Limoliner, Inc. v. Dattco, Inc., 14–2188.

• Decision Date: 23 December 2015
• Docket Number: No. 14–2188.,14–2188.
• Citation: 809 F.3d 33
• Parties: LIMOLINER, INC., Plaintiff, Appellant, v. DATTCO, INC., Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

809 F.3d 33

LIMOLINER, INC., Plaintiff, Appellant,

v.DATTCO, INC., Defendant, Appellee.

No. 14–2188.

United States Court of Appeals, First Circuit.

Dec. 23, 2015.

Robert E. Curtis, Jr., with whom James S. Singer and Rudolph Friedmann LLP were on brief, for appellant.

Christopher S. Williams, with whom Williams & Associates was on brief, for appellee.

Before KAYATTA, STAHL, and BARRON, Circuit Judges.

BARRON, Circuit Judge.

This appeal arises out of a suit over repair work on a luxury motor coach. The company that owns the vehicle, LimoLiner, Inc., contracted with an automotive repair company, Dattco, Inc., to do the work. The parties do not contest the finding below that Dattco breached the repair contract by failing to do all of the work that LimoLiner had requested. But LimoLiner does appeal the rulings below that Dattco may not be held liable under a Massachusetts regulation for certain actions and omissions that occurred on the job; that Dattco did not breach the parties' oral contract to make the repairs in a timely manner; and that Dattco owes damages only for the loss of use of the vehicle for one limited period of time.

We certify a question concerning the Massachusetts regulation's intended scope to the Supreme Judicial Court of Massachusetts, and we thus do not decide the merits of LimoLiner's regulatory claims. We otherwise affirm.

I.

LimoLiner is a Massachusetts corporation that owns and operates a fleet of luxury motor coaches that are known as "Liners." Dattco is a Connecticut corporation that repairs and services motor vehicles, including buses and coaches. The undisputed facts are as follows.

On May 30, 2011, two LimoLiner employees met with two Dattco representatives to discuss the possible need to repair one of the Liners, Liner 3001. That vehicle had been out of service for about a year and needed extensive repair work.

At the May 30th meeting, Dattco orally agreed to repair Liner 3001 by, among other things, replacing or repairing a part of the vehicle called the inverter. The parties agreed that Liner 3001 would be towed to Dattco's facility in Massachusetts for inspection and that Dattco would provide a list of repairs following inspection. During that meeting, LimoLiner's general manager told Dattco's sales manager that LimoLiner wanted Liner 3001 to be repaired "as soon as possible."

Following that meeting, Dattco generated a list of repairs, though that list did not include the inverter work that the Magistrate Judge found that Dattco had actually agreed to perform. The two parties used this list to divide the responsibility for each repair between each party. Dattco was to undertake the bulk of the repair work with the rest left for LimoLiner's own mechanics.

After Dattco took hold of Liner 3001, LimoLiner became concerned about the time Dattco was taking to repair the vehicle. On August 4, 2011, at an in-person meeting, the representatives from LimoLiner demanded compensation from Dattco for the monetary losses LimoLiner claimed it had sustained up to that point as a result of its inability to use Liner 3001. On August 8, 2011, LimoLiner followed up by letter and "complained about the level of attention, time and resources assigned to the job" by Dattco and specifically demanded $42,000 in compensation. LimoLiner, Inc. v. Dattco, Inc., No. 11–11877–JCB, 2014 WL 4823877, at *4 (D.Mass. Sept. 24, 2014). That letter also contained an offer to pay Dattco a certain amount for its services if Dattco delivered Liner 3001 by 5:00 p.m. on Friday, August 12, 2011.

Dattco responded to that letter by email on August 25, 2011. In doing so, Dattco informed LimoLiner that Liner 3001 was ready for pickup. Attached to the email was an invoice for $10,404.

LimoLiner refused to pay, but offered to put the money in escrow in exchange for the return of Liner 3001. Dattco did not accept that offer.

On October 5, 2011, LimoLiner filed this action in Massachusetts Superior Court. The suit alleged breach of contract, misrepresentation, negligence, replevin, and violation of 940 C.M.R. § 5.05, a regulation promulgated by the Massachusetts Attorney General pursuant to Mass. Gen. Laws ch. 93A, § 2 ("Chapter 93A"). LimoLiner also moved for an order directing Dattco to return Liner 3001.

The court issued the requested order after first requiring LimoLiner to submit a $10,404 deposit to the Clerk's Office. Dattco complied with the court's order and returned Liner 3001 to LimoLiner on October 12, 2011.

