UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 95-1820
ROY R. DAMON AND ELEANOR M. DAMON,
Plaintiffs - Appellants,
v.
SUN COMPANY, INC.,
Defendant - Appellee.
____________________
No. 95-1821
ROY R. DAMON AND ELEANOR M. DAMON,
Plaintiffs - Appellees,
v.
SUN COMPANY, INC.,
Defendant - Appellant.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. W. Arthur Garrity, Jr., Senior U.S. District Judge] __________________________
____________________
Before
Torruella, Chief Judge, ___________
Aldrich, Senior Circuit Judge, ____________________
and Selya, Circuit Judge. _____________
_____________________
Brian R. Corey, with whom Law Offices of Brian R. Corey was ______________ _____________________________
on brief for Roy R. Damon and Eleanor M. Damon.
Michael A. Fitzhugh, with whom Michael John Miguel, Cynthia ___________________ ___________________ _______
S. Phelan and Fitzhugh & Associates were on brief for Sun __________ ______________________
Company, Inc.
____________________
July 5, 1996
____________________
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TORRUELLA, Chief Judge. Plaintiffs brought suit in TORRUELLA, Chief Judge. ___________
this case claiming misrepresentation and violation of Mass. Gen.
L. ch. 93A, 11. For the reasons stated herein, we affirm the
decision of the district court.
BACKGROUND BACKGROUND
The parties stipulated to the following facts:
Defendant Sun Oil Company, Inc. (R & M) ("Sun") owned property
located at 225 Brockton Ave., Abington, Massachusetts, (the
"property") from 1971 to 1979. In 1972, Sun built a gasoline
station with underground storage tanks on the property and
operated a retail gasoline station thereafter until November
1977. On or about December 19, 1974, a leaking underground pipe
leading from the underground storage tanks to the pumps released
approximately 2,000 gallons of gasoline. Sun's regional manager
of operations, Robert Laubinger ("Laubinger"), was on the
property after the leak was discovered. On November 21, 1979,
the plaintiffs, Roy Damon ("Damon") and Eleanor Damon (together,
the "Damons"), purchased the property from Sun for $90,000. The
plaintiffs had a right to examine the property by terms of the
Agreement of Sale. The Damons owned the property from 1979 to
March 25, 1992 and operated a retail service station at the
property from June 12, 1980 to January 31, 1991.
On January 31, 1991, the plaintiffs leased the property
to K. Rooney, Inc. ("Rooney"). Since then, Rooney has operated a
retail service station on the property. In November 1991, Rooney
began upgrading the station by installing new pumps and Stage II
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of a vapor recovery system. As digging commenced, the Abington
Fire Department observed petroleum product pooling in the surface
excavations, shut down the construction and notified the
Massachusetts Department of Environmental Protection ("DEP"). On
December 19, 1991, the DEP sent a Notice of Responsibility to the
plaintiffs and Rooney, requiring that a Phase I Limited Site
Investigation Report and Preliminary Assessment Report be
completed. A company hired by Rooney performed the investigation
and issued a report dated October 1992. As part of the Phase I
investigation, monitoring wells were installed and samples of
groundwater were taken and analyzed. As a result of the
discovery of the pollution, Rooney refused to pay rent from
November 1991 to March 1992. The lease agreement between
plaintiffs and Rooney granted Rooney an option to purchase the
property for $600,000. Rooney did not exercise its lease option.
On March 25, 1992, Rooney purchased the property from the Damons
by assuming a first mortgage in the amount of $275,000 and a
second mortgage in the amount of $50,000. Rooney also made a
cash payment of $20,000 to plaintiffs.
The district court's additional findings of fact
included the following. A rupture of an elbow joint in the pipe
which connects the tanks and the pumps caused the 1974 spill,
which closed the station for approximately six weeks. In June or
July 1979, Damon attempted to reach Richard Bunzell ("Bunzell"),
whose name was given on the "For Sale" sign at the station.
After some unsuccessful attempts to reach Bunzell, a Sun
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telephone operator referred Damon to Laubinger, Sun's regional
manager for service station maintenance. The questions Damon
asked Laubinger about the property included an inquiry concerning
the age of the building, and whether Sun had experienced any
problems with the station, particularly with the underground
tanks. Laubinger knew of the 1974 spill, but did not reveal it.
Rather, he answered that it was a "good station" which just
needed to be run by a good operator to be successful. After his
phone conversation with Laubinger, Damon contacted Bunzell and,
after some negotiation, accepted his offer of $90,000. In late
August 1979, Damon and Bunzell met at the property to view the
property. Damon asked about a depression he noticed in the
blacktop near the pumps and Bunzell explained it was caused by
the installation of the first stage of a vapor recovery system.
In response to Damon's question of whether Sun had had any
problems with the underground storage tanks, Bunzell stated, "No,
we've had no problems with it. It's all good."
In 1980 Damon had the three 6,000 gallon underground
gasoline tanks tested for tightness by Getty Oil, Co., his first
gasoline supplier: they tested tight, as they did in May 1984 and
again in January 1991. In 1992, no holes were observed in any of
the underground gasoline tanks or oil tanks. The southern end
of the pit dug around the three gasoline tanks yielded the
highest level of contamination; 101 cubic yards of contaminated
soil were eventually removed for off-site treatment. Finally,
samples of contaminated water collected and examined by the
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company conducting the 1992 Phase I study indicate that the
contamination contained the gasoline additive MTBE ("MTBE"),
which was not added to Sunoco gasoline until 1984.
The Damons brought suit against Sun, alleging common
law misrepresentation and violation of chapter 93A, 11. The
district court, after a four day bench trial, found for the
Damons on both the misrepresentation and the chapter 93A counts,
awarding them $245,000 plus reasonable attorney's fees and costs.
In its appeal, Sun now challenges the three rulings of the
district court -- its denial of Sun's motion for entry of
judgment at the close of plaintiffs' case in chief, see Fed. R. ___
Civ. P. 52(c); the district court's judgment and findings
pursuant to trial; and its denial of Sun's post-trial motions to
alter and amend the judgment and findings and for a new trial,
see Fed. R. Civ. P. 59. ___
CAUSATION AND DAMAGES CAUSATION AND DAMAGES
A. The Legal Framework A. The Legal Framework ___________________
The Damons charged Sun with the tort of
misrepresentation, also referred to as fraud or deceit. See Bond ___ ____
Leather Co. v. Q.T. Shoe Mfg. Co., 764 F.2d 928, 935 (1st Cir. ___________ ___________________
1985). The elements of misrepresentation are well established:
in order to recover, plaintiff
must allege and prove that the defendant
made a false representation of a material
fact with knowledge of its falsity for
the purpose of inducing the plaintiff to
act thereon, and that the plaintiff
relied upon the representation as true
and acted upon it to his [or her] damage.
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Barret Assocs., Inc. v. Aronson, 190 N.E.2d 867, 868 (Mass. _____________________ _______
1963) (quoting Kilroy v. Barron, 95 N.E.2d 190, 191 (Mass. ______ ______
1950)); see Metropolitan Life Ins. Co. v. Ditmore, 729 F.2d 1, 4 ______________________________ _______
(1st Cir. 1984). "The party making the representation need not
know that the statement is false if the fact represented is
susceptible of actual knowledge." VMark Software, Inc. v. EMC ____________________ ___
Corp., 642 N.E.2d 587, 593 n.9 (Mass. App. Ct. 1994). Here, the _____
alleged false representations are the statements made by Sun's
representatives that it was a "good" station, upon which Damon
relied in his purchasing decision. The alleged harm suffered was
that the Damons bought a gas station in 1979 that would have been
worth more in 1992 if what the defendant's representatives stated
had in fact been true. The damages were measured by the
difference between the value of the property if it had been
uncontaminated, as the defendant represented, and the actual
value of the property as contaminated.
Appellant questions the district court's findings
related to two of these elements: causation and damages. The
causation element requires that the misrepresentation be a
substantial factor in the plaintiff's actions, such that it
"tend[s] along with other factors to produce the plaintiff's
[harm]." O'Connor v. Raymark Indus., Inc., 518 N.E.2d 510, 513 ________ ____________________
(Mass. 1988). The defendant's conduct need not be the sole cause
of the injury: "'It is enough that [plaintiffs] introduce
evidence from which reasonable men [and women] may conclude that
it is more probable that the event was caused by the defendant
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than that it was not.'" Mullins v. Pine Manor College, 449 _______ ___________________
N.E.2d 331, 339 (Mass. 1983) (quoting Carey v. General Motors _____ ______________
Corp., 387 N.E.2d 583, 585 (1979)). Damages, in turn, must be _____
proven "with a fair degree of certainty." Pearl v. William _____ _______
Filene's Sons Co., 58 N.E.2d 825, 827 (Mass. 1945); see Squeri v. _________________ ___ ______
McCarrick, 588 N.E.2d 22, 26 (Mass. App. Ct. 1992) ("While proof _________
of damages does not require mathematical precision, it must be
based on more than mere speculation.").
