Opinion
19-P-1474
10-16-2020
JEROME J. MANNING CO., INC. v. KIRGIZ REALTY, LLC, & others.
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
The defendants, Sefer Ozdemir and three different businesses, appeal from a corrected judgment entered following a jury trial in favor of the plaintiff, Jerome J. Manning Co., Inc. (Manning), on Manning's claims for breach of contract and violation of G. L. c. 93A, § 11. The defendants also appeal from an order denying their motion for judgment notwithstanding the verdict. They argue that their conduct was not unfair or deceptive within the meaning of G. L. c. 93A, claim error in the damages awarded, and argue that the attorney's fees awarded to Manning under G. L. c. 93A were excessive. We affirm.
While Manning brought separate claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and quantum meruit, the judge instructed the jury that the implied covenant and quantum meruit claims were subsumed within the breach of contract claims.
Background. We recite the facts in the light most favorable to Manning, as the jury could have found them. See Reid v. Boston, 95 Mass. App. Ct. 591, 592 n.2 (2019). This case arises out of Ozdemir's decision to hire Manning, an auction firm, to conduct absolute auction sales of two different properties. The defendant businesses, all controlled by Ozdemir, were the record owners of the properties. The first property, located in Natick, was owned by Han Realty, LLC (Han). The second property, located in Revere, was originally owned by Kirgiz, LLC (Kirgiz), and then transferred to Yourelo Your Full-Service Relocation Corporation (Yourelo).
At an absolute auction, the property is sold to the highest bidder, regardless of price. In contrast, at a reserve auction, the property is sold to the highest bidder only if the highest bid exceeds a reserve price.
On October 6, 2016, the parties executed two different absolute auction listing agreements, one for each property. The defendants agreed to employ Manning to conduct auction sales of the properties on November 10, 2016, and that each sale would be "absolute to the highest bidder regardless of price." The agreements also provided that Manning's commission equaled a ten percent buyer's premium, less a seller auction service fee that the defendants had to deposit for advertising and other expenses. The seller auction service fee for both properties combined was $6,000. Lastly, the agreements included a damages provision, which specified that the defendants would "be liable to [Manning] for its commission, all advertising expenses, and/or other damages incurred by [Manning]." Ozdemir also signed limited powers of attorney to allow Manning to act on the defendants' behalf with respect to the sales of the Natick and Revere properties.
Ozdemir signed the agreement for the Natick property on behalf of Han and also in his own personal capacity, but Ozdemir signed the agreement for the Revere property only on behalf of Kirgiz and Yourelo and not in his own personal capacity.
It was Manning's practice, as reflected in the agreements, to have the ten percent buyer's premium added to the highest bid. The sum of those amounts equaled the total sale price. It was then Manning's practice, again as reflected in the agreements, to refund the seller auction service fee out of the ten percent buyer's premium. Manning retained the difference between the ten percent buyer's premium and the seller auction service fee as its commission.
While the agreements stated that the seller auction service fee for each separate property was $5,000, there was testimony that the parties agreed to a seller auction service fee for both properties combined of $6,000.
When the parties signed the absolute auction listing agreements, Manning was unaware that there were several problems with both properties. The Natick property had been zoned as residential but was being used for commercial purposes and, moreover, the property did not meet lot size requirements for building a residential structure. Regarding the Revere property, Manning discovered a lien from a company that had done some environmental cleanup work and an order of conditions from the Massachusetts Department of Environmental Protection. Unlike Manning, Ozdemir was aware of at least some of these problems when the parties signed the absolute auction agreements.
The judge instructed the jury that an order of conditions "is a regulation of the use of an owner's property."
After discovering the problems with the properties, Manning agreed to two actions based on the belief that the parties were still proceeding with the auctions. First, Manning agreed to reschedule the auctions, originally to November 17, 2016, and then to December 2, 2016, to give Ozdemir an opportunity to resolve the problems. Second, even though Manning had already incurred $1,048 in advertising expenses, Manning provided a presale refund of Ozdemir's $6,000 seller auction service fee because Ozdemir suggested that he would hire Manning to auction a third property if Manning did so.
While Manning would have sold the properties regardless, Manning wanted to give Ozdemir an opportunity to maximize the final sale prices. According to Ozdemir, a Manning employee informed Ozdemir that the Natick property would have sold for as little as $50,000 to $100,000 with the zoning issues unresolved.
