Neponset Landing Corp. v. Nw. Mutual Life Ins. Co.

• Decision Date: 22 October 2012
• Docket Number: Civil Action No. 10–11963–JGD.
• Citation: 902 F.Supp.2d 149
• Parties: NEPONSET LANDING CORPORATION, Plaintiff/Defendant–in–Counterclaim, v. The NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, Defendant/Plaintiff–in–Counterclaim, v. Terence Conroy, Sr., Additional Defendant–in–Counterclaim.
• Court: U.S. District Court — District of Massachusetts

902 F.Supp.2d 149

NEPONSET LANDING CORPORATION, Plaintiff/Defendant–in–Counterclaim,

v.The NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, Defendant/Plaintiff–in–Counterclaim,

v.Terence Conroy, Sr., Additional Defendant–in–Counterclaim.

Civil Action No. 10–11963–JGD.

United States District Court, D. Massachusetts.

Oct. 22, 2012.

James E. Gallagher, Thomas S. Fitzpatrick, Davis, Malm & D'Agostine, P.C., Boston, MA, for Plaintiff/Defendant–in–Counterclaim.

John P. Connelly, Robert T. Ferguson, Jr., Hinckley, Allen & Snyder LLP, Boston, MA, for Defendant/Plaintiff–in–Counterclaim.

MEMORANDUM OF DECISION AND ORDER ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

DEIN, United States Magistrate Judge.

I. INTRODUCTION

This action arises out of a Real Estate Purchase Agreement (“Purchase Agreement”) pursuant to which the plaintiff, Neponset Landing Corporation (“Neponset”), sold property containing a residential apartment building (the “Property”) to the defendant, The Northwestern Mutual Life Insurance Company (“NML”). Under the terms of the Purchase Agreement, NML was required to comply with certain post-closing obligations. In particular, NML was obligated to pay Neponset an “Earnout Amount,” defined as “[a]n amount equal to fifty percent (50%) of the amount by which the Final Capitalized Value (net of imputed sales costs of 1%) exceeds the Purchase Price, but in no event shall the amount paid to Seller exceed $7,500,000.” It was also required to use good faith efforts to manage the Property in a commercially reasonable manner, consistent with the management of similar apartment properties in the area, so as to maximize the net operating income from the Property, and consequently, the Final Capitalized Value of the Property and the Earnout Amount that would be due to Neponset. By its claims in this action, including its claims for breach of contract (Count I), breach of the implied covenant of good faith and fair dealing (Count II) and violation of Mass. Gen. Laws ch. 93A (“Chapter 93A”) (Count III), Neponset is seeking damages for NML's alleged failure to comply with its post-closing obligations, including its alleged failure to pay Neponset an Earnout Amount of $1,123,920. NML, in turn, has brought counterclaims against Neponset for various pre-closing payments allegedly due under the Purchase Agreement, and against Terence Conroy, Sr., the alleged guarantor of Neponset's pre-closing payment obligations.

The matter is presently before the court on the “Defendant's Motion for Summary Judgment on Plaintiff's Complaint” (Docket No. 46). By its motion, NML asserts that Neponset cannot prevail on any of its claims because it has not proved that it suffered damages as a result of NML's alleged failure to comply with its post-closing obligations. In support of its claim for damages, Neponset relies exclusively on its expert, Webster A. Collins. In its motion for summary judgment, NML argues that Collins made a mistake in his calculation of the Earnout Amount that Neponset claims is due to it under the terms of the Purchase Agreement, and that when the error is corrected it results in an Earnout payment of zero. Therefore, NML contends that even if it were assumed that it failed to use good faith efforts to manage the Property in a commercially reasonable manner, it is entitled to summary judgment on each of Neponset's claims because the plaintiff has not demonstrated that any Earnout Amount would have been due.

For all the reasons detailed below, the defendant's motion for summary judgment is ALLOWED IN PART and DENIED IN PART. NML has established that Collins' calculations are in error and that, when corrected, Collins has not established any actual damages. Nevertheless, while under Massachusetts law a claim under Chapter 93A cannot survive in the absence of such damages, the inability to establish damages is not dispositive of a plaintiff's contract claims. Accordingly, NML's motion is ALLOWED with respect to the Chapter 93A claim set forth in Count III, but DENIED with respect to the contract claims set forth in Counts I and II.

II. STATEMENT OF FACTS¹

Scope of the Record

In its opposition to NML's motion, Neponset argues that summary judgment must be denied because the defendant's Statement of Undisputed Material Facts in Support of its Motion for Summary Judgment (“Statement”) fails to meet the requirements of Local Rule 56.1. That Rule provides in relevant part that

[m]otions for summary judgment shall include a concise statement of the material facts of record as to which the moving party contends there is no genuine issue to be tried, with page references to affidavits, depositions and other documentation. Failure to include such a statement constitutes grounds for denial of the motion.