"Following a bench trial, the court of appeals reviews
the trier's factual determinations for clear error, but affords
plenary review to the trier's formulation of applicable legal
rules." Smith v. F.W. Morse & Co., 76 F.3d 413, 420 (1st Cir. _____ _________________
1996) (citations omitted); see Fed. R. Civ. P. 52(a); Dedham ___ ______
Water Co. v. Cumberland Farms Dairy, Inc., 972 F.2d 453, 457 (1st _________ ____________________________
Cir. 1992). Of course, "to the extent that findings of fact can
be shown to have been predicated upon, or induced by, errors of
law, they will be accorded diminished respect on appeal." Id. ___
However, as we have noted in regards to causation,
[a]pplication of the legal cause standard
to the circumstances of a particular case
is a function ordinarily performed by,
and peculiarly within the competence of,
the factfinder. The SJC has consistently
held questions of causation to be for the
factfinder.
Swift v. United States, 866 F.2d 507, 510 (1st Cir. 1988); see _____ _____________ ___
Dedham Water Co., 972 F.2d at 457 ("As a general rule, causation ________________
questions are grist for the factfinder's mill."); Mullins, 449 _______
N.E.2d at 338; see, e.g., Smith, 76 F.3d at 420, 422-24 (applying ___ ____ _____
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the clearly erroneous standard to district court's finding of
causation in Title VII context).
B. Causation B. Causation _________
The district court found that the Damons met their
burden of proving "by a preponderance of the evidence that the
2,000 gallon spill was a substantial factor in the DEP decision
that a gasoline contamination sufficient to trigger 21E liability
existed at the [property]." (District Court Findings of Fact and
Conclusions of Law, at 8). Sun argues on appeal that the
evidence that the district court relied on in finding that Sun
more probably than not was a substantial cause of the
contamination found in 1991 is insufficient as a matter of law,
for three reasons. Upon review of the record, however, we find
that the Damons met their burden of proof, such that the district
court did not clearly err in finding that the causation element
of misrepresentation has been met. We address, and dismiss, each
of Sun's arguments in turn.
First, Sun notes that the district court conceded that
"it is unclear how much of the 2,000 gallons [of the 1974 spill]
was recovered," (District Court Findings of Fact and Conclusions
of Law, at 9), and concludes from that statement that there was
no evidence of what (if any) contamination found in 1991 actually
dated to 1974. The fact that there was a release, without more,
Sun argues, is insufficient to impose liability.
There is more, however: the district court found not
only that there was a release, but also that the clean-up efforts
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at the time of the release were limited, at best.
Defendant's remedial efforts in 1974 were
not conducted for the purpose of ridding
the property of contamination; rather,
the goal was to make the [property] safe.
To this end, the focus was on stopping
the flow of gasoline onto the neighboring
property -- no effort was made to clean
or remove contaminated soil on the
[property] itself. From the Abington
Fire Department records it is unclear how
much of the 2,000 gallons was recovered.
Presumably, the company hired by Sun to
pump the trenches was pumping a mixture
of gas and water, but no one knows the
relative proportions or the total amount
of mixture pumped.
(District Court Findings of Fact and Conclusions of Law, at 9).
To suggest that the district court's statement that "it is
unclear how much of the 2,000 gallons was recovered" can be read
to imply that it was all recovered is to misread the context of
the statement.
Additional evidence the lower court found determinative
in its finding of causation included the sheer size of the 1974
spill (2,000 gallons); the fact that Robert Cataldo ("Cataldo"),
plaintiffs' expert, testified that the underground pipe which ran
from the pumps to the tanks created a channel along which the
gasoline could flow from the rupture and settle under the tanks;
and that no gasoline spills larger than 10 gallons occurred at
the property between 1974 and 1992, during which time the Damons'
tanks periodically tested tight. Finally, the court also noted
that "Cataldo testified, albeit hesitatingly, that in his opinion
the 1974 spill was a substantial factor contributing to the
contamination found at the [property] in 1992." (District Court
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Findings of Fact and Conclusions of Law, at 10). Clearly, the
evidence the district court relied on in finding causation goes
beyond the simple fact that there was a release in 1974. Sun
does not challenge any of these specific findings; indeed, our
review of the record finds support for each.
In making its argument, Sun relies on Providence & _____________
Worcester R.R. Co. v. Chevron U.S.A., Inc., 622 N.E.2d 262 (Mass. __________________ ____________________
1993). In that case, contamination was discovered in 1988 on
property owned by the plaintiff railroad. The railroad sued
defendant Chevron, claiming that the 1988 contamination was
caused by a 1972 leak of 12,000 gallons of fuel oil from a
storage facility defendant had maintained on the property. The
court found no causal link between the spills, where there was no
evidence that the soil was significantly saturated by the 1972
surface spill, which had been pumped out the same day, where
sixteen years had passed, and where the question whether the oil
would remain in some form was left unanswered in the face of
conflicting evidence. The court specifically noted that the
railroad's expert was not asked to give an opinion whether the
1988 contamination was caused at least in part by the 1972 spill.
Id. at 264. ___
Sun draws on Providence & Worcester as demonstrating _______________________
that evidence of the 1974 spill, in and of itself, is
insufficient to impose liability. That may be true, as far as it
goes. The evidence in the present case, however, shows much
more. As in Providence & Worcester, many years passed between _______________________
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the spills in the present case. However, the evidence is that
the 1974 spill was not cleaned up immediately, as in Providence & ____________
Worcester. Rather, the fire department logs indicate that _________
pumping did not start until two days after discovery of the leak
on December 19, 1974: as late as February 4, 1975, more than a
month after the leak was first reported, gasoline fumes were
still being detected in the basement of an adjacent property.
Thus, there was evidence in this case that the soil was
contaminated by the 1974 spill. What is more, plaintiffs' expert
here did state that the 1974 spill was a substantial factor
contributing to the 1991 contamination, as we discuss below.
Sun's second attack on the sufficiency of the evidence
focuses on the soil. In the face of the uncontested fact that
the 1974 spillage was subsurface, due to a leaky underground
pump, Sun contends that no evidence was presented that the soil
was contaminated by Sun, or that Sun's failure to clean up or
remove soil was wrongful. In support of its position, Sun lists
four pieces of evidence regarding soil testing. Firstly, it
notes that soil samples taken in 1992 by consultants were
spoiled, and never analyzed. While it is unfortunate that the
samples were not analyzed, that fact simply shows we do not have
all possible information: it does not shed any light, one way or
the other, on whether the 1974 spillage contaminated the soil.
Secondly, Sun points out that in 1979, Getty Oil commissioned a
company to dig around the fill area above the storage tanks, and
that the company never said anything to Damon about contaminated
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soil, but rather stated that the area was clean. However, Sun
points to no evidence that the company was asked to do an
examination of the soil for contamination: it was testing the
tanks for tightness. Thus, the third fact Sun looks to for
support, that Cataldo's environmental company found contamination
in 1992 around the same fill pipes that Getty Oil, in 1980, had
told Damon were clean, is not as conclusive as Sun would like.
Set against the Getty results is Cataldo's testimony that the
1974 release was a contributing factor in the 1991 contamination.
Finally, Sun notes that Cataldo testified that there was not much
thickness of soil, such that "flushing" of the soil by rising and
falling subsurface groundwater elevations would tend to reduce
any residual contamination. However, Cataldo also testified that
the on-site testing he conducted in four monitoring wells found
volatile organic compounds ("VOCs") which are constituents of
gasoline in the groundwater. The constituents found in 1991, he
stated, were similar to those of the 1974 release. As he stated
in his testimony:
Q. . . . . And based on your
examination of the underground conditions
at that [property] and the geology of the
[property], and based upon the
information of this 2,000 gallon spill in
1974, would you expect to find VOCs in
the areas where you did find them in
1992?
A. Yes, I would.
Q. Is the presence of VOCs consistent
with the topography and geology of that
[property] and a spill in 1974?
A. Yes, it is.
(Day 2, page 76). On this record, we find that the evidence was
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sufficient to find causation. The evidence to which Sun points
does not convince us otherwise, let alone that the district court
clearly erred in making its finding.
