Sharp v. Hylas Yachts, LLC

United States Court of Appeals
For the First Circuit
Nos. 16-1917, 16-1923
NELSON R. SHARP; DESTINY YACHTS, LLC,
Plaintiffs-Appellees/Cross-Appellants,
v.
HYLAS YACHTS, LLC,
Defendant-Appellant/Cross-Appellee,
GMT COMPOSITES, INC.; FORESPAR PRODUCTS CORP.,
Third Party Defendants-Appellees,
MASTERVOLT, INC.,
Third Party Defendant.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Jennifer C. Boal, U.S. Magistrate Judge]
Before
Lynch, Kayatta, and Barron,
Circuit Judges.
Jeffrey S. Baker, with whom Baker and Associates, Daniel P.
Tarlow, and Copani, Tarlow & Cranney, LLC were on brief, for
defendant-appellant.
Robert E. Collins, with whom Clinton & Muzyka PC was on brief,
for third-party defendant-appellee GMT Composites, Inc.
Stefan L. Jouret, with whom Jouret LLC, Warren D. Hutchison,
and LeClair Ryan PC, were on brief, for plaintiffs-appellees.
September 22, 2017
KAYATTA, Circuit Judge. Following an eleven-day jury
trial and verdict, the district court entered judgment against
Hylas Yachts, LLC and in favor of plaintiffs Nelson Sharp and his
LLC, Destiny Yachts, in the amount of $663,774 plus interest and
costs, on account of numerous defects in a brand-new yacht that
Hylas custom built and sold to plaintiffs. Both sides appeal.
For the following reasons, neither side persuades us to upset the
judgment.
I. Background
To frame the principal issues raised on this appeal
(Hylas's challenges to the verdict and plaintiffs' challenge to
the judgment as a matter of law entered on one of its claims), we
summarize the relevant evidence as a reasonable factfinder might
have viewed it most favorably to plaintiffs. See Atl. & Gulf
Stevedores, Inc. v. Ellerman Lines, Ltd., 369 U.S. 355, 364 (1962);
Acevedo-Garcia v. Monroig, 351 F.3d 547, 565 (1st Cir. 2003).
Our summary begins in June of 2009, when Sharp and Hylas
signed a contract for the purchase and sale of a new seventy-foot
yacht, to be named "Destiny," for $1.99 million. A semiretired
mechanical engineer with a background in hydraulics, Sharp had
owned a boat before—two years prior, he had purchased a fifty-
four-foot sailboat from another company—but never a vessel as big
as the one he planned to buy from Hylas, a luxury yacht seller in
Marblehead, Massachusetts.
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The purchase agreement between Sharp and Hylas included
detailed provisions devoted to the yacht's commissioning, the
delivery and closing, and assorted warranties. The agreement
provided that the yacht would be commissioned in Ft. Lauderdale,
Florida, and commissioning would "include all work necessary to
install all equipment . . . and place same in good and proper
operating condition." The agreement also included a warranty
provision in which Hylas guaranteed that the yacht delivered to
Sharp would be "of excellent quality, of good workmanship and
materials, seaworthy and suitable for its intended use of extended
ocean cruising." Hylas agreed "for a period of three (3) years
after Delivery, to either fix any warranty defects by the factory
or reimburse [Sharp] for the cost incurred in fixing it." And
Hylas agreed to indemnify Sharp from claims brought by Hylas's
subcontractors and suppliers, and to pay attorneys' fees incurred
by Sharp in handling such claims.
To build the yacht, Hylas contracted with a number of
vendors who supplied, installed, and serviced certain components
of the yacht. GMT Composites, Inc. supplied the boom (a "long
spar used to extend the foot of the sail") and all boom-related
components, including the boom-furling system, part of the
gooseneck assembly, the mandrel, and the pawl assembly. Forespar
Products Corp., another vendor, supplied the mast, the plates
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connecting the mast to the gooseneck assembly, and other parts of
the gooseneck assembly.
Sharp made a substantial down payment to Hylas on
July 12, 2010, from his personal bank account. The remaining
balance was paid at closing from a bank account held by Destiny
Yachts, LLC, a limited liability company Sharp set up. When Sharp
closed on and took possession of the yacht on December 4, 2010, he
did so on Destiny Yachts' behalf as its sole member. From that
point forward, Destiny Yachts owned Destiny in full.
After taking possession of the yacht, Sharp sailed from
Ft. Lauderdale toward St. Thomas in the Caribbean on December 4.
About four or five hours into the maiden journey, Sharp noticed a
hydraulic fitting leaking. He turned the boat around and a Hylas
employee in Ft. Lauderdale met him the following morning and
tightened the fitting. Within a day and a half of Sharp's second
departure from Ft. Lauderdale, though, the fitting began to leak
again. A more "massive failure" occurred a few days later when
the boom came loose, the furling motor connections and hydraulic
lines broke, and hydraulic oil spilled on Destiny's deck. When
Destiny arrived in St. Thomas, Hylas and GMT arranged for a local
rigging company called Island Rigging to repair the boom and the
hydraulics.
Between January 4, 2011, and February 26, 2011, Destiny
sailed through the Caribbean to Grenada. The yacht had numerous
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other problems during its journey, including hydraulic system
malfunctions, malfunctions of the electronic throttle, a broken
generator, failing battery chargers, and toilet malfunctions.
Sharp corresponded repeatedly with Hylas and GMT, expressing his
dissatisfaction with the services Hylas was rendering and
frustration with the continuing problems his crew was
experiencing. Sharp later recalled spending several weeks in
Grenada trying to repair the hydraulic system, which continued to
fail, and the charging system, which by this point "was almost
non-existent." When Sharp could not get these systems repaired,
he decided to return to Ft. Lauderdale so that Hylas could effect
repairs before Destiny would continue on to the Mediterranean.
On April 7, 2011, the yacht left Grenada for
Ft. Lauderdale. During the trip, the clevis pin fell out of the
boom, causing the boom to completely fall off the mast. Sharp
eventually put in at Ft. Lauderdale to undergo repairs. Hylas
sent the hydraulic system manufacturer to replace the controls for
the hydraulic system, and sent the charging system manufacturers
to replace the charging system. A GMT technician repaired the
damage done when the boom fell.
Problems continued to arise. They included boom-
fitting, mandrel, foot-track, and hydraulic oil issues. Destiny
eventually docked in Newport, Rhode Island, where it underwent
eight days of repairs. Graham Robertson, who joined the crew as
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Destiny's captain in June 2011, recalled that GMT performed all of
the repairs; nobody from Hylas was involved.
On June 23, 2011, Destiny left Rhode Island for the
Mediterranean. Sharp received an email from Hylas's vice
president, Kyle Jachney, the day before the yacht departed, stating
that Jachney planned to come see the yacht and conduct sea trials.
