Doliner v. Brown 21 Mass. App. Ct. 692

Kaplan, J.

Upon full findings of fact, a judge of the Superior Court ruled, first, that the defendant Harold Brown had not committed an actionable interference with the plaintiff Julius Doliner’s prospective contractual relations concerning a condominium conversion, and, second, that he did not stand in breach of G. L. c. 93A, § 11. Doliner does not contest the judge’s findings of fact,1 and we are persuaded that the judge *693was right in his application of the law. We do no more than outline the situation and comment briefly on the legal propositions.

Doliner, an experienced real estate developer and contractor, learning that the owners were disposed to sell an apartment building at 50 Green Street, Brookline, decided to buy it, if he could, and convert it to condominium units. He began to negotiate with the owners and at the same time to search for primary and secondary financing. In the latter behalf he met with Raymond C. Green and Richard K. Bendetson. Doliner told them the details of his plan for the purchase and conversion of the property, and sought to interest them in providing a second mortgage for $350,000 (against an assumed purchase price of about $1,310,000). There is no indication that Doliner asked these men to keep his purpose or plan confidential. They said they would attempt to get a third person (undisclosed) to participate in the loan.

From the meeting with Doliner, Green and Bendetson — as independent businessmen, the judge held, not as agents of Doliner — went to see Harold Brown. Brown was a man with large experience in real estate investments in general, and in condominium properties in particular; he had been involved in many condominium conversions. Brown heard the details of Doliner’s plan from Green and Bendetson who, as far as appears, did not pledge Brown to any kind of secrecy or circumspection. Brown said he would consider seriously taking a fifty percent position in the secondary loan.2 He said he would

*694seek background information about the project from Robert Keezer, a broker or salesman of condominium units. In fact, Keezer already knew of Doliner’s interest in the property and had mentioned it to Brown perhaps a month earlier.

Although Green and Bendetson advised against calling Keezer, Brown promptly did so and asked Keezer to find out from Jordan Friedman (who had been sounded on primary financing) whether he, Brown, could secure an equity position in the transaction. Keezer called Friedman and then communicated to Brown that under Doliner’s latest plan Doliner would take the entire equity. At this point, Keezer, who evidently had had some hope of participating in the equity perhaps as consideration for acting as broker in the sale of the units, began to feel that he would do better with Brown as purchaser and developer than with Doliner in the same role. Now Brown (with Keezer’s support) began to aim at acquiring the property for himself.3

Friedman reported the Keezer call to Doliner. When the substance of that call was relayed by Doliner to Green, Green said he did not believe Brown was maneuvering for equity; and Doliner, apparently reassured, told Friedman that Brown’s involvement was limited to the secondary financing. Doliner did not confront Brown at this time, nor did the two ever communicate with one another.

We reach a time when a purchase price of $1,310,000 had been settled between Doliner and the owners but a draft of purchase and sale contract had not been fully agreed, and Doliner’s financing was still uncertain and inconclusive. At *695that point the owners broke off negotiations with Doliner and sold to Brown at the same price and under terms which in some particulars were more favorable to Brown than those tendered to Doliner. The judge found that were it not for Brown’s closing with the owners, they would have signed a purchase and sale agreement with Doliner if he had been able to achieve satisfactory financing.4 Recriminations by Green and Bendetson after the event need not be detailed. Keezer wound up acting as broker of the units.

1. As one of the actors in this story put it, Brown “scooped” Doliner. That, however, was far from encompassing the tort of interference with prospective contractual relations. A competitor may “interfere” with another’s contractual expectancy by picking the deal off for himself, if, in advancing his own interest, he refrains from employing wrongful means. See Restatement (Second) of Torts § 768 (1979); Nolan, Tort Law § 72, at 85-86 (1979). Acknowledging this generalization, the plaintiff’s argument expends itself in an effort, first, to show that Brown did not stand in the relation of a competitor to Doliner because he was approached by Green and Bendetson as a second mortgage lender and expressed interest in joining in the loan, and was not then announcing himself as angling for the equity. Surely this conceives of “competitor” too narrowly. It is enough that Brown was seeking to acquire the same object, not in order to inflict injury on Doliner, but for his own commercial advantage; moreover, Brown was known to be an operator in many departments of the real estate game, including condominium conversion. Compare Candalaus Chicago, Inc. v. Evans Mill Supply Co., 51 Ill. App. 3d 38, 48-49 (1977), with Lowell v. Mother’s Cake & Cookie Co., 79 Cal. App.3d 13, 21 (1978). So far as the question of “com*696petition” is one of fact, the judge’s finding controls. See H & M Associates v. El Centro, 109 Cal. App.3d 399, 409 (1980).

