## Facts

- American Mechanical Corporation owned commercial real estate and related machinery and equipment in Saugus, Massachusetts, subject to a mortgage held by Saugus Bank & Trust Company.
- American was in financial distress, behind on mortgage payments, and under pressure from the bank to sell the property and equipment.
- American and Union Machine Company of Lynn, Inc. executed a written agreement under which Union would purchase the real estate, machinery, and equipment for $135,000.
- Union tendered a $5,000 check as a down payment to be held in escrow until closing.
- Union knew when it contracted that American’s financial condition made foreclosure likely if the sale did not close.
- Union refused to complete the purchase.
- The bank took possession, sold the equipment for $35,000, foreclosed on the real estate, and purchased it at foreclosure for $55,000, for total proceeds of $90,000.
- American sued Union (and the bank), asserting breach of contract and unfair or deceptive acts or practices under Massachusetts General Laws chapter 93A.
- After a jury-waived trial, the Superior Court found Union breached the contract but awarded only nominal damages and dismissed the c. 93A claim at the close of the evidence based on the absence of a demand letter and the judge’s view that a § 11 claim had not been pleaded.

## Issues

1. Whether a seller may recover more than nominal damages for a buyer’s breach of a contract to purchase mortgaged commercial property and equipment when the property is later disposed of through foreclosure for less than the contract price, and whether $45,000 (the contract price minus foreclosure proceeds) was the proper measure.
2. Whether the trial court erred by dismissing the chapter 93A count without reaching the merits based on the absence of a demand letter and an asserted failure to plead a claim under c. 93A, § 11.

## Decision

- The Appeals Court reversed the nominal-damages award on the contract claim and held American was entitled to $45,000 in damages (the $135,000 contract price minus the $90,000 realized through the bank’s sale and foreclosure).
- The court reasoned that Union’s knowledge of American’s financial distress and the likelihood of foreclosure made the loss foreseeable, and there was no basis on the record to reduce damages for failure to avoid the loss.
- The court vacated the dismissal of the c. 93A count and remanded for a decision on the merits under the proper statutory framework.
- The court held the absence of a demand letter did not justify dismissal where the claim was brought under c. 93A, § 11, and the complaint sufficiently invoked § 11 by alleging a business-to-business dispute in trade or commerce.

## Legal Principles

- Contract damages for breach of an agreement to purchase commercial real estate and related property are generally measured by the difference between the contract price and the amount the seller ultimately realizes, absent proof the seller acted unreasonably in avoiding or minimizing loss.
- Foreseeability of damages is assessed in light of what the parties contemplated at contracting; a breaching party’s knowledge that foreclosure is likely if the deal fails supports recovery of losses tied to that foreclosure.
- When foreclosure proceeds are used as the post-breach realization figure, damages may be calculated using those proceeds absent evidence that the sale was improper or that the seller failed to act reasonably.
- Under Massachusetts General Laws c. 93A, § 11 (business-to-business claims), a demand letter is not a prerequisite to suit; applying § 9 demand-letter requirements to a § 11 claim is error.
- A complaint that cites c. 93A, § 11 and alleges facts showing the parties acted in trade or commerce is sufficient to require adjudication of the c. 93A claim on the merits when the evidence could support a finding of unfair or deceptive conduct.

## Conclusion

The Appeals Court held that Union’s breach entitled American to expectancy damages equal to the contract price minus the amount realized through the foreseeable foreclosure process, and it required the trial court to address the business-to-business chapter 93A claim on the merits rather than dismissing it based on an inapplicable demand-letter requirement.


Am. Mech. Corp. v. Union Mach. Co. of Lynn, Inc., 21 Mass. App. Ct. 97, 485 N.E.2d 680 (1985)