Intershell International Corp. v. Great Eastern Marine Service, Inc. ( 2024 )

NOTICE: Summary decisions issued by the Appeals Court pursuant to M.A.C. Rule
23.0, as appearing in 97 Mass. App. Ct. 1017 (2020) (formerly known as 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 23.0 or 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).
COMMONWEALTH OF MASSACHUSETTS
APPEALS COURT
23-P-1117
INTERSHELL INTERNATIONAL CORP.
vs.
GREAT EASTERN MARINE SERVICE, INC.
MEMORANDUM AND ORDER PURSUANT TO RULE 23.0
This action concerns a contract for the defendant, Great
Eastern Marine Service, Inc. (GEM), to construct a pier for the
plaintiff, Intershell International Corp. (Intershell). The
parties dispute whether the agreement included a condition
precedent that GEM would obtain a building permit such that
construction would be complete before June 1, 2020. GEM did not
obtain a building permit in time to do so (through no fault of
either party), and Intershell then brought this action in which
both parties alleged, among other claims and counterclaims, that
the other breached their agreement. After a bench trial, a
judge of the Superior Court concluded that the agreement did
contain an unfulfilled condition precedent and, as a result, the
contract was unenforceable. The judge ordered GEM to return the
$100,000 that Intershell previously had paid GEM, less $5,000
that GEM expended in preparation to complete the work.
The parties cross-appealed from the judgment. GEM argues
that the judge's findings that the contract contained a
condition precedent and that Intershell's $100,000 payment
constituted a refundable deposit were clear error. Intershell
counters that it was entitled to prejudgment interest on the
amount it received under the judgment. We vacate so much of the
judgment as declined to award prejudgment interest and remand
for reconsideration.1 We otherwise affirm.
Background. We set forth the undisputed facts as well as
those found by the judge after trial. We reserve certain facts
for our later discussion.
Intershell is a commercial fishing business and GEM is a
marine construction business. Howard Monte Rome is Intershell's
general manager. Kenneth Taliadoros (Kenneth) is GEM's owner
and president, and Kenneth's son, Jonathan Taliadoros
(Jonathan), is an engineer for GEM.2
1 Although the judgment itself does not include the order to
return the deposit, we treat that order as subsumed in the final
judgment that entered on April 6, 2023.
2 Because Kenneth and Jonathan share a last name, we refer
to them by their first names.
2
1. The bid and the contract. In December 2019, Intershell
sought bids to construct a new pier (project) on its property in
the city of Gloucester (city).3 Intershell wanted the project
completed by June 1, 2020,4 which was the start of its busy
season. To that end, Rome and Kenneth, who were acquainted
because of the parties' previous business dealings over the
years, met at the property to discuss the project. At that
meeting, Rome gave Kenneth copies of certain documents including
an amended order of conditions (OOC) that Intershell had
obtained for the project from the city's conservation
commission.
On January 10, GEM sent a written bid for the project in
the amount of $357,500 to Intershell. The bid provided that
"[u]nless specifically modified in the attached
quotation/proposal, payment terms require [one-third] upon
acceptance, [one-third] upon [fifty percent] completion and
[one-third] upon [one hundred percent] completion." In the e-
mail message accompanying the bid, Kenneth stated that the
"quote includes [GEM] pulling the building permit for the
project." Notwithstanding that representation, the bid
specified that "[a]ll permits are by owner."
3 My Management Group, LLC, an Intershell affiliate, is the
record owner of the property.
4 Unless otherwise specified, all events took place in 2020.
3
On January 25, Rome, Kenneth, and Jonathan met to discuss
GEM's bid. During that meeting, the parties agreed to the terms
set forth in GEM's bid with the following three oral
modifications: (1) Intershell's first payment to GEM would be
in the amount of $100,000 rather than one-third of the bid price
($117,975); (2) GEM was responsible for obtaining the building
permit for the project; and (3) the project had to be completed,
and GEM's equipment and barge removed from the site by June 1.
The parties signed the bid and Intershell provided GEM with
$100,000. Of the three bids that Intershell received for the
project, GEM's bid was the highest. However, Intershell
selected GEM's bid because GEM was the only bidder prepared to
complete the project by June 1.
2. Building permit and GEM's preparation work. On
February 19, Kenneth submitted the building permit application
to the city. Kenneth believed that the city would quickly issue
the building permit because Intershell already obtained several
environmental-related permits, including the OOC. On February
22, GEM brought a barge and other equipment to the job site. At
that time, Kenneth informed Rome that he had not yet received
the building permit. A few days later, Jonathan and another GEM
employee performed some preparation work on the job site,
including removing debris and preparing to demolish and remove a
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concrete slab. GEM spent between $5,000 and $6,000 to complete
this work.