What Manning did not know, however, is that Ozdemir had been experiencing financial difficulties when the auction agreements were entered into in October 2016, but that by November 2016, Ozdemir had found another way to resolve those financial difficulties. On December 2, 2016, Ozdemir e-mailed Manning to say that he was out of the country, that he would not be returning anytime soon, and that "[w]e have unfortunately lost the opportunity to auction" the properties. On January 9, 2017, Manning contacted Ozdemir by telephone to discuss how to proceed with the auctions, to which Ozdemir responded that the parties could proceed only if (1) Manning acknowledged that the absolute auction listing agreements had been canceled and (2) the parties were able to negotiate new reserve auction listing agreements. In an attempt to preserve the original deal with Ozdemir, Manning e-mailed Ozdemir on January 10, 2017, referenced the absolute auction listing agreements, and said that Manning would be "moving forward" by auctioning the properties on March 15, 2017. Ozdemir's attorney responded by revoking Manning's power of attorney.
Nonetheless, Manning continued to advertise the properties, to generate reports for the defendants, and to respond to inquiries about the properties. In April 2017, an interested buyer offered Manning $650,000 for the Revere property. Manning conveyed that offer to Ozdemir, and Ozdemir responded that he would not "entertain any offers from [Manning]" unless the parties negotiated new agreements.
There was a dispute as to whether the offer was for $650,000 or $800,000 and whether an environmental contingency in the offer would have resulted in a lower final sale price. These were all questions of fact for the jury to decide.
Unable to resolve the dispute, Manning commenced the underlying action, which was tried to a jury. At the judge's initiative, and without objection, the G. L. c. 93A counts were also tried to the jury. See Brewster Wallcovering Co. v. Blue Mountain Wallcoverings, Inc., 68 Mass. App. Ct. 582, 604 n.53 (2007). A special verdict slip was prepared in which the jury were asked to resolve the following questions pertinent to this appeal: (1) whether Ozdemir and Han breached the agreement for the Natick property, (2) whether Kirgiz and Yourelo breached the agreement for the Revere property, and (3) whether the defendants engaged in unfair or deceptive acts or practices, and whether their conduct was willful or knowing. The jury answered "yes" to all the questions. The judge subsequently doubled the jury's award of $1,048 in damages under c. 93A.
The jury were also asked to resolve counterclaims that are not at issue in this appeal.
While Manning also alleged that Ozdemir breached the agreement for the Revere property, Manning's breach of contract, implied covenant, and quantum meruit claims, see note 2, supra, against Ozdemir arising out of the Revere property were dismissed following a motion for a directed verdict because Ozdemir did not sign the agreement for the Revere property in his own personal capacity, see note 4, supra.
Discussion. 1. Liability and damages. The defendants argue on appeal that, as a matter of law, their conduct was not unfair or deceptive within the meaning of G. L. c. 93A, § 11. They portray the case as a mere breach of contract between sophisticated businesses. The defendants also claim error in the damages awarded. The defendants argue that the breach of contract damages were too speculative and that, as to the c. 93A claims, there was no causal link between any unfair or deceptive acts or practices and the damages awarded. The defendants did not, however, raise any of the arguments now advanced regarding liability or damages with specificity in their motion for a directed verdict following the close of Manning's evidence or the renewed motion at the close of all the evidence. The defendants' arguments regarding both liability and damages are thus waived. See Bonofiglio v. Commercial Union Ins. Co., 411 Mass. 31, 34 (1991) (motion for directed verdict must state specific grounds for motion). While the defendants subsequently raised an issue with respect to the c. 93A damages in their motion for judgment notwithstanding the verdict, the defendants' failure to raise that issue in their prior motion for a directed verdict at the close of the evidence is dispositive. See id. ("no grounds for the motion for judgment notwithstanding the verdict may be raised which were not asserted in the directed verdict motion"). See also Mass. R. Civ. P. 50 (b), as amended, 428 Mass. 1402 (1998).
Moreover, as to the c. 93A claim, the jury permissibly concluded that Manning had shown a violation. General Laws c. 93A, § 11, provides a civil remedy to "[a]ny person who engages in the conduct of any trade or commerce and who suffers any loss of money ... as a result of the use or employment by another person who engages in any trade or commerce of an unfair method of competition or an unfair or deceptive act or practice." Businesses seeking relief under this section are held to a stricter standard than consumers seeking relief under G. L. c. 93A, § 9. See Giuffrida v. High Country Investor, Inc., 73 Mass. App. Ct. 225, 238 (2008). In addition, although a breach of contract standing alone does not amount to a c. 93A violation, we have said that "practices involving even worldlywise business people do not have to attain the antiheroic proportions of immoral, unethical, oppressive, or unscrupulous conduct, but need only be within any recognized or established common law or statutory concept of unfairness." VMark Software, Inc. v. EMC Corp., 37 Mass. App. Ct. 610, 620 (1994).