Sun's third and final argument that the evidence is
insufficient to find causation focuses on Cataldo's testimony.
It is fundamental that "[e]xpert testimony must be predicated on
facts legally sufficient to provide a basis for the expert's
opinion. " In re Salvatore, 46 B.R. 247, 253 (D.R.I. 1984). ________________
Thus, "[a]n expert should not be permitted to give an opinion
that is based on conjecture or speculation from an insufficient
evidentiary foundation." Van Brode Group, Inc. v. Bowditch & _______________________ __________
Dewey, 633 N.E.2d 424, 430 (Mass. App. Ct. 1994). Cataldo's _____
testimony, Sun contends, did not meet this criteria. Although
Cataldo testified that the 1974 spill was a "substantial factor"
in the 1991 contamination, Sun argues that its cross-examination
of Cataldo revealed that he had no factual basis for that
conclusion: indeed, he testified at one point that he could not
say that the 1974 spill was "more probably than not" the cause of
the 1991 contamination.
Sun points to a series of perceived flaws in Cataldo's
testimony. First, Cataldo attested that although methods exist
which would quantify the amount of contaminants found in 1992
which were representative of the 1974 release, none were
performed here. He agreed that he did not know how much gas was
left on the property after the 1974 release, and that none of the
work performed by his firm had to do with aging or dating the
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petroleum product found on the property. Nor did they test to
determine what percentage of the gas found in 1991 was 1974 gas.
After admitting that the ratios of the BTEX chemical constituents
were indicative of a more recent -- post-1980 -- release, Cataldo
testified that he could not say "one way or the other" that the
gasoline constituents encountered in 1992 were more probably than
not the result of the 1974 release. Thus, Sun maintains, the
best Cataldo could testify to at trial was that the property was
insufficiently investigated to allow him to come to any ultimate
conclusions concerning the contaminate sources; that since the
1974 release was the only known release, it at least partially
caused the 1991 contamination; and that there was no way of
apportioning what amounts, if any, of the 1991 contamination were
attributable to Sun based on the work done to date. This
opinion, Sun concludes, is insufficient as a matter of law.
We disagree. The issue is not whether Cataldo was
right: but, rather, whether he had sufficient factual grounds on
which to draw conclusions. See Van Brode Group, Inc., 633 N.E.2d ___ _____________________
at 430. On the basis of our review of the record, we conclude
that Cataldo's expert testimony was predicated on facts legally
sufficient to provide a basis for his conclusions. There is no
doubt that more testing could have been done on the property,
which would have been helpful to the factfinder. However,
Cataldo noted that although there are methods to attempt to
quantify the amount of contaminants dating back to 1974, he does
not know "if there's anything that really can say, yes or no, how
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much there is." (Day 2, page 133). He drew his conclusions on
the basis of his "experience with dealing with gasoline stations,
residual contamination, [and] the knowledge that the only
significant or large release at the [property] was reportedly the
2,000 gallons in 1974." (Day 2, page 71). He and his personnel
visited the property, investigated its history, and made tests,
from which he drew his conclusions. His testimony reflects his
research: asked how gas spilled in 1974 could still be present
in 1992, he stated,
A. Because the gasoline tends to
absorb and holds in to some of the soil.
It also fills up the pores between the
soil and clings in to that. The
[property] was paved, so that all the
rain that falls in it doesn't get a
chance to percolate through, so you don't
have that complete flushing action that
you would in an open field. Most of the
rainwater probably channeled off, and
that's one of the purposes of blacktop.
So it's my opinion that there would still
be some remnants of the gasoline
remaining.
(Day 2, page 87). He later noted that biodegradation alone would
not have removed contamination of the scale of 2,000 gallons over
18 years, and that there had been a reported release of four
gallons subsequent to 1980, which would be sufficient to account
for the levels of MTBE found. As the district court noted, his
attribution of the contamination, at least in part, to the 1974
contamination, "has an additional earmark of trustworthiness
because it was prepared for a third-party, Rooney, pursuant to an
order of the DEP, and not in any way in anticipation of this
litigation." (District Court Findings of Fact and Conclusions of
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Law, at 11). Cf. Venturelli v. Cincinnati, Inc., 850 F.2d 825, ___ __________ _________________
832 (1st Cir. 1988) ("The decision of whether an expert is
adequately qualified is a matter primarily for the district
court.").
In arguing that Cataldo's testimony provides
insufficient basis, Sun also relies on Providence & Worcester for ______________________
the proposition that the Damons were "required to bring forth an
expert opinion that the on-site activity on the subject property
during Sun's operation of gasoline station (1972-1977) was more
probably than not a substantial factor in causing the
contamination found on the property in 1992." (Brief of
Appellant, at 19). We disregard this argument, for two reasons.
First, in Providence & Worcester, although the SJC found it _______________________
significant that the railroad's expert did not testify as to
causation, the court specifically noted that it "[did] not say
that expert testimony is required to establish causation in every
soil contamination case." 622 N.E.2d at 264 (noting that the
subject "is not one that jurors would be expected to understand
in many circumstances without guidance from an expert"). We will
not create such a requirement here. Second, even if that
requirement existed, plaintiff met it. Cataldo explicitly, if
reluctantly, testified that the 1974 spill was "a substantial
factor" in the contamination detected in 1991, a fact the
district court noted twice in its finding of causation. In sum,
then, we find that the district court did not clearly err in
finding that Sun's acts were a substantial cause of the DEP
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decision that contamination sufficient to trigger 21E liability
existed at the property.
We note that the district court's task of determining
causation on this record was not an easy one. Nonetheless,
"[w]hen the evidence supports conflicting inferences, the
district court's choice from among the several inferences cannot
be clearly erroneous." Dedham Water Co., 972 F.2d at 462. Thus ________________
we uphold the district court, and reject Sun's argument that the
evidence upon which the district court relied is insufficient.
C. Damages and the Burden of Proof C. Damages and the Burden of Proof _______________________________
The parties dispute who bore the burden of proof
regarding whether the harm was divisible. The backdrop to their
dialogue is the fact that the evidence indicates that Sun was not
the only owner or operator of the property whose acts led to the
1991 contamination. As the district court stated, the presence
of MTBE "compel(s) the conclusion that there had been a
widespread release of gasoline at the [property] after 1984, when
MTBE became common." (District Court Findings of Fact and
Conclusions of Law, at 10). Thus, there was at least one release
of gasoline when the property was operated by Rooney or the
plaintiffs. The Damons concede that the evidence and findings
indicate that there was a post-1980 release of gasoline. At the
same time, there was no evidence of a spill greater than 10
gallons, and the district court specifically found that during
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the time the Damons owned the property, no significant leaks
occurred.1
The Damons bear the burden of proving that tortious
conduct by Sun caused them harm. See Restatement (2d) of Torts ___
433B(1). They were required to produce evidence that it is
more likely than not that Sun's conduct was a substantial factor
in bringing about the harm they suffered. See id. comment a ___ ___
(noting that "[a] mere possibility of such causation is not
enough"). Sun argues that the Damons did not meet their burden
of showing that Sun's conduct substantially caused the harm they
suffered. Accordingly, it maintains, the burden of identifying
what other actors were also responsible for the harm and of
allocating the harm (or showing that it was indivisible) remained
with the plaintiffs, who did not fulfill that task. However, we
have already established above that the district court did not
err in finding that Sun's conduct substantially caused the harm
the Damons suffered. Therefore, the burden shifted to Sun, as
did the cost of not meeting it. See Restatement (2d) of Torts ___
433B(2) ("Where the tortious conduct of two or more actors has
combined to bring about harm to the plaintiff, and one or more of
the actors seeks to limit his liability on the ground that the
____________________
1 Sun argues that the district court's factual findings are
inconsistent. We disagree: the evidence at trial indicated that
a spill as small as four gallons could account for the amount of
MTBE present, and that Cataldo's research found no record of any
spills over ten gallons. The evidence leads to the inference
that a spill made up of less than ten gallons, but which was
nonetheless spread out (or several such spills), could account
for the MTBE found.
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harm is capable of apportionment among them, the burden of proof
as to the apportionment is upon each such actor."); see also ________
O'Neil v. Picillo, 883 F.2d 176, 178 (1st Cir. 1989) (noting, in ______ _______
CERCLA action, that rule based on the Restatement (2d) of Torts
requires that damages be apportioned only if defendant shows that
the harm is divisible), cert. denied sub nom. American Cyanamid _____________________ __________________
Co. v. O'Neil, 493 U.S. 1071 (1990). Accordingly, we find no ___ ______
error in the district court's apparent allocation of the burden
of proof, and need not enter into the parties' dispute over who
bore what burden, and whether divisibility was indeed shown.
