58 Mass. App. Ct. 685 | Mass. App. Ct. | 2003
This appeal arises from the aborted sale of car wash system equipment intended for use at a facility located in Somerset. The equipment was manufactured by the plaintiff, Belanger, Inc. (Belanger), and sold by the coplaintiff, Auto Shine Car Wash Systems, Inc. (Auto Shine), to the defendant, Nice ‘N Clean Car Wash, Inc. (Nice ‘N Clean).
Apart from breach of contract and misrepresentation claims, the plaintiffs allege that Nice ‘N Clean deliberately induced Auto Shine, by way of false pretenses, to cancel the sale and return a deposit of $53,750 while Nice ‘N Clean arranged for the purchase of similar equipment from a competitor. This conduct, the plaintiffs claim, amounted to a deceptive and unfair practice in violation of G. L. c. 93A, §§ 2 and 11. After a jury-waived trial, the judge found for the plaintiffs on all counts
In this appeal, Nice ‘N Clean quarrels principally with the c. 93A aspect of the judgment, claiming error in the judge’s (1) determination that the conduct complained of occurred “primarily and substantially” within the Commonwealth; (2) imposition of double damages; and (3) award of lost profit damages to Belanger.
Background. We recite the judge’s pertinent factual findings, which we accept absent clear error.
On May 2, 1997, Auto Shine and Nice ‘N Clean entered into a written contract for the purchase and sale of a Belanger manufactured car wash system for Nice ‘N Clean’s facility in
Nice ‘N Clean first stalled delivery on December 12, 1997, with a request for a delay in shipment, claiming that its Somerset facility would not be ready for approximately one month. Thereafter, there were further postponements at Nice ‘N Clean’s request. Eventually, by letter dated March 4, 1998, Nice ‘N Clean asked for a full refund of its $53,750 deposit. As justification, Nice ‘N Clean cited problems it purportedly had experienced with Belanger equipment at its West Bridgewater car wash facility.
The refund request prompted a meeting on March 24, 1998, in West Bridgewater, between representatives of Auto Shine, Belanger, and Nice ‘N Clean. That meeting led to Auto Shine’s promise to correct any existing problems with equipment at the West Bridgewater location, even though the equipment was outside the warranty period.
Less than three months later, by a letter dated June 15, 1998, Nice ‘N Clean changed course once again and represented to Auto Shine that it could not proceed with the sale, alleging that “legal issues” had arisen with an abutter of the Somerset facility. Nice ‘N Clean asserted that it would be unable “to resolve this matter in the near future,” and again requested a full refund of its deposit. Unbeknownst to Auto Shine, there was no pending legal dispute involving a neighbor of the car wash. Relying on Nice ‘N Clean’s representations, however, Auto Shine acquiesced and returned the $53,750 deposit, not knowing that Nice ‘N Clean had recently purchased equipment from another supplier and installed it at the Somerset location.
In the present matter, the judge appropriately employed the “functional approach,” ruling that most, if not all, of the pertinent contacts were in Massachusetts: the contract was to be performed in Massachusetts; the parties met “frequently” in Massachusetts; the alleged problems with equipment that Nice ‘N Clean had previously procured from Belanger occurred in Massachusetts; and the misrepresentation inducing the return of the deposit originated in Massachusetts. Accordingly, the judge concluded, § 11 applied to the circumstances pertaining to Nice
Since the time of trial and oral argument, however, the Supreme Judicial Court, although not rejecting outright the Makino approach employed by the judge below, has stated that the analysis required under § 11 should focus on the context of the entire § 11 claim and “whether the center of gravity of the circumstances that give rise to the claim is primarily and substantially within the Commonwealth.” Kuwaiti Danish Computer Co. v. Digital Equip. Corp., 438 Mass, at 473. See Makino, U.S.A., Inc. v. Metlife Capital Credit Corp., 25 Mass. App. Ct. at 311. This would include, but not be limited to, looking at the place of conduct and the “situs of loss.” Kuwaiti Danish Computer Co. v. Digital Equip. Corp., supra at 472 n.13. In any event, whether a § 11 claim occurred primarily and substantially within the Commonwealth “is not a determination that can be reduced to any precise formula.” Id. at 472.
Turning to the trial judge’s analysis, we conclude that he reached the correct result on the facts found and that the result would be the same regardless of which analytical standard is applied. Crucial to the judge’s decision were his findings that the deception and resulting harm that form the basis of the § 11 claim both occurred in Massachusetts. On June 15, 1998, Nice ‘N Clean faxed, from its West Bridgewater site, a letter containing the misrepresentation that ultimately induced a refund from Auto Shine. The result for both plaintiffs was a loss of business within the Commonwealth. Contrast Bushkin Assocs., Inc. v. Raytheon Co., 393 Mass, at 637-639 (alleged misrepresentations occurred in Massachusetts, but were received and acted upon in New York, where resulting harm occurred). Thus, as the “center of gravity” of the plaintiffs’ c. 93A claim was primarily and substantially within the Commonwealth, the judge was correct in rejecting Nice ‘N Clean’s contention that it was exempt from liability under c. 93A.
