Stop & Shop Supermarket Co. v. Loomer

837 N.E.2d 712, 65 Mass. App. Ct. 169, 2005 Mass. App. LEXIS 1113

• Court: Massachusetts Appeals Court
• Decided: November 28, 2005
• Docket: No. 03-P-1643
• Status: Published

Opinions

Grasso, J.

We consider whether G. L. c. 93A, § 11, applies to the following circumstance. While employed as a cash office clerk at The Stop & Shop Supermarket Company (Stop & Shop), Karen Loomer cashed eight checks for her husband, Richard Loomer, in the amount of $5,185. Both knew that the checks were drawn on their joint personal checking account at a time when the account contained insufficient funds, but Richard had immediate need of cash to meet his general contracting company’s payroll.

We conclude that the defendants’ conduct, even if amounting to conversion or deceit, does not amount to a violation of G. L. c. 93A, § 11. We reverse an order entering summary judgment in favor of Stop & Shop on the c. 93A claims.

1. Procedural background. Underlying the merits is a complicated procedural history. In October, 1995, Stop & Shop commenced this action in the Superior Court against Karen, a cash office clerk in one of its stores, and her husband Richard, a general contractor.² Upon transfer of the case to the District Court and after trial, a District Court judge found for Stop & Shop on counts alleging conversion and deceit, but for the Loomers on counts against them under G. L. c. 93A, § 11. Neither Stop & Shop nor the Loomers claimed a report to the Appellate Division of the District Court. The Loomers did, however, request that the case be retransferred to the Superior Court pursuant to G. L. c. 231, § 102C.³

There, Stop & Shop moved for summary judgment on all its claims and supported its motion with a copy of the District Court decision and discovery material presented to the District Court.⁴ Relying on the prima facie effect of the District Court judgment in their favor on the c. 93A counts, the Loomers failed to oppose Stop & Shop’s motion for summary judgment.

Subsequently, a Superior Court judge allowed Stop & Shop’s summary judgment motion on the stated basis that the Loomers “admittedly engaged in illicit activity to convert funds of Stop & Shop for use in their business,” activity which was, “[a]s a matter of law, ... an unfair and deceptive practice proscribed by [G. L. c.] 93A.” Following a hearing on Stop & Shop’s motion for an assessment of damages, another judge awarded Stop & Shop treble damages, interest, and counsel fees.

Suitably alerted to the gravity of the situation, the Loomers moved for reconsideration of the order that established their liability under G. L. c. 93A, asserting that entry of summary judgment against them was based on errors of law. When that motion was denied, they moved for relief from judgment pursuant to Mass.R.Civ.P. 60(b)(1), 365 Mass. 828 (1974), and Mass. R.Civ.P. 60(b)(6), 365 Mass. 829 (1974), reiterating that the summary judgment order was based on errors of law and, further, arguing that they had relied on the “presumptive weight” of the District Court finding in their favor in not opposing Stop & Shop’s motion. This motion was also denied.

The matter comes before us on the Loomers’ appeal from the orders denying their motions for reconsideration and for relief from judgment. The Loomers do not appeal from the entry of judgment on the counts for conversion and deceit, but only from those based on G. L. c. 93A, § 11.

The Loomers’ failure to oppose Stop & Shop’s motion under Mass.R.Civ.P. 56(c), 365 Mass. 824 (1974), would entitle Stop & Shop to summary judgment only upon a showing that no material facts were in dispute, see Niemi v. GenRad, Inc., 20 Mass. App. Ct. 948, 949 (1985), and that Stop & Shop was entitled to judgment as matter of law. See Highlands Ins. Co. v. Aerovox, Inc., 424 Mass. 226, 232 (1997). However, upon the retransfer of a case from the District Court to the Superior Court, the District Court decision constitutes “prima facie evidence upon such matters as [were] put in issue by the pleadings” in that court. G. L. c. 231, § 102C, inserted by St. 1978, c. 478, § 262. See O’Brion, Russell & Co. v. LeMay, 370 Mass. (1976); Cole v. New England Mut. Life Ins. Co., 49 Mass. App. Ct. 296, 297 (2000). Standing alone, that decision constitutes evidence sufficient to warrant a verdict or finding in the Superior Court in favor of the Loomers on Stop & Shop’s c. 93A claims regardless of any other evidence introduced by it. See Eisenberg v. Phoenix Assn. Mgmt., Inc., 56 Mass. App. Ct. 910, 911 (2002), and cases cited therein. Although a fact finder is free at trial to disregard the decision of the District Court if additional evidence so warrants, see Mongeau v. Borlen, 11 Mass. App. Ct. 1031, 1032 (1981), such is not the case when a Superior Court judge is ruling on a motion for summary judgment, even one that is unopposed.