SUFFICIENCY OF THE EVIDENCE SUFFICIENCY OF THE EVIDENCE
Sun challenges the sufficiency of the evidence,
contending that the district court's findings were clearly
erroneous and highly prejudicial to Sun's case in three
instances. We examine such challenges to the district court's
factual findings for clear error. See O'Brien v. Papa Gino's of ___ _______ ______________
America, Inc., 780 F.2d 1067, 1076 (1st Cir. 1986). To ______________
demonstrate that the Damons did not meet their burden of proving
misrepresentation by a preponderance of the evidence, Sun "must
show that the verdict was against the great weight of the
evidence, viewed in the light most favorable to [the Damons], or
would work a clear miscarriage of justice." Cambridge Plating __________________
Co. v. Napco, Inc., No. 95-1781, slip op. at 26 (1st Cir. June 3, ___ ___________
1996). We address each of Sun's contentions in turn.
A. The Alleged Representations A. The Alleged Representations ___________________________
Sun first alleges that the alleged representations were
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opinions and not statements of fact. The distinction is a
crucial one, as it is well established that the latter can
ordinarily be the basis of a claim of fraud, but the former
cannot. See, e.g., Briggs v. Carol Cars, Inc., 553 N.E.2d 930, ___ ____ ______ ________________
(Mass. 1990) (noting that a statement which is an opinion in form
"in some circumstances may reasonably be interpreted by the
recipient to imply that the maker of the statement knows facts
that justify the opinion"); Coe v. Ware, 171 N.E. 732, 734 (Mass. ___ ____
1930). The determination of whether a statement is of opinion or
fact is a factual one, see id., and so we review only for clear ___ ___
error.
The district court held that
It should have been clear from Damon's
questions [to Sun's agents] that he was
concerned about the past and future
integrity of the entire underground gas
delivery system; as Damon testified at
trial, "the only thing you've got in a
gas station is tanks and pumps and the
lines. I mean, what else is there?"
(District Court Findings of Fact and Conclusions of Law, at 7
n.1). Sun contends that there is no evidentiary basis for such a
finding. Seeking support, it points to the district court's
statement during closing arguments that
the testimony that [Damon] had, that they
told him it was a good station, is not
significant in my view because that's
absolutely an opinion rather than a
statement of fact.
(Day 4, page 15), and contends that by making this comment the
district court essentially conceded that there was no evidentiary
basis to find that the statements by the Sun employees were
-21-
opinion. To the contrary, all this statement reveals is that the
district court changed its mind as to the significance of the
statements, which is certainly within its province to do.
Indeed, that is the very mission of closing arguments: to
convince the factfinder that a party's view of the facts is
correct.
Similarly, that Damon's testimony about the
conversations could be viewed as inconsistent, as Sun notes, is a
question that addresses Damon's credibility, not the district
court's finding. Credibility, of course, is an issue for the
factfinder, and Sun has shown us no clear error in the district
court's judgment on the matter. See O'Brien, 780 F.2d at 1076 ___ _______
("No subject matter is more clearly within the exclusive province
of the fact-finder than this.").
Our review of the record leads us to affirm the
district court's finding that the statements were factual in
nature. First, we note that the evidence supports the findings.
The court found that Damon asked Bunzell if Sun had had any
problems with the underground storage tanks, to which Bunzell
responded that Sun had had "no problems with it. It's all good."
(District Court Findings of Fact and Conclusions of Law, at 5).
This is consistent with Damon's testimony at trial. Bunzell's
testimony did not contradict him, since he stated in his
affidavit, entered at trial, that he neither remembered the sale
of the property nor recalled any discussion of it or the terms of
the sale. The district court also found that although Laubinger
-22-
knew about the 1974 spill -- indeed, he visited the property at
the time -- he did not reveal the information to Damon. Instead,
he responded to Damon's questions about whether Sun had any
problems with the station, particularly with the underground
tanks, by stating "that it was a 'good station' which just needed
to be run by a good operator to be successful." (District Court
Findings of Fact and Conclusions of Law, at 5). This was
consistent with Damon's testimony at trial. Laubinger testified
that he did not recall having a telephone conversation with Damon
or ever not telling anyone about the release in discussing the
property, and the trial court was free to credit Damon's more
specific recollection.
Next, in discussing whether the Bunzell and Laubinger
statements were opinions or fact, the district court noted that
Damon's questions were not just about the current conditions on
the property. If they had been, their statements that it was a
good station would presumably have been opinion. Rather, the
district court specified that the questions also went to whether
there had been problems in the station in the past of which Damon
should be aware, with the underground tanks specifically. In
that context, reading the record in the light most favorable to
the Damons, we do not find that the district court erred in
finding that the Sun representatives' statements that it was a
"good station" were factual. Indeed, we are hard put to see how,
where there has been a spill of 2,000 gallons in 1974, which Sun
knew of, statements five years later that it was a "good station"
-23-
and that Sun had had "no problems with it" in reply to a question
regarding the underground tanks are not misrepresentations of
fact.
B. Evidence of the Elements of Fraud B. Evidence of the Elements of Fraud _________________________________
Sun's second contention is that the record contains no
evidence of the key elements needed to prove fraud. First, Sun
asserts that the statements by Bunzell and Laubinger were not
misrepresentations of material facts, and thus the first element
of the tort has not been shown. See Barret Assocs., Inc., 190 ___ _____________________
N.E.2d at 868 (noting that the first element is that "defendant
made a false representation of a material fact"). We disagree.
There can be no doubt that the statements were misrepresentations
in terms of the past history of the property: stating that it is
a "good station" ignores the fact that there was a 2,000 gallon
spill. It may have been a "good station" in 1979, from Sun's
perspective: the spill had been cleaned up in accordance with
the requirements of the time, and there is no evidence of other
problems. Nonetheless, there had been a problem in the past, and
to omit that was to misrepresent the situation. The district
court found that the fact was material, as it gave credence to
Damon's testimony that his affiliation with a car dealership
which sold gasoline gave him a general awareness of the growing
importance of environmental issues, and that he would not have
bought the station had he been aware of the spill. Thus, the
statements by the Sun representatives were certainly "'one of the
principal grounds, though not necessarily the sole ground, that
-24-
caused the plaintiff[s] "to take the particular action that the
wrongdoer intended he would take as a result of such
representations."'" Bond Leather Co., 764 F.2d at 936 (quoting ________________
National Car Rental Sys., Inc. v. Mills Transfer Co., 384 N.E.2d _______________________________ __________________
1263 (Mass. App. Ct. 1979) (quoting National Shawmut Bank v. ______________________
Johnson, 58 N.E.2d 849 (Mass. 1945))). While this testimony is _______
undoubtedly in Damon's interest, the district court's credence in
that testimony has not been shown to be in error. See O'Brien, ___ _______
780 F.2d at 1076. Finally, we have already established that
these were factual statements. Thus, the statements were
misrepresentations of material facts.
Sun tries to fend off this conclusion by pointing out
that "[s]ellers . . . are not liable in fraud for failing to
disclose every latent defect known to them which reduces
materially the value of the property and of which the buyer is
ignorant." Nei v. Burley, 446 N.E.2d 674, 676 (Mass. 1983). ___ ______
However, it is well established that "in Massachusetts . . . a
party who discloses partial information that may be misleading
has a duty to reveal all the material facts he [or she] knows to
avoid deceiving the other party." V.S.H. Realty, Inc. v. Texaco, ___________________ _______
Inc., 757 F.2d 411, 415 (1st Cir. 1985); cf. Nei, 446 N.E.2d at ____ ___ ___
676 (finding no misrepresentation where seller "did not convey
half truths . . . [or] make a partial disclosure of the kind
which so often requires a full acknowledgement to avoid
deception"). Accordingly, we find Maxwell v. Ratcliffe, 254 _______ _________
N.E.2d 250, 252 (Mass. 1969), analogous to the Damons' position.
-25-
In that case, potential buyers of a house asked whether the
cellar was dry, and the brokers represented that it was, when
they had, or should have had, knowledge that there was periodic
water seepage. The Court found that "because the question of the
dryness of the cellar had been raised expressly, there was
special obligation on the brokers to avoid half truths and to
make disclosure at least of any facts known to them or with
respect to which they had been put on notice." Id. at 252-53; ___
see Greenery Rehabilitation Group, Inc. v. Antaramian, 628 N.E.2d ___ ___________________________________ __________
1291, 1294 (Mass. App. Ct. 1994) (noting, inter alia, that buyers __________
did not request financial information about tenant from seller in
finding that situation was not a case of partial disclosure).
