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Nat'l Lumber Co. v. Gerard E. Welch, Inc.

COMMONWEALTH OF MASSACHUSETTS APPEALS COURT
Nov 26, 2014
No. 13-P-1929 (Mass. App. Ct. Nov. 26, 2014)

Opinion

13-P-1929

11-26-2014

NATIONAL LUMBER COMPANY v. GERARD E. WELCH, INC., & others.


NOTICE: Decisions issued by the Appeals Court pursuant to its rule 1:28 are primarily addressed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, rule 1:28 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.

MEMORANDUM AND ORDER PURSUANT TO RULE 1:28

The plaintiff, National Lumber Company, brought this contract action against Gerard E. Welch, Inc. (corporation), and Gerard E. Welch and Jacques Marchand, its principals. The plaintiff recovered a money judgment against the corporation upon a jury verdict rendered on November 3, 2010. It appeals from so much of the judgment (Parts B and C) as dismisses its claims against Welch and Marchand. The case against Welch and the corporation were tried together to a jury. The case against Marchand was tried to a judge.

The suit was to recover monies the plaintiff was owed for goods sold and delivered to the corporation on credit or account pursuant to the terms of a credit agreement. At the time the credit agreement was entered into, the plaintiff demanded and required that Marchand and Welch sign a personal guaranty. The guaranty, bearing what appeared to be the signatures of Welch and Marchand, was in evidence.

We turn first to the Welch case. In his answer, Welch admitted that he had signed the guaranty. Before trial, he stipulated to its existence and proper execution. The guaranty is unambiguous, and Welch provided neither evidence nor argument why liability under the guaranty should not follow automatically from a finding of liability on the part of the corporation.

At trial the jury were provided with a special verdict form. The first question was: "1. Is Gerald E. Welch, Inc. indebted to the plaintiff?" If the answer was no, the form stated that that was the end of the case. If the answer was yes, the jury were asked to answer a second question: "2. What amount of damages do you award the plaintiff in connection with goods sold and delivered, including any interest you may find to be due?"

The jury were also instructed, if they answered question two, that they should answer a third question: "3. Is Gerard E. Welch liable to the plaintiff for the debt owed by Gerard E. Welch, Inc. by virtue of the guaranty executed by Gerard E. Welch?" The genesis of this third question was a request made by Welch's counsel at a conference during trial regarding the verdict slip. The judge suggested that the second question should simply be: "What amount do the defendants owe under the agreement?" Counsel for Welch, however, asked for a third question along the line of that submitted to the jury. Welch's counsel made clear that he was "not challenging the guaranty." He argued that Welch was entitled to a jury question to determine whether the case against him had been proved. Counsel for the plaintiff noted that the signature on the guaranty had been admitted by Welch in the pleadings, but did not formally object to inclusion of the question.

The judge indicated that he did not know on what basis "a guarantor would be let off the hook unless there was some sort of a release or other basis for letting the person off the hook." Nonetheless, he allowed the request to add the additional question, noting that "it will be interesting what the arguments are. The arguments, of course, will have to stay within the bounds of the law."

Earlier, the trial judge had suggested that perhaps the reason Welch's counsel wanted the question might have been that counsel was talking about "jury nullification."

In closing, however, Welch's counsel did not mention the third question. He put forward no argument at all based upon the guaranty, or attempting to distinguish Welch individually from the corporation in terms of liability. In fact, he reiterated that "Mr. Welch signed various security agreements that have all come into evidence. He agreed that the properties that he was constructing could have a lien on them to secure the repayment of the line of credit. He also offered up his own personal residence for a mortgage on that." His argument was that "[t]he security agreements were paid off," disputing the plaintiff's calculation of the amount owed.

The jury answered the first question in the affirmative, holding the corporation liable. In question two they specified that the amount of damages was $35,590.37. The jury, however, answered the third question "no." The jury were dismissed.

Six days after trial, the plaintiff, pursuant to Superior Court Rule 9A, timely served a motion to amend the judgment entered pursuant to the jury verdict with respect to its claim against Welch, or, in the alternative, for a new trial as to that claim. The plaintiff's motion was brought under rules 59(e) (to amend the judgment) and 59(a) (for a new trial) of the Massachusetts Rules of Civil Procedure, 365 Mass. 827 (1974). The plaintiff argued that there was neither a legal nor a factual basis for the answer to the third question.

