United States Court of Appeals

For the First Circuit

No. 10-1247

IRWIN BARKAN AND D&D BARKAN LLC,

Plaintiffs, Appellants,

v.

DUNKIN' DONUTS, INC. AND BASKIN-ROBBINS USA, CO.,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND

[Hon. Ronald R. Lagueux, Senior U.S. District Judge]

Before

 Boudin, Selya and Stahl, Circuit Judges.

Ronald W. Dunbar, Jr., with whom Andrew Goloboy, William

Bagley and Dunbar Law P.C. were on brief for appellants.

Arthur L. Pressman with whom Jeffrey S. Brenner and Nixon

Peabody LLP were on brief for appellees.

December 6, 2010
Barkan does not appeal the dismissal of any of the other 1

claims. 

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STAHL, Circuit Judge. On February 8, 2005, PlaintiffsAppellants Irwin J. Barkan and D&D Barkan LLC (collectively

"Barkan") filed suit against Defendants-Appellees Dunkin' Donuts,

Inc. and Baskin-Robbins USA, Co. (collectively "Dunkin' Donuts") in

the United States District Court for the District of Rhode Island.

Barkan alleged, among other claims, that Dunkin' Donuts breached 1

a contract in which it had promised to work with Barkan and the CIT

Group ("CIT") to refinance Barkan's debt to CIT. At trial, the

district court excluded the testimony of Barkan's expert and

granted, pursuant to Federal Rule of Civil Procedure 50(a),

judgment as a matter of law in favor of Dunkin' Donuts. Barkan now

appeals both decisions. Because Barkan failed to present

sufficient evidence of causation, we affirm the district court's

judgment as a matter of law.

I. FACTS AND BACKGROUND

A. The Evidence Presented at Trial

Because this is an appeal of a judgment as a matter of

law, we set forth the evidence "'in the light most favorable to'

the nonmoving party." See Malone v. Lockheed Martin Corp., 610

F.3d 16, 20 (1st Cir. 2010) (quoting Espada v. Lugo, 312 F.3d 1,

2 (1st Cir. 2002)) (affirming renewed motion for judgment as a

matter of law under Rule 50(b)).
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In late 2001 and early 2002, Barkan became a Dunkin'

Donuts franchisee when he purchased five stores for $1.5 million. 

Simultaneously, Barkan obtained from Dunkin' Donuts a Store

Development Agreement ("SDA") giving him the right, subject to

various limitations, to develop additional stores in a specified

area of downtown Providence. To finance these purchases, Barkan

secured several loans from CIT through a program established to

facilitate financing for Dunkin' Donuts' franchisees. Pursuant

to this program, Dunkin' Donuts guaranteed the loans and promised

to make "cure payments" to CIT if Barkan failed to meet his

obligations.

Shortly after this initial transaction, Barkan

purchased three additional SDAs from Dunkin' Donuts for $100,000

each. These SDAs gave Barkan the right to open stores in other

specified locations in Rhode Island. Like the Providence SDA

acquired at the time of the initial transaction, these new

contracts also contained various restrictions to his right to

develop, including a requirement that Barkan be "qualif[ied] for

expansion" under Dunkin' Donuts' "franchise performance rating

system."

Pursuant to these development rights, Barkan eventually

opened new stores in Burrillville, Warwick, and the Providence

Place Mall. To finance this expansion and his Dunkin' Donuts

franchise operations, Barkan testified that he borrowed $1.4
By May 2004, Dunkin' Donuts had made roughly $160,000 in cure 2

payments to CIT. 

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million from the DMS Group, which eventually sued Barkan to

recover much of this allegedly unpaid debt. At about the same

time, Barkan also began preparations to open a handful of

additional stores in areas covered by his SDAs. These

preparations included acquiring property, negotiating leases,

researching neighborhoods, and navigating the zoning processes. 

Throughout 2003, Barkan's existing stores struggled to

satisfy Dunkin' Donuts' inspections, thereby jeopardizing

Barkan's right to develop under the SDAs. Inspectors cited the

stores for failing to comply with various Dunkin' Donuts

regulations, including food-safety requirements. 

Barkan's network of stores also struggled financially,

and ultimately Barkan closed two of the locations. Throughout

2002 and 2003, Barkan repeatedly contacted Dunkin' Donuts

representatives to express concern about the financial health of

his operations. Barkan suggested various avenues to

profitability, including restructuring his CIT loans. By the end

of 2003, however, Barkan's financial difficulties had become so

acute that he had ceased paying his monthly obligations to CIT,

forcing Dunkin' Donuts to make cure payments. Barkan also fell 2

behind on payments to Dunkin' Donuts for royalty fees,

advertising fees, and the remaining purchase price of the SDAs. 
The Agreement also required Barkan to execute franchise 3

termination letters for Dunkin' Donuts to hold in escrow. In the

event of Barkan's breach, Dunkin' Donuts was authorized to utilize

these letters after giving Barkan notice and seven days to cure. 

