Rhode Island Hosp. Trust Nat. Bank v. Varadian

• Decision Date: 05 April 1995
• Citation: 419 Mass. 841,647 N.E.2d 1174
• Parties: RHODE ISLAND HOSPITAL TRUST NATIONAL BANK v. Paul N. VARADIAN & another, 1 trustees, 2 & others. 3
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 1174

647 N.E.2d 1174

419 Mass. 841

RHODE ISLAND HOSPITAL TRUST NATIONAL BANK v. Paul N. VARADIAN & another, ¹ trustees,² & others. ³

Supreme Judicial Court of Massachusetts,

Middlesex.

Argued Oct. 5, 1994.

Decided April 5, 1995.

Paul S. Samson (Isaac H. Peres, with him), for plaintiff.

Cathy P. Brooks (Peter S. Brooks, with her), for defendants.

Before LIACOS, C.J., and LYNCH, O'CONNOR and GREANEY, JJ.

O'CONNOR, Justice.

This is the plaintiff bank's appeal. We granted direct appellate review, following requests for direct appellate review by all parties. The appeal relates to counts III, IV and V of the bank's complaint and to count I of the defendants' counterclaim. In count III of its complaint, the bank alleges that the defendants Varadian and Nebelkopf, as trustees of Harborside Landing Realty Trust, owe the bank $2,900,000 pursuant to a promissory note. Count IV alleges that Varadian and Nebelkopf are individually liable as guarantors of that note. Count V asserts that Varadian and Nebelkopf are individually liable on a $1,000,000 promissory note (line of credit). The defendants filed an answer denying the bank's claims. Subsequently, Varadian and Nebelkopf filed amended answers and counterclaims asserting in count I that the bank had breached an oral contract to lend $43,500,000 for the construction of a multi-unit condominium complex in Lynn called the "Harborside Project" with the asserted result that there was no liability on the aforesaid notes and guarantees and, instead, the bank was liable to Varadian and Nebelkopf for breach of contract.

The liability issues were tried to a jury. The parties stipulated to the execution and delivery of the relevant notes and to the unpaid balances. The trial focused on the alleged oral promise by the bank to provide a construction loan of $43,500,000 and on the circumstances relevant to the question whether Varadian and Nebelkopf's engagement in a costly course of action was a result of their reasonable reliance on the bank's alleged promise. The judge instructed the jury on the legal theory of promissory estoppel and submitted to the jury nine special verdict questions pursuant to Mass.R.Civ.P. 49(a), 365 Mass. 812 (1974).

The jury answered the special questions substantially as follows: (1) Roland Lamothe or Robert Britton, bank personnel, had "apparent authority to make the construction loan;" (2) the bank intended to be bound only by an agreement in writing for the construction loan; (3) Varadian and Nebelkopf understood that the bank intended only to be bound by an agreement in writing for the construction loan; (4) the bank, Varadian, and Nebelkopf did not "have a binding agreement that [the bank] would provide the construction financing for the proposed Harborside Landing Project"; (5) the bank did "promise to provide the construction financing for the proposed Harborside Landing Project to Mr. Varadian and Mr. Nebelkopf"; (6) the bank "reasonably intend[ed] the promise to make the construction loan for the Harborside Landing Project to induce Varadian and Nebelkopf to act or forbear from taking certain actions"; (7) Varadian and Nebelkopf reasonably relied on the bank's promise to provide the construction financing for the Harborside Landing project; (8) the bank "induce[d] Mr. Varadian and Mr. Nebelkopf to execute the note and guarantee for the Harborside Land Acquisition and the line of credit by a promise to provide the construction financing for the Project"; (9) the failure to provide construction financing did not render impossible the performance of Varadian and Nebelkopf due the bank under the notes and guarantees.

A trial on damages, before a second jury, followed. Following the jury's assessment of damages, and in keeping therewith, the following judgment, insofar as the judgment is material to this appeal, was entered:

"With respect to Counts III, IV [and] V ... of the Complaint, the Plaintiff [bank] takes nothing and those counts shall be dismissed, with prejudice and without costs.

