* Of the District of Rhode Island, sitting by designation.



# United Stat es Court of Appeals

For the First C ircuit

No. 03-2189 NED ZACHAR AND JANET ZACHAR, Plaintiffs, Appellees,

v. JEFFREY W. LEE, SUSAN A. LEE AND JEFFREY W. LEE REAL ESTATE, INC., Defendants, Appellants.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Nancy Gertner, U.S. District Judge ]

Before Selya, Circuit Judge , Coffin, Senior Circuit Judge , and Smith, * District Judge . W. Paul Needham , with whom Mark A. Johnson , was on brief for appellants. James A.G. Hamilton , with whom Susan E. Stenger and Perkins, Smith & Cohen, LLP , were on brief for appellees.

April 2, 2004-2- SMITH, District Judge . This appeal challenges a jury verdict andaward of $205,000 in damages for breach of the implied covenant of good faith and fair dealing in connection with an attemptedsale of a home on Nantucket Island, in Massachusetts. The Appe llants Jef frey W. Lee, Susan A. Lee, and Jeffrey W. Lee Real Estate, Inc. (“Lee Real Estate” or the “Lees”) assert two

errors on appeal: (1) that the district court erred by de nyin g their motion for judgment as a matter of law brought under Rule 50 of the Federal Rules of Civil Procedure, and (2) that the district court s hou ld not have admitted Appellees Ned and Janet Zachar’s (the “Zachars”) expert’s rep ort into evidence in its entirety. After a careful review of the record, we affirm.

I. THE FACTS We take the facts and the reasonable inferences therefrom in the light most hospitable to the jury’s verdict. See Correa v. Hosp. San Francisco , 69 F.3d 1184, 1188 (1 st Cir. 1995); Sanchez v. Puerto Rico Oil Co. , 37 F.3d 712, 716 (1 st Cir. 1994); Wagenmann v. Adams , 829 F.2d 196, 200 (1 st Cir. 1987).

On August 21, 1998, the Zachars, enamoredwith Nantucket in summer, signed a purchase and sale agreement (the “P&S”) with the Lees to purchase property located at 2 Anne’s Lane on Nantucket (the “Property”). The agreed-upon purchase price for the Property was $2,050,000. In accordance with the P&S, the Zachars made the requiredten percent deposit of $205,000 to the Lees’ attorney, and-3-

the purchase of the Property was scheduled to close on February 2, 1999. Like the setting sun, however, by late December 1998, the Zachars’ desire to purchase the Property began fading to the west when Mr. Zachar accepted a job as a tel ecommunications stock analyst in San Francisco. However, under the terms of the P&S, the Zachars’ failure to close on the Property would result in their forfeiture of the $205,000 depo sit. In an attempt to avoid this result, the Zachars proposed an alternative arrangement that might allow them to recoup, in whole or in part, the deposit they placed

on the Property. On January 13, 1999, the Zachars and Lees entered into an agreement (the “Agreement”) that required the Lees to list the Prop erty for sale on July 1, 1999, and keep it on the market through February 29, 2000. Un der t he terms of the Agreement, if the Property sold before February 29, 2000, the Lees were obligated to pay the Zachars any funds in excess of the sale price set forth in the P&S up to a maximum of $205,000.

The Agreement also provided that Lee Real Estate, as the sole broker for the Property, woulduse reasonable and commercially acceptable means to sell the Property. The Agreement provided, in pertinent part, that:

Mr. and Mrs. Lee agree to li st the property with Lee Real Estate, Inc. for sale commencing July 1, 1999 at a pri ce to be chosen by them. Lee Real Estate shall market andattempt to sell the propert y in a1 The district court docket is silent with respect to the fate

of the Zachars’ misrepre sentat ion and conversion claims, but pleadings filed with the district court indicate that these claims were voluntarily dismissed with prejudice by the Zachars prior to the case being submitted to the jury. The ch. 93A claim was tried to the court. On July 23, 2003, the district court issued a written decision that dismissed the ch. 93A claim on the merits.

-4- reasonable commercial manner as comparable properties are marketed on Nantucket. A greement at ¶ 4. On July 1, 1999, the Lees listed the Property for sale with Lee Real Estate. Because the median sales prices of Nantucket homes in 1999 hadbeen increasing substantially, Lee Real Estate set the asking price for the Property at $2,475,000 -- approximately $500,000 higher than the price of the Property at the time the Zachars and Lees entered into the P&S. The Lees did not lower the asking price for the Pr oper ty during the term of the Agreement, and when the Agreement expired on February 29, 2000, the Property hadnot sold. The Zachars were therefore unable to recoup any of their $205,000 deposit.

