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Timestamp: 2019-04-23 18:26:23+00:00

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MCEVOY TRAVEL BUREAU, INC. vs. NORTON COMPANY.
CIVIL ACTION commenced in the Superior Court Department on October 28, 1983.
The case was tried before Robert V. Mulkern, J.
Michael P. Angelini for the defendant.
Daniel F. Featherston, Jr., for the plaintiff.
Donald N. Sweeney, George P. Field & Edgar J. Bellefontaine, for John R. Schwanbeck, amicus curiae, submitted a brief.
GREANEY, J. McEvoy Travel Bureau, Inc. (McEvoy), brought this action against Norton Company (Norton) in the Superior Court alleging breach of contract, fraud, and unfair and deceptive trade practices in violation of G. L. c. 93A, Sections 2 (a) and 11 (1988 ed.). The breach of contract and fraud claims were tried to a jury which returned a verdict on the contract claim against Norton in the amount of $35,000, and a separate verdict on the fraud claim in the amount of $465,000.
is not before us.) On Norton's motion for new trial, the judge ordered a new trial unless McEvoy agreed to remit $165,000 of damages which the judge deemed excessive. McEvoy accepted the remittitur. The judge thereafter ruled in favor of McEvoy on its claim under G. L. c. 93A, doubling the damages, and indicating that McEvoy was to recover attorney's fees and costs. An amended judgment entered assessing $600,000 in damages (the reduced amount of $300,000 doubled), plus attorney's fees and costs. [Note 2] The judgment computed prejudgment interest only on the base damages of $300,000. McEvoy moved pursuant to Mass. R. Civ. P. 59 (e), 365 Mass. 828 (1974), to alter or amend the judgment to have prejudgment interest computed on the entire $600,000. This motion was denied.
Norton has appealed, claiming that it was entitled to judgment as matter of law on the fraud claim because McEvoy's evidence failed to establish fraud. In connection with this argument, Norton contends that because the finding of liability under G. L. c. 93A was based exclusively on the jury's finding of fraud, it was entitled to judgment in its favor on the G. L. c. 93A claim. Norton also claims error in matters of evidence and in the jury instructions. McEvoy has cross-appealed, asserting that it was entitled to prejudgment interest on the full $600,000 in damages. We transferred the appeals to this court. We find no error in any of the points argued and, therefore, affirm the amended judgment.
travel agency founded in the 1940's. For three decades prior to 1980, McEvoy provided air travel services to Norton, a large international conglomerate based in Worcester. During those three decades McEvoy and Norton never had a written contract or agreement of any kind. In the summer and fall of 1980, during a series of conferences with McEvoy, Norton proposed an arrangement whereby Norton would make McEvoy its exclusive travel agent for all of its Worcester area business. In return, McEvoy would make several commitments necessary to service the increased volume of business and share the commissions thereby derived. The parties agreed at this time that the arrangement would be a "long-term" contract. At no time during the negotiations was a written contract mentioned or envisioned.
business. In addition, McEvoy ceased its efforts to obtain other clients in order to devote more attention to its Norton account. McEvoy commenced full service of Norton's travel needs on January 1, 1981.
After McEvoy had been fully performing under the agreement for two months, Norton's director of corporate purchasing and transportation drafted a contract to memorialize the financial arrangements between the parties and sent it to McEvoy. In view of the lengthy dealings between the parties based exclusively on oral understandings, McEvoy was surprised by the contract and was particularly concerned that the contract contained a sixty-day termination clause. In addition, the contract had a term of one year, renewable at the end of 1981. McEvoy voiced its concerns at a meeting with Norton's representative in early March, 1981. Norton's representative in early March, 1981. Norton's representative reassured McEvoy that the parties in fact would continue to have a long-term arrangement and that the termination clause was "inoperative" and "meaningless," a mere technicality that Norton's law department had required. Based on these statements, McEvoy decided to sign the agreement a day or so after the meeting.
that would not be affected by the termination clause in the contract.
In 1982 and 1983, the parties executed two subsequent written contracts which were identical to the 1981 contract, except that the financial formula for profit sharing was different in each one. The termination clause was not discussed at the signing of either of the two subsequent contracts.
Prior to the signing of the 1983 contract, Norton advised McEvoy that it planned to explore the possibility of using a different travel agency if it could find one that offered better terms. During the first half of 1983, Norton entered into an arrangement with another travel agency. In May, Norton exercised the sixty-day termination provision of the 1983 contract, thereby ending its lengthy relationship with McEvoy.
