Opinion
10-P-2008
12-05-2011
GRUBB & ELLIS COMPANY & another [FN1] v. MICHAEL R. SACCONE & others. [FN2]
NOTICE: Decisions issued by the Appeals Court pursuant to its rule 1:28 are primarily addressed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, rule 1:28 decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28, issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
This litigation involves the claims by two real estate brokers to recover a commission. The plaintiff Stubblebine Company (Stubblebine) was the seller's broker. The plaintiff Grub & Ellis Company (Grub & Ellis) introduced the buyer to the subject commercial property in Tewksbury (the 'Property').
In their complaint, the plaintiff brokers alleged breach of contract and G. L. c. 93A claims against the seller defendants, Michael Saccone; MDR Holdings, LLC (MDR Holdings); and MDR Construction Company, Inc. (MDR Construction) (collectively, the 'seller'). The brokers also asserted G. L. c. 93A claims against the buyer defendants Stephen Arena; Auto Body Clinic, Inc.; and Modern Auto Glass, LLC (collectively, the 'buyer').
After a lengthy bench trial, a Superior Court judge found in favor of the brokers and entered a judgment holding the defendant seller and defendant buyer jointly and severally liable for $135,000 in actual G. L. c. 93A damages, to be doubled for wilful and knowing violation of c. 93A, along with $81,811.08 in attorney's fees. The judge also ordered enforcement of an indemnification agreement between the buyer and the seller, which provided, in pertinent part, that the seller agreed to indemnify the buyer for any sales commission determined by a court to be due and payable. However, the judge held the buyer and seller jointly and severally liable for the doubling of the damages and for the c. 93A award of attorney's fees. We affirm.
The judge's findings of fact and conclusions of law are set forth in an extraordinarily detailed and comprehensive memorandum of decision. It is not necessary to, and we shall not, attempt to repeat all the findings. Rather, we limit our factual recitation to certain controlling findings which are outcome determinitive in affirming the judgment.
In brief summary, the seller contracted with the broker Stubblebine to sell, at five percent commission, the Property, consisting of a commercial building and land. Either the seller or Stubblebine could terminate the brokerage contract, subject to a thirty-day termination period, during which the contract would be of force and effect. In the event of such termination, the broker Stubblebine was to provide the seller with a list of those persons and entities to whom Stubblebine had shown the Property. If the Property was later sold to any of the listed persons, Stubblebine was to receive its commission, notwithstanding the contract's termination. As the judge found, and as further described below, the buyer was on Stubblebine's list given to the seller.
From the buyer's side, the buyer contacted Grubb & Ellis to find a building for its business operations. Grubb & Ellis brought the Property to the buyer's attention. On August 30, 2005, the brokers Stubblebine and Grubb & Ellis arranged for the buyer to view the Property. As of this date, in August, 2005, the brokerage contract was in effect.
On January 4, 2006, the seller notified its broker Stubblebine that it was terminating the brokerage contract. Two days after the seller's termination notice, but well within the thirty-day termination period, Grubb & Ellis and Stubblebine again showed the Property to the buyer. On January 31, 2006, Grubb & Ellis submitted a proposed offer form to the buyer to pay $2.7 million for the Property. The buyer reduced the proposed offer to $2.5 million, and the offer was submitted to the seller. The seller rejected the offer. However, soon after the thirty day expiration period ended, the buyer contacted the seller directly to restart negotiations. On this action, the judge found as follows.
'Approximately four days after [the seller] Saccone rejected the Offer, [the buyer] Arena called Saccone directly and asked to meet with him to discuss the sale of his building. Arena did not inform [Grubb & Ellis] that he intended to call Saccone directly and set up a meeting, nor did he invite [Grubb & Ellis] to participate in the meeting.'
Indeed, in the course of the direct negotiations, the buyer told the seller that, if brokers were involved, there would be no deal. The judge's findings are as follows.
'Without the brokers' knowledge, Arena and Saccone negotiated the terms of a sale. During negotiations, Saccone told Arena that he had had a contract with Stubblebine, but that it had expired. Arena told Saccone more than once that the deal would not get done if the brokers were involved.'
Ultimately, the seller agreed to sell the property to the buyer for $2.7 million, (the same amount originally sought by the seller, but now the purchase price of $2.7 million would be without any brokerage fees being paid therefrom). In effect, the buyer and seller agreed to stiff the brokers. The two sides to the transaction even went so far as to put into the purchase and sale agreement certain false language and representations, including, but not limited to a misrepresentation that no brokers were involved -- which was patently untrue.
We restate the judge's findings on these points.
'Prior to executing the P&S, and certainly prior to the actual sale of the Property, both Saccone and Arena knew that Arena had been shown the property by Stubblebine and Grubb & Ellis while the Listing Agreement was still in force and effect on August 30, 2005, and again on January 6, 2006. Both showings occurred before the Listing Agreement terminated on February 3, 2006 (thirty days after notice of termination). Prior to the closing, both Arena and Saccone knew that the brokers were entitled to a commission, yet they refused to agree to pay it.'
