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Recent Victory in the Mass. Appellate Division Provides Clarity on Consumer Protection Exception

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Attorneys Brendan Slean and K. Scott Griggs of Lawson & Weitzen LLP recently clarified the Massachusetts Consumer Protection Law - known as Chapter 93A - “trade or commerce” exception for charitable organizations after a successful decision at the Massachusetts Appellate Division. In Hebrew Senior Life, Inc. v. Novack, No. 20-ADSP-03SO (June 30, 2021), the Appellate Division held that Hebrew Senior Life (“HSL”) was not engaging in “trade or commerce” when it leased an apartment to a tenant, but did not make profit from the rental of property, and thus, was not subject to a Chapter 93A claim.

This summary process action originally was tried before a jury in 2016 who found in favor HSL on all counts, with the trial judge reserving the Chapter 93A claim for himself and similarly finding no violation of the consumer protection statute. The Appellate Division later affirmed the judgment of the trial court but vacated the trial judge’s entry of judgment on the Chapter 93A claim because the trial judge failed to issue findings of fact and rulings of law. The Chapter 93A claim was remanded back to the trial court where HSL moved for summary judgment arguing that HSL was a nonprofit entity not engaged in “trade or commerce” under Chapter 93A.

G.L. c. 93A, § 2(a) makes unlawful “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” (Emphasis added). Here, the Appellate Division aptly characterized the issue as “whether as a nonprofit entity, HSL was engaged in ‘trade or commerce’ for purposes of G.L. c. 93A, § 2, when it leased the apartment to Novack.” As noted by the Appellate Division, the inquiry of whether an entity is engaged in “trade or commerce” turns on whether the acts complained of by Novack were committed within a “business context” by HSL. In its motion for summary judgment, HSL introduced undisputed facts HSL did not earn a profit from renting the property to Novack. The record also included evidence that the tenant lived in a subsidized rental unit, which was below market rate. Finally, HSL also entered evidence that its core mission was one of charity and service, as opposed to a profit motive. 

In reviewing this evidence, the trial court determined that it was undisputed that HSL was not engaged in “trade or commerce” under Chapter 93A. The Appellate Division agreed and held that, “[b]ecause it is not in dispute that her lease was subsidized, below market rate, and that HSL was not making a profit from the ‘transaction,’ we conclude that HSL’s conduct did not take place in a business context.” Hebrew Senior Life v. Novack, (citing All Season Servs., Inc. v. Commissioner of Health and Hosps. of Boston, 416 Mass. 269, 271 (1993). Accordingly, the Appellate Division concluded HSL was not engaging in “trade or commerce” and was not subject to a c. 93A claim. 

This decision provides helpful clarity to charitable organizations, particularly in the healthcare industry, who face G.L. c. 93A claims in their role as landlord. In short, this case further solidifies that a charitable organization that does not earn a profit from the transaction of renting property to tenants may be immune from liability under G.L. c. 93A because they are not operating in a “business context.” 

Lawson & Weitzen attorneys regularly represent commercial and charitable landlords in summary process actions and other civil litigation matters. If we can assist, please do not hesitate to contact Brendan P. Slean or K. Scott Griggs.