Gowen v. Benchmark Senior Living LLC (Lawyers Weekly No. 12-057-17)

ADRIENNE GOWEN, through her legal guardian Scott Gowen and on behalf of herself and all others similarly situated
Adrienne Gowen lives in an assisted living facility that is now managed by Benchmark Senior Living LLC. Gowen claims that Benchmark’s predecessor assessed and collected some unlawful charges when Gowen first moved in. Benchmark, in turn, claims that Gowen has failed to pay what she owes for living in the Benchmark facility and receiving assisted-living services from Benchmark.
Gowen alleges that Benchmark’s predecessor violated Massachusetts residential landlord/tenant law in two ways: by charging her a $ 2500 “community fee” at the inception of her lease even though such a fee is not authorized by G.L. c. 186, § 15B(1)(b); and by charging $ 5500 for last month’s rent that in realty was a security deposit, and not complying with the legal requirements for assessing a security deposit (such as holding it in a separate interest-bearing account and paying Gowen interest on her deposit each year). Gowen alleges that Benchmark is liable for prior and ongoing misconduct with respect to each of these two charges. She asserts claims for violations of G.L. c. 186, § 15B, and G.L. c. 93A and for negligent misrepresentation, intentional fraud, and unjust enrichment.
Benchmark alleges that Gowen and her guardian have failed to pay what they owe for Gowen’s residency and the services she has been receiving at the facility. Benchmark asserts counterclaims for breach of contract and unjust enrichment.
Both sides have moved to dismiss all claims and counterclaims against them under Mass. R. Civ. P. 12(b)(6). The Court will allow Benchmark’s motion in part with respect to Gowen’s claim under G.L. c. 93A concerning the “community fee” and with respect to all of her claims for negligent misrepresentation and intentional fraud. It will deny the rest of Benchmark’s motion. It will also deny Gowen’s motion to dismiss the counterclaims against her.
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1. Legal Standards. To survive a motion to dismiss under Rule 12(b)(6), a complaint must allege facts that, if true, would “plausibly suggest[] … an entitlement to relief.” Lopez v. Commonwealth, 463 Mass. 696, 701 (2012), quoting Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008), and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007). For the purpose of deciding the pending motions to dismiss, the Court must assume that the factual allegations in the complaint and any reasonable inferences that may be drawn in Plaintiffs’ favor from the facts alleged are true. See Golchin v. Liberty Mut. Ins. Co., 460 Mass. 222, 223 (2011). In so doing, however, it must “look beyond the conclusory allegations in the complaint and focus on whether the factual allegations plausibly suggest an entitlement to relief.” Maling v. Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, 473 Mass. 336, 339 (2015), quoting Curtis v. Herb Chambers I-95, Inc., 458 Mass. 674, 676 (2011).
2. Claims against Benchmark.
2.1. Community Fee claims.
2.1.1. G.L. c. 186, § 15B. Gowen states a viable claim in Count I that it was illegal for Benchmark’s predecessor to make Gowen pay a $ 2500 “community fee” and that it is therefore illegal for Benchmark to retain that community fee. Chapter 186 governs the renting of residential living space. It provides in relevant part that “no lessor may require a tenant or prospective tenant,” at or before commencement of a residential tenancy, “to pay any amount in excess of” first and last months’ rent, a security deposit equal to first month’s rent, and a charge for the cost of installing a new lock and providing a key. See G.L. c. 186, § 15B(1)(b).
Benchmark’s assertion that assisted living facilities are not subject to c. 186, § 15B, because they are regulated by the Executive Office of Elder Affairs under G.L. c. 19D, is without merit. Assisted living facilities provide their residents with a combination of a place to live and an array of supportive services. The “Residence and Service Agreement” that Gowen says she executed specifies that Gowen is entitled to receive not only living accommodations but also personal assistance and care (including assistance with bathing and grooming), housekeeping services, monitoring of her health needs, and social and recreational activities. The additional services beyond a mere residential tenancy are governed by c. 19D. But nothing in that statute
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supersedes, either expressly or by necessary implication, the legal protections that § 15B provides to all residential tenants in Massachusetts.
Nothing in c. 19D expressly exempts assisted living facilities from the requirements imposed by c. 186. Although the Legislature expressly exempted such facilities from having to comply with certain statutes that regulate health care facilities and from any zoning requirement that cluster developments obtain a special permit, it did not exempt such facilities from the fee limitations and security deposit requirements that apply to all residential tenancies. See. G.L. c. 19D, § 18. The Court may not “read into the statute a provision which the Legislature did not see fit to put there, whether the omission came from inadvertence or of set purpose.” Provencal v. Commonwealth Health Ins. Connector Auth., 456 Mass. 506, 516 (2010), quoting General Elec. Co. v. Department of Envtl. Protection, 429 Mass. 798, 803 (1999).