1. The basis of McEvoy's common law claim against Norton is that Norton fraudulently induced McEvoy to sign the written contract by misrepresenting its intentions. McEvoy contended that by declaring that the termination provisions were "meaningless" or "inoperative," and that the longstanding arrangement which had existed between the parties would continue in full force, Norton, in effect, had represented that it harbored on intention of invoking the termination provision. The jury agreed and found that Norton had made false representations because Norton did, in fact, actually intend to invoke the termination provision.
(1963). Feldman v. Witmark, 254 Mass. 480, 481-482 (1926). See also Restatement (Second) of Torts Section 530 (1977).
Norton cites Turner v. Johnson & Johnson, 809 F.2d 90 (1st Cir. 1986), in support of the contention that a fraud claim cannot be based upon the oral misrepresentations alleged by McEvoy because those statements contradict a specific and unambiguous provision of a written contract. Turner involved the sale by the plaintiffs of an electric thermometer business to Johnson & Johnson in return for cash consideration and a portion of the royalties. There were extensive negotiations during a period of six months, and the parties exchanged several versions of a written contract. Id. at 93. At one point during the negotiations, Johnson & Johnson represented to the plaintiffs, among other things, that it would promote the sale of the thermometer, offer it to customers, and educate health care professionals on how to use it. The final version of the written contract, however, stated that Johnson & Johnson was not obligated to use its best efforts to market the thermometer.
When Johnson & Johnson failed to market the thermometer, the plaintiffs sued, alleging common law fraud. The United States Court of Appeals for the First Circuit reversed a judgment based on a jury verdict in favor of the plaintiffs. The court held that "where both parties were experienced in business and the contract was fully negotiated and voluntarily signed, plaintiffs may not raise as fraudulent any prior oral assertion inconsistent with a contract provision that specifically addressed the particular point at issue." Id. at 97.
in such circumstances, "the language of a contract simply would not matter anymore." Id. at 96.
Having pointed out these distinctions between Turner and this case, we add that it has never been necessary under Massachusetts law in order to establish fraud in the circumstances like those found by the jury to prove that the fraud was committed at the precise time the contract was signed. Liability may be imposed if "[a]t the time of the execution of the contract [the] misrepresentation was still operative, even if the fraud took place prior to the contract's execution." Broomfield v. Kosow, 349 Mass. 749, 758-759 (1965). As the Broomfield decision points out at 759, the leading case of Bates v. Southgate, 308 Mass. 170, 182 (1941), specifically rejects a defense based on the timing of the fraud.
in fraud to induce the contract. Bates v. Southgate, supra, states the strong public policy that supports this principle. See Restatement (Second) of Contracts Section 164 (1981). "In obedience to the demands of a larger public policy the law long ago abandoned the position that a contract must be held sacred regardless of the fraud of one of the parties in procuring it." Bates v. Southgate, supra at 182. See Broomfield v. Kosow, supra; Sandler v. Elliott, 335 Mass. 576 (1957). In this case, the jury determined that harm and injustice would result from Norton's fraud unless McEvoy was allowed to recover. Cases like this one are to be analyzed in light of the principles stated in Bates, supra, while cases, generally similar to Turner, where there can be no reasonable reliance on the alleged misrepresentation, are to be analyzed under the principles stated in Plumer v. Luce, supra. We therefore see no reason to create, as Turner suggests, a new rule or an exception to fit cases between sophisticated business enterprises involving contracts which have been induced by the fraud of a party.
about Norton's possible use of another travel agency could be found by the jury as occurring after significant reliance had been effected.
2. Because the fraud judgment is tenable in fact and law, it follows, contrary to Norton's argument, that there was no error in the judge's finding that Norton had violated G. L. c. 93A, Sections 2 (a) and 11. Common law fraud can be the basis for a claim of unfair or deceptive practices under the statute, see PMP Assocs., Inc. v. Globe Newspaper Co., 366 Mass. 593, 596 (1975); Levings v. Forbes & Wallace, Inc., 8 Mass. App. Ct. 498, 504 (1979), and an intentional fraud can constitute a basis for the multiplication of damages.
3. Norton's remaining arguments on the fraud verdict are not substantial.
(a) Norton claims that it was error for the judge to admit certain testimony that was irrelevant and prejudicial. At different points during the trial, there was testimony as to the possible illegality of certain arrangements that Norton had made with another travel company in 1983 in order to obtain international rebates. Norton contends that the introduction of this evidence allowed the jury to make the impermissible inference that, because Norton might have acted illegally in obtaining the international rebates, it must have defrauded McEvoy.
