Opinion
16-P-234
04-25-2017
Amanda KHAN & another v. BEACON ASSOCIATES, INC.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The plaintiff-tenants brought this action against the defendant-landlord alleging, inter alia, that the landlord had violated G. L. c. 93A, §§ 2 and 9, by including an illegal late fee provision in their residential lease. A Superior Court judge concluded that the tenants had failed to establish that they suffered a distinct harm, a prerequisite to recover under G. L. c. 93A, and granted summary judgment in favor of the landlord. We affirm.
Background. On July 23, 2013, the tenants entered into a one-year lease/rental agreement with the landlord for a residential property located in Somerville. The lease provided that "[a] charge of [fifty dollars] may be assessed for rent payments not received by 5:00 p.m. on the [first] day of each month." The landlord did not receive the tenants' December rent before 5:00 p.m. on December 1, 2013. Accordingly, on December 4, 2013, the landlord sent the tenants an invoice for a fifty dollar late fee. The landlord did not receive the tenants January rent before 5:00 p.m. on January 1, 2014. Accordingly, on January 2, 2014, the landlord sent the tenants another invoice for a fifty dollar late fee. Both fees were automatically generated by the landlord's computer system.
One of the tenants contacted the property manager to dispute the landlord's right to collect the late fees, but the property manager believed the fee was valid and insisted that the tenants pay it. On January 14, 2014, the tenants sent the landlord a check for $100 with a letter stating that the payment was being made under protest. On January 24, 2014, the landlord returned the check, uncashed, to the tenants.
On February 11, 2014, the tenants sent the landlord a G. L. c. 93A demand letter on behalf of themselves and a purported class of tenants similarly situated, demanding that the landlord cease and desist from including the late fee provision in all residential leases, pay twenty-five dollars to each class member for every month of tenancy that was subject to the offending provisions, and pay actual damages and interest resulting from the alleged violation. On March 13, 2014, the landlord responded in writing, confirming that the $100 check had been promptly returned to the tenants, stating that the tenants had thus not suffered any actual injury, and offering, inter alia, to (1) amend the lease by removing the improper penalty provision; (2) re-execute the tenants' current lease agreement upon request; and (3) re-execute other lessees' lease agreements, without the improper penalty provision, upon request. The tenants never responded to the landlord's offer to have their lease re-executed.
The tenants also demanded additional class-wide relief. However, the judge denied the tenants' motion for class certification, and thus any facts pertaining to other tenants, or any issues involving class-wide claims, are not before this court.
On March 24, 2014, the tenants filed a putative class action complaint. On September 15, 2014, a Superior Court judge denied the tenants' motion for class certification. The tenants subsequently filed a motion for partial summary judgment as to their individual claims, and the landlord filed a cross motion for summary judgment in its entirety. On October 27, 2015, in a comprehensive written decision, the same judge denied the tenants' motion and allowed the landlord's motion. Judgment entered for the landlord and the tenants' complaint was dismissed.
Discussion. 1. Standard of review. Summary judgment is appropriate where there are no issues of material fact and the moving party is entitled to judgment as a matter of law. Mass.R.Civ.P. 56(c), as amended, 436 Mass. 1404 (2002). We review a decision to grant summary judgment de novo. See Boazova v. Safety Ins. Co., 462 Mass. 346, 350 (2012). "[W]here both parties have moved for summary judgment, the evidence is viewed in the light most favorable to the party against whom judgment has entered." Ibid. (quotation omitted). "A party seeking summary judgment may satisfy its burden of demonstrating the absence of triable issues by showing that the party opposing the motion has no reasonable expectation of proving an essential element of its case." Ibid. (citation omitted).
2. Claim of injury under G. L. c. 93A, § 9 . The tenants argue that the landlord's inclusion of the late fee provision in the lease violated a Massachusetts statute, G. L. c. 186, § 15B(1)(c ), which provides that "[n]o lease or other rental agreement shall impose any interest or penalty for failure to pay rent until thirty days after such rent shall have been due." They contend that this violation constituted an unfair and deceptive act under G. L. c. 93A, § 9.
