Zachar v. Lee

• Decision Date: 02 April 2004
• Docket Number: No. 03-2189.,03-2189.
• Citation: 363 F.3d 70
• Parties: Ned ZACHAR and Janet Zachar, Plaintiffs, Appellees, v. Jeffrey W. LEE, Susan A. Lee and Jeffrey W. Lee Real Estate, Inc., Defendants, Appellants.
• Court: U.S. Court of Appeals — First Circuit

363 F.3d 70

Ned ZACHAR and Janet Zachar, Plaintiffs, Appellees, v. Jeffrey W. LEE, Susan A. Lee and Jeffrey W. Lee Real Estate, Inc., Defendants, Appellants.

No. 03-2189.

United States Court of Appeals, First Circuit.

Heard January 6, 2004.

Decided April 2, 2004.

W. Paul Needham, with whom Mark A. Johnson, was on brief for appellants.

James A.G. Hamilton, with whom Susan E. Stenger and Perkins, Smith & Cohen, LLP, were on brief for appellees.

Before SELYA, Circuit Judge, COFFIN, Senior Circuit Judge, and SMITH,^* District Judge.

SMITH, District Judge.

This appeal challenges a jury verdict and award of $205,000 in damages for breach of the implied covenant of good faith and fair dealing in connection with an attempted sale of a home on Nantucket Island, in Massachusetts. The Appellants Jeffrey W. Lee, Susan A. Lee, and Jeffrey W. Lee Real Estate, Inc. ("Lee Real Estate" or the "Lees") assert two errors on appeal: (1) that the district court erred by denying their motion for judgment as a matter of law brought under Rule 50 of the Federal Rules of Civil Procedure, and (2) that the district court should not have admitted Appellees Ned and Janet Zachar's (the "Zachars") expert's report into evidence in its entirety. After a careful review of the record, we affirm.

I. THE FACTS

We take the facts and the reasonable inferences therefrom in the light most hospitable to the jury's verdict. See Correa v. Hosp. San Francisco, 69 F.3d 1184, 1188 (1st Cir.1995); Sanchez v. Puerto Rico Oil Co., 37 F.3d 712, 716 (1st Cir.1994); Wagenmann v. Adams, 829 F.2d 196, 200 (1st Cir.1987).

On August 21, 1998, the Zachars, enamored with Nantucket in summer, signed a purchase and sale agreement (the "P & S") with the Lees to purchase property located at 2 Anne's Lane on Nantucket (the "Property"). The agreed-upon purchase price for the Property was $2,050,000. In accordance with the P & S, the Zachars made the required ten percent deposit of $205,000 to the Lees' attorney, and the purchase of the Property was scheduled to close on February 2, 1999.

Like the setting sun, however, by late December 1998, the Zachars' desire to purchase the Property began fading to the west when Mr. Zachar accepted a job as a telecommunications stock analyst in San Francisco. However, under the terms of the P & S, the Zachars' failure to close on the Property would result in their forfeiture of the $205,000 deposit. In an attempt to avoid this result, the Zachars proposed an alternative arrangement that might allow them to recoup, in whole or in part, the deposit they placed on the Property. On January 13, 1999, the Zachars and Lees entered into an agreement (the "Agreement") that required the Lees to list the Property for sale on July 1, 1999, and keep it on the market through February 29, 2000. Under the terms of the Agreement, if the Property sold before February 29, 2000, the Lees were obligated to pay the Zachars any funds in excess of the sale price set forth in the P & S up to a maximum of $205,000.

The Agreement also provided that Lee Real Estate, as the sole broker for the Property, would use reasonable and commercially acceptable means to sell the Property. The Agreement provided, in pertinent part, that:

Mr. and Mrs. Lee agree to list the property with Lee Real Estate, Inc. for sale commencing July 1, 1999 at a price to be chosen by them. Lee Real Estate shall market and attempt to sell the property in a reasonable commercial manner as comparable properties are marketed on Nantucket.

Agreement at ¶ 4. On July 1, 1999, the Lees listed the Property for sale with Lee Real Estate. Because the median sales prices of Nantucket homes in 1999 had been increasing substantially, Lee Real Estate set the asking price for the Property at $2,475,000 — approximately $500,000 higher than the price of the Property at the time the Zachars and Lees entered into the P & S. The Lees did not lower the asking price for the Property during the term of the Agreement, and when the Agreement expired on February 29, 2000, the Property had not sold. The Zachars were therefore unable to recoup any of their $205,000 deposit.

II. THE PROCEEDINGS BELOW

The Zachars brought suit against the Lees and their real estate company asserting five causes of action: (1) breach of contract; (2) misrepresentation; (3) breach of the implied covenant of good faith and fair dealing; (4) conversion; and (5) a violation of Mass. Gen. Laws ch. 93A. Following a trial, the Zachars' case was submitted to the jury on the breach of contract and breach of the implied covenant of good faith and fair dealing claims.¹ The jury found that the Lees did not breach the Agreement and returned a verdict on that count in their favor. However, the jury found that the Lees breached the implied covenant of good faith and fair dealing, and awarded the Zachars $205,000 in damages with respect to that count.