Sun also seeks support from the fact that Damon signed
an agreement representing that he had inspected the property and
would indemnify Sun from and against liability for violation of
environmental laws. However, "Massachusetts case law
unequivocally rejects assertion of an 'as is' clause as an
automatic defense against allegations of fraud." V.S.H. Realty, ______________
Inc., 757 F.2d at 418 (noting also that Uniform Commercial Code ____
2-316, which allows disclaimers in the sale of goods between
merchants, does not preclude claims based on fraud); see Turner ___ ______
v. Johnson & Johnson, 809 F.2d 90, 95-98 (1st Cir. 1986) __________________
(discussing basis and limits of Massachusetts rule that parties
may not contract out of fraud). Nei v. Burley, which Sun cites, ___ ______
offers it no support. There, the court relied on the absence of
a duty to disclose the latent defect, not the fact that the
-26-
sellers provided the buyers with test results, in finding there
had been no tort of fraud. 446 N.E.2d at 676-77.
Sun challenges the evidentiary basis for a second
element, that the party making the representation have knowledge
of its falsity. See Barret Assocs., Inc., 190 N.E.2d at 868. ___ _____________________
Clearly Laubinger knew of the 1974 spillage -- he had been on the
property during the clean-up, and was able to testify in some
detail about the event. It stretches credence to posit that he
would not have knowledge of the falsity of stating that it was a
good station when asked about past problems. There is no
evidence that Bunzell had actual knowledge. However, under
Massachusetts law, the party making a misrepresentation "need not
know that the statement is false if the fact represented is
susceptible of actual knowledge." VMark Software, Inc., 642 _____________________
N.E.2d at 593 n.9; see Snyder v. Sperry and Hutchinson Co., 333 ___ ______ __________________________
N.E.2d 421, 428 (Mass. 1975); Zimmerman v. Kent, 575 N.E.2d 70, _________ ____
74 (Mass. App. Ct. 1991). The district court found that while
inspecting the station Damon asked Bunzell about a depression in
the blacktop, and whether there had been any problems with the
underground storage tanks, to which Bunzell replied "No, we've
had no problems with it. It's all good." This is clearly a
misstatement of facts "susceptible of actual knowledge" --
indeed, Bunzell's name was listed on the "For Sale" sign at the
station: presumably, it would be his responsibility to be
informed about the history of the particular station he was
selling.
-27-
Relying on an Odometer Act case applying Georgia law,
see Huycke v. Greenway, 876 F.2d 94, 95 (11th Cir. 1989), Sun ___ ______ ________
next argues that the Damons did not meet their burden of proving
intent to defraud. In fact, however, "Massachusetts law does not
. . . require an intent to deceive, let alone an intent to
deprive the plaintiff of money, to prove misrepresentation."
Bond Leather Co., 764 F.2d at 937 (citation omitted). ________________
"[A] long line of [Massachusetts] cases
[establishes] that 'the charge of
fraudulent intent, in an action for
deceit, may be maintained by proof of a
statement made as of the party's own
knowledge, which is false; provided the
thing stated is not merely a matter of
opinion, estimate or judgement, but is
susceptible of actual knowledge; and in
such a case it is not necessary to make
any further proof of an actual intent to
deceive.'"
Sperry, 333 N.E.2d at 428 (quoting Powell v. Rasmussen, 243 ______ ______ _________
N.E.2d 167, 168 (1969) (quoting Chatham Furnace Co. v. Moffat, 18 ___________________ ______
N.E. 168, 169 (Mass. 1888))); see Roadmaster Indus., Inc. v. ___ ________________________
Columbia Mfg. Co., 893 F. Supp. 1162, 1176 (D. Mass. 1995); ___________________
Zimmerman, 575 N.E.2d at 74.2 The Damons have met this burden _________
of showing that the Sun representatives made a misrepresentation
of facts susceptible of actual knowledge, and so they have met
____________________
2 While the decision Bond Leather Co. v. Q.T. Shoe Mfg. Co. _________________ ___________________
notes that, contrary to Sun's contention, an intent to deceive
need not be proven, it also reads Sperry as requiring an "intent ______
that the plaintiff rely on the challenged false statements." 764
F.2d at 937. We have found no case law supporting that
contention. Nonetheless, we note that it is a reasonable
inference that the representations made by Sun's representatives
to a known potential buyer were made with the intent that the
Damons rely on the statements.
-28-
their burden as to intent.
Sun maintains that the district court failed to find
that Sun intended the plaintiffs to rely on the
misrepresentations.3 Federal Rule of Civil Procedure 52(a)
mandates that courts "find the facts specially and state
separately [their] conclusions of law thereon" when trying facts
without a jury. See, e.g., Monta ez v. Bagg, 510 N.E.2d 298, 300 ___ _____ ________ ____
(Mass. App. Ct. 1987) (noting that judge did not make detailed
findings of fact regarding chapter 93A claims under Mass. R. Civ.
P. 52(a)). However, "the judge need only make brief, definite
pertinent findings and conclusions on the contested matters."
Makuc v. American Honda Motor Co., 835 F.2d 389, 394 (1st Cir. _____ _________________________
1987). Here, while it did not explicitly discuss intent, the
district court set out the elements of the tort of
misrepresentation, and found that Sun's representatives made the
statements, that they were not opinions, and that Laubinger at
least knew about the spill when he made his statement. In short,
although the district court did not spell out every pertinent
point, it is clear that it has provided us with more than mere
____________________
3 Sun contests that the district court's statement that "it
should have been clear from Damon's questions that he was
concerned about the past and future integrity of the entire
underground gas delivery system" (District Court Findings of Fact
and Conclusions of Law, at 7 n.1), implies that Sun did not in
fact know what Damon asked about, and so no intent is
demonstrated on this record. However, we refuse Sun's invitation
to read this implication into the district court's statement,
especially as, in its findings of fact, the district court
specifically found that Damon had asked each of the
representatives about past conditions, particularly regarding the
underground tanks.
-29-
conclusions.
C. Reasonable Reliance C. Reasonable Reliance ___________________
Sun's final attack on the evidence centers on the
element of reasonable reliance. See Elias Bros. Restaurants v. ___ _______________________
Acorn Enters., 831 F. Supp. 920, 922 (D. Mass. 1993) (noting that _____________
the reliance element of the tort has been defined as requiring
that it be reasonable). First, it states that the district court
was silent on reasonable reliance. To the contrary, although it
did not address the reasonableness of the reliance, the district
court found that Damon "would not have purchased the station for
$90,000 if he had been aware of the 1974 spill." (District Court
Findings of Fact and Conclusions of Law, at 8).
Sun points to the fact that the Damons had the right to
inspect the property prior to sale and did not do so as vitiating
any argument of reasonable reliance, especially given Damon's
acknowledged awareness of environmental issues. However, it is
well established under Massachusetts law that "failure to
investigate the veracity of statements does not, as a matter of
law, bar recovery for misrepresentation." Bond Leather Co., 764 ________________
F.2d at 936. To find that the Damons' failure to investigate
effectively bars their claim, as Sun requests, would run counter
to the established case law on that point. "Only reliance on
'preposterous or palpably false' representations vitiates a
misrepresentation claim." Roadmaster Indus., Inc., 893 F. Supp. ________________________
at 1179 (quoting Zimmerman, 575 N.E.2d at 76). Sun's _________
representations cannot be so characterized.
-30-
Sun's reliance on Maloney v. Sargisson, 465 N.E.2d 296 _______ _________
(Mass. App. Ct. 1984), is misplaced. There, the Maloneys bought
property, and subsequently discovered that because of a drain
line to a local reservoir, it could not be built on. Sargisson
was the attorney with whom they entered the purchase and sale
agreement. That agreement was made contingent on the land
passing a percolation test and deep hole test to qualify for a
building permit, with the tests to be done at the buyers'
expense. The tests were done, indicated positive results, and
the sale went through. Later, however, it turned out that the
tests were done at the wrong time of year, and the results of the
second deep hole test were adverse. The Maloneys sued Sargisson
alleging, among other things, misrepresentation. The Appeals
Court found that the Maloneys could not have relied on
Sargisson's statements that "he knew all there was to know about
the property," that they did not need to hire a lawyer, and that
"the lot was a good building lot":
Whatever those alleged statements may be
taken to mean, the Maloneys would not
have relied upon them to their detriment
so far as they might have borne on the
capacity of the lot to pass soil tests .
