Opinion
20-P-613
05-11-2021
NATIONAL LUMBER COMPANY v. Peter MIRANDA, Jr., & Others.
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
Following a jury-waived trial, the defendants, Peter Miranda, Jr., both individually and as trustee of F&M Realty Trust II (F&M Realty II), and Russell Fleming (together, the defendants) were found liable to National Lumber Company (National) on guarantees for certain supply contracts between F&M Realty II and National for the sale of lumber and other building materials. On appeal, the defendants argue: (1) the judge erred in denying their motion for summary judgment, (2) the judge erred in finding Miranda and Fleming personally liable for the obligations of F&M Realty II on the supply contracts, and (3) the judge abused his discretion in denying the defendants' motion for involuntary dismissal. We affirm.
On October 26, 2011, an amended judgment entered against Linda J. Filaretos as to count six of the amended complaint, the sole count against her. On February 14, 2013, default judgment entered against James Filaretos as to count six; on November 28, 2018, he was dismissed entirely from the case after entry of his discharge in bankruptcy.
1. Denial of summary judgment. The defendants claim that the judge erred in denying their motion for summary judgment, and claim that we must reverse that denial, despite them having had a full trial on the merits. We disagree.
"It is well-established that ‘the denial of motions for summary judgment ... will not be reviewed on appeal after a trial on the merits.’ " Harootian v. Douvadjian, 80 Mass. App. Ct. 565, 566 (2011), citing Deerskin Trading Post, Inc. v. Spencer Press, Inc., 398 Mass. 118, 126 (1986). "The purpose of summary judgment is to bring litigation to an early conclusion without the delay and expense of a trial when no material facts are at issue, and it goes without saying that that purpose cannot be served after the case has gone to trial. The merits of a claim are better tested on appeal on the record as it exists after an evidentiary trial, than on the record in existence at the time the motion for summary judgment was denied" (citation omitted). Id. at 566-567. Therefore, where the defendants raised the same issues in their motion for summary judgment as they now do on appeal, after a full trial on the merits, the defendants' appeal of the denial of their motion for summary judgment is not properly before us. See id.
2. Contractual liability and personal guaranty. Pursuant to Rule 20 (2) (h) of the Rules of the Superior Court (2018), parties may, in a jury-waived civil trial, choose to waive detailed written findings of fact and rulings of law, and instead submit to the judge special questions on the elements of each claim. See Spinosa v. Tufts, 98 Mass. App. Ct. 1, 10 (2020). "Any appellate review of the court's decision and of the judgment entered shall be according to the standard of review that would apply to a verdict by a jury in a case tried to a jury and to the judgment entered thereon." Rule 20 (8) (b) of the Rules of Superior Court. Generally, "[w]e must uphold [a] jury verdict as long as anywhere in the evidence, from whatever source derived, any combination of circumstances could be found from which a reasonable inference could be drawn in favor of the plaintiff" (citation and quotation omitted). Rabassa v. Cerasuolo, 97 Mass. App. Ct. 809, 814 (2020). Such is true "even if different circumstances shown by the evidence would sustain a defense verdict." See Linkage Corp. v. Trustees of Boston Univ., 425 Mass. 1, 15 (1997).
The defendants claim that Phil Crotty, the job supervisor for the general contractor, did not have the actual or apparent authority to sign the material supply contracts for the 51 Pearl Street and 63 Central Place projects on behalf of F&M Realty II. Furthermore, the defendants claim that F&M Realty II cannot be bound by such material supply contracts, as it is not identified as the party to be bound on the contract. We disagree.
The record demonstrates that Crotty, on numerous occasions, signed multiple material supply contracts on behalf of F&M Realty II as the job supervisor at the project sites owned by the defendants or their affiliates. Among those contracts were the material supply contracts that are the subject of this appeal, the contracts for the 51 Pearl Street and 63 Central Place projects. In each of those contracts, the "Customer" or "Purchaser" is listed as "F&M Realty," not "F&M Realty II," and not the corporate entities that the defendants claim actually owned the project sites.
