DANIEL DEWOLFE vs. HINGHAM CENTRE, LTD., & others. [Note 1]

LENK, J . This case arises from certain incorrect representations that a real estate broker made to prospective buyers about

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the zoning classification of a listed property. The plaintiff purchased the property after having received the incorrect information and was thereafter unable to use the property as he had intended. We are called upon to decide whether, in the circumstances, a broker has a duty to investigate before making representations as to the zoning classification of a property. We are also called upon to decide whether an exculpatory clause concerning warranties and representations, contained in a standard form purchase and sale agreement, precludes the buyer from relying on the broker's prior written representations as to zoning classification.

We conclude that a broker has a duty to exercise reasonable care in making representations as to a property's zoning designation. Where, as here, the misrepresentations were based on information provided by the seller, the question turns on whether it was reasonable in the circumstances to rely upon such information, a question to be determined by the trier of fact. We further conclude that the exculpatory clause in the purchase and sale agreement does not preclude the buyer's reliance on prior written representations. Because the defendants have not satisfied their burden of establishing an entitlement to judgment as a matter of law, see Mass. R. Civ. P. 56 (c), as amended, 436 Mass. 1404 (2002), we vacate the judgment. [Note 2]

1. Background. The following facts are undisputed. M. Eileen Richards was a licensed real estate broker employed by the real estate agency Hingham Centre, Ltd. (Hingham Centre). In August, 2004, Paul D. Tribuna (Tribuna) and Lauren N. Tribuna, the owners of a property located at 461 Washington Street in Norwell (property), retained Richards and Hingham Centre to list the property and broker it for sale. Tribuna told Richards either that the property was zoned "Residential Business B" or that it was zoned "Business B." [Note 3] "Residential Business B" is

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not a zoning designation in Norwell. Richards, who had experience listing and brokering for sale properties in Norwell, was not aware of any prior business use of the property, and although she saw businesses located across the street, she observed only houses and not businesses adjoining the property on either side. Richards subsequently advertised the property in at least two newspapers as being zoned "Business B."

DeWolfe is a professional hairdresser. In 2000, he began looking for a location for a six-station hair salon. DeWolfe saw one of the advertisements for the property that Richards had placed, and telephoned Hingham Centre to arrange a viewing. His first visit to the property was brief, and Richards was not present. He arranged for a second viewing, during which Richards was present. At this viewing, DeWolfe told Richards that he was considering the property as a possible location for a six-station hair salon. DeWolfe saw a copy of the multiple listing service (MLS) listing for the property that Richards had prepared. The listing stated that the property was "zoned Business B." [Note 4] Additionally, DeWolfe saw a copy of the relevant section of the Norwell zoning ordinance, which Richards had placed at the property with the phrase "Business B" handwritten at the top of the page. The ordinance lists "hairdresser" as a permissible use of properties zoned "Business B."

On October 9, 2004, DeWolfe made a written offer to purchase the property. On October 29, 2004, DeWolfe and the Tribunas executed a standard form purchase and sale agreement, which was provided by Richards and Hingham Centre. [Note 5] Paragraph 25

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of the agreement, captioned "Warranties and Representations," states:

"The BUYER acknowledges that the BUYER has not been influenced to enter into this transaction nor has he relied upon any warranties or representations not set forth or incorporated in this agreement or previously made in writing, except for the following additional warranties and representations, if any, made by either the SELLER or the Broker(s): NONE."

On December 13, 2004, the Tribunas conveyed the deed to the property to DeWolfe. In January or February of 2005, DeWolfe learned that the property was zoned "Residential B" rather than "Business B," and that a six-station hair salon was not among the permitted uses of the premises. [Note 6]

In 2006, DeWolfe filed this action against Richards and Hingham Centre, alleging misrepresentation and violation of G. L. c. 93A, § 2. [Note 7] His amended complaint alleges that "the Tribunas made material representations to Richards . . . that the property was zoned 'Business B,' " and that Richards's "representation[s] regarding the zoning of the property were known by [the Tribunas] and by . . . Richards to be false, or should have [been] known by [them] to be false." [Note 8]

Richards and Hingham Centre moved for summary judgment.

