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Date: 12-16-2015

Case Style: Saia v. Bay State Gas Co

Case Number: 14-P-1010

Judge: Diana Maldonado

Court: Massachusetts Supreme Court

Plaintiff's Attorney: Valeriano Diviacchi

Defendant's Attorney: J. Christopher Allen, Jr., Troy Lieberman

Description: The plaintiff appeals from a judgment of dismissal contending, as she did below, that a transaction involving the lease of a water heater was actually a credit sale in disguise, and, consequently, that the defendant's failure to
make certain required disclosures amounted to common-law misrepresentation and a violation of G. L. c. 93A. Guided by
Silva v. Rent-A-Center, Inc., 454 Mass. 667 (2009) (Silva), a Superior Court judge concluded that the transaction at issue did
not meet the definition of either a "credit sale" under the Consumer Credit Cost Disclosure Act (CCCDA), G. L. c. 140D, 1,
or a "retail installment sale agreement" under the Retail Instalment Sales and Services Act (RISSA), G. L. c. 255D, 1,
and, accordingly, granted summary judgment in favor of the defendant. We agree and affirm.
Background. In July, 2010, the plaintiff, Diane Saia, entered into an agreement with the defendant, Bay State Gas
Company (Bay State), for the installation of a new water heater at her home in Longmeadow. The plaintiff signed a document
entitled "Appliance Lease Agreement," which obligated her to pay $28.16 per month for three years for use of a water heater.
The total lease payments for the three-year "minimum term" amounted to $1,013.76. That amount combined with a $220 upfront
installation fee brought the plaintiff's total obligation under the agreement to $1,233.76. At the end of the minimum term,
both the plaintiff and the defendant could cancel the lease at any time upon a thirty-day written notice. Absent the written
cancellation notice, the lease could continue indefinitely. The plaintiff was also given the option to purchase the water heater at any time during the lease (including within the minimum term). Under this buyout option, the purchase price was the
greater of two amounts: (1) the sum of one-half of the paid lease payments subtracted from a "total installed price" of
$1,510.87,2 or (2) $75. After making thirteen lease payments totaling $366.08, the plaintiff chose to exercise the purchase
option and paid an additional $1,381.66 pursuant to the contract buyout formula.3 Adding together the lease payments, the
upfront installation fee, the buyout price, and the sales tax, the plaintiff spent a total of $1,967.74 to take ownership of
the water heater. On November 10, 2010, the plaintiff filed a four-count amended class action complaint asserting misrepresentation (Count I), violations of G. L. c. 93A (Count II), unjust enrichment (Count III), and seeking rescission on the basis that while not defined in the written agreement, the total installed price reflected the wholesale cost of the heater plus a markup, the labor costs for installation, and the defendant's operating and maintenance costs. The price to purchase the water heater from the defendant upfront instead of leasing it would have been similar to the "total installed price."
3 Applying the buyout formula, the total rental payments of $366.08 were divided by two (one half of the total lease payments paid to date). The resulting figure of $183.04 was then subtracted from the total installed price of $1,510.87 for a resulting buyout purchase price of $1,327.83, to which $53.83 in sales tax was added for a sum total of $1,381.66.
the defendant had violated G. L. c. 93, 48 (Count IV). A Superior Court judge dismissed the entire complaint for failure
to state a claim pursuant to Mass.R.Civ.P 12(b)(6), 365 Mass. 754 (1974). This court, in an unpublished decision pursuant to
Appeals Court Rule 1:28, affirmed the dismissal of counts III and IV and reversed the dismissal of the remaining claims which,
resting on the CCCDA and the defendant's failure to disclose interest charges, alleged common-law misrepresentation and a
violation of G. L. c. 93A. Saia v. Bay State Gas Co., 81 Mass. App. Ct. 1127 (2012) (Saia I).4 Following remand on the
reinstated counts, the judge entered summary judgment in favor of the defendant on the plaintiff's amended complaint, and the
plaintiff timely filed her appeal. Summary judgment. In reviewing a grant of summary
judgment, we consider the evidence in the light most favorable
to the nonmoving party and determine whether "all material facts
have been established and the moving party is entitled to a
judgment as a matter of law." Augat, Inc. v. Liberty Mut. Ins.
Co., 410 Mass. 117, 120 (1991). "We may consider any ground
supporting the judgment." Ibid.
4 In the plaintiff's amended complaint and in the appeal that followed, the plaintiff rested her claim on an alleged violation of the CCCDA. There was no claim under RISSA. Accordingly, in Saia I, we did not consider, as we do now, the effect of RISSA and the Supreme Judicial Court's decision in Silva (interpreting the application of only the RISSA statute to a lease agreement) to her claim.

