Opinion
10-P-1796
10-11-2011
DENNIS A. KELLEY v. RICCELLI ENTERPRISES OF MASSACHUSETTS, INC., & others.
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
The plaintiff, Dennis A. Kelley, was an independent trucking contractor working for the defendants (collectively, Riccelli). While Kelley's truck was parked in Riccelli's equipment yard, it caught fire; the fire destroyed Kelley's truck, damaged two trucks parked on either side of it, and a discharge of fuel and oil caused some environmental damage to the property. Shortly before the fire, Kelley submitted an invoice for payment of services rendered, but Riccelli withheld payment, claiming both a common-law right and a contractual right, under an indemnification provision in the contract between the parties, to offset the damages caused by the fire.
Kelley's insurance carrier, Safety Insurance Company, paid the claim for the destruction of his truck. Riccelli commenced a separate action against Kelley in Superior Court to recover for the damage caused to its two trucks and its property.
The indemnification provision states: 'To the fullest extent permissible by the law [Kelley] agrees to indemnify and hold [Riccelli] including [its] agents and employees, harmless from and against any and all losses, claims damages, penalties or expenses, including reasonable attorney's fees, arising from bodily injury or death to any person and/or property damage including loss of use arising out of or in anyway relating to the work performed or omission caused by [Kelley], agents or employees of [Kelley] under this contract.'
Kelley commenced the present action in District Court for breach of contract, quantum meruit, and violation of G. L. c. 93A, § 11, for Riccelli's withholding payment of the invoice in order to leverage a settlement in its separate action against him. A motion judge denied Riccelli's motion for partial summary judgment. Riccelli's argument was that based on the contract, New York law applied and barred recovery under c. 93A. After a bench trial, the trial judge (who differed from the motion judge) held that the indemnification provision did not apply on these facts; that Massachusetts law, specifically c. 93A, did apply; and that Riccelli's withholding payment for services rendered in order to extort a more favorable settlement in the separate action, was both unfair and knowing. Kelley was awarded $2,955.14 in damages on his contract claim, double damages under the c. 93A claim, reasonable counsel fees later determined to be $25,506.81, and costs and interest.
The contract provides: 'This agreement shall be interpreted under the laws of New York State.'
Specifically, 'since 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,' Massachusetts law applies.
Riccelli appealed both the denial of its motion for partial summary judgment and the judgment to the Appellate Division of the District Court Department. The Appellate Division affirmed, holding that Riccelli's conduct was 'in disregard of known contractual arrangements,' constituted an unfair business practice, and was knowing and wilful. Riccelli appeals to this court arguing: (1) the motion judge erred in denying its motion for partial summary judgment as the parties' relationship is governed by New York law, which does not recognize an unfair and deceptive business practice in a nonconsumer context; (2) the trial judge erred in finding a violation of G. L. c. 93A, § 11; and (3) the trial judge erred in awarding multiple damages and attorney's fees.
The Appellate Division refused to address the motion judge's order denying partial summary judgment, which concluded that the contract provision did not mandate the application of New York law on these facts and, therefore, c. 93A was applicable. The Appellate Division held that the denial of the motion was not appealable after the bench trial on the merits, citing Deerskin Trading Post, Inc. v. Spencer Press, Inc., 398 Mass. 118, 126 (1986). Because we believe this threshold issue of law was preserved, we address the question on Riccelli's appeal to this court.
--------
We disagree with Riccelli that New York law applies on these facts. The contractual language that Riccelli relies on, that the agreement 'shall be interpreted under the laws of New York,' is not equivalent to language that New York law shall govern the contract. Furthermore, even if New York law does apply, '[t]he choice of law provision ordinarily will apply only to contract claims that arise from the agreement.' Stagecoach Transp., Inc. v. Shuttle, Inc., 50 Mass. App. Ct. 812, 818 (2001), citing Knieriemen v. Bache Halsey Stuart Shields, Inc., 74 A.D.2d 290, 293-294 (N.Y. 1980). Riccelli's conduct that constituted the unfair and deceptive act, i.e., the withholding of payment of Kelley's invoice in an effort to leverage settlement in the separate case, did not arise out of the contract. Cf. ibid. We agree with the trial judge that the relationship of the parties and of the unfair or deceptive act to Massachusetts necessitated the application of Massachusetts law, specifically c. 93A.
With respect to Riccelli's additional claim that its 'conduct did not rise to the 'level of rascality' and egregiousness as [necessary] between business entities, . . . we conclude that the trial judge's rulings in this respect are fully supported by the record.' Id. at 819, citing Linkage Corp. v. Trustees of Boston Univ., 425 Mass. 1, 26-27, cert. denied, 522 U.S. 1015 (1997). As the Appellate Division held, 'the trial judge's finding that Riccelli's withholding of payment was undertaken to leverage its position on its claim against Kelley for environmental cleanup costs indicates [the judge's] awareness of the level of unfairness and deception required under § 11.' RA 429. See Anthony's Pier Four, Inc. v. HBC Assocs., 411 Mass. 451, 474 (1991) ('[C]onduct 'in disregard of known contractual arrangements' and intended to secure benefits for the breaching party constitutes an unfair act or practice for c. 93A purposes'), quoting from Wang Labs., Inc. v. Business Incentives, Inc., 398 Mass. 854, 857 (1986). There was evidence that Riccelli knew that Kelley's destroyed truck was his sole source of income, which meant that withholding payment of the invoice left him unable to care for his family. In addition, there was evidence that if the insurance claim for the property damage was paid, Riccelli would release the invoice payment. As there was sufficient evidence of Riccelli's violation of c. 93A, the trial judge's award of multiple damages and attorney's fees was appropriate. Kelley seeks attorney's fees associated with this appeal which we think warranted in this instance.
Kelley initially sought payment of an invoice for an amount less than $3,000 and was forced to expend nearly ten times that amount in attorney's fees below just to obtain judgment. Kelley, therefore, should file within fourteen days of the date of the rescript an application for appellate attorney's fees and costs with the appropriate supporting materials. See Fabre v. Walton, 441 Mass. 9, 10-11 (2004). Riccelli then will have ten days to respond.
Decision and order of Appellate Division affirmed.
By the Court (Trainor, Fecteau & Hanlon, JJ.),