Court Opinion

ID: 2962554
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:59:08.002468+00
Date Added: 2024-06-11T11:42:30.977159
License: Public Domain

USCA1 Opinion

	

          April 29, 1994        [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 93-1685                          NORTH ATTLEBORO ARMS REALTY TRUST,                                Plaintiff, Appellant,                                          v.                           HARTFORD FIRE INSURANCE COMPANY,                                 Defendant, Appellee.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                     [Hon. Joseph L. Tauro, U.S. District Judge]                                            ___________________                                 ____________________                                        Before                                 Breyer, Chief Judge,                                         ___________                            Coffin, Senior Circuit Judge,                                    ____________________                            and Torruella, Circuit Judge.                                           _____________                                 ____________________            Guy E. Guarino for appellant.            ______________            Raymond A. LaFazia with whom Gunning, LaFazia &  Gnys, Inc. was on            __________________           ______________________________        brief for appellee.                                 ____________________                                 ____________________                       BREYER, Chief  Judge.  The plaintiff  in this case                               ____________             (the  "Developer")  is a  real  estate  trust  that hired  a             Contractor to build condominiums.  The Developer says that a             Subcontractor  -- a  maker  of exterior  walling systems  --             defaulted on  its contract  to supply the  condominiums with             "curtain  walls."   And,  it has  sued that  Subcontractor's             surety, The Hartford Fire Insurance Company, for damages.                         The district court, trying  both the facts and the             law,  found that the Developer suffered no harm -- at least,             none  that legally entitles it to  an award of damages.  The             Developer  now appeals, basically asking us to find that the             court's factfinding  was "clearly erroneous."   Fed.R.Civ.P.             52(a).    The  district  court's  findings,   however,  have             adequate  record  support;  and,  we  therefore  affirm  its             judgment.                       We have  read the record in  a light appropriately             favorable  to  the winning  party,  defendant  Surety.   See                                                                      ___             Capt'n Mark v. Sea Fever Corp., 692 F.2d  163, 166 (1st Cir.             ___________    ______________             1982).  So read,  the record reveals the  following relevant             background facts:                       1)   In  a contract  dated  December 2,  1987, the                            Subcontractor promised  the Contractor (which                            in turn was  controlled by the  Developer) to                            provide  curtain  walls  for the  condominium                            building for a total price of $339,655.                        2)   As of June  or July, 1988,  the Subcontractor                            had substantially completed the job.  Several                            months  later,  on  November  4,   1988,  the                            Contractor's    architect    provided     the                            Subcontractor  with a  "punch  list" of  five                            items to be corrected (such as "rust  stains"                            on certain walls,  "misalignment" of  certain                            panels, "incomplete trim" around some sliding                            doors,  etc.)    About  ten days  later,  the                            architect  sent an  expanded  list  of  eight                            items.                       3)   On November 18, 1988, the Subcontractor wrote                            back that  the work  on the punch  list "will                            cost  approximately  $3,000   to  $4,000   to                            remedy."  But, it would not perform that work                            until  the  architect   released  its   final                            payment  (which  it  estimated  to  be  about                            $31,000).  It pointed  out that the architect                            retained  an  additional  $34,000  (otherwise                            belonging to the  Subcontractor) as  security                            for  performance; and,  it  agreed  that  the                            architect need  not release this  money until                            all  the  work  was   complete.    In   early                            December,   the   Developer   wrote  to   the                            architect that the punch list work "ha[d] not                            been started,"  that it would  require 24  of                            the  units  "to  be  plumbed  out"  (removing                            existing  dry wall), and that this would cost                            $2,200 per condominium unit.   A month later,                            the Developer  wrote to  the Surety that  the                            Subcontractor was in "default."                       4)   Ten  months  later,  in  November  1989,  the                            Developer's  counsel  wrote  to   the  Surety                            stating that the  Subcontractor's failure  to                            cure the punch  list defects  meant that  the                            Developer could not                                  conclude closings of                                 fifty-four      (54)                                 units   which   were                                 under        written                                 purchase   and  sale                                 agreements      with                                 third parties.                                            -3-                                          3                            He   added  that   these  "damages   are  not                            speculative," and that he would  like to work                            with the Surety "in acquiring  a settlement."                            