Source: http://masscases.com/cases/app/50/50massappct812.html
Timestamp: 2019-04-22 20:10:19+00:00

Document:
STAGECOACH TRANSPORTATION, INC. vs. SHUTTLE, INC.
Present: PERRETTA, GILLERMAN, & GELINAS, JJ.
CIVIL ACTION commenced in the Superior Court Department on May 13, 1994.
The case was tried before David M. Roseman, J., and motions for new trial and for other further relief were heard by him.
Andrew J. Frackman, of New York, for Shuttle, Inc. Douglas G. Moxham for Stagecoach Transportation, Inc., & others.
GELINAS, J. We consider in this case whether a claim for damages under G. L. c. 93A, brought in a Massachusetts court, is precluded by a choice of law provision (New York law as the choice) in an unsigned contract. We further consider whether jury misconduct in this case requires a new trial, whether the plaintiff was in breach of the contract, thereby excusing the defendant's breach, and, finally, whether the evidence of damages at trial was sufficient. to support the jury's award. We find no error and affirm the judgment and the orders of the Superior Court denying motions for a new trial and other further relief.
A jury in the Superior Court determined that Stagecoach Transportation, Inc. (Stagecoach), and Shuttle, Inc. (Shuttle), had agreed to all the material terms of an unsigned contract and awarded substantial damages to Stagecoach. The jury further determined that Stagecoach had failed to sign the contract in reliance on promises made by Shuttle's then vice-president, Terry V. Hallcom; that Hallcom's conduct in this regard was unfair and deceptive; and that Stagecoach had thereby suffered damage. A Superior Court judge, acting on Stagecoach's claim for punitive damages under G. L. c. 93A, s.s. 2 and 11, doubled the jury's contract damage award. The jury further found that Stagecoach had made false representations of material fact to Shuttle regarding tickets purchased or bills rendered to Shuttle, that Shuttle thereby suffered damage, and that Shuttle further suffered damage as a result of the unfair or deceptive conduct of Martin Hoffman, Stagecoach's president. On the issue of jury misconduct, the trial judge, after hearing, determined that a hypothetical jury would not have been influenced by the foreman's bringing to them a definition of "material breach" that he had obtained from his insurance broker during an evening telephone conversation. The trial judge further denied Shuttle's motions for a new trial and other further relief, finding that there was no change in senior management that amounted to a breach of contract on Stagecoach's part, and that there was sufficient evidence to support the jury's finding of damages.
predecessor of defendant Shuttle [Note 1]. Under a two-year agreement (1991 contract) originating on September 5, 1991, the parties offered door to door transportation (an air/ground package called the "TicPac") between Boston, New York, and Washington, D.C. Stagecoach provided ground transportation, portal to airport and airport to portal. Shuttle provided air transportation, airport to airport. Stagecoach purchased airline tickets from Shuttle for resale to passengers, at reduced prices as set forth in the 1991 contract; Shuttle had the right to purchase ground transportation vouchers from Stagecoach for resale to passengers, again at reduced prices as set forth in the 1991 contract. The TicPac could also be purchased from a passenger's travel agent. The incentives to customers for purchasing a TicPac were convenience and a reduced cost of transportation.
In the course of working together in negotiating and then implementing the 1991 contract, Shuttle's vice-president of operations, Hallcom, and Stagecoach's then president, Kevin O'Brien, developed a close business and personal relationship. The business side of the relationship waned in May, 1993, when O'Brien, indicted and convicted of Medicare fraud for his activities while an officer of an unrelated company, was sentenced to prison. In 1992, when first indicted on the Medicare fraud charge, O'Brien resigned as president of Stagecoach. He continued to work for Stagecoach as director of sales and marketing until he began serving his sentence in 1993. Upon O'Brien's resignation as president, Martin Hoffman, one of Stagecoach's principal investors, was named as president; Martin's father, Herbert S. Hoffman (Hoffman), was chairman of Stagecoach's board of directors and became chief executive officer.
In May of 1993, prior to the expiration of the 1991 contract, Shuttle invited a proposal from Stagecoach for continuing that contract with a revised pricing structure. Shuttle also invited a like proposal from Boston Coach, Inc., Stagecoach's competitor.
that Stagecoach relinquish the exclusive rights under the agreement. Stagecoach refused, and Shuttle then refused to provide tickets. On May 13, 1994, Stagecoach filed suit.
were offset by a jury finding that Stagecoach and Martin Hoffman had not reported to Shuttle the proceeds from the sale of certain tickets. The jury determined the amount of the offset to be $152,330.00, or $88,490.00 against Shuttle and $63,840.00 against Martin Hoffman. The judge awarded attorney's fees of $335,000.00 to Stagecoach. He also awarded attorney's fees and costs to Shuttle in the amount of $21,280.00 against Martin Hoffman.
