RCS LEARNING CENTER, INC., & Another v. ANN B. PRATT, Trustee, & Others.

NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule
23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as rule 1:28,
as amended by 73 Mass. App. Ct. 1001 [2009]), are primarily directed to the parties
and, therefore, may not fully address the facts of the case or the panel's
decisional rationale. Moreover, such decisions are not circulated to the entire
court and, therefore, represent only the views of the panel that decided the case.
A summary decision pursuant to rule 23.0 or rule 1:28 issued after February 25,
2008, may be cited for its persuasive value but, because of the limitations noted
above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260
n.4 (2008).

COMMONWEALTH OF MASSACHUSETTS

APPEALS COURT

22-P-951

RCS LEARNING CENTER, INC., & another1

vs.

ANN B. PRATT, trustee,2 & others.3

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

This case arises out of a failed real estate transaction

between the plaintiffs, RCS Learning Center, Inc. and RCS,

Behavioral & Educational Consulting LLC (collectively "RCS"),

and the defendants, Ann B. Pratt, trustee of the Nobscot Realty

Trust ("the trust"), Northside LLC ("Northside"), Robert E.

Foley ("Foley"), and Foley's son, Luke R. Foley ("Luke"). In

May 2015, the plaintiffs entered into a purchase and sale

agreement ("the agreement") whereby RCS agreed to purchase two

contiguous parcels of real estate located in Framingham, one

owned by the trust and the other owned by Northside. When,

after extensive unsuccessful negotiations, RCS failed to acquire

1 RCS, Behavioral & Educational Consulting LLC.
2 Of the Nobscot Realty Trust.
3 Northside LLC, Robert E. Foley, and Luke R. Foley.
the property, it commenced this action in the Land Court seeking

specific performance or, in the alternative, damages and

restitution of all payments it had made toward the purchase

price. The amended verified complaint alleges breach of

contract (count one), breach of the covenant of good faith and

fair dealing (count two), detrimental reliance (count three),

and unjust enrichment (count four) against the trust and

Northside. Count five of the complaint was directed solely to

defendants Foley and Luke and sought recovery of approximately

$138,000 in loans ("money had and received").4

On the eve of trial, RCS waived its claim for specific

performance and proceeded to trial on its alternative claims.

The Land Court judge, who was appointed to sit as a judge of the

Superior Court, concluded that neither party had breached their

agreement, and that instead the parties had "abandoned" it. The

judge then determined that RCS was entitled to the return of the

money it had paid to the trust, Northside, and Foley, and

entered judgment against the trust and Northside on count four

and against Foley on count five in the total amount of $763,000.

All remaining claims were dismissed with prejudice. The judge

4 The plaintiffs also sought recovery of money they spent toward
improving the property. The judge concluded that the plaintiffs
were not entitled to be reimbursed for these expenditures and
the plaintiffs do not contest this aspect of the judgment on
appeal.

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further concluded that RCS was not entitled to prejudgment

interest or costs.

RCS appeals on one issue: it claims that the judge erred

by not awarding prejudgment interest. The defendants cross-

appeal on three issues: first, they claim that the judge erred

by finding that RCS did not breach the agreement. Second, they

argue that due to the alleged breach they are entitled to retain

the money they received from RCS as liquidated damages. Third,

Foley argues that because he was the "acting agent" for the

trust and Northside at all times, he cannot be held personally

liable under a theory of money had and received.

Background. We briefly summarize the relevant facts from

the judge's detailed findings. RCS wished to purchase land to

build a facility from which it could operate its day care

program and provide services for children and young adults

diagnosed with autism spectrum disorder. With the assistance of

Foley, RCS located two parcels of land owned by the trust and

Northside and agreed to purchase the property for approximately

$2.5 million. The agreement was signed on May 6, 2015, and

required a $25,000 deposit. Among other terms, the agreement

provided that if RCS defaulted, the defendants were to retain

"all deposits" as liquidated damages. A few weeks later, on May

22, 2015, the parties amended the agreement to effect a change

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of the escrow agent but otherwise ratified and confirmed the

original agreement.

Thereafter, over the course of approximately two years, the

parties discussed and drafted numerous amendments to the

agreement. The question whether some or all of these proposed

modifications were binding was hotly disputed at trial. There

was no dispute, however, that while the parties were negotiating

modifications to the agreement, RCS made significant payments to

the trust, Northside, Foley, and Luke. By September 2016, RCS

had paid the defendants a total of $763,000. Some of those

payments were characterized as loans and were used by the trust

and Northside to meet their mortgage and real estate tax

obligations. Other payments were made directly to Foley, and

RCS also loaned money to Luke for personal business purposes.