. . . Concerning that aspect of the
land's character, their affidavit
discloses, the Maloneys made their own
examination.
Id. at 301. ___
Clearly, Maloney is distinguishable from the present _______
case. There, the buyer specified in the agreement that it would
make the tests, and did so. A district court had found that
-31-
there was no evidence Sargisson knew or should have known of the
existence of the problem, a finding which carried weight as prima
facie evidence in the superior court and was not questioned by
the Appeals Court. Id. at 300. There is no indication that ___
Sargisson made a representation as to the status of the soil:
rather, it is clear that the Maloneys relied on their own tests.
Here, the questions went to the past history of the property, not
just the present condition. In short, the reasoning in Maloney _______
is based on a sufficiently different set of facts such that Sun's
reliance on it fails.4 See Roadmaster Indus., Inc., 893 F. ___ ________________________
Supp. at 1179 (holding that plaintiff buyer's failure to
investigate contamination of soil at manufacturing plant as to
matters of public record did not vitiate its misrepresentation
claim).
D. Factual Conclusions D. Factual Conclusions ___________________
Sun makes the additional argument that the district
court made factual findings, where the facts were controverted,
without explaining the reasoning for its determination.5 See ___
____________________
4 Sun's reliance on Rhode Island Hosp. Trust Nat'l Bank v. _____________________________________
Varadian, 647 N.E.2d 1174 (Mass. 1995), a promissory estoppel ________
case, is similarly misplaced. There, the court found that since
the evidence did not warrant a finding that a promise in the
contractual sense was made, reliance by the experienced
businessmen plaintiffs would be unreasonable as a matter of law.
Id. at 1179. We fail to see how that case sheds any light on the ___
misrepresentation charge here, where the court has found that a
misrepresentation was indeed made.
5 Sun also contends that several of the district court's
findings were irreconcilable and contradictory. As we address
those allegations elsewhere in the opinion, we do not discuss
them here.
-32-
Fed. R. Civ. P. 52(a) (mandating that court "find the facts
specially and state separately its conclusions of law thereon"
when trying facts without a jury). "To satisfy the demands of
Rule 52(a), a trial court must do more than announce statements
of ultimate fact. The court must support its rulings by spelling
out the subordinate facts on which it relies." U.S. for the Use ________________
of Belcon, Inc. v. Sherman Constr. Co., 800 F.2d 1321, 1324 (4th ________________ ___________________
Cir. 1986) (vacating decision and remanding where district court
made no finding on extent of plaintiff's responsibilities where
the conflict "turn[ed] upon [the parties'] respective duties").
Our examination of the findings Sun questions reveal no error by
the district court.6
First, Sun questions the credence the district court
placed in Damon's testimony. Specifically, it argues that it
should be provided with an explanation of why the court
"disregarded the uncontroverted testimony of Mr. Damon that the
station, the underground tanks, and the soil was '100% clean' in
1980 when Getty examined the station." (Appellant's Brief, at
40). Sun's phrasing twists the testimony: Damon testified that
Getty told him the soil was clean, not that he knew it to be
true. As we have already noted, Sun has not provided any
evidence that Getty was in fact testing the soil: the district
court specifically found that Getty was testing the tanks for
____________________
6 Two of Sun's contentions, that the district court's findings
are insufficient as to intent and reliance, and that it did not
adequately address the factual basis for Cataldo's exert opinion
on the property's condition, have been addressed elsewhere in the
opinion.
-33-
tightness. The district court stated during closing arguments
that it also did not consider that Damon had made an admission
that the property was clean.
Sun also argues that the court had to explain why it
chose the "version" of his story Damon told at trial, instead of
what it deems "varying" earlier versions under oath, especially
as regards what questions he put to the Sun representatives. Our
review of the record does not indicate that Damon's testimony at
trial was so inconsistent with his earlier testimony as to
constitute "'unsupported self-serving testimony that flies in the
teeth of unimpeachable contradicting evidence and universal
experience.'" Venturelli, 850 F.2d at 833 (quoting Insurance Co. __________ _____________
of North Am. v. Musa, 785 F.2d 370, 374-75 (1st Cir. 1986)). _____________ ____
Indeed, the district court stated that it did not "look upon them
as being that different. There are differences, there's no
question, but the extent of the differences is a difficult
question, it strikes me." (Day 4, page 17).
Lastly, Sun contends that the court did not provide an
evidentiary basis for its conclusion, made in a footnote, that
"it should have been clear" to Sun what Damon meant in his
questioning. The findings here, however, are not like the
inconsistent and contradictory findings in Lyles v. United _____ ______
States, 759 F.2d 941, 944 (1st Cir. 1985), cited by Sun. The ______
court here specifically stated in its findings of fact that Damon
asked both Laubinger and Bunzell about past problems. In
connection with its comment that Sun's representatives should
-34-
have understood the scope of Damon's questions, the district
court cited his testimony that "the only thing you've got in a
gas station is tanks and pumps and the lines. I mean, what else
is there?" (District Court Findings of Fact and Conclusions of
Law, at 7 n.1). A "judge need only make brief, definite
pertinent findings and conclusions on the contested matters."
Makuc v. American Honda Motor Co., 835 F.2d 389, 394 (1st Cir. _____ ________________________
1987). The district court met its burden here.
CALCULATION OF DAMAGES CALCULATION OF DAMAGES
The district court calculated the damages for the tort
claim as $245,000, the difference between the actual value of the
Damon's property if it was uncontaminated -- $600,000 -- as the
defendant's representatives stated and the actual value of the
property as contaminated -- $325,000 -- as measured when the
plaintiffs sold the property to Rooney in 1992.7 Sun does not
contest the district court's basic measurement, but argues that
it should have set off specific monies against the purchase
price, and should have accounted for the Damons' obligation to
mitigate damages. We disagree, for the following reasons.
First, Sun contends the value of the indemnity Rooney
gave the Damons from and against all environmental liability,
which it suggests is approximately $104,000, should have been set
____________________
7 Adopting the sale price suggested by Rooney's gasoline
supplier, the district court found the fair market value of the
property if it had been not been contaminated to be $600,000. It
took the actual sale price as the measure of the value of the
property as contaminated: Rooney assumed the $325,000 of the
Damons' first and second mortgages, $10,000 in arrears, and made
a $20,000 cash payment, for a total of $355,000.
-35-
off against the purchase price. However, as the Damons point
out, if Sun had not made the misrepresentation, the Damons would
not be responsible to clean up the mess. Had the Damons cleaned
up the property themselves, they would be entitled to
reimbursement, and, presumably, the sale price of the property
would have been higher: reducing the damages by the value of the
indemnity would virtually reverse this process. Second, Sun
argues that $40,000 should be taken off the damage figure, as the
Damons did not give Rooney $40,000, as they were required to per
their agreement, to defray costs of contamination. Again, if
Sun's representatives had not misrepresented the property's
condition, the Damons would not have owed that money to Rooney;
if they had paid it to Rooney, it would have been added to, not
offset against, the damages (and presumably would be reflected in
the actual sale price). Third, Sun argues that $29,000 in back
rent from Rooney should have been offset as well, since the
Damons did not seek it from him. However, once again, the
plaintiffs would not have lost that money without the
misrepresentation. Also, according to paragraph 9 of the
Agreement and Lease, Rooney was entitled to opt out of his lease
if a governmental authority prevented him from occupying or using
the property as a gasoline station. Thus, it is unclear that
Rooney did, in fact, owe the past rent.
Sun also argues that the Damons failed to mitigate
their losses by not seeking back rent from Rooney. In light of
the terms of the Agreement and Lease between Rooney and the
-36-
Damons, the fact that the Damons were obligated to pay Rooney
$40,000, which they did not, and the subsequent sale of the
property, we are hard put to accept their reasoning.
For the above reasons, the district court's
determination of damages is affirmed.
CHAPTER 93A CLAIMS CHAPTER 93A CLAIMS
The district court found that Sun's actions were
"unfair or deceptive" and thus violated Massachusetts General
Laws chapter 93A, section 11. At the same time, the lower court
refused to award multiple damages under section 11, on the basis
that "the evidence of bad faith or willful intent to deceive
[was] insufficient to merit a punitive award." (District Court
Findings of Fact and Conclusions of Law, at 12). See Mass. Gen. ___
L. ch. 93A, 11 (allowing multiple damages if "the use or
employment of the . . . act or practice was . . . willful or
knowing"). Sun argues on appeal that the court erred in finding
it violated chapter 93A, while the Damons contend that the court
erred in refusing multiple damages. For the reasons discussed
below, we affirm the district court's finding that Sun was liable
under chapter 93A, as well as its refusal of multiple damages.