Destiny departed before Jachney made it, however. While the yacht
was sailing across the Atlantic, Robertson noticed that in addition
to emerging problems with the mandrel foot track and the sail
feeder, the bolts in the boom fitting connecting the boom to the
mast appeared to be loosening. Destiny could not be sailed, and
had to travel using a motor to get to the Azores for repairs;
nobody there could fix it, so it made its way unrepaired to Palma
de Mallorca.
On June 27, 2011, Sharp forwarded to Jachney an email he
had received from Robertson describing all of these problems, and
Sharp asked Jachney to "provide your insights and suggested course
of action." Roughly two weeks later, Sharp, who had at this point
made his way to Palma de Mallorca to tend to Destiny, emailed
Jachney again to state that he had received no response to his
email request, and that he and Destiny's crew were going to
"proceed[] to the best of [their] ability to effect a fix that
will still salvage part of the Summer in the Mediterranean." Sharp
indicated that he would be forced to conduct repair work and he
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expected Hylas to reimburse him for the work and the value of the
lost use of the yacht. He also reminded Jachney that Hylas did
not ever provide Destiny's hydraulic system schematics despite
Sharp's request for them in early May 2011.
Taking the advice of mechanics who said some of the parts
connecting the boom and mast were undersized, Sharp had the mast
connection rebuilt and increased the size of the clevis. Still,
subsequent emails he sent to Jachney and David Schwartz, the
president of GMT, alerted Hylas and GMT that Destiny continued to
experience problems with loosening screws and bolts in the boom
along with continual hydraulic leaks.
On July 31, 2011, Destiny left Palma de Mallorca and
experienced more problems, this time with the pawl (the component
used to raise and lower the sail). After stopping for more repairs
in Sardinia, Destiny resumed its journey through the Mediterranean
on August 5, 2011.
On October 13, 2011, plaintiffs sued Hylas, alleging
breach of contract, breach of warranties, negligence,
misrepresentation, and violations of Massachusetts General Laws
chapter 93A. Hylas impleaded GMT and Forespar, and GMT leveled
fourth-party contract claims against plaintiffs based on a bill it
issued that was allegedly never paid.
As Destiny headed back across the Atlantic in November
2011, more screws in the boom-to-mast connection broke or loosened.
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Robertson noticed that bolts in the gooseneck were shearing; he
instructed the crew to check them twice a day, and at least one
bolt required tightening at each check. The pawl assembly again
had problems, as did the bolts in the gooseneck assembly, so the
yacht sailed the last few days into the Carribean under reduced
sail. After the yacht made its way to Newport, Rhode Island from
Ft. Lauderdale in June 2012, Sharp eventually had the boom replaced
in early September 2012. No further significant problems ensued.
The case went to trial in July 2015. Plaintiffs claimed
damages of $1,019,066, consisting of $320,000 in lost charter
revenue, $364,514 in depreciation during the 8-1/2 months when
Destiny could not be used, $140,789 to replace the gooseneck and
boom, and assorted lesser amounts for other repairs, travel, lost
time, and marina and diversion expenses.
The jury signed a special verdict form in which they
found that Hylas's breach of contract and breaches of implied and
express warranties rendered it liable to Sharp in the amount of
$663,774. The jury also found that GMT breached its contract with
Hylas and breached an express warranty and implied warranties of
merchantability and workmanlike conduct, and that at least one of
these breaches proximately caused harm to Hylas. But the jury
found that Hylas was entitled to no damages from GMT, the liability
findings notwithstanding. The jury found against Hylas on all of
its contract claims against Forespar, and found that plaintiffs
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did not breach a contract with GMT or become unjustly enriched by
failing to pay an unpaid bill. A few months later, the magistrate
judge found against plaintiffs on their chapter 93A claims.
Hylas's post-trial motions were denied, and Hylas and plaintiffs
both appealed.
II. Discussion
Hylas complains that the jury verdict holding it liable
to Sharp for a substantial sum was necessarily inconsistent with
the jury's verdict that GMT, the boom supplier, breached
contractual commitments and warranties given to Hylas, yet owed
Hylas no damages. Hylas also argues that the district court
improperly dismissed its indemnification claim against GMT, and
that the verdict was tainted by erroneous instructions, improperly
admitted evidence, and a failure to hold Sharp accountable for the
spoliation of evidence. Plaintiffs, in turn, press on cross appeal
the contention that they were entitled as a matter of law to
multiple damages and attorneys' fees under Massachusetts state
law. Mass. Gen. Laws ch. 93A, § 11. As we will explain, none of
these arguments persuade us.
A. Damages evidence
Hylas claims that the trial court abused its discretion
in allowing plaintiffs to put into evidence and claim as damages
the $320,000 in alleged lost charter revenues and the roughly
$536,000 in depreciation, crew salaries and expenses, fuel costs,
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marina charges, and Sharp's own time and expense. In maritime
law, such amounts are sometimes referred to as "demurrage" or
"detention damages." Hylas's argument is that Destiny was a
pleasure craft owned for personal use, not a commercial charter,
hence detention damages are not recoverable in this breach of
contract action.
Hylas rests this argument on the Supreme Court's
decision in The Conqueror, 166 U.S. 110 (1897), a case in which
the Court found that the owner of a pleasure yacht could not
recover damages for loss of pleasure use. Id. at 133. The Court
observed that "the loss of profits or of the use of a vessel
pending repairs, or other detention, arising from a collision or
other maritime tort, and commonly spoken of as 'demurrage,' is a
proper element of damage," but only "when profits have actually
been, or may be reasonably supposed to have been, lost, and the
amount of such profits is proven with reasonable certainty." Id.
at 125. With no evidence that the yacht owner had any interest in
engaging the vessel in "profitable commerce," the Court found that
such proof was lacking. Id. at 133.
The Conqueror arose under markedly different
circumstances: It disposed of an action alleging a maritime tort
under admiralty law, not contract claims possibly governed by
Massachusetts law. Hylas does not expressly argue that federal
maritime law applies, nor do plaintiffs argue that it does not.
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Notably, however, the parties did not object to the district
court's instruction to the jury that plaintiffs are not entitled
to any damages based on "any loss of use . . . for recreational
purposes," because "[m]ere inconvenience arising from an inability
to use the vessel for purposes of pleasure is not recoverable."
They also agreed to the district court's instruction that lost
profits and lost charter revenues could be recovered if proven
"with a reasonable degree of certainty." These instructions
suggest that the parties implicitly agreed to the application of
The Conqueror's framework in this case. We therefore assume,
without deciding, that The Conqueror applies fully to plaintiffs'
claims; hence, Sharp cannot recover damages for lost pleasure use
of a pleasure vessel.