Based on the evidence, a jury could have found that Ozdemir knew about -- but strategically failed to disclose -- various problems with the properties. Unaware of these problems, Manning entered into the agreements and expended time and money in advertising and preparing for the upcoming auctions. After discovering the problems, Manning agreed in good faith to reschedule the auctions and to provide a presale refund of Ozdemir's $6,000 seller auction service fee. The jury could have found that Ozdemir, for his part, no longer needed to sell the properties but continued to string Manning along, causing Manning to expend additional uncompensated efforts on his behalf, while Ozdemir attempted to negotiate more favorable contract terms. Such conduct qualifies as deceptive and goes beyond breach of contract, and the jury thus could have found Manning was entitled to relief under G. L. c. 93A, § 11. See, e.g., Anthony's Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 474 (1991) ; Exhibit Source, Inc. v. Wells Ave. Business Ctr., LLC, 94 Mass. App. Ct. 497, 500-501 (2018).
Furthermore, there was no error in the damages awarded. See, e.g., Abrams v. Liss, 53 Mass. App. Ct. 751, 755 (2002) (briefly addressing waived argument that had no merit); Commissioner of Revenue v. Destito, 23 Mass. App. Ct. 977, 978 (1987) (same). The breach of contract damages were not speculative. There was evidence, which the jury appears to have credited, that the Natick property would have sold for $100,000 and the Revere property would have sold for $650,000. The fact that these sales were not certain does not render the breach of contract damages speculative. See, e.g., Selmark Assocs., Inc. v. Ehrlich, 467 Mass. 525, 545-546 (2014). Pursuant to the liquidated damages provisions and the judge's instructions not to award duplicative damages, the jury verdict was consistent with calculating Manning's breach of contract damages by taking ten percent of the above amounts and deducting from the damages for the Revere property: (1) the $6,000 seller auction service fee, and (2) the $1,048 in advertising expenses that the jury awarded as c. 93A damages. The jury's conclusion that Manning was entitled to breach of contract damages equaling $10,000 for the Natick property and $57,700 for the Revere property flowed directly from the evidence.
To the extent there was conflicting evidence as to what the final sale prices would have been, these were questions of fact for the jury to decide.
The defendants assert that the liquidated damages provisions applied only if auctions occurred and the defendants refused to execute purchase and sale agreements with the highest bidders. This is not accurate. The liquidated damages provisions applied in those circumstances but also if the defendants "refuse[d] to comply with [their] obligations pursuant to [the] [absolute auction listing agreements]."
While the numbers do not add up with mathematical exactitude, our standard of review "does not require mathematical precision" (quotation omitted). Spinosa v. Tufts, 98 Mass. App. Ct. 1, 10 (2020).
As to c. 93A claims, there was a clear link between the defendants' unfair or deceptive acts or practices and the damages awarded, $1,048, which equaled Manning's advertising expenses. Manning spent that money in reliance on the fact that it would be auctioning the properties pursuant to the parties' contractual arrangements. Due to the defendants' conduct, those auctions never occurred. There is no basis for us to overturn the jury's conclusion that Manning's c. 93A damages equaled $1,048. See, e.g., Schaumberg v. Friedmann, 72 Mass. App. Ct. 52, 57 (2008).
3. Attorney's fees. Lastly, we turn to whether the attorney's fees awarded to Manning under G. L. c. 93A were excessive. We review the judge's award for an abuse of discretion. See Castricone v. Mical, 74 Mass. App. Ct. 591, 603 (2009). The defendants contend that the trial judge erroneously failed to ascertain the amount of work spent solely on Manning's c. 93A claims versus its breach of contract claims. According to the defendants, because the same conduct gave rise to both sets of claims, Manning's c. 93A claims required "little or no additional work." The defendants' argument misapprehends both the judge's order and the apportionment of attorney's fees under G. L. c. 93A when a plaintiff brings both common-law claims and successful c. 93A claims.
If the time spent on common-law claims is separable from the time spent on c. 93A claims, a trial judge should limit the award of attorney's fees under G. L. c. 93A to the time spent on the c. 93A claims. See Castricone, 74 Mass. App. Ct. at 604. When the "same primary conduct or chain of events" give rise to both the common law claims and the c. 93A claims, a trial judge "may treat the entire work as an indivisible contribution to the c. 93A accomplishment." Id. Here, the judge, who was familiar with the case and the nature of the claims, made appropriate deductions for the work that was separate and apart from the G. L. c. 93A claims, and awarded attorney's fees for the work he deemed indivisible. See id. at 603, quoting Fontaine v. Ebtec Corp., 415 Mass. 309, 324 (1993) ("The trial judge ‘is in the best position to determine how much time was reasonably spent on a case, and the fair value of the attorney's services’ "). There was no abuse of discretion.
Manning makes a request for appellate attorney's fees and is entitled to those fees for the appeal of the c. 93A claims. Manning may, within fourteen days of the decision, submit a detailed and supported submission of the fees sought, in accordance with the procedures set forth in Fabre v. Walton, 441 Mass. 9, 11 (2004).
Corrected judgment affirmed.