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14

- P

- 1010 Appeals Court

DIANE SAIA 1 vs . BAY STATE GAS CO MPANY .

No. 14

- P

- 1010. Suffolk. April 15, 2015.

- December 15 , 2015. Present: Cohen, Wolohojian, & Maldonado, JJ.

Massachusetts Retail Instalment Sales Act
. Massachusetts Consumer Credit Cost Disclosure Act
. Consumer Protection Act , Class action. Practice, Civil , Summary judgment. Contract , Lease of equipment.

C ivil action commenced in the Superior Court Department on November 2, 2010. After review by this court, 81 Mass. App. Ct. 1127 (2012) , t he case was heard by Janet L. Sanders , J., on motions for summary judgment.

Valeriano Diviacchi for the plaintiff
. J. Christopher Alle n, Jr . ( Troy Lieberman with him) for the defendant
.
MALDONADO, J. The plaintiff appeals from a judgment of dismissal contending , as she did below, that a transaction

1 Individually and as a representative of other persons similarly situated.2

involving the leas e of a water heater was actually a credit sale in disguise, and, consequently, that the defendant's failure to make certain required discl osures amounted to common

- law misrepresentation and a violation of G. L. c. 93A. Guided by Silva v. Rent

- A

- Center, Inc ., 454 Mass. 667 (2009) ( Silva ) , a Superior Court judge concluded that the transaction at issue did not meet the definition of either a " credit sale" under the Consumer Credit Cost Disclosure Act (CCCDA), G. L. c. 140D, § 1, or a "retail installment sale ag reement" under the Retail
Insta lment Sales and Services Act (RISSA), G. L. c. 255D, § 1, and, accordingly, granted summary judgment in favor of the defendant. We agree and affirm
. Background . In July , 2010, the plaintiff , Diane Saia, entered into an agreement with the defendant, Bay State Gas
Co mpany (Bay State), for the installation of a new water heater at her home in Longmeadow. The plaintiff signed a document entitled "Appliance Lease Agreement," which obligated her to pay $28.16 per month for three years for use of a water heater. The total lease payments for the three

- year "minimum term" amounted to $1,013.76. That amount c ombined with a $220 upfront installation fee brought the plaintiff's total obligation under the agreement to $1,233.76

. At the end o f the minimum term, both the plaintiff and the defendant could cancel the lease at any time upon a thirty

- day written notic e. Absent the written3

cancellation notice, the lease could continue indefinitely. The plaintiff was also given the option to purchase the water heater at any time during the lease (i ncluding within the minimum
term ). Under this buyout option, the purch ase price was the greater of two amounts: (1) the sum of one

- half of the paid lease payments subtracted from a "total installed price" of $1,510.87, 2 or (2) $75. After making thirteen lease payments totaling $366.08, the plaintiff chose to exercise the p urchase option and paid an additional $1,381.66 pursuant to the contract buyout formula. 3 Addi ng together the lease payments, the upfront installation fee, the buyout price, and the sales tax, the plaintiff spent a total of $1,967.74 to take ownership of
the water heater. On November 10, 2010, the plaintiff filed a four

- count amended class action complaint asserting misrepresentation (Count I), violations of G. L. c. 93A (Count II), unjust enrichment (Count III), and seeking rescission on the basis t hat

2 While not defined in the written agreement, the total installed price reflected the wholesale cost of the heater plus a markup, the labor costs for installation, and the defendant's operating and m aint enance costs. The price to purchase the water heate r from the defendant up front instead of leasing it would have been similar to the "total installed price."

3 Applying the buy out formula, the total rental payments of $366.08 w ere divided by two (one half of the total lease payments paid to date). The resulting figure of $183.04 was then subtracted from the total installed price of $1,510.87 for a resulting buyout purchase price of $1,327.83, to which $53.83 in sales tax was added for a sum total of $1,381 .66.4

the defendant had violated G. L. c. 93, § 48 (Count IV). A Superior Court j udge dismissed the entire complaint for failure to state a claim pursuant to Mass.R.Civ.P 12(b)(6) , 365 Mass. 754 (1974). This c ourt, in an unpublished decision pursuant to Ap peals Court Ru le 1:28, affirmed the dismissal of counts II I and I V and reversed the dismissal of the remaining claims which, resting on the CCCDA and the defendant's failure to disclose interest charges, alleged common

- law misrepresentation and a violation of G. L. c. 93A. Saia v. Bay State Gas Co ., 81 Mass. App. Ct. 1127 (2012) ( Saia I )
. 4 Following remand on the reinstate d counts , the judge entered summary judgment in favor of the defendant on the plaintiff's amended complaint, and the pla intiff timely f iled her appeal. Summary j udgment . In reviewing a grant of summary judgment, we consider the evidence in the light most favorable to the nonmoving party and determine whether "all material facts have been established and the moving party is entitled to a judgment as a matter of law." Augat, Inc . v. Liberty Mut. Ins
. Co ., 410 Mass. 117, 120 (1991)
. "We may consider any ground supporting the judgment." Ibid
.

