The Massachusetts Appeals Court, in Stranberg v. Cooperative Bank, recently concluded that “every deal that goes sour does not give rise to a c. 93A claim.” A prophetic conclusion indeed, as Chapter 93A claims seem to be added to most consumer-based lawsuits. Here, the underlying dispute arose from a proposed commercial loan that did not close. Specifically, the plaintiff (through an entity) sought to purchase a commercial building and entered into a purchase and sale agreement. Plaintiff also sought financing from the defendant bank. After initial discussions and submission of financial documents, the plaintiff signed a loan term sheet, which explicitly stated that it was not a commitment to lend, and that any loan would be subject to the bank’s due diligence and approval process.

After the bank’s internal review raised concerns, further negotiations, and a revised term sheet (with the same cautionary language), the bank ultimately did not approve the loan. The plaintiff secured alternative financing but incurred additional costs and damages, which prompted the plaintiff to sue the bank, alleging, among other things, unfair and deceptive acts or practices in violation of Massachusetts General Laws Chapter 93A. 

The plaintiff claimed that the bank’s employees made representations about financing being provided if an appraisal and environmental report were satisfactory, and that the bank “strung him along” in the loan process, causing him to forgo other financing opportunities. The plaintiff also argued that the bank failed to disclose its internal decision-making process. The facts and circumstances, however, were not sufficient to violate Chapter 93A. Although “stringing along” a party to induce detrimental reliance can, in some circumstances, violate Chapter 93A, the bank’s statements were made during preliminary negotiations, with the expectation that any agreement would be finalized in formal loan documentation. The Appeals Court found nothing “immoral, unethical, oppressive, or unscrupulous” in breaking off incomplete negotiations for a commercial agreement. In doing so, the Appeals Court emphasized that there was no reasonable reliance by the plaintiff on the bank’s statements, which is an essential element in “stringing along” cases. Also, the bank had no obligation to disclose its internal decision-making process to a potential borrower in a commercial loan transaction. As a result, the Appeals Court affirmed the Superior Court’s grant of summary judgment in the bank’s favor, holding that the facts did not support a claim for unfair or deceptive acts or practices under Chapter 93A.