Schultz v. Subaru of America, Inc.

This appeal raises a question of first impression in Massachusetts as to whether a consumer, who has successfully utilized G.L. c.90, §7NM¡ (New Car Lemon Law) state-certified arbitration procedures to obtain a full refund from an automobile manufacturer for a non-conforming motor vehicle, may subsequently maintain a separate action against the manufacturer pursuant to G.L. c. 93A for the sole purpose of recovering attorneys’ fees incurred in pursuing arbitration. We hold that attorneys’, fees are not recoverable in a separate G.L. c.93A action subsequent to a consumer’s acceptance of a G.L. c.90, §7N‘/2 manufacturer’s motor vehicle refund.

This matter was tried upon a “Joint Stipulation as to Matters of Fact” which indicated the following: Plaintiff Roberta Schultz (“Schultz”) purchased a new, *41985 Subaru GL from the defendants’ (“Subaru”) authorized dealer, Boston Subaru, on April 12,1985. Schultz immediately experienced mechanical arid other problems with the vehicle, and attempted on three separate occasions to have the car repaired by Subaru’s dealer. The vehicle remained out of service during these repair periods for at least fifteen days.

In February, 1986, Schultz retained present counsel to assist her in resolving this dispute. Plaintiffs counsel sent two letters to Subaru and its authorized dealer to notify them of their opportunity to attempt a final repair of Schultz’ vehicle. Such attempt proved unsuccessful, and plaintiffs counsel tendered the non-conforming vehicle back to the defendant by letter dated March 10, 1986. On April 29, 1986, plaintiffs counsel sent written demands for relief pursuant to G.L. C.93A, §9 to both defendants. Subaru of New England, Inc. made no response to Schultz’ G.L. C.93A demand fetter. Subaru of America, Inc. responded only by indicating that it would forward Schultz’ letter to its distributor, Subaru of New England, Inc.

On June 27, 1986,2 Schultz requested state-certified, new car arbitration pursuant to G.L. c.90, § 7N]A After hearing and by decision dated September 9, 1986, the arbitrator directed the defendants to accept the return of Schultz’ vehicle and to pay her $11,165.78, which included $1,252.00 in finance charges; $535.00 in sales tax and $20.00 in registration fees. The defendants paid Schultz the full amount of the arbitration award and accepted the return of the vehicle within twenty days of the arbitrator’s decision as mandated by G.L. c.90, § 7Ní4(6). The parties’ Joint Stipulation indicates that the defendants satisfied the arbitration award in the belief that such payment released them from any further liability to the plaintiff with respect to her vehicle.

Approximately one year later, on October 30, 1987, Schultz instituted this G.L. C.93A, §9 suit to recover $2,490.00 in attorney’s fees for services rendered between February 3, 1986 and October 8, 1986. Subaru answered that the recovery sought by Schultz was unavailable under G.L. c.93A, G.L. c.90, §7N!¿ or Massachusetts common law; and that Schultz’ pursuit of state-certified arbitration and acceptance of an award was res judicata of her G.L. C.93A claim and constituted a binding election of remedies.

Judgment was entered for the defendants, and Schultz thereafter requested an appeal to this Division.

1. The established rule in Massachusetts is that a party must bear his own legal expenses in the absence of a statute, contract provision or stipulation which permits an award of counsel fees. See, e.g., Fuss v. Fuss, 372 Mass. 64, 70 (1977); Kohl v. Silver Lake Motors, Inc., 369 Mass. 795, 801 (1976); Chartrand v. Riley, 354 Mass. 242, 243-244 (1968). Contrary to Schultz’ arguments in this case, neither the letter, nor the underlying policies, of G.L. c.90, §7NV& permits the recovery of attorneys’ fees by a consumer who both elects to pursue state-certified arbitration as a remedy for a manufacturer’s failure to repair a non-conforming vehicle and accepts a refund from such manufacturer.

The damages recoverable by a consumer, upon an arbitrator’s finding that the vehicle in question did not conform to relevant warranties and that a refund must be made, are specifically delineated in Subsection (3) of G.L. c.90, §7N!4. Subsection (3) provides, in relevant part:

the manufacturer shall accept return of the vehicle from the

*6We do not believe that the language of §105 is intended merely to expedite proceedings before arbitrators by removing from their nonjudicial consideration the potentially troublesome item of legal fees. It also discloses a principal purpose to further the speedy, efficient and uncomplicated resolution of business disputes with very limited judicial intervention or participation.. ..

We should not, and will not encumber the statutory arbitration procedure by appending to it any of the incidents of litigation, absent a specific decision by the Legislature to do so.

Id. at 96.

2. Despite Floors, the plaintiff contends that an award of legal fees would not offend either the letter or spirit of G.L. c.90, § 7N Vs because the plaintff is proceeding in a separate action to enforce independent consumer rights. Specifically, the plaintiff argues that a separate G.L. C.93A action for attorneys’ fees is permissible because neither that statute, nor G.L. c.90, §7N*/2, compels an election of remedies; and because attorneys’ fees constitute additional relief to which the consumer is entitled, but which is unavailable through arbitration.

