LFS Group, Inc. v. Gutzler

2011 Mass. App. Div. 83
CourtMassachusetts District Court, Appellate Division
DecidedApril 22, 2011
StatusPublished

This text of 2011 Mass. App. Div. 83 (LFS Group, Inc. v. Gutzler) 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
LFS Group, Inc. v. Gutzler, 2011 Mass. App. Div. 83 (Mass. Ct. App. 2011).

Opinion

Hand, J.

Defendant-appellants Thomas R. Gutzler (“Gutzler”) and John Gutzler are trustees of the Gutzler Property Trust (the ‘Trust”). At all relevant times, the Trust has owned properties at 294 and 294R Commercial Street, Provincetown (respectively, “294” and “294R”) (collectively, “complex”). Plaintiff-appellee LFS Group, Inc. (“LFS”) is a property-management company owned by Laurie Ferrari-Sacco (“Ferrari-Sacco”). LFS managed the complex for the Trust. Gutzler, who has lived in Florida for the past 20 years, was the Trust’s de facto liaison with LFS during the parties’ professional relationship. There is no evidence that the parties ever entered into any written contract for property-management services; the terms of the parties’ relationship were defined by their course of dealing over a period of years.

The complex included a commercial space as well as one residential apartment at 294 and two at 294R. The complex’s commercial tenant paid rent on an annual basis. During the parties’ working relationship, LFS’ responsibilities for the complex included collecting rents and paying bills. The Trust afforded Ferrari-Sacco broad discretion in financial matters concerning the complex. As the Trust conceded in its brief, “Ferrari had total control over the bank account: she received the monthly statements; she deposited rent checks; and she wrote all the bills. A decision as to which bills were to be paid, and in what order, was made solely by Ferrari.” LFS was also responsible for overseeing the maintenance at the complex. LFS managed the work, using its own crews of painters and handymen, and invoicing the Trust for the work done. There is no evidence that, at any time during the parties’ relationship, [84]*84the Trust provided any specific or detailed instruction about how LFS or LFS’ workers were to perform their jobs, or that the Trust ever instructed LFS that the Trust wanted to have particular input on who did the hands-on portions of any work LFS supervised at the complex. In short, on the record before us, it is clear that Gutzler discussed with LFS the general budget and scope of any planned maintenance on an annual basis, and the need for unanticipated work as LFS became aware of those needs, but that the Trust otherwise left the conduct of maintenance and repair work to the complex entirely up to LFS.

Ferrari-Sacco met personally with Gutzler at least once a year to establish an annual budget for the complex. Other than those face-to-face meetings, Ferrari-Sacco and Gutzler communicated by telephone and e-mail oh an as-needed basis. In January, 2006, at their annual meeting, Ferrari-Sacco and Gutzler established a working budget for that year, including anticipated maintenance and repair costs for the complex. Gutzler told Ferrari-Sacco that he wanted to be notified if expenses were to exceed $1,000.00.5

In October, 2006, one of the residential tenants at 294R, Angel Colozzo (“Colozzo”), was evicted from his apartment (“Colozzo unit”). Following Colozzo’s departure, Ferrari-Sacco conducted a walk-through of the apartment and learned that the tenant had left the unit “trashed” and a “mess.” On the recommendation of the sheriff involved in Colozzo’s eviction, Ferrari-Sacco took photographs of the apartment as Colozzo had left it. When informed of the Colozzo unit’s condition, Gutzler told Ferrari-Sacco “to get the place cleaned up” and prepared for rental. Ferrari-Sacco and Gutzler discussed the likely cost of the renovations. There was no discussion between the parties about obtaining bids for the renovation of the Colozzo unit, and LFS had its own employees perform the necessary work. The project ultimately cost more than $6,000.00. By January, 2007, Gutzler had seen and approved the renovation of the Colozzo unit. When the Colozzo unit was next rented, LFS successfully demanded a higher monthly rent for the apartment than it had been able to obtain before the unit was repaired.

In the late spring of 2007, after LFS’ successful renovation of the Colozzo unit, two additional residential tenants vacated apartments in the complex. In May, 2007, [85]*85James Bonnie (“Bonnie”) was evicted from the bottom apartment in 294R (“Bonnie unit”), leaving it in “pretty horrendous” condition. The vacated Bonnie unit had a “smell,” the walls were in “really poor condition,” certain of the cabinets in the apartment were “falling apart,” and the apartment contained discarded hypodermic needles. Gutzler’s testimony was that Ferrari-Sacco described the Bonnie unit as a “mess,” language very similar, if not identical, to the words she had used in describing the Colozzo unit before LFS renovated it. As in the case of the Colozzo unit, the sheriff advised Ferrari-Sacco to take photographs to document the poor condition of the vacated unit, and she did so. Informed that the apartment needed work before being rented again, Gutzler told Ferrari-Sacco to “get the place cleaned up for rental.” Given her discussions with Gutzler about the work needed to restore the Colozzo unit to a rentable condition, and the similar conditions of the two units after the evictions of their respective tenants, Ferrari-Sacco believed that Gutzler was well aware that the cost of the work on the Bonnie unit would exceed $1,000.00 and did not take further steps to notify the Trust of that fact.

Shortly thereafter, in June, 2007, tenant Julie Brown (“Brown”) moved out of the apartment in 294 (“Brown unit”). While Brown’s unit was not left in the chaotic state in which Ferrari-Sacco had found the vacated Colozzo and Bonnie units, Ferrari-Sacco’s view was that Brown’s apartment was not in a rentable condition. Ferrari-Sacco noted the empty apartment to be “old and deteriorated” with the trim “black with chipped paint.” Gutzler told Ferrari-Sacco to “clean the place tip and get it ready for rent.” As in the case of the Bonnie unit, Ferrari-Sacco believed that Gutzler was aware that the cost of the work to the Brown unit would exceed $1,000.00. LFS did not explicitly advise the Trust of the estimated costs of repair.

There is no evidence in the record that the parties discussed the renovation of either the Bonnie or Brown units in any greater detail. After speaking with Gutzler, Ferrari-Sacco understood that she was to restore both the Bonnie and the Brown units to a rentable condition, comparable to that of the repaired and updated Colozzo unit. As noted, LFS employees had done the repair and renovation work on the Colozzo unit; LFS also performed the work on the Bonnie and Brown units. There was no evidence at trial that Gutzler, or the Trust, ever expressed a desire to obtain bids for the necessary work on the Bonnie or the Brown unit. When the Bonnie unit was rented again, it was rented for more than Bonnie had paid.6 LFS charged the Trust $4,660.00 for the work to the Bonnie unit and $5,406.74 for its work on the Brown unit. Additionally, LFS billed the Trust for $1,175.72, plus finance charges, for hardware supplies charged at Lands End Marine Supply, Inc. Contending, primarily, that LFS had been required to obtain the Trust’s approval for expenses over $1,000.00 in connection with LFS’ work on the complex, but did not do so in connection with the work on the Bonnie and Brown units, and secondarily, that LFS had engaged in improper self-dealing in failing to put the contested work out for bid, the Trust declined to pay LFS’ [86]*86invoices for the work. The Trust also refused to settle the account with the hardware supplier.

LFS sued the Trust on six theories: breach of contract; violation of the Consumer Protection Act, G.L.c.

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2011 Mass. App. Div. 83, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lfs-group-inc-v-gutzler-massdistctapp-2011.