II. THE PROCEEDINGS BELOW The Zachars brought suit against the Lees and their real estate company asserting five cause s of a ction: (1) breach of contract; (2) misrepresentation; (3) breach of the implied covenant of goodfaith and fair dealing; (4) conversion; and (5) a violation of Mass. Gen. Laws ch. 93A. Following a trial, the Zachars’ case was submitted to the jury on the breach of contract and breach of the implied covenant of good faith and fair dealing c la ims. 1 The-5-

juryfound that the Lees did not breach the Agreement and returned

a verdict on that count in their favor. However, the jury found that the Lees breachedthe implied covenant of goodfaith and fair dealing, and awarded the Zachars $205,000 in damages with respect to that count.

Pursuant to Fed. R. Civ. P. Rule 50, the Lees moved for judgment as a matter of law at the close of the evidence and again following the jury verdict. The district court denied both motions. This appeal followed.

III. ANALYSIS A. Sufficiency of the Evidence on the Plaintiffs’ Implied

Covenant of Good Faith and Fair Dealing Claim. The Lees argue that there was insufficient evidence for the jury to conclude that they breached the implied covenant of good faith and fair dealing. Specifically, the Lees contend that because the jury found that they did not breach the Agreement (including the provision regarding the reasonable marketing of the property), it could not h ave co nsidered evidence relating to the marketing of the property to find a breach of the implied covenant. Accordingly, the Lees contend there was insuffici ent e vidence, absent marketing-related evidence, to find a breach of the implied covenant and the district court should therefore have granted their Rule 50 motion.-6- In most instances, we review de novo the district court’s decision to deny a Rule 50 motion for judgment as a matter of law. See Gibson v. City of Cranston , 37 F.3d 731, 735 (1 st Cir. 1994). In undertaking this review, we look to all evidence in the record, drawing all reasonable inferences there from in the nonmovants’ favor, and resist the temptation to weigh the evidence or make our own credibility determinations. See Reeves v. Sanderson Plumbing Prods., Inc. , 530 U.S. 133, 151, 120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000); Correa , 69 F.3d at 1191; Gibson , 37 F.3d at 735. We “may

reverse the denial of such a motion only if reasonable persons couldnot have reached the conclusion that the jury embraced.” Correa , 69 F.3d at 1191 (citing Sanchez , 37 F.3d at 716).

However, before we undertake this review we must be satisfiedthat the Lees properly prese rved their arguments for appeal. Rule 50(a) requires that challenges to the sufficiency of the evidence must be raised initially at the close of the evidence. Such challenges must be sufficiently specific so as to apprise the district court of the grounds relied on in support of the motion. See Fed. R. Civ. P. 50(a)(2); Correa , 69 F.3d at 1196. Accordingly, a motion for judgment as a matter of law at the close of the evidence “preserves for review only those grounds specified at the time, and no others.” Id. (citing Sanchez , 37 F.3dat 723). If the Rule 50(a) motion is denied and the case is submitted to a jury, the movant must renew the motion once aga in in ord er to-7-

preserve the issue for appeal. See Fed. R. Civ. P. 50(b); Martin H. Redish, 9 Moore’s Federal Practice ¶ 50.41 (3d ed. 2003). The grounds for the renewed motion under Rule 50(b) are limited to those as serte d in the earlier Rule 50(a) motion. See Correa , 69 F.3dat 1196 (“The movant cannot use [a Rule 50(b)] motion as a vehicle to introduce a legal theory not distinctly articulated in its close-of-evidence motion for a directed verdict.”); Sanchez , 37 F.3d at 723.

The Lees argued in their Rule 50(a) moti on tha t the Zachars’ claim for breach of the implied covenant of good faith and fair dealing was “indistinguishable from their claimfor breach of contract.” They further argued that, to the extent that these claims could be treated separately, “there was no breach of the implied cove nant.” The district court denied this motion. Fo llowing the jury verdict, the Lees renewed their motion und e r Rule 50(b). The Rule 50(b) motion tried a new tack arguing that because the jury found in their favor on the bre ach of con tract claim(imp lic itly finding that they had acted in a commercially reasonable manner when marketing the Property), the jury couldnot have relied upon the Lees’ marketing efforts to conclude that the Lees breached the implied covenant of good faith and fair dealing. Absent that evidence, the Lees argued that there was insufficient evidence to support a verdict on the implied covenant of goodfaith andfair dealing claim. Unpersuaded, the distr ict co urt also-8-

deniedthis motion. In this appeal, the Lees press the same grounds argued in the Rule 50(b) motion.

The Lees’ challenge to the implied covenant of good faith and fair dealing claim is one that was not advanced in their Rule 50(a) motion. At the close of the e vid ence, the Lees sought judgment as a matter of law arguing that the breach of contract and breach of the implied covenant of good faith and fair dealing claims were essentially duplicative. Such an objection however is simplynot sufficient to preserve, and certainly cannot be read to encompass, the legal theory underlying the Lees’ Rule 50(b) motion

a ndthis appeal (that a finding of breach of contract is a prerequisite to a finding of breach of the implied covenant of good faith and fair dealing).

