Stop & Shop Supermarket Co. v. Loomer, No. 03-P-1643.

• Decision Date: 28 November 2005
• Docket Number: No. 03-P-1643.
• Citation: 65 Mass. App. Ct. 169,837 N.E.2d 712
• Parties: The STOP & SHOP SUPERMARKET COMPANY v. Karen LOOMER & another.<SMALL><SUP>1</SUP></SMALL&gt
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

837 N.E.2d 712

65 Mass. App. Ct. 169

The STOP & SHOP SUPERMARKET COMPANY v. Karen LOOMER & another.¹

No. 03-P-1643.

Appeals Court of Massachusetts, Middlesex.

Argued November 16, 2004.

Decided November 28, 2005.

COPYRIGHT MATERIAL OMITTED

Marc D. Padellaro, Cambridge, for the defendants.

Matthew P. Tuller for the plaintiff.

Present: PERRETTA, GRASSO, & MILLS, JJ.

GRASSO, J.

We consider whether G.L. c. 93A, § 11, applies to the following circumstance. While employed as a cash office clerk at The Stop & Shop Supermarket Company (Stop & Shop), Karen Loomer cashed eight checks for her husband, Richard Loomer, in the amount of $5,185. Both knew that the checks were drawn on their joint personal checking account at a time when the account contained insufficient funds, but Richard had immediate need of cash to meet his general contracting company's payroll.

We conclude that the defendants' conduct, even if amounting to conversion or deceit, does not amount to a violation of G.L. c. 93A, § 11. We reverse an order entering summary judgment in favor of Stop & Shop on the c. 93A claims.

1. Procedural background. Underlying the merits is a complicated procedural history. In October, 1995, Stop & Shop commenced this action in the Superior Court against Karen, a cash office clerk in one of its stores, and her husband Richard, a general contractor.² Upon transfer of the case to the District Court and after trial, a District Court judge found for Stop & Shop on counts alleging conversion and deceit, but for the Loomers on counts against them under G.L. c. 93A, § 11. Neither Stop & Shop nor the Loomers claimed a report to the Appellate Division of the District Court. The Loomers did, however, request that the case be retransferred to the Superior Court pursuant to G.L. c. 231, § 102C.³

There, Stop & Shop moved for summary judgment on all its claims and supported its motion with a copy of the District Court decision and discovery material presented to the District Court.⁴ Relying on the prima facie effect of the District Court judgment in their favor on the c. 93A counts, the Loomers failed to oppose Stop & Shop's motion for summary judgment.

Subsequently, a Superior Court judge allowed Stop & Shop's summary judgment motion on the stated basis that the Loomers "admittedly engaged in illicit activity to convert funds of Stop & Shop for use in their business," activity which was, "[a]s a matter of law, . . . an unfair and deceptive practice proscribed by M.G.L. Chapter 93A." Following a hearing on Stop & Shop's motion for an assessment of damages, another judge awarded Stop & Shop treble damages, interest, and counsel fees.

Suitably alerted to the gravity of the situation, the Loomers moved for reconsideration of the order that established their liability under c. 93A, asserting that entry of summary judgment against them was based on errors of law. When that motion was denied, they moved for relief from judgment pursuant to Mass.R.Civ.P. 60(b)(1), 365 Mass. 828 (1974), and Mass.R.Civ.P. 60(b)(6), 365 Mass. 829 (1974), reiterating that the summary judgment order was based on errors of law and, further, arguing that they had relied on the "presumptive weight" of the District Court finding in their favor in not opposing Stop & Shop's motion. This motion was also denied.

The matter comes before us on the Loomers' appeal from the orders denying their motions for reconsideration and for relief from judgment. The Loomers do not appeal from the entry of judgment on the counts for conversion and deceit, but only from those based on G.L. c. 93A, § 11.

The Loomers' failure to oppose Stop & Shop's motion under Mass.R.Civ.P. 56(c), 365 Mass. 824 (1974), would entitle Stop & Shop to summary judgment only upon a showing that no material facts were in dispute, see Niemi v. GenRad, Inc., 20 Mass.App.Ct. 948, 949, 479 N.E.2d 742 (1985), and that Stop & Shop was entitled to judgment as matter of law. See Highlands Ins. Co. v. Aerovox, Inc., 424 Mass. 226, 232, 676 N.E.2d 801 (1997). However, upon the retransfer of a case from the District Court to the Superior Court, the District Court decision constitutes "prima facie evidence upon such matters as [were] put in issue by the pleadings" in that court. G.L. c. 231, § 102C, inserted by St.1978, c. 478, § 262. See O'Brion, Russell & Co. v. LeMay, 370 Mass. 243, 244, 346 N.E.2d 861 (1976); Cole v. New England Mut. Life Ins. Co., 49 Mass.App.Ct. 296, 297, 729 N.E.2d 319 (2000). Standing alone, that decision constitutes evidence sufficient to warrant a verdict or finding in the Superior Court in favor of the Loomers on Stop & Shop's c. 93A claims regardless of any other evidence introduced by it. See Eisenberg v. Phoenix Assn. Mgmt., Inc., 56 Mass.App.Ct. 910, 911, 777 N.E.2d 1265 (2002), and cases cited therein. Although a fact finder is free at trial to disregard the decision of the District Court if additional evidence so warrants, see Mongeau v. Borlen, 11 Mass.App.Ct. 1031, 1032, 419 N.E.2d 1386 (1981), such is not the case when a Superior Court judge is ruling on a motion for summary judgment, even one that is unopposed.