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A Superior Court judge granted the defendants' motion, [Note 9] and DeWolfe appealed. The Appeals Court vacated the judgment and remanded the case for further proceedings. DeWolfe v. Hingham Centre, Ltd., 80 Mass. App. Ct. 765 (2011). We allowed the defendants' petition for further appellate review.

2. Standard of review. "We review a grant of summary judgment de novo to determine 'whether, viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to a judgment as a matter of law.' " Juliano v. Simpson, 461 Mass. 527, 529-530 (2012), quoting Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117, 120 (1991). Because our review is de novo, we accord no deference to the decision of the motion judge. Federal Nat'l Mtge. Ass'n v. Hendricks, 463 Mass. 635, 637 (2012). The moving parties, here the defendants, have the burden of establishing that there is no genuine issue as to any material fact and that they are entitled to judgment as a matter of law. Dias v. Brigham Med. Assocs., Inc., 438 Mass. 317, 319 (2002).

3. Discussion. To prove the tort of negligent misrepresentation, a plaintiff must establish that the defendant, (1) in the course of her business, or in a transaction in which she had a

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pecuniary interest, (2) supplied false information for the guidance of others (3) in their business transactions, (4) causing and resulting in pecuniary loss to those others (5) by their justifiable reliance on the information, and that she (6) failed to exercise reasonable care or competence in obtaining or communicating the information. See Gossels v. Fleet Nat'l Bank, 453 Mass. 366, 371-372 (2009), citing Nycal Corp. v. KPMG Peat Marwick LLP, 426 Mass. 491, 495-496 (1998); Restatement (Second) of Torts § 552 (1977).

The defendants claim that they are entitled to judgment as a matter of law because a real estate broker has no duty to confirm the zoning status of a property that the broker lists and brokers for sale. The defendants claim as well that, even if Richards had a duty to investigate the zoning designation of the property before making representations concerning it, the warranties and representations clause in the purchase and sale agreement relieves them of any liability. [Note 10]

a. Duty of broker. Pursuant to the common-law doctrine of negligent misrepresentation, a real estate broker, like any person engaged "in the course of his business," may be liable for failing to exercise reasonable care in making representations to prospective buyers. See Gossels v. Fleet Nat'l Bank, supra at 372; Maxwell v. Ratcliffe, 356 Mass. 560, 562-563 (1969). While a broker ordinarily may rely on information provided by the seller in making representations about a property, a broker is not insulated from all liability merely by virtue of such reliance. See Hoffman v. Connall, 108 Wash. 2d 69, 77 (1987) ("A real estate broker must take reasonable steps to avoid disseminating false information to buyers"). The critical question is whether the broker "failed to exercise reasonable care or competence in obtaining or communicating the information." Gossels v. Fleet Nat'l Bank, supra. See Fernandes v. Rodrigue, 38 Mass. App. Ct. 926,

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928 (1995) (broker may rely on "information reasonably thought to be reliable"). Where it is reasonable in the circumstances for a broker to rely on information provided by the seller, the broker will not be liable for conveying such information to prospective buyers without conducting further investigation. See, e.g., Quinlan v. Clasby, 71 Mass. App. Ct. 97, 103 (2008).

By contrast, where it is unreasonable in the circumstances for a broker to rely on information provided by the seller, the broker has a duty to investigate further before conveying such information to prospective buyers. See Restatement (Third) of Agency § 7.01 comment d (2006) ("In some situations, an agent may have a duty to inquire further when provided with information by the principal or by a coagent. The agent's duty of inquiry may stem from . . . circumstances that make it unreasonable to rely on the information provided without further inquiry"). Cf. Maxwell v. Ratcliffe, supra (brokers liable for deceit in misrepresenting cellar as dry, where listing, of which brokers did or should have had knowledge, noted periodic water seepage).

The case of Quinlan v. Clasby, supra, is not to the contrary, instead illustrating the proposition that a broker may rely on information provided by the seller, except where circumstances put the broker on notice that such information may be unreliable. There, the trial evidence established that the seller of a property told his broker the property was a "three-family," and that the broker saw that the property was currently in use as a three-family residence. Id. at 98. The broker advertised the property as a "three-family residence." [Note 11] Id. at 98-99. However, it was later discovered that, as configured, the property could not lawfully be used for that purpose. Id. at 99. In holding that the broker had no liability under G. L. c. 93A, § 11, for the incorrect information she conveyed, the Appeals Court stated that "[t]he broker was under no duty, under the facts of this

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case, to determine if the property was in compliance with the applicable zoning laws. . . . There was little, if any, reason for the broker to suspect that the property was not lawfully a three-family residence." Id. at 103.