On February 27, Kenneth contacted the city's building
department to inquire about the status of the permit application
and learned that the conservation commission was "holding up"
approval of the application. Kenneth then contacted the
conservation commission and was told that the permit application
had to be denied because the OOC previously obtained by
Intershell was not valid. Kenneth immediately told Rome and, in
turn, Rome took prompt action to obtain a new OOC.
Rome kept Kenneth apprised of the status of the OOC, but
its issuance was delayed by the conservation commission. When
it became clear that the new OOC would not issue in time for GEM
to obtain a building permit and complete the project by June 1,
Intershell took the position that the contract was null and void
and offered to cover GEM's costs thus far. GEM continued to
offer to complete the project once the permit issued.
In April, Rome directed Kenneth to remove its barge and
equipment, and GEM did so. In May, Rome requested that Kenneth
return Intershell's $100,000 and stated that the parties could
discuss GEM performing the work in the coming fall or winter.
GEM continued to offer to perform under the agreement once the
permit was obtained. That same month, Rome suggested that GEM
provide a new bid consistent with the lower bid prices that it
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previously received (between $220,000 and $265,000) because the
parties' agreement was "no longer valid" and Intershell was not
willing to pay "the premium" price for the project given that
the June 1 deadline could not be met. In June, Rome notified
Kenneth that Intershell received the OOC and was ready "to make
a plan for the work." Kenneth responded that the parties'
attorneys should have further discussions. Intershell later
awarded the project to another company for $219,000.
3. The judge's findings. In August, Intershell brought an
action for breach of contract and violation of G. L. c. 93A.5
GEM brought counterclaims for breach of contract, breach of the
covenant of good faith and fair dealing, and violation of G. L.
c. 93A. The matter proceeded to a jury-waived trial where Rome,
Kenneth, and Jonathan testified. After hearing the parties'
evidence, the judge allowed each party's motion for involuntary
dismissal of the other's c. 93A claim.
Following the trial, the judge entered written findings on
the parties' breach of contract claims and GEM's breach of the
covenant of good faith and fair dealing claim, the relevant
portions of which are summarized as follows. The judge found
that the parties entered into a valid contact that required GEM
5 Intershell also brought a fraud claim that was dismissed
prior to trial. The parties make no argument about that claim
on appeal.
6
to complete the project, and to remove its equipment and barge
by June 1. The requirement that GEM obtain a building permit to
complete the work by June 1 was a condition precedent to the
parties' performance under the contract. Because that condition
could not be met through no fault of the parties, the contract
was unenforceable and neither party was in breach. Intershell
also did not breach the implied covenant of good faith and fair
dealing because Intershell acted in good faith and made
expeditious attempts to obtain a new OOC.
As to the $100,000 that Intershell paid to GEM, the judge
found that payment was a deposit that must be returned.
Nonetheless, the judge found that GEM was entitled to be paid
for the services it rendered under the doctrine of quantum
meruit and that the fair and reasonable value of the work
performed by GEM in preparation for the project was $5,000. In
light of these findings, the judge ordered that GEM return
$95,000 of the deposit to Intershell. The judge further ordered
that "[n]o party is entitled to recover interest (because no
monetary judgment shall enter) or their costs." Judgment then
entered and this cross appeal followed.
Discussion. "We review a judge's findings of fact under
the clearly erroneous standard and his conclusions of law de
novo." Casavant v. Norwegian Cruise Line Ltd., 460 Mass. 500,
503 (2011).
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1. Condition precedent. GEM first argues that the judge's
finding that the contract included a condition precedent was
clear error. "A condition precedent defines an event which must
occur before a contract becomes effective or before an
obligation to perform arises under the contract." Massachusetts
Mun. Wholesale Elec. Co. v. Danvers, 411 Mass. 39, 45 (1991)
(Massachusetts Mun.). A condition precedent may be expressly
created by the parties, usually through the use of "[e]mphatic
words" in the contract (citation omitted). Id. at 46. A
condition precedent also may be implied in fact if "the intent
of the parties to create one is clearly manifested in the
contract as a whole." Id. See Restatement (Second) of
Contracts § 226 comments a and c (1981); 8 T. Murray, Corbin on
Contracts § 30.10 (rev. ed. 2018).
