Walsh v. Chestnut Hill Bank and Trust Co.

Decision Date12 February 1993
Citation607 N.E.2d 737,414 Mass. 283
PartiesMary E. WALSH v. CHESTNUT HILL BANK AND TRUST COMPANY & another. 1
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

Mark A. Berthiaume, Boston (Christopher A. Matherly, with him), for plaintiff.

Nancy F. Gans, Wellesley, for Bernard J. Doherty.

Kenneth J. Mickiewicz, Boston (Jo Anne Rosenblum, with him) for Chestnut Hill Bank and Trust Co.

Before LIACOS, C.J., and ABRAMS, NOLAN, LYNCH and GREANEY, JJ.

ABRAMS, Justice.

These appeals arise out of a partnership agreement between Mary E. Walsh and Bernard J. Doherty as partners in a real estate partnership (Brandon Group) and a loan agreement between the Brandon Group and Chestnut Hill Bank and Trust Company (bank). The complaint against the bank included, among other claims, claims for fraud and deceit and breach of the covenant of good faith and fair dealing. Walsh appeals from the judge's denial of her motion to amend her complaint to include a claim under G.L. c. 93A (1990 ed.) against the bank. She also asserts that the bank should be required to rescind the loan agreement. Doherty appeals from the denial of his motions for judgment notwithstanding the verdict and for a new trial. We transferred the case on our own motion. We affirm the judge's denial of the motion to amend, his denial of Walsh's request that he grant rescission of the contract, and the relief granted. We affirm the judge's denial of Doherty's motions for judgment notwithstanding the verdict and for a new trial.

1. We summarize the relevant facts in Walsh's appeal. Walsh and Doherty agreed in 1985 to form a partnership, the Brandon Group, to conduct real estate business in Charlestown. As part of their business, they approached the bank in order to negotiate a $400,000 line of credit. Pursuant to the terms of the loan agreement, the bank took mortgages on property that Doherty owned in Lincoln, New Hampshire, and property that Walsh owned in Newport, Rhode Island. The bank notified Walsh by letter that it had first mortgages on the property in Lincoln, New Hampshire. Sometime after that, but before the loan agreement was signed, the bank became aware that its mortgage on one parcel of the New Hampshire property was a second mortgage, not a first mortgage. The bank did not inform Walsh that its mortgage on this parcel was a second mortgage.

Walsh sued the bank alleging a variety of claims. 2 See supra. The day before trial was scheduled to begin, she moved for leave to amend her complaint in order to allege a violation of G.L. c. 93A. The judge reserved the c. 93A claims. The remainder of the case was tried to a jury who answered special questions. See Mass.R.Civ.P. 49(a), 365 Mass. 812 (1974).

With respect to the case between Walsh and the bank, the jury found that (1) the bank violated its covenant of good faith and fair dealing with Walsh; (2) the bank did not intentionally make false representations of material fact to Walsh on which she relied to her detriment; (3) the bank did negligently make false representations of material fact to Walsh on which she reasonably relied to her detriment; and (4) Walsh did not bring her claim against the bank for the purpose of obtaining an advantage or concession with respect to her obligations under the loan agreement. After hearing the answers to the special questions, Walsh requested that the judge cancel or rescind the loan agreement. She did not offer to repay the money or any portion of the money that the Brandon Group had received under the loan agreement with the bank.

In his memorandum of decision and orders, the judge ruled on the plaintiff's motion for leave to amend the complaint to include a count against the bank for violation of G.L. c. 93A. The judge found, "Despite the latitude and leniency counseled by [Mass.R.Civ.P. 15(a) ] the request to further amend the already prolix complaint came too late." In addition, the judge found that the bank's "conduct in the transaction was neither unfair or deceitful." Consequently, the judge denied Walsh's request to amend her complaint.

The judge considered Walsh's request that the loan agreement either be cancelled or rescinded. The judge determined that rescission was not appropriate given the particular facts, circumstances, and equities of the case. The judge did rule that the bank "be required to proceed against collateral put up by ... Doherty in the event of a foreclosure of the security before it proceeds against the collateral put up by" Walsh.

a. The motion for leave to amend. 3 In Castellucci v. United States Fidelity &

Guar. Co., 372 Mass. 288, 292, 361 N.E.2d 1264 (1977), we said that "[a] liberal amendment policy does not justify overriding the rights of a person who would be prejudiced by the last minute allowance of a motion of amend."

