Smith v. Jenkins

• Decision Date: 11 October 2011
• Docket Number: Civil Action No. 07–12067–RGS.
• Citation: 818 F.Supp.2d 336
• Parties: Robert SMITH, et al. v. Dwight JENKINS, et al.
• Court: U.S. District Court — District of Massachusetts

818 F.Supp.2d 336

Robert SMITH, et al.

v.Dwight JENKINS, et al.

Civil Action No. 07–12067–RGS.

United States District Court, D. Massachusetts.

Oct. 11, 2011.

Jonathan D. Plaut, Chardon Law Offices, Jeffrey S. Baker, Baker & Associates, Boston, MA, for Robert Smith, et al.

Geoffrey A. Domenico, Piscitelli, Domenico & Murphy, LLP, North Easton, MA, Kate L. Moran, John R. Bauer, Alexandria E. Baez, Katherine S. Kayatta, Peter J. Moser, Robinson & Cole LLP, Joseph A. King, Elizabeth E. Feeherry, Mary Alys Azzarito, Murphy & Riley PC, Jay S. Gregory, Thomas K. McCraw, Jr., LeClairRyan, PC, Douglas A. Robertson, Martin, Magnuson, McCarthy and Kenney, Donn A. Randall, J. Patrick Kennedy, Bulkley, Richardson & Gelinas, LLP, Boston, MA, James F. McLaughlin, McLaughlin, McLaughlin & McLaughlin, Brockton, MA, Christopher J. Fein, Fein Law Office, Braintree, MA, Michael J. Markoff, Falmouth, MA, for Dwight Jenkins, et al.

MEMORANDUM AND ORDER ON PLAINTIFF'S MOTION TO AWARD DAMAGES PURSUANT TO MASS. GEN. LAWS CH. 93A, § 9

STEARNS, District Judge.

On July 21, 2011, the First Circuit Court of Appeals dismissed an appeal of a jury verdict taken by plaintiff Robert Smith and two of the named defendants. The Court of Appeals dismissed the appeal as prematurely brought, in that Smith's claims under the Massachusetts Consumer Protection Statute, Mass. Gen. Laws ch. 93A (Chapter 93A), remained pending against three defendants: Dwight Jenkins, Louis Bertucci, and New England Merchants Corporation (NEMC). This decision will address Smith's motion for a Chapter 93A award of treble damages and attorneys' fees.

BACKGROUND

On November 1, 2010, after the jury returned a verdict in most respects favorable to Smith on claims of fraud and breach of fiduciary duty, the court entered the following judgments: $50,000 apiece against Dorchester Real Estate d/b/a Century 21 (Century 21), NEMC, and Union Capital Business Mortgage Trust (Union) (for fraud and breach of fiduciary duty); $25,000 against attorney Louis Bertucci (for fraud); and $85,000 against Dwight Jenkins (for fraud, breach of contract, and breach of fiduciary duty). See Judgment (Dkt. # 452). The court prior to trial had reserved a decision on Smith's Chapter 93A claims.¹

In October and November of 2010, Signature Group Holdings, Inc. (a/k/a Fremont), Union, Bertucci, and Century 21 renewed their motions for judgment as a matter of law on the Chapter 93A claims. After a hearing in February of 2011, and the filing of additional briefing regarding proper service of Smith's Chapter 93A demand letters, the court allowed the motions of all of the moving defendants but Bertucci.² See Smith v. Jenkins, 777 F.Supp.2d 264 (D.Mass.2011). In the same April of 2011 Order, the court set a schedule for Bertucci, NEMC, and Jenkins to file responses to Smith's surviving Chapter 93A claims, and for Smith to reply.³ Resolution of the issue, however, was deferred after Smith, Century 21, and NEMC filed notices of appeal.⁴ See United States v. Brooks, 145 F.3d 446, 455–456 (1st Cir.1998).

DISCUSSION

To prevail on a Chapter 93A claim, a plaintiff must show that a defendant engaged in “[u]nfair methods of competition and unfair or deceptive acts or practices in business transactions.” Mass. Gen. Laws. ch. 93A, § 2. Practices are deceptive in the context of Chapter 93A if they could reasonably be found to have “ ‘caused a person to act differently from the way he [or she] otherwise would have acted.’ ” See Aspinall v. Philip Morris Cos., Inc., 442 Mass. 381, 394, 813 N.E.2d 476 (2004), quoting Purity Supreme, Inc. v. Attorney Gen., 380 Mass. 762, 777, 407 N.E.2d 297 (1980). A Chapter 93A plaintiff must also prove that a defendant's deceptive conduct caused him some appreciable loss or injury. See Hershenow v. Enter. Rent–A–Car Co. of Boston, Inc., 445 Mass. 790, 799–800, 840 N.E.2d 526 (2006). ⁵

