Neuhoff v. Marvin Lumber and Cedar Co.

• Decision Date: 07 June 2004
• Docket Number: No. 03-2111.,03-2111.
• Citation: 370 F.3d 197
• Parties: Roger NEUHOFF and Louise Neuhoff, Plaintiffs, Appellants, v. MARVIN LUMBER AND CEDAR COMPANY; and Marvin Windows of Tennessee, Inc., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

370 F.3d 197

Roger NEUHOFF and Louise Neuhoff, Plaintiffs, Appellants, v. MARVIN LUMBER AND CEDAR COMPANY; and Marvin Windows of Tennessee, Inc., Defendants, Appellees.

No. 03-2111.

United States Court of Appeals, First Circuit.

Heard January 7, 2004.

Decided June 7, 2004.

COPYRIGHT MATERIAL OMITTED

Robert L. Rossi, with whom Odin P. Anderson, was on brief, for appellants.

Thomas H. Boyd, with whom Tiffany A. Blofield, Winthrop & Weinstine, P.A., Scott W. Wynn and Law Office of Scott W. Wynn, were on brief, for appellees.

TORRUELLA, Circuit Judge, LIPEZ, Circuit Judge, and LISI,^* District Judge.

TORRUELLA, Circuit Judge.

Plaintiffs-appellants, Roger and Louise Neuhoff (hereinafter jointly referred to as "the Neuhoffs") brought a diversity action against defendants-appellees Marvin Lumber & Cedar Company and Marvin Windows of Tennessee, Inc. (hereinafter jointly referred to as "Marvin") for breach of an oral contract, breach of implied warranty, violation of Mass. Gen. Laws ch. 93A, and promissory estoppel. The district court granted Marvin's motion for summary judgment on all four claims. We conclude that the district court appropriately granted summary judgment on the first three claims, but inappropriately granted summary judgment on the promissory estoppel claim. We, therefore, affirm in part and reverse in part.

I. Background

In 1991, the Neuhoffs purchased and installed sixty windows manufactured by Marvin. In 1994, the Neuhoffs noticed that many of the windows were decaying and notified Simon Hickman, the contractor who installed the windows, of the decay.

The parties disagree as to when Marvin was notified of the decay. The Neuhoffs contend that Marvin was notified in 1994 or early 1995 when Marvin's area distributor came to examine the windows. Marvin contends that it did not learn of the decay until late 1997 when the area distributor contacted Marvin regarding the decay.

In 1998, Marvin sent Roy Holthusen to inspect the windows. The inspection showed that 56 windows had either "obvious decay" or "incipient decay." In March 1998, Marvin sent the Neuhoffs a letter promising to replace 33 windows for free. Several weeks later, after inquiring about the remaining windows, the Neuhoffs claim that Marvin's agent, Greg Muirhead, orally informed them that the remaining windows would be replaced for free, but that Marvin could not replace them yet due to production problems. In 1999, Marvin replaced 33 of the windows that were in the most advanced state of decay.

In June 2000, the Neuhoffs contacted Marvin again because the windows that had not been replaced had reached an advanced state of decay. Marvin sent another inspector to the Neuhoffs' home. This inspector concluded that 21 windows, including four of the newly installed windows, had obvious decay. In January 2001, Marvin informed the Neuhoffs that their windows would not be replaced for free, but that the Neuhoffs could purchase replacement windows at a 32% discount. The Neuhoffs filed suit in July 2001.

II. Standard of Review

We review summary judgment decisions de novo, viewing the facts in the light most favorable to the nonmoving party. GTE Wireless, Inc. v. Cellexis Int'l, Inc., 341 F.3d 1, 4 (1st Cir.2003). Summary judgment is inappropriate if there is a genuine issue as to any material fact. Id. It is undisputed that Massachusetts substantive law controls.

III. Analysis

A. Breach of oral contract

The Neuhoffs allege that Marvin breached an oral contract to provide replacement windows for free. The oral contract was allegedly made in March 1998 when Greg Muirhead informed the Neuhoffs that their decaying windows would be replaced once Marvin's production problems were fixed and the windows reached a more advanced stage of decay.

The district court held that there was not a breach of an oral contract because the promise to replace the defective windows constituted a remedy, not a new contract. See Neuhoff v. Marvin Lumber & Cedar Co., 2003 WL 21672831, at *1-2, 2003 U.S. Dist. LEXIS 12278, at *4 (D.Mass. Jul. 16, 2003) (citing New England Power Co. v. Riley Stoker Corp., 20 Mass.App.Ct. 25, 477 N.E.2d 1054, 1058 (App.Ct.1985)). As a result, the district court granted Marvin's summary judgment motion on this claim. Although we disagree with the district court's reasoning, we do not disagree with the result.