A. Sun's Liability Under Chapter 93A A. Sun's Liability Under Chapter 93A _________________________________
1. Standard of Review 1. Standard of Review __________________
We begin our analysis by reciting our standard of
review. The district court's findings of law face de novo ________
review, and its findings of fact engender clear error review.
See Industrial Gen. Corp. v. Sequoia Pacific Sys. Corp., 44 F.3d ___ _____________________ __________________________
-37-
40, 43 (1st Cir. 1995). We deem a finding of fact to be clearly
erroneous "'when although there is evidence to support it, the
reviewing court on the entire evidence is left with the definite
and firm conviction that a mistake has been committed.'" Id. at ___
43 (quoting Anderson v. City of Bessemer City, 470 U.S. 564, 573 ________ ______________________
(1985) (citation omitted)).
-38-
2. The Legal Framework 2. The Legal Framework ___________________
The district court found that Sun's actions were
"unfair or deceptive" within the scope of chapter 93A. Section
11 provides a cause of action to
[a]ny person who engages in the conduct
of any trade or commerce and who suffers
any loss of money or property, real or
personal, as a result of the use or
employment of another person who engages
in any trade or commerce of . . . an
unfair or deceptive act or practice
. . . .
Mass. Gen. L. ch. 93A, 11; see Mass. Gen. L. ch. 93A, 2 ___
(establishing that "unfair or deceptive acts or practices in the
conduct of any trade or commerce" are unlawful). Common law
misrepresentation claims provide a basis for liability under
section 11. See, e.g., Sheehy v. Lipton Indus., Inc., 507 N.E.2d ___ ____ ______ ___________________
781, 785 (Mass. App. Ct. 1987).
Section 11 does not define what conduct rises to the
level of an "unfair or deceptive" act. See Cambridge Plating ___ __________________
Co., slip op. at 38-39. In weighing whether a defendant's ___
conduct meets the statute's requirements, "a common refrain has
developed. 'The objectionable conduct must attain a level of
rascality that would raise an eyebrow of someone inured to the
rough and tumble of the world of commerce.'"8 Quaker State Oil ________________
____________________
8 The Damons argue that in Massachusetts Employers Ins. Exch. v. __________________________________
Propac-Mass, Inc., 648 N.E.2d 435 (Mass. 1995), the SJC abandoned _________________
the "rascality test" in stating that it "view[s] as uninstructive
phrases such as 'level of rascality' and 'rancid flavor of
unfairness'." Id. at 438. Contrary to the Damons' ___
interpretation, the SJC was simply recognizing that the mentioned
phrases do not, despite their frequent citation, lend much
guidance in the fact-specific context of a chapter 93A claim.
-39-
Ref. Corp. v. Garrity Oil Co., 884 F.2d 1510, 1513 (1st Cir. __________ ________________
1989) (quoting Levings v. Forbes & Wallace Inc., 396 N.E.2d 149, _______ _____________________
153 (Mass. App. Ct. 1979)). In other words,
a chapter 93A claimant must show that the
defendant's actions fell "within at least
the penumbra of some common-law,
statutory, or other established concept
of unfairness," or were "immoral,
unethical, oppressive or unscrupulous"
. . . .
Id. (quoting PMP Assocs., Inc. v. Globe Newspaper Co., 321 N.E.2d ___ _________________ ___________________
915, 917 (Mass. 1975)); see Tagliente v. Himmer, 949 F.2d 1, 7 ___ _________ ______
(1st Cir. 1991). As the SJC recently stated, in weighing an
act's fairness, the focus is "on the nature of the challenged
conduct and on the purpose and effect of that conduct as the
crucial factors." Massachusetts Employers Ins. Exch., 648 N.E.2d __________________________________
at 438.
3. Sun's Violation of Chapter 93A 3. Sun's Violation of Chapter 93A ______________________________
In its challenge to the district court's finding that
Sun is liable under section 11, Sun maintains that its conduct
was not "unfair or deceptive." However, its argument on that
basis is conclusory at best: Sun points to neither evidence in
the record nor case law which would cast into doubt the district
court's factual determination on that point.9 As neither Sun
____________________
See Cambridge Plating Co., slip op. at 39. ___ _____________________
9 Sun does cite to evidence that Damon was a businessmen who had
sold gasoline and used underground storage tanks for some thirty
years prior to buying the property, but only to maintain that the
court must apply a "heightened standard of an unfair or deceptive
act or practice." We remind Sun that "[s]ophistication of the
parties is not mentioned in chapter 93A and the amendment of
chapter 93A to cover business entities did not limit the
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nor our review of the record provides us with grounds to find the
district court erred, we affirm the lower court's application of
section 11. See Schwanbeck v. Federal-Mogul Corp., 578 N.E.2d ___ __________ ___________________
789, 803 (Mass. 1991) (noting that "whether a particular set of
acts, in their factual setting, is unfair or deceptive is a
question of fact"), rev'd on other grounds, 592 N.E.2d 1289 ________________________
(Mass. 1992).
Sun does look to Winter Panel Corp. v. Reichhold ___________________ _________
Chems., Inc., 823 F. Supp. 963 (D. Mass 1993), for support. _____________
There, plaintiff alleged that the defendant chemical supplier
made false statements about its ability to supply the plaintiff
with chemicals. Sun acknowledges that the Winter Panel court ____________
noted that "[k]nowing non-disclosure of information necessary to
make affirmative statements complete or non-misleading will give
rise to an action for misrepresentation, including an action
under chapter 93A." Id. at 975. Sun nonetheless seeks to save ___
itself from liability by reliance on the court's additional
statement that "[s]imply neglecting to discuss [defendant's
representatives'] lack of practical experience with the precise
methods of production pursued by Winter Panel, however, does not
at present seem to be the kind of knowing omission that achieves
____________________
statute's protection to small, unsophisticated businesses."
V.S.H. Realty, Inc. v. Texaco, Inc., 757 F.2d 411, 418 (1st Cir. ____________________ ____________
1985). Regardless of the level of the parties' sophistication,
we apply the well-developed standard for section 11 actions
between two persons engaged in business. Of course, their
relative levels of sophistication may enter into the fact-based
analysis the court carries out in weighing whether a party's act
was unfair or deceptive.
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the level of rascality necessary to find a violation of chapter
93A." Id. As we have already affirmed the district court's ___
finding of misrepresentation, it is manifest that Sun's acts sink
below the level of "simply neglecting to discuss" the 1974
contamination. Winter Panel offers Sun no relief. ____________
Sun's primary argument against the district court's
holding blurs the line between section 11 liability and multiple
damages.10 Specifically, it contends that since the district
court apparently found Sun's conduct was not willful and knowing,
Sun cannot have engaged in common law fraud. Since it could not
have engaged in fraud, it concludes, its conduct did not rise to
the level of intentional misconduct, beyond mere negligence or
inadvertence, that section 11 demands.
We disagree. As noted above, the district court
refused to award multiple damages here on the basis that
[m]ultiple damages are not mandated when
misrepresentation occurs. Only "callous
and intentional violations" deserve
multiple damages treatment. In this
instance, we believe the evidence of bad
faith or willful intent to deceive is
insufficient to merit a punitive award of
multiple damages.
____________________
10 Sun also makes the circular argument that if its conduct
amounts to negligence, it has not met the requirement of
rascality needed for section 11, since negligence cannot be the
basis for a section 11 violation. To the contrary, negligence
can provide the basis for chapter 93A liability, so long as it is
paired with an unfair or deceptive act or practice -- in other
words, negligence plus rascality equals liability. See Squeri, ___ ______
588 N.E.2d at 24; Glickman v. Brown, 486 N.E.2d 737, 741 (Mass. ________ _____
App. Ct. 1985); see, e.g., Briggs v. Carol Cars, Inc., 553 N.E.2d ___ ____ ______ ________________
930 (Mass. 1990) (upholding application of sections 2 & 9 of
chapter 93A where defendant made reckless misrepresentation).