Observing that plaintiffs did not produce brochures,
hire a broker, or otherwise make any effort to charter Destiny at
any point during the several months they claimed losses prior to
filing suit, Hylas argues that it was inappropriate for the jury
to consider evidence of the damages plaintiffs allegedly incurred
in lost profits and use of Destiny pending repairs.1 The
1Specifically, Hylas takes issue with Trial Exhibit 38, a
summary of Sharp's calculations of the damages he sought against
Hylas, which was admitted over objection during Sharp's testimony
at trial. Because we find that it was not an abuse of discretion
for the magistrate judge to allow Sharp's testimony and evidence
concerning detention and demurrage damages, we need not address
plaintiffs' argument that Hylas failed to preserve its objection
by not repeating its objection at the time Exhibit 38 was finally
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Conqueror's holding, however, is not so broad. While it does
provide that the owner of a pleasure craft may not recover based
on the loss of pleasure use that occurs when a vessel needs
repairs, it does not purport to bar the owner of a multipurpose
vessel from recovering damages attributable to lost business use.
See Oswalt v. Resolute Indus., Inc., 642 F.3d 856, 864–65 (9th
Cir. 2011) (distinguishing The Conqueror and affirming an award of
business-related and nonspeculative loss-of-use damages). The
Conqueror did not reach so broadly because the record was devoid
of any testimony "tending to show that [the vessel owner] bought
[the vessel] for hire, or would have leased [the vessel] if he had
been able to do so." 166 U.S. at 133–34. Circuit courts have, in
turn, adopted a rule allowing owners of multipurpose vessels to
recover detention and demurrage damages where owners can show with
"reasonable certainty" that those damages arose from lost business
use rather than lost pleasure use. See, e.g., Cent. St. Transit
& Leasing Corp. v. Jones Boat Yard, Inc., 206 F.3d 1373, 1376–77
(11th Cir. 2000); Oswalt, 642 F.3d at 864–65.
According to Hylas, the "reasonable certainty" standard
can only mean that "to be awarded damages for lost profits, a
recreational vessel must have a history of income. Absent such
history, these damages are too speculative and cannot be awarded."
entered into evidence and by stipulating to the admission of
another exhibit containing a copy of the contents of Exhibit 38.
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But no court has crafted so strict a rule. Instead, courts have
consistently observed that "what constitutes 'reasonable
certainty' is of necessity a fact-intensive inquiry in which the
issue of evidentiary sufficiency can only be determined on a case-
by-case basis." Yarmouth Sea Prods., Ltd. v. Scully, 131 F.3d
389, 395 (4th Cir. 1997). Although courts typically require a
showing that the vessel "has been engaged, or was capable of being
engaged in a profitable commerce," Delta S.S. Lines, Inc. v.
Avondale Shipyards, Inc., 747 F.2d 995, 1001 (5th Cir. 1984)
(internal quotation marks omitted), we have previously stated:
The burden of proof imposed on a vessel owner
claiming demurrage is not excessive:
"It is not necessary for him to show by
direct evidence that he would have employed
his vessel . . . . It suffices if he shows a
state of facts from which a court or jury can
find that there was an opportunity to do so,
and that he would have availed himself of it."
Trans-Asiatic Oil Ltd., S.A. v. Apex Oil Co., 804 F.2d 773, 782
(1st Cir. 1986) (quoting Skou v. United States, 478 F.2d 343, 346
(5th Cir. 1973)); see also Jackson v. Innes, 121 N.E. 489, 491
(Mass. 1919) (citing The Conqueror for the proposition that a
defendant "cannot avoid liability" for "the loss of the use of [a]
boat during [a] period of detention" merely because "no income was
derived from it," and observing that "evidence of the fair market
rental value for the use of the boat was admissible on the question
of damages").
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Hylas's fallback argument is that the evidence was
insufficient to warrant treating Destiny as other than a pleasure
craft for the noncommercial use of Sharp and his friends and
family. Hylas notes that the evidence shows that the insurance
policy on Destiny covered only Sharp's private use of the yacht,
and that Sharp did not take a business deduction on the yacht when
he filed his taxes the year he made the purchase. But the record
also includes Sharp's testimony that he formed Destiny Yachts LLC—
prior to closing on and taking possession of Destiny—"because [he]
was going to charter the yacht," so he "wanted to put it into,
essentially, a corporate shell." Sharp explained that seventy-
foot yachts like Destiny are very expensive to maintain, and he
did not plan to live his life at sea, so he intended from the start
to charter the yacht during the extensive amount of time each year
that he himself would be unavailable to sail. The record also
included undisputed evidence that Destiny was eventually regularly
chartered at a rate of $20,000 per week after all repairs were
completed. The fact that this occurred after suit was filed is a
talking point for Hylas's attorney, but not a bar to a jury
concluding that Sharp would have "availed himself" of the
opportunity to charter Destiny sooner if it were not for the
yacht's constant need of repairs. Trans-Asiatic Oil, 804 F.2d at
782.
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All in all, the trial court had before it a mixed record,
with some evidence supporting the conclusion that Sharp would have
chartered the yacht but for its troubles, and other evidence
pointing to the contrary. This is why we have jurors. And in
this case, the duly empaneled jurors were properly instructed that
plaintiffs had to prove their lost profits to a "reasonable degree
of certainty." On such a record, the trial court certainly did
not abuse its discretion in allowing plaintiffs to offer their
evidence of damages for the jury's evaluation.
B. Spoliation of evidence
In June of 2012, plaintiffs notified Hylas that they
planned on replacing the boom in September. Seven weeks later,
Hylas requested to conduct a sea trial of Destiny. The following
week, Hylas conducted an inspection of Destiny, and voiced no
concerns regarding the vessel's seaworthiness. On August 31, the
magistrate judge ordered plaintiffs to turn over the yacht to Hylas
for a sea trial. When plaintiffs did so the following week, the
yacht was unsafe to sail. Before Hylas could reschedule a sea
trial, plaintiffs replaced the boom. Hylas claimed that by
replacing the boom, plaintiffs had effectively and in bad faith
destroyed evidence. It moved for sanctions, seeking dismissal or
at least an instruction to the jury that they were "entitled in
[their] deliberations to draw a negative inference form [sic] the
fact that the Plaintiffs have precluded by their conduct the
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Defendants from adequately and fairly testing the components while
the Yacht is under sail."
In response to Hylas's request for dismissal, the
district court held a two-day evidentiary hearing on spoliation.
The court ultimately concluded that "the vessel was delivered for
the sea trials in a conditions [sic] in which it was dangerous to
sail." For that reason, the district court ordered plaintiffs to
"pay the defendants' reasonable expenses in arranging to be present
at the sea trial." The district court declined, however, to
dismiss plaintiffs' claims against Hylas. Later, the district
court also declined to give an adverse-inference instruction to
the jury concerning spoliation of evidence. On appeal, Hylas
challenges the district court's refusal to grant its requests,2
which we review for abuse of discretion. See Booker v. Mass. Dep't
of Pub. Health, 612 F.3d 34, 46 (1st Cir. 2010).
