North Attleboro v. Hartford Fire

USCA1 Opinion









April 29, 1994 [NOT FOR PUBLICATION]

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

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No. 93-1685

NORTH ATTLEBORO ARMS REALTY TRUST,

Plaintiff, Appellant,

v.

HARTFORD FIRE INSURANCE COMPANY,

Defendant, Appellee.


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APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Joseph L. Tauro, U.S. District Judge]
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Before

Breyer, Chief Judge,
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Coffin, Senior Circuit Judge,
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and Torruella, Circuit Judge.
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Guy E. Guarino for appellant.
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Raymond A. LaFazia with whom Gunning, LaFazia & Gnys, Inc. was on
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brief for appellee.


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BREYER, Chief Judge. The plaintiff in this case
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(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
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Capt'n Mark v. Sea Fever Corp., 692 F.2d 163, 166 (1st Cir.
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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.

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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.

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

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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
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value (e.g., the difference between the market value of the
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structure-as-promised and the market value of the structure-

as-constructed). See generally Concannon v. Galanti, 202
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N.E.2d 236, 238 (Mass. 1964); Restatement (Second) of
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Contracts 348(2) & cmt. c (1979); John D. Calamari &
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Joseph M. Perillo, Contracts 14-29, at 633-36 (3d ed.
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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


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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.
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v. Cumberland Farms Dairy, Inc., 972 F.2d 453, 457 (1st Cir.
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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
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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


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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.
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Forbes & Wallace, Inc., 396 N.E.2d 149, 153 (Mass. 1979).
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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.
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