Opinion ID: 196849
Heading Depth: 2
Heading Rank: 3

Heading: Damages and the Burden of Proof

Text: 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 -18- 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. -19- 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 -20- 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).