Garshman v. General Electric

• Court: Court of Appeals for the First Circuit
• Decided: March 29, 1999
• Docket: 98-1681
• Status: Published

Opinion

USCA1 Opinion

                  United States Court of Appeals

                      For the First Circuit

                       ____________________



No. 98-1681



                    THE GARSHMAN COMPANY LTD,

                       Plaintiff, Appellee,



                                v.



                    GENERAL ELECTRIC COMPANY,

                      Defendant, Appellant.



                       ____________________



No. 98-1682



                    THE GARSHMAN COMPANY LTD,

                      Plaintiff, Appellant,



                                v.



                    GENERAL ELECTRIC COMPANY,

                       Defendant, Appellee.



                       ____________________



          APPEALS FROM THE UNITED STATES DISTRICT COURT



                FOR THE DISTRICT OF MASSACHUSETTS



         [Hon. Nathaniel M. Gorton, U.S. District Judge]



                       ____________________



                              Before



                      Boudin, Circuit Judge,



Magill, Senior Circuit Judge,



and Keeton, District Judge.



                      _____________________



     Barbara Friedman Yaksic, with whom Benesch, Friedlander,

Coplan & Aronoff, was on brief, for General Electric Company. 

     Louis M. Ciavarra, with whom Kimberly A. Stone O'Brien and

Bowditch & Dewey, LLP were on brief, for The Garshman Company, Ltd.


____________________



                         March 29, 1999

                       ____________________          KEETON, District Judge.  This appeal centers around a

contract dispute between The Garshman Company, Limited ("Garshman")

and the General Electric Company ("GE").  Garshman brought claims

against GE in the district court for breach of contract, estoppel,

quantum meruit, breach of the implied covenant of good faith and

fair dealing, and a violation of Mass. Gen. Laws ch. 93A (the only

non-jury claim).  The jury found for Garshman on all claims before

it.  Judge Gorton found for GE on the Mass. Gen. Laws ch. 93A

claim.

          On appeal, GE challenges the district court's refusal to

instruct the jury on the application of the Nevada Exclusive

Listing Statute.  Garshman challenges both the court's denial of

its claim under Mass. Gen. Laws ch. 93A and the court's denial of

its post-trial Motion to Amend or Alter Judgment.  We affirm the

district court in all respects.

                            I.  FACTS

          GE owned the Springer Mine located in Pershing County,

Nevada (the "Mine").  The Mine was formerly used to mine tungsten,

a substance used in light bulbs, but the Mine had not been

operational for many years.  Garshman is a company that sells the

assets of its clients for a fee.

          In 1993, GE decided to sell-off the Mine's assets.  After

negotiations between Garshman and GE, a written contract was signed

by which Garshman and a company called "GE Capital" (also known as

"Second Source") would become the exclusive agents for the sale of

the Mine's assets (the "Auction Agreement").  The Auction Agreement

provided that Garshman would receive a 12% commission upon the sale

of the assets.  The Auction Agreement also provided for liquidated

damages in the event that GE violated the terms of the Auction

Agreement.  Acting under the Auction Agreement, Garshman scheduled

an "absolute auction" for June 24, 1994.

          Soon after the Auction Agreement was signed, Sky

Scientific, Inc. ("Sky") approached Garshman about buying the

Mine's assets and some of the surrounding land before the scheduled

auction.  Garshman relayed the offer to GE.  GE and Garshman (as

the jury found) then orally agreed that GE would pay Garshman the

commission on the Sky transaction when Sky paid a non-refundable

deposit and signed a Letter of Intent.

          As a result of continuing negotiations, Sky eventually

signed a Letter of Intent and made a non-refundable deposit of

$75,000.  Thereafter, GE directed Garshman to withdraw the assets

from the scheduled auction so they could be included in the sale to

Sky.

          Ultimately, the transaction between GE and Sky fell

through.  No auction or sale of either the Mine or its assets ever

occurred.  When Garshman and GE Capital requested payment by GE, GE

denied its obligation to pay the commission.  This lawsuit ensued.