Neither an adverse-inference instruction nor dismissal
was required. Although it is true that "an adverse inference
2 In a heading in its opening brief, Hylas frames its argument
as asserting that it was an abuse of discretion not to impose "any
sanction . . . based on spoliation of evidence." (Emphasis added).
But beyond this general statement, Hylas does not advance any
further argument that the district court should have imposed some
sanction other than dismissal. Any such argument is therefore
waived. See Vallejo Piedrahita v. Mukasey, 524 F.3d 142, 144 (1st
Cir. 2008) ("It is well settled that issues adverted to on appeal
in a perfunctory manner, unaccompanied by some developed
argumentation, are deemed to have been abandoned."(internal
quotation marks omitted)).
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instruction may be allowed when a party fails to produce [evidence]
that exists or should exist and is within [the party's] control,"
Astro-Med, Inc. v. Nihon Kohden Am., Inc., 591 F.3d 1, 20 (1st
Cir. 2009), such an instruction "usually makes sense only where
the evidence permits a finding of bad faith destruction." United
States v. Laurent, 607 F.3d 895, 902 (1st Cir. 2010). The record
in this case supports a contrary conclusion: Three months in
advance, plaintiffs proactively informed Hylas that they intended
to replace the boom in early September. As best the briefs
reflect, Hylas never insisted that the replacement be put off until
after sea trials were completed. Plaintiffs sent scores of
pictures and measurements to Hylas to allow Hylas to prepare for
trial. Moreover, the record contained evidence from which the
district court could have concluded that during the two years that
passed from the time the yacht was commissioned to the date the
boom was replaced, Hylas had a number of other opportunities to
examine the boom, inspect the yacht, and conduct sea trials. Aside
from Hylas's vague reference to the generalized prejudice it
suffered from being "precluded from presenting a valid defense" to
plaintiffs' claims, Hylas is unable to explain what it thinks it
might have discovered upon inspection of the boom that it could
not learn from the materials and information plaintiffs provided,
or why the time it was given to make accommodations in light of
the impending boom replacement was insufficient. In sum, the
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district court did not abuse its discretion in concluding, in
effect, that "no adverse-inference instruction would make sense
here." Laurent, 607 F.3d at 903.
If an adverse-inference instruction was not required,
sanctioning the plaintiffs with dismissal was also not required.
"The intended goals behind excluding evidence, or at the extreme,
dismissing a complaint, are to rectify any prejudice the non-
offending party may have suffered as a result of the loss of
evidence and to deter any future conduct, particularly deliberate
conduct, leading to such loss of evidence." Collazo-Santiago v.
Toyota Motor Corp., 149 F.3d 23, 29 (1st Cir. 1998). "While a
district court has broad discretion in choosing an appropriate
sanction for spoliation, 'the applicable sanction should be molded
to serve the prophylactic, punitive, and remedial rationales
underlying the spoliation doctrine.'" Silvestri v. General Motors
Corp., 271 F.3d 583, 590 (4th Cir. 2001) (quoting West v. Goodyear
Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999)). We have
also counseled that, in light of our "prefer[ence] that
adjudications be driven by the merits of a case," McKeague v. One
World Techs., Inc., 858 F.3d 703, 707 (1st Cir. 2017), dismissal
should be granted only in extreme cases. Collazo-Santiago, 149
F.3d at 28 (citing Benjamin v. Aroostook Med. Ctr., Inc., 57 F.3d
101, 107 (1st Cir. 1995)). Here, where Hylas cannot identify the
prejudice it allegedly suffered and where the evidence fails to
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compel a finding that plaintiffs acted in bad faith, the district
court was not required to do more than it did.
C. Implied indemnity
In its first amended third-party complaint, Hylas sought
indemnification against GMT under Massachusetts law. Although
Hylas conceded that it did not have an express indemnification
agreement with GMT, Hylas claimed that it nevertheless had an
indemnity relationship with GMT under an implied contract theory
or a tort theory. See Araujo v. Woods Hole Martha's Vineyard,
Nantucket Steamship Auth., 693 F.2d 1, 2 (1st Cir. 1982)
(describing the three ways an indemnity relationship may arise).
By "implied contractual indemnity," Hylas means that, in addition
to its warranty obligations, GMT was responsible for "mak[ing]
good any loss or damage incurred by [Hylas] while acting at [GMT's]
request for [its] benefit"; in other words, for reimbursing Hylas
for any and all damages incurred by Sharp in connection with the
boom. Although the claim survived a summary judgment motion from
GMT prior to trial, it eventually fell to a motion for judgment as
a matter of law. The district court found that the record was
devoid of evidence that showed the contractual relationship
between Hylas and GMT to be of the type that can give rise to
implied indemnity. It also found that "common law" indemnification
could not be shown because common law indemnification exists under
Massachusetts law only in tort actions.
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Hylas contends that the district court erred in
dismissing the indemnity claim, arguing that the record included
enough evidence to withstand summary adjudication on the question
whether Hylas had an implied contractual indemnity relationship
with GMT.3 Pointing to evidence that GMT conducted repairs, gave
advice, offered redesigns, and interacted directly with plaintiffs
and third-party repairers of GMT components, Hylas argues that GMT
was far more than just a boom vendor that contracted with Hylas as
its vendee. Rather, says Hylas, this evidence, along with the
warranties GMT provided to Hylas on the boom and the service and
support GMT provided "above and beyond its claimed contractual
obligations," shows that GMT built a "special relationship" with
Hylas whereby Hylas would not be liable to others for any boom-
related damages. We review the district court's decision granting
GMT's motion for judgment as a matter of law de novo, viewing the
evidence and the reasonable inferences that can be drawn therefrom
in the light most favorable to Hylas. See Delgado v. Pawtucket
Police Dep't, 668 F.3d 42, 50 (1st Cir. 2012).
In contending that it had a "special relationship" with
GMT, Hylas misunderstands the way a relationship between parties
can override the absence of an express indemnity agreement to
create an indemnification obligation under Massachusetts law.
3 Hylas does not challenge the district court's finding that
common law indemnity could not be shown.
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Contrary to Hylas's contention, merely going "above and beyond"
what is required under a contract does not create a "special
relationship" that implies indemnity. Rather, for a relationship
to generate an obligation to indemnify, the relationship must be
"generally recognized" as special. Fireside Motors, Inc. v. Nissan
Motor Corp., 479 N.E.2d 1386, 1391 (Mass. 1985). Hylas does not
contend that its relationship with GMT is generally recognized as
one that establishes indemnity. Instead, it argues that a plethora
of evidence adduced at trial demonstrated that GMT was more
involved with repairs than the contract demanded, working directly
with plaintiffs, assuming primary control over everything related
to the boom, and demonstrating its willingness to be more than
merely a vendor who relinquished its handiwork to its vendee.
Hylas essentially contends that "'special factors' surround[ed] the
contractual relationship which indicate[d] an intention by one
party to indemnify [the other] in [this] particular situation."