As to the seller, the judge found that the seller's refusal to pay the commission constituted both a breach of contract and a violation of G. L. c. 93A. Specifically, the judge found as follows.
'Saccone's conduct on behalf of MDR Construction and MDR Holdings constitutes unfair and deceptive acts or practices in violation of G. L. c. 93A. Prior to the execution of the P & S, and certainly prior to the actual sale of the Property, Saccone knew that both Stubblebine and Grubb & Ellis had shown the property to Arena, first on August 30, 2005 and then on January 6, 2006, while the Listing Agreement was still in effect. Both showings occurred prior to the effective date of termination of the Listing Agreement on February 3, 2006. Saccone, with Arena, executed the P & S that specifically included a paragraph claiming that no brokers' commission was due. In doing so, Saccone and Arena were, in part, attempting to justify not paying the brokers' commission they knew was due. In addition, through this conduct, Saccone knowingly breached the Listing Agreement in order to secure unwarranted benefits for MDR Construction and himself. As such, Saccone engaged in unfair and deceptive conduct prohibited by G. L. c. 93A, § 11.'
The judge further determined that the seller's acts were wilful and knowing, and doubled the award under c. 93A.
As to the buyer, the judge reasoned that the buyer could not be found liable for breach of contract, because there was no contract between the buyer and either broker. However, the judge determined that the buyer was liable under G. L. c. 93A because, acting in a business capacity throughout the sales process, the buyer engaged in unfair and deceptive pratices. The judge found as follows.
'Arena's conduct violated G. L. c. 93A. Specifically, after Grubb & Ellis submitted the original offer to purchase to Saccone, and Saccone rejected the offer, Arena called Saccone directly in an attempt to effectuate the purchase. Arena did not inform [the Grubb & Ellis broker] that he had contacted Saccone directly, did not invite [the Grubb & Ellis broker] to his subsequent meeting with Saccone, and further informed Saccone that the deal would not go through if the brokers were involved. Most notably, it was Arena who made the misrepresentation, embodied in the P & S, that Grubb & Ellis 'did nothing other than transmit the [offer to purchase] to Stubblebine.' Arena admitted this statement was false and that he had provided false information. Arena sought to effect the sale of the property by attempting to deprive the brokers of their commission. Accordingly, his conduct violated G. L. c. 93A.'
The judge found that the buyer also acted wilfully and knowingly, and therefore, was also liable for doubled G. L. c. 93A damages and attorney's fees.
The defendant seller's appellate arguments, reduced to essentials are as follows: (1) the seller cannot be held liable under G. L. c. 93A because the brokers did not suffer any injury distinct from that occasioned by the breach of contract; (2) the seller did not engage in unfair or deceptive conduct; (3) the seller cannot be found liable to Grubb & Ellis under c. 93A because it never contracted with Grubb & Ellis and was a 'business stranger' to Grubb & Ellis; and (4) the indemnification provision was unenforceable because the buyer lied about various matters relating to Grubb & Ellis's activities. For the reasons carefully and fully explicated in the memorandum and order of the Superior Court judge, none of these arguments have merit.
The defendant buyer's appellate arguments reduced to essentials, are that (1) the buyer cannot be found liable under c. 93A because there was no causal connection between its acts and the seller's refusal to pay the commission; and (2) the buyer was not acting in a business capacity, and the buyer's actions did not rise to the level of conduct prohibited by G. L. c. 93A. For the reasons stated in the judge's memorandum of decision, these arguments are without merit. In sum, as the judge concluded, 'As demonstrated by their joint conduct, both Arena and Saccone acted willfully in their efforts to deprive Grub & Ellis and Stubblebine of their commission.'
The defendants raise a series of challenges arguing that certain of the trial judge's findings were clearly erroneous. The challenges are not availing, as the record fully supports the judge's findings. A finding is clearly erroneous only where a 'reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.' J.A. Sullivan Corp. v. Commonwealth, 397 Mass. 789, 792 (1986), quoting from United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948).
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The intentional breach of a contractual duty for gain is a well-established species of G. L. c. 93A misconduct. See, e.g., Wang Labs., Inc. v. Business Incentives, Inc., 398 Mass. 854, 857-858 (1986); Anthony's Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 474 (1991); Atkinson v. Rosenthal, 33 Mass. App. Ct. 219, 225-226 (1992). Here, the defendant seller Saccone blatantly violated his listing agreement with Stubblebine. The defendant buyer Arena vigorously collaborated in this breach. Both defendants acted for their financial gain. Both are, therefore, liable under G. L. c. 93A, §§ 2 and 11, for deceptive trade practices.
Attorney's fees. The plaintiffs have requested, and, under G. L. c. 93A, are entitled to appellate attorney's fees. The plaintiffs are directed to submit an application for appellate attorney's fees and costs, with any appropriate supporting materials, to the of this court within fourteen days of the date of the rescript, pursuant to Fabre v. Walton, 441 Mass. 9 (2004). The defendants shall have ten days thereafter to respond.
Judgment affirmed.
By the Court (Berry, Cohen & Sikora, JJ.), Clerk