Court Opinion

ID: 195341
Source: CourtListenerOpinion
Date Created: 2011-02-07 02:38:00+00
Date Added: 2024-06-11T09:42:03.428227
License: Public Domain

23 F.3d 394
NOTICE: First Circuit Local Rule 36.2(b)6 states unpublished opinions may be cited only in related cases.NORTH ATTLEBORO ARMS REALTY TRUST, Plaintiff, Appellant,v.HARTFORD FIRE INSURANCE COMPANY, Defendant, Appellee.
No. 93-1685
United States Court of Appeals,First Circuit.
April 29, 1994.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon.  Joseph L. Tauro, U.S. District Judge ]
Guy E. Guarino for appellant.
Raymond A. LaFazia with whom Gunning, LaFazia & Gnys, Inc. was on brief for appellee.
D.Mass.
AFFIRMED.
Before Breyer, Chief Judge, Coffin, Senior Circuit Judge, and Torruella, Circuit Judge.
BREYER, Chief Judge.

1
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.

2
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.

3
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:

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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.

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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.

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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."

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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

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conclude closings of fifty-four (54) units which were under written purchase and sale agreements with third parties.

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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.

10
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).

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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 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 Sec. 348(2) & cmt. c (1979);  John D. Calamari & Joseph M. Perillo, Contracts Sec. 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.

12
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 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 Sec. 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.

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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 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

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Affirmed.