Nor does c. 19D implicitly supersede c. 186. To the contrary, the Legislature directed that assisted living facilities “shall meet the requirements of all applicable federal and state laws and regulations[.]” G.L. c. 19D, § 16. This makes clear that c. 19D is not intended to be an exhaustive regulatory scheme that governs all aspects of assisted living operations. And it also makes clear that Benchmark must comply with all laws that govern residential tenancies to the extent they apply to its facility.
Assisted living facilities can easily comply with both statutory schemes, providing supportive services in accord with c. 19D to a resident whose tenancy is also governed by § 15B. Courts must therefore construe and apply these two statutes in a manner that gives “meaning and purpose to both … ‘so that the policies underlying both may be honored.’ ” Alliance to Protect Nantucket Sound, Inc. v. Energy Facilities Siting Bd., 457 Mass. 663, 673 (2010), quoting Commonwealth v. Harris, 443 Mass. 714, 725 (2005).
Benchmark’s further argument that it is permitted to charge an upfront “community fee” to cover the cost of activities and other services that are provided in additional to a resident’s tenancy seems correct in the abstract. The statutory limitation on fees imposed by residential landlords only governs fees charged for a “tenancy.” See c. 186, § 15B(1)(b). To the extent that Benchmark or another assisted living facility operator provides its residents with services that are beyond the scope
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of a typical residential tenancy, it is entitled to charge for those services and may do so without running afoul of § 15B.
But Ms. Gowen alleges facts plausibly suggesting that the “community fee” she was required to pay was assessed at least in part as a charge for her residential tenancy, and not for separate activities or services. Gowen alleges that she executed a contract providing that Gowen’s $ 2500 community fee “covers up front admission staff administrative costs, your initial services coordination plan and move-in assistance, and establishes a replacement reserve for building improvements.” It may be that Benchmark’s predecessor could lawfully charge a reasonable fee for preparing a service coordination plan for and providing move-in assistance to Ms. Gowen. But costs for processing an admission application and contributions to a capital reserve appear to be costs that are associated with any residential tenancy, and which would mean they cannot be assessed in an up-front fee. See G.L. c. 186, § 15B(1)(b).
In addition, Ms. Gowen alleges facts plausibly suggesting that Benchmark can be held liable as the successor-in-interest to Gowen’s original landlord if continued retention of the community fee would violate § 15B. Gowen alleges that Benchmark adopted all of the residence agreements executed by the prior operator, is acting as Gowen’s residential landlord pursuant to the residence agreement she previously executed, and received Gowen’s $ 2500 community fee payment from the prior operator. Benchmark admits the further allegation that Gowen has not signed a new residence agreement since Benchmark took over the facility. Taken together, these allegations plausibly suggest that Benchmark “impliedly assume[d] liability of the predecessor” with respect to its alleged retention of the community fee payment. See generally Guzman v. MRM/Elgin, 409 Mass. 563, 566 (1991).
As a result, Ms. Gowen has stated a viable claim that the community fee, or at least part of it, violates c. 186, § 15B, and that Benchmark is therefore liable under the statute for retaining Gowen’s community fee payment.
2.1.2. G.L. c. 93A. Gowen claims in Count II that Benchmark can be held liable under G.L. c. 93A because the prior landlord committed an unfair trade practice by charging Gowen the community fee. It is an unfair trade practice in violation of c. 93A for a residential landlord to “require a tenant” to make a payment
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at or before the commencement of a tenancy that is not allowed by c. 186, § 15B. See 940 C.M.R. § 3.17(4)(a). As a result, Gowen may have a viable claim under c. 93A against the prior landlord.
But Gowen has not alleged any facts plausibly suggesting that Benchmark can be held liable for an alleged c. 93A violation by the prior operator of the facility where Gowen lives. As the Supreme Judicial Court has explained and held:
[T]he liabilities of a selling predecessor corporation are not imposed upon the successor corporation which purchases its assets, unless (1) the successor expressly or impliedly assumes liability of the predecessor, (2) the transaction is a de facto merger or consolidation, (3) the successor is a mere continuation of the predecessor, or (4) the transaction is a fraudulent effort to avoid liabilities of the predecessor.”
Guzman, 409 Mass. at 566. Gowen does not allege that there was a de facto merger between the prior operator and Benchmark, as a result of which Benchmark would be liable for conduct by its predecessor in violation of c. 93A. Contrast Bump v. Robbins, 24 Mass. App. Ct. 296, 314 (1987). Nor does she allege any facts plausibly suggesting that Benchmark implicitly assumed any liability of its predecessor under c. 93A, or that Benchmark can be held liable as the successor corporation under any other theory. The allegation that Gowen’s community fee payment was transferred to Benchmark does not plausibly suggest that Benchmark itself committed any unfair trade practice or that it has succeeded to any such liability of the prior landlord.