4 In the plaintiff 's amended complaint and in the appeal that followed, t he plaintiff r ested her claim on a n alleged violation of the CCCDA . There was no claim under RISSA . Accordingly, in Sai a I , we did not consider , as w e do now, the effect of RISSA and the Supreme Judicial Court's decision in Silva (interpreting the application of only the RISSA statute to a lease agreement) to her claim
.5

The plaintiff contends the transaction at issue was actually a disguised credit sale or a retai l instal ment sale agreement and, as a result, that the defendant failed to make certain disclosures required by the CCCDA and RISSA. 5 The plaintiff asserts this failure amounts to common

- law misrepresentation and a violation of G. L. c. 93A. The first
st ep in our inquiry, therefore, is to determine whether the
transac tion meets the definition of a credit sale under the
CCCDA or a retail instalment sale agreement under the RISSA.
T he CCCDA defines a credit sale as: "any contract in the form of a bailment or lease if the bailee or lessee contracts to pay as compensation for use a sum substantially equivalent to or in excess of the aggregate value of the property and services involved and it is agreed that the bailee or lessee will become, or for no other or a nominal consideration has the option to become, the owner of the property upon full compliance with his obligations under the contract." G. L. c. 140D, § 1 , inserted by St. 1981, c. 733, § 2. The RISSA similarly defines a retail instalment sale agreement as: "any contract in the form of a bailment or lease if the bailee or lessee contracts to pay as compensation for use a sum substantially equivalent to or in excess of the value

5 Following remand, the plaintiff raised RISSA in a motion seeking partial summary judgment. In granting summary judgment for the defendant , the motion judge addressed the plaintiff's claims under RISSA both because the plaintiff raised RISSA in he r motion, and because RISSA spells out the same disclosure requirements as those specifie d in the CCCDA. See G. L. c. 255D, § 31 (indicating that transactions subject to RISSA are also subject to CCCDA). For the same reasons, we also consider the application of RISSA.6

of goods involved and it is agreed that the bailee or lessee will be come, or for no other or for a nominal consideration has the option to become the owner of the goods upon full compliance with his o bligations under the contract." G. L. c. 255D, § 1 , as appearing in St. 1981, c. 733, § 14. The operational language of th e two statutes is virtually indistinguishable, differing only in the manner in which each describe s the object of the agreement. Th e object of the agreement in a credit sale is defined as "property and services," while it is d efined simply as "goods" for a retail i nsta lment sales agreement
. We nevertheless address each statute separately.
In Silva , the Supreme Judicial Court considered a certified question from a judg e of the U nited S tates District Court for the District of Massachusetts concerning whet her a "consumer lease agreement" for a laptop computer was actually a retail instalment sale agreement in disguise and, therefore, subject to RISSA regulation. Silva , supra at 668. Emphasizing that both requirements of the statute had to be met, the c our t stated that in o rder for a transaction to be a retail instalment sale agreement, the contract must both "obligate the consumer to pay an amount substantially equivalent to, or in excess of [the value of] the goods involved and the consumer must have the option to become the owner for no other or nominal consideration7

on full compliance with his or her contractual obligations."
Id . at 673 n.11. In evaluating a contract under this two

- prong test, the c ourt directs that we look "to the nature of the
contra ct at the time it was formed, focusing on the parties' contractual rights and obligations at that point. See 4 J.J. White & R.S. Summers, Uniform Commercial Code § 30

- 3, at 19 (5th ed. 2002). " Id . at 674. The c ourt also observed that "application of a r egulatory framework does not depend on the economics of hindsight." Ibid
. Applying this analytical framework to the lease agreement into which the plaintiff entered here, we conclude the agreement with B ay State does not qualify as a retail instalment agreement under RISSA
. While it appears that there may be at least a colorable claim that the lease agreement at issue here meets the first prong of the test identified i n Silva , supra at 673 n.11, 6 we

