Chapter 93A Demand Letters: Flammable Materials for Any Business

Receipt of a Massachusetts General Laws ch. 93A demand letter by any business creates a serious legal issue. It is a pre-text for costly Massachusetts State Court litigation and sets a path for litigants to use the law to impose severe financial penalties on businesses that are ultimately found to have violated the statute.  This Blog Article will examine the severity of the statute and why it is a prudent business decision to take 93A demand letters very seriously.  

What is the Massachusetts General Laws ch. 93A Consumer Protection Statute?

Massachusetts General Laws ch. 93A (Hereinafter “93A”), the consumer protection statute, provides a legal claim and remedy to consumers if they have contended with unfair and deceptive business practices.  Unfair and deceptive business conduct has been defined by Massachusetts courts as: (1) a practice that, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise; (2) immoral, unethical, oppressive, or unscrupulous actions; (3) acts that cause substantial injury to consumers.  Despite the language of the statute, 93A permits both consumers and businesses to file claims against other business entities. The statute also contemplates some type of business relationship between the parties. 

The 93A statute does not define unfair and deceptive trade practices. The Massachusetts legislature has left it to the Courts to define what conduct and circumstances constitute unfair and deceptive business practices.  The most common examples of 93A violations include fraud / intentional misrepresentation; conversion of property; intentional trademark and copyright infringement; violations of the home improvement contractor statute, G.L. ch. 142A; intentionally withholding contractual duties and benefits from another party to renegotiate a contract or obtain increased payments; and unfair and bad faith insurance claims practices. Not every business transaction gone awry will support a claim under the statute.  As one Court has stated: “[t]he objectionable conduct must attain a level of rascality that would raise the eyebrow of someone inured to the rough and tumble of the world of commerce.” Levings v. Forbes & Wallace, Inc., 8 Mass. App. Ct. 498, 504 (1981). Within these parameters, the facts and circumstances of the business relationship will be examined to determine whether a violation has occurred.

A 93A claim does not comprise a plain breach of contract dispute. If there is a dispute between two parties regarding payment or performance of contractual obligations, those acts and/or omissions do not constitute a violation of the consumer protection statute.  Duclersaint v. Federal National Mortgage Association, 427 Mass. 809, 696 NE2d 536 (1998).  Many claimants who serve a 93A demand letters have the mistaken belief that a breach of contract dispute also constitutes a 93A violation. These claimants often attempt to “dress up” contract claims with additional facts to create an impression of unfair and deceptive practices. Despite this style of legal artistry, these claims are often dismissed once the circumstances surrounding the business relationship are revealed.

Why Should My Business be Concerned With 93A? 

93A financial penalties are severe.  If a party is found to have violated the statute, a claimant can request triple damages plus an attorney’s fees and legal costs incurred in the prosecution of the claim. For example, a claim valued at $100,000 with $50,000 in legal fees can result in a $350,000.00 judgment under the statute. This could result in a substantial monetary award in a party’s favor, and has the potential to put many businesses into Chapter 7 bankruptcy. A Massachusetts Court or Jury has the discretion to award a claimant double or triple damages based on the level of unfairness and deceptiveness of the conduct in question, and evaluate whether reasonable legal fees and costs were incurred in litigation.  An award of damages and fees is not automatic.  There may be an instance where a party is found to have violated the statute, however, no damage award is warranted since the conduct was not found to be severe or there are no public interests at stake to warrant a punitive damage award.  

There is No Demand Letter Requirement for a Business to Business 93A Dispute

Despite the appearance of a consumer protection law, 93A applies to the business to consumer relationship AND the business to business relationship. However, there is no requirement that one business serve another business with a 93A demand letter prior to commencing a civil action.  In other words, another business is not required to notify your business of any claims, and failure to serve a demand letter prior to commencing litigation is not grounds for case dismissal.

Many businesses still serve 93A demand letters for several reasons. The demand letter can help place another businesses’ insurance carrier on notice of any potential claim. The demand letter can also help facilitate settlement discussions that can result in an informal settlement, mediation, or an agreement to elect arbitration as opposed to State Court litigation. However, many litigants forgo this process entirely, and will just file a Civil Complaint in State Court and allege 93A violations.

What is the Process Once a Claimant Serves a 93A Letter? 

Prior to commencing any State Court litigation, a claimant must serve a demand letter at least thirty (30) days prior to commencing the action.  M.G.L. ch. 93A, § 9(3) states that “at least thirty days prior to the filing of any such action, a written demand for relief, identifying the claimant and reasonably describing the unfair or deceptive act or practice relied upon and the injury suffered, shall be mailed or delivered to any prospective respondent.”  If a consumer claimant fails to serve a G.L. ch. 93A demand letter and instead files a civil action, that case can be dismissed for failure to comply with the statue. 

