existed on one site adjacent to the plaintiff's property upon which a tannery and glue-making business and a chemical company had been operated. Litigation over those conditions had occurred and was also well known. According to the plaintiff, the hazardous material problem in Woburn had been brought to his attention before the sale by a series of newspaper articles and, by his own encounter with a very sweet unpleasant odor in the area. Since he had smelled such an odor on the Lipton property, the plaintiff inquired directly of Algonquin's broker whether Lipton's property had any potential problem with hazardous material. The broker told him, "Don't worry about it." Based on that representation, the plaintiff concluded that the property on which he was about to make an offer was free of hazardous material, and the sale went ahead.

After the sale, the plaintiff applied for a building permit and was told that hazardous material existed on the property. He retained an expert firm to study the problem. The firm reported to him that a mixture of animal wastes and poisonous substances (lead, arsenic, chromium and various volatile organic compounds) contaminated two portions of the property. On March 22, 1983, the plaintiff received notice from the Executive Office of Environmental Affairs (EOEA) that preparation of an environmental impact report would be necessary before the property could be considered for industrial development. As the notice indicated, "[t]he creation of a 60 acre industrial park on a parcel known to contain hazardous waste and other waste materials and abutting one of the top 20 hazardous waste sites in the country has the potential for significant environmental impact." The plaintiff had been advised that the development of the property would require containment or removal of the hazardous material under supervision by the staff of the Department of Environmental Quality Engineering (DEQE). ² This lawsuit followed against Lipton and Algonquin.

1. Nuisance. The plaintiff's first count seeks damages from Lipton for the creation of a private nuisance. The plaintiff bases this claim principally on the provisions of Restatement (Second) of Torts § 373 (1965), set forth in the margin. ³ These provisions do not help the plaintiff. The liability discussed therein concerns a physical condition created by a vendor which causes harm to "others outside of the land." The provisions do not support an action by a vendee against his vendor. See Restatement (Second) of Torts § 373, Illustration 1; Prosser, Torts § 64 at 413 (4th ed. 1971). The same conclusions hold true for the liability described in Restatement (Second) of Torts § 840A (1977). See comment c to § 840A. See also Minaya v. Massachusetts Credit Union Share Ins. Corp., 392 Mass. 904, 906-907, 467 N.E.2d 874 (1984) (adopting § 840A for the benefit of those outside the land transferred and to whom the vendor would have been liable before the sale); Philadelphia Elec. Co. v. Hercules, Inc., 762 F.2d 303, 312-315 (3d Cir.1985), cert. denied, 474 U.S. 980, 106 S.Ct. 384, 88 L.Ed.2d 337 (1985) (dismissing a nuisance action by a landowner against a predecessor in title for hazardous material buried on the land). There is nothing in Connerty v. Metropolitan Dist. Commn., 398 Mass. 140, 495 N.E.2d 840 (1986), which supports a contrary conclusion. Summary judgment was properly granted for Lipton on this count.

2. Other common law claims. The plaintiff has brought misrepresentation counts against both defendants. Summary judgment should not have been granted on these counts.

We think the answer of Algonquin's broker--"Don't worry about it"--made in direct response to a question by the plaintiff about the possible presence of hazardous material on the property cannot be held, as matter of law, to be incomprehensibly ambiguous or mere seller's talk. On the present record, it is possible that the statement could be found to be a false statement of fact. The remark is not to be looked at in isolation but in the context of the whole situation. "It is enough if all the circumstances considered together would warrant the [fact finder] in concluding that it was untrue." Commonwealth v. Morrison, 252 Mass. 116, 122-123, 147 N.E. 588 (1925).

It also cannot be said, as matter of law, that Lipton is not liable for the statement because it was an unauthorized representation by its agent. Despite Lipton's assertion that Algonquin had no authority to speak for it about possible contamination of the land, there is sufficient indication in the materials submitted in opposition to summary judgment that Algonquin was actively involved in the negotiations that led to the sale. The situation could be found to fall within the rule in Cellucci v. Sun Oil Corp., 368 Mass. 811, 811-812, 331 N.E.2d 813 (1975) ("However, while the [principal] might not have clothed the agent with authority to execute the contract, it placed him in a position of sufficient ostensible authority to negotiate it to the point where all that was necessary was its formal execution.... Consequently, the [principal] must be held responsible for the manner in which the agent conducted himself during those negotiations...." [citations omitted] ). There are issues of fact to be decided on the scope of Algonquin's authority. ⁴ See also Cellucci v. Sun Oil Corp., 2 Mass.App.Ct. 722, 729-732, 320 N.E.2d 919 (1974).

Finally, the materials in the record create a triable issue on the question of the plaintiff's reliance on the statement. On that point, the provisions in the purchase and sale agreement that the plaintiff accepted the conveyance "as is," that he "recognize[d] that [s]eller makes no warranties whatsoever," and that he "has not been influenced to enter into this transaction nor has he relied upon any warranties or representations not set forth in this agreement or previously made in writing" (none was set forth or made) cannot assist either defendant in obtaining summary judgment. Massachusetts case law rejects the assertion of "as is" and like clauses as an automatic defense to allegations of fraud or deceit. "The same public policy that in general sanctions the avoidance of a promise obtained by deceit strikes down all attempts to circumvent that policy by means of contractual devices. In the realm of fact it is entirely possible for a party knowingly to agree that no representations have been made to him, while at the same time believing and relying upon representations which in fact have been made and in fact are false but for which he would not have made the agreement." ⁵ Bates v. Southgate, 308 Mass. 170, 182, 31 N.E.2d 551 (1941). See also John A. Frye Shoe Co. v. Williams, 312 Mass. 656, 661, 46 N.E.2d 1 (1942); V.S.H. Realty, Inc. v. Texaco, Inc., 757 F.2d 411, 418 (1st Cir.1985). Of course, the exculpatory clauses may have "evidential value ... as tending to show that no representations were in fact made, or if made that they were not relied upon." ⁶ Bates v. Southgate, 308 Mass. at 183, 31 N.E.2d 551.

Both defendants have argued forcefully that the plaintiff, an experienced businessman who had the benefit of legal counsel before he signed the purchase and sale agreement, could not have relied on any statement that might have been made about the land. This may ultimately be found to be so. Because, however, these are proceedings under Mass.R.Civ.P. 56, the plaintiff's proof and affidavits presented in opposition to summary judgment must be strictly construed against the...