NASCO, Inc. v. Public Storage, Inc.
| Decision Date | 03 May 1994 |
| Docket Number | No. 94-1035,94-1035 |
| Citation | 29 F.3d 28 |
| Parties | NASCO, INC., Plaintiff, Appellant, v. PUBLIC STORAGE, INC., Defendant, Appellee. . Heard |
| Court | U.S. Court of Appeals — First Circuit |
Joseph G. Abromovitz with whom Marsha A. Morello and Abromovitz & Leahy, P.C., Boston, MA, were on brief for appellant.
John P. Connelly with whom James E. Carroll and Peabody & Arnold, Boston, MA, were on brief for appellee.
Before TORRUELLA, Circuit Judge, COFFIN, Senior Circuit Judge, and STAHL, Circuit Judge.
In this appeal, plaintiff-appellant NASCO, Inc., challenges the district court's entry of summary judgment against it and in favor of defendant-appellee Public Storage, Inc. ("PSI"). NASCO asserts that the court erred in concluding that a trial was not warranted on its claims for breach of contract and unfair and deceptive trade practices. After conducting a careful review of the record, we agree. We therefore vacate and remand for a trial on the merits.
In June 1987, NASCO, a closely-held family corporation which had manufactured and distributed springs for mattresses and box springs, ceased business operations. At the time NASCO closed down, it owed Shawmut Bank approximately $800,000.00. NASCO had been having trouble servicing its debt to Shawmut and faced foreclosure. Its only asset of any value was the Chelsea, Massachusetts, facility from which it had operated its business. This facility was estimated to be worth approximately $4,000,000.00.
In early 1988, NASCO retained real estate broker Peter Cooney of Coldwell Banker to act as its agent in marketing the Chelsea facility for sale. Soon after the property went on the market, agents of PSI approached NASCO and expressed an interest in purchasing it for use as a self-storage facility. In April 1988, PSI offered NASCO approximately $3,800,000.00 for the facility, subject to certain terms and conditions. Negotiations ensued and continued for approximately two years. During this period, Shawmut continually threatened foreclosure, but held off because of the apparent seriousness of the negotiations between NASCO and PSI.
Throughout the period of negotiations, other companies, groups, and individuals expressed interest in purchasing the property. PSI's interest, however, appeared significantly more substantial, as PSI representatives (1) repeatedly assured NASCO that PSI would purchase the property as soon as it acquired a permit allowing the property to be used as a self-storage facility; (2) became personally involved in zoning issues and land court litigation to secure such a permit; 1 and (3) offered to meet with representatives from Shawmut to demonstrate PSI's good faith and interest in acquiring the property. NASCO therefore put all of its energies into finalizing a deal with PSI.
Finally, on January 31, 1990, following a personal review of the property by certain PSI representatives, PSI signed a purchase and sales agreement ("the Agreement") to buy the property for $3,575,000.00. 2 NASCO countersigned the Agreement on February 2, 1990. One paragraph of this Agreement, reproduced below, is particularly relevant to this litigation:
11. Expiration. This Agreement shall be of no force or effect unless, within seven (7) days after the date this Agreement has been executed by Seller and Buyer's Real Estate Representative, an Officer, the Secretary or Assistant Secretary of Buyer, executes this Agreement on behalf of Buyer and delivers to Seller an executed copy of this Agreement signed on behalf of Buyer by both its Real Estate Representative and either the Secretary or an Assistant Secretary of Buyer, together with the [$20,000.00] Deposit [PSI agreed to provide upon execution of the Agreement].
Importantly, although a PSI Assistant Secretary signed the Agreement and thereafter delivered a copy of it to NASCO, PSI never provided NASCO with the $20,000.00 deposit referenced in paragraph 11.
Subsequent to the signing of the Agreement, the following pertinent events took place. On February 12, 1990, PSI asked NASCO to reactivate electric service to the Chelsea property. NASCO complied with this request. On February 21, 1990, Thomas Bennett, NASCO's attorney, wrote to David Dunn, PSI's attorney, and brought to his attention the fact that PSI had not yet provided NASCO with the $20,000.00 deposit. When Peter Cooney, NASCO's real estate agent, received a copy of this letter, he contacted PSI representatives, who assured him that the transaction remained viable. These same representatives told him that "the red tape of setting up a development plan" had occasioned the delay in forwarding the deposit. Meanwhile, Attorney Dunn responded to Attorney Bennett's letter by informing him that the deposit "was being worked" on by PSI. Attorney Dunn did not inform Attorney Bennett that the deal was off at this time.