2. Multiplication of damages. The judge determined that Nice ‘N Clean’s professed reason for its refund request was a wilful and knowing misrepresentation that induced the plaintiffs to cancel the order and refund the deposit. In its June 15, 1998,
Based on these findings, the judge could reasonably have inferred that Nice ‘N Clean did not intend to “re-work” the deal with the plaintiffs as it had claimed and, thus, properly concluded that Nice ‘N Clean’s conduct amounted to a wilful and knowing violation of c. 93A. There was, therefore, a sound basis for double damages, and their imposition did not constitute an abuse of discretion. See Kattar v. Demoulas, 433 Mass. 1, 15-16 (2000), and cases cited.
3. Lost profit damages. Pursuant to G. L. c. 106, § 2-708(2),
The limiting case for such a credit to the buyer is when the vendor is a “lost volume seller,” defined as “one who had there been no breach by the buyer, could and would have had the benefit of both the original contract and the resale contract.” Teradyne, Inc. v. Teledyne Indus., Inc., 676 F.2d 865, 868 & n.2
Nice ‘N Clean’s assertion that no reported Massachusetts appellate decision has adopted the reasoning of Teradyne is overdrawn. Although the issue has not been squarely addressed, cf. Jericho Sash & Door Co. v. Building Erectors, Inc., 362 Mass. 871 (1972) (applying G. L. c. 106, § 2-708 [2]); Cesco Mfg. Corp. v. Norcross, Inc., 7 Mass. App. Ct. 837, 842-843 (1979) (same), there is no reason to question or reject the rationale of Teradyne. “Remedies under the Uniform Commercial Code are to be construed liberally so that the aggrieved party is placed in the same position as if the contract was performed.” Delano Growers’ Coop. Winery v. Supreme Wine Co., 393 Mass. 666, 678 n.5 (1985). Here, where Nice ‘N Clean’s breach caused Belanger an over-all decrease in its sales of car wash equipment, the judge’s decision not to allow Nice ‘N Clean credit for Belanger’s resale to a second buyer comports with those principles.
Judgment affirmed.
The judge also found for the plaintiffs on Nice ‘N Clean’s counterclaim, which was based on a theory that defects in the car wash equipment that Nice ‘N Clean had previously purchased from Belanger and installed at its West Bridgewater facility not only furnished Nice ‘N Clean grounds to withdraw from the new sale, see G. L. c. 106, § 2-609, but also gave rise to an independent claim for damages. Nice ‘N Clean does not appeal that ruling.
Nice ‘N Clean does not argue that any of the judge’s findings of fact are clearly erroneous, including those findings supporting the claim of misrepresentation.
Auto Shine fulfilled that promise.
These points were apparently memorialized in an April 9, 1998, letter from Belanger to Nice ‘N Clean, which was admitted in evidence as exhibit 14. The record on appeal, however, does not contain that document.
In part, G. L. c. 93A, § 11, provides as follows: “No action shall be brought or maintained under this section unless the actions and transactions constituting the alleged unfair method of competition or the unfair or deceptive act or practice occurred primarily and substantially within the commonwealth. For purposes of this paragraph, the burden of proof shall be upon the person claiming that such transactions and actions did not occur primarily and substantially within the commonwealth.”
That subsection provides as follows: “If the measure of damages provided in [§ 2-708(1)] is inadequate to put the seller in as good a position as performance would have done then the measure of damages is the profit (including reasonable overhead) which the seller would have made from full performance by the buyer, together with any incidental damages provided in this Article [§ 2-710], due allowance for costs reasonably incurred and due credit for payments or proceeds of resale.”
The term “lost volume seller” is not elucidated in our case law. An oft-cited formulation is found in Storage Technology Corp. v. Trust Co. of N.J., 842 F.2d 54, 56 n.2 (3d Cir. 1988), quoting from White & Summers, Uniform Commercial Code § 7-9, at 275 (2d ed. 1980): “A lost volume seller is one who upon a buyer’s breach of contract, resells the article to a second purchaser at the price agreed to by the first purchaser. The second purchaser, however, would have purchased a similar article notwithstanding the first purchaser’s breach. Under such circumstances, when the seller resells the article, he is still not made whole because ‘he will have lost one sale, one profit, over the course of the year.’ ”