The district court's reliance on New England Power and the cases cited therein was mistaken for several reasons. First, in New England Power, the promises to repair were viewed as remedies "rather than as an independent or separate warranty" because the warranty and the promise to repair were included in the same contract. New England Power, 477 N.E.2d at 1058. The logic behind New England Power is that a promise to repair does not create a contract independent from the warranty because if it did, then "limitations periods could be extended for virtually infinite time." Id. In this case, however, the initial contract was executed in 1991. The promise to repair did not allegedly occur until 1998 and was not a part of the original contract or warranty in effect. Marvin went to great lengths to emphasize that the original contract warranty had expired and the ten year warranty was inapplicable. Thus, the promise to repair was independent of the warranties and could, therefore, be breached.

Second, by applying New England Power, the district court confuses a "promise to repair warranty" from a promise to repair that is made after a product's defects are known. A "promise to repair warranty" refers to a type of warranty that stipulates the remedy to be invoked if the product purchased becomes faulty. See Standard Alliance Indus., Inc. v. Black Clawson Co., 587 F.2d 813, 818 n. 10 (6th Cir.1978). If the promisor does not abide by the promise to repair, then the promisee has a cause of action for the underlying breach of warranty for the defective product. New England Power, 477 N.E.2d at 1058. In this case, the promise to repair made by Marvin was not the type of promise that stipulates the remedy to be invoked in case of a defect, rather it was an independent promise addressing a known defect.

Nonetheless, the Neuhoffs' breach of contract claim fails because Marvin's alleged promise to repair lacked consideration. See Geffon v. Micrion Corp., 249 F.3d 29, 35 (1st Cir.2001) (court of appeals may affirm a grant of summary judgment on any ground supported by the record). A contract must have consideration to be enforceable and "[i]n order for a contract to have valid consideration, the contract must be a bargained-for exchange in which there is a legal detriment of the promisee or a corresponding benefit to the promisor." See Hinchey v. NYNEX Corp., 144 F.3d 134, 142 (1st Cir.1998) (quotations and citations omitted).

The Neuhoffs allege three types of consideration: (1) forbearance of their legal claims, (2) the time and labor expended assisting Marvin in connection with Marvin's promise to replace the defective windows, and (3) the benefit Marvin received to their reputation by agreeing to replace the windows.

It is well-settled that "abandonment of a claim believed to be well founded ... is the surrender of a thing of value and is a sufficient consideration for a contract." Blair v. Cifrino, 355 Mass. 706, 247 N.E.2d 373, 375 (1969) (quotations and citations omitted). The claim need not be "of such character in law or fact or both as finally to commend itself to the judgment of the tribunal of last resort," rather it need only be "well founded and made in good faith and not frivolous, vexatious or unlawful." Id. (internal quotations and citations omitted). But, "[m]ere forbearance to sue a claim, without any promise either in express terms or by fair implication from all of the circumstances, does not form sufficient consideration...." Merrimac Chem. Co. v. Moore, 279 Mass. 147, 181 N.E. 219, 222 (1932). It is undisputed that the Neuhoffs never expressed their willingness to forbear suit before or after the promise to replace the defective windows was made. Nonetheless, the Neuhoffs argue that their willingness to forbear suit could be implied. An "agreement to forbear to sue may be implied when the circumstances are such as to lead to the reasonable conclusion that the ... thing of value was given to induce the [other party] to forbear." Id. The record shows that the alleged promise to replace all of the windows was not given to induce the Neuhoffs to relinquish a claim against Marvin. Thus, the Neuhoffs' claims of forbearance is not sufficient for consideration since such forbearance was neither express nor could be found by fair implication from all the circumstances.

The Neuhoffs also claim that the time and labor expended assisting Marvin in connection with Marvin's promise to replace the defective windows was consideration. Actions can constitute consideration when a promisee gives "up something which immediately prior thereto the promisee was privileged to retain, or doing or refraining from doing something which he was then privileged not to do, or not to refrain from doing." Graphic Arts Finishers, Inc. v. Boston Redevelopment Auth., 357 Mass. 40, 255 N.E.2d 793, 795 (1970) (internal citation omitted). The record contains scant evidence indicating any time or labor expended assisting Marvin in connection with Muirhead's promise to replace the remaining defective windows. Rather, the record demonstrates that the actions taken by the Neuhoffs were a result of Muirhead's letter stating that Marvin would replace the first 33 windows. Pursuant to Marvin's letter, for example, the Neuhoffs obtained construction bids, but only for the first 33 windows.

The only effort expended by the Neuhoffs that related specifically to Muirhead's alleged oral promise to replace the remaining defective windows was effort relating to allowing a second inspector to view the defective windows. This action was taken as a result of the...