Here, viewing the evidence in the light most favorable to DeWolfe, a trier of fact could find that Richards failed to exercise reasonable care in making representations as to the zoning status of the property. A trier of fact could conclude that Tribuna told Richards, an experienced real estate broker, that the property was zoned "Residential Business B"; "Residential Business B" is not an actual zoning designation in Norwell; Richards advertised the property as zoned "Business B" instead; Richards was aware of no prior business use of the property; and Richards observed houses, not businesses, adjoining the property on either side. A trier of fact could find that Richards was on notice that the information provided by Tribuna might be unreliable, and that Richards acted unreasonably in representing the property as zoned "Business B" without first conducting further investigation. [Note 12]

Because a broker has a duty to exercise reasonable care in making representations to prospective buyers, and because the evidence of record could support a finding that Richards did not exercise reasonable care when representing the property as zoned "Business B," the defendants have failed to establish that they are entitled on this basis to judgment as a matter of law. See Dias v. Brigham Med. Assocs., Inc., supra.

b. Warranties and representations clause. The defendants claim that, even if the broker had a duty in the circumstances to investigate the zoning designation of the property, the warranties and representations clause in the purchase and sale agreement nonetheless relieves them of any liability for prior misrepresentations. That clause provides:

"The BUYER acknowledges that the BUYER has not been influenced to enter into this transaction nor has he

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relied upon any warranties or representations not set forth or incorporated in this agreement or previously made in writing, except for the following additional warranties and representations, if any, made by either the SELLER or the Broker(s): NONE."

While the defendants read this exculpatory clause as precluding reliance on prior representations made in writing, DeWolfe construes it in precisely the opposite manner, i.e., as permitting reliance on such representations. Because there were no "additional warranties and representations" listed at the end of the paragraph, nor were any pertinent warranties or representations "set forth or incorporated" elsewhere in the agreement, DeWolfe's negligent misrepresentation and G. L. c. 93A claims by necessity rest only upon certain of the prior written representations made by Richards. The meaning of the exculpatory clause is pivotal in this regard.

The parties' differing interpretations of the clause center upon whether the word "not," where it appears for the second time ("not set forth or incorporated in this agreement or previously made in writing"), applies only to the phrase "set forth or incorporated in this agreement" or as well to the subsequent phrase "previously made in writing." DeWolfe contends that the word "not" applies to both phrases, while the defendants maintain that it applies only to the first phrase. Reduced to essentials and phrased affirmatively, DeWolfe maintains that the clause permits the buyer to rely only on warranties and representations made by the seller or broker that either (a) are set forth or incorporated elsewhere in the agreement, (b) were previously made in writing, or (c) are expressly listed at the end of that paragraph. The defendants advance a contrary reading to the effect that the buyer is permitted to rely only on the warranties and representations set forth or incorporated in the agreement, including those expressly listed at the end of the paragraph.

In construing this clause, we turn to familiar rules, including the standard rules of grammar. See Twiss v. Simpson, 183 Mass. 212, 216-217 (1903) (rules of grammar are to be "generally adhered to"). Where there is no ambiguity, we "construe the words of a contract in their usual and ordinary sense." Citation Ins. Co. v. Gomez, 426 Mass. 379, 381 (1998), quoting Hakim

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v. Massachusetts Insurers' Insolvency Fund, 424 Mass. 275, 280 (1997). Wherever practicable, we interpret a contract so that every word is given effect. Hagerty v. Myers, 333 Mass. 387, 388 (1955), quoting Rocci v. Massachusetts Acc. Co., 222 Mass. 336, 343 (1916). If a contractual provision is ambiguous, we construe it against the drafter. Costa v. Brait Bldrs. Corp., 463 Mass. 65, 76 (2012), citing Restatement (Second) of Contracts § 206 (1981). Here, we conclude that the clause permits reliance by the buyer on prior written representations made by the seller or broker that are not set forth or incorporated in the agreement. The standard rules of grammar support this construction, one which gives effect to every word of the clause.

