In H1 Lincoln Inc. v. South Washington Street, LLC, Case No. SJC-13098 (January 24, 2022), the Massachusetts Supreme Judicial Court Massachusetts Supreme Judicial recently ruled that a limitation-of-liability provision provides no protection for defendants who willfully or knowingly engage in unfair or deceptive conduct in violation of G. L. c. 93A, ? 11, the Massachusetts version of the Consumer Fraud Act.
The trial judge found for Plaintiff on its claim and granted specific performance. After finding that Defendants’ violations of the statute were willful or knowing the judge doubled the damages awarded. After reopening the trial, the judge awarded Plaintiff additional damages for willful or knowing violations. The Supreme Judicial Court affirmed, holding (1) Defendants’ conduct met the standard for unfair or deceptive acts or practices under chapter 93A, 11; (2) the double damages award was warranted; and (3) a limitation of liability provision provides no protection in a chapter 93A, 11 action where the violation of the statute was done willfully or knowingly, as in this case.
The Court invalidated a limitation-of-liability clause in a commercial leasing contract. The Court held that the provision was “unenforceable as contrary to public policy” because of the lessor’s “fraudulent misrepresentations and intentional schemes to string along and take advantage of” the leasee. When a party’s conduct is sufficiently “callous and intentional” to “merit multiple damages” under the Massachusetts Act, the Court reasoned, public policy concerns and the legislative intent of the statute to deter intentionally unfair and deceptive acts require invalidation of contractual limitations on liability.
The key takeaway, here, is that businesses engaged in commerce in Massachusetts should recognize that a limitation-of-liability provision may not protect them from unfair and deceptive trade practices liability-even where sophisticated, commercial entities negotiated the contract. The likelihood of invalidation will turn on the seriousness of the violation. The more serious the violation, the more likely a court will invalidate the provision. The reverse also appears true. “Enforcement of limitation of liability provisions for so-called relatively innocent violations of the statute,” the Court noted, “does not raise the same public policy concerns as would enforcement of liability waivers for willful or knowing violations.”