Given the Lees’ failure to comply with the strictures of Rule 50, our review is limited to “‘whether the record reflects an absolute d eart h of evidentiary support for the jury’s verdict.’” Davignonv. Clemmey , 322 F.3d 1, 13 (1 st Cir. 2003) (quoting Udemba

v. Nicoli , 237 F.3d 8, 13-14 (1 st Cir. 2001)). Under this standard, the district court will only be reversed when “its ruling is obviously insupportable.” Id. (citing Udemba , 237 F.3d at 13-14). Areview of the record leaves us with no doubt that the jury ha d sufficie nt ev idence before it (albeit conflicting evidence) to conclude that the Lees violated the implied covenant of good faith and fair dealing.-9- It is apparent that the Lees developed the theory raised in their Rule 50(b) motion only after the jury’s verdict, because the Lees failed to object to the jury instru ction on the implied covenant of good faith and fair de aling cl aim. If the Lees b elievedthat the breach of a contract is a sine qua non in an y claimfor breach of the i mplied cov enant of good faith and fair deali ng, the y would - and should – have asked for such an instruction. They did not, and by failing to do so, the Lees forfeitedtheir argument to the extent that it was not forfeited by their failure to assert those grounds in their Rule 50(a) motion.

Furthermore, even if the Lee s’ argument in this appeal couldbe construed as a claim that the jury’s verdicts in this case

were inconsistent (a ruling in their favor on the breach of contract but against them with respe ct to the implied covenant), such an argument would still be waived. This court has held that objections to the inconsistency of verdicts ordinarily must be made after the verdict is read and before the jury is discharged. See Babcock v. General Motors Corp. , 299 F.3d 60, 63-64 (1 st Cir. 2002). Here, the Lees failed to raise an objection to the verdicts before the jury was discharged. Therefore, the Lees’ argument in this appeal is forfeited to the extent that it amounts to a claim that the verdicts were inconsistent.-10- B. Admissionof the Expert Report in its Entirety . The Lees argue that the district court erred when it admit tedinto evidence the entire appraisal report of Robert W. Saben, Jr., the Zachars’ expert witness. The Lees contend that portions of the report (s pecif ically, those containing Saben’s opinion that a reasonable marketing period for the Property would have been six to twelve months) are based on an unreliable methodology, and that Saben was not qualified to render such an opinion. We review a district court’s decision to admit expert testimonyfor abuse o f disc retion. Gaydar v. Sociedad Instituto Gineco-Quirurgico y Planificacion , 345 F.3d 15, 24 (1 st Cir. 2003); Correa v. Cruisers, a Div. of KCS Int’l, Inc. , 298 F.3d 13, 24 (1 st Cir. 2002). During direct examination of Saben, his appraisal report of the Property was offered into evidence. The Lees’ counsel objectedto the admission of the entire report, but did not specifyany portions of the report. The district court admitted th e entire appraisal report into evidence. The Zachars conten d that such a general objection to the admission of an expert report is insufficient under Fed. R. Evid. 103(a)(1)(requiring objections to the admission of evidence to state the “specific ground of objection”), an d th erefore does not preserve this ground for appeal. While the Zachars may be correct with respect to the need-11-

for specificity in the objection, a trial objection is not the only avenue available to a party to preserve the right to appeal.

Prior to trial, the Lees filed a motion in limine to prevent Saben from testifying regarding the adequacy of the Lees’ marketing efforts. This motion was denied by the district court. The 2000 Amendment to Fed era l Rule of Evidence 103 specifically provides that once the district court “makes a definitive ruling on the record admitting . . . evidence, either at or before trial, a partyneed not renew a n objection . . . to preserve a claim of

error for appeal.” Fed. R. Evid. 103(a)(2); accord Crowe v. Bolduc , 334 F.3d 124, 133 (1 st Cir. 2003)(holding that denial of a motion in limine preserves an issue for appeal, despite the absence of an objection at trial). Here, the Lees preserved their grounds for appeal with respect to Saben’s appraisal report by filing the motion in limine and receiving a definitive denial of that motion

on the record. Accordingly, the Lees’ inartful objection at trial to the admission of the report does not prevent them from appealing the admission of the appraisal report. See Crowe , 334 F.3d at 133.

