Opinion
14-P-1012
06-05-2015
G.H.E., INC., & others. v. HING SOO HOO.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such 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. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The plaintiffs appeal from (1) a judgment that did not include a separate award of attorney's fees on their G. L. c. 93A, § 11, claim, and (2) the denial of their motion to amend that judgment to include attorney's fees and costs under G. L. c. 231, § 6F. The defendant has filed a cross appeal from the damages awarded the plaintiffs on their G. L. c. 93A, § 11, claim. We consider the parties' various arguments together and conclude that the plaintiffs were not entitled to an award of attorney's fees and costs, either as damages or otherwise, on their c. 93A claim, but that on remand the judge should consider an award of attorney's fees and costs under G. L. c. 231, § 6F.
Background. The plaintiffs purchased a restaurant business from the defendant in 2010. As part of that transaction, the defendant agreed to pay $26,052.89 for certain goods that had been purchased before the closing. He did not do so, and the plaintiffs demanded payment. In response the defendant, through counsel, sent a demand letter in which he asserted that the plaintiffs had breached various obligations to him, including that they had failed to make a cash payment of $103,700 that was due in connection with the closing. The demand letter closed by stating that "if these matters cannot be resolved within 45 days of this letter, it is my clients' intention to take all necessary legal measures to protect their rights and recover their damages."
Before waiting forty-five days to see if the defendant would in fact file suit, the plaintiffs themselves filed the underlying litigation alleging breach of contract, breach of an indemnity agreement, and violation of G. L. c. 93A, § 11. The plaintiffs' c. 93A claim was based on the allegation that the defendant had "fabricated the claim that he had not received payment of the $103,200[ ] . . . so that he could delay paying $26,052.89 in trade debt to G.H.E., Inc. and so that he could ultimately force the Engs, as shareholders and principals of G.H.E., Inc. to waive or compromise G.H.E., Inc.'s claim."
The defendant asserted counterclaims, including one that alleged violation of c. 93A. Among other things, he asserted that the plaintiffs had failed to pay the $103,700 that was due
Elsewhere, the amount is referred to as $103,700. The discrepancy is immaterial for our purposes.
Ultimately, all other claims between the parties having been resolved, the only issue submitted to the jury was the $103,700 payment. The trial judge reserved to himself the c. 93A claim but posed two special questions to the jury, both of which were answered in favor of the plaintiffs. The first was whether the plaintiffs had in fact made the $103,700 payment as required by the credit agreement. The second was whether the defendant "deliberately falsely" claimed that he had not received the payment. The judge adopted both findings, and concluded that the defendant's actions violated c. 93A, § 11. He found that "[t]he defendant intentionally and willfully refused to pay a debt that he knew was due and owing, and then he intentionally and willfully fabricated the claim of not having received the $103,700 cash payment in an attempt unfairly to leverage the plaintiffs from pressing their rightful claim with regard to the trade debt." The judge then ordered the plaintiffs to submit a memorandum of damages and an affidavit with regard to attorney's fees and costs.
The plaintiffs did so, claiming their attorney's fees and costs in this litigation as their c. 93A damages, and asserting that those fees and costs were their "injury." The judge agreed, reasoning that "[a]bsent walking away from the $103,700 that the plaintiffs had already paid to the defendant and absent agreeing to pay a like amount a second time, the plaintiffs had no alternative but to expend money to obtain their just entitlement." The judge awarded, as damages, $85,832.05 (consisting entirely of attorney's fees and costs), which he then doubled because of the wilful and knowing nature of the defendant's acts (for a total of $171,664.10). However, the judge denied the plaintiffs' request that they additionally be awarded the same amount of attorney's fees and costs under the fee-shifting provision of c. 93A, § 11.
The plaintiffs also moved to recover an award of fees, expenses, and costs pursuant to G. L. c. 231, § 6F. In this motion, the plaintiffs sought "an award of the attorney's fees, costs and expenses [they were] forced to incur in prosecuting [their] claim for $26,052.89 after Mr. Soo Hoo asserted defenses that were wholly insubstantial, frivolous, and not advanced in good faith." That motion was allowed, and no appeal has been taken from it. However, when the plaintiffs later sought to amend the judgment to include an award of fees pursuant to § 6F, the judge denied that motion because he did not intend for the plaintiffs to receive what he viewed as in effect a trebling of their attorney's fees.