2.1.3. Negligent Misrepresentation and Fraud. In Counts III and IV, Gowen asserts claims for negligent misrepresentation and intentional fraud with respect to the original assessment of the community fee.
These counts fail to state viable claims because the facts alleged do not plausibly suggest that Benchmark assumed any liability on this score from the prior landlord. The alleged misstatements were made at or about the time that Gowen was charged the community fee, before Benchmark had anything to do with Gowen’s tenancy. The allegations that Benchmark now runs the facility and holds Gowen’s community fee payment do not plausibly suggest that Benchmark can be held liable for alleged misrepresentations or fraud by the prior facility operator. Cf. Guzman, 409 Mass. at 566-571 (company that takes over manufacture of particular product line from predecessor is not liable for torts committed by predecessor).
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2.1.4. Unjust Enrichment. Gowen claims in Count V that Benchmark is liable under an unjust enrichment theory for retaining Gowen’s community fee payment.
This claim is not time barred. Claims like this one, brought “to recoup money paid to the defendant under conditions … giving rise to an obligation in equity and good conscience to refund” the payment, are quasi-contractual claims that are subject to a six year limitations period under G.L. c. 260, § 2. City of New Bedford v. Lloyd Inv. Associates, Inc., 363 Mass. 112, 118-119 (1973); accord Suffolk Const. Co. v. Benchmark Mechanical Sys., Inc., 475 Mass. 150, 156 (2016). This action was filed less than four years after Gowen paid the community fee she now seeks to challenge.
This claim for unjust enrichment appears to be redundant of Gowen’s statutory claim under G.L. c. 186, § 15B. Gowen claims that Benchmark’s alleged retention of the community fee is unjust because doing so violates § 15B. Since Gowen has an adequate remedy at law under that statute, it appears that the separate unjust enrichment claim is improper. See Santagate v. Tower, 64 Mass. App. Ct. 324, 329 (2005) (“An equitable remedy for unjust enrichment is not available to a party with an adequate remedy at law.”); Reed v. Zipcar, Inc., 883 F.Supp.2d 329, 334 (D.Mass. 2012) (Gorton, J.), aff’d, 527 Fed. Appx. 20 (1st Cir. 2013) (dismissing claim for unjust enrichment because statutory claim for unfair trade practices under G.L. c. 93A provided adequate remedy at law).
But Benchmark has not moved to dismiss Count V on this basis. And it seems unlikely that it will make any practical difference, for example with respect to the scope of discovery or any trial, whether this claim is dismissed or not. The Court therefore declines to dismiss this claim for unjust enrichment sua sponte on this basis that Gowen has an adequate remedy under the statute.
2.2. Last Month’s Rent claims.
2.2.1. G.L. c. 186, § 15B. Gowen states a viable claim in Count VI that her upfront payment of a last month’s rent was actually a security deposit, and that Benchmark is therefore liable for not complying with the legal requirements for residential landlords who hold a security deposit. The residency agreement that Gowen alleges she signed provides that the landlord may deduct from her last
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month’s rent payment an amount equal to the cost to repair any damage to her apartment not caused by normal wear and tear or to repair any other property of the landlord. Gowen therefore has a viable claim that her payment of $ 5500 as “last month’s rent” is subject to the statutory requirements imposed on landlords who collect security deposits. As discussed above, Benchmark’s argument that assisted living facility operators need not comply with G.L. c. 186, § 15B, is without merit.
By statute, Benchmark is the legal successor-in-interest to Gowen’s prior landlord with respect to the continued holding of any security deposit or any last month’s rent. See G.L. c. 186, § 15B(5) & (7A).
Benchmark therefore has a legal obligation to hold any security deposit paid by Gowen in a separate interest bearing account and to pay Gowen annual interest on that deposit. See G.L. c. 186, § 15B(3)(a) & (b). The complaint plausibly suggests that Benchmark has breached these statutory obligations.
2.2.2. G.L. c. 93A. Count VII states a viable claim against Benchmark under G.L. c. 93A. Gowen alleges that Benchmark has failed to pay interest each year on her security deposit and failed to hold that deposit in a separate interest bearing account. Such conduct, if proved, would constitute an unfair trade practice in violation of c. 93A. See 940 C.M.R. § 3.17(4)(c)-(d).