Although it uses the term "refinancing," the Agreement only 4

required Dunkin' Donuts to help restructure Barkan's loans' terms

to give him more time to repay the balance and to temporarily limit

his monthly obligations to interest-only payments. Dunkin' Donuts

did not agree to assist Barkan with anything that would have

resulted in Barkan securing additional financing from CIT.

Accordingly, in effect Barkan sought merely a debt restructuring,

and we will refer to it as such for the remainder of this opinion.

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Finally, in June 2004, Dunkin' Donuts and Barkan

entered into a Settlement Agreement ("Agreement") in an effort to

resolve the disputes that had arisen between them and to improve

the financial condition of Barkan's operations. Under the

Agreement, Barkan promised to, among other things, timely make

all future payments to CIT and release Dunkin' Donuts from any

claims Barkan might have against it. In exchange, Dunkin' 3

Donuts agreed to some modifications of the SDAs and, under

Section 4 of the Agreement, promised the following: 

[Dunkin' Donuts] hereby agrees to work with

[Barkan] and CIT to attempt to re-finance

such existing debt. Specifically, [Dunkin'

Donuts] will request that CIT issue a new

note for the current balance of the

financing, including interest and cure

payments, with interest only payments for 18

months, except for reimbursement to [Dunkin'

Donuts] for the above cure payments, such

reimbursement to be made at the time of

refinancing. . . . . [Dunkin' Donuts] makes

no representation that CIT will provide such

refinancing.4
The precise timing and nature of much of the communication 5

between CIT, Blowers, and Barkan is not entirely clear, as Barkan

only introduced testimony from himself and Shelly Rush at trial. 

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In keeping with this promise, Dunkin' Donuts assigned

Betheny Blowers to work with Barkan and CIT. In March 2003,

before the Agreement was even finalized, Blowers contacted Laura

Sneed at CIT about Barkan's debt restructuring. Blowers learned 5

that the maximum amount of time for which CIT would permit

interest-only payments was four months, and that Barkan would

need to fill out a "rewrite form" requiring documentation about

his credit history and overall finances. Barkan testified that,

in April 2004, he faxed the rewrite form to CIT along with

fifteen pages of attachments that specified his restructuring

request, listed his creditors, estimated his personal net worth,

and summarized the financial condition of his operations.

Over the next few months, Blowers continued her efforts

to facilitate the restructuring. At Barkan's request, Blowers

spoke with Sneed about CIT waiving its refinancing fee and

increasing the period of time for which CIT would accept

interest-only payments. Blowers also notified Barkan of CIT's

request for a business plan and financial statements. In

response, Barkan provided Blowers with what he termed a "brief

narrative and supporting projections," which Blowers forwarded to

CIT.
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Shelly Rush -- the vice president of the portfolio unit

at CIT -- was the ultimate decision maker on this particular

restructuring request. Prior to her involvement with Barkan's

restructuring, she was made aware of his failure to make the

monthly payments due to CIT. Rush's deposition testimony, which

was read at trial, indicated that she was frustrated with the

information, or lack thereof, available to assist with her

decisionmaking. This frustration apparently began when she

received what she found to be incomprehensible financial

documentation about Barkan's operations. Specifically, she was

given a two-inch-thick pile of spreadsheets, completely lacking

the type of "summary information" -- such as a balance sheet or

income statement -- that she typically relied on in analyzing a

restructure request. Rush claimed she never saw the seventeenpage rewrite application that Barkan testified he faxed to CIT. 

In what was the only conversation Rush would ever have

with a Dunkin' Donuts representative pertaining to Barkan's

restructuring efforts, Rush and Sneed called Blowers to clarify

their confusion about this mass of information. Rush testified

that Blowers was "vague" and "not forthcoming" on the phone. In

response to Rush's complaint about the lack of clarity in the

documentation, Blowers said she could not share any more

information. Rush asked if any of Barkan's stores had closed

and, after an initially "evasive" response, Blowers told Rush
Barkan testified that he did in fact inform CIT about at 6

least one of these closures.

Rush testified that, under the terms of the Dunkin' Donuts- 7

CIT financing program, "once [a franchisee's] stores are closed,

those accounts need to be repurchased by Dunkin' Donuts" and, at

that point, "cure payments [are] no longer available." 

