Tag Archives: litigation

Understanding the Limitations of Chapter 93A: Pre-Litigation Attorneys’ Fees Not Recoverable

By on January 30, 2018

The Regulation of Business Practices for Consumer Protection Act, commonly referred to by its statutory chapter number, “Chapter 93A,” is a frequently utilized statute that provides individual consumers and businesses with a right to bring legal action and recover damages if they are harmed by an unfair business practice.  Under the statute, “unfair or deceptive acts or practices” or “unfair methods of competition” committed while conducting business in Massachusetts permit the harmed party to recover their actual damages, or a statutory minimum of $25 per offense (whichever is greater), and up to three times such damages for knowing and willful violations of the statute, plus an award for reasonable attorneys’ fees and the costs of the lawsuit.  Chapter 93A creates harsh penalties, with a wide-reaching scope, to deter unfair business acts, however, it does have limitations.

Previously, we explained the prohibition on Chapter 93A recovery with regard to a party’s decision to litigate a dispute, rather than settle with the opposing party.

A second limitation on recovery under Chapter 93A relates to the timing of when a party’s legal fees are incurred. Recently, the Suffolk County Superior Court considered the issue of whether pre-litigation attorneys’ fees are recoverable under Chapter 93A in Beninati, et al. v. Borghi, et al. The court awarded double damages to one of the plaintiffs under Chapter 93A. The defendants who were found liable under Chapter 93A then moved the court to reduce the attorneys’ fees award by $170,000 for fees incurred prior to the filing of the lawsuit, relating to “extensive settlement discussions.” The court agreed that pre-litigation fees are not recoverable under Chapter 93A, stating that it “is aware of no authority that permits the award of fees incurred before the litigation began and that do not bear directly on its preparation.”  Accordingly, the court excluded the pre-litigation attorneys’ fees from the award.

This case is just one example of the importance of understanding the process of litigating claims and the implications of dealing with an adverse party.  Depending on the circumstances of a dispute, it can be wise to initiate litigation sooner to ensure large portions of incurred attorneys’ fees are ultimately recoverable from the party causing the harm. To learn more about scope and application of Chapter 93A, contact an experienced Massachusetts litigation attorney.

New Hampshire Supreme Court Denies Consumer Protection Act Claim in Real Estate Transaction Gone Bad

By on June 15, 2017

     In the recent case of Fat Bullies Farm, LLC, v. Lori Devenport et al., the New Hampshire Supreme Court had occasion to consider whether a series of less than truthful representations made by a prospective purchaser in the course of negotiating a real estate transaction gave rise to liability under NH RSA 358-A, New Hampshire Consumer Protection Act (the “Act”).

     After a trial in the matter, the Superior Court determined that the plaintiff and counterclaim defendants, Fat Bullies Farm and its principals, were liable for an award of enhanced damages – double attorney’s fees and double costs – pursuant to the Act.  On appeal, Fat Bullies Farm and its principals argued that the trial court erred in determining that the conduct underlying the award was sufficient to support liability under the applicable legal standard – that is, that the conduct was sufficiently unfair and deceptive to meet the “rascality test” for determining liability under the Act.

     The Act proscribes unfair and deceptive practices in commerce generally, and provides an inexhaustive list of specific types of conduct that give rise to liability under the Act.  For conduct not specifically listed, courts in New Hampshire consider the conduct complained of under the Act’s general proscription against unfair and deceptive conduct.  When considering whether any particular conduct not proscribed in the Act nevertheless supports liability, New Hampshire courts consider the conduct against the so-called “rascality test.”  Under the “rascality test” the conduct complained of must “attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble of the world of commerce.”  As a practical matter the court seeks guidance from the Federal Trade Commission Act (the “FTCA”) to determine whether such conduct runs contrary to the “rascality test” and offends the Act.

     The FTCA test considers whether the complained of activity offends public policy as embodied in other statutes, the common law or otherwise offends established norms of fairness, whether the conduct is immoral, unscrupulous, oppressive or unethical or whether it causes substantial harm to consumers.