Dattco removed the case to federal district court on the basis of diversity jurisdiction, answered, and counterclaimed for breach of contract and quantum meruit. A Magistrate Judge, presiding by consent over a bench trial, found that Dattco had expressly agreed to repair Liner 3001's inverter and breached the agreement by failing to make that repair.¹ The Magistrate Judge awarded LimoLiner $35,527.89 in damages for that breach. The Magistrate Judge ruled for Dattco on all of LimoLiner's other claims, including the remaining contract claims and the regulatory claims. The Magistrate Judge also awarded Dattco $10,404 in damages on its quantum meruit claim, thereby reducing LimoLiner's total recoverable damages to $25,123.89.

LimoLiner appeals on three grounds. First, LimoLiner contends that the Magistrate Judge erred when she held, as a matter of law, that 940 C.M.R. § 5.05 does not apply to this dispute because the regulation does not apply to disputes between two businesses. Second, LimoLiner contends that the Magistrate Judge committed clear error when she found both that the parties did not agree to an expedited term for performance and that Dattco did not breach the parties' implicit agreement to complete the work within a reasonable period of time. Third, LimoLiner contends that the Magistrate Judge clearly erred in awarding damages that provide compensation only for one portion of the time that LimoLiner was without the use of Liner 3001.

II.

We start with LimoLiner's regulatory claims. Chapter 93A generally prohibits "unfair or deceptive acts or practices in the conduct of any trade or commerce." Mass. Gen. Laws ch. 93A, § 2(a). The statute also empowers the Attorney General of Massachusetts to issue regulations the violation of which constitutes a per se violation of Chapter 93A. See id. § 2(c) ; 940 C.M.R. § 3.16(3).

LimoLiner's regulatory claims rely on one of those regulations, 940 C.M.R. § 5.05. It provides, among other things, that "[i]t is an unfair or deceptive act or practice for a repair shop, prior to commencing repairs on a customer's vehicle, to fail to record in writing ... [t]he specific repairs requested by the customer...." Id. § 5.05(2)(e).

The Magistrate Judge found that Dattco failed to include the inverter in the written list of repairs it prepared prior to working on Liner 3001, even though LimoLiner had previously requested that specific repair. LimoLiner thus contends that Dattco plainly violated the regulation in this and other respects. But the Magistrate Judge ruled that § 5.05 does not apply to business-to-business transactions and instead regulates transactions only between businesses and individual consumers. For that reason, the Magistrate Judge rejected LimoLiner's claim that Dattco violated the regulation.

Neither the Massachusetts Supreme Judicial Court ("SJC") nor this Circuit has construed this regulation before. But the SJC has held that a subsection of an arguably analogous Chapter 93A regulation is inapplicable to corporate consumers. See Knapp Shoes, Inc. v. Sylvania Shoe Mfg. Corp., 418 Mass. 737, 640 N.E.2d 1101, 1102 (1994) (holding that 940 C.M.R. § 3.08(2) does not apply to business-to-business transactions). And we have followed Knapp in concluding that a different Chapter 93A regulation also does not apply to business-to-business disputes. See Baker v. Goldman, Sachs & Co., 771 F.3d 37, 56–57 (1st Cir.2014) (holding, on the basis of Knapp, that 940 C.M.R. § 3.16 does not apply to business-to-business transactions).

In Knapp, the SJC addressed 940 C.M.R. § 3.08(2), a provision that makes it an unfair and deceptive act or practice "to fail to perform or fulfill any promises or obligations arising under a warranty." 940 C.M.R. § 3.08(2). Knapp held that it was "reasonably clear that, in drafting the regulation, the Attorney General had in mind protection for consumers," meaning individuals. Knapp, 640 N.E.2d at 1105.

The SJC reached that conclusion by first noting that § 3.08(2) was promulgated in 1971, the year before Chapter 93A was amended to give corporate entities a right of action under the statute. Id. at 1103, 1105. The SJC then examined § 3.08"as a whole" and noted that the other two subsections of the regulation explicitly referred to "consumers" and "concern[ed] matters generally involved in consumer transactions," such as "the obligation[ ] to provide the customer with a written and accurate estimate of the anticipated cost of repairs[ ] and a prohibition on charging for repairs which the customer has not authorized." Id. at 1105. The SJC thus concluded that subsection (2) of the regulation was "not intended to encompass a contract dispute between businessmen" because "the bulk of the regulation applie[d] only to consumers and their interests, and subsection (2) contain[ed] no language suggesting that it was meant to apply to a broader class of persons or interests." Id.

Dattco contends—and the Magistrate Judge agreed—that § 5.05 is just like the subsection of the regulation construed in Knapp. Although § 5.05 does not use the term "consumer," it does set out obligations very similar to those that the Knapp court described as being "generally involved in consumer transactions." See 940 C.M.R. § 5.05 (referring to repairs and service made for the benefit of the "customer" and with respect to the "customer's" vehicle); 940 C.M.R. § 5.05(2)(e) (obligating a repair shop to make a written record of all specific repairs requested by the customer before commencing repair work); id. §...