The judge denied the motion. He concluded that the plaintiff was challenging the verdict as "inconsistent," citing Holder v. Gilbane Bldg. Co., 19 Mass. App. Ct. 214, 218 (1985), for the proposition that such a matter should have been raised prior to the jury being dismissed. However, this is not precisely a case of claimed inconsistent verdicts, a claim that relies upon inconsistent factual findings. Service Publications, Inc. v. Goverman, 396 Mass. 567, 573 n.8 (1986) ("To constitute inconsistent verdicts, it must be shown that the verdicts are based on inconsistent findings of fact"). Rather, the plaintiff asserts that Welch's liability follows as a matter of law from the finding of corporate liability, and that there was no factual or legal support for a contrary conclusion. Therefore, it argues, the verdict dictated by the negative answer to the third jury question cannot stand.

It is clear that the plaintiff was entitled to judgment against Welch as a matter of law once the corporation's liability was established. The parties stipulated to the existence and execution of the credit application, which contained Welch's personal guaranty. The guaranty was in evidence, and the stipulation amounts to a judicial admission of liability contingent upon liability of the corporation.

At least in the absence of a claim of prejudice, this is precisely a circumstance in which the plaintiff is entitled to relief under rule 59(e), which "is designed to correct judgments which are erroneous because they lack legal or factual justification." Pentucket Manor Chronic Hosp., Inc. v. Rate Setting Commn., 394 Mass. 233, 237 (1985) (treating a party's motion to vacate as a rule 59[e] motion "because the relief sought was correction of errors of law"). The judgment in favor of Welch on count III therefore must be vacated, and judgment on that count must be entered in favor of the plaintiff.

In light of this conclusion, we need not reach the plaintiff's alternative claim for relief under rule 59(a).

The Marchand case stands on a different footing. After trial, a different judge found that it was not Marchand's signature on the guaranty but that his name had been written in by someone else. That conclusion was amply supported by the evidence, and the plaintiff does not argue otherwise. Instead, it argues only that Marchand's answer denied the signature with insufficient specificity such that, under Mass.R.Civ.P. 8(b), 365 Mass. 749 (1974), the court was required to take it as admitted. Rule 8(b) provides: "[t]he signature to an instrument set forth in any pleading shall be taken as admitted unless a party specifically denies its genuineness." The Reporters' Notes to rule 8(b) indicate that the purpose behind the requirement of specificity is the provision of notice to the court and the opposing party. Reporters' Notes to Mass.R.Civ.P. 8(b), 46 Mass. Gen. Laws Ann. at 82 (West 2006).

The relevant paragraph of the complaint alleged that Marchand "in his individual capacity, signed, executed and delivered to [the plaintiff] a personal[] guaranty agreement . . . whereby he agreed to personally and unconditionally guarantee the timely payments of all of [the corporation's] obligations to [the plaintiff] . . . ." In his pro se answer, Marchand "denie[d] the allegations contained" in that paragraph. Further, the plaintiff's own evidence at trial demonstrates that it knew some two years before trial that an allegedly forged signature was the basis of Marchand's defense to its claims.

The numbered paragraph in the answer actually stated the wrong paragraph number in its text, but there is no disagreement that it was meant to reference the corresponding paragraph in the complaint, quoted in the text above.

Rule 8(f) of the Massachusetts Rules of Civil Procedure, 365 Mass. 749 (1974), states that "all pleadings shall be so construed as to do substantial justice." The Reporters' Notes indicate that this rule altered "the prior Massachusetts rule that pleadings must be construed most strictly against the party drafting them." Reporters' Notes to Mass.R.Civ.P. 8(f), 46 Mass. Gen. Laws Ann. at 84 (West 2006). Even assuming rule 8(b) applies to contracts like this, and not only, for example, to negotiable instruments, a question we do not decide, in light of rule 8(f) and the facts and circumstances here, we see no error in the judge's construction of Marchand's pleading to have denied his signature with adequate specificity for compliance with rule 8(b).

Part B of the judgment, in favor of Welch on count III (personal guaranty), is vacated, and the case is remanded to the Superior Court for entry of judgment in favor of the plaintiff on that count. Part C of the judgment, in favor of Marchand on count IV (personal guaranty) is affirmed.

So ordered.

By the Court (Green, Rubin & Agnes, JJ.),

Panel members appear in order of seniority.

Clerk Entered: November 26, 2014.


Summaries of

Nat'l Lumber Co. v. Gerard E. Welch, Inc.

COMMONWEALTH OF MASSACHUSETTS APPEALS COURT
Nov 26, 2014
No. 13-P-1929 (Mass. App. Ct. Nov. 26, 2014)
Case details for

Nat'l Lumber Co. v. Gerard E. Welch, Inc.

Case Details

Full title:NATIONAL LUMBER COMPANY v. GERARD E. WELCH, INC., & others.

Court:COMMONWEALTH OF MASSACHUSETTS APPEALS COURT

Date published: Nov 26, 2014

Citations

No. 13-P-1929 (Mass. App. Ct. Nov. 26, 2014)