Fall River Housing Auth. v. H.V. Collins Co., 604 N.E.2d 1310,
1313 (Mass. 1992) (quoting Decker v. Black & Decker Mfg. Co., 449
N.E.2d 641, 644 (Mass. 1983)); see also Fireside Motors, 479 N.E.2d
at 1391 (recognizing that a right to indemnification may be implied
"when there are unique special factors demonstrating that the
parties intended that the putative indemnitor bear the ultimate
liability" (internal quotation marks omitted)); E. Amanti & Sons,
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Inc. v. R.C. Griffin, Inc., 758 N.E.2d 153, 162–63 (Mass. App. Ct.
2001).
The nature of the relationship between the parties may
be relevant to whether there exist "special factors" that would
imply indemnity, but Massachusetts courts "infer[] the existence
of indemnity agreements only when the terms of the contract
themselves contemplate[] such indemnification." Larkin v. Ralph
O. Porter, Inc., 539 N.E.2d 529, 532 (Mass. 1989); see also Decker,
449 N.E.2d at 643 (distinguishing between an "implied contract of
indemnity" and a tort-based "obligation implied from the
relationship of the parties"). On the few occasions when the
Supreme Judicial Court of Massachusetts has found an implied
contractual right to indemnification, it has done so where the
natural reading of the contract itself established an indemnity
relationship between the parties. See Larkin, 539 N.E.2d at 532
(collecting cases); Monadnock Display Fireworks, Inc. v. Town of
Andover, 445 N.E.2d 1053, 1056–57 (Mass. 1983) (finding town
responsible for indemnifying a fireworks company for damages
arising from town's failure to furnish police for crowd control it
had promised to provide); Great Atl. & Pac. Tea Co. v. Yanofsky,
403 N.E.2d 370, 374 (Mass. 1980) (inferring, from "express
agreement" to make all outside repairs, existence of agreement to
indemnify for damages from failure to repair).
- 23 -
The district court correctly found that no reasonable
juror could infer the existence of an indemnity relationship from
the contract between Hylas and GMT. Although Article IV of the
contract set forth a warranty "that the Boom delivered to [Hylas]
shall be free of all defects of workmanship and engineering, to
the extent that such engineering is provided by [GMT], for one
year from the date of delivery," this was the "sole warranty" GMT
gave to Hylas, and it was "strictly limited" by express terms.
GMT warranted that it would repair components that turned out to
be defective, but Hylas would be responsible for "transportation
to and from the repair facility and for all costs associated with
removing and installing the equipment in the boat." GMT made "no
warranty . . . as to the duration of any delay necessary for
repairs," and expressly disclaimed responsibility "for any damage
to the original purchaser or any others for loss of time,
inconvenience, loss or damage to personal property, injury to
persons, loss of revenue or any other damages consequential or
otherwise." Nothing about these warranties, or any other aspect
of the contract between GMT and Hylas, signals that the parties
contemplated indemnification.4
4GMT and Hylas each devote considerable attention to the
question whether the evidence did or did not show that they had
forged an ordinary vendor–vendee relationship. But even if GMT
was contractually obligated to do more than a typical vendor, which
the evidence arguably shows here, that would not be the same as
having an indemnification obligation.
- 24 -
As a last resort, Hylas falls back on the argument that
judgment as a matter of law was inappropriate because the doctrine
of implied indemnity, at least in Massachusetts, is not well
defined, as at least one district court has noted: "Massachusetts
law on the issue of implied contractual indemnification can perhaps
best be described as unsettled." Steffen v. Viking Corp., 441 F.
Supp. 2d 245, 251 (D. Mass. 2006). According to Hylas, the fact
that the law of implied indemnity may not be fully settled in
Massachusetts should prevent a court from being able to grant
judgment as a matter of law on the issue. This argument confuses
the summary judgment requirement that the material facts be
indisputable with a nonexistent requirement that the relevant law
be clear and firmly entrenched. In the absence of evidence tending
to support the existence of the "special factors" from which
Massachusetts courts have inferred a right to indemnification, the
district court was correct to grant judgment as a matter of law in
favor of GMT.
D. Jury instructions
In its tenth instruction, the court admonished the jury
that if they found "that the boom, mast, or related components
were defective, or that repairs performed by GMT were not performed
properly, by virtue of the contract, those problems are
attributable to Hylas." Out of context, this instruction could
have been read in a rather nonsensical manner as indicating that
- 25 -
Hylas could not recover from GMT even if GMT breached its
obligations owed to Hylas. And Hylas objected on these grounds.
In context, though, the instruction was clearly directed
at explaining that, as between plaintiffs and Hylas, Hylas could
not escape liability by passing the buck to its supplier, GMT.
The trial court first described plaintiffs' breach-of-contract
claim against Hylas; then it described Hylas's waiver defense
against plaintiffs' breach-of-contract claim. Next, the court
instructed the jury on plaintiffs' breach-of-express-warranties
claim against Hylas, plaintiffs' claim that Hylas violated the
implied warranty of merchantability, and plaintiffs' claim that
Hylas violated the implied warranty of fitness for a particular
purpose. The court instructed the jury that plaintiffs' breach-
of-warranty claims could not succeed if the jury found plaintiffs
did not give reasonable notice.
Only after these instructions concerning plaintiffs'
claims against Hylas were given did the court turn its attention
to Instruction 10, explaining to the jury the law that governed
Hylas's claims against GMT. When it did, the court repeated the
elements of a breach-of-contract claim, and reminded the jury of
the elements of express- and implied-warranty claims, this time
with reference to GMT's potential liability to Hylas. The court
explained that Hylas could succeed on its claim of breach of
contract against GMT if the jury found by a preponderance of the
- 26 -
evidence that "Hylas performed its obligations under the
contract," GMT "breached or violated the contract," and "Hylas
suffered damages as a result of the breach of the contract." The
jury heard as well that Hylas would have an "entitlement to
recover" from GMT if the jury found GMT breached certain
warranties.
But, says Hylas, counsel for Forespar in closing pointed
to Instruction 10 as meaning that problems with the boom, mast, or
related components would be attributable to Hylas, rather than
Forespar. Hylas argues that that argument by Forespar spun the
instruction in a manner that would cause the jurors to conclude
that no damages should be awarded against GMT. As we have just
noted, though, the judge expressly told the jurors that Hylas would
be entitled to recover damages from GMT if the requisite findings
were made. Pointing out that Hylas—rather than Forespar—would be
liable to plaintiffs for problems with the boom is not inconsistent
with that instruction.
"[A] single instruction to a jury may not be judged in
artificial isolation, but must be viewed in the context of the
overall charge." Cupp v. Naughten, 414 U.S. 141, 146–47 (1973);
see McDonald v. Town of Brookline, 863 F.3d 57, 65 (1st Cir. 2017)
("[O]ur role is to evaluate whether the jury instructions as a
whole adequately explained the law or whether they tended to
confuse or mislead the jury on controlling issues . . . .").