Freedfrom this procedural snag, we turn to the substance of the Lees’ argument. Rule 702 of the Federal Rules of Civil Procedure sets forth the ground rules for consideration of expert testimony. The rule provides:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understandthe evidence or to determine a fact in issue, a witness qualified as an expert by-12- knowledge, skill, experience, training or educati on m ay testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods to the facts of the case. Fed. R. Evid. 702. The Supreme Court’ s decision s in Daubert v. Merrell Dow Pharm., Inc. , 509 U.S. 579, 113 S. Ct. 2786, 125 L. Ed. 2d469 (1993), and Kumho Tire Co. v. Carmichael , 526 U.S. 137, 119 S. Ct. 1167, 143 L. Ed. 2d 238 (1999), guide district courts when determining the admissibili ty of evidence under Rule 702. Under the holding of Daubert , a district court must act as a “gatekeeper” bydetermining “whether the reasoning or methodology underlying the testimonyis . . . valid and whether that reasoning properly can be applied to the facts in issue.” 509 U.S. at 592-93. The court’s assessment of reliability is flexible, but “an expe rt m ust vouchsafe the reliability of the data on which he relies and explain how the cumulation of that data was consistent with standards of the expert ’s profession.” SMS Sys. Maint. Servs., Inc. v. Digital Equip. Corp. , 188 F.3d11, 25 (1 st Cir. 1999). In Kumho Tire , the Court extended the reach of Daubert ’s gatekeeping function to cover all types of expert testimony involving technical or otherwise specialized knowledge. 526 U.S. at 141.

The Lees argue that Saben was not qualified to render the opinion that a reasonable marketing period for the Property would have been six to twelve months. Further, the L ees argue that,-13-

irrespective of his qualifications, Saben relied on an unreliable methodologyto reach his opinion. However, these are issues we need not decide because even if we assume Saben was not qualified to provide an opinion as to the marketing of the Property, and the portion of the report in question was, in fact, the product of an unreliable methodology, the district court’s admission o f tha t portion of the report would be harmless error.

In determining whether a n error is harmless, “[o]ur inquiryis ‘whether [admission] of the evidence affe cted the plaintiff[s’] substantial rights.’” Lubanski v. Coleco Indus., Inc. , 929 F.2d 42, 46 (1 st Cir. 1991) (quoting Vincent v. Louis Marx & Co., Inc. , 874 F.2d 36, 41 (1 st Cir. 1989)). “‘The standard for reviewing a district court’s nonconstitutional error in a civil suit requires that we find such erro r harmless if it is highly probable that the error did not affect the outcome of the case.’” Moulton v. Rival Co. , 116 F.3d 22, 26 (1 st Cir. 1997) (quoting Harrison v. Sears, Roebuck & Co. , 981 F.2d 25, 29 (1 st Cir. 1992)). The centrality of the evidence that was admitted and the prejudicial effect of its inclus ion are important factors to consider; howe ver, a harmless error analysis must consider the admission of the e vidence in light of the entire record. See Vincent , 874 F.2d at 41.

Saben’s opinion regarding a reasonable marketing period for the Property was hardly the focus of his testimony, or of the2 In their brie f, the Lees contend that the Zachars’ counsel

insertedthe marketing opinion into the appraisal report so that it couldbe mentioned in closing argument. However, while the Zachars’ cou nsel did discuss the appraisal report during closing argument, he never specifically addressed Saben’s opinion regarding the reasonable marketing period for the Property. -14- Zachars’ case for that matter. A review of Saben’s testimony, as well as the appraisal report itself, reveals tha t the marketing opinion was buried on one page near the end of Saben’s forty-five page appraisal report. Saben’s marketing opinion was not addressed

on either direct examina tio n or in closing argument. 2 Moreover, the record reveals that the jury had enough (though not abundant) evidence, independent of the contested portion of Saben’s report, to conclude that the Lees’ approach to the marketing of the Property amounted to a breach of the implied covenant of goodfaith andfair dealing. The jury heard testimony regarding the Lees’ listing price for the Property and its substantial increase since the Zachars signed the P&S. The jury also heard evidence showing that the Lees never lowered the price of the Property during the time it was on the market, despite the fact that t hey neve r receivedan offer on the Property. Jeffrey Lee even testified that it is common practice to lower the price of a house when no offers

are forthcoming. From this evidence, the jury could have concluded that the Lees’ asking price for the Property was over-inflated and their refusal to lower the price was deliberately intended to ward off potential buyers. The Zachars pre sented additional evidence-15-

that the Lees failed to advertise the Property in the Inquirer & Mirror, a publication commonly used to advertise the s ale of Nantucket real estate, for much of July. This omission, coupled with the over-inflated price, was adequate evidence for the jury to determine that the Lees breached the implied covenant of good faith andfair dealing. Consequently, while it is theoretically possible that the admission of Saben’s entire expert report had some slight prejudicial effect on the jury, we cannot say with “‘fair assurance

. . . that the judgment was [] substantially swayed’ ” b y its admiss ion. Esp eaignnette v. Gene Tierney Co. , 43 F.3d 1, 9 (1 st Cir. 1994) (quoting Lubanski , 929 F.2d at 46).

Affirmed.