Rush did not recall Blowers ever expressly requesting that 8

the loan be restructured. 

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that Barkan had closed two stores in the prior months. At that

point, Rush expressed disappointment that she had not been

notified about these closures, which had significant 6

implications for Barkan's existing debt. Rush testified that 7

the store closures were "a red flag that there's a lot of

activity happening out there that isn't been [sic] defined or

shared . . . ." Toward the end of the phone call, Rush told

Blowers that she could not act on the application without better

information. No additional information was ever provided, 8

however, and CIT did not approve the restructuring. 

Although Barkan promised in the Agreement to make

timely payments to CIT, he failed to do so. Similarly, Barkan

continued to fail to make payments on other debts he owed to

Dunkin' Donuts and the DMS Group. Eventually, in January 2005,

Dunkin' Donuts sent Barkan a notice to cure. In February 2005,

Barkan filed for bankruptcy, and eventually his remaining stores

were sold for $4.025 million.
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B. The District Court's Exclusion of the Expert 

 Testimony and Judgment as a Matter of Law

After almost six days of trial, the district court

considered the admissibility of the testimony of Barkan's

purported expert, Frank Torchio. Barkan's theory of damages was

that his inability to restructure his debt prevented him from

developing additional stores under the SDAs, and Torchio was

prepared to testify about the profits Barkan would have realized

from operating those stores. Torchio's proposed testimony was

limited to the issue of damages -- he disavowed any opinion as to

whether Dunkin' Donuts' conduct prevented Barkan from

restructuring or opening new stores. After a hearing outside the

presence of the jury, the district court excluded his testimony

because Torchio's opinions were (1) based on facts not in the

record, and (2) irrelevant in light of the lack of evidence that

Barkan would have opened additional stores but for the denial of

the debt restructuring. 

After Torchio's testimony was excluded, Barkan rested

and Dunkin' Donuts moved for a judgment as a matter of law. The

district court granted the motion on three grounds: (1)

insufficient evidence that Dunkin' Donuts breached the Agreement,

(2) "no evidence" that the alleged breach "caused CIT not to

restructure the loan[,]" and (3) "no evidence that . . . . [the

alleged breach] caused Barkan any loss." 
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II. DISCUSSION

This court reviews de novo a district court's decision

to grant a judgment as a matter of law. See J.R. v. Gloria, 593

F.3d 73, 78 (1st Cir. 2010).

Judgment as a matter of law is only appropriate if the

evidence would preclude a reasonable jury from finding in favor

of the non-moving party. See Fed. R. Civ. P. 50(a); Malone, 610

F.3d at 20 (affirming judgment as a matter of law granted under

Rule 50(b)); Trigano v. Bain & Co., 380 F.3d 22, 28 (1st Cir.

2004). "If instead fair-minded persons could draw different

inferences from the evidence presented at trial, the matter is

for the jury[.]" Espada, 312 F.3d at 2 (citing Santiago Hodge v.

Parke Davis & Co., 909 F.2d 628, 634 (1st Cir. 1990)). 

Accordingly, the court "may not consider the credibility of

witnesses, resolve conflicts in testimony, or evaluate the weight

of the evidence." See Richmond Steel, Inc. v. Puerto Rican Am.

Ins. Co., 954 F.2d 19, 22 (1st Cir. 1992). A non-moving party

with the burden of proof must, however, "present 'more than a

mere scintilla' of evidence and may not rely on conjecture or

speculation." Katz v. City Metal Co., 87 F.3d 26, 28 (1st Cir.

1996) (quoting Richmond Steel, 954 F.2d at 22).
Neither party disputes that Rhode Island substantive law 9

governs this claim. See LaChapelle v. Berkshire Life Ins. Co., 142

F.3d 507, 509 (1st Cir. 1998) (substantive state law applies to

breach of contract claim brought under diversity jurisdiction

(citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938))). 

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To succeed on a breach of contract claim under Rhode

Island law, a plaintiff must prove that (1) an agreement existed 9

between the parties, (2) the defendant breached the agreement,

and (3) the breach caused (4) damages to the plaintiff. Petrarca

v. Fid. & Cas. Ins. Co., 884 A.2d 406, 410 (R.I. 2005) (citing

Rendine v. Catoia, 158 A. 712, 713 (R.I. 1932)); see Zuromski v.

Lukaszek, 20 A.2d 685, 686 (R.I. 1941). 

Barkan asserts that Dunkin' Donuts breached its

obligations under the Agreement when Blowers failed to request

expressly the restructuring, responded to Rush's questions with

evasive and unhelpful answers, and failed to act on Rush's

request for better information. Barkan argues that this breach

caused CIT to refuse his restructuring request, which in turn

caused him to lose his opportunity to develop additional stores

under the SDAs. 