                II. THE DISTRICT COURT PROCEEDINGS

          After a four day trial, the jury made the following

findings:

          (1) GE withdrew the Mine's assets from the auction

without a waiver by Garshman;

          (2) It was unreasonable for GE to terminate the Auction

Agreement;

          (3) Under the terms of the oral contract, the minimum

required to trigger GE's obligation to pay Garshman its commission

was for Garshman to procure a buyer who paid a non-refundable

deposit and signed a Letter of Intent;

          (4) The events described in (3) as the minimum required

to trigger GE's obligation did occur, and the jury finding of

amount of damages to Garshman attributable to these events was

$372,000;

          (5) GE was estopped from denying its obligation to pay

Garshman a commission, and the value of Garshman's detrimental

reliance was $10,000;

          (6) Garshman was entitled to recover under quantum meruit

in the amount of $40,000;

          (7) GE committed a breach of its duty to act in good

faith and to deal fairly in its conduct toward Garshman; and

          (8) GE's breach of the implied covenant of good faith and

fair dealing caused damages to Garshman in the amount of $100,000.

See GE's Appendix at A-161.

          In a Memorandum and Order dated November 18, 1997, Judge

Gorton evaluated Garshman's claim under Mass. Gen. Laws ch. 93A. 

See A-188.  Judge Gorton held that "[b]ecause all of GE's conduct

and much of Garshman's conduct occurred outside Massachusetts, ...

GE has met its burden of proving that its conduct did not occur

primarily and substantially in Massachusetts and thus, Garshman has

no claim under Chapter 93A."  See A-190-92.

          On November 26, 1997, the Clerk at Judge Gorton's

direction entered judgment for the plaintiff in the amount of

$504,754.86 ($404,754.86 of liquidated damages and $100,000 for the

breach of the implied covenant of good faith and fair dealing) plus

pre-judgment interest in the amount of $135,039.21, for a total of

$639,794.07.  See A-194.  The judgment was to bear post-judgment

interest at the rate of 5.42% per annum.  See id.

          Garshman filed a post-trial motion to amend or alter the

judgment to reflect the fact that the jury found breaches of two

contracts.  See A-216.  Garshman argued that it was owed both the

liquidated damages for breach of the Auction Agreement and an

additional $372,000 for breach of the oral contract.  Garshman

further argued that the amount of damages awarded for estoppel and

quantum meruit should have been added to, rather than subsumed in,

the liquidated damages.  See A-216-17.  The district court denied

the motion, stating that a plaintiff cannot recover twice for the

same loss.  See A-217.

          Both parties then filed motions for partial summary

judgment on the implied covenant claim.  Garshman also filed a

motion to clarify the previous order.  On April 29, 1998, Judge

Gorton declared moot both motions for partial summary judgment and

amended the judgment to reflect the fact that the jury awarded

Garshman $100,000 for GE's breach of the implied covenant of good

faith and fair dealing but, to avoid duplicative recovery, further

amended the judgment to preclude Garshman from collecting on that

claim beyond the amount of damages awarded for breach of the

Auction Agreement.

                         III.  THE APPEAL

          Three issues are before us on appeal: whether the trial

court properly refused to charge the jury on the Nevada Exclusive

Listing Statute; whether the trial court properly refused to allow

Garshman to recover damages for both the breach of the Auction

Agreement and the breach of the oral contract; and whether the

trial court improperly denied Garshman's claim under Mass. Gen.

Laws ch. 93A.

             A. The Nevada Exclusive Listing Statute

          The sole issue raised by GE on appeal is whether the

trial court erred in refusing to allow the jury to determine

whether Nevada's Exclusive Listing Statute (the "Statute") applied

to the disputed transactions.  The Statute provides that:

          Every brokerage agreement which includes a

          provision for an exclusive listing must:

            1. Be in writing.

            2. Have set forth in its terms a definite,

            specified and complete termination.

            3. Contain no provision which requires the

            client who signs the brokerage agreement

            to notify the real estate broker of his

            intention to cancel the exclusive features

            of that listing after termination of the

            listing.

            4. Be signed by both the client or his

            authorized representative and the listing

            agent or his authorized representative in

            order to be enforceable.



N.R.S. 645.320.

          A brokerage agreement is an "exclusive listing" within

the meaning of 645.320 if it is (1) an agreement between an owner

and a broker, (2) for the sale of real property, (3) that excludes

other brokers.  See Morrow v. Barger, 737 P.2d 1153, 1155, n.2

(Nev. 1987).