Where the adverb "not" precedes two phrases linked by the conjunction "or," it applies without more to both phrases. See H.L. Fowler, A Dictionary of Modern English Usage 422-423 (2d ed. 1983) (Fowler). See also Globe Indem. Co. v. Teixeira, 230 F. Supp. 451, 454 (D. Haw. 1964), aff'd, 349 F.2d 502 (9th Cir. 1965). Cf. Bate Refrigerating Co. v. Sulzberger, 157 U.S. 1, 20 (1895) (patent statute requires that invention sought to be patented is one "not known or used before the application"). [Note 13] Indeed, it is generally a grammatical error to include a second negative modifier, such as "not" or "without," after the conjunction "or," as such repetition alters the meaning of the sentence. Fowler, supra ("there is much difference between without falsehood or deceit [which implies that neither is present] and without falsehood or without deceit [which implies only that one of the two is not present]" [emphasis in original]).

Notwithstanding this, the defendants maintain that the word

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"not" applies only to the first of the two phrases linked by the conjunction "or." Under this view, in order to negate the phrase after the word "or," it would be necessary to add a word, i.e., an additional "not," so that the clause would read, "nor has he relied upon any warranties or representations not set forth or incorporated in this agreement or not previously made in writing." See Continental Cas. Co. v. Gilbane Bldg. Co., 391 Mass. 143, 147 (1984) ("We are not free to revise [a contract]"). However, far from achieving the meaning DeWolfe desires, inserting this additional "not" would indicate that either one of the two conditions ("not set forth or incorporated in this agreement" or "not previously made in writing") would alone suffice to preclude the buyer from relying on a given representation. See Fowler, supra. Such a revision would alter the meaning of the clause in a manner plainly contrary to its intended import, precluding the buyer from relying on any warranty or representation set forth in the agreement unless it had also previously been made in writing.

Therefore, we understand the word "not," where it appears for the second time in the clause, to apply to both of the phrases that follow it, as the phrases are linked by the conjunction "or." See Sheehy v. Lipton Indus. Inc., 24 Mass. App. Ct. 188, 193 (1987) (clause barring reliance on warranties and representations "not set forth in this agreement or previously made in writing" applied where no warranty or representation "was set forth or made" [emphasis supplied]). Doing so supports DeWolfe's interpretation of the clause.

Further, DeWolfe's construction of the clause is to be favored, because the construction offered by the defendants fails to give effect to the words "or previously made in writing." If, as the defendants suggest, the warranties and representations clause were intended to preclude reliance on all prior representations other than those expressly contained in the written agreement, its purpose would have been better served had it stated simply, "The BUYER acknowledges that the BUYER has not been influenced to enter into this transaction nor has he relied upon any warranties or representations not set forth or incorporated in this agreement." Instead, the clause adds the words "or previously made in writing." The defendants account for these words by suggesting that they merely provide an example of an

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excluded warranty or representation. This is not persuasive. "It is an elementary rule in the interpretation of contracts that whenever reasonably practicable every word shall be given effect." Hagerty v. Myers, supra, quoting Rocci v. Massachusetts Acc. Co., supra. DeWolfe's construction of the exculpatory clause plainly gives effect to the phrase "or previously made in writing." Under the defendants' construction, by contrast, the meaning of the clause is the same whether or not the phrase is included, and that construction therefore gives the phrase no effect. DeWolfe's construction is to be preferred.

We thus read the warranties and representations clause as permitting reliance on prior written representations not set forth or incorporated in the agreement. [Note 14] It follows that the warranties and representation clause of the agreement does not relieve the defendants of liability for Richards's written misrepresentations. The defendants have accordingly failed to establish that they are entitled on this basis to judgment as a matter of law. See Dias v. Brigham Med. Assocs., Inc., 438 Mass. 317, 319 (2002).

4. Conclusion. The judgment in favor of Richards and Hingham Centre is vacated, and the matter is remanded to the Superior Court for further proceedings consistent with this opinion.

So ordered.