"Where, as here, the terms of an oral agreement are in
dispute, the finder of fact determines the terms of any
agreement 'from the conversation of the parties and their
conduct'" (citation omitted). Twin Fires Inv., LLC v. Morgan
Stanley Dean Witter & Co., 445 Mass. 411, 420 (2005). "Where
the dispute concerns a condition precedent, 'a court looks to
the parties' intent to determine whether they have created a
condition precedent. To ascertain intent, a court considers the
words used by the parties, the agreement taken as a whole, and
surrounding facts and circumstances'" (citation omitted). Id.8
Here, the judge made explicit findings that at the time
they entered into the agreement, the parties clearly understood
and agreed to the following. First, that the work on the
project could not be performed until GEM secured the building
permit from the city. Second, that the project must be
completed, and GEM's barge and equipment must be removed from
the job site by June 1, as this deadline was an essential and
material term of the parties' agreement. Although those terms
were not reduced to writing, the judge's finding that the
parties orally agreed to these terms was adequately supported by
Rome's testimony at trial and the parties' written
communications in evidence.6
The judge properly considered this evidence when
determining that the parties intended the contract to contain a
condition precedent. This was not clear error. See Tilo
Roofing Co. v. Pellerin, 331 Mass. 743, 746 (1954) (parties
orally agreed to condition precedent that written agreement not
effective until defendants satisfied as to quality of
plaintiff's work). See also Twin Fires Inv., LLC, 445 Mass. at
6 The judge did not credit Kenneth's testimony that the June
1 deadline was not firm and that GEM could complete the work in
the fall. On that point, the judge instead credited Rome's
testimony and other evidence to the contrary, and we defer to
the judge's findings on that point. See Twin Fires Inv., LLC,
445 Mass. at 421 (judge's findings resolving disputes over
content of oral conversations entitled to deference).
9
421 (where parties' intent must be deduced from conflicting
testimony, "we accord particular deference to the judge's
findings"). Moreover, where that condition precedent was
unfulfilled through no fault of the parties, the judge correctly
concluded that the contract was unenforceable and thus neither
party was in breach.7 See Massachusetts Mun., 411 Mass. at 45.
2. Order to return deposit. a. Deposit. GEM next argues
that it was entitled to keep the $100,000 paid by Intershell at
the January 25 meeting because it was a nonrefundable
installment payment and not a deposit. In support, GEM points
to written bid that sets forth "payment terms," which required
the first of the three payments to be made on acceptance of the
bid.
As an initial matter, we note that the bid discusses
"payment terms" but not deposits or installments. Regardless,
the judge found that the parties orally agreed to modify the
payment terms at the January 25 meeting by reducing the amount
due on acceptance. More importantly, the judge made a specific
For the same reasons, GEM's claim that Intershell breached
7
the covenant of good faith and fair dealing fails, see Uno
Restaurants, Inc. v. Boston Kenmore Realty Corp., 441 Mass. 376,
385 (2004) (implied covenant of good faith and fair dealing does
not "create rights and duties not otherwise provided for in the
existing contractual relationship"), as does its related claim
for a violation of G. L. c. 93A.
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finding that the parties intended for the payment made at the
January 25 meeting to be treated as a deposit.
Conflicting evidence was presented on the nature of the
payment, but there was ample evidence to support the judge's
finding of a deposit. For example, ten days before the January
25 meeting, Rome informed Kenneth via text message, "I will go
ahead with your offer and will be ready with a deposit early
next week." Kenneth did not contest Rome's characterization of
the deposit and simply responded, "Great I'll plan on seeing you
next week." Moreover, Rome testified that the parties
negotiated "a requirement of [a] deposit for $100,000." The
nature of the payment turned on the parties' intent and we defer
to the judge's finding on this point. See Twin Fires Inv., LLC,
445 Mass. at 421. See also Rood v. Newberg, 48 Mass. App. Ct.
185, 191 (1999) ("If the trial judge makes one of several
possible choices of what facts are supported by the evidence,
the judge's choice is not clearly erroneous" [citation
omitted]).
b. Cost of GEM's preparation work. GEM next argues that
the judge committed clear error by disregarding its evidence of
the costs for its preparation work. However, the judge's
finding that "the value of the labor and materials to GEM for
bringing the barge and equipment to the job site, and for
performing the preparation work was approximately $5,000 to
11
$6,000," was amply supported by Jonathan's own testimony.
Jonathan testified as to the work that GEM completed between
February and April. When asked if he had "any estimate as to
the costs incurred for that period of time," Jonathan responded,
"I think in the tune of, direct out-of-pocket cost, for those
specific items, was probably 5 or $6,000."
Although GEM also sought to recover additional costs from
Intershell (including $50,000 for the two-month period that
equipment owned by GEM was at the project site and $20,000 for
business overhead), the evidence on these costs consisted only
of brief testimony from Jonathan and a single-page spreadsheet
that Jonathan created in preparation for GEM's bid on the
project. The judge did not commit clear error in rejecting that
minimal evidence of GEM's additional costs and instead
determining that $5,000 constituted a fair and reasonable value
for the services rendered.
c. Prejudgment interest. Intershell's sole argument on
cross appeal is that it was entitled to prejudgment interest
under G. L. c. 231, §§ 6C and 6H. GEM counters that no such
interest is permitted because the judge's order to return the
deposit did not constitute a damages award.