5
The plaintiff contends the transaction at issue was
actually a disguised credit sale or a retail instalment sale
agreement and, as a result, that the defendant failed to make
certain disclosures required by the CCCDA and RISSA.5 The
plaintiff asserts this failure amounts to common-law
misrepresentation and a violation of G. L. c. 93A. The first
step in our inquiry, therefore, is to determine whether the
transaction meets the definition of a credit sale under the
CCCDA or a retail instalment sale agreement under the RISSA.
The CCCDA defines a credit sale as:
"any contract in the form of a bailment or lease if the bailee or lessee contracts to pay as compensation for use a sum substantially equivalent to or in excess of the aggregate value of the property and services involved and it is agreed that the bailee or lessee will become, or for no other or a nominal consideration has the option to become, the owner of the property upon full compliance with his obligations under the contract."
G. L. c. 140D, 1, inserted by St. 1981, c. 733, 2. The
RISSA similarly defines a retail instalment sale agreement as:
"any contract in the form of a bailment or lease if the bailee or lessee contracts to pay as compensation for use a sum substantially equivalent to or in excess of the value 5 Following remand, the plaintiff raised RISSA in a motion seeking partial summary judgment. In granting summary judgment for the defendant, the motion judge addressed the plaintiff's claims under RISSA both because the plaintiff raised RISSA in her motion, and because RISSA spells out the same disclosure requirements as those specified in the CCCDA. See G. L. c. 255D, 31 (indicating that transactions subject to RISSA are also subject to CCCDA). For the same reasons, we also consider the application of RISSA.

6
of goods involved and it is agreed that the bailee or lessee will become, or for no other or for a nominal consideration has the option to become the owner of the goods upon full compliance with his obligations under the contract."
G. L. c. 255D, 1, as appearing in St. 1981, c. 733, 14. The
operational language of the two statutes is virtually
indistinguishable, differing only in the manner in which each
describes the object of the agreement. The object of the
agreement in a credit sale is defined as "property and
services," while it is defined simply as "goods" for a retail
instalment sales agreement. We nevertheless address each
statute separately.
In Silva, the Supreme Judicial Court considered a certified
question from a judge of the United States District Court for
the District of Massachusetts concerning whether a "consumer
lease agreement" for a laptop computer was actually a retail
instalment sale agreement in disguise and, therefore, subject to
RISSA regulation. Silva, supra at 668. Emphasizing that both
requirements of the statute had to be met, the court stated that
in order for a transaction to be a retail instalment sale
agreement, the contract must both "obligate the consumer to pay
an amount substantially equivalent to, or in excess of [the
value of] the goods involved and the consumer must have the
option to become the owner for no other or nominal consideration

7
on full compliance with his or her contractual obligations."
Id. at 673 n.11. In evaluating a contract under this two-prong
test, the court directs that we look "to the nature of the
contract at the time it was formed, focusing on the parties'
contractual rights and obligations at that point. See 4 J.J.
White & R.S. Summers, Uniform Commercial Code 30-3, at 19 (5th
ed. 2002)." Id. at 674. The court also observed that
"application of a regulatory framework does not depend on the
economics of hindsight." Ibid. Applying this analytical
framework to the lease agreement into which the plaintiff
entered here, we conclude the agreement with Bay State does not
qualify as a retail instalment agreement under RISSA.
While it appears that there may be at least a colorable
claim that the lease agreement at issue here meets the first
prong of the test identified in Silva, supra at 673 n.11,6 we
6 Under her lease agreement, the plaintiff was obligated to pay a monthly rental fee, including tax, of $28.16 for a minimum term. At the end of the minimum three-year lease term, the plaintiff would have been obligated to have paid $1,013.76 in rental fees, plus an additional upfront installation fee of $220 for a total contract price of $1,233.76, inclusive of sales tax. This figure amounts to about seventy-five per cent of the stated $1510 installed price, which is significantly higher than the minimal one-week $39 payment required in Silva, supra. Plus, the plaintiff asserts that $1510 is an inflated price for a water heater. According to the plaintiff, the actual price of an installed water heater is $1200, and the defendant does not dispute that there is arguably a factual question regarding the installed price, which, according to the plaintiff, results in a sum "substantially equivalent to or in excess of the value" of the water heater. See Silva, supra at 674. Without conceding