Notwithstanding the Loomers' failure to oppose Stop & Shop's summary judgment motion in Superior Court, we consider the merits of their appeal from the determination of their liability under G.L. c. 93A. Even were we to conclude that the District Court decision in their favor did not excuse the Loomers' failure to oppose Stop & Shop's motion for summary judgment, the circumstances before us present a situation in which an injustice would result were we to decline to exercise our discretion to consider the question on the merits. See Clark v. Trumble, 44 Mass.App.Ct. 438, 440-441, 692 N.E.2d 74 (1998), and authorities cited therein, including Mass.R.Civ.P. 56(c), 365 Mass. 824 (1974). See also McLeod's Case, 389 Mass. 431, 434, 450 N.E.2d 612 (1983), citing Hormel v. Helvering, 312 U.S. 552, 557, 61 S.Ct. 719, 85 L.Ed. 1037 (1941) (discretion exercised sparingly and reserved for situations where an "injustice might otherwise result"). The record, which provides an adequate basis for resolution of the issue, convinces us that the Superior Court judge erred in concluding that G.L. c. 93A, § 11, is applicable in the circumstances. See Nuclear Metals, Inc. v. Low-Level Radioactive Waste Mgmt. Bd., 421 Mass. 196, 209, 656 N.E.2d 563 (1995). Indeed, as matter of law, the Loomers' conduct does not amount to a violation of G.L. c. 93A, § 11.⁵ Accordingly, we reverse and order entry of judgment for the Loomers on the counts brought under G.L. c. 93A, § 11.

2. The facts. We examine the facts in the light most favorable to Stop & Shop, the party against whom we now order summary judgment. The R.J. Loomer Company (company) is an unincorporated general contracting business owned and operated by Richard. Richard used a payroll service company, Genesis, to prepare the company's payroll checks. Genesis would not accept a check in exchange for prepared payroll checks unless a client had an amount equal to twice the monthly payroll in an escrow account. Richard did not maintain an escrow account. Consequently, Genesis required cash up front.

On or about February 25, 1994, Richard needed payroll checks. Although Richard had deposited a check from Santoro Associates, Inc. (Santoro), dated February 24, 1994, in the amount of $3,373, into his and Karen's personal checking account, it would take at least two days before that check cleared and those funds would be credited and available. Until the Santoro check cleared, the balance in their personal checking account, about $2,000 to $3,000, was insufficient to fund the sums needed for the payroll checks.

Richard went to Stop & Shop where Karen was employed as a cash office clerk and, with her assistance, cashed several checks drawn on their joint personal checking account in an amount totaling $5,185. He then gave the cash to Genesis in exchange for company payroll checks. Although the Loomers were aware that the funds in their checking account were insufficient to cover the checks cashed at Stop & Shop, they hoped that by the time the personal checks cashed at Stop & Shop were presented for collection, the Santoro check would have cleared.

Although Stop & Shop had a company policy that prohibited cashing of an employee's personal checks, in the course of her employment with Stop & Shop, Karen had cashed personal checks for Richard on other occasions during the period of 1992 to 1994. "Some or all" of those checks had been returned for insufficient funds.⁶

3. The c. 93A determination. Section 11 of G.L. c. 93A, inserted by St.1972, c. 614, § 1, provides in pertinent part:

"Any person who engages in the conduct of any trade or commerce and who suffers any loss of money or property, real or personal, as a result of the use or employment by another person who engages in any trade or commerce of an unfair method of competition or an unfair or deceptive act or practice . . . may, as hereinafter provided, bring an action. . . ."⁷

We conclude that Richard's negotiation at Stop & Shop of checks drawn on his and Karen's joint personal checking account does not amount to his use or employment of unfair or deceptive acts or practices in trade or commerce in violation of G.L. c. 93A, § 11, even though both Richard and Karen knew that there were insufficient funds in the account at the time, and even though they intended to use the monies obtained to keep Richard's (or Richard and Karen's) contracting business afloat.⁸

At the outset, we note that this case does not concern an unfair method of competition between two competing business entities. Rather, we deal with that branch of the statute that prohibits the use or employment of an unfair or deceptive act or practice by a person engaged in trade or commerce. Liability under that branch of G.L. c. 93A, § 11, "requires that there be a commercial transaction between a person engaged in...