Notwithstanding the Loomers’ failure to oppose Stop & Shop’s summary judgment motion in Superior Court, we consider the merits of their appeal from the determination of their liability under G. L. c. 93A. Even were we to conclude that the District Court decision in their favor did not excuse the Loomers’ failure to oppose Stop & Shop’s motion for summary judgment, the circumstances before us present a situation in which an injustice would result were we to decline to exercise our discretion to consider the question on the merits. See Clark v. Trumble, 44 Mass. App. Ct. 438, 440-441 (1998), and authorities cited therein, including Mass.R.Civ.P. 56(c). See also MeLeod’s Case, 389 Mass. 431, 434 (1983), citing Hormel v. Helvering, 312 U.S. 552, 557 (1941) (discretion exercised sparingly and reserved for situations where an “injustice might otherwise result”). The record, which provides an adequate basis for resolution of the issue, convinces us that the Superior Court judge erred in concluding that G. L. c. 93A, § 11, is applicable in the circumstances. See Nuclear Metals, Inc. v. Low-Level Radioactive Waste Mgmt. Bd., 421 Mass. 196, 209 (1995). Indeed, as matter of law, the Loomers’ conduct does not amount to a violation of G. L. c. 93A, § 11.⁵ Accordingly, we reverse and order entry of judgment for the Loomers on the counts brought under G. L. c. 93A, § 11.

2. The facts. We examine the facts in the light most favorable to Stop & Shop, the party against whom we now order summary judgment. The R.J. Loomer Company (company) is an unincorporated general contracting business owned and operated by Richard. Richard used a payroll service company, Genesis, to prepare the company’s payroll checks. Genesis would not accept a check in exchange for prepared payroll checks unless a client had an amount equal to twice the monthly payroll in an escrow account. Richard did not maintain an escrow account. Consequently, Genesis required cash up front.

On or about February 25, 1994, Richard needed payroll checks. Although Richard had deposited a check from Santoro Associates, Inc. (Santoro), dated February 24, 1994, in the amount of $3,373, into his and Karen’s personal checking account, it would take at least two days before that check cleared and those funds would be credited and available. Until the Santoro check cleared, the balance in their personal checking account, about $2,000 to $3,000, was insufficient to fund the sums needed for the payroll checks.

Richard went to Stop & Shop where Karen was employed as a cash office clerk and, with her assistance, cashed several checks drawn on their joint personal checking account in an amount totaling $5,185. He then gave the cash to Genesis in exchange for company payroll checks. Although the Loomers were aware that the funds in their checking account were insufficient to cover the checks cashed at Stop & Shop, they hoped that by the time the personal checks cashed at Stop & Shop were presented for collection, the Santoro check would have cleared.

Although Stop & Shop had a company policy that prohibited cashing of an employee’s personal checks, in the course of her employment with Stop & Shop, Karen had cashed personal checks for Richard on other occasions during the period of 1992 to 1994. “Some or all” of those checks had been returned for insufficient funds.⁶

3. The c. 93A determination. Section 11 of G. L. c. 93A, inserted by St. 1972, c. 614, § 1, provides in pertinent part:

“Any person who engages in the conduct of any trade or commerce and who suffers any loss of money or property, real or personal, as a result of the use or employment by another person who engages in any trade or commerce of an unfair method of competition or an unfair or deceptive act or practice . . . may, as hereinafter provided, bring an action . . . .”⁷

We conclude that Richard’s negotiation at Stop & Shop of checks drawn on his and Karen’s joint personal checking account does not amount to his use or employment of unfair or deceptive acts or practices in trade or commerce in violation of G. L. c. 93A, § 11, even though both Richard and Karen knew that there were insufficient funds in the account at the time, and even though they intended to use the monies obtained to keep Richard’s (or Richard and Karen’s) contracting business afloat.⁸

At the outset, we note that this case does not concern an unfair method of competition between two competing business entities. Rather, we deal with that branch of the statute that prohibits the use or employment of an unfair or deceptive act or practice by a person engaged in trade or commerce. Liability under that branch of G. L. c. 93A, § 11, “requires that there be a commercial transaction between a person engaged in trade or commerce [and] another person engaged in trade or commerce.” Szalla v. Locke, 421 Mass. 448, 451 (1995). The inquiry is twofold: only after it has been established that a “commercial transaction” exists does the court address whether the individuals were acting in a “business context” and apply the business context test discussed in Begelfer v. Najarian, 381 Mass. 177, 190-191 (1980). See Linkage Corp. v. Trustees of Boston Univ., 425 Mass. 1, 22-23, cert. denied, 522 U.S. 1015 (1997).