Chapter 93A award. We consider first the judge's award of damages to Stagecoach under G. L. c. 93A, s. s. 2 and 11, and Shuttle's claims that (a) New York choice of law controls and that, under New York law, Stagecoach is entitled to neither punitive damages nor attorney's fees, and (b) even if Massachusetts law prevails, Stagecoach is not entitled to G. L. c. 93A damages because there was no injury to Stagecoach, Shuttle's conduct did not rise to a level of "rascality" and egregiousness, see Spence v. Boston Edison Co., 390 Mass. 604 , 616 (1983), necessary to support a finding of violation of G. L. c. 93A, and the award itself was erroneous, because based on lost profits as found by the jury [Note 6].
(a) Choice of law. The jury's response to question one stated that the parties had agreed to all the material terms of the contract. Assuming that the choice of law provision was a material term, we consider whether the clause precludes c. 93A recovery here.
The choice of law clause in the unsigned contract provided: "This Agreement shall be governed and interpreted in accordance with the laws of the State of New York. Without limiting in any way the jurisdiction of the courts of any state, nation or province, or Shuttle's right to invoke the jurisdiction of such courts, Stagecoach hereby submits and consents to the jurisdiction of the courts of the United States of America and the State of New York. . . . "
reasonable. See Morris v. Watsco, Inc., 385 Mass. 672 , 674-675 (1982) (court has acknowledged and given effect to the law reasonably chosen by the parties to govern their rights under contracts); Jacobson v. Mailboxes Etc. U.S.A., Inc., 419 Mass. 572 , 575 (1995) (forum selection clauses are to be enforced if it is fair and reasonable to do So) [Note 7].
Shuttle argues that, with regard to the c. 93A claim, Stagecoach should be bound by the choice of law clause designating New York law, which does not recognize, in a commercial transaction, punitive damages or the award of attorney's fees, no matter how malicious or intentional a defendant's wrongful conduct. See Hooper Assocs., Ltd. v. AGS Computers, Inc., 74 N.Y.2d 487, 491 (1989) (attorney's fees not available in absence of contractual or statutory provisions permitting such fees); Fischer v. Yaakov, 176 A.D.2d 655, 655 (N.Y. 1991) (punitive damages not available to corporations in action based on private wrong). Shuttle's argument is misplaced.
sign. Stagecoach's claim did not arise under the contract. See Krock v. Lipsay, 97 F3d 640, 645 (2d Cir. 1996) (language that a "[m]ortgage shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts" governs actions under the contract only and not those sounding in tort); Rosenberg v. Pillsbury Co., 718 E Supp. 1146, 1150 (S.D.N.Y 1989) (franchise agreement provided that any performance or breach to be "governed and construed pursuant to the laws of the State of New York," but provision did not apply to fraud claims, sounding in tort). Contrast Turtur, 26 F.3d at 309 (clause "to resolve any controversy or claim arising out of or relating to this contract or breach thereof " held to include all actions arising from activity surrounding the transaction).
As in Jacobson v. Mailboxes Etc. U.S.A., Inc., 419 Mass. at 580 n.9, because the choice of law clause does not purport to declare that the rights of the parties were to be governed by New York law, the application of G. L. c. 93A to the parties' dealings is not barred. The trial court's determination that Shuttle's conduct did not relate to an interpretation of the agreement, and thus was governed by G. L. c. 93A, was correct.
(b) Additional claims with respect to G. L. c. 93A. With respect to Shuttle's additional claims that there was no injury, that the conduct did not rise to the "level of rascality" and egregiousness as between business entities, and that the measure of damages was erroneous, we conclude that the trial judge's rulings in this respect are fully supported by the record. See Linkage Corp. v. Trustees of Boston Univ., 425 Mass. 1 , 26-27, cert. denied, 522 U.S. 1015 (1997).
contract [Note 9]." The foreman in turn reported his findings to the jury at the start of deliberations on the next day [Note 10].
fered from the actual law governing the case." Annot., Prejudicial Effect of Jury's Procurement or Use of Book During Deliberations in Civil Cases, 31 A.L.R.4th 623, 627 (1984). While the definition of material breach was no doubt important to the case, the trial judge found, and the record supports, that a hypothetical jury would give little, if any, weight to the information in circumstances where, as here, there was evidence that the jury had already decided the issue before being given the information. Further, the material did not differ in great respect from the actual law (the judge ruled that, in fact, "substantial" is an appropriate synonym for "material").