"... With respect to Count I of the Counterclaim upon liability by virtue of promissory estoppel:

"(a) The Plaintiffs-in-Counterclaim, Varadian and Nebelkopf, individually and as they are general partners of Lynn Harbor Development Limited Partnership and as they are the trustees of Harborside Landing Realty Trust, recover of the Defendant-in-Counterclaim [the bank] the sum of $2,697,000.00 (consisting of $1,936,000.00 in reliance damages and $761,000.00 in mitigation damages) together with interest from May 7, 1987 as provided by law and costs in the amount of $5,242.02;

"(b) that the Plaintiffs-in-Counterclaim, Varadian and Nebelkopf as they are the general partners of Lynn Harbor Development Limited Partnership, recover of the Defendant-in-Counterclaim [the bank] the sum of $650,000.00 together with interest from May 7, 1987 as provided by law and costs in the amount of $3,510.00; and

"(c) that the Plaintiffs-in-Counterclaim, Varadian and Nebelkopf as they are the general partners of Lynn Land Development Associates Limited Partnership and as they are the trustees of Van Realty Trust, recover of the Defendant-in-Counterclaim [the bank] the sum of $725,000 together with interest from May 7, 1987 as provided by law."

At the liability phase of the trial, after the defendants as plaintiffs-in-counterclaim introduced their evidence and rested, the bank moved for a directed verdict as to the counterclaims, setting forth specific grounds therefor including those on which the bank now relies. Mass.R.Civ.P. 50(a), 365 Mass. 814 (1974). The motion was denied. The defendants (plaintiffs-in-counterclaim) did not request an opportunity to submit additional evidence. The bank then presented evidence and rested. The bank did not renew its motion for a directed verdict at that time. Plaintiff and defense counsel presented closing jury arguments and the judge instructed the jury. The judge called counsel to the sidebar to take objections and requests relating to the instructions. In the course of that discussion, counsel for the bank stated that he wanted to "renew [his] motion for directed verdict." The judge responded "Thank you." The defendants (plaintiffs-in-counterclaim) did not request an opportunity to present further evidence and the judge proceeded to supplement his jury instructions. The jury then retired to deliberate. After judgment entered, following the bifurcated liability and damages trials, the bank filed motions for judgment notwithstanding the verdict pertaining to counts III, IV, and V of the bank's complaint and to the counterclaim. The judge denied the motions, explaining in a memorandum of decision that, although he "did not believe that a reliance by Messrs Varadian and Nebelkopf on an oral promise by officers of the Bank to lend $43 million was reasonable as evidenced by [his] decision on the Chapter 93A claim of the defendants" which is not at issue in this appeal, the judge was satisfied that the evidence was sufficient to warrant the jury's concluding both that the bank had made a sufficiently detailed promise to be enforceable and that the defendants reasonably relied on it.

On appeal, the bank argues, among other things, that the evidence was insufficient as a matter of law to warrant a finding that Varadian and Nebelkopf could reasonably rely on the bank's oral "promise" to grant a $43,500,000 construction loan, and that therefore the bank is entitled to judgment on counts III, IV, and V of its complaint and on count I of the counterclaim notwithstanding the verdict. We must first consider whether, as the defendants argue, the bank failed to protect its right to challenge the judge's denial of its motion for judgment notwithstanding the verdict.

Rule 50 of the Massachusetts Rules of Civil Procedure, 365 Mass. 814 (1974), provides in relevant part as follows:

"(a) Motion for Directed Verdict: When Made; Effect. A party may move for a directed verdict at the close of the evidence offered by an opponent, and may offer evidence in the event that the motion is not granted.... A party may also move for a directed verdict at the close of all the evidence.... A motion for a directed verdict shall state the specific grounds therefor....

"(b) Motion for Judgment Notwithstanding the Verdict. Whenever a motion for a directed verdict made at the close of all the evidence is denied or for any reason is not granted, the court is deemed to have submitted the action to the jury subject to a later determination of the legal questions raised by the motion. Not later than 10 days after entry of judgment, a party who has moved for a directed verdict may move to have the verdict and any judgment entered thereon set aside and to have judgment entered in accordance with his motion for a directed verdict...."

The defendants (plaintiffs-in-counterclaim) correctly say that, "in the absence of an effective motion for directed verdict at trial, a party may not challenge the sufficiency of his opponent's evidence on appeal. Deerskin Trading Post v. Spencer Press, 398 Mass. 118, 125 (1986)[.] International Fidelity [Ins.] Co. v. Wilson, 387 Mass. 841, 846-847 (1983)." The defendants are also correct when they say that "[e]ven where a party did move for a directed verdict at trial, the appellate courts will not review the sufficiency of the evidence with respect to any matters or grounds that were not raised in the motion. Bonofiglio v. Commercial Union [Ins.] Co., 411 Mass. 31, 34 (1991)." The critical question is whether the bank's motion for a directed verdict setting forth specific grounds, made at the close of the liability evidence offered by its opponents, plus bank counsel's oral statement made to the judge at the sidebar conference relative to the jury instructions, that counsel wanted to "renew [his] motion for a directed verdict" constitutes "a motion for a directed verdict made at the close of all the evidence" within the...