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(District Court Findings of Fact and Conclusions of Law, at 12
(citations omitted)). As Sun itself indicates, reading the
district court opinion as finding that Sun was not at all knowing
or willful is inconsistent with the first element of the tort of
misrepresentation, i.e. that a party make a false representation
with the knowledge of its falsity. See Barret Assocs., Inc., 190 ___ ____________________
N.E.2d at 868. We understand the district court opinion as
indicating that there was evidence of bad faith and willful
intent to deceive, but that some quantum of knowing or willful
violation must be met before a party is entitled to punitive
damages under chapter 93A. Indeed, "shades of culpability are
supposed to matter in applying the punitive damages provision in
the statute." Cambridge Plating Co., slip op. at 42. Our ______________________
reading is consistent with the district court's specific finding
that when Damon asked Laubinger if Sun had experienced any
problems with the station and underground tanks, Laubinger
replied that it was a "good station," despite his knowledge of
the 1974 contamination. Cf. VMark Software, 642 N.E.2d at 596 ___ ______________
n.15 ("We put great stock in the findings of the trial judge on
issues such as intent and motivation, since he was in a superior
position to assess the weight and credibility of the witnesses,
and there is no showing that his findings were clearly
erroneous.").
The case law supports this reading. In VMark Software, _______________
Inc. v. EMC Corp., cited by the district court, the trial court ____ _________
found VMark guilty of misrepresentation, but did not grant EMC
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multiple damages under section 11. EMC claimed that the scienter
requirement for the tort of misrepresentation automatically
triggered section 11's mandatory doubling of damages for a
knowing violation of chapter 93A. The court disagreed, finding
that although VMArk's misstatements were made with sufficient
awareness of the facts for it to be liable under the traditional
tort formula, "they were not made so 'knowingly' as to warrant
the punitive sanctions of double damages under c. 93A." Id. at ___
595. We recently reaffirmed that "[l]iability under Chapter 93A
for conduct amounting to intentional misrepresentation does not
automatically trigger punitive damages. There must be something
more." Cambridge Plating Co., slip op. at 42. Accordingly, the _____________________
district court's conclusion that Sun's actions were not knowing
and willful enough to require punitive damages is not
inconsistent with intentional misrepresentation.
4. Multiple Damages Under Chapter 93A 4. Multiple Damages Under Chapter 93A __________________________________
Paragraph 5 of section 11 provides for multiple damages
where "the court finds that the use or employment of the . . .
act or practice was a willful or knowing violation." The Damons
argue that they should have been granted multiple damages, but do
not contend that the district court should have found Sun's
violation sufficiently willful or knowing to require double
damages.11 Instead, they base their position on the premise
____________________
11 In their statement of conclusions, the Damons do posit that
we should conclude that the district court's indication that Sun
was guilty of some level of bad faith or willful intent to
deceive suffices to require multiple damages under section 11,
para. 5. However, as they offer no support for this contention,
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that we should essentially read into section 11 the provision of
section 9 which awards multiple damages for a defendant's bad
faith refusal to make a reasonable settlement offer after
demand.12 Their argument relies on the fact that sections 9
____________________
we deem it waived. See United States v. Zannino, 895 F.2d 1, 17 ___ _____________ _______
(1st Cir.) ("[W]e see no reason to abandon the settled appellate
rule that issues adverted to in a perfunctory manner,
unaccompanied by some effort at developed argumentation, are
deemed waived."), cert. denied, 494 U.S. 1082 (1990). ____________
12 That section provides, in pertinent part:
Any person receiving . . . a demand for
relief who . . . makes a written tender
of settlement which is rejected by the
claimant may, in any subsequent action,
file the written tender and an affidavit
concerning its rejection and thereby
limit any recovery to the relief tendered
if the court finds that the relief
tendered was reasonable in relation to
the injury actually suffered by the
petitioner. In all other cases, if the
court finds for the petitioner, recovery
shall be . . . up to three but not less
than two times [actual damages] if the
court finds that . . . the refusal to
grant relief upon demand was made in bad
faith with knowledge or reason to know
that the act or practice complained of
violated said section two.
Mass. Gen. L. ch. 93A, 9(3). By comparison, section 11 states,
in pertinent part:
The respondent may tender with his answer
. . . a written offer of settlement for
single damages. If such tender or
settlement is rejected by the petitioner,
and if the court finds that the relief
tendered was reasonable in relation to
the injury actually suffered by the
petitioner, then the court shall not
award more than single damages.
Mass. Gen. L. ch. 93A, 11.
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and 11 share the goal of promoting reasonable settlement offers.
See International Fidelity Ins. Co. v. Wilson, 443 N.E.2d 1308, ___ ________________________________ ______
1318 (Mass. 1983). According to this logic, to further the
statute's goals we should punish defendants who are liable under
section 11 and who do not offer single damages with their Answer
by inflicting multiple damages on them, and reward those who do
with single damages.
We have previously noted that "[i]t is unclear whether
section 11 permits recovery of multiple damages under such a
theory where bad faith is proved." Southworth Mach. v. F/V Corey ________________ _________
Pride, 994 F.2d 37, 40 (1st Cir. 1993). Nonetheless, we do not _____
hesitate in refusing the Damons' argument. First, we note that
section 9 is by its terms inapplicable to transactions between
persons engaged in business, and section 11 quite simply does not
include language acting as a counterpart to section 9's
requirement of multiple damages where a party does not make a
written tender of settlement. See id. Second, we note that, ___ ___
although it shares specific goals with section 9, "[s]ection 11
provides a different procedure for achieving the same objectives
of facilitating settlement and fixing damages." Nader v. Citron, _____ ______
360 N.E.2d 870, 874 (Mass. 1977). Indeed, the Massachusetts and
federal courts have consistently respected the differences in
procedures between the two sections. See, e.g., Fickes v. Sun ___ ____ ______ ___
Expert, Inc., 762 F. Supp. 998, 1001 (D. Mass. 1991); Aetna _____________ _____
Casualty and Surety Co. v. State Park Ins. Agency, Inc., 428 _________________________ ______________________________
N.E.2d 376, 377 (Mass. App. Ct. 1981); see also Glickman, 486 _________ ________
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N.E.2d at 742 & n.7 (refusing to analyze section 11 damages in
terms of defendants' response to plaintiffs' demand letter).
"Whatever the merits of implying the demand letter scheme of 9
into 11, as urged by defendants, we find no support for such
implication in the language and structure of 11." Nader, 360 _____
N.E.2d at 874. Finally, we note that the district court did not
find that Sun's failure to tender an offer of settlement was
"made in bad faith with knowledge or reason to know that the act
or practice complained of violated said section 2," as section 9
demands, and the Damons have not demonstrated any evidence to the
contrary. Thus, even if we were to weigh Sun's failure to tender
an offer into our analysis, the Damons' challenge to the court's
damage award would fail.
Our decision today does not clash with the SJC's
decision in International Fidelity Ins. Co., despite the Damons' ________________________________
reliance on it. There, the SJC weighed the goal of promoting
reasonable settlements in both sections 9 and 11, and found that
it would be appropriate to impose independent liability against
the multiple defendants in that case, as to do so would promote
settlements. 443 N.E.2d at 1318. At the same time, however, the
Court noted that "the procedures set out in the two sections
differ," despite their common goal. Id. (citing Nader, 360 ___ _____
N.E.2d at 870). Thus, we read International Fidelity Ins. Co. ________________________________
not as suggesting we read the damage provisions of section 9 into
section 11, but as recognizing that their goals are similar while
their methods are not. See Levings v. Forbes & Wallace, Inc., ___ _______ ______________________
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396 N.E.2d 149, 153 (Mass. App. Ct. 1979) ("The remedies and
procedures in 9 and 11 are related, but not parallel, and the
conditions of one section should not be read by implication into
the other."); Nader, 360 N.E.2d at 874 (noting that "analogies, _____
whatever their utility, do not form a basis for the judicial
rewriting of statutes" in refusing to read section 9's demand
letter procedure into section 11).
ATTORNEY'S FEES ATTORNEY'S FEES
The district court awarded the Damons $40,620.40 in
attorney's fees and costs. See Mass. Gen. L. ch. 93A, 11 para. ___
6 (mandating reasonable attorney's fees and costs be awarded
where the court finds a violation of 2). Sun argues that the
award was not reasonable, on the basis that the hourly rates
granted (specifically, the rate of $235 an hour for court
appearances and depositions) were exorbitant and unreasonable,
and the contingency nature of the engagement. Based on our
review of the record, we do not find the court's award
unreasonable.
CONCLUSION CONCLUSION
For the reasons discussed above, we find that the
district court's refusal of Sun's motion for entry or judgment
and motions to alter and amend the judgment and findings and for
a new trial were not an abuse of its discretion. Having
considered all the parties' arguments, we find both appeals to be
lacking in merit. Consequently, we affirm the decision of the ______
district court on all points.
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No costs on appeal to either party.
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