Putting aside whether Dunkin' Donuts breached the

Agreement, we turn to the third element of a breach of contract

action: causation. To establish causation, the plaintiff must

prove that the defendant's breach was the "but for" cause of the

alleged damages. See Wells v. Uvex Winter Optical, Inc., 635

A.2d 1188, 1191 (R.I. 1994). Consequently, for Barkan's claim to
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survive a Rule 50(a) motion under his theory of damages, the

record must have included some evidence that Barkan would have

developed additional stores but for Dunkin' Donuts' breach. More

specifically, Barkan was required to offer support for two causal

links: (1) but for Dunkin' Donuts' breach, CIT would have

restructured the loans, and (2) but for the lack of debt

restructuring, Barkan would have developed the additional stores. 

Barkan failed, however, to present sufficient evidence of either

one, and judgment as a matter of law was therefore appropriate. 

A. CIT's Debt Restructuring Decision 

As to the first link, no reasonable jury could have

concluded that CIT would have restructured the debt but for

Blowers' purported failures. To begin with, Rush never suggested

that Dunkin' Donuts could have done anything to persuade her to

approve the restructuring. To be sure, Rush testified that she

received evasive answers to her questions, informed Blowers that

she wanted more concise financial information, and never received

the information she sought. Rush's refusal to move forward with

the restructuring request without better information does not,

however, prove that she would have agreed to restructure if she

had received that information. In fact, implicit in her quest

for a financial summary of Barkan's operations was that Rush

would have only agreed to the restructuring if she was

comfortable with what she learned from that summary. Barkan,
At oral argument, Barkan asserted that a jury could infer, 10

from his previous success in obtaining loans from CIT and his

"forty year[]" history of obtaining financing from other lenders,

that CIT would have approved this restructuring but for Dunkin'

Donuts' breach. Barkan's ability to secure financing for projects

in the past, however, has little bearing on whether Rush would have

approved this particular restructuring request in 2004.

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however, presented no evidence that his operations could have

withstood such scrutiny.10

Not only did Barkan fail to present direct evidence of

Rush's willingness to restructure these loans, the trial record

was replete with evidence suggesting that Rush would be reluctant

to do so. Specifically, Barkan's operations were rife with

financial problems, Barkan had failed to meet his existing

obligations to CIT for months, and Barkan had shuttered two

stores (a development which raised a "red flag" with Rush). 

Although its guarantee of the debt could lead to

speculation that a well-orchestrated lobbying effort by Dunkin'

Donuts would have resulted in CIT restructuring the loans,

nothing in the record actually speaks to how CIT would have

reacted to aggressive pressure, or at least better assistance,

from Blowers or Dunkin' Donuts. If anything, the fact that CIT

demanded detailed financial information from Barkan, even though

the debt was guaranteed, suggests that CIT would not have been

particularly susceptible to arm-twisting from Dunkin' Donuts. 
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B. Barkan's Development of Additional Stores

Although Barkan's failure on the first causal link

suffices to affirm the district court's judgment as a matter of

law, we nonetheless also find that Barkan failed to present

sufficient evidence that Barkan would have successfully opened

additional stores but for CIT's refusal to restructure the debt. 

By 2004, Barkan's network of stores was plagued by

financial difficulty, and Dunkin' Donuts representatives had

threatened to block his development of new stores because of what

they viewed as substandard conditions at his existing locations. 

Although Barkan may have taken preliminary steps to develop

additional stores throughout Rhode Island, he failed to

demonstrate how, given the struggles his franchises faced, the

restructuring could have put him in a position to take the next

step and actually open the additional stores. For example, other

than the unsubstantiated suggestion that the DMS Group would have

continued to finance him, Barkan offered no evidence as to how he

would have obtained the significant capital presumably required

to open any new location. As noted by the district court, the

restructuring itself would not have infused Barkan with

additional money, but would only have temporarily decreased his

monthly obligations -- which by 2004 he was not paying anyway. 

Under these circumstances, a jury could not reasonably conclude
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that this particular restructuring would have resulted in any

expansion of Barkan's network of stores. 

In sum, Barkan failed to provide sufficient evidence of

either link required to prove that Dunkin' Donuts' alleged breach

caused damages. It follows that the lack of such causation proof

also made the expert evidence as to damages irrelevant and

potentially misleading; but, even had it been admitted, the

outcome on the Rule 50 motion would have had to be the same. 

III. CONCLUSION 

For the foregoing reasons, we affirm the district

court's judgment as a matter of law.