          It is clear to this court, and GE agrees, that the

Auction Agreement concerned the Mine's assets only, and not any

real estate.  The Statute, then, does not apply to the Auction

Agreement.  Although the oral agreement did involve the sale of

some real estate, the Statute does not apply to that transaction

either.

          GE's position is that because the Auction Agreement

contained a provision for exclusivity, the oral agreement between

GE, Garshman and Sky must also be interpreted as containing that

same provision.  In support of this position, GE contends that the

oral agreement was, in essence, an oral modification of the Auction

Agreement and, thus, the exclusive listing provision in the Auction

Agreement must apply in full force to the Sky transaction.  We

reject this contention.

          The Statute is not a declaration about oral brokerage

agreements generally.  It applies only to those oral brokerage

agreements that "include a provision for an exclusive listing." 

The Statute does not say anything at all about an oral brokerage

agreement like the one in this case.

          The events of this case do not represent an ordinary

transaction.  No exclusive listing provision was included in the

oral agreement.  Also, the evidence does not support a

determination that the terms of the Auction Agreement were

incorporated into the oral agreement.  The Statute is, therefore,

irrelevant to this case.  For this reason, GE's complaints on

appeal that the trial court failed to instruct the jury on the

Exclusive Listing Statute is without merit, quite apart from

grounds of procedural preclusion raised by Garshman.  The trial

court has no duty to instruct the jury on matters of law that are

irrelevant to the special questions they are directed to answer in

a verdict answering special questions only.

                      B. Duplicative Damages

          Garshman argues that the trial court erred in entering

judgment only in the amount of the liquidated damages recoverable

for breach of the Auction Agreement, plus interest.  Garshman

contends that it is entitled to recover both the liquidated damages

and the damages for breach of the oral agreement found by the jury. 

          The jury found that GE violated the Auction Agreement by

withdrawing the assets from the auction.  The jury further found

that GE violated the oral agreement by failing to pay Garshman its

commission after Sky signed a Letter of Intent and placed a

deposit.  Garshman argues that the proper result of these jury

findings is to award Garshman both the $404,754.86 of liquidated

damages and the $372,000 awarded by the jury.  This argument is

without merit.

          It is well-settled that damages for breach of contract

should place the wronged party in as good a position as it would

have been in had the other party fully performed its obligation. 

See Hornwood v. Smith's Food King, No. 1, 807 P.2d 208, 211 (Nev.

1991).  A plaintiff is not entitled to duplicative damages; it may

recover only the amount of damages it actually suffered.  SeeBergstrom v. Estate of DeVoe, 854 P.2d 860, 862 (Nev. 1993).

          In this case, the verdict form was not precise enough to

allow the jury to consider the possibility of duplicative damages. 

In these circumstances, no party having objected to this lack of

precision, the trial court had the authority to resolve the dispute

that emerged after verdict over whether the damages findings were

in part duplicative.

          In resolving this dispute on the record available to the

district judge (which we assume, absent any showing to the

contrary, was no more lucid on this point than the record before us

on appeal), the district judge could appropriately consider the way

in which the parties might have arrived at the liquidated damages

figure of $404,754.86.  That analysis might have a bearing on

whether part or all of the harm suffered from breach of the oral

agreement was also part or all of the harm suffered from breach of

the Auction Agreement.  It happens that adding together (1) a

commission of 12% on an assumed sale price of $3,100,000, which is

$372,000, and (2) expenses of $32,754.86, produces a total of

$404,754.86.  Thus, Judge Gorton might reasonably have inferred

that loss of a commission of $372,000 was an element of the

liquidated damages for breach of the Auction Agreement and also was

an element of the damages for breach of the oral agreement, as the

jury found.

          Garshman contends that it is nevertheless entitled to

both commissions because each was separately earned.  We conclude,

however, that Garshman has not provided a record that demonstrates

as a matter of law that its contention is correct.  Nor has

Garshman provided a record that shows that it asked for submission

of this precise question to the jury, accompanied by a proffer of

sufficient evidence at trial to support a finding in its favor. 

The trial court noted that Garshman pled breach of the Auction

Agreement and breach of the oral agreement as alternative theories

of recovery, and ruled: "[m]erely because ... the jury found

damages under both theories does not entitle [Garshman] to recover

under more than one theory."  See A-216-17.  