Other jurisdictions have come to a similar conclusion where jurors obtain clarifying definitions. See United States v. Cheyenne, 855 F.2d 566 (8th Cir. 1988) (definition of "callous" and "wanton"); Franks v. State, 306 Ark. 75 (1991) (jury obtained definition of "premeditation"); McGee v. McGee, 237 SW.2d 778, 783-784 (Tex. App. 1950) (definition of "stock").
Some jurisdictions make a formal distinction whether the extraneous information is factual or definitional. See People v. Sotelo, 102 Cal. App. 688 (1929) (during deliberations certain jurors consulted law books to discern meaning of the term "malice aforethought," and then asked for and received further instruction on the subject; consulting law books in these circumstances held not to constitute error); State v. Tinius, 527 NW.2d 414 (Iowa Ct. App. 1994) (jury use of a dictionary during deliberations constitutes jury misconduct because it introduces outside information, but definition of "reasonable" in the dictionary did not conflict with any aspect of the court's instructions; use of dictionary during deliberations viewed as generally harmless); State v. Sheppard, 84 Ohio St. 3d 230 (1998), cert. denied, 527 U.S. 1026 (1999), and cert. denied, U.S. (2000) (deliberating juror contacted a psychologist for a definition of "paranoid schizophrenia" before deliberation on the penalty phase of a capital murder case; the request for information constituted juror misconduct, but the appellant did not establish that any prejudice resulted from this misconduct, because the conversation reinforced the expert defense testimony) [Note 11].
defendant in any way. We do not reverse a trial judge's determination in the matter where there is "no reasonable likelihood of prejudice." Fitzpatrick v. Allen, 410 Mass. at 795. We discern no such likelihood here.
Right to terminate. We find no merit in Shuttle's argument on appeal that the contract should not be enforced because section 17 gave Shuttle the right to terminate if a change occurred in Stagecoach's senior management (president and/or vice-president of sales and marketing), and such a management change did in fact occur (O'Brien was demoted from president to director of marketing). Shuttle submitted the draft contracts of July and August to Stagecoach after it was known to Shuttle that not only had O'Brien been demoted but that he had left the company and was committed to federal prison. All this took place with Shuttle's full knowledge, well before the contemplated effective date of the contract, September 1, 1993. There is no evidence that Shuttle sought to amend or terminate the negotiations or vitiate the proposed agreement based on this change in management. To the contrary, all of the evidence suggests that Shuttle refused to sign the contract in an effort to force Stagecoach to provide in some way for the departed O'Brien and members of his family. Shuttle then began doing business with another transportation company when these efforts did not produce results to Shuttle's liking.
Evidence of damages. We also find no merit to the argument that the jury had insufficient evidence to support its award of damages. Brian Beck, who was Stagecoach's accountant, provided ample evidence of the company's historical revenues and costs and of the projected profit that Stagecoach might anticipate over the term of the agreement, including the average cost and selling price of the TicPacs. We uphold the jury's damage award where, as here, it has a "solid basis in the evidence." Rizika v. Donovan, 45 Mass. App. Ct. 159 , 166 (1999). See Linkage Corp. v. Trustees of Boston Univ., 425 Mass. at 28 n.38.
component and for less than the amount Shuttle charged a walk-up customer for airfare, and Shuttle suffered financial damage as a result of these sales. There was no error.
Attorney's fees. Stagecoach has requested reasonable attorney's fees pursuant to c. 93A, s. 11, in connection with this appeal. Stagecoach is entitled to reasonable attorney's fees incurred in opposing Shuttle's appeal but not to fees arising from Martin Hoffman's unsuccessful cross appeal. See Golber v. BayBank Valley Trust Co., 46 Mass. App. Ct. 256 , 261 (1999). Stagecoach shall provide to our clerk's office "the necessary back-up materials and details as to hours spent [excluding time spent on Martin Hoffman's cross appeal], the precise nature of the work, and fees requested," Williams v. B & K Med. Sys., Inc., 49 Mass. App. Ct. 563 , 578 (2000), quoting from Yorke Mgmt. v. Castro, 406 Mass. 17 , 20 (1989), within fifteen days of the decision. Shuttle shall have fifteen days to respond.
Orders denying motions for new trial and for further relief affirmed.
[Note 1] Prior to the expiration of the 1991 contract, Trump ceased to do business. Shuttle succeeded to Trump's fights and obligations under the 1991 contract and continued the program with Stagecoach. Shuttle is commonly known as the US Air Shuttle.