We assume, without deciding, that Richard’s cashing of checks in Stop & Shop’s cash office is a “commercial transaction” in the sense required by G. L. c. 93A. See Szalla v. Locke, 421 Mass. at 451-452.⁹ However, those transactions fail the second prong of the two-part test: the parties were not “engaged in trade or commerce” with each other and therefore acting in a “business context.” See Linkage Corp. v. Trustees of Boston Univ., supra at 23-24. To be actionable under G. L. c. 93A, § 11, the conduct complained of must occur in a context in which the parties to the transaction are persons engaged in “trade or commerce” with each other and therefore “acting in a business context.” Id. at 23. Each case requires examination of its own circumstances to determine whether it arose in a “business context.” Id. at 24.

That Stop & Shop is engaged in “trade or commerce”¹⁰ and suffered loss of money is not contested. Nor is it open to dispute that engaging in a general contracting business constitutes “trade or commerce.” We assume, further, that knowingly cashing checks drawn on insufficient funds is an unfair or deceptive act or practice.

Nevertheless, when measured against the “business context” test of Begelfer v. Najarian, 381 Mass. at 190-191,¹¹ the Loomers’ activities do not constitute engaging in “trade or commerce” with Stop & Shop for purposes of § 11 liability. Rather, these activities are a private transaction beyond the reach of the statute. See id. at 191.

Undeniably, Richard was not engaged in general construction services for Stop & Shop. Nor was he purchasing large quantities of construction supplies for his business. The check-cashing transaction was not business-to-business; nor did business-to-business communications or negotiations precede the transaction. Richard merely presented personal checks and obtained money in return. In advancing the money, Stop & Shop did not rely on any business actions or representations by Richard in his capacity as a general contractor. Because these indicia denote purely private, and not business-to-business, transactions, we attach little, if any, significance to the fact that Richard had cashed other such checks on previous occasions. In these circumstances, we are also unpersuaded that Richard’s motivations bear any relevance to determining whether the transactions occurred in a business context. We fail to discern how Richard’s intention to use the funds obtained for his general contracting payroll, as opposed to for vacation or other purely personal pursuits, transforms his activity into engaging in “trade or commerce” and acting in a “business context” with Stop & Shop.

That cashing checks was not part of the ordinary course of Richard’s general contracting business is not dispositive, but also need not be ignored. See Begelfer v. Najarian, 381 Mass. at 191 (“We do not read § 11 as requiring that a commercial transaction must take place only in the ordinary course of a person’s business or occupation before its participants may be subject to liability under G. L. c. 93A, § 11”); Gargano & Assocs., P.C. v. John Swider & Assocs., 55 Mass. App. Ct. 256, 263 (2002). Contrast Linkage Corp. v. Trustees of Boston Univ., 425 Mass. at 23 n.33 (c. 93A not available to parties in a strictly private transaction where “undertaking is not in the ordinary course of a trade or business” [citation omitted]). It cannot be gainsaid that in cashing checks at Stop & Shop, Richard would ostensibly be no different from any store customer who tendered a check at the courtesy window.¹² Along the spectrum between purely private activities and those constituting “trade or commerce,” this undertaking is a private transaction, not related to Richard’s general contracting business or to the conduct of any trade or commerce with Stop & Shop. Missing from this case is the requisite connection between the use or employment of an unfair or deceptive act or practice, and a trade or commerce in which Richard engaged with Stop & Shop. It is not enough that a defendant be engaged in trade or commerce and that he employ unfair or deceptive acts or practices on another business person with whom he was not engaged in trade or commerce. Rather, the unfair or deceptive act or practice must occur in the context of a trade or commerce in which the defendant engages with the plaintiff.

As stated in Manning v. Zuckerman, 388 Mass. 8, 10 (1983):

“[Section] 11 of G. L. c. 93A was intended to refer to individuals acting in a business context in their dealings with other business persons and not to every commercial transaction whatsoever. Lantner v. Carson, 374 Mass. 606, 611 (1978). Nader v. Citron, 372 Mass. 96, 97 (1977). PMP Assocs. v. Globe Newspaper Co., 366 Mass. 593, 595 (1975).”