However, the mere fact that "F&M Realty II" was not listed on the contracts as the purchaser is not determinative of the defendants' liability on the contracts, where Crotty acted with apparent authority to bind F&M Realty II. See Fergus v. Ross, 477 Mass. 563, 566-567 (2017) (principal liable for agent's conduct where agent acts with apparent authority such that third person reasonably believes principal consents to agent's conduct). Under each of these contracts, the building materials were delivered by National, and then accepted and used by the defendants at the respective project sites. Following delivery of the materials, Miranda paid the bills for the two projects, despite the wrong entity being billed, and testified he never provided notice of such error to National.
Where the defendants accepted and paid for the delivered building materials without objection, we find no error in the judge's finding that National reasonably relied on Crotty's apparent authority to bind F&M Realty II on the 51 Pearl Street and 63 Central Place contracts. In essence, the conduct of the defendants ratified Crotty's actions on each of the contracts, such that the defendants agreed to be bound by the terms of the contract. "It is the instant duty of a principal, upon ascertaining the facts, at once to disaffirm an act done in his name by an agent in execution of a power conferred but in a mode not sanctioned by the terms of the agency or in excess or misuse of the authority given." Linkage Corp., 425 Mass. at 18, citing Boice-Perrine Co. v. Kelley, 243 Mass. 327, 330-331 (1923). The defendants' failure to promptly disavow Crotty's conduct in signing the contracts that sought to bind "F&M Realty," coupled with their acceptance of the benefits of the contract in exchange for payment, evidences National's reasonable reliance on Crotty's apparent authority to act on behalf of the defendants in these transactions. See Fergus, 477 Mass. at 567 (apparent authority need not arise from direct communication of principal, but instead can arise from ratification of agent's conduct by principal's acquiescence).
Miranda and Fleming also claim that they are not personally liable for the supply contracts on the 51 Pearl Street and 63 Central Place projects, as they assert that the personal guaranty that was signed on the reverse side of the original credit agreement was limited only to the initial supply contract for the 192 Pearl Street project. We disagree.
"A guaranty is a contract ‘like all other contracts.’ " Federal Fin. Co. v. Savage, 431 Mass. 814, 817 (2000), citing Merchants Nat'l Bank v. Stone, 296 Mass. 243, 250 (1936). "When the words of the guaranty ‘are clear they alone determine the meaning.’ " Federal Fin. Co., supra, citing Merrimack Valley Nat'l Bank v. Baird, 372 Mass. 721, 723 (1977). Miranda and Fleming signed the personal guaranty on the reverse side of the credit agreement between F&M Realty II and National. Nothing in the guaranty limits it to any particular contract. To the contrary, the language of the guaranty is clear that the agreement was "intended to cover a running account or accounts by [F&M Realty II]." Furthermore, the guaranty provided by Miranda and Fleming covered all transactions between National and F&M Realty II, until written notice of termination of the guaranty was provided to National. No such written notice was ever provided to National. It is well established that the liability of a guarantor can be terminated only in accordance with the terms of the contract. See Federal Fin. Co., 431 Mass. at 817. Here, where the guaranty only provided for one mechanism for termination, i.e. written notice to National, the defendants' failure to comply with such termination mechanism resulted in their continued liability on the guaranty. See id. Where the language of the personal guaranty was unambiguous in its intent to cover all transactions between National and F&M Realty II, and where Miranda and Fleming failed to properly terminate the personal guaranty, we find no error in the judge's decision to hold Miranda and Fleming personally liable for the supply contracts for the 51 Pearl Street and 63 Central Place projects. See Linkage Corp., 425 Mass. at 15 (standard of review for appeal of Rule 20 (2) (h) jury-waived trial is not one of substituted judgment).
In such guaranty contracts without a written duration provision, the guaranty is not held to be indefinite, and instead is operative for a reasonable time. See Atlantic Aluminum & Metal Distrib., Inc. v. Standard Paint & Wall Paper Co., 347 Mass. 415, 417 (1964). The guaranty at issue here, however, has a written duration provision; it was operative until written notice of termination was provided to National. See Federal Fin. Co., 431 Mass. at 817.
