York v. Sullivan

• Decision Date: 03 December 1975
• Citation: 369 Mass. 157,338 N.E.2d 341
• Parties: Linda YORK et al. 1 v. Richard A. SULLIVAN et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 341

338 N.E.2d 341

369 Mass. 157

Linda YORK et al. ¹

v. Richard A. SULLIVAN et al.

Supreme Judicial Court of Massachusetts, Franklin.

Argued Oct. 9, 1975.

Decided Dec. 3, 1975.

Steven J. Schwartz, Northampton, for plaintiffs.

Ralph Warren Sullivan, Boston, for defendants.

Before TAURO, C.J., and REARDON, QUIRICO, BRAUCHER and WILKINS, JJ.

BRAUCHER, Justice.

Once again we are called on to rule on the procedure to be followed under G.L. c. 93A, § 9. Cf. COMMONWEALTH V. DECOTIS, --- MASS. --- , 316 N.E.2D 748 (1974)^A; SLANEY V. WESTWOOD AUTO, INC., --- MASS. --- , 322 N.E.2D 768 (1975)^B; Entrialgo v Twin City Dodge, Inc., --- Mass. --- ^c, 333 N.E.2d 202 (1975); BALDASSARI V. PUBLIC FIN. TRUST, --- MASS. --- , 337 N.E.2D 701 (1975)^D; see Rice, New Private Remedies for Consumers: The Amendment of Chapter 93A, 54 Mass.L.Q. 307 (1969). We hold that (1) the 'written demand for relief' sent to the defendants by the consumer plaintiffs complied with the statute, (2) the plaintiffs did not waive their statutory rights by bringing a nonstatutory action within thirty days after sending that demand, and (3) the defendants did not make a 'written tender of settlement' pursuant to the statute. We therefore reverse the judgment dismissing the action and remand for further proceedings.

We summarize the parties' agreed statement of the case. See Mass.P.A.P. 8(d), 365 Mass. --- (1974). The defendants are the owners, operators and lessors of a federally assisted housing development for low and middle income tenants. On August 7, 1973, they applied to the Department of Housing and Urban Development (HUD) for an increase in rents by reason of increased taxes and other costs. Thereafter they executed one-year leases to the two named plaintiffs and others. The leases contained provisions that the rents were subject to adjustments on approval by HUD, but the tenants were not informed that an application for increase was pending. On January 14, 1974, HUD approved rent increases, and on January 28, 1974, the defendants notified the tenants that increased rents, approved by HUD, would be effective March 1, 1974.

On February 15, 1974, several tenants sent a letter to the defendants alleging unfair and deceptive practices under c. 93A. The letter identified the two named plaintiffs and asserted that each, when the lease was signed, was 'led to believe' by the defendants' agent that he or she was obligated to pay the monthly rent set forth in the lease for the entire term of one year, subject to adjustment if the tenant's income changed, and that each had later received notice of a rent increase. The letter referred to Regulation XV--B, promulgated by the Attorney General pursuant to G.L. there is a violation of § 2 if ² 'B. Any person . . . fails to disclose to a buyer or prospective buyer any fact, the disclosure of which may have influenced the buyer or prospective buyer not to enter into the transaction.' On February 21, 1974, the defendants replied, refusing all demands for relief.

On February 26, 1974, the two named plaintiffs and a third tenant filed a bill in equity challenging the rent increase on grounds independent of c. 93A and seeking interlocutory relief. At a preliminary hearing on March 5, 1974, the defendants agreed that any tenant could cancel his lease without penalty rather than pay the increased rent and that no tenant would be evicted until a decision was made by the court. On March 26, 1974, the two named plaintiffs filed a second bill in equity under c. 93A. The defendants answered, and the two cases were consolidated for trial and tried on May 27, 1974.

At trial the only factual issue in dispute was whether the tenants had been advised by the defendants' agent that at the time of signing their leases an application for rent increase had been filed and was pending before HUD. The two named plaintiffs testified that they were not informed of the application and that they would not have signed the leases if they had been so informed. The defendants offered no evidence.

On August 8, 1974, after trial, the judge made findings, rulings and an order for judgment. He found that the plaintiffs 'were not advised when they signed the leases that an application for a rent adjustment was then pending.' The judgment in the first action declared that the tenants were obligated to pay the increased rents. The action under c. 93A was dismissed on the merits. The judge ruled that (1) the demand letter did not reasonably describe the act or practice relied on, (2) by bringing a bill in equity during the thirty days following the demand letter, the plaintiffs waived their rights under c. 93A, and (3) the defendants' stipulation at the March 5 hearing had the effect of a reasonable tender of settlement under G.L. c. 93A, § 9(3). The plaintiffs appealed from the judgment in the c. 93A action.