2.2.3. Negligent Misrepresentation and Fraud. In Counts VIII and IX, Gowen asserts claims for negligent misrepresentation and intentional fraud with respect to the original assessment of the alleged security deposit. For the reasons discussed above, the facts alleged in the complaint do not plausibly suggest that Benchmark can be held liable for alleged misrepresentations or fraud by Gowen’s previous landlord. The Court will therefore dismiss these claims.
2.2.4. Unjust Enrichment. Gowen claims in Count X that Benchmark is liable under an unjust enrichment theory for retaining Gowen’s alleged security deposit. For the reasons discuss above, Benchmark’s argument that this claim is barred by the statute of limitations is without merit.
2.3. Class Allegations. Gowen asserts claims on behalf of herself and a putative class consisting of former, current, and prospective tenants of this assisted
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living facility who have paid any fee not allowed under G.L. c. 186, § 15B(1)(b) or an amount subject to regulation as a security deposit under c. 186, § 15B(4).
Benchmark has moved to “dismiss” these class allegations. Benchmark has not moved to deny class certification based upon an appropriate factual showing. That is unsurprising, as Gowen has not even had the opportunity to conduct discovery that may be necessary to address class certification issues. Instead, Benchmark seeks to strike the class allegations at the outset without giving Gowen any opportunity to muster evidence to support a motion for class certification (or to oppose a motion to deny class certification).
The Court denies this request. Class allegations are not subject to being dismissed under Mass. R. Civ. P. 12(b)(6) if the underlying claims are legally viable.
3. Counterclaims against Gowen. Benchmark asserts counterclaims for breach of contract and unjust enrichment, based on its allegations that Ms. Gowen has stopped paying what she owes for her residency and the services provided to her at the Benchmark facility. Gowen has moved to dismiss these counterclaims on three grounds, none of which has merit.
First, the counterclaims are not barred by res judicata. It is undisputed that Benchmark previously brought a summary process action seeking to evict Gowen, and that the district court entered final judgment in Gowen’s favor. But the district court issued an order stating that it was dismissing the action because Ms. Gowen was “not properly served with a Notice to Quit as required” and her guardian was not a proper party to the action in his individual capacity. The prior judgment has no claim preclusive effect because the case was not decided on the merits. See Custody of a Minor, 375 Mass. 733, 741-742 (1978); Miller v. Campello Co-operative Bank, 344 Mass. 76, 79 (1962). The Court cannot view the district court judgment in isolation, without considering the order stating that the case was being dismissed without any decision on the merits. See Custody of a Minor, supra at 742.
Second, Gowen’s argument that Benchmark has not alleged the basis for its contractual claims “with particularity” and “specificity” misses the mark. A contract claim does not need to be alleged with particularity. See Mass. R. Civ. P. 8(a), 9(b). Benchmark’s allegations plausibly suggest that Gowen is living in Benchmark’s
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facility and receiving assisted living services, that Gowen has either an express or an implied contractual obligation to pay for her residency and services, and that Gowen has not done so. Benchmark is not required to provide more factual detail the terms of the alleged contract, what amounts Gowen has paid, and what amount Benchmark claims it is still owed. See, e.g., Lopez v. Commonwealth, 463 Mass. 696, 701 (2012) (“detailed factual allegations are not required”).
Third, Gowen’s assertion that Benchmark’s counterclaims are an impermissible attempt to circumvent the requirements of summary process is also without merit. It is true that Benchmark cannot evict Ms. Gowen except by bringing a summary process action under G.L. c. 239 in District Court. See G.L. c. 184, § 18 (“No person shall attempt to recover possession of land or tenements in any manner other than through an action brought pursuant to [G.L. c. 239] or such other proceedings authorized by law.”); Attorney General v. Dime Sav. Bank of New York, FSB, 413 Mass. 284 (1992) (mortgagee who forecloses on real property may not bring trespass action against holdover tenant or mortgagor in actual possession of foreclosed premises because exclusive remedy to obtain possession is provided by summary process statute). But Benchmark does not seek to evict Gowen in this proceeding. If a landlord does bring a summary process eviction action, it may also bring a separate action for rent. See G.L. c. 239, § 2 (“Failure to claim rent and use and occupation in the action shall not bar a subsequent action therefor.”). Benchmark is similarly free to sue Gowen seeking unpaid rent without asserting such a claim as part of a summary process action.
The motion by Benchmark Senior Living LLC to dismiss all claims against it is ALLOWED IN PART with respect to Counts II, III, IV, VIII, and IX of Plaintiff’s complaint and DENIED IN PART with respect to Counts I, V through VII, and X and with respect to the allegations regarding a putative class action. The motion by Adrienne Gowen to dismiss all counterclaims against her is DENIED.
5 May 2017
Kenneth W. Salinger
Justice of the Superior Court
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