While we agree that the landlord's inclusion of the late fee provision constituted a per se unfair or deceptive act or practice, our inquiry does not end there. A plaintiff bringing a claim under G. L. c. 93A, § 9, must also prove that the unfair practice caused him or her "some kind of separate, identifiable harm arising from the violation itself." Tyler v. MichaelsStores, Inc., 464 Mass. 492, 503 (2013). See Hershenow v. Enterprise Rent-A-Car Co. of Boston, 445 Mass. 790, 791 (2006) ("proving a causal connection between a deceptive act and a loss to the consumer is an essential predicate for recovery under our consumer protection statute"). Per se deceptive acts are not automatically injurious. See id. at 798 ("[A] plaintiff seeking a remedy under G.L. c. 93A, § 9, must demonstrate that even a per se deception caused a loss").
Under 940 Code Mass. Regs. § 3.17(3)(a)(1) (1993), it is an unfair or deceptive act for a landlord to include in "any rental agreement" a provision that violates "any law." Accordingly, the landlord's inclusion of an illegal lease provision is per se unfair or deceptive. See, e.g., Casavant v. Norwegian Cruise Line Ltd., 460 Mass. 500, 504 (violation of Attorney General regulation constituted unfair or deceptive act as matter of law).
Citing Leardi v. Brown, 394 Mass. 151, 160 (1985), the tenants contend that they suffered distinct harm or injury because the inclusion of the late fee provision violated their "legally protected interests." Alternatively, they argue that they suffered distinct injury because the landlord "forced them to tender amounts in consideration for the late fee." We disagree.
As to the tenants' first argument, our precedent has clarified that the invasion of a legally protected interest, without more, does not automatically entitle a plaintiff to nominal damages and attorney fees. Tyler, supra. To the contrary, the tenants' overly broad interpretation of Leardi has been rejected by Massachusetts appellate courts. See Hershenow, supra at 801; Tyler, supra; Bellermann v. Fitchburg Gas and Elec. Light Co., 475 Mass. 67, 73 (2016) ; Lord v. CommercialUnion Ins. Co., 60 Mass. App. Ct. 309, 321-322 (2004). Likewise, a plaintiff is not entitled to recover statutory damages and attorney's fees simply because a contract is noncompliant with a statute or regulation. Hershenow, supra. Rather, the plaintiff must also demonstrate that the noncompliance caused a distinct compensable loss, economic or otherwise. Ibid.
The tenants' alternative argument similarly falls short. The tenants did not suffer a distinct injury by tendering a check for $100 to the landlord. The check was returned less than two weeks later, and it was never cashed. The prompt return of the uncashed check in the present circumstances belies the claim that attempted enforcement of the late-fee provision created an actual injury, and we are not persuaded by the tenants' claim that the purported loss of access to the $100 precluded them from placing the funds in an interest-bearing account or using the funds for some other unidentified purpose. The argument is speculative. Moreover, this is the type of claim of an inchoate harm that our courts have rejected. See Hershenow, supra; Bellermann, supra; Lord, supra. In short, the tenants have not demonstrated that the landlord's deceptive act caused actual compensable loss, economic or otherwise. See Hershenow, supra at 802.
The uncashed check was returned to the tenants on January 24, 2014, well before the tenants sent their demand letter to the landlord on February 11, 2014. See generally Slaney v. Westwood Auto, Inc., 366 Mass. 688, 704 (1975) (one function of demand letter "is to encourage negotiation and settlement by notifying prospective defendants of claims arising from allegedly unlawful conduct"). Where the judge granted summary judgment for the landlord, she did not reach the issue of whether the landlord's settlement offer was reasonable in relation to the actual injury alleged. See Kohl v. Silver Lake Motors, Inc., 369 Mass. 795, 797 (1976). We note, however, that the summary judgment record reflects that, apart from not cashing the check (and thus not attempting to enforce the late fee provision), the landlord has also replaced each tenant's lease with a new lease omitting the late fee provision.
To the extent we do not discuss other arguments made by the parties, they have not been overlooked. "We find nothing in them that requires discussion." Commonwealth v. Domanski, 332 Mass. 66, 78 (1954).
Judgment affirmed.