          Given all these circumstances bearing on the issue of

duplication, we conclude that the trial court acted well within the

scope of its discretion in determining that Garshman should not

receive more than the liquidated damages in the circumstances of

this case.

                   C.  Mass. Gen. Laws ch. 93A

          Garshman appeals the trial court's decision to deny its

claim under Mass. Gen. Laws ch. 93A.  The trial court's decision

was two-fold.  First, the trial court determined that the conduct

relevant to this case did not occur "primarily and substantially"

within Massachusetts.  See A-192.  Second, the court determined

that even if the conduct did occur primarily and substantially

within Massachusetts, it did not rise to the level of a violation

of Chapter 93A.  See id.  We do not address the second issue

because we affirm the trial court's decision on the first ground,

without reaching the second ground.

          GE has the burden of showing that its relevant conduct

occurred primarily and substantially outside Massachusetts.  Mass.

Gen. Laws ch. 93A  11.  The trial court's determination that GE

satisfied that burden was a mixed legal-factual determination.  The

trial court's findings of historical facts are reviewed for clear

error.  The legal elements that govern the relevancy of those

factual premises are reviewed de novo.  See Play Time v. LDDS

Metromedia Communications, Inc., 123 F.3d 23, 32 (1st Cir. 1997);

Roche v. Royal Bank of Canada, 109 F.3d 820, 829 (1st Cir. 1997);

and Clinton Hospital Ass'n v. The Corson Group, Inc., 907 F.2d

1260, 1264 (1st Cir. 1990).

          We have often stated that three basic factors must be

weighed in determining whether conduct occurs primarily and

substantially in Massachusetts.  See, e.g., id.  First, the court

considers where the defendant committed the deception.  Second, the

court considers where the plaintiff was deceived and acted upon the

deception.  Third, the court considers the situs of plaintiff's

losses due to the deception.  See Clinton Hospital Ass'n, 907 F.2d

at 1265-66.  The trial court properly followed this approach in

making its determination that the conduct occurred primarily and

substantially outside of Massachusetts.  See A-191.

          Considering the first factor, the trial court found that

"all of GE's conduct took place in either Ohio or Nevada."  See id. 

None of GE's employees or officers ever came to Massachusetts in

connection with the disputed transactions.  Although we have held

that this is the least weighty of the factors, it is still relevant

when weighing all factors together in the balance to make a

reasoned decision.

          Following precedent, the trial court analyzed the second

factor by making two distinct inquiries: where did plaintiff

receive the deception and where did plaintiff act upon the

deception.  The trial court found that Garshman learned of GE's

refusal to pay the commission while in Massachusetts.  Most of

Garshman's relevant conduct, however, occurred in Nevada.  Garshman

inspected the Mine in Nevada, and Garshman employees created a

video of the property and did the physical preparation for the

auction in Nevada.  Although this second factor weighs in part in

favor of Garshman and in part in favor of GE, the conduct actively

taken by Garshman outside of Massachusetts in furtherance of the

transactions outweighs the mere fact that Garshman learned, while

in Massachusetts, that GE would not pay its commission.  Therefore,

this factor, taken as a whole, weighs in favor of GE.

          The third factor to be considered is the location of the

loss.  The trial court determined that Garshman's loss occurred in

Massachusetts.  The trial court correctly recognized, however, that

the place of injury is not determinative; otherwise in almost every

case with a Massachusetts plaintiff the defendant would be subject

to Chapter 93A violations, regardless of how negligible the

defendant's activity in Massachusetts was.  See id.  The fact that

Garshman incurred the loss in Massachusetts is not determinative in

this case.

          The trial court weighed these factors explicitly and

determined that because all of GE's conduct and much of Garshman's

conduct occurred outside of Massachusetts, GE met its burden of

proving that its conduct did not occur primarily and substantially

within Massachusetts.  We review a trial court's weighing of

factors and evaluative inferences drawn from historical facts for

abuse of discretion.

          Although it is not insignificant that Garshman learned of

the loss and incurred the loss in Massachusetts, Garshman did

conduct a substantial amount of business outside of Massachusetts,

and GE conducted all of its business outside of Massachusetts. 

These facts weigh heavily in favor of the defendant.  The trial

court was well within its discretion in determining that defendant

met its burden of proving that its conduct occurred primarily and

substantially outside of Massachusetts.

          Affirmed.