In relevant part, G. L. c. 231, § 6C, provides as follows:
"In all actions based on contractual obligations, upon a
verdict, finding or order for judgment for pecuniary
damages, interest shall be added by the clerk of the court
12
to the amount of damages, at the contract rate, if
established, or at the rate of twelve per cent per annum
from the date of the breach or demand."
The statute also applies to quantum meruit damages. See Peabody
N.E., Inc. v. Marshfield, 426 Mass. 436, 444-446 (1998). "[T]he
policy underlying G. L. c. 231, § 6C, is that '[p]rejudgment
interest serves to compensate [a party] for the loss of use of
money wrongfully withheld'" (citation omitted). Henry v.
Morris, 62 Mass. App. Ct. 714, 717-718 (2004).8
We turn then to whether the statute applies to the judge's
order for the return of Intershell's deposit. The circumstances
here are analogous to those in National Starch & Chem. Co. v.
Greenberg, 61 Mass. App. Ct. 906, 906 (2004) (National Starch),
which pertained to an agreement for the sale of commercial
property. The agreement allowed the seller to retain the
buyer's deposit as liquidated damages if the buyer breached the
agreement. See id. The agreement also included a mortgage
contingency clause that provided that the agreement was "void
without recourse to the parties" and the buyer was entitled to
return of her deposit if the buyer provided timely written
notice that she was unable to obtain financing. Id. The
8 "General Laws c. 231, § 6H, is a 'catch-all interest
provision,' that 'reflects the Legislature's intent that
prejudgment interest always be added to an award of compensatory
damages'" (citations omitted). Governo Law Firm LLC v.
Bergeron, 487 Mass. 188, 198–199 (2021).
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parties disputed whether they agreed to extend the deadline to
comply with mortgage contingency clause, but ultimately the
buyer did not obtain financing. See id. at 906-907. Both
parties requested the deposit from the escrow agent and the
agent refused to release the funds to either party. See id at
907. The seller then brought an action to recover the deposit
on grounds that the buyer was in breach. See id. The court
concluded to the contrary, finding that the agreement was "void
without recourse" because the buyer timely exercised her right
under the mortgage contingency clause. Id. The court ordered
the deposit to be returned to the buyer and awarded prejudgment
interest under G. L. c. 231, §§ 6C and 6H. National Starch,
supra. As to the interest, the court held that the buyer was
entitled to prejudgment interest because the seller demanded the
deposit from the escrow agent at the point in time when the
agreement was void and that demand "did deprive the buyer of
funds to which she was then rightfully entitled." Id. Cf.
Henry, 62 Mass. App. Ct. at 718 (prejudgment interest not
required under National Starch where buyer-plaintiffs did not
seek return of deposit, only specific performance, and judge
made no finding that deposit was wrongfully withheld).
Here, after it became clear that the permit would not issue
in time for the work to be completed by the June 1 deadline,
Intershell requested that GEM return its deposit less GEM's
14
expenses for the preparation work. GEM refused to do so and
took the position that it was "not contractually obligated to
refund any portion of the first payment due to delays in the
permit process." Ultimately, Intershell initiated this action
to recover the $100,000 deposit. Although the judge did not
explicitly find that the deposit was "wrongfully withheld," the
facts as found suggest that threshold was met for the same
reasons as in National Starch.
We recognize that G. L. c. 231, § 6C, sets forth different
events that trigger the accrual of prejudgment interest -- i.e.,
the date of breach (of which there was none here), demand, or
commencement of the action. When prejudgment interest begins to
accrue is a question for the fact finder.9 See Aronovitz v.
Fafard, 78 Mass. App. Ct. 1, 10 (2010). Accordingly, we remand
the case for further consideration on the issue of prejudgment
interest.
Conclusion. We vacate so much of the judgment entered
April 6, 2023, as declined to award prejudgment interest. In
all other respects, the judgment is affirmed. The case is
9 GEM argues that a trial judge may adjust an award of
prejudgment interest if it would "result in a windfall for
plaintiffs amounting, in essence, to an award of punitive
damages." Sterilite Corp. v. Continental Cas. Co., 397 Mass.
837, 841 (1986). See Nissan Autos. of Marlborough, Inc. v.
Glick, 62 Mass. App. Ct. 302, 311 (2004). However, the judge
made no such finding here.
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remanded for reconsideration of prejudgment interest and entry
of an amended judgment consistent with this memorandum and
order.
So ordered.
By the Court (Meade,
Englander & Hodgens, JJ.10),
Clerk
Entered: October 4, 2024.
10 The panelists are listed in order of seniority.
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