Here, the pivotal question is whether the prohibited acts or practices took place in the context of the Loomers engaging in trade or commerce with Stop & Shop. In these circumstances the loss arose not because of an unfair or deceptive act or practice in trade or commerce between business persons, but because an ordinary and entirely fungible consumer cashed checks drawn on insufficient funds. While actions for deceit and conversion afford a remedy, an action for violation of G. L. c. 93A, § 11, does not. At bottom, this case involves a garden variety instance of an individual passing checks drawn on insufficient funds in the hope of obtaining money to which he would not otherwise be entitled. This simply does not add up to a “commercial transaction” in which that individual is “engaged in trade or commerce” for purposes of G. L. c. 93A, § 11.

4. Conclusion. The judgment entered in favor of Stop & Shop and against the Loomers on counts 1, 2, 4, and 5 for conversion and deceit is affirmed. The judgment entered in favor of Stop & Shop and against the Loomers on counts 8 and 9 for violation of G. L. c. 93A, § 11, is reversed and those counts are remanded to the Superior Court with an order that judgment be entered in favor of the Loomers on Stop & Shop’s claims for violations of G. L. c. 93A, § 11.

So ordered.

2 An earlier criminal action against Karen was unsuccessful.

3 The statute provides in pertinent part that “[a]ny party to the transferred action aggrieved by the finding or decision [of the District Court] may as of right have the case retransferred for determination by the [S]uperior [C]curt” (emphasis supplied). G. L. c. 231, § 102C, inserted by St. 1978, c. 478, § 262. Neither party has briefed the question whether the Loomers’ request for retransfer of “the case” also brought to the Superior Court so much of the District Court decision as was in their favor on the counts under c. 93A. Consequently, we also pass over this question.

4 This included excerpts from Richard’s deposition, Richard’s admissions deemed to have been made pursuant to the second paragraph of Mass.R.Civ.P. 36(a), 365 Mass. 795 (1974), and Karen’s answers to Stop & Shop’s request for admissions.

5 Our determination has no effect on the judgment in favor of Stop & Shop on its claims against the Loomers for conversion and deceit. We leave undisturbed that portion of the judgment that provides Stop & Shop with recovery of its out-of-pocket losses and interest thereon.

6 The only checks at issue in the present action are those cashed on February 25, 1994.

7 Section 2 proscribes “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce . . . .” G. L. c. 93A, § 2, inserted by St. 1967, c. 813, § 1.

The terms “trade” and “commerce” are defined in G. L. c. 93A, § 1(b), as amended by St. 1987, c. 664, § 1, which provides in full:

“ ‘Trade’ and ‘commerce’ shall include the advertising, the offering for sale, rent or lease, the sale, rent, lease or distribution of any services and any property, tangible or intangible, real, personal or mixed, any security as defined in subparagraph (k) of section four hundred and one of chapter one hundred and ten A and any contract of sale of a commodity for future delivery, and any other article, commodity, or thing of value wherever situate, and shall include any trade or commerce directly or indirectly affecting the people of this Commonwealth.”

8 Because we decide the case on this ground, we need not consider Karen’s separate contention that her actions are also not within the ambit of G. L. c. 93A, § 11, because, as an employee of Stop & Shop, her conversion of company assets would be an intra-enterprise occurrence and not a commercial transaction within the meaning of that statute. See Linkage Corp. v. Trustees of Boston Univ., 425 Mass. 1, 22-23 & n.33, cert. denied, 522 U.S. 1015 (1997).

9 Of course, broadly viewed, cashing a check is a commercial act governed by the law of commercial transactions. It is less clear, however, whether the instant transaction, which involved Richard’s use of Karen’s inside position at Stop & Shop, has the arm’s-length characteristic of a “commercial transaction” regulated by the statute. See Linkage Corp. v. Trustees of Boston Univ., 425 Mass. at 23.

10 We assume, notwithstanding Stop & Shop’s policy against cashing checks for employees, that the cashing of checks for Richard as well as for the convenience of customers is “trade or commerce” within the meaning of G. L. c. 93A.

11 The Begelfer “business context” test requires “assessing] the nature of the transaction, the character of the parties involved, and the activities engaged in by the parties. Other relevant factors are whether similar transactions have been undertaken in the past, whether the transaction is motivated by business or personal reasons . . . and whether the participant played an active part in transaction.” (Citation omitted.) Begelfer v. Najarian, 381 Mass. at 191.

12 That the checks were personal checks is not dispositive. We would discern no material difference even had the checks been drawn on an R.J. Loomer business checking account.