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Damon v. Sun Co.

Citation: 26 ELR 21517
No. Nos. 95-1820, -1821, 87 F.3d 1467/43 ERC 1009/(1st Cir., 07/05/1996)

The court affirms a district court decision that an oil company is liable for commonlaw misrepresentation and engaging in unfair or deceptive trade practices in violation of Massachusetts General Laws chapter 93A, § 11, in connection with its sale of a gasoline station. Although the company's regional manager knew that approximately 2,000 gallons of gasoline had leaked from underground storage tanks (USTs) at the site in 1974, he did not reveal that to plaintiff-appellants before they purchased the site in 1979. In addition, another company representative told plaintiff-appellants before the sale that there had been no problems with the USTs. The court first holds that the district court did not err in finding that plaintiff-appellants had met the causation element of misrepresentation. The court rejects the company's argument that there was no evidence of what contamination actually dated back to 1974. The court further holds that the district court did not err in allocating the burden of proof.

The court next upholds the district court's finding that the statements that the company's representatives made were not opinions and holds that those statements were misrepresentations of material facts. The court rejects the company's reliance on the fact that one plaintiff-appellant signed an agreement that he had examined the property and would indemnify the company against liability for violation of environmental laws. Massachusetts case law rejects the assertion that an "as is" clause is an automatic defense against allegations of fraud. The court next holds that plaintiff-appellants met their burden of showing intent, because they showed that the company's representatives made a misrepresentation of facts susceptible of actual knowledge. The court notes that although the district court did not address the reasonableness of plaintiff-appellants' reliance on the misrepresentation, it did find that they would not have purchased the station for $ 90,000 if they had been aware of the spill. The court rejects the argument that their failure to inspect the property vitiates any argument of reasonable reliance. The court also rejects the company's argument that the district court made factual findings, when the facts were controverted, without explaining the reasoning for its determination. And the court upholds the district court's determination of damages.

The court next affirms the district court's finding that the company is liable under Massachusetts General Laws chapter 93A, § 11. The company failed to point to evidence in the record or to case law that would cast into doubt the district court's factual determination that the company's conduct was unfair or deceptive. The district court's conclusion that the company's actions were not knowing and willful enough to require punitive damages is not inconsistent with intentional misrepresentation, on which the § 11 action is based. The court, however, rejects plaintiff-appellants' argument that the district court should have granted them multiple damages. Their argument is based on reading into § 11 the provision of § 9 that awards multiple damages for a defendant's bad faith refusal to make a reasonable settlement offer after demand. Section 9, however, is inapplicable to transactions between persons engaged in business, and § 11 does not include a counterpart to § 9's language. Finally, the court upholds the district court's award of attorneys fees and costs to plaintiff-appellants.

Counsel for Plaintiffs
Brian R. Corey
251 Bank St., Fall River MA 02720
(508) 675-0301

Counsel for Defendant
Michael A. Fitzhugh
Fitzhugh & Associates
One Boston Pl., Ste. 3300, Boston MA 02108
(617) 723-2330

Before TORRUELLA, Chief Judge, ALDRICH, Senior Circuit Judge, and SELYA, Circuit Judge.