Pursuant to Fed.R.Civ.P. Rule 50, the Lees moved for judgment as a matter of law at the close of the evidence and again following the jury verdict. The district court denied both motions. This appeal followed.

III. ANALYSIS

A. Sufficiency of the Evidence on the Plaintiffs' Implied Covenant of Good Faith and Fair Dealing Claim.

The Lees argue that there was insufficient evidence for the jury to conclude that they breached the implied covenant of good faith and fair dealing. Specifically, the Lees contend that because the jury found that they did not breach the Agreement (including the provision regarding the reasonable marketing of the property), it could not have considered evidence relating to the marketing of the property to find a breach of the implied covenant. Accordingly, the Lees contend there was insufficient evidence, absent marketing-related evidence, to find a breach of the implied covenant and the district court should therefore have granted their Rule 50 motion.

In most instances, we review de novo the district court's decision to deny a Rule 50 motion for judgment as a matter of law. See Gibson v. City of Cranston, 37 F.3d 731, 735 (1st Cir.1994). In undertaking this review, we look to all evidence in the record, drawing all reasonable inferences therefrom in the nonmovants' favor, and resist the temptation to weigh the evidence or make our own credibility determinations. See Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 151, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000); Correa, 69 F.3d at 1191; Gibson, 37 F.3d at 735. We "may reverse the denial of such a motion only if reasonable persons could not have reached the conclusion that the jury embraced." Correa, 69 F.3d at 1191 (citing Sanchez, 37 F.3d at 716).

However, before we undertake this review we must be satisfied that the Lees properly preserved their arguments for appeal. Rule 50(a) requires that challenges to the sufficiency of the evidence must be raised initially at the close of the evidence. Such challenges must be sufficiently specific so as to apprise the district court of the grounds relied on in support of the motion. See Fed.R.Civ.P. 50(a)(2); Correa, 69 F.3d at 1196. Accordingly, a motion for judgment as a matter of law at the close of the evidence "preserves for review only those grounds specified at the time, and no others." Id. (citing Sanchez, 37 F.3d at 723). If the Rule 50(a) motion is denied and the case is submitted to a jury, the movant must renew the motion once again in order to preserve the issue for appeal. See Fed.R.Civ.P. 50(b); Martin H. Redish, 9 Moore's Federal Practice ¶ 50.41 (3d ed.2003). The grounds for the renewed motion under Rule 50(b) are limited to those asserted in the earlier Rule 50(a) motion. See Correa, 69 F.3d at 1196 ("The movant cannot use [a Rule 50(b)] motion as a vehicle to introduce a legal theory not distinctly articulated in its close-of-evidence motion for a directed verdict."); Sanchez, 37 F.3d at 723.

The Lees argued in their Rule 50(a) motion that the Zachars' claim for breach of the implied covenant of good faith and fair dealing was "indistinguishable from their claim for breach of contract." They further argued that, to the extent that these claims could be treated separately, "there was no breach of the implied covenant." The district court denied this motion. Following the jury verdict, the Lees renewed their motion under Rule 50(b). The Rule 50(b) motion tried a new tack arguing that because the jury found in their favor on the breach of contract claim (implicitly finding that they had acted in a commercially reasonable manner when marketing the Property), the jury could not have relied upon the Lees' marketing efforts to conclude that the Lees breached the implied covenant of good faith and fair dealing. Absent that evidence, the Lees argued that there was insufficient evidence to support a verdict on the implied covenant of good faith and fair dealing claim. Unpersuaded, the district court also denied this motion. In this appeal, the Lees press the same grounds argued in the Rule 50(b) motion.

The Lees' challenge to the implied covenant of good faith and fair dealing claim is one that was not advanced in their Rule 50(a) motion. At the close of the evidence, the Lees sought judgment as a matter of law arguing that the breach of contract and breach of the implied covenant of good faith and fair dealing claims were essentially duplicative. Such an objection however is simply not sufficient to preserve, and certainly cannot be read to encompass, the legal theory underlying the Lees' Rule 50(b) motion and this appeal (that a finding of breach of contract is a prerequisite to a finding of breach of the implied covenant of good faith and fair dealing).

Given the Lees' failure to comply with the strictures of Rule 50, our review is limited to "`whether the record reflects an absolute dearth of evidentiary support for the jury's verdict.'" Davignon v. Clemmey, 322 F.3d 1, 13 (1st Cir.2003) (quoting Udemba v. Nicoli, 237 F.3d 8, 13-14 (1st Cir.2001))....