The judge found that the loans to Foley and Luke were "not tied

to the acquisition of the property." Although Luke repaid the

loan to Foley, RCS was not repaid.5 According to RCS, Foley

agreed that all the money he had received would be put toward

the deposit on the property.6

5 Foley testified at trial that Luke repaid all the money
borrowed from RCS to him and that he did not return the funds to
RCS.
6 It does not appear from the record that Foley argues to the

contrary.

4
Ultimately, notwithstanding how the monies paid to the

defendants were described or used, the judge found that RCS

intended all of the payments to be credited towards the purchase

of the property. Moreover, as the judge explained, the extent

to which the agreement was modified and the question whether one

party or the other breached the agreement as modified was

inconsequential because, in the final analysis, "neither party

tendered performance under the agreement as modified so as to

put the other in breach and that, instead, the parties abandoned

their agreement." As previously noted, the judge then concluded

that RCS was entitled to restitution of the $763,000 it paid to

the defendants under the theories of unjust enrichment (count

four) and money had and received (count five). The judge

further concluded that RCS was not entitled to prejudgment

interest because it initially sought specific performance and

the return of the monies paid by them to the defendants was not

an award of damages that would trigger the prejudgment interest

statute.

Discussion. 1. RCS's appeal. RCS contends that it is

entitled to prejudgment interest under G. L. c. 231, § 6C or

§ 6H.7 We disagree. As we discuss below, there can be no

7 RCS has not pursued its claim for costs.

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assessment of interest under either section because there was no

award of damages.

In pertinent part, G. L. c. 231, § 6C provides:

"In all actions based on contractual obligations, upon a
verdict, finding or order for judgment for pecuniary
damages, interest shall be added by the clerk of the court
to the amount of damages at the contract rate, if
established, or at the rate of twelve per cent per annum
from the date of the breach or demand."

In Henry v. Morris, 62 Mass. App. Ct. 714 (2004),8 on which the

judge properly relied, we observed that "[F]or a claim to come

within the compass of [§ 6C], a breach of a contractual

obligation must occur, and that breach ultimately must ripen

into a judgment for pecuniary damages." Id. at 717, quoting

Protective Life Ins. Co. v. Dignity Viatical Settlement

Partners, L.P., 171 F.3d 52, 54 (1st Cir. 1999). Here, the

8 We agree with the judge that Henry, 62 Mass. App. Ct. at 715-
718, is dispositive. In that case the buyers brought an action
for specific performance of a purchase and sale agreement. Id.
at 715. The trial judge found that neither party had breached
the agreement and ordered the return of the deposit to the
buyers and awarded prejudgment interest and costs. Id. at 716.
We reversed the award of interest and costs because the return
of the buyers' deposit was not an award of damages and because
the buyers were seeking specific performance and the trial judge
made no finding that the deposit was wrongfully withheld. See
id. at 717-718. RCS's attempt to distinguish the present case
from Henry is unavailing. It matters not, as RCS claims, that
RCS ultimately waived its claim for specific performance. Nor
is it significant that the payments at issue were not held in
escrow as the deposit was in Henry. Lastly, contrary to RCS's
assertion, the buyers in Henry, like here, sought specific
performance and, in addition, "costs, damages, interest,
attorney's fees, and other further relief." Id. at 715.

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judge specifically found there was no breach of the agreement.

"Therefore, the judge's decision to return the deposit

[payments] to the buyers was not an award of damages that would

trigger the statute." Henry, supra at 717.

In addition, as we further observed in Henry, "the policy

underlying G. L. c. 231, § 6C, is that '[p]rejudgment interest

serves to compensate [a party] for the loss of use of money

wrongfully withheld.'" Id. at 717-718, quoting Cambridge Trust

Co. v. Commercial Union Ins. Co., 32 Mass. App. Ct. 561, 568

(1992). Here, RCS did not demand that the defendants return the

payments it made toward the purchase price. Instead, it pursued

a claim of specific performance until the first day of trial.

Up to that point, had RCS prevailed and specific performance

been granted, the defendants would have retained the payments.

That RCS ultimately did not pursue its claim for specific

performance is of no moment where, as here, the judge made no

finding that the payments were wrongfully withheld by the

defendants. Compare National Starch & Chem. Co. v. Greenberg,

61 Mass. App. Ct. 906, 908 (2004) (ordering award of prejudgment

interest on deposit wrongfully retained where buyer demanded

return of deposit and seller's refusal to release it "deprive[d]

the buyer of funds to which she was then rightfully entitled").