In addition, Miranda executed a mortgage with National "to secure the full payment of all current and future obligations of Peter Miranda, Jr., as Trustee of F&M Realty Trust II." National received $300,000.00 for the closing of the mortgaged premises, which was deemed to be a partial payment of the balance of F&M Realty II's outstanding debt to National. The mortgage and payment, which occurred in 2008, long after the time in which the defendants allege F&M Realty II finished their initial 192 Pearl Street project, supports the judge's finding that Miranda and Fleming remained personally liable on the guaranty to National. The mortgage by Miranda is at the very least an acknowledgment in 2008 of his own personal debt to National on behalf of F&M Realty II.
3. Denial of motion for involuntary dismissal. The defendants also claim that the judge abused his discretion in denying their motion for involuntary dismissal, pursuant to Mass. R. Civ. P. 41 (b) (2), 365 Mass. 803 (1974). We disagree.
"On motion of the defendant, with notice, the court may, in its discretion, dismiss any action for failure of the plaintiff to prosecute." Mass. R. Civ. P. 41 (b) (2). However, "[i]nvoluntary dismissal is a drastic sanction which should be utilized only in extreme situations." Monahan v. Washburn, 400 Mass. 126, 128 (1987). "The law strongly favors a trial on the merits of a claim." Id. at 129. "As a minimal requirement, there must be convincing evidence of unreasonable conduct or delay." Id. at 128. The decision to deny a rule 41 (b) (2) motion is committed to the motion judge's sound discretion. See Bucchiere v. New England Tel. & Tel. Co., 396 Mass. 639, 641 (1986). We review such a decision only for an abuse of discretion. See id.
Here, the defendants sought an involuntary dismissal for National's failure to file status reports with the trial court for a period of three years regarding the bankruptcy proceedings involving former codefendants James and Linda Filaretos. The defendants emphasize that the court order required National to file such status reports and argue that National has failed to provide "good cause" for the delay. However, National is not required to show good cause to avoid involuntary dismissal under Mass. R. Civ. P. 41 (b) (2). In fact, the burden is on the defendants to demonstrate that National's failure to prosecute the case caused actual prejudice. See Ahern v. Warner, 16 Mass. App. Ct. 223, 228-229 (1983) (dismissal under rule 41 (b) (2) motion warranted where defendants can show actual cause due to delays).
The judge properly determined that the defendants have not demonstrated such prejudice, and that without such a showing of prejudice at any stage of the trial, involuntary dismissal is not warranted. See Dewing v. J.B. Driscoll Ins. Agency, 30 Mass. App. Ct. 467, 472 (1991). At bottom, without a showing of actual prejudice, or evidence of intentional delay on the part of National, the three-year delay by itself is insufficient to require the motion judge to grant the rule 41 (b) (2) motion for involuntary dismissal. Cf. Bucchiere, 396 Mass. at 642 ( rule 41 (b) (2) would be ineffective if judge were unable to dismiss case for want of prosecution after six and one-half years of inactivity). Accordingly, we discern no abuse of discretion in the judge's denial of the motion. See id. at 641 ("There is no error of law amounting to an abuse of discretion simply because a reviewing court might have reached a different result; the standard of review is not substituted judgment").
In support of their motion for involuntary dismissal, the defendants have speculated that there were witnesses that they could not locate that would have become unavailable to testify at trial. At the motion hearing, the defendants also claimed that Miranda himself may have not been able to attend the trial due to an illness, and that as a result of the illness, the delay had resulted in actual prejudice. However, contrary to the arguments made before the motion judge, Miranda was available and did in fact testify at trial.
The only prejudice to which the defendants point is the accrual of statutory interest, but the parties have reached a compromise on the interest amount.
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Judgment affirmed.
Order denying motion for involuntary dismissal affirmed.