6 Under her lease agreement, the plaintiff was obligated to pay a monthly rental fee, including tax, of $ 28.16 for a minimum term. At the end of the minimum three

- year lease term , the plaintiff would have been obligated to have paid $1 , 013.76 in rental fees , plus an additional upf ront installation fee of $220 for a total contract price of $1,233.76, inclusive of sales tax. Th is figure amount s to about seventy

- five per cent of the stated $1510 install ed price, which is significantly higher than the minimal o ne - week $39 payment required in Silva , supra . Plus, the plaintiff asserts that $1510 is an inflated price for a water heater. A ccording to the plaintiff , the actual price of an install ed water heater is $1200, and the defendant does not dispute that ther e is arguably a factual question regarding the installed price, which, according to the plaintiff, results in a sum "substantially equivalent to or in excess of the value" of the water heater. See Silva , supra at 674. Without conceding8

nevertheless agree with Bay State that the plaintiff ' s claim fails on the second prong. In order for the plaintiff to take ownership of the water heater at the end of her three

- year lease term, she would have had to make an additional payment of $1,003.99

-- the $1510 install ed price minus $506.88 (one

- half of $1 , 013 7 ) plus tax. That payment, which is nearly two thirds of the $1,510.87 install ed price, is , in the words of the statute, neither "no other" n or "nominal consideration" and, accordingly, precludes a conclusion that the lease agreeme nt at issue h ere constitutes a retail instalment sale agreement under
RISSA. 8 See Silva , supra at 674.

that the first pro ng is satisfied by the three

- year lease term at issue here, the defendant contends that even if that prong was satisfied, the plaintiff's claim fails on the second prong. Ibid
.
7 Three years of monthly rental payments at $28.16.

8 Counterintuitively, the transaction may have qualified as an insta lment sale had the payoff amount been less. In other words, by charging more money, i.e., structuring the deal such that only a small portion of the lease payments w as credited toward the purchase price, the transaction was potentially transformed from a sale to a lease, and fell outside of RISSA ' s consumer protection reach, even though considering the upfront payment, lease payments, and payoff payment, the consumer would have paid approxi mately forty

- six per cent above the $1 , 510 install ed price to take ownership of the water heater. Saia contends that because the agreement involves a long

- term lease of a permanent household fixture, which by its very nature results most often in purchase, extension, or renewal of the lease at the end of the three years, RISSA applies. Stated that way, however, while the agreement may appear to disfavor consumers in that regard, she points to no wording in the statute or any case law that dr aws the distinc tions she urges.9

Bay State now urges that we apply the reasoning of Silva to the plaintiff 's claim under the CCCDA. As noted, Silva addressed t he definition of a retail insta lment sale agreement under RISSA. We agree that the identical language used by the two statutes in defining their respective sales transactions invites application of the same analysis. That approach was recently acknowledged by the United States Court o f Appeals for the First Circuit in a similar case involving a water heater
lease. See Phil i botte v. Nisource Corporate Servs. Co ., 793 F.3d 159, 167 (1st Cir. 2015). The c ourt noted, however, that the Supreme Judicial Court ha d not yet spoken to the appl ication of Silva in the CCCDA context. Id . at 1 66
. Instead , t he c ourt reasoned that the plaintiff's lease in that case failed to meet the first prong of the CCCDA definition for a credit sale and
. thus , the c ourt did not address whether Silva required th e same result. See Philibotte v. Nisource Corporate Servs. Co ., supra at 1 6 7 ("We need not, and so should not, reach that issue because Philibotte's claim plainly fails to meet the first prong of the CCCDA definition"). In light of Phil i botte v. Nisource Corporate Servs. Co ., supra , and the arguments raised in this appeal, we are now persuaded that Silva 's interpretation of the definition of a retail installment sale under RISSA should apply as well to the CCCDA's definition of a credit sale. First , the two statutes10

are expressly connected pursuant to § 31 of RISSA, as appearing in St. 1981, c. 733, § 23 , which provides that "[a] transaction subject to the provisions of this chapter shall also be subject to the provisions of chapter one hundred and forty D . . . ." 9 We interpret this to mean that the statutes should be given the same consideration, so as to achieve their common goal. See generally, May v. SunTrust M ort. , Inc ., 467 Mass. 756, 759 (2014) , quoting from Fidler v. Central Coop. Bank , 226 B.R. 734, 736 (Ba n kr
. D. Mass. 1998) (CCCDA designed "to assure a meaningful disclosure of credit terms" and protect against inaccurate and unfair credit billing); Wilkins, The New Massachusetts Retail Installment Sales Act, 51 Mass. L.Q. 205, 206

- 208 (1966) ( RISSA to provide substantial protection to consumers, including the disclosure of finance charges on obligations paid in more t han one instalment). Furthermore, the two statutes share the same overriding purpose and, with respect to the relevant definitio ns, nearly identical language. Therefore, they should be treated in a consistent manner. 10 That the two statutes are aimed at somewhat

9 Although RISSA was enacted in 1966, § 31 was amended in 1981 to make reference to c. 140D, when the latter went into effect. See St. 1981, c. 733, § 23.

