Supreme Judicial Court of Massachusetts, Middlesex
JAMES M. RYAN, executor, , 
MARY ANN MORSE HEALTHCARE CORP. 
Heard: September 9, 2019.
action commenced in the Superior Court Department on August
24, 2016. A motion to dismiss was heard by Christopher K.
Supreme Judicial Court on its own initiative transferred the
case from the Appeals Court.
N. Garick (Matthew T. LaMothe also present) for the
Nguyen for the defendant.
following submitted briefs for amici curiae:
M. Desmond & Justin L. Amos for Massachusetts Assisted
Lillian Glickman, pro se.
Elizabeth A. Aniskevich & Susan A. Silverstein, of the
District of Columbia, Richard M.W. Bauer, Liane Zeitz, &
Rebecca J. Benson for AARP & others.
Present: Gants, C.J., Lenk, Gaziano, Lowy, Budd, Cypher,
& Kafker, JJ.
issue in this case is the extent to which Massachusetts
assisted living residences (ALRs) are subject to the
strictures of the security deposit statute, G. L. c. 186,
§ 15B. The defendant operates an ALR in Framingham that
charges new residents an upfront "community fee,"
in addition to the first month's rent and the last
month's rent permitted by G. L. c. 186, § 15B. The
community fee was intended to cover upfront administrative
costs, an initial service coordination plan, move-in
assistance, and a replacement reserve for building
improvements. The plaintiff alleges that the community fee
violates G. L. c. 186, § 15B, as it exceeded the upfront
costs allowed by the security deposit statute. The defendant
moved to dismiss the suit, arguing that ALRs are not subject
to G. L. c. 186, § 15B. The motion to dismiss was
granted, and the plaintiff appealed.
conclude that G. L. c. 19D, the ALR statute, incorporates
applicable consumer protection laws, including G. L. c. 186,
§ 15B, but allows for additional upfront charges for the
distinctive services assisted living facilities provide that
are not applicable to traditional landlord-tenant
relationships. Indeed, the ALR statute and corresponding
regulations expressly provide for the payment of particular
fees related to initial assessments of residents to determine
their suitability for placement in an assisted living
facility. Such services and fees have no applicability to the
traditional landlord-tenant relationship, and are thus not
subject to the security deposit law. Accordingly, ALRs may
institute upfront charges beyond those permitted by G. L. c.
186, § 15B (1) (b), to the extent that such charges
correspond to the distinct services enumerated in G. L. c.
19D, § 13, or to other services designed specifically
for assisted living residences. If, however, an ALR charges
upfront fees that are not used to fund such distinct assisted
living services, it does so in violation of § 15B.
instant case, further factual development is required to
determine whether the fee at issue was permissibly charged
and used for services distinct to ALRs, and thus the motion
to dismiss was not properly allowed. One or more components
of the defendant's community fee appear to have been
charged for initial assessments mandated by the ALR statute.
Such a service and fee would be specific to assisted living
facilities and not governed by the security deposit statute.
However, further clarification and factual development as to
the purpose and use of other components of the community fee
is required, particularly for the replacement reserve fee for
building improvements. We cannot discern on this record
whether each component of the community fee was imposed and
used for services distinct to assisted living facilities but
inapplicable to the traditional landlord-tenant relationship.
We therefore reverse the decision allowing the motion to
dismiss and remand the case to the Superior Court for further
proceedings consistent with our decision.
review the allowance of a motion to dismiss de novo,
accepting as true all well-pleaded facts alleged in the
complaint. See Calixto v.
Coughlin, 481 Mass. 157, 158 (2018). We summarize
the factual allegations as set forth in the complaint and the
residency agreement referenced by both parties. See
Marram v. Kobrick Offshore Fund, Ltd.,
442 Mass. 43, 45 & n.4 (2004).
2013, Julia Ryan entered into an agreement with Mary Ann
Morse Healthcare Corp., doing business as Heritage at
Framingham (Heritage), to lease an apartment in the
defendant's ALR in Framingham. The agreement, titled
"Residency Agreement," provided that Heritage
"hereby leases to the Resident" an apartment at the
rent was $4, 000 per month. Prior to the commencement of
Ryan's residency, Heritage required her to pay the first
and last month's rent. In addition to the first and last
month's rent, Heritage also charged Ryan a nonrefundable,
one-time "community fee" of $2, 800. According to
the residency agreement, the community fee was "intended
to cover upfront staff administrative costs, the
Resident's initial service coordination plan and move-in
assistance, and establish a replacement reserve for building
improvements." The agreement also provided that
"the Community is required to pay interest to the
Resident annually in keeping with the Landlord/Tenant Law
Chapter 186, Section 151B(2)(a)."
