Opinion
13-P-1471
05-19-2015
ACRA-CUT, INC., & another v. ALMEGA TOOLING, INC., & others.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
Acra-Cut, Inc., and Intech, Inc. (collectively, Acra-Cut), appeals from an amended judgment ordering it to pay the defendants $700,739.84 in damages: $21,746.25 for breach of contract, plus $22,378.63 in interest, to Almega Tooling, Inc. (Almega); $105,253.75 for promissory estoppel, plus $108,314.52 in interest, to the defendants; $127,000 for c. 93A damages to Almega; and $316,046.69 in attorney's fees to Almega. On appeal, Acra-Cut asserts that (1) the judge erred in denying its motions for a directed verdict and for judgment notwithstanding the verdict (n.o.v.) on Almega's promissory estoppel counterclaim, (2) the judge erred in finding for Almega on its c. 93A counterclaim, and (3) the judge erred in denying Acra- Cut's motions for a directed verdict and for judgment n.o.v. on its breach of warranty claim., For the reasons that follow, we affirm.
Acra-Cut's posttrial motions were filed and ruled upon prior to the amended judgment, which entered on May 13, 2013.
At oral argument, Acra-Cut abandoned any claim based on the denial of its motion for a directed verdict because such a motion was not filed.
Background. The essential facts are not in dispute. Acra-Cut is a medical device company that manufactures instruments used in neurosurgery. Intech, Inc. (Intech), manufactures component parts. John Baker owns both companies and his son, Jeffrey Baker (Jeffrey), is the vice-president and general manager. Almega designs and builds molds used in plastic injection molding. Apex Engineering Corp., subsequently renamed Apex Resource Technologies, Inc. (Apex), injects molds and produces various plastic products. Donald R. Rochelo is the principal owner of Almega and Apex.
In August of 2003, Acra-Cut contracted with Almega to design and to build a mold to be used in producing Acra-Cut's drive shell (used in its disposable cranial perforator). The contract price was $86,985, with fifty percent payable with the purchase order, twenty-five percent payable at eighty percent completion, and twenty-five percent at sample submission. Payments of $65,238.75 were made successfully. Almega then completed the mold and submitted a final invoice, expecting $21,746.25 in final payment.
The contract did not require that the submitted samples conform to the part specifications (or in industry terms, that the samples be "in spec"), that a "design of experiment" (DOE) be used, or that the samples be "validated" -- all of which would require substantially more work and cost. Apex sent Acra-Cut a DOE quote and a quote for the molding of parts. Acra-Cut refused to make the final payment, expressing unhappiness with the sample parts and requesting changes. Almega made these changes, but still received no final payment. Acra-Cut instead, in a letter dated March 18, 2004, demanded additional services, promising to pay only if these services were performed, and made a series of threats.
Acra-Cut asserted that it would not make final payment until it received parts in spec. Jeffrey then purported to cancel the contract based on "nonperformance" and demanded the return of the previous payments. In a letter dated April 27, 2004, Jeffrey reiterated his position that Acra-Cut was entitled to a full refund plus interest because parts were not in spec.
Despite assurances that Almega had performed its obligations under the contract, Acra-Cut, in a letter dated May 18, 2004, continued to demand either parts in spec by June 1, 2004, or a refund of the $65,238.75 it had paid. Almega chose to provide in spec parts and Acra-Cut accepted them on June 10, 2004, but still refused to make final payment and demanded validation testing.
Rochelo offered to "further prove" that the mold was "a production ready mold" by running validation testing, and asked for a check in advance of doing the work, so as not to incur any more expenses. Jeffrey responded that Acra-Cut wished to proceed. He later stated that the "burden is on Almega/Apex to prove subject mold is production ready." He next said that because of Almega's "continuing delays, [Acra-Cut] will be charging Almega/Apex $938.00 per day." Jeffrey threatened that Acra-Cut would contract for the manufacture of new molds elsewhere at Almega's "peril" if validation was not completed. On July 1, 2004, Rochelo offered to send the mold to Acra-Cut if the final overdue payment was made. Jeffrey responded with new demands. Rochelo told Acra-Cut that its refusal to pay for the mold or for validation constituted "unfair business practices."