- 27 -
Viewing the instructions as a whole in this case, we see no reason
to think that the jurors transplanted a portion of the plaintiffs-
versus-Hylas instructions into the Hylas-versus-GMT instructions
in a manner that would have made the latter instructions
nonsensical.5
E. Verdict inconsistency
Finally, we arrive at Hylas's central argument on
appeal: that a new trial should be ordered because the jury's
verdict was inconsistent.
The jury returned a special verdict in which it found
that Hylas (1) breached an express warranty to plaintiffs;
(2) breached an implied warranty of merchantability to plaintiffs;
(3) breached an implied warranty of fitness for a particular
purpose to plaintiffs; and (4) breached its contract with
plaintiffs. Answering "yes" to the question whether "any of the
breaches" they found caused plaintiffs harm, the jury determined
that plaintiffs were entitled to $663,774 from Hylas. Next, the
jury also found that GMT (1) breached an express warranty to Hylas;
(2) breached an implied warranty of merchantability to Hylas;
(3) breached an implied warranty of workmanlike product; and
(4) breached its contract with Hylas. Although the jury found
5
A fortiori, Hylas's identified but unpreserved objection
to Instruction 11 (like 10, but referencing the Island Rigging
repairs) fails.
- 28 -
that GMT proximately caused harm to Hylas, it ultimately concluded
that Hylas was not entitled to any damages from GMT.
Hylas does not dispute that the evidence in the record
was sufficient to show that Hylas breached its contract with
plaintiffs and breached the warranties expressly and impliedly
provided therein. Rather, Hylas contends that because the weight
of the evidence adduced by plaintiffs at trial concerned the
defective boom GMT provided and the damage caused each time the
boom collapsed, fell off the mast, or otherwise malfunctioned, the
jury's verdict awarding substantial damages to plaintiffs from
Hylas cannot be reconciled with the decision to award no damages
to Hylas from GMT, the manufacturer and servicer of the boom.
We are "substantial[ly] reluctan[t] to consider
inconsistency in civil jury verdicts a basis for new trials."
McIsaac v. Didriksen Fishing Corp., 809 F.2d 129, 133 (1st Cir.
1987) (quoting Merchant v. Ruhle, 740 F.2d 86, 91 (1st Cir. 1984));
see also Climent-García v. Autoridad de Transporte Marítimo y Las
Islas Municipio, 754 F.3d 17, 20 (1st Cir. 2014) ("The tide runs
strongly against a litigant seeking to overturn a jury verdict.").
"When a party claims that jury verdicts are inconsistent, we
'attempt to reconcile the jury's findings, by exegesis if
necessary.' This exercise involves determining whether the jury
could have, consistent with its instructions, rendered the
challenged verdicts." Davignon v. Hodgson, 524 F.3d 91, 109 (1st
- 29 -
Cir. 2008) (citation omitted) (quoting Acevedo-Diaz v. Aponte, 1
F.3d 62, 74 n.15 (1st Cir. 1993)).
It is true that plaintiffs presented a substantial
amount of evidence and testimony concerning the defective design,
manufacture, and installation of the boom provided by GMT, and the
failure of subsequent repairs (rendered by GMT) to fully resolve
the problem. But Hylas would have us conclude, from the sheer
volume of evidence demonstrating that boom failures resulted in
harm to the plaintiffs, that the jury could not consistently find
Hylas responsible for over $600,000 in damages to plaintiffs while
also finding that GMT owed Hylas nothing. For several reasons, we
disagree.
The jury was asked whether any of the breaches by GMT
were a "proximate (substantial) cause of any harm suffered by
Hylas," to which they responded, "Yes." Hylas places a lot of
weight in this answer. But all it means is that the jury concluded
that GMT's breaches were a cause of at least some of Hylas's harm.
The evidence, in turn, supported a finding that GMT fixed or paid
for fixing many problems with the boom. So, if it was these
problems that constituted GMT's breach causing harm to Hylas, the
jury may have concluded that any resulting loss to Hylas or to the
plaintiffs had already been remedied. To the extent that there
were alleged problems with the boom that GMT did not remedy, the
jury could have found those problems were caused by something other
- 30 -
than a GMT warranty breach (e.g., interfacing components, shoddy
outside repair work, or improper use6). Or the jury may not have
included other boom costs in plaintiffs' damage award.
There was, after all, evidence that the boom was but one
of many components of the yacht that suffered multiple failures of
great enough magnitude to require repair and prevent chartering.
For example, the jury heard testimony that the hydraulics—which
were used to operate "just about everything required to run the
boat"—failed "three, four times a week" when plaintiffs first took
possession of Destiny, and that Hylas's failure to provide
installation drawings or operation manuals (as required by its
contract with plaintiffs) made repair work impossible in some
situations. Sharp also testified that during some of the most
significant incidents of equipment failure, including a "[c]ouple
in particular" in which repairs to the hydraulic systems were
needed, "there were big delays in . . . communication" after he
reached out to Hylas for support. In addition, evidence was
6 For example, the jury heard evidence that Hylas changed
hydraulics systems and added a pressure intensifier to Destiny
without informing GMT. They also heard testimony that "if . . .
hooked up to the boom hydraulics, [an intensifier] could put excess
pressure above what [GMT] would assume onto [its] system," and
that the intensifier was indeed attached to the boom. On another
occasion, heard the jury, the boom fell off the mast not because
GMT failed to properly service it, but because Island Rigging
(acting on Hylas's behalf) failed to properly set screws during a
repair. And evidence was offered indicating that user error caused
at least some of the boom problems.
- 31 -
presented that after Island Rigging made repairs in St. Thomas,
Destiny experienced failures of its electronic throttle,
generator, battery chargers, and toilets. And the jury heard
testimony that the mast, too, had problems that required repair.
Sharp and Robertson both testified that a GMT technician who was
sent twice to conduct repairs on Destiny had expressed confusion
about "why he was there," because the required repairs were not
his expertise. Virtually every time Destiny was forced to stop to
fix mechanical failures, repairs were required for, and made to,
more than just the GMT boom. It is thus not necessarily true that
the damages associated with repairs were for boom failures.
Furthermore, even if the jury did award damages for some
of the expenses associated with repairing and replacing the boom,
they could have found that the damages arose from Hylas's breaches
of contract and warranty, not GMT's. To explain why, we must
briefly revisit the warranties GMT and Hylas gave.
As we mentioned above, GMT warranted to Hylas that "the
Boom delivered to [Hylas] shall be free of all defects of
workmanship and engineering, to the extent that such engineering
is provided by [GMT], for one year from the date of delivery."
