Jordan-Milton Machinery, Inc. v. F/V Teresa Marie, II, JORDAN-MILTON

• Decision Date: 30 October 1992
• Docket Number: No. 91-1761,JORDAN-MILTON,91-1761
• Citation: 978 F.2d 32
• Parties: MACHINERY, INC., Plaintiff, Appellee, v. F/V TERESA MARIE, II, et al., Defendants, Appellants.
• Court: U.S. Court of Appeals — First Circuit

Page 32

978 F.2d 32

JORDAN-MILTON MACHINERY, INC., Plaintiff, Appellee, v. F/V TERESA MARIE, II, et al., Defendants, Appellants.

No. 91-1761.

United States Court of Appeals First Circuit.

Argued April 7, 1992.

Decided Oct. 30, 1992.

Mark G. Furey with whom Martin R. Johnson, Portland, Me., was on brief, for defendants, appellants.

Jotham D. Pierce, Jr. with whom Michael N. Ambler, Jr. and Pierce, Atwood, Scribner, Allen, Smith & Lancaster, Portland, Me., were on brief, for plaintiff, appellee.

Before SELYA, Circuit Judge, CAMPBELL, Senior Circuit Judge and BOYLE, ^* District Judge.

FRANCIS J. BOYLE, Chief Judge.

Counterclaim plaintiff-appellants, Teresa Marie II, Inc. and Fishing Vessel Teresa Marie II (F/V Teresa Marie II), appeal from a directed verdict in favor of counterclaim defendant-appellee, Jordan-Milton Machinery, Inc. (Jordan-Milton). Appellants contend that the trial court erred in granting Jordan-Milton's motion for directed verdict. We affirm.

BACKGROUND

On or about April 14 or 15, 1989, the engine of the F/V Teresa Marie II seized and required replacement. James Odlin, principal stockholder of Teresa Marie II, Inc. contacted a salesman, Thomas Peacock, at Jordan-Milton Machinery Inc., an authorized Caterpillar dealer, about the possibility of securing a rebuilt Caterpillar engine for the F/V Teresa Marie II. Peacock located and reported to Odlin the existence of factory rebuilt engines at prices ranging from $60,000 to $90,000.

As an alternative, Peacock also told Odlin that a new engine could be purchased for $135,000. Odlin told Peacock that he could not afford a new engine. Peacock then represented that a new engine could be financed through Caterpillar Financial Services at an interest rate of 7.9 percent.

A day or two later, Peacock informed Odlin that the Caterpillar financing rate had changed from 7.9 percent to 8.25 percent. Based on the corrected rate and 100 percent financing of the engine's cost, Peacock estimated that monthly payments would range between $3,000 and $4,000. In response Odlin asked, "Well how aggressive is Caterpillar?" Peacock responded, "Don't worry we can do this deal." Peacock then told Odlin that he would possibly need financial statements for the last three years. Odlin instructed Peacock to order the new engine.

Shortly after ordering the engine, Odlin telephoned his bank, State Street Bank and Trust Company, requesting permission to give a mortgage to Caterpillar on the F/V Teresa Marie II as security for financing the new engine. Permission for the mortgage was granted.

Engine installation began on May 1, 1989. On May 8, 1989, Odlin met with Peacock and Peacock's immediate supervisor, John Banks, at South Portland Shipyard where the engine was being installed. Banks, who had given approval for shipment of the engine, told Odlin at this meeting that he wanted to add an additional $9,000 from an outstanding bill to the $135,000 amount that Jordan-Milton was sending to Caterpillar Financial Services for approval. Odlin agreed to the change.

On May 10, 1989, Odlin signed a blank purchase order for the new engine. Peacock, thereafter, completed the purchase order by filling in the appropriate sections. Peacock checked a box on the form marked "JM Financing", adding the following notation:

"Customer wants to finance through Caterpillar Financial. If unable to (sic) customer will finance through his own bank."

There was evidence that checking the "JM Financing" box meant that Jordan-Milton would provide in-house financing or it would relay the information to others--in this case, Caterpillar Financial Services. However, Odlin did not tell Peacock that he would secure financing from his bank, nor did he authorize Peacock to add this notation to the form.

On May 30, 1989, Odlin gave Peacock the financial statements for Teresa Marie II, Inc. Two days later, June 1, 1989, these statements were forwarded to Caterpillar Financial Services. Two weeks later, Caterpillar Financial Services rejected Teresa Marie II, Inc.'s application for financing because of the corporation's poor cash flow, negative net worth and lack of equity in the F/V Teresa Marie II. Within a few days, Peacock informed Odlin of Caterpillar Financial Services' decision.

On June 23, 1989, Peacock hand delivered to Odlin the purchase order which had been signed in blank on May 10. The total cost listed on the purchase order was approximately $151,000. No demand for payment was made at that time.

