NRT New England, Inc. v. Moncure
937 N.E.2d 999
Mass. App. Ct.2010Background
- Coldwell and Moncure entered an exclusive listing to sell the Wayland property; Plain Road offered to buy for $1,850,000, with Coldwell drafting the agreement.
- The agreement required Plain Road to deposit 5% of the purchase price into Coldwell’s escrow; total deposit was $92,500.
- The June 30, 2004 closing failed due to Plain Road’s financing, while Moncure secured a bridge loan to pursue a different property.
- Moncure claimed Plain Road was in breach and reserved the right to forfeiture; no new agreement was executed and the property later sold to another buyer.
- Plain Road’s $34,699 debt to Coldwell was assigned to Plain Road’s assignee; Coldwell sued Moncure for the escrow funds, while retaining the funds for over a year.
- Coldwell placed the disputed funds with another escrow agent one week before filing suit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are liquidated damages enforceable in this escrow? | Deposit reflects industry norm and is a reasonable forecast. | Damages could be easily ascertainable due to Moncure’s bridge loan. | Enforceable; five percent deposit is a valid liquidated damages provision. |
| Did Coldwell breach fiduciary duties as escrow agent? | Escrow duties remained owed while funds were held and until disbursement. | Escrow duties ended when the Wayland property sold. | Coldwell breached by obtaining an adverse interest and asserting claim to funds. |
| Whether Coldwell’s conduct supports a G.L. c. 93A claim for unfair or deceptive acts? | Breach coupled with self-dealing and improper leverage justified 93A claims. | No improper conduct beyond breach; no deceit. | 93A claim affirmed; actual damages trebled and attorney’s fees awarded. |
Key Cases Cited
- Kelly v. Marx, 428 Mass. 877 (Mass. 1999) (liquidated damages enforceable when damages difficult to ascertain)
- NPS, LLC v. Minihane, 451 Mass. 417 (Mass. 2008) (burden on challenger to show unenforceability of liquidated damages)
- TAL Fin. Corp. v. CSC Consulting, Inc., 446 Mass. 422 (Mass. 2006) (clarifies reasonableness of liquidated damages in contract law)
- Two Attorneys, 421 Mass. 619 (Mass. 1996) (escrow holder’s self-dealing breaches fiduciary duty)
- Zang v. NRT New England, Inc., 77 Mass. App. Ct. 665 (Mass. App. Ct. 2010) (escrow fiduciary duties extend to parties to escrow; duties exist while funds remain)
- Matter of Hilson, 448 Mass. 603 (Mass. 2007) (escrow agent’s fiduciary duties extend to hold funds pending appeal)
- Renovator’s Supply, Inc. v. Sovereign Bank, Mass. App. Ct. 419 (Mass. App. Ct. 2008) (unethical conduct under 93A depends on circumstances)
- Matter of the Discipline of Two Attorneys, 421 Mass. 619 (Mass. 1996) (escrow duties include avoiding self-dealing; scope not universally fixed)