      In the instant matter, the trial court found that Fat Bullies Farm’s conduct, which consisted of a course of unscrupulous behavior including misrepresenting their intentions for the future of the real property included in the proposed transaction, along with certain other selfish bargaining and business dealing tactics, was sufficient to establish liability under the Act. 

     The Supreme Court disagreed with the trial court’s decision, however, and held as a matter of law that misrepresentations concerning future uses of real property to be purchased could not give rise to liability under the Act if not contained in writing, because oral promises concerning real property are unenforceable under the Statute of Frauds.  The Supreme Court noted that even though Fat Bullies Farm’s misrepresentations encouraged property owner to sell the property to them, a course of misrepresentations of intent were not enough to support liability under the general proscription of the Act and the “rascality test” absent more.

     Each decision concerning liability under the general proscription of the Act and the related “rascality test” is inherently fact based, and therefore may not serve as strong precedent for future decisions of the Court.  Nonetheless, the Fat Bullies Farm decision further underscores the larger body of New Hampshire Supreme Court jurisprudence that demonstrates a pattern of restraint in its application of the Act to business dealings.  While other states with similar statutes apply the remedies offered by the Act liberally, the New Hampshire Supreme Court applies the remedy sparingly, and potential litigants should not be confident that, absent extraordinary circumstances, the Act provides redress for unscrupulous conduct in business dealings.  To consider whether the circumstances of your dispute merit consideration of a claim under the Act, litigants are well-advised to contact a New Hampshire litigator.       

Property Managers – Ensure The Property Owner Indemnifies You

By on March 23, 2015

Most property management companies focus their efforts on maintaining the day-to-day operations of their properties and really do try to address their tenants’ requests. Often times, it is a thankless job. A quick Google search of many property management companies will reveal horror stories about tenants’ negative experiences. When something goes wrong at a property, the tenant will make demands on the property manager, often times without including the property owner in those discussions. I have been guilty of this myself. If such a problem ultimately leads to litigation, the tenant will often sue both the property management company and the owner. If the property management company does not have adequate indemnification from the property owner, the property manager may have to defend the tenants’ claims, even if the owner actually caused the problem (e.g. a defect in the building).

As a Boston property management attorney, I recently had a large property management company that had to unnecessarily litigate a mold issue with one of its tenants. Obviously, an allegation of “mold” is very serious. The problem is that most mold is black in color and therefore many people may think they have “black mold” (Stachybotrys) even if they do not. Even so, an allegation of “black mold” is enough to give most people pause and can lead to very lengthy litigation. In my client’s particular case, the tenant sued both the property management company and the property owner when mold was discovered shortly after a flood. Prior to commencing litigation, the tenant gave notice to the property owner who attempted to remediate the mold. Unfortunately, our client did not have any sort of indemnification clause in its agreement with the property owner and, as such, the client was stuck litigating the case for years until it ultimately settled.

Generally speaking, an indemnification clause in the property management context states that an owner will indemnify a property management company (that is, step into their shoes and/or defend the property management company) for damages that are beyond the property manager’s control. Typical situations involve defects in the property, natural disasters and work undertaken by the owner. To be clear, a simple indemnification clause will not relieve property managers of all liability. For example, a property manager cannot refuse to act or to address property issues. In our client’s case, however, the owner was admittedly responsible for the damage as well as the remediation. As such, had our client had a comprehensive indemnification clause in its management agreement, it could have recouped its litigation costs from the owner. Instead, the case dragged on for over a year, several depositions were taken, and it actually reached the point where the parties hired their own professional experts.

An indemnification clause is not a cure-all, but it is a crucial starting point. A clause that is too broad (e.g. one that includes indemnification for gross negligence) may not be enforceable. So, if you are a property management company and do not have an indemnification clause with your clients, change that immediately. If you do have one, make sure you have your lawyer review it to ensure that it offers you adequate coverage and is enforceable. This seemingly simple process could save you thousands of dollars in unnecessary litigation costs.