Opinion
11-P-1270
03-23-2012
POWERCOMM, LLC, v. HOLYOKE GAS & ELECTRIC DEPARTMENT.
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
PowerComm, LLC, appeals from the allowance of a motion to dismiss its amended complaint against Holyoke Gas & Electric Department (Holyoke), alleging that Holyoke breached a 2006 contract with PowerComm. We affirm.
Background. The complaint, which appends the contract at issue and accompanying specification, alleges the following. The contract for services between Holyoke and PowerComm was for a period of one year, from August 26, 2006, to August 25, 2007. In addition to the contract, the specifications contained the following provision: 'The work performed under this contract will be for the annual period between August 27, 2006 and August 25, 2007 with an option for an additional one (1) year.' PowerComm alleges that the bid specification constitutes a 'mandatory renewal option for an additional term of one (1) year.' However, Holyoke did not renew the contract and ultimately awarded the 2007 contract to a different company. PowerComm filed two suits against Holyoke in State court and a third in Federal court. See PowerComm, LLC v. Holyoke Gas & Elec. Dept., 657 F.3d 31 (1st Cir. 2011), petition for cert. filed, 80 U.S.L.W 3150 (January 18, 2012). The judge in the instant case allowed the motion to dismiss, ruling, after a review of the complaint and the appended documents, that the contract expired by its terms and that renewal was not mandatory. Discussion. Our review of the allowance of a motion to dismiss is de novo. Curtis v. Herb Chambers I-95, Inc., 458 Mass. 674, 676 (2011). To survive a motion to dismiss pursuant to Mass.R.Civ.P. 12(b)(6), 365 Mass. 754 (1974), 'a complaint must contain factual allegations sufficient 'to raise a right to relief above the speculative level . . . [based] on the assumption that all the allegations in the complaint are true." Provencal v. Commonwealth Health Ins. Connector Authy., 456 Mass. 506, 512 n.12 (2010), quoting from Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008).
1. Mandatory renewal. PowerComm's legal theory throughout these proceedings has been that while the contract had a termination date of August 25, 2007, the option found in the specifications executed automatically. This argument fails as a matter of law. This is not a contract that contains an evergreen clause mandating renewal in the absence of action. Compare Seagram Distillers Co. v. Alcoholic Bevs. Control Commn., 401 Mass. 713, 722-723 (1988) (clause required thirty days' advance notice of intent not to renew contract; contract remained in force on its face in absence of notice). Nor does it contain language suggesting the option need not be exercised, or that it is self-executing. Compare M.S. Alper & Son v. Capaldi, 99 R.I. 242, 247 (1965) (easement that converts to sale at end of five years without further action by grantee is 'self-executing option'). As the motion judge noted, a 'mandatory option in the absence of a self-executing provision is an oxymoron.'
We need not decide whether the option in the bid specification left the power of acceptance with the optionee as a matter of law, as PowerComm asserts, or with the optionor, as Holyoke contends, because the result is the same in either case. 'An option is simply an irrevocable offer creating a power of acceptance in the optionee. 1A A. Corbin, Contracts § 259 (1963). Therefore, no duty to perform arises in the optionor until the optionee accepts the irrevocable offer embodied in the option.' Stapleton v. Macchi, 401 Mass. 725, 729 n.6 (1988). Were we to agree with PowerComm that the power to exercise lay in its hands, the amended complaint contains no allegation that PowerComm attempted to exercise the option to renew contained within the specification applicable to the 2006 contract. The failure to include such an allegation in the complaint is fatal to the claim. See General Motors Acceptance Corp. v. Abington Cas. Ins. Co., 413 Mass. 583, 584 (1992) (claim must be based on facts set forth in complaint). PowerComm's allegations are insufficient. See Iannacchino v. Ford Motor Co., 451 Mass. at 636.
In the Federal court proceeding it was undisputed that the option was not exercised by either party. See PowerComm, LLC v. Holyoke Gas & Elec. Dept., 657 F.3d at 36 and n.4. Although a Federal court judgment may be res judicata on a State law claim brought in State court, see Mancuso v. Kinchla, 60 Mass. App. Ct. 558 (2004), there is no final judgment at this time. For this reason, res judicata does not apply. Ibid.
2. The option provision. PowerComm's related legal theory, raised for the first time in its reply brief, is that it was the optionee and that it exercised its option. Arguments not raised below are waived on appeal. See Campbell Hardware, Inc. v. R.W. Granger & Sons, Inc., 401 Mass. 278, 280-281 (1987) (court need not consider issues argued for first time in reply brief); Carrel v. National Cord & Braid Corp., 447 Mass. 431, 442-443 (2006).
Holyoke has moved to strike the supplemental affidavits and materials submitted in connection with the reply brief. The panel has not considered any of the documents outside the record submitted by PowerComm or Holyoke. The motion is denied as moot.
3. Two year contract. PowerComm argues in the alternative that the contract was not an option contract, but rather a two-year services contract. '[E]very word and phrase of a contract should, if possible, be given meaning, and . . . none should be treated as surplusage if any other construction is rationally possible.' Computer Sys. of America, Inc. v. Western Reserve Life Assur. Co. of Ohio, 19 Mass. App. Ct. 430, 437 (1985). To interpret the contract as PowerComm suggests would be to read the word 'option' out of the specifications, rendering that word either superfluous or meaningless.
See Black's Law Dictionary(9th ed. 2009): 'option, n (17c) . . . 2. An offer that is included in a formal or informal contract; esp., a contractual obligation to keep an offer open for a specified period, so that the offeror cannot revoke the offer during that period.'
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Holyoke has moved for attorney's fees. Although plainly unmeritorious, this appeal was not frivolous within the meaning of Mass.R.A.P. 25, as appearing in 376 Mass. 949 (1979). See Avery v. Steele, 414 Mass. 450, 455 (1993). The motion is therefore denied.
Judgment affirmed.
By the Court (Carhart, Agnes & Sullivan, JJ.),