8
nevertheless agree with Bay State that the plaintiff's claim
fails on the second prong. In order for the plaintiff to take
ownership of the water heater at the end of her three-year lease
term, she would have had to make an additional payment of
$1,003.99 -- the $1510 installed price minus $506.88 (one-half
of $1,0137) plus tax. That payment, which is nearly two thirds
of the $1,510.87 installed price, is, in the words of the
statute, neither "no other" nor "nominal consideration" and,
accordingly, precludes a conclusion that the lease agreement at
issue here constitutes a retail instalment sale agreement under
RISSA.8 See Silva, supra at 674.
that the first prong is satisfied by the three-year lease term at issue here, the defendant contends that even if that prong was satisfied, the plaintiff's claim fails on the second prong. Ibid.
7 Three years of monthly rental payments at $28.16.
8 Counterintuitively, the transaction may have qualified as an instalment sale had the payoff amount been less. In other words, by charging more money, i.e., structuring the deal such that only a small portion of the lease payments was credited toward the purchase price, the transaction was potentially transformed from a sale to a lease, and fell outside of RISSA's consumer protection reach, even though considering the upfront payment, lease payments, and payoff payment, the consumer would have paid approximately forty-six per cent above the $1,510 installed price to take ownership of the water heater. Saia contends that because the agreement involves a long-term lease of a permanent household fixture, which by its very nature results most often in purchase, extension, or renewal of the lease at the end of the three years, RISSA applies. Stated that way, however, while the agreement may appear to disfavor consumers in that regard, she points to no wording in the statute or any case law that draws the distinctions she urges.

9
Bay State now urges that we apply the reasoning of Silva to
the plaintiff's claim under the CCCDA. As noted, Silva
addressed the definition of a retail instalment sale agreement
under RISSA. We agree that the identical language used by the
two statutes in defining their respective sales transactions
invites application of the same analysis. That approach was
recently acknowledged by the United States Court of Appeals for
the First Circuit in a similar case involving a water heater
lease. See Philibotte v. Nisource Corporate Servs. Co., 793
F.3d 159, 167 (1st Cir. 2015). The court noted, however, that
the Supreme Judicial Court had not yet spoken to the application
of Silva in the CCCDA context. Id. at 166. Instead, the court
reasoned that the plaintiff's lease in that case failed to meet
the first prong of the CCCDA definition for a credit sale and.
thus, the court did not address whether Silva required the same
result. See Philibotte v. Nisource Corporate Servs. Co., supra
at 167 ("We need not, and so should not, reach that issue
because Philibotte's claim plainly fails to meet the first prong
of the CCCDA definition").
In light of Philibotte v. Nisource Corporate Servs. Co.,
supra, and the arguments raised in this appeal, we are now
persuaded that Silva's interpretation of the definition of a
retail installment sale under RISSA should apply as well to the
CCCDA's definition of a credit sale. First, the two statutes

10
are expressly connected pursuant to 31 of RISSA, as appearing
in St. 1981, c. 733, 23, which provides that "[a] transaction
subject to the provisions of this chapter shall also be subject
to the provisions of chapter one hundred and forty D . . . ."9
We interpret this to mean that the statutes should be given the
same consideration, so as to achieve their common goal. See
generally, May v. SunTrust Mort., Inc., 467 Mass. 756, 759
(2014), quoting from Fidler v. Central Coop. Bank, 226 B.R. 734,
736 (Bankr. D. Mass. 1998) (CCCDA designed "to assure a
meaningful disclosure of credit terms" and protect against
inaccurate and unfair credit billing); Wilkins, The New
Massachusetts Retail Installment Sales Act, 51 Mass. L.Q. 205,
206-208 (1966) (RISSA to provide substantial protection to
consumers, including the disclosure of finance charges on
obligations paid in more than one instalment).
Furthermore, the two statutes share the same overriding
purpose and, with respect to the relevant definitions, nearly
identical language. Therefore, they should be treated in a
consistent manner.10 That the two statutes are aimed at somewhat
9 Although RISSA was enacted in 1966, 31 was amended in 1981 to make reference to c. 140D, when the latter went into effect. See St. 1981, c. 733, 23.
10 A similar approach has been adopted with respect to identical language in the disclosure requirements of the CCCDA and the Federal Truth in Lending Act (TILA), 15 U.S.C. 1635. See, e.g., May v. SunTrust Mort., Inc., 467 Mass. 756, 759

