Royce-George & Associates (RGA), a Massachusetts LLC, brought suit against U.S. Bank and Wells Fargo arising from the administration and payoff of a commercial mortgage loan secured by property in Flemington, New Jersey. Among other claims, RGA alleged that Wells Fargo violated Massachusetts Consumer Protection Law Chapter 93A by failing to apply escrow funds to pay down the loan prior to default, as RGA had requested. RGA also alleged that Wells Fargo’s conduct violated Chapter 93A, Section 11 based on alleged misrepresentation of fees, terms, and conditions, as well as knowingly or willfully misapplying payments to escrow accounts.

The choice-of-law provision was the plaintiff’s first hurdle to overcome in its Chapter 93A claim. Defendants argued that the loan documents’ New Jersey choice-of-law provision precluded the claim. The court rejected this argument based on prior precedent, drawing a distinction between two types of provisions:

• Provisions stating that the rights of the parties are governed by another state’s law, which preclude a Chapter 93A claim.
• Provisions stating that the agreement itself is governed by another state’s law, which do not preclude a Chapter 93A claim.

The parties’ reserve and security agreement fell into the second category. Because the clause governed only the contract — not the parties’ rights generally — the court held that it did not bar RGA’s Chapter 93A claim as a threshold matter.

Despite surviving the choice-of-law hurdle, the court dismissed RGA’s Chapter 93A claim because the alleged wrongful conduct did not occur “primarily and substantially” within Massachusetts, as required under Chapter 93A, Section 11. The court applied the “center of gravity” test, focusing solely on the actionable conduct giving rise to the violation. Key facts weighing against Massachusetts jurisdiction included:

• Wells Fargo’s principal place of business (i.e., the locus of its decision-making) was in California, not Massachusetts;
• The subject property was in New Jersey; and
• The loan documents concerned a New Jersey property.

While RGA alleged that it may have suffered financial harm at its Massachusetts principal place of business, the court held that the location of financial loss alone is insufficient to establish the required nexus.

The court noted that RGA failed to identify any specific deceptive act or “dominant event” that occurred in Massachusetts and observed that the sole Massachusetts connection was RGA’s residency, which courts have consistently found insufficient. The court confirmed that the burden of demonstrating that the alleged offensive conduct occurred primarily and substantially outside Massachusetts rests with the defendants – not the plaintiff.

The court granted the defendants’ motion to dismiss the Chapter 93A claim. This decision illustrates how courts may analyze choice-of-law clauses. It also highlights that Chapter 93A claims from Massachusetts-based borrowers may be a litigation risk – even in transactions governed by another state’s law – if any decision-making, communications, or conduct relevant to the alleged violation occurs in Massachusetts.