The plaintiff is correct in her assertion that both statutes expressly provide that the consumer procedures and remedies therein created are neither compulsory, nor exclusive.6 A consumer may choose to proceed with state-certified arbitration, or to initiate suit to recover C.93A, common law or Uniform Commercial Code damages. A final acceptance of both the arbitration award and a refund or replacement by the manufacturer pursuant to G.L. c.90, § 7N‘/2 does, however, terminate the consumer’s G.L. C.93A rights. Subsection (7) of §7N'/2 states:

For the purposes of said chapter ninety-three A, the timely delivery by a manufacturer of a refund or acceptable replacement, pursuant to a finding of state-certified arbitration, shall constitute the granting of relief upon demand.

*7This provision closely parallels Subsection (3) of G.L. C.93A, §9 which permits an action upon the prospective defendant’s failure to grant relief in response to a consumer’s thirty day demand letter. Section 9 of c.93A utilizes the terminology “written tender of settlement” to describe a prospective defendant’s response to a demand letter. Such response to “tender” may or may not be reasonable under the circumstances of the case and, if unreasonable, may properly result in consumer litigation. The phrase “tender of settlement” must be distinguished form the “granting of relief upon demand” which appears in G.L. c.90, § 7NV&(7). Construing the latter phrase in accordance with the usual and ordinary meaning of the terms employed, Conroy v. Boston, 392 Mass. 216 (1984), it is clear that the payment of an arbitration award by a manufacturer constitutes not the “tender”, but the “granting” of complete and final relief to a consumer which bars the pursuit of any unnecessary or duplicitous recovery in a subsequent C. 93A action.7 This construction of c.90, §7N!/2 serves to implement the Legislature’s obvious attempt to orchestrate and integrate different statutory consumer protection programs. It also avoids any derogation of the conclusiveness, and thus the effectiveness, of the consumer remedy created by the Lemon Law.

The plaintiff is also mistaken in her claim that c.93A “attorneys’ fees” constitute “additional relief’ to which a consumer remains entitled even after securing a full recovery under § 7NV¿ of the value of a non-conforming vehicle plus incidental expenses. The plaintiffs argument confuses the concept of damages with litigation costs or expenses. Monetary remedies or forms of relief signify damages which generally represent the total dollar value of the actual injury sustained by the plaintiff. Berube v. Selectmen of Edgartown, 336 Mass. 634, 639 (1958). Conversely, attorneys’fees are considered under c.93A merely an element of the costs or expenses of litigation which are added to, and thus distinguishable from, damages. Mott v. Kulesza, 1984 Mass. App. Div. 169, 170. Contrary to the plaintiffs contention, attorneys’ fees do not constitute “additional relief’ and cannot serve as an independent predicate for a C.93A suit. Such fees can be considered only when suit is necessary and actually filed for the purpose of obtaining substantive relief to which a plaintiff is otherwise entitled. As plaintiff Shultz was granted a full recovery in arbitration of all actual and incidental damages, her present C.93A suit was not only unnecessary, but actually barred by Sec. 7NV£(7). A litigant cannot claim to be entitled to the costs of litigation when the litigation itself is unnecessary or proscribed. This is particularly true when the attorneys’ fees sought were incurred in pursuing arbitration, and were thus not expenses or costs growing out of any litigation.8

*8The plaintiffs reliance on Kohl v. Silver Lake Motors, Inc., 369 Mass. 795 (1976) for the proposition that a consumer may institute a C.93A suit solely for the purpose of recovering attorneys’ fees is misplaced. The Supreme Judicial Court did state that “the Legislature has allowed counsel fees only if suit has been brought. .Id. at 802, signifying merely that attorneys’ fees are not recoverable other than as an incident to, or cost of, litigation. Specifically, the Court ruled that legal fees may not be considered in evaluating the reasonableness of a c.93A, Sec. 9 settlement offer. The implication is that parties are not entitled under C.93A to attorneys’ fees if they settle out of court.

The Kohl holding undoubtedly was derived from the function of attorneys’ fees in the C.93A statutory scheme. Statutory compensation for an aggrieved consumer’s legal expenses encourages private litigation of “vindictive” suits which serve ultimately to deter unlawful business practices. McGrath v. Mishara, 386 Mass. 74, 85-86 (1982). Although there is clearly a “benefit to the public where deception in the marketplace is brought to light (and thereby corrected)...”, Trempe v. Aetna Casualty & Surety Co., 20 Mass. App. Ct. 448, 458 (1985), it must also be noted that the provisions of C.93A are equally designed to promote reasonable, out of court settlements of consumer disputes. International Fidelity Ins. Co. v. Wilson, 387 Mass. 841, 857 (1983); Nader v. Citron, 372 Mass. 96, 100 (1977). Such settlement was effected in this case by the plaintiffs successful pursuit of c.90, § 7N!/2 state-certified arbitration. It would violate the settlement policies of G.L. c.93 A to permit the plaintiff herein to prevail in unnecessary litigation filed only as a pretext for recovering expenses incurred, but not recoverable, in prior arbitration proceedings.

Accordingly, the trial court’s finding is sustained. Report dismissed.