10 A similar approach has been adopted with respect to identical language in the d isclosure requirements of the CCCDA and the Federal Truth in Lending Act (TILA), 15 U.S.C. § 1635. See, e.g., May v. SunTrust M ort ., Inc ., 467 Mass. 756, 75911

different aspects of consumer credit transactions reflects, we believe, the historical development of consumer credit le gislation generally, rather than a legislative intent that their virtually identical provisions be treated differently. See Curran, Legislative Controls as a Response to Consumer

Credit Problems, 8 B.C. Indus. & Com. L. Rev. 409, 419 (1967) (as a result o f piecemeal legislation responding to changes in
the consumer

- credit market, " [ w ] hen regulation of the same subject matter occurs in acts that apply to different classes of arrangements, similarity of treatment may be observed"). For these reasons, in our view, application of Silva 's RISSA analysis to the identical operational language in CCCDA's definition of a credit sale compels the same result. As noted in our discussion under RISSA, we understand full compliance with contractual obligations, under th e second prong of the CCCDA's definition, to mean completion of the three

- year lease term, irrespective of the option to renew. Since the plaintiff could not become the owner of the water heater for nominal consideration at the end of the three

- year term, the lease agreement did not constitute a credit sale under the CCCDA, and Bay State's alleged failure to provide the plaintiff with the
(2014) (interpreting CCCDA consistently with TILA, upon which the State statute was modeled); Rod rigues v. Members M ort . Co ., 323 F. Supp. 2d 202, 210 (D. Mass. 2004) (essentially identical disclosure requirements of the CCCDA and TILA " do not require separate analysis " ).12

disclosures required under the CCCDA did not constitute a violation of c. 93A. Because the parties' transaction involv ing the water heater was neither a credit sale nor a retail instalment sale agreement, Bay State was not obligated to make disclosures pursuant to the CCCDA or RISSA. 11 The lack of statutory disclosure, therefore, cannot serve as the basis for common

- law

m isrepresentation or c. 93A claims. We affirm the entry of summary judgment on that basis. Other matters
. a. Unreviewable claims . The plaintiff also appeals from what she claims is the j udge's denial of her motion to further amend the complaint. On the record before us, however, there is no indication that the judge acted on this motion. Without a ruling on the motion, there is no disposition for us to review. Marcil v. John Deere Indu s. Equip. Co ., 9 Mass. App. Ct. 625, 632 (1980)
. 12

11 The Philibotte case involved the same plaintiff 's counsel and defense counsel , a s well as the same defendant , as in this case. (Nisource was described as doing business as Bay State Gas Co. Philibotte v. Nisource Corporate Servs. Co ., supra at 1 60
. ) It also involved the same general allegations that a transaction involving a water heater was actually a disguised credit sale and that the defendant failed to make the required disclosures. Id . at 161
.

12 The plaintiff also seeks to appeal from the jud ge ' s denial of her motion for a preliminary injunction . In view of our disposition of the case on the merits, we need no t address this claim.13

b
. Motion to v acate . The plaintiff ap peals from the judge's denial of a motion to vacate the dismissal of her unjust enrichment claim, which dismissal we affirmed in Saia I
. The plaintiff cites no au thority, and we know of none, that authorizes the Superior Court to effectively overrule our decision. The plaintiff mistakenly cites the "law of the case" doctrine, see Peterson v. Hopson , 306 Mass. 597, 601

- 602 (1 940) , which has no application in the ci rcumstances presented here.

c . D ismissal of recission claim . Finally, we also reject the plaintiff' s claim that the judge misinterpreted our decision in Saia I by declining to consider her G. L. c. 93, § 48 , claims. In Saia I we expressly affirmed the dismissal of the plaintiff' s claim for rescission of the agreement under G. L.

c. 93, § 48, and the judge d id not err in so concluding. Judgment affirmed
.