Specifically, Jeffrey demanded that the mold be able to "produce good parts" within twenty minutes of start-up and have a cycle time of forty seconds, alleged that Acra-Cut was incurring $28,140 per month in damages, and demanded that the mold be examined and validated by an outside molder. If Jeffrey's consultant disapproved, Almega was to return the partial payments.
After suit was filed, Acra-Cut had Charles Lombardi make a number of changes that had nothing to do with getting the mold to make parts in spec. Almega incurred significant costs in making these changes and running the mold. In addition, Lombardi's molding assistant damaged the mold, requiring repairs by Almega.
Discussion. 1. Standard of review. When reviewing the denial of a motion for judgment n.o.v., we "apply the same standard as the motion judge, 'taking into account all the evidence . . . most favorable to the plaintiff, to determine whether, without weighing the credibility of the witnesses or otherwise considering the weight of the evidence, the jury reasonably could return a verdict for the plaintiff.'" Kattar v. Demoulas, 433 Mass. 1, 8 n.5 (2000), quoting from Tosti v. Ayik, 394 Mass. 482, 494 (1985).
2. Almega's promissory estoppel counterclaim. Promissory estoppel requires proof of an unambiguous promise and detrimental reliance in circumstances in which there is no express contract on the subject. See Rhode Island Hosp. Trust Natl. Bank v. Varadian, 419 Mass. 841, 848 (1995). We agree with Almega that Jeffrey's representations made in his letters dated March 18, April 27, and May 21, described supra, were not mere proposals, but rather amounted to promises that Almega reasonably relied upon. This case falls into that category of cases in which relief may be awarded on a theory of promissory estoppel where "there has been a pattern of conduct by one side which has dangled the other side on a string." Papas Industrial Parks, Inc. v. Psarros, 24 Mass. App. Ct. 596, 598 (1987). Contrary to Acra-Cut's argument, Almega reasonably relied on representations that it would be paid if it went ahead and performed validation work that was not called for in the original contract. A commitment to another party that upon performance of certain acts payment will be made is no less a promise simply because that term is not expressly included in the exchanges between the parties.
3. Almega's c. 93A counterclaim. The trial judge, who was not the motion judge, read the summary judgment order correctly as not granting summary judgment to Almega on its c. 93A counterclaim. Although in her written decision the motion judge discounts certain theories of recovery for purposes of c. 93A, it is clear that the judge rejects Acra-Cut's contention that it was entitled to judgment as a matter of law on the promissory estoppel theory of recovery. This is made unambiguously clear in the judge's order which omits any reference to promissory estoppel in listing the theories of c. 93A recovery that are foreclosed.
It requires only a brief note to dispense with Acra-Cut's argument that a claim under c. 93A must be derived from Almega's other claims for promissory estoppel or breach of contract. The validity of Almega's c. 93A claim does not depend on whether there was an accompanying independent common-law claim because violation of a common-law duty is not an essential ingredient in a c. 93A case. See Kattar v. Demoulas, 433 Mass. at 13.
We also agree with Almega that the evidence was sufficient to support the trial judge's finding that Acra-Cut engaged in oppressive or unscrupulous conduct in violation of c. 93A, § 11. The judge found that the totality of Acra-Cut's behavior -- its refusal to pay the final installment due on its contract with Almega after Almega produced and delivered the mold, demanding a refund of money it had already tendered to Almega for the mold it produced and delivered to Acra-Cut, claiming reimbursements for costs it allegedly incurred during Almega's production of the mold, and, most significantly, insisting that Almega undertake a product validation process, which was not part of the original contract, without any additional compensation -- constituted oppressive and unscrupulous conduct. The judge was warranted in describing this course of conduct as "an attempted commercial mugging."
4. Breach of warranty claim. All that is required to dispose of Acra-Cut's contention that the evidence was not sufficient to warrant the verdict in favor of Almega on the count for breach of warranty is to point to the extensive trial testimony and documentary evidence from which the jury could find Almega produced the product called for in its contract with Acra-Cut, namely a mold that was capable of producing parts in accordance with specifications agreed to by the parties, and Acra-Cut failed to pay for it.
Amended judgment entered May 13, 2013, affirmed.
By the Court (Green, Rubin & Agnes, JJ.),
The panelists are listed in order of seniority.
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Clerk Entered: May 19, 2015.