L.R. 56.1. Neponset contends that NML's Statement is inadequate because it consists principally of argument of counsel and because many of NML's assertions are not supported by appropriate citations to the record. (Pl. Opp. Mem. (Docket No. 62) at 7–9). NML disagrees, and contends that it is Neponset's Response to Defendant's Statement of Undisputed Material Facts that fails to comply with Local Rule 56.1 because it “is replete with inappropriate legal citations and ... explicit/unabashed legal argument.” (Def. Reply Mem. (Docket No. 66) at 9–11).

This court finds that NML's Statement is sufficient to satisfy Local Rule 56.1. NML has supported most of its factual assertions with citations to the record, including specific references to page numbers, exhibits and paragraphs. Moreover, it appears that most of the facts which Neponset is challenging as argumentative merely reflect the opinions set forth in the Affidavit of Robin G. Smith. As this court has ruled in its Memorandum of Decision and Order on Plaintiff's Motion to Strike issued separately on this date, those opinions are admissible as lay witness opinion under Fed.R.Evid. 701. Therefore, NML's Statement is not improper and does not contain the types of deficiencies that would warrant the denial of NML's motion. Compare Dale v. H.B. Smith Co., Inc., 910 F.Supp. 14, 20 (D.Mass.1995) (denying motion for summary judgment where defendant failed to file a Local Rule 56.1 statement, presented arguments rather than facts in “Background” section of memorandum, and failed to support factual assertions with citations to page numbers or references to sworn affidavits and depositions); In re Atl. Fin. Mgmt., Inc. Sec. Litig., 718 F.Supp. 1003, 1007 (D.Mass.1988) (denying summary judgment where facts were not supported by record references and where “many of defendants' assertions [were] not facts, but conclusions, representing inferences defendants hope[d] the finders of fact [would] draw”).

To the extent NML's Statement does include statements that are not supported by citations to the record or merely reflect the arguments of counsel, this court has not credited them as facts. Similarly, this court has not accepted as facts any responses in which Neponset has failed to cite to any competent evidence in the record or has simply taken the opportunity to expand upon its legal arguments. The Statement of Facts set forth herein represents this court's careful scrutiny of the parties' factual statements, as well as the underlying record, and this court's effort to provide a fair description of the relevant material facts that are, and are not, genuinely in dispute.

The Purchase Agreement

On April 18, 2006, the parties entered into a Real Estate Purchase Agreement (“Purchase Agreement”) for the purchase and sale of a 280–unit apartment building located in Quincy, Massachusetts (the “Property”). (DF ¶¶ 1–2). Pursuant to the Purchase Agreement, NML agreed to purchase the Property, once completed, for $75,584,764. (DF ¶ 2; PR ¶ 2). It also agreed to comply with certain post-closing obligations. ( See Purchase Agreement at Art. 11).² In particular, NML agreed to “pay [Neponset] the Earnout Amount, if any, on the Payout Date.” (DF ¶ 2; PR ¶ 2). It also agreed to “use good faith efforts to manage or cause the Property to be managed in a commercially reasonable manner intended to maximize Net Operating Income from the Property consistent with similar apartment properties in the area.” (DF ¶ 5; Purchase Agreement at Art. 11). By its claims in this action, Neponset alleges that NML failed to comply with these obligations, and that as a result, Neponset did not receive the Earnout Amount that it would have collected in the absence of NML's breach.

The Purchase Agreement defines the term “Earnout Amount” as “[a]n amount equal to fifty percent (50%) of the amount by which the Final Capitalized Value (net of imputed sales costs of 1%) exceeds the Purchase Price, but in no event shall the amount paid to [Neponset] exceed $7,500,000.” (DF ¶ 3). Additionally, the term “Final Capitalized Value” is defined to mean the “amount determined by capitalizing Net Operating Income ... at 6.5%[,]” while the term “Net Operating Income” (“NOI”) is defined as “[t]he annualized net income from the Property derived from apartment and parking space rentals determined in accordance with generally accepted accounting principles, consistently applied, for the six months immediately preceding the Earnout Date ....” (DF ¶ 4). There is no dispute that for purposes of calculating the Earnout Amount, Neponset selected the six-month period of June 2009 through November 2009 (the “Earnout Period”). (DF ¶ 2; PR ¶ 2).

NML's Earnout Calculation

On about January 13, 2010, NML calculated the Earnout Amount in accordance with the relevant provisions of the Purchase Agreement, and determined that the Final Capitalized Value of the Property was $38,442,250.77, over $37 million below the purchase price of the Property. ( See DF ¶ 6; Smith Aff. ¶ 4 and Ex. 1 thereto). NML provided its calculation to Neponset, and informed the plaintiff that under the formula set forth in the Purchase Agreement, no Earnout Amount was due. (Smith Aff.,...