GMT promised to pay to repair defectively manufactured components
it provided, but expressly stated that Hylas would be responsible
for "transportation to and from the repair facility and for all
costs associated with removing and installing the equipment in the
- 32 -
boat." GMT made "no warranty . . . as to the duration of any delay
necessary for repairs," and expressly disclaimed responsibility
"for any damage to the original purchaser or any others for loss
of time, inconvenience, loss or damage to personal property, injury
to persons, loss of revenue or any other damages consequential or
otherwise."
Hylas, by contrast, more broadly warranted that the
yacht would "be of excellent quality, of good workmanship and
materials, seaworthy and suitable for its intended use of extended
ocean cruising," and guaranteed for three years "to either fix any
warranty defects by the factory or reimburse the Buyer for the
cost incurred in fixing it." Hylas also agreed that "[a]ny defects
by the factory for issues that apply to the deck and hull for a
period of ten (10) years shall be the responsibility of [Hylas]."
An even more obvious and relevant difference between
these warranties is that GMT's warranty to Hylas does not cover
consequential damages, including all detention or demurrage
damages, which were enough by themselves to account for the entire
damage award. Therefore, plaintiffs could have suffered damages
of a consequential type that were attributable to Hylas, and for
which GMT bore no responsibility. Hylas's principal rejoinder to
this point is that the detention damages were caused by problems
with the boom, so GMT should owe Hylas damages for the cost of
repair or replacement of the boom. As we have explained, this is
- 33 -
not clearly correct. But even if the boom problems caused some of
the detention damages, it may well have been that those boom
problems were the ones for which GMT paid, or were caused by
someone other than GMT in using or repairing the yacht. Perhaps
the jury found that GMT did, in fact, breach its contract and
warranty to Hylas because the boom it provided was faulty, but did
not breach the contract's requirement that GMT pay for repairs.
After all, the jury heard evidence that all but one of the repairs
GMT performed were done at no charge to plaintiffs or Hylas, and
the one time GMT charged plaintiffs directly for the repair, no
money ever changed hands. The jury then may have found the
additional costs associated with boom repairs were for
transportation, removal or installation, delay, loss of time,
inconvenience, and loss of revenue—items expressly excluded from
GMT's warranty to Hylas, but potentially included in Hylas's
warranty to plaintiffs, to pay for whatever "cost[s]" plaintiffs
"incurred" to fix the yacht.
"An appellate court confronted with a claim of
inconsistent special verdicts 'must affirm if there is a view of
the case that makes the jury's answers to the interrogatories
consistent.'" Kavanaugh v. Greenlee Tool Co., 944 F.2d 7, 9 (1st
Cir. 1991) (quoting Mashpee Tribe v. New Seabury Corp., 592 F.2d
575, 590 (1st Cir. 1979), cert. denied, 444 U.S. 866 (1979)). For
- 34 -
the foregoing reasons, there is such a view here. Hylas's verdict-
inconsistency claim therefore fails.7
F. Chapter 93A claim
We turn now to plaintiffs' appeal. In their complaint,
plaintiffs alleged that Hylas violated Massachusetts General Laws
chapter 93A by willfully or knowingly breaching its warranties to
the plaintiffs. The parties reserved the chapter 93A claims for
post-trial disposition by the court. After trial concluded and
the jury found in favor of plaintiffs on their breach-of-contract
and warranty claims, the parties submitted proposed findings of
fact and rulings of law to the district court. The district court
found in favor of Hylas.
On appeal, plaintiffs argue that because the jury found
Hylas breached its warranties to plaintiffs, the district court
was required to find a chapter 93A violation occurred as well. In
plaintiffs' estimation, a breach of warranty under Massachusetts
law is a per se chapter 93A violation. Plaintiffs alternatively
argue that even if chapter 93A liability is not the per se rule
anytime a breach of warranty has been found, Hylas's breaches of
warranty were nonetheless deceptive and unfair in contravention of
chapter 93A. Plaintiffs therefore ask that we reverse the district
7Finding no error by the district court, we also reject
Hylas's argument that the district court abused its discretion by
refusing to order a new trial.
- 35 -
court and remand for the district court to consider whether
chapter 93A's damages multiplier should apply and to calculate an
award of attorneys' fees. We review the district court's legal
conclusions de novo, but we conduct that review based on the facts
as found by the district court except where those factual findings
are clearly erroneous. McDermott v. Marcus, Errico, Emmer &
Brooks, P.C., 775 F.3d 109, 115 (1st Cir. 2014).
Chapter 93A prohibits "unfair methods of competition and
unfair or deceptive acts or practices in the conduct of any trade
or commerce." Mass. Gen. Laws ch. 93A, § 2(a). It provides that
a court should be "guided by the interpretations given by the
Federal Trade Commission and the Federal Courts to section 5(a)(1)
of the Federal Trade Commission Act [FTCA]," id. § 2(b), and that
the Massachusetts Attorney General may implement "rules and
regulations interpreting the provisions" of Chapter 93A, section
2(a) so long as those rules and regulations are not "inconsistent
with the rules, regulations and decisions of the Federal Trade
Commission and the Federal Courts interpreting the provisions of
[the FTCA]," id. § 2(c).
Although "whether or not particular conduct violates
Chapter 93A is generally determined on a case-by-case basis,"
McDermott, 775 F.3d at 117 (citing Kattar v. Demoulas, 739 N.E.2d
246, 257 (Mass. 2000)), Massachusetts courts have identified a few
situations in which violation of some other law constitutes a per
- 36 -
se violation of chapter 93A. For example, as identified in
McDermott, the Supreme Judicial Court of Massachusetts has
recognized that a violation of the state unfair claims settlement
act, Mass. Gen. Laws ch. 176D, is itself a violation of chapter 93A
pursuant to chapter 93A, section 9(1). Id.; see Polaroid Corp. v.
Travelers Indem. Co., 610 N.E.2d 912, 917 (Mass. 1993). Likewise,
a violation of the state home improvement contractor's law, Mass.
Gen. Laws ch. 142A, has been found to be a violation of chapter 93A
not based on a standalone provision of chapter 93A so providing,
but based on language in the home improvement contractor's law
itself providing that "[v]iolations of any of the provisions of
this chapter shall constitute an unfair or deceptive act under the
provisions of chapter [93A]," Mass. Gen. Laws ch.142A, § 17.
Plaintiffs insist that this is another such situation,
and urge us to follow a regulation promulgated by the Massachusetts
Attorney General providing that "[i]t shall be an unfair and
deceptive act or practice to fail to perform or fulfill any
promises or obligations arising under a warranty." 940 Mass. Code
of Regs. § 3.08(2). But, as we explained in McDermott, "the
Attorney General is not empowered to issue regulations rendering
certain statutory violations 'per se' Chapter 93A violations."