[Note 2] Stagecoach sent Shuttle a letter accepting all terms and conditions contained in the new pricing approach. Shuttle sent Stagecoach a letter stating that it had elected to stay with Stagecoach for another two years, and that it would be "business as usual" for the week or so that it would take to prepare a written agreement. Shuttle's then president, Gordon Linkon, sent an agreement to Stagecoach with a note that stated, "Here is my draft. If ok, let's sign. If not, let's talk." The new agreement in all respects was satisfactory to Stagecoach; Hoffman requested that the contract be signed.
[Note 3] Clause seven of the 1993 agreement provided: "EXCLUSIVITY During the term of this Agreement, Stagecoach shall not purchase for resell [sic] or offer tickets for air transportation between BOS [Boston - Logan Airport] and LGA [New York - LaGuardia Airport] or between DCA [Washington D.C. - National Airport] and LGA from any air carrier other than Shuttle, without Shuttle's express, written approval in advance. Likewise, during the term of this Agreement, Shuttle shall not sell or provide its tickets for air transportation between BOS and LGA or DCA and LGA to an executive sedan transportation company other than Stagecoach for resale as part of a combination package nor shall Shuttle offer the travel vouchers of any executive sedan transportation company other than Stagecoach as a part of a combination package between BOS and LGA or DCA and LGA without Stagecoach's express, written approval in advance." The 1991 contract contained language to the same effect.
[Note 4] The judge had the choice of letting the jury find the facts of the c. 93A claim, reserving to himself all aspects of the c. 93A claim, or asking the jury for a nonbinding advisory opinion as to whether Shuttle had acted unfairly or deceptively in preventing the contract from being signed. See Acushnet Fed. Credit Union v. Roderick, 26 Mass. App. Ct. 604 , 606 (1988), and cases cited.
"(1) Did Stagecoach and Shuttle agree on all the material terms of Exhibit 17 [the 1993 agreement]?" Answer: "Yes."
"(2) . . . If you answered 'yes' to Question 1, what, if any, damage did Stagecoach suffer as a result of Exhibit 17 not being implemented?" Answer: "Amount: $2,750,000.00."
"(3) Did Stagecoach fail to sign Exhibit 17 in reliance on promises made by Mr. Hallcom?" Answer: "Yes."
"(4) . . . If you answered 'yes' to Question 3, what, if any, damage did Stagecoach suffer as a result of its reliance on those promises of Mr. Hallcom?" Answer: "Amount: $2,750,000.00."
"(5) If you answered 'Yes' to Question 3, was Mr. Hallcom's conduct unfair or deceptive to Stagecoach?" Answer: "Yes."
"(6) . . . If you answered 'yes' to Question 5, what amount of damage, if any, did Stagecoach suffer as a result of such conduct." Answer: "Amount: $2,750,000.00"
"(7) If you answered 'yes' to Question 5, do you find Shuttle's conduct to have been wilful or knowing?" Answer: "Yes."
[Note 6] Phrases such as "level of rascality" are deemed uninstructive in deciding questions of unfairness under G. L. c. 93A; courts should rather focus on the nature of the challenged conduct and on the purpose and effect of that conduct. Massachusetts Employers Ins. Exch. v. Propac-Mass, Inc., 420 Mass. 39 , 42 (1995).
[Note 7] In Jacobson v. Mailboxes Etc. U.S.A., Inc., supra, the contract provided both that the agreement was to be construed under and governed by the laws of California and that all actions to enforce the agreement were to be brought in California. See Cambridge Biotech Corp. v. Pasteur Sanofi Diagnostics, 433 Mass. 122 , 130-131 (2000) (upholding forum selection clause). In our case, the agreement does not limit enforcement actions to the New York courts.
[Note 8] The discovery was made when, after the verdict was entered, the court clerk received a letter from a juror concerning what the juror perceived to be misconduct.
[Note 9] The agent testified that in his evening conversation with the foreman, "[I] gave [the foreman] my opinion after I read the book .... it meant that one party didn't follow through on a contract with another, that there was a knowing - that the party that was breaking the contract knowingly broke it and didn't follow through on the terms and conditions of the contract or the spirit of the contract." The foreman responded: "[T]here's so much that you said, and . . . if you had to give me one word on what material breach of contract meant, what would it be?" The agent's response: "I said it was a significant breach of contract."
[Note 10] One juror was disturbed by the foreman's actions and suggested that the matter be reported to the judge. At least ten of the jurors rejected this suggestion; the judge found that those jurors "felt that [the foreman] had asked for a ,synonym' and that they did not perceive his action to be wrong," and that the issue was already decided.
[Note 11] The court held as well that trial courts are given broad discretion in dealing with outside contacts. Sheppard, supra at 233-234.

References: V. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.