93 N.E.3d 852
Mass. App. Ct.2016Background
- City of Beverly owned Beverly Golf & Tennis Club; Johnson Golf managed it under a five-year contract (with city option to extend). Johnson assigned the contract to Bass River in 2008; Tozer (guarantor) guaranteed Bass River's payment obligations (capped at $600,000).
- Contract allocated building structural repairs to the city and interior/grounds maintenance to manager; city retained discretion as to order/timing of structural repairs and relied on Gale reports for priorities.
- Bass River operated the facility ~2008–2009, knew the second-floor function room lacked AAB (accessibility) compliance, and was told city lacked immediate funds but would provide interim mechanical access.
- By late 2009 Bass River fell >$600,000 behind on payments; city declined to renew and sued Bass River and Tozer for breach; Bass River counterclaimed (including G. L. c. 93A, breach of implied covenant, conversion).
- Jury found Bass River breached, Tozer liable as guarantor, awarded city ~$632k; jury also found city breached covenant of good faith/fair dealing and converted property, awarding Bass River ~$49k; judge dismissed Bass River’s c.93A claim and later amended judgment against Tozer to $600,000.
- Tozer later filed Chapter 11; appellate court stayed Tozer’s appeal under the automatic stay but allowed Bass River’s appeal to proceed; appellate court affirmed final judgment.
Issues
| Issue | Plaintiff's Argument (City) | Defendant's Argument (Bass River/Tozer) | Held |
|---|---|---|---|
| Denial of directed verdict on city’s breach claim | City argued evidence supported breach by Bass River for nonpayment | Bass River argued city materially breached (AAB noncompliance), excusing its payments | Denial affirmed: Bass River waived renewal of motion; evidence permitted jury to find no material breach by city |
| Motion to amend judgment / new trial | City argued verdict was supported by evidence and law | Bass River argued verdict was against weight and jurors misapplied material-breach doctrine | Denied: judge did not abuse discretion; jury verdict not against weight of evidence |
| Jury instructions (damages & benefit/restitution) | City defended charge as legally correct and not prejudicial | Bass River claimed failure to instruct on out-of-pocket reliance damages and erroneous statement that city could recover benefit even if it breached | No reversible error: jury was instructed on compensatory damages; any erroneous statement was harmless because jury found no city breach |
| G. L. c. 93A counterclaim | City maintained municipality not acting unfairly or in business context; conduct not unfair/deceptive | Bass River argued city engaged in trade/commerce and acted deceptively regarding renovations and accessibility | Affirmed dismissal: even assuming trade/commerce, city’s conduct did not constitute unfair or deceptive acts as matter of law |
| Effect of Tozer’s bankruptcy on appeal | City (and parties) agreed automatic stay applies only to Tozer | Tozer sought stay of the appeal after Chapter 11 filing | Tozer’s appeal stayed under 11 U.S.C. § 362; Bass River’s appeal proceeds (stay doesn't extend to co-defendant) |
Key Cases Cited
- Association of St. Croix Condominium Owners v. St. Croix Hotel Corp., 682 F.2d 446 (3d Cir. 1982) (automatic stay on appeals applies when appeal is continuation of action against debtor)
- In re Two Appeals Arising Out of the San Juan Dupont Plaza Hotel Fire Litig., 994 F.2d 956 (1st Cir. 1993) (automatic stay limited to proceedings against the debtor)
- In re Furlong, 660 F.3d 81 (1st Cir. 2011) (automatic stay does not extend to assets of separate corporation even if debtor owns stock)
- O'Brien v. Pearson, 449 Mass. 377 (2007) (standard of review for directed verdict; draw evidence for nonmovant)
- Turnpike Motors, Inc. v. Newbury Group, Inc., 413 Mass. 119 (1992) (same; inferences for nonmoving party)
- Dalrymple v. Winthrop, 50 Mass.App.Ct. 611 (2000) (failure to renew directed verdict motion constitutes waiver on appeal)
- Lease-It, Inc. v. Massachusetts Port Authy., 33 Mass.App.Ct. 391 (1992) (definition and instruction on material breach)
- Park Drive Towing, Inc. v. Revere, 442 Mass. 80 (2004) (municipal liability under G. L. c. 93A requires acting in trade or commerce)
- PMP Assocs., Inc. v. Globe Newspaper Co., 366 Mass. 593 (1975) (three-part test for unfairness under c.93A)
- Anthony's Pier Four, Inc. v. HBC Assocs., 411 Mass. 451 (1991) (conduct in disregard of contractual arrangements may constitute c.93A unfairness)