Second, the plaintiff seeks to show that Brown was guilty of an independent tort or something close to it.5 However, the elements of fraudulent representation were not present, nor anything that can be nearly assimilated to them. It would be hard to find a basis for imposing a duty on Brown to declare that he was now in the lists to acquire the equity. Indeed, Doliner was given warning by Friedman of the fact but he reacted mildly.6

2. The remedy of businessman against businessman of G. L. c. 93A, § 11, may be invoked against an “unfair method of competition” or an “unfair or deceptive act or practice declared unlawful by [§ 2] or by any rule or regulation issued under [§ 2(c)]” by the Attorney General. These references point to Federal Trade Commission lore as a source of interpretation. As to the first-quoted phrase, Brown was not engaged in any practice considered abusive of, or injurious to competition such as may be discerned in the theft of trade secrets,7 or in passing

*697off,8 or in adjacent business torts. See Pirozzolo, Chapter 93A: The Massachusetts Little FTC Act — A Potent Unexplored Remedy in Business Disputes, 62 Mass.L.Q. 77 (1977). Embraced in the other quoted phrase have been examples of extortion or similar oppression,9 breach of warranty,10 misrepresentation,11 betrayal of fiduciary duty,12 violation of specific regulations of the Attorney General.13 It is recognized that the language is broad enough to take in some reprehensible acts committed in business contexts that elude conventional definitions and categories.14 The courts are not invited by the statute to punish every departure from “the punctilio of an honor the most sensitive” (Meinhard v. Salmon, 249 N.Y. 458, 464 *698[1928]), but they may enforce standards of behavior measurably higher than perfidy. They need not necessarily endorse a pattern of behavior because it happens to be current in the market place. We tried to suggest a mood, although we could not prescribe a rule, when we said in Levings v. Forbes & Wallace, Inc., 8 Mass. App. Ct. 498, 504 (1979), that a new tort may be recognized under § 11 when the questioned conduct “attaints] a level of rascality that would raise an eyebrow of someone inured to the rough and tumble of the world of commerce.” See also Spence v. Boston Edison Co., 390 Mass. 604, 616 (1983). The situations have to be sized up one by one. In our view the present case is outside § 11 unless we are prepared to say that the statute enacts a rule of noblesse oblige by which a party is to be barred from competing for a business advantage because he is made aware that another has been exerting himself to the same end. That would be an extravagant rule of law.15

We are not called on to say whether before a tribunal of pure conscience Brown would be held deserving of the rebuke he got after the event on the part of Green and Bendetson.

Judgment affirmed.

Brown, J.

(concurring in part and dissenting in part). It is with utmost reluctance that I concur, even in part. I only wish that the law would aid the needy as assiduously as it does the greedy. Brown did more than sabotage Doliner’s contractual expectancy; he “pick[ed] the deal off for himself.” The judge found that, were it not for Brown’s closing with the owners, they would have signed a purchase and sale agreement with Doliner, assuming the latter had been able to achieve satisfactory financing.

In the real estate game, one never commits fully until the “numbers” have been canvassed fully. Here, the numbers were very clearly set out by Green and Bendetson during their visit to Brown. Brown told them that he would consider seriously *699taking a fifty percent position in the secondary financing of the deal. No sooner had the two messengers departed than the defendant rushed to the phone, putting in motion his plan to “scoop” the entire deal.1 If that is not wrong — and the majority opinion concludes that it is not wrong under principles of common and statutory law — then perhaps there is something amiss in the common law and in our statutory scheme.

It is not enough for me that the common law be viewed as simply a mirror of the manner and mores of the marketplace. Fundamental principles of decency and fairness, resplendent in other areas of common law, ought to be recognized here.2 I disapprove of a view which condones conduct as reprehensible as that exhibited by the defendant in this case. Ethics and morality do have a place in our economic system, the greatest example of capitalism in the history of the world. In this regard, see the instructive discussion in Meinhard v. Salmon, 249 N.Y. 458, 464 (1928). Nevertheless, having reviewed the authorities cited in the majority opinion, and mindful of the role of an intermediate appellate court not “to alter established rules of law governing principles of substantive liability” (Burke v. Toothaker, 1 Mass. App. Ct. 234, 239 [1973]), I am constrained to join in part 1 of the majority opinion.

Turning from the common law to our own statutory law, I respectfully dissent from the majority’s view that the defendant’s conduct was not actionable under G. L. c. 93A, § 11. In formulating applicable standards of conduct under c. 93A, we are advised “to discover and make explicit those unexpressed standards of fair dealing which the conscience of the com*700munity may progressively develop.” Commonwealth v. De-Cotis, 366 Mass. 234, 242 (1974), quoting Judge Learned Hand in FTC v. Standard Educ. Soc., 86 F.2d 692, 696 (2d Cir. 1936), rev’d in part, 302 U.S. 112 (1937). In this case, I would characterize the totality of the defendant’s conduct as having been infused with a high enough “level of rascality” (Levings v. Forbes & Wallace, Inc., 8 Mass. App. Ct. 498, 504 [1979]) not only to have raised the plaintiff’s eyebrow, but also to have permitted him to recover under §11.1 reject the suggestion, implicit in the majority’s view of the circumstances, that if one knows there is a shark in the water, one must take special precautions to avoid being eaten. I am not prepared to say that the law should afford greater protection to real estate sharks than it does, for example, to banks. Compare Dolton v. Capitol Fed. Sav. & Loan Assn., 642 P.2d 21, 23-24 (Colo. App. 1981). See also Warsofsky v. Sherman, 326 Mass. 290, 293-295 (1950).

Chapter 93A has established in general, for businesses as well as for consumers, a path of conduct higher than that trod by the crowd in the past. Cf. Meinhard v. Salmon, 249 N.Y. at 464. It troubles me to see such a substantial deviation from that path.