775 F.3d at 120; see also Klairmont v. Gainsboro Rest., Inc., 987
N.E.2d 1247, 1255, 1257 (Mass. 2013) (finding a chapter 93A
violation, but holding that a knowing violation of building codes
- 37 -
was not a per se violation of chapter 93A because the Attorney
General's regulation at issue covered more than just unfair and
deceptive conduct in trade or commerce). We agree with the
district court that the Massachusetts Attorney General's
regulation does not require us to find that any and all breaches
of warranty are necessarily violations of chapter 93A.
Seizing on our statement in McDermott that there are two
"alternative paths to per se Chapter 93A liability: the text of
Chapter 93A itself, or the text of an independent statute,"
McDermott, 775 F.3d at 122, plaintiffs offer another theory: that
breach of warranty is a per se chapter 93A violation because under
the Magnuson-Moss Warranty Act (MMWA), 15 U.S.C. § 2310(d)(1), it
is unfair and deceptive for a "supplier, warrantor, or service
contractor" to fail to comply with an obligation to a "consumer"
under a written warranty. See also 15 U.S.C. § 2310(b) (stating
that it is an unfair practice to violate any prohibition listed in
this chapter, including § 2310(d)(1)). This argument, however,
comes far too late for us to pay it any mind: Plaintiffs did not
sue under the MMWA, nor did they argue to the district court that
the breaches of warranty they proved at trial satisfy the elements
of an MMWA claim; plaintiffs gave neither Hylas nor the district
court the opportunity to consider this theory, and the district
court accordingly made no related findings of fact or conclusions
of law. The raise-or-waive rule bars plaintiffs from advancing
- 38 -
this belated argument on appeal. See Tutor Perini Corp. v. Banc
of Am. Sec. LLC, 842 F.3d 71, 84–85 (1st Cir. 2016).8
With neither chapter 93A itself nor the Massachusetts
Attorney General's regulations requiring us to find per se
liability under chapter 93A, plaintiffs are left arguing that the
district court was required, under the facts of this case, to find
that Hylas's breaches of warranty were unfair or deceptive under
chapter 93A. They do so on two bases: that the district court's
findings of fact were clearly erroneous, and that its conclusions
of law were incorrect. We disagree.
The district court found that Hylas failed to deliver a
yacht "in completely sound condition with all systems and equipment
operating safely and properly," in violation of its warranties to
plaintiffs. But it also found that "Hylas'[s] failure to do so
was due in large part to its inability to conduct sufficient sea
8 In their reply brief and at oral argument, plaintiffs
attempted to explain why this is a case in which we should find
the raise-or-waive rule does not apply. See Lang v. Wal-Mart
Stores E., L.P., 813 F.3d 447, 455 (1st Cir. 2016) (rejecting an
argument that the raise-or-waive rule does not apply). In essence,
their argument—that they "could not reasonably anticipate that the
trial judge would conclude that dishonoring express and implied
warranties causing $663,774 of damage 'did not in fact produce
unfairness or deception'"—is that a party that does not know ahead
of time that the court will reject its argument should be forgiven
for failing to raise a different one. A litigant choosing not to
make an argument based on an errant assumption that a different
argument will succeed is not the type of "extraordinary
circumstance" that allows one to circumvent the raise-or-waive
rule. If it were, there would be no raise-or-waive rule.
- 39 -
trials, which was motivated by nothing more than a desire to please
its customer." In so finding, the district court was referring to
the fact that the contract anticipated that Hylas would conduct
all sea trials before Sharp finally accepted the yacht and paid
all balances due. As things played out, Hylas forewent completing
at least some sea trials it would have otherwise conducted had
Sharp not wanted to set sail as soon as possible. The court
explained that
Sharp's request to close on the sale of the
Yacht came suddenly and unexpectedly and Hylas
expected to be able to conduct further sea
trials after closing. However, the Yacht left
without adequate notice before Hylas had the
opportunity to conduct further sea trials.
The district court also found that "[e]ach time Sharp or his crew
encountered problems with the Yacht, Hylas attempted to resolve
the problem." Plaintiffs argue that these factual findings were
clearly erroneous because the court "ignored" (1) evidence that
Jachney did not believe plaintiffs prematurely departing from port
caused problems; (2) extensive evidence showing that plaintiffs
repeatedly sought repairs for numerous failures over many months;
(3) evidence showing Hylas did not reimburse plaintiffs for the
cost of replacing the boom, despite the contract between the
parties requiring Hylas to reimburse Sharp for costs incurred in
fixing the yacht; and (4) Hylas's failure to respond to plaintiffs'
demand letter, sent prior to commencing suit.
- 40 -
The district court, however, did not ignore this
evidence. The court expressly found that plaintiffs "served on
Hylas a demand for relief under Chapter 93A, Section 9," and that
"Hylas made no substantive response and no offer of settlement."
It noted that Sharp incurred the cost of replacing the boom, and
it agreed with the jury that Hylas failed to live up to its express
warranty to reimburse plaintiffs for costs associated with fixing
the yacht. It listed the numerous occasions on which Destiny
needed to be repaired, and observed that Hylas's repairs were
"ineffectual." And although the record included an email from
Jachney stating that "[t]he timing . . . as far as shaking the
yacht down I do not think was an issue," other evidence in the
record supports the district court's determination that Hylas
intended to do more extensive testing before plaintiffs took
possession of the yacht: The district court considered an email
from Jachney two days before closing disclosing his intention to
take the yacht out for a test sail and Jachney testified that
Sharp's request to close on the yacht in early December 2010 came
suddenly and did not provide adequate time to finish testing. The
email plaintiffs cite also sheds no contrary light on the district
court's conclusion concerning Destiny's abrupt departure from
Newport in June 2011, when Jachney again emailed Sharp stating
that he intended to participate in sea trials before Destiny
departed Newport.
- 41 -
In light of these factual findings, we cannot say that
the district court erred as a matter of law in finding that
"Hylas'[s] actions constituted a breach of contract and breach of
express and implied warranties," but that the breaches of
warranties in this case "did not in fact produce unfairness or
deception." While it is true that "[g]enerally, a breach of
warranty constitutes a violation of [chapter 93A]," Maillet v.
ATF-Davidson Co., 552 N.E.2d 95, 100 (Mass. 1990), neither the
Massachusetts legislature nor the Supreme Judicial Court has gone
so far as to find that all breaches of warranties are inherently
deceptive or unfair. See Evans v. Lorillard Tobacco Co., 990
N.E.2d 997, 1038 n.25 (Mass. 2013) ("[W]e decline, as we did in
Maillet, to decide whether liability should be 'imposed
automatically under [Mass. Gen. Laws ch. 93A] whenever a defendant
has violated the warranty of merchantability,' even where there is
no finding of negligence."). Where, as here, the district court
finds (without clearly erring) that the defendant made genuine but
ultimately ineffectual efforts to live up to its contractual
obligations, the mere breach of express and implied warranties is
not sufficient to mandate a finding of liability under chapter 93A.
III. Conclusion
For the foregoing reasons, we affirm.
- 42 -