Discussion. In certain circumstances, attorney's fees and litigation costs may be recovered as damages in a successful G. L. c. 93A, § 11, claim. However, those circumstances are limited. It is not enough that a plaintiff show that it has incurred attorney's fees and costs in bringing an action under the statute. "Rather, [the plaintiff] must show that she was forced to incur such expenses as a result of the defendant's initiation of litigation which itself constituted a violation of the statute." Tech Plus, Inc. v. Ansel, 59 Mass. App. Ct. 12, 21 (2003) (no recovery of legal fees and costs incurred by plaintiff in bringing c. 93A claim and in defending against defendant's counterclaims). Put otherwise, "[i]f a c. 93A violation forces someone to incur legal fees and expenses that are not simply those incurred in vindicating that person's rights under the statute, those fees may be treated as actual damages in the same way as other losses of money or property." Siegel v. Berkshire Life Ins. Co., 64 Mass. App. Ct. 698, 703 (2005) (allowing recovery of fees and costs incurred in third-party litigation brought by defendant insurance company for purpose of negatively affecting beneficiary's rights under policy). See Columbia Chiropractic Group, Inc. v. Trust Ins. Co., 430 Mass. 60, 63 (1999) (allowing recovery of fees and costs incurred in defending against fraudulent submission of medical reimbursement claims).
Here, it bears noting at the outset that, although the defendant falsely claimed in his c. 93A demand letter that he had not been paid the $103,700, it is the plaintiffs who filed suit. It is the plaintiffs' proactive c. 93A claim that is at issue -- not any defense they were "forced" to undertake in response to a claim by the defendant. In this regard, the plaintiffs stand in no different shoes with respect to recovering their attorney's fees and costs than any other litigant who brings a c. 93A claim. To be sure, the defendant asserted the same false defense in this litigation that he claimed in his c. 93A demand letter. But in this regard, this case is indistinguishable from Tech Plus, Inc., supra, where the successful c. 93A plaintiff was not permitted to recover fees expended in pursuing that claim and in defending against the defendants' counterclaims, including his c. 93A counterclaim. Indeed, none of our cases has allowed attorney's fees and costs to be classified as c. 93A damages when they have been incurred solely -- as here -- in connection with pursuing that claim. We conclude, therefore, that the plaintiffs were not entitled to have their attorney's fees and costs awarded to them as c. 93A damages, nor (as a result) to have them doubled because of the wilful and knowing nature of the defendant's activities.
We note that, as a general matter, statements made in connection with litigation, including in presuit demand letters, are subject to the litigation privilege even if uttered maliciously or in bad faith. See generally Mass. G. Evid., art. V, introductory note (h)(1), at 84 (2015). Under this principle (which the parties have not raised here or apparently below), the defendant's false statements in his c. 93A demand letter and in connection with his defense are not actionable under c. 93A or otherwise. Although we make note of the doctrine here, as a practical matter, nothing turns on it because the plaintiffs, as explained in the body of our decision, are not entitled to recovery on their c. 93A claim in any event.
That said, the plaintiffs, in theory, were entitled to receive their attorney's fees and costs under the fee-shifting provision of c. 93A, § 11, provided that they established an essential element of their § 11 claim, namely that they suffered a "loss of money or property, real or personal." G. L. c. 93A, § 11. "'[M]oney' means money, not time, and . . . 'property' means the kind of property that is purchased or leased, not such intangibles as a right to a sense of security, to peace of mind, or to personal liberty." Baldassari v. Public Fin. Trust, 369 Mass. 33, 45 (1975). Here, the plaintiffs concede that they suffered no loss of money or property apart from their attorney's fees and litigation costs. These, as we have stated, were not properly classified as c. 93A damages. Thus, there being no loss of money or property as required, the plaintiffs were not entitled to prevail on their § 11 claim, much less to recover their attorney's fees and costs as the prevailing party pursuant to the statute's fee-shifting provision.
As noted above, the judge, consistent with his finding that the defendant wilfully and deliberately manufactured a false defense, allowed the plaintiffs' motion seeking an award of fees and costs under c. 231, § 6F. However, the judge did not make an award of fees and costs and refused to amend the judgment because he was of the view that to do so would result in a treble award of fees and costs to the plaintiffs, something the judge did not intend. The judge was correct to be wary of such a result. However, given our decision that the plaintiffs were not entitled to recover their attorney's fees or costs under c. 93A, the judge's concern no longer exists. The matter is accordingly remanded to permit the judge to revisit the question of attorneys' fees and costs under G. L. c. 231, § 6F.
The judgment is reversed. The order denying the motion to amend the judgment is vacated. The case is remanded for consideration of attorney's fees and costs under G. L. c. 231, § 6F. The plaintiff's request for attorney's fees and costs in connection with this appeal is denied.
So ordered.
By the Court (Cohen, Wolohojian & Maldonado, JJ.),
The panelists are listed in order of seniority.
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Clerk Entered: June 5, 2015.