Tosti v. Ayik, 394 Mass. 482, 490 (1985). There was no error.
(b) Norton contends that the judge committed error by instructing the jury that the standard for reliance was whether it was reasonable for McEvoy to rely on Norton's representations, rather than whether it would have been reasonable for experienced business people so to rely.
A trial judge has considerable discretion in giving the applicable law to the jury, and the judge is under no obligation to charge the jury in the specific language requested by a party. Corsetti v. Stone Co., 396 Mass. 1, 14-15 (1985). The judge in this case may have determined that, because of the evidence of the parties' long-term relationship and of the trust that had developed between them over the decades, it would not be proper for the jury to assess their conduct by the standards of experienced business people dealing with each other at arm's length. Alternatively, the judge may have determined that the instructions he gave encompassed the instruction requested by Norton. He did not, as Norton claims, set forth a naked "reasonableness" standard, but asked whether it was reasonable for a specific party, McEvoy, to rely on Norton's representations in the circumstances that could have been found operative by the jury. See Jacobs v. Pine Manor College, 399 Mass. 411, 414 (1987). It was within the judge's discretion to instruct the jury as he did. See Julian v. Randazzo, 380 Mass. 391, 397 (1980).
(c) Norton contends that the question of the meaning of "long-term arrangement" was improperly submitted to the jury. Specifically, Norton claims that because an essentially vague and ambiguous term was defined by McEvoy's expert witness as being two to three years in duration and because there is no evidence as to the parties' intent, the expert's testimony should have been considered binding. Norton urges that the jury should not have been allowed to consider the meaning of the term any further. We disagree.
There was other evidence as to the parties' intent respecting the duration of a "long-term arrangement." The jury permissibly could have looked at the factors included in the arrangement that had been made, for example, the fact that McEvoy had signed a five-year lease on its office in Norton's building in reliance on the arrangement, and discontinued business with other clients, or the understandings that the parties had had under earlier arrangements. Furthermore, the expert's testimony was far from clear. "Where the evidence is disputed as to the terms or performance of an oral agreement, or the meaning of the words used by the parties, the matter should be left to the jury." Green v. Richmond, 369 Mass. 47, 53 (1975). See Goldstein v. Katz, 325 Mass. 428, 430 (1950). The question was properly referred by the judge to the jury's determination. The jury's apparent construction of the term was within the scope of the evidence before them, and the damages based thereon (as remitted) cannot be said to be speculative or unreasonable. See Mirageas v. Massachusetts Bay Transp. Auth., 391 Mass. 815, 822 (1984).
4. In the cross-appeal, McEvoy disputes the judge's failure to direct the addition of prejudgment interest to the multiple damages assessed under G. L. c. 93A. In Makino, U.S.A., Inc. v. Metlife Capital Credit Corp., 25 Mass. App. Ct. 302, 320-322 (1988), the Appeals Court held that prejudgment interest is not to be added to multiple damages imposed under G. L. c. 93A. McEvoy urges that we reject the Makino decision and conclude that it was entitled to prejudgment interest on the entire $600,000. We are satisfied that the rule in Makino is the correct one.
by G. L. c. 93A. The latter statute in turn makes no provision for interest on any multiple damages assessed thereunder. General Laws c. 231, Section 6B, and G. L. c. 93A are to be construed to promote their common objectives. See Board of Educ. v. Assessor of Worcester, 368 Mass. 511, 513-514 (1975).
The purpose of prejudgment interest under G. L. c. 231, Section 6B, is "to compensate a damaged party for the loss of use or the unlawful detention of money." Conway v. Electro Switch Corp., 402 Mass. 385, 390 (1988). See Mirageas v. Massachusetts Bay Transp. Auth., supra at 821; Bernier v. Boston Edison Co., 380 Mass. 372, 388 (1980); Makino, U.S.A. v. Metlife Capital Credit Corp., supra at 320-321. The damaged party is entitled to a return on the money that the party would have had but for the other party's wrongdoing. To give the damaged party more than that would go beyond the purpose of the statute. The purpose behind the prejudgment interest statute is not to penalize the wrongdoer, Mirageas v. Massachusetts Bay Transp. Auth., supra at 821, or to make the damaged party more than whole.