Counsel  wrote  further  letters,  threatened                            legal  action,  and  then, in  preparing  for                            litigation   in   September  1990,   had  the                            architect  draw  up   a  final  repair   cost                            estimate totalling roughly $345,000.               After the Surety refused to pay,  the Developer brought this             diversity  action, arguing,  among  other  things, that  the             Surety broke its surety  contract requiring it "promptly" to             "remedy" any "default," and seeking damages in the amount of             the repair and completion costs ($345,000).                       After a  trial, the district  court concluded that             the Developer had failed  to prove its case.  The court said             that  although  it  accepted Developer's  sole  witness (the             architect) as competent to testify on the matter of damages,             it need not "credit"  his opinion.  Specifically,  the court             rejected the architect's $345,000  correction-cost estimate,             which in the court's view was "an extraordinary amount," and             which  (by  what  seemed  to  the  court  "an  extraordinary             coincidence") amounted to  the entire curtain  wall contract             price.   The court found  "more immediate" problems  for the             Developer  in the  fact that,  even if  one assumed  that it             would cost  $345,000 to  dismantle portions of  the building             and then make  the punch  list repairs, that  cost would  so             vastly exceed "any resulting benefit" that it would "involve                                         -4-                                          4             unreasonable  economic  waste."  (internal  quotation  marks             omitted).   In such circumstances, the  court concluded that             the  proper  measure  of  damages was  (1)  the  Developer's             reasonably incurred actual costs, or (2) the loss of  market                                               __             value (e.g., the difference between  the market value of the                    ____             structure-as-promised and the market value of the structure-             as-constructed).   See generally Concannon  v. Galanti,  202                                ___ _________ _________     _______             N.E.2d  236,  238  (Mass.  1964);  Restatement  (Second)  of                                                _________________________             Contracts     348(2) &  cmt. c  (1979);  John D.  Calamari &             _________             Joseph  M.  Perillo, Contracts    14-29,  at 633-36  (3d ed.                                  _________             1987).  Because  the record lacked any concrete  evidence as             to either, the plaintiff was not entitled to any recovery.                       On appeal, the Developer argues at length that the             district court erred in  its factfinding.  But, on  the all-             important  issue  of  loss  suffered  as  a  result  of  the             Subcontractor's  (alleged)  default,  the Developer's  brief             contains virtually  no  citations to  the record.   We  have             reviewed  the  record  independently,   but  have  found  no             significant evidence  tending to  show "lost unit  sales" or             sales  "at  reduced  prices,"   or  any  other  evidence  of             diminished market value.   Indeed, the one  person who would             seem to have been qualified to testify about the market loss             caused by the alleged  defects in the walling system  -- the                                         -5-                                          5             Developer's trustee,  Alfred Pace,  Sr. -- did  not testify.             We, like the  district court, can find no  concrete evidence             of  loss, other  than  the evidence  about  the $345,000  in             correction costs,  which figure the district  court found to             be  both (1)  unbelievable  and (2)  an  improper basis  for             recovery.  We must respect the district court's  decision to             reject the architect's  opinion.  See Dedham Water Co., Inc.                                               ___ ______________________             v. Cumberland Farms Dairy, Inc., 972 F.2d 453, 457 (1st Cir.                ____________________________             1992).    We also  agree with  the  district court,  for the             reasons it stated, that the $345,000 is not a legally proper             measure of damages.  See Restatement (Second) of Contracts                                    ___ _________________________________             348(2)  &  cmt.  c.    Of  course,  we  recognize  that  the             Subcontractor itself  conceded  that it  would cost  roughly             $3,000 to $4,000 as  of November 1988 to complete  the punch             list items, and that, with minor exceptions, they were never             completed.  But, as  far as we  can tell, the Developer  did             not  seek recovery for  those costs, and  the Developer does             not  argue for those  specific costs on  appeal.    Thus, we             need not consider  in this context  whose fault it  actually             was that the punch list corrections were never made.                       The   district   court    also   held   that   the             Subcontractor's refusal  to make  the punch list  repairs in             November  1988  did not  amount  to  a "default,"  for  that                                         -6-                                          6             failure represented  a reasonable refusal not  to proceed in             the absence of a further payment, to which the Subcontractor             was entitled.  The record more than adequately supports this             finding.   And,  in its  light, we  agree with  the district             court that there was  not sufficient evidence of "rascality"             by the Surety to  support a chapter 93A  claim.  Levings  v.                                                              _______             Forbes & Wallace,  Inc., 396 N.E.2d  149, 153 (Mass.  1979).             _______________________             The finding  of  no proven  damages  is also  sufficient  to             warrant judgment for the Surety on the Developer's remaining             claims.                       The judgment of the district court is                       Affirmed.                       _________                                         -7-                                          7