11
different aspects of consumer credit transactions reflects, we
believe, the historical development of consumer credit
legislation generally, rather than a legislative intent that
their virtually identical provisions be treated differently.
See Curran, Legislative Controls as a Response to Consumer
Credit Problems, 8 B.C. Indus. & Com. L. Rev. 409, 419 (1967)
(as a result of piecemeal legislation responding to changes in
the consumer-credit market, "[w]hen regulation of the same
subject matter occurs in acts that apply to different classes of
arrangements, similarity of treatment may be observed").
For these reasons, in our view, application of Silva's
RISSA analysis to the identical operational language in CCCDA's
definition of a credit sale compels the same result. As noted
in our discussion under RISSA, we understand full compliance
with contractual obligations, under the second prong of the
CCCDA's definition, to mean completion of the three-year lease
term, irrespective of the option to renew. Since the plaintiff
could not become the owner of the water heater for nominal
consideration at the end of the three-year term, the lease
agreement did not constitute a credit sale under the CCCDA, and
Bay State's alleged failure to provide the plaintiff with the
(2014) (interpreting CCCDA consistently with TILA, upon which the State statute was modeled); Rodrigues v. Members Mort. Co., 323 F. Supp. 2d 202, 210 (D. Mass. 2004) (essentially identical disclosure requirements of the CCCDA and TILA "do not require separate analysis").

12
disclosures required under the CCCDA did not constitute a
violation of c. 93A.
Because the parties' transaction involving the water heater
was neither a credit sale nor a retail instalment sale
agreement, Bay State was not obligated to make disclosures
pursuant to the CCCDA or RISSA.11 The lack of statutory
disclosure, therefore, cannot serve as the basis for common-law
misrepresentation or c. 93A claims. We affirm the entry of
summary judgment on that basis.
Other matters. a. Unreviewable claims. The plaintiff
also appeals from what she claims is the judge's denial of her
motion to further amend the complaint. On the record before us,
however, there is no indication that the judge acted on this
motion. Without a ruling on the motion, there is no disposition
for us to review. Marcil v. John Deere Indus. Equip. Co., 9
Mass. App. Ct. 625, 632 (1980).12
11 The Philibotte case involved the same plaintiff's counsel and defense counsel, as well as the same defendant, as in this case. (Nisource was described as doing business as Bay State Gas Co. Philibotte v. Nisource Corporate Servs. Co., supra at 160.) It also involved the same general allegations that a transaction involving a water heater was actually a disguised credit sale and that the defendant failed to make the required disclosures. Id. at 161.
12 The plaintiff also seeks to appeal from the judge's denial of her motion for a preliminary injunction. In view of our disposition of the case on the merits, we need not address this claim.

13
b. Motion to vacate. The plaintiff appeals from the
judge's denial of a motion to vacate the dismissal of her unjust
enrichment claim, which dismissal we affirmed in Saia I. The
plaintiff cites no authority, and we know of none, that
authorizes the Superior Court to effectively overrule our
decision. The plaintiff mistakenly cites the "law of the case"
doctrine, see Peterson v. Hopson, 306 Mass. 597, 601-602 (1940),
which has no application in the circumstances presented here.

Outcome: Finally, we also reject the plaintiff's claim that the judge misinterpreted our decision
in Saia I by declining to consider her G. L. c. 93, 48, claims. In Saia I we expressly affirmed the dismissal of the plaintiff's claim for rescission of the agreement under G. L. c. 93, 48, and the judge did not err in so concluding.
Judgment affirmed.

Plaintiff's Experts:

Defendant's Experts:

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