Further, G. L. c. 93A, Section 11, speaks in terms of a successful plaintiff's recovery of "actual damages," which, in appropriate circumstances, may be multiplied. "Generally, `actual damages' are losses flowing directly from a wrongful act," Simon v. Solomon, 385 Mass. 91, 112 (1982), which in this case are McEvoy's economic losses. The language of G. L. c. 231, Section 6B, applies to the payment of prejudgment interest on the actual damages contained in the verdict, and the statute's language reasonably cannot be stretched to encompass noncompensatory multiple damages. Indeed, in connection with another multiple damages statute, G. L. c. 231, Section 85J (1988 ed.), we implicitly have accepted the principles stated in the Makino decision on prejudgment interest by noting that "[w]e agree with the defendant that interest on the multiple damages portion of the Section 85J damages award runs only from the date of judgment. See Makino, U.S.A., Inc. v. Metlife Capital Credit Corp., 25 Mass. App. Ct. 302, 320-321 (1988)." Briggs v. Carol Cars, Inc., 407 Mass. 391, 396 n.2 (1990).
The other arguments made on this issue are not persuasive.
(a) We reject McEvoy's strained reading of the "judgment" to be multiplied in the recently amended version of G. L. c. 93A, Section 11, as including prejudgment interest. [Note 10] This amendment to the fifth paragraph of Section 11 simply cannot be read as requiring prejudgment interest on multiple damages.
(c) Finally, we do not believe that a failure to award the prejudgment interest sought by McEvoy will have an adverse effect on promoting the prompt settlement of valid G. L. c. 93A claims. There is enough force in the possibility of penalty damages under the statute to compel a culpable party to think seriously of settlement without misapplying G. L. c. 231, Section 6B, as a further stimulus.
directions stated in the Yorke Management decision, supra at 20.
The amended judgment is affirmed.
[Note 1] Norton had moved unsuccessfully for a directed verdict on both claims during the trial. See Michnik-Zilberman v. Gordon's Liquor, Inc., 390 Mass. 6, 9 (1983).
[Note 2] The amount of attorney's fees and costs, however, has not yet been determined.
[Note 3] The legal quality of McEvoy's evidence on the fraud claim is to be assessed under the standard governing a motion for judgment notwithstanding the verdict. In such a case, "the judge's task, `taking into account all the evidence in its aspect most favorable to the plaintiff, [is] to determine whether, without weighing the credibility of the witnesses or otherwise considering the weight of the evidence, the jury reasonably could return a verdict for the plaintiff.' Tosti v. Ayik, 394 Mass. 482, 494 (1985), quoting Rubel v. Hayden, Harding & Buchanan, Inc., 15 Mass. App. Ct. 252, 254 (1983). The court will consider whether `anywhere in the evidence, from whatever source derived, any combination of circumstances could be found from which a reasonable inference could be drawn' in favor of the non-moving party. Poirier v. Plymouth, 374 Mass. 206, 212 (1978), quoting Raunela v. Hertz Corp., 361 Mass. 341, 343 (1972). The inferences to be drawn from the evidence must be based on probabilities rather than possibilities and cannot be the result of mere speculation and conjecture. Id." McNamara v. Honeyman, 406 Mass. 43, 45-46 (1989).
McEvoy suggests that we can bypass analysis of the issues pertaining to the fraud claim because the G. L. c. 93A judgment stands on its own and establishes liability entirely apart from the jury's verdict. Norton, on the other hand, maintains that the judge adopted the jury's verdict on the fraud claim and, as a result, that both the fraud and G. L. c. 93A findings are legally deficient. We cannot ascertain with clarity whether the G. L. c. 93A finding stands on its own. The judge made no independent findings of fact on the G. L. c. 93A claim. In his memorandum of decision, the judge stated that he "accept[ed] and endorse[d] the jury's findings that Norton made knowingly false representations," and predicated G. L. c. 93A liability thereon. In our view, the state of the record is such that proper decision of the appeals requires decision of the parties' contentions with respect to both the fraud and the G. L. c. 93A claims.
[Note 4] The evidence, principally in the form of internal memoranda of Norton, which disclosed that Norton did not want to bind itself to a long-term arrangement with McEvoy, permitted the jury to find that the actual intentions of Norton's representative were very different from the statements made to McEvoy to induce the signing of the contract, and that Norton harbored the secret purpose of using McEvoy only until it could find a cheaper way of doing business.
