Crown Communities, LLC v. Austin arose out of a dispute over the exercise of a statutory right of first refusal under the Massachusetts Manufactured Housing Act. The Pocasset Park Association, Inc. (the Association), an incorporated homeowners’ association representing resident tenants of a manufactured housing community in Bourne, Massachusetts, sought to purchase the property on which the community was located after the property owner, the Charles W. Austin Trust, entered into a purchase and sale agreement with Crown Communities, LLC (Crown) for $3.8 million. In response to the Association’s attempt to exercise its statutory right of first refusal, Crown engaged in an outreach campaign directed at resident tenants, which ultimately formed the basis of the Association’s Chapter 93A claims.
Crown filed a lawsuit against the Association, seeking declaratory relief to clarify that the Association had not sufficiently or validly exercised its right of first refusal. The Association brought counterclaims against Crown under Massachusetts General Law, Chapter 93A, § 11, alleging unfair and deceptive business practices, as well as a related claim for tortious interference with the Association’s purchase and sale agreement with the trust. Specifically, Crown allegedly engaged in several activities that the Association characterized as improper: Crown allegedly sent letters to resident tenants touting its superior management capabilities and offering financial incentives, including a $50 gift card in exchange for signing a withdrawal form retracting support for the Association’s purchase. The Association also alleged that Crown offered a “Crown Guarantee” package that included a $5,000 home remodeling credit, a home buy-back program at $10,000 over appraised value, and a home trade-up program at dealer invoice cost. Additionally, and most significantly for the Chapter 93A analysis, Crown allegedly told resident tenants that under the Association’s management, they would lose rent control rights — a statement that the Association asserted was factually incorrect, as neither local nor state law afforded the tenants any rent control rights, regardless of who purchased the property.
The Massachusetts Supreme Judicial Court affirmed the trial court’s rejection of the Association’s Chapter 93A claims, applying a deferential standard of review to the trial judge’s factual findings. The appeals court ruled that, to prevail on a claim under Chapter 93A, § 11, the Association was required to demonstrate that Crown engaged in an unfair or deceptive act or practice — specifically, conduct that falls within the penumbra of some common-law, statutory, or other established concept of unfairness, or conduct that is immoral, unethical, oppressive, or unscrupulous. The court noted that fraudulent misrepresentation is sufficient to establish deception under Chapter 93A, but that an innocent or good faith misstatement, even if incorrect, does not rise to that level.
The trial judge credited testimony from Crown’s representatives that they genuinely, though mistakenly, believed Massachusetts law afforded the tenants rent control rights, undermining the Association’s claim that Crown knowingly made false statements. The Massachusetts Supreme Judicial Court deferred to this credibility determination. According to the court, because the misrepresentation was not knowingly or recklessly made, it did not constitute a fraudulent misrepresentation and therefore did not support a Chapter 93A claim.
As to Crown’s alleged financial incentives to resident tenants, the trial judge found that these incentives were offered in good faith to win resident tenants’ support and that they were noncoercive, as tenants were free to reject them without repercussion. The appeals court affirmed this finding, explaining that a business entity may by proper means seek to divert business from competitors through attractive offers of its own goods or services.
The Association also argued that Crown’s filing of the underlying lawsuit and the memorandum of lis pendens constituted tortious interference and an unfair or deceptive practice, characterizing the complaint as frivolous. The Massachusetts Supreme Judicial Court disagreed, finding that the litigation concerned a genuine, good faith dispute over whether the Association had validly exercised its statutory right of first refusal. Because there was a colorable legal basis for Crown’s claims, filing the lawsuit could not support a Chapter 93A violation. Finally, the court reaffirmed the well-established principle that the motivation of personal or financial gain is generally not sufficient to constitute improper motive for purposes of either tortious interference or a Chapter 93A claim.
The court’s analysis makes clear that not every aggressive or even factually incorrect statement made in the course of a business dispute will rise to the level of an unfair or deceptive practice under Chapter 93A. The linchpin of the court’s reasoning was the credibility of Crown’s witnesses and the trial judge’s determination that Crown’s representatives acted in good faith, even when their statements turned out to be wrong. This case underscores the importance of witness preparation and credibility at trial. Businesses may wish to confirm that any competitive inducements or incentives offered to third parties are noncoercive and clearly presented as voluntary, so that they may be characterized as legitimate competitive conduct rather than improper means, if necessary.