Typically, a demand letter will arrive via Certified Mail; overnight courier or, in rare cases, by a process server or deputy Sheriff. This is so that the claimant can obtain evidence that the demand letter was served on the party, and there will be no dispute or question as to whether the claimant properly notified the business. If you own multiple business locations, the letter may be delivered to that location; to the business address listed at the Secretary of Commonwealth, Corporations Division; or to the address of the Registered Agent that you designated for the business. There is no “template” or form for demand letters, and they differ substantively depending on the author.  In most, if not all cases, demand letters are authored and served by another Massachusetts attorney.

A party served with a 93A demand letter has thirty (30) days to respond to the demand letter from the date of its mailing, and at the latest, the date in which the letter was delivered.  To err on the side of caution, it is recommended that this deadline be calculated from the date that appears on the 93A demand letter.  A party should provide a written response to each of the allegations in the demand letter, and make a substantive respond to the monetary demand.  In other words, the demand letter must either refuse monetary settlement, or make a reasonable offer of settlement. If a party offers a reasonable settlement amount, and if the claimant subsequently refuses that offer; then the responding party can preclude the claimant for seeking and obtaining reimbursement of legal fees and costs if they prosecute the 93A claim.   

Recommendations for Dealing with 93A Demand Letters

Do Not Delay  The clock has begun to tick towards the deadline for responses to the 93A demand letter from either the date the letter was sent or delivered to your business.  Despite whether the letter was delivered certified or not; the correct business address was not used; or if you did not receive the letter for one week after it was sent, you must not delay your response.  Failure to respond and/or offer a settlement upon service of a demand letter within thirty (30) days will expose your business to the financial penalties under the statute, and can serve as evidence that you have not reasonably responded to a bona fide dispute with your customers or business partners/vendors. Yes, the claimant will be required to litigate their claim, and damages are not automatic, however, a failure to respond increases the stakes in litigation for your business.

Do Not Ignore the Letter -  Even if you feel strongly about the dispute, or have no opinion on it whatsoever, you are playing with fire if you chose to ignore a 93A demand letter.  Even if the letter is unintelligible, vague, meritless, or written on a fast food wrapper, you need to respond to it. The statute makes no exceptions for failure to respond to a duly served demand letter that complies with the statutory substantive requirements.  

Do Not Play Games with Service and Delivery  Do you think that by failing to sign the certified delivery receipt from the post office or overnight delivery service that you can avoid the issue entirely?   This strategy does not work.  A certified delivery provides the claimant with evidence that the demand letter was served. Even without signature confirmation, a certified or overnight delivery will still show proof that the letter was delivered, despite your failure to accept delivery. 

Set Up Internal Procedures - Make sure your employees and managers promptly notify you of any demand letter or legal correspondence. Make sure that you have an internal procedure in place to ensure that the designated persons at the business are timely notified of any legal correspondence, and that your general counsel is copied on any communications.  You do not want to inadvertently ignore or fail to respond to a demand letter because an employee failed to notify you of the letter or the letter was lost or temporarily misplaced.

Don’t Write a Response Yourself – This is very important.  You do not want a demand letter response that was poorly drafted, legally inaccurate, or unprofessional to haunt you for the next several years. If the dispute escalates to State Court litigation, then your demand letter response can and will be used against you.  Your response to the demand letter will be filed as a public document in a court proceeding and constitute a material document that will be examined under oath at depositions and at trial. This response letter will certainly be used as an exhibit (evidence) in a court proceeding. In other words, every single word and the procedural and substantive features of your response will be significant throughout the dispute.  Second, the demand letter must comply with the procedural and substantive requirements of G.L. ch. 93A and the applicable case law. The response should also identify any of the procedural and substantive defects of the demand letter to preserve rights to contest the validity of the demand letter in litigation.  It takes Massachusetts business litigation lawyers years of experience and lessons learned in numerous cases to learn how to carefully craft a 93A demand letter response. A demand letter response is not the correct opportunity for “do it yourself” advocacy and legal correspondence. These types of letter should be treated as you would with any other flammable material.  With due caution and at a distance.

Hire an Experienced Business Litigation Attorney  Despite the dire warnings above, a Massachusetts business and commercial litigation attorney is the correct counsel for responding to 93A demand letters. In many cases, these types of disputes can be negotiated and resolved without the need for litigation. Some of these types of cases will simply “go away” once a claimant understands that a business has taken an assertive position on the demand letter and intends to vigorously defend any claims. Finally, there is a portion of these cases that do end up in State or Federal Court, and your attorney must also have the ability and skills to navigate this process and ensure that you receive a favorable outcome at trial.  It is not recommended that a business hire general counsel or a transactional business lawyer to respond to these demand letters.

Thank You for Reading! About Us

The Law Office of Stefan Cencarik, PLLC of Lynnfield, Massachusetts has prosecuted and defended G.L. ch. 93A claims on behalf of businesses for the past ten years. Our business litigation attorneys are adept at resolving and litigating G.L. ch. 93A disputes by helping clients navigate the murky and rough waters of a business dispute.  If you, a colleague or any business owner have questions about best practices to avoid G.L. ch. 93A liability, or have received a demand letter, please feel free to contact one of our Greater Boston business litigation lawyers at 781-463-6063.  We provide a free initial consultation, and are responsive to the deadlines and timetables of any new matter.