2016, James Ryan, the executor of Julia Ryan's estate,
commenced this putative class action, alleging that Heritage
violated G. L. c. 186, § 15B, and G. L. c. 93A by
charging new residents the community fee. Heritage moved to
dismiss the plaintiff's complaint, claiming that, as an
ALR, it was not subject to the security deposit statute. On
March 5, 2018, a judge in the Superior Court granted the
motion, concluding that the Legislature did not intend for
ALRs to be subject to the security deposit statute. The
2017, while the motion to dismiss was still pending, a
different judge in the Superior Court concluded that the
security deposit statute did apply to ALRs. See Gowen v.
Benchmark Senior Living LLC, Mass. Super. Ct., No.
1684CV03972- BLS2 (Suffolk County May 9, 2017). The Gowen
decision recognized, however, a possible exception to the fee
restrictions imposed by G. L. c. 186, § 15B, in the
context of ALRs, stating:
"The statutory limitation on fees imposed by residential
landlords only governs fees charged for a 'tenancy.'
To the extent that [the defendant] or another assisted living
facility operator provides its residents with services that
are beyond the scope of a typical residential tenancy, it is
entitled to charge for those services and may do so without
running afoul of § 15B." (Citation omitted.)
Id. at 3-4. The judge went on to conclude, however,
that the plaintiff had plausibly alleged facts suggesting
that the community fee "was assessed at least in part as
a charge for her residential tenancy, and not for separate
activities or services." Id. at 4. That judge
reached a similar conclusion again in another case in August
2018. See Hennessy v. Brookdale Senior Living
Communities, Inc., Mass. Super. Ct., No.
1784CV04215-BLS2 (Suffolk County Aug. 1, 2018). In light of
the conflicting reasoning and outcomes on this issue by
judges in the Superior Court, we transferred the
plaintiff's appeal to this court on our own motion.
The security deposit statute.
Legislature enacted the security deposit statute "as
part of an elaborate scheme of rights and duties to prevent
abuses and to insure fairness to the tenant."
Meikle v. Nurse, 474 Mass. 207,
212 (2016) . "In passing the [security deposit statute],
the Legislature recognized that tenants have less bargaining
power than landlords and are less able to vindicate their
rights in court." Phillips v.
Equity Residential Mgt., L.L.C., 478 Mass. 251, 254
(2017). See Mellor v. Berman, 390
Mass. 275, 282 (1983) (explaining that § 15B manifests
Legislature's "concern for the welfare of tenants in
residential property who, as a practical matter, are
generally in inferior bargaining positions and find
traditional avenues of redress relatively useless").
Accordingly, § 15B "protects tenants by providing
clear guidelines for landlords to follow with regard to
handling security deposits." Phillips,
15B provides, inter alia, that "[a]t or prior to the
commencement of any tenancy, no lessor may require a tenant
or prospective tenant to pay any amount in excess of"
four enumerated charges. G. L. c. 186, § 15B (2) (b).
Specifically, lessors are limited to charging the first
month's rent, the last month's rent, a security
deposit equal to the first month's rent, and the purchase
and installation cost for a key and lock. Id.
Charging any amount in excess of those four permissible fees
is considered an unfair or deceptive practice in violation of
G. L. c. 93A. See 940 Code Mass. Regs. § 3.17(4)(a)
extent that a landlord charges a permissible upfront fee,
§ 15B also imposes specific requirements as to the
handling of those fees. If a landlord chooses to require a
security deposit, the landlord must hold the deposit in a
"separate, interest-bearing account in a bank, located
within the commonwealth under such terms as will place such
deposit beyond the claim of creditors of the lessor." G.
L. c. 186, § 15B (3) (a.) . If a landlord chooses to
require the last month's rent upfront, the landlord must
"pay interest at the rate of five per cent per year or
other such lesser amount of interest as has been received
from the bank where the deposit has been held." G. L. c.
186, § 15B (2) (a). The landlord must also provide the
tenant with yearly receipts as to the amount of interest