Walsh notes that the G.L. c. 93A theory of liability rose from the same set of facts as the other theories in her complaint and that the allowance of the amendment would not have prejudiced the bank. Walsh had already amended her complaint once, to add a count under G.L. c. 93A against the other defendant, Doherty. She was aware of the facts of her case and the possibility that those facts might support a c. 93A claim against the bank. She moved for leave to amend more than eighteen months after she had filed her original complaint and the motion came on the eve of the scheduled first day of trial. Walsh unreasonably delayed amending her complaint. A "plaintiff's undue delay in pressing these claims justifies the judge's refusal to allow the amendment." United States Leasing Corp. v. Chicopee, 402 Mass. 228, 233, 521 N.E.2d 741 (1988), citing Castellucci v. United States Fidelity & Guar. Co., supra 372 Mass. at 289-292, 361 N.E.2d 1264. See Hamed v. Fadili, 408 Mass. 100, 106, 556 N.E.2d 1020 (1990); Barbosa v. Hopper Feeds, Inc., 404 Mass. 610, 621-622, 537 N.E.2d 99 (1989). "While 'undue delay' may justify a denial [of a motion to amend], [we] usually require[ ] some factor other than delay, such as the imminence of trial or the plaintiff's attempting to introduce a totally new theory of liability." Goulet v. Whitin Mach. Works, Inc., 399 Mass. 547, 552, 506 N.E.2d 95 (1987). There is an additional element here because Walsh moved to amend on the day before the scheduled first day of trial.

More importantly, however, the record reveals that the judge, in substance, did rule on Walsh's c. 93A claim. Before denying the motion, the judge heard the evidence. After the trial and after receiving the jury's responses to the special questions, the judge determined that "the Bank's conduct in the transaction was neither unfair or deceitful" and then denied Walsh's motion to amend. There was no error.

We may not set aside a fact finder's findings of fact unless they are clearly erroneous. First Pa. Mortgage Trust v. Dorchester Sav. Bank, 395 Mass. 614, 621, 481 N.E.2d 1132 (1985). See Mass.R.Civ.P. 52(a), 365 Mass. 816 (1974). 4 We must be definitely and firmly convinced that the fact finder made a mistake before we will reject its determinations. First Pa. Mortgage Trust, supra 395 Mass. at 621, 481 N.E.2d 1132. 5

Walsh argues that, because the jury found that the bank had made negligent misrepresentations, the judge's determination that the bank did not engage in any unfair or deceitful acts or practices was clearly erroneous. We do not agree. "[N]ot every negligent act is unfair or deceptive and thus unlawful under G.L. c. 93A, § 2." Swanson v. Bankers Life Co., 389 Mass. 345, 349, 450 N.E.2d 577 (1983). The judge determined that the acts were not unfair or deceptive. Walsh was not entitled to have this issue decided by a jury. "[T]he equitable nature of the relief permitted [under c. 93A] ... leads us to conclude that there is no right to a trial by jury for actions cognizable under G.L. c. 93A." Nei v. Burley, 388 Mass. 307, 315, 446 N.E.2d 674 (1983). There was no error in his denial of Walsh's motion for leave to amend.

b. The request for rescission. Walsh suggests that the judge should have granted rescission of the loan agreement. She relies on Restatement (Second) of Torts § 551 and comment h (1977). 6

"[A] false, though innocent, representation which concerns a matter susceptible of knowledge ... may afford the basis of rescission." Bellefeuille v. Medeiros, 335 Mass. 262, 265, 139 N.E.2d 413 (1957). Ordinarily, a party requesting rescission must "restore or offer to restore all that he received" through the contract, although it "has been held that, where complete restoration is not possible, rescission may, nevertheless, be granted upon such equitable conditions as would amply protect the rights of the defendant." Id. at 266, 139 N.E.2d 413. Both parties cite numerous cases from within and without the jurisdiction on whether this remedy requires that the party requesting rescission "restore or offer to restore" all or a portion of what she has received.

Walsh may not have entered into the loan agreement had she known that the mortgage on Doherty's property was not a first mortgage. She did, however, sign the loan agreement. As a principal in the partnership, she did receive a benefit of almost $400,000 from the loan agreement. She has not offered to return it or any portion of it. The jury determined that the bank was negligent, not wilful. In such circumstances, there was no error in not granting rescission of the loan agreement. Bellefeuille v. Medeiros, supra at 266, 139 N.E.2d 413.

c. The relief granted Walsh against the bank. Walsh claimed that the bank represented to her that the mortgages on Doherty's property were in excess of the amount of the line of credit and that it would proceed against Doherty first. The jury did not receive a special question concerning the making of such a representation. Under Mass.R.Civ.P. 49(a), 365 Mass. 812 (1974), when a question of fact is omitted from the questions submitted to the jury, "e...

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