1. Statutory exemption. The defendants contend that G.L. c. 93A, § 3(1)(a), ³ exempts them from c. 93A. This contention was not raised by the pleadings or considered by the judge. It cannot now be raised as matter of right. Socony Mobil Oil Co. v. Cottle, 336 Mass. 192, 196, 143 N.E.2d 265 (1957). There is no showing that HUD regulates unfair or deceptive failure to disclose material facts to prospective tenants. Cf. Hahn v. Gottlieb, 430 F.2d 1243, 1247--1248 (1st Cir. 1970). The defendants had the burden of showing the availability of the exemption. G.L. c. 93A, § 3(2). Commonwealth v. DeCotis, --- Mass. ---, --- ^e, 316 N.E.2d 748 (1974).

2. The demand letter. The judge ruled that the defendants' failure to advise the tenants of the pending HUD application was the only act or practice which was 'colorably a violation' of c. 93A, and that the plaintiffs' written demand for relief did not mention that act or practice and therefore was not one 'reasonably describing the unfair or deceptive act or practice relied upon,' as required by § 9(3). ⁴ The evidence clearly warranted a finding that the disclosure of the application 'may have influenced' a prospective tenant 'not to enter into the transaction,' within the meaning of Regulation XV-B. If such a finding were made, we have no doubt that the failure to disclose would be a deceptive act or practice. Cf. Commonwealth v. DeCotis, --- Mass. ---, --- n. 6 ^f, 316 N.E.2d 784 (1974).

We think the demand letter was sufficient to give the defendants 'an opportunity to review the facts and the law involved to see if the requested relief should be granted or denied' and to enable them to make 'a reasonable tender of settlement' in order to limit the recoverable damages. See Slaney v. Westwood Auto, Inc., --- Mass. ---, --- ^g, 322 N.E.2d 768 (1975). In ENTRIALGO V. TWIN CITY DODGE, INC., --- MASS. --- , 333 N.E.2D 202 (1975)^H, a demand letter claimed that a used car was defective and that deceptive representations influenced its purchase; the letter was held insufficient to show reliance on violations of the Truth-in-Lending statutes. In Truth-in-Lending cases the aggrieved consumer commonly knows what has been disclosed, and he can ascertain whether there has been compliance with the governing legal requirements. See Lynch v. Signal Fin. Co. of Quincy, --- Mass. ---, --- ⁱ, 327 N.E.2d 732 (1975). Here the demand letter clearly claimed that the tenants had been deceived as to the stability of their rent levels, and the defendants' response shows that they understood the nature of the grievance. The record does not show whether at the time the plaintiffs sent the demand letter they knew the date of the application to HUD. The defendants knew that date and the dates of the plaintiffs' leases. We do not think they could insist that the plaintiffs inform them of facts they had deceptively failed to disclose. Information which serves no useful purpose is not required. Cf. Baldassari v. Public Fin. Trust, --- Mass. ---, --- ^j, 337 N.E.2d 70 (1975).

3. Waiver by suit. The defendants' answer made no claim of waiver, but the judge ruled that a claimant who fails to observe the thirty-day requirement of § 9(3) should be held to have waived the statutory remedy, and to have elected to pursue his nonstatutory rights, if any, independently of the statute. This was error in three respects.

First, the thirty-day requirement, as part of the requirement of a written demand for relief, is a prerequisite to suit, to be alleged and proved. Cf. ENTRIALGO V. TWIN CITY DODGE, INC., --- MASS. --- , 333 N.E.2D 202 (1975)^K. But it is not jurisdictional in the sense that a party cannot waive it, and we do not think it is open to the judge to raise the point on his own motion after trial and long after the thirty days have expired. Demand before suit is often a fruitless ceremony. See Lent v. Padelford, 10 Mass. 230, 238--239 (1813). The defendants here had refused all demands for relief. If they felt unduly hurried in deciding whether to change their minds, a telephone call to the plaintiffs' counsel or an application to the court might well have solved their problem. In fact they were able to prepare sufficiently to make an offer on March 5, 1974, which resulted in the denial of interlocutory relief. Cf. Schulte v. Director of the Div. of Employment Security, --- Mass. ---, --- ^l, 337 N.E.2d 677 (1975).

Second, the thirty-day requirement is a prerequisite to an action under § 9, but nothing in the statute makes it a prerequisite to any other remedy available to aggrieved consumers. The statute created new rights and remedies for consumers; it was not designed to limit their preexisting rights and remedies, or to create obstacles to their pursuit. See Commonwealth v. DeCotis, --- Mass. ---, --- n.8 ^m, 316 N.E.2d 748 (1974). The first suit here was nonstatutory. 'Such claims can be made apart from G.L. c. 93A, § 9, without compliance with the requirements of that section.' Baldassari v. Public Fin. Trust, --- Mass. ---, --- ⁿ, 337 N.E.2d 701 (1975). Cf. Johnson v. Railway Express Agency, Inc., 421...