On August 11, 1989, Peacock hand delivered an invoice, dated June 2, 1989, to Odlin requesting a net cash payment of approximately $144,000. On August 16, 1989, Odlin received another invoice requesting a net cash payment of $135,000. Odlin did not pay any part of either invoice.

Later, Jordan-Milton, as an accommodation, offered to extend financing to Teresa Marie II, Inc. at an interest rate of 12 percent. Odlin refused this offer. He insisted on financing terms identical to those which had been discussed in conjunction with Caterpillar financing.

On August 13, 1990, Jordan-Milton filed a verified complaint against Teresa Marie II, Inc. and the F/V Teresa Marie II, seeking payment for the engine. The F/V Teresa Marie II was seized and sold at a United States Marshal's sale to State Street Bank and Trust Co. for $375,000. The sale was confirmed by the United States District Court, District of Maine on November 27, 1990. Both Teresa Marie II, Inc. and F/V Teresa Marie II filed counterclaims alleging breach of contract, fraudulent and negligent misrepresentation, and breach of an implied covenant of good faith and fair dealing.

At the close of the counterclaim plaintiffs', Teresa Marie II, Inc. and F/V Teresa Marie II, case, the trial court directed a verdict in favor of Jordan-Milton. The court ruled that there was no agreement which required Jordan-Milton to provide financing. Because there was no agreement, the court held that there was no basis for a claim of breach of an implied covenant of good faith and fair dealing. Finally, the court found that there was no evidence of fraudulent or negligent misrepresentation. Teresa Marie II, Inc. and F/V Teresa Marie II appeal.

II. STANDARD OF REVIEW

Appellate review of a motion for directed verdict ¹ is de novo. Biggins v. Hazen Paper Co., 953 F.2d 1405, 1409 (1st Cir.1992). A directed verdict is proper when the evidence leads to but one conclusion. Richmond Steel v. Puerto Rican Am. Ins., 954 F.2d 19, 22 (1st Cir.1992). The evidence and all reasonable inferences which may be drawn therefrom must be construed in the light most favorable to the nonmoving party. Id. The trial court is not free to make credibility determinations or to weigh the evidence. Veranda Beach Club v. Western Sur. Co., 936 F.2d 1364, 1383-84 (1st Cir.1991).

III. BREACH OF CONTRACT

The trial court determined that there was no agreement requiring Jordan-Milton to provide Teresa Marie II, Inc. with financing. We agree.

First, the parties do not dispute that there was a contract between Jordan-Milton and Teresa Marie II, Inc. for the sale of the engine. The question is whether there was also an agreement for financing the purchase price of the new engine.

Odlin and Peacock had several conversations regarding financing. All of these conversations concerned the purchase of the engine and all involved Caterpillar financing. At trial, Odlin testified as follows:

... so then he [Peacock] came in and he said, 'Look, let me look into a new one, a 3509.' I said, 'I don't have any money to pay for a new one.... I can't afford a new engine.' He said, 'Well, we can do financing at 7.9% rate' ... and I said 'Well, you know, if you can do that, look into it.' 'It was either that day or the next day he [Peacock] came back to the office and his deal was he had located an engine Southworth Machinery. He quoted me a price of $135,000 with the gear ...... You know it isn't 7.9% financing, Jim. I was wrong. They have changed that program. It's 8.25 percent financing.... Local banks are 13 percent. See what a great deal this is.' [A]nd I said, 'Yes, that's great.' He quoted me the payments, originally, of like $2755 up through $4000, and again I had told him the day before I can't afford a new engine. We don't have the cash. He stated that the payments would be in the $4000 range. I said, 'Well, how aggressive is Caterpillar?' Because I didn't want to have a problem. He said, 'Don't worry. We can do this deal.' I specifically said, 'How aggressive are they?' He said, 'We can do the deal.' Based on that, I said, 'Let's do the deal.' I shook his hand and said, 'Order the new engine' and I left it at that. ... I called the State Street Bank, and I said, 'Mr. Morse, I have got Caterpillar here ready to finance an engine. I have got to be able to put a mortgage on it. Can I have your permission?' He gave me that permission prior to the engine being installed.

It is clear from Odlin's testimony that there was no mention of financing by Jordan-Milton or any other financial institution, and that he anticipated Caterpillar financing to be forthcoming. Caterpillar, however, did not give Odlin any assurance that it would provide financing for the new engine. Odlin simply hoped that Caterpillar financing would come through. Plaintiffs argue, however, that sufficient assurances of financing were provided by Jordan-Milton's conduct of ordering and causing the engine to be shipped, knowing that financing was a necessary part of the sale.

This argument, however, has no basis given the uncontested evidence that Odlin in his course of dealing with Jordan-Milton through Peacock had in the past received a Caterpillar engine from Jordan-Milton before financing had been approved. On that occasion, Odlin was notified some four months after receipt and installation of the engine that Caterpillar had approved financing. Given Odlin's course of dealing with Jordan-Milton, he knew or indeed should have known that...