[Note 5] There is no merit to Norton's argument that the parol evidence rule barred evidence of the misrepresentations. It is well established that the parol evidence rule does not apply when the complaining party alleges fraud in the inducement. See Broomfield v. Kosow, 349 Mass. 749, 759 (1965); Kilkus v. Shakman, 254 Mass. 274, 279 (1926). See also Restatement (Second) of Contracts Section 214 (1981).
[Note 6] Similarly, the Massachusetts case upon which Turner heavily relies, Plumer v. Luce, 310 Mass. 789 (1942), did not involve a fraudulent inducement to sign. As this court stated in Plumer: "The agreement that [the plaintiff] signed may not read very much like what she says the proposed arrangement was, but where, as here, it is not open to her to contend that she was induced to sign the agreement by fraud, we are of opinion that she cannot rightly contend that one of the terms of a proposed agreement that never came into existence can be used as a basis upon which to bring [a fraud action]." Id. at 805.
[Note 7] In describing a case almost identical to this one, Corbin states: "When parties . . . sign a document and include in it a provision as to termination by notice, at the same time expressly stating that the provision is a mere `face-saving device' never to be effective, they have not adopted that document as a `complete and accurate integration' of their agreement. Instead they have [in Williston's words] issued it `in usual form, but limited its terms by parol agreement.'" 3 Corbin on Contracts Section 582, at 463 (1960). See also 9 J. Wigmore, Evidence Section 2435, at 118 and Section 2439, at 128 (1981).
[Note 8] Norton's contention that it was error for the judge to exclude Norton's contract with the other company from evidence and, at the same time, admit evidence as to the possible illegality of international rebates, is not serious. The judge did admit the other company's proposals to Norton concerning the international rebate arrangement, overruling Norton's objections. The inconsistency, if any, of the rulings is insignificant.
[Note 9] McEvoy's attempt to distinguish between multiple damages and punitive damages, even if valid, does not bear on our holding. To the extent that both are noncompensatory in nature, the prejudgment interest statute does not apply.
Reference has also been made to G. L. c. 231, Section 6H (1988 ed.), which involves prejudgment interest in cases not otherwise covered. The analysis above applies to any considerations under Section 6H that might be argued here.
"The fifth paragraph of section 11 of said chapter 93A, as so appearing, is hereby amended by inserting after the first sentence the following sentence: -- For the purpose of this chapter, the amount of actual damages to be multiplied by the court shall be the amount of the judgment on all claims arising out of the same and underlying transaction or occurrence regardless of the existence or nonexistence of insurance coverage available in payment of the claim."
[Note 11] See Bass v. Spitz, 522 F. Supp. 1343 (E.D. Mich. 1981); Lauder v. Peck, 11 Conn. App. 161, 167-168 (1987); Midland-Guardian Co. v. United Consumers Club, Inc., 499 N.E.2d 792, 800 (Ind. Ct. App. 1986). The fourth case cited by McEvoy, Dorsett Carpet Mills, Inc. v. Whitt Tile & Marble Distrib. Co., 734 S.W.2d 322 (Tenn. 1987), did not reach the issue.
[Note 12] To supplement the list of courts cited in Makino that have held that prejudgment interest does not apply to penal or punitive damages, we note the following decision: Rayonier, Inc. v. Polson, 400 F.2d 909, 922 (9th Cir. 1968) (construing Washington statute); Rowse v. Platte Valley Livestock, Inc., 604 F. Supp. 1463, 1473-1474 (D. Neb. 1985) (construing Federal statute); Wirig v. Kinney Shoe Corp., 448 N.W.2d 526, 535 (Minn. Ct. App. 1989); Poling v. Wisconsin Physicians Serv., 120 Wis. 2d 603, 611 (Ct. App. 1984). We are aware of the fact that these decisions may turn on the particular language of the statute involved or common law principles that differ somewhat from Massachusetts law. The decisions nevertheless bespeak a policy that we think is relevant. That policy rejects the idea of prejudgment interest on multiple damages.
McEvoy cites several cases decided in this court, and in the Appeals Court, which appear to have allowed prejudgment interest on G. L. c. 93A multiple damages. The issue before us and the Makino court was not raised in any of the cases, however. "The most that can be said is that the point was in the cases if anyone had seen fit to raise it. Questions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, are not to be considered as having been so decided as to constitute precedents." Webster v. Fall, 266 U.S. 507, 511 (1925). See also Kneeland v. Emerton, 280 Mass. 371, 388 (1932). These decisions obviously do not control.

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