In another appeal of a summary process action, the Massachusetts Appeals Court addressed two questions related to Chapter 93A on appeal in 133 W. Main St. Realty, LLC v. Kimball. First, whether the landlord was engaged in trade or commerce when renting a residential property to the tenants, and second, whether a technical violation of the state sanitary code warranted actual damages under Chapter 93A, as opposed to statutory damages. 

After trial, the Housing Court issued judgment in the landlord’s favor for unpaid rent and costs but awarded the tenants possession of the property along with damages for the Chapter 93A violation. The Appeals Court agreed with the Housing Court that a personal decision to allow an acquaintance to reside at the recently purchased property to help him get on his feet “morphed into” a transaction occurring in a business context such that Chapter 93A applied. The Appeals Court concluded that the “totality of facts” sufficiently supported the Housing Court’s conclusion. Amongst those facts were that (1) the premises was owned by an LLC without evidence the LLC managers ever lived there; (2) the rental was not an isolated rental property for the LLC, as it managed other residential and commercial properties; (3) one of the LLC managers worked with the tenants to resolve issues, pay bills, and co-managed the premises and other properties owned or operated through another LLC manager; and (4) other tenants previously resided at the premises.

As to the second issue, the Massachusetts state sanitary code seeks to protect the health, safety, and well-being of occupants and the general public by requiring that the owner of a dwelling provide water, sewer, and electricity absent a written agreement for them to be provided by a dwelling occupant. Here, the landlord and tenant had a verbal agreement that the tenant was responsible for utilities. The failure to reduce the agreement to writing, according to the Appeals Court, amounted to technical state sanitary code and Chapter 93A violations. The Housing Court awarded the tenants the exact amount that they paid for water and sewer utilities. However, since the violation was only a technical one, the tenants had affirmatively agreed to pay for utilities since the tenancy’s inception, and the Housing Court made explicit and repeated findings that the violation did not constitute a breach of the covenant of quiet enjoyment, the Housing Court erred in awarding actual rather than nominal damages. As such, the Appeals Court upheld the liability determination but vacated and remanded the amount of those damages to the Housing Court for recalculation. 

It does not appear that the Appeals Court properly considered and applied the injury requirement under Chapter 93A, § 9 when reaching the second conclusion. Although the Appeals Court correctly cited Tyler v. Michaels Stores, Inc., 464 Mass. 492, 502 (2013) and noted that a plaintiff must allege and ultimately prove a separate and distinct injury that arose from the Section 2 violation, it does not appear the Appeals Court required a separate and distinct injury. Instead, it appears that the Appeals Court relied solely on violation of the State Sanitary Code (which it concluded automatically violated 940 Code Mass. Regs. § 3.16(3) and amounted to a per se Section 2 violation). According to the Massachusetts Supreme Judicial Court in Klairmont v. Gainsboro Restaurant, Inc., 465 Mass. 165, 174 (2013), however, not every violation of the law violates 940 Mass. Code Regs. § 3.16(3) and, in turn, Section 2. Rather, code violations run afoul of Section 2 when “the conduct leading up to the violation is both unfair or deceptive.” In Klairmont, the SJC dealt with a building code violation and the argument that the code violation also violated 940 C.M. R. § 3.16(3), which triggered a per se Section 2 violation. The SJC, however, rejected the argument and, when doing so, concisely explained that the fact that a building code may qualify as a regulation “meant for the protection of the public’s health, safety, or welfare” (940 Mass. Code Regs. § 3.16(3)), does not mean that a violation of the building code necessarily qualifies as a violation of c. 93A, § 2. Section 2(a) proscribes unfair or deceptive acts or practices in the conduct of trade or commerce. Although the language of 940 Code Mass. Regs. § 3.16(3) “is unquestionably broad, by its terms it imposes the substantive limitation that the law or regulation at issue must be intended to protect consumers, and we further read the regulation as being bound by the scope of c. 93A, § 2(a).” As such, under 940 Code Mass. Regs. § 3.16(3), a violation of a law or regulation, including a building code violation, would violate Section 2 “only if the conduct leading to the violation is both unfair or deceptive and occurs in trade or commerce.” 

Finally, the SJC recognized that whether a particular violation or violations qualify as unfair or deceptive conduct “is best discerned ‘from the circumstances of each case.’” It appears, however, that the Appeals Court adopted the more lenient per se violation without further analysis of Klairmont’s requirements.