Accordingly, as the judge concluded, G. L. c. 231, § 6C is not

applicable.

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RCS's argument that it is entitled to prejudgment interest

under G. L. c. 231, § 6H, the so-called "catch-all" provision

of the statute, fares no better. See Herrick v. Essex Regional

Retirement Bd., 465 Mass. 801, 807 (2013), quoting G. L. c. 231,

§ 6H ("Section 6H is a catch-all interest provision that applies

to 'any action in which damages are awarded, but in which

interest on said damages is not otherwise provided by law'").

Section 6H provides in pertinent part:

"In any action in which damages are awarded, but in which
interest on said damages is not otherwise provided by law,
there shall be added by the clerk of court to the amount of
damages interest thereon at the rate provided by section
six B to be determined from the date of commencement of the
action even though such interest brings the amount of the
verdict or finding beyond the maximum liability imposed by
law."

This provision "reflects the Legislature's intent that

prejudgment interest always be added to an award of compensatory

damages." George v. National Water Main Cleaning Co., 477 Mass.

371, 378 (2017). However, "[n]ot all forms of monetary relief

are compensatory and, accordingly, not all monetary awards are

considered damages." Brennan v. Ferreira, 102 Mass. App. Ct.

315, 317 (2023). "In assessing whether G. L. c. 231, § 6H,

requires the assessment of prejudgment interest . . . we are

guided by the difference between compensatory damages, on the

one hand, and restitutionary remedies, on the other." Governo

Law Firm LLC v. Bergeron, 487 Mass. 188, 199 (2021). A

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restitutionary remedy does not require an assessment of

prejudgment interest. See id. In this case, the judge's

decision to order the return of money RCS paid to acquire the

property was not an award of damages that requires the

assessment of prejudgment interest because the recovery was

"restitutionary." Thus, the award of $763,000 does not

constitute damages within the meaning of G. L. c. 231, § 6H and

an assessment of prejudgment interest was not warranted.

2. Defendants' appeal. The defendants assert that they

are entitled to retain the payments made by RCS as liquidated

damages. This claim is based on the unfounded premise that the

judge erroneously determined that the parties abandoned the

agreement. "A finding is 'clearly erroneous' only when,

'although there is evidence to support it, the reviewing court

on the entire evidence is left with the definite and firm

conviction that a mistake has been committed.'" Fecteau

Benefits Group, Inc. v. Knox, 72 Mass. App. Ct. 204, 212-213

(2008), quoting Demoulas v. Demoulas Super Mkts., Inc., 424

Mass. 501, 509 (1997). There was no mistake here.

The judge made extensive and detailed findings based in

large part upon her assessment of the credibility of the

witnesses. She specifically found that the parties were not

working toward the consummation of the agreement and that

neither party had tendered performance within a reasonable

9
period of time after the closing should have occurred. The

judge also found that although by May 2017, RCS did not appear

ready, willing, and able to close due to a lack of financing, by

that time the defendants' position was that the agreement had

"expired and was unenforceable" and not that RCS was in breach.

In sum, because the judge's finding that neither party was in

breach of the agreement and that instead the agreement had been

abandoned was not clearly erroneous, the liquidated damages

clause was not triggered, and the defendants were not entitled

to retain the deposits.

The defendants' final claim that the judge erred in holding

Foley individually liable was never raised before or during

trial. "Objections, issues, or claims –- however meritorious –-

that have not been raised at the trial level are deemed

generally to have been waived on appeal." Palmer v. Murphy, 42

Mass. App. Ct. 334, 338 (1997). Because this claim "fits none

of the usual exceptions to the general rule that claims not

raised below are waived," we need not address it. Id. at 338-

339. In any event, even if the claim were preserved, we discern

no error. "An action for money had and received lies to recover

money which should not in justice be retained by the defendant,

and which in equity and good conscience should be paid to the

plaintiff." Cannon v. Cannon, 69 Mass. App. Ct. 414, 423

(2007). It is undisputed that RCS made numerous payments to

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Foley both personally and on behalf of the defendants that were

to be credited against the purchase price. RCS did not acquire

the property. Thus, the evidence fully supported the judge's

decision that it would be against equity and good conscience to

permit Foley to retain the payments.9

Judgment affirmed.

By the Court (Vuono, Meade &
Walsh, JJ.10),

Assistant Clerk

Entered: January 12, 2024.

9 The defendants' request for costs and fees is denied.
10 The panelists are listed in order of seniority.

11