On or about February 22, 1990, PSI generated a mortgage update on the property. On March 2, 1990, PSI prepared a project analysis for the property. On March 19, 1990, Attorney Dunn wrote to Attorney Bennett and informed him that PSI had "decided to terminate" the Agreement. On or about that same date, PSI produced a "Project Abandonment Authorization" which indicated that the Agreement was cancelled as of March 19, 1990, and which noted that no PSI deposits were at risk. Nonetheless, on April 3, 1990, PSI generated a second project analysis.
On April 13, 1990, Shawmut learned that PSI had cancelled the Agreement. Soon thereafter, Shawmut sent NASCO a formal Notice of Intent to Foreclose. On May 23, 1990, Shawmut held a foreclosure sale and itself purchased the property for approximately $852,000.00.
On November 9, 1992, NASCO filed a two-count complaint against PSI, alleging that PSI had (1) breached the Agreement; and (2) engaged in unfair and deceptive trade practices in violation of Mass.Gen.L. ch. 93A. The complaint sought more than $8,000,000.00 in damages. Jurisdiction was premised upon diversity of citizenship.
On October 29, 1993, following the close of discovery, PSI filed a motion for summary judgment on both counts of the complaint. With regard to NASCO's breach of contract claim, PSI argued that, under paragraph 11 its failure to pay the $20,000.00 deposit within seven days of signing of the Agreement unambiguously had caused the Agreement to "expire by its own terms." In the alternative, PSI asserted that the deposit provision was a condition precedent, and that its failure to pay the deposit had prevented the Agreement from coming into existence. With regard to NASCO's unfair trade practices claim, PSI contended that its conduct, even if objectionable, would not "raise an eyebrow of someone inured to the rough and tumble of the world of commerce," and therefore did not attain "a level of rascality" which could give rise to liability under ch. 93A. See Levings v. Forbes & Wallace, Inc., 8 Mass.App. 498, 396 N.E.2d 149, 153 (1979) ().
In response, NASCO argued, inter alia, that paragraph 11 is ambiguous as to whether PSI's failure to pay the deposit either caused the Agreement to expire or constituted a failure to satisfy a condition precedent, and that extrinsic evidence is admissible to help resolve this ambiguity. It then contended that the extrinsic evidence in this case demonstrates that the Agreement did come into existence and did not expire when PSI did not pay the deposit. NASCO next maintained that this same evidence created a triable issue as to whether PSI's conduct was beyond the toleration of even those persons "inured to the rough and tumble of the world of commerce," id., and precluded summary judgment on its ch. 93A claim. Finally, NASCO asserted that PSI's conduct and its own detrimental reliance on that conduct gave rise to viable claims of estoppel and breach of the implied covenant of good faith and fair dealing, and that these claims, while not explicitly pleaded in its complaint, were implicit in the allegations underlying its ch. 93A count.
On December 8, 1993, the district court granted PSI's summary judgment motion. With respect to NASCO's breach of contract claim, the court declined to look at NASCO's extrinsic evidence, reasoning that paragraph 11 clearly and unambiguously required payment of the deposit by PSI for the Agreement to have continuing effect. 3 With respect to NASCO's ch. 93A claim, the court stated: "For the same reasons [that NASCO's breach of contract claim fails], Count II of the complaint (the 93A claim), which does not specifically allege any misrepresentations made by PSI, but merely a failure to comply with the Agreement, is also without merit." The court did not explicitly respond to NASCO's contention that its complaint adequately set forth causes of action for estoppel and breach of the implied covenant of good faith and fair dealing. This appeal followed.
NASCO's appellate arguments largely mirror the relevant ones made in its memorandum of law in support of its opposition to PSI's summary judgment motion. 4 NASCO contends that (1) the district court erred in granting PSI summary judgment on its breach of contract claim; (2) the court erred in granting PSI summary judgment on its ch. 93A claim; and (3) the court erred in overlooking the estoppel and breach of the implied warranty of good faith and fair dealing claims that inhered in the allegations in its complaint. After reciting the summary judgment standard, we discuss each argument in turn.
When presented with a motion for summary judgment, courts should "pierce the boilerplate of the pleadings and assay the parties' proof in order to determine whether trial is actually required." Wynne v. Tufts Univ. Sch. of...
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