The jury found that Jenkins, Bertucci, and NEMC engaged in fraudulent conduct and this court agrees. Cf. Poly v. Moylan, 423 Mass. 141, 151, 667 N.E.2d 250 (1996), quoting Wyler v. Bonnell Motors., Inc., 35 Mass.App.Ct. 563, 567, 624 N.E.2d 116 (1993) (“[A] judge may make independent and, therefore, different, findings on the c. 93A aspect of a case that arises from the same facts which gave rise to parallel common law claims.”). See also R.W. Granger & Sons, Inc. v. J & S Insulation, Inc., 435 Mass. 66, 73, 754 N.E.2d 668 (2001), quoting Schwanbeck v. Fed.-Mogul Corp., 31 Mass.App.Ct. 390, 415, 578 N.E.2d 789 (1991), rev'd on other grounds 412 Mass. 703, 592 N.E.2d 1289 (1992) (“Although whether a particular set of acts, in their factual setting, is unfair or deceptive is a question of fact ... the boundaries of what may qualify for consideration as a [Chapter] 93A violation is a question of law.”). Bluntly speaking, defendants' actions were tantamount to criminal behavior that only by the vagaries of chance and undeserved fortune came to be privately litigated rather than pursued in a public prosecution. ⁶

Dwight Jenkins

Jenkins was the motive force in the fraud. Jenkins trolled the margins of society for the gullible (like Smith) and the greedy (like DaSilva) whom he recruited as straw “investors” in shady real estate deals. With the help of louche mortgage brokers and a complicit attorney, the “investors” were inveigled into taking out “liar loans” for the purchase of overvalued residential properties. The “investors” received a small fee, while Jenkins and his cohorts (including the brokers) skimmed fees and commissions from the grossly inflated purchase prices.⁷

Smith, a Marine veteran and former drug addict, had drifted in and out of the New England Shelter for Homeless Veterans in Boston. He suffers from schizophrenia, post-traumatic stress disorder, depression, and mental retardation. Smith graduated from high school in 1978 only with the help of special education courses. His comprehension, reading, and writing skills are well below those of an average adult.

In January of 2005, Smith was living out of his car and working as a trash collector for Waste Management Corporation (WMC) in the Fields Corner neighborhood of Dorchester. He was approached by a woman named Laurice Taylor, to whom he was attracted.⁸ Taylor identified herself as a RE/MAX employee. Taylor told Smith that RE/MAX was offering a special investment program and asked if he would like to participate. When Smith replied that he did not have any money to invest, Taylor responded that it didn't matter. Taylor promised that RE/MAX would provide the expertise and make all of the critical decisions. Taylor gave Smith her business card and invited him to call.

Several days later, Smith contacted Taylor. She invited him to meet her at the RE/MAX office on Dorchester Avenue. There she told Smith that if he signed up for the investment program, he would earn $10,000 for every investment in which he was placed. She reassured him that “RE/MAX would take care of everything,” and claimed that RE/MAX worked regularly with veterans.⁹

After Smith agreed to participate, Jenkins and Taylor created a false financial profile for him. In late January of 2005, they provided the profile to Rachel Noyes, an NEMC branch manager.¹⁰ Noyes completed loan applications in Smith's name using the false information to make him, on paper, a more attractive candidate for a mortgage loan. Noyes then forwarded the applications to Fremont. Once the loans were approved, Jenkins arranged for Bertucci, a Massachusetts real estate lawyer, to act as the closing attorney.

In February of 2005, Taylor directed Smith to travel to the RKelley–Law Offices in Braintree. When he arrived, he was met by Jenkins and James Adamos, a representative of Century 21. Jenkins told Smith that he would be making an “investment” in a residence in Dighton, Massachusetts, and that there was “nothing to worry about.” Jenkins promised Smith that he would maintain the property, collect rent, deal with tenants, pay operating bills, mortgages, and other expenses, and eventually sell the property at a profit in which Smith would share. At Bertucci's direction, Smith signed real estate closing documents, promissory notes, mortgage agreements, and the completed loan applications. Without understanding the import of the documents, Smith unwittingly borrowed $411,964.24 in the form of two mortgages brokered through Fremont. Smith eventually received $10,000 for his role as the “purchaser.” Jenkins took for himself $42,000 of the proceeds as a “contract release fee.”

On February 28, 2005, Taylor escorted Smith to a second “investment meeting,” at the RKelley–Law Offices. There, Smith was induced to sign for a mortgage loan of $437,198.13 for the purchase of a three-family home on West Cottage Street in Boston—ostensibly to be his primary residence. Bertucci again presided at the closing. Smith received $10,000 of the proceeds, while Jenkins paid himself a $41,500 “contract release fee.”

Several months after the closings, Smith began receiving phone calls from lenders dunning him for missed mortgage payments. In addition, tenants called to complain that their utility bills had not been paid. Jenkins and Taylor assured Smith that they would deal with the complaints. The calls, however, persisted. It is clear from the evidence presented at trial that Jenkins did nothing to perform his promise to manage the properties. Eventually, the Dighton and Cottage Street properties went into foreclosure. ¹¹ Jenkins asserted his Fifth Amendment right against self-incrimination at trial and refused to answer any questions with respect to his dealings with Smith or any of the defendants or parties to the real estate transactions that he had arranged.¹²

NEMC

Rachel Noyes, the NEMC branch manager with whom Jenkins and Taylor were in league, made numerous statements that she knew or should have known were false regarding Smith's creditworthiness in the loan applications for both properties.¹³ The first of the...