Abbott Rental Co. v. American Magazine Service Co.

1983 Mass. App. Div. 33, 4 Mass. Supp. 274, 1983 Mass. App. Div. LEXIS 26
CourtMassachusetts District Court, Appellate Division
DecidedFebruary 16, 1983
StatusPublished

This text of 1983 Mass. App. Div. 33 (Abbott Rental Co. v. American Magazine Service Co.) is published on Counsel Stack Legal Research, covering Massachusetts District Court, Appellate Division primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Abbott Rental Co. v. American Magazine Service Co., 1983 Mass. App. Div. 33, 4 Mass. Supp. 274, 1983 Mass. App. Div. LEXIS 26 (Mass. Ct. App. 1983).

Opinion

Tiffany, J.

This is an action in contract in which the plaintiff, Abbott, as the [34]*34lessor, seeks to recover a sum as liquidated damages from the defendant, American, as lessee, for early termination of an automobile leasing contract.

After a trial on the merits, there was a finding for the plaintiff, Abbott, in the amount of $2,437.91 which was entered on the docket sheet and it was stipulated by the parties that this amount was the judgment and that the finding memorandum setting forth $2,289.12 was a typographical error.

A summary of the evidence presented at trial as contained in the report reveals that the parties had entered into a written motor vehicle rental agreement on May 3, 1979 for the lease of a 1979 Pontiac Grand Prix. The term of the lease was for twenty-six (26) months and required monthly payments of $425.15. It is not in dispute that Abbott purchased the automobile at American’s request and provided the specified options at a cost to Abbott of $8,918.99, and that this was a lease agreement and not a lease purchase agreement. The lease also contained a termination clause requiring defendant (American), in the event of termination, to pay an amount up to eighteen (18) months rental payments plus two (2) months past the termination date. Translated from this obscure legalese, it appears that Abbott needed twenty monthly rental payments before it started to make a profit.

Due to factors beyond its control, American’s counsel notified Abbott on September 30, 1980 that its employee, Gloverman, was no longer employed by American and that the automobile was to be returned to Abbott. This was accomplished on October 1, 1980 by Gloverman personally returning the automobile to Abbott. The contract was, in effect, terminated as of that date and it was stipulated between the parties that the September rental check was received by Abbott and was no longer an issue at trial.

On or about October 7,1980, the subject automobile was sold to Gloverman by Abbott for $6,700.00. Abbott, on that day, had an outstanding chattel mortgage of $6,243.30.

The defendant, American, is presently before this Division claiming to be aggrieved by the denial of its requests for rulings of law numbers 1 through 9.

The trial justice’s findings were specific and to the point wherein she set forth:

“I find the defendant breached its contract with the plaintiff and the plaintiff is entitled to damages under the terms of the contract.”

Request Numbers I & 2:

1. The plaintiff s effort to recover from the defendant where the plaintiff previously received compensation for the sale of the automobile constitutes a violation of G.L.c. 93A, § 11. As a result, the defendant is entitled to judgment in the amount of $7,520.01 (treble damages; three times ad damnum), plus costs and reasonable attorney’s fees.
2. The plaintiff s effort to recover from the defendant where the plaintiff previously refused compensation for the sale of the automobile constitutes a violation of 15 U.S.C. § 1600 et seq. and 12 C.F.R. 226, Regulation Z. As a result, the defendant is entitled to judgment in the amount of $7,520.01 (treble damages; three times ad damnum), plus costs and reasonable attorney’s fees. .

These requests can be treated alike as the facts clearly set forth and the trial justice found American was in breach of the terms of the contract. It is a general rule that where one breaches a contract to be performed for an entire price, he cannot recover on the contract because he has not performed and is not within the provisions of G.L.c. 93A, § 11 because his voluntary failure to complete the agreement prevents recovery. Jewett v. Warriner, 237 Mass. 36, 38 (1921).

As to request number 2, it is clear that this was a lease agreement and not a lease purchase agreement. When American returned the vehicle to Abbott, it [35]*35had no further interest in the vehicle and Abbott was under no legal obligation to consult American as to further disposition of the vehicle.

Requests Numbers 3, 4 & 5:

3. The defendant is entitled to judgment in its favor because the plaintiff sold the automobile in question in a commercially unreasonable manner in violation of G.L.c. 106 et seq.
4. The defendant is entitled to judgment in its favor because the plaintiff acted in bad faith in violation of G.L.c. 106 et seq.
5. The defendant is entitled to judgment in its favor because the lease upon which the plaintiff relies is unconscionable, unenforceable and otherwise null and void.

These requests bring into play G.L.c. 106, § 2-302(1) commonly referred to as the unconscionability aspects of a contract and is an issue of law to be decided by the court. The basic test is whether, in the light of the general commercial background and the commercial needs of the particular trade, the clauses involved are so one sided as to be unconscionable under the circumstances existing at the time of the making of the contract. The principle is one of prevention of oppression or unfair surprise. Zapatha v. Dairy Mart, 408 N.E. 2d 1370, 1375 (1980). It is clear from the evidence that both parties were clear in their own minds as to what they wanted from the contract at issue. The vehicle was purchased by Abbott at American’s request with forty (40) specific options set forth by American and fulfilled by Abbott. Attorneys for both parties were involved in the execution of the contract. There was a definite equality of bargaining position, no attempt at exploitation, and the liquidated damage provision and the reasons for the inclusion were or should have been understood by American. As contract unconscionability must be determined on a case by case basis, Commonwealth v. Gustafson, 370 Mass. 181, 187 (1976), we cánnot find a potential for unfairness to American in the inclusion of the liquidated damage clause in the contract.

Request Number 6:

The termination clause upon which plaintiff relies is unenforceable because the stipulated sum is unreasonably and grossly disproportionate to the real damages from the alleged breach, and the amount stated is unconscionably excessive. Thus, even if the plaintiff is to prevail, plaintiff can be awarded no more than actual damages. A-Z Servicecenter, Inc. v. Segal, 334 Mass. 672, 675 (1956). It is likewise unconscionable to allow plaintiff to recover a charge for unearned interest. Id at 677. Since the plaintiff here has failed to prove actual damages, the defendant is entitled to judgment in its favor.

From the actions of the parties, it was clearly anticipated that the damages were to be liquidated and readily computed on a rational basis. Daley v. J.F. White Contracting Company, 347 Mass. 285 (1964). In the instant case, no penalty was involved as the quid pro quo was to make Abbott as whole as if the contract had been completed.

Requests Numbered 7a, 7b & 8:

7a.

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Related

Daley v. J. F. White Contracting Co.
197 N.E.2d 699 (Massachusetts Supreme Judicial Court, 1964)
A-Z Servicenter, Inc. v. Segall
138 N.E.2d 266 (Massachusetts Supreme Judicial Court, 1956)
Zapatha v. Dairy Mart, Inc.
408 N.E.2d 1370 (Massachusetts Supreme Judicial Court, 1980)
Commonwealth v. Gustafsson
346 N.E.2d 706 (Massachusetts Supreme Judicial Court, 1976)
Jewett v. Warriner
129 N.E. 296 (Massachusetts Supreme Judicial Court, 1921)
Bell v. Fred T. Ley & Co.
179 N.E. 294 (Massachusetts Supreme Judicial Court, 1932)

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Bluebook (online)
1983 Mass. App. Div. 33, 4 Mass. Supp. 274, 1983 Mass. App. Div. LEXIS 26, Counsel Stack Legal Research, https://law.counselstack.com/opinion/abbott-rental-co-v-american-magazine-service-co-massdistctapp-1983.