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Full Opinion
United States Court of Appeals
For the First Circuit
No. 03-2111
ROGER NEUHOFF AND LOUISE NEUHOFF,
Plaintiffs, Appellants,
v.
MARVIN LUMBER AND CEDAR COMPANY; AND
MARVIN WINDOWS OF TENNESSEE, INC.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Rya W. Zobel, U.S. District Judge]
Before
Torruella, Circuit Judge,
Lipez, Circuit Judge,
and Lisi,* District Judge.
Robert L. Rossi, with whom Odin P. Anderson, was on brief, for
appellants.
Thomas H. Boyd, with whom Tiffany A. Blofield, Winthrop &
Weinstine, P.A., Scott W. Wynn and Law Office of Scott W. Wynn, were
on brief, for appellees.
June 7, 2004
*
Of the District of Rhode Island, sitting by designation.
TORRUELLA, Circuit Judge. Plaintiffs-appellants, Roger
and Louise Neuhoff (hereinafter jointly referred to as "the
Neuhoffs") brought a diversity action against defendants-appellees
Marvin Lumber & Cedar Company and Marvin Windows of Tennessee, Inc.
(hereinafter jointly referred to as "Marvin") for breach of an oral
contract, breach of implied warranty, violation of Mass. Gen. Laws
ch. 93A, and promissory estoppel. The district court granted
Marvin's motion for summary judgment on all four claims. We
conclude that the district court appropriately granted summary
judgment on the first three claims, but inappropriately granted
summary judgment on the promissory estoppel claim. We, therefore,
affirm in part and reverse in part.
I. Background
In 1991, the Neuhoffs purchased and installed sixty
windows manufactured by Marvin. In 1994, the Neuhoffs noticed that
many of the windows were decaying and notified Simon Hickman, the
contractor who installed the windows, of the decay.
The parties disagree as to when Marvin was notified of
the decay. The Neuhoffs contend that Marvin was notified in 1994
or early 1995 when Marvin's area distributor came to examine the
windows. Marvin contends that it did not learn of the decay until
late 1997 when the area distributor contacted Marvin regarding the
decay.
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In 1998, Marvin sent Roy Holthusen to inspect the
windows. The inspection showed that 56 windows had either "obvious
decay" or "incipient decay." In March 1998, Marvin sent the
Neuhoffs a letter promising to replace 33 windows for free. Several
weeks later, after inquiring about the remaining windows, the
Neuhoffs claim that Marvin's agent, Greg Muirhead, orally informed
them that the remaining windows would be replaced for free, but that
Marvin could not replace them yet due to production problems. In
1999, Marvin replaced 33 of the windows that were in the most
advanced state of decay.
In June 2000, the Neuhoffs contacted Marvin again because
the windows that had not been replaced had reached an advanced state
of decay. Marvin sent another inspector to the Neuhoffs' home.
This inspector concluded that 21 windows, including four of the
newly installed windows, had obvious decay. In January 2001, Marvin
informed the Neuhoffs that their windows would not be replaced for
free, but that the Neuhoffs could purchase replacement windows at
a 32% discount. The Neuhoffs filed suit in July 2001.
II. Standard of Review
We review summary judgment decisions de novo, viewing the
facts in the light most favorable to the nonmoving party. GTE
Wireless, Inc. v. Cellexis Int'l, Inc., 341 F.3d 1, 4 (1st Cir.
2003). Summary judgment is inappropriate if there is a genuine
-3-
issue as to any material fact. Id. It is undisputed that
Massachusetts substantive law controls.
III. Analysis
A. Breach of oral contract
The Neuhoffs allege that Marvin breached an oral contract
to provide replacement windows for free. The oral contract was
allegedly made in March 1998 when Greg Muirhead informed the
Neuhoffs that their decaying windows would be replaced once Marvin's
production problems were fixed and the windows reached a more
advanced stage of decay.
The district court held that there was not a breach of an
oral contract because the promise to replace the defective windows
constituted a remedy, not a new contract. See Neuhoff v. Marvin
Lumber & Cedar Co., 2003 U.S. Dist. LEXIS 12278, at *4 (D. Mass.
Jul. 16, 2003) (citing New England Power Co. v. Riley Stoker Corp.,
477 N.E.2d 1054, 1058 (Mass. App. Ct. 1985)). As a result, the
district court granted Marvin's summary judgment motion on this
claim. Although we disagree with the district court's reasoning,
we do not disagree with the result.
The district court's reliance on New England Power and
the cases cited therein was mistaken for several reasons. First,
in New England Power, the promises to repair were viewed as remedies
"rather than as an independent or separate warranty" because the
warranty and the promise to repair were included in the same
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contract. New England Power, 477 N.E.2d at 1058. The logic behind
New England Power is that a promise to repair does not create a
contract independent from the warranty because if it did, then
"limitations periods could be extended for virtually infinite time."
Id. In this case, however, the initial contract was executed in
1991. The promise to repair did not allegedly occur until 1998 and
was not a part of the original contract or warranty in effect.
Marvin went to great lengths to emphasize that the original contract
warranty had expired and the ten year warranty was inapplicable.
Thus, the promise to repair was independent of the warranties and
could, therefore, be breached.
Second, by applying New England Power, the district court
confuses a "promise to repair warranty" from a promise to repair
that is made after a product's defects are known. A "promise to
repair warranty" refers to a type of warranty that stipulates the
remedy to be invoked if the product purchased becomes faulty. See
Standard Alliance Indus., Inc. v. Black Clawson Co., 587 F.2d 813,
818 n.10 (6th Cir. 1978). If the promisor does not abide by the
promise to repair, then the promisee has a cause of action for the
underlying breach of warranty for the defective product. New
England Power, 477 N.E.2d at 1058. In this case, the promise to
repair made by Marvin was not the type of promise that stipulates
the remedy to be invoked in case of a defect, rather it was an
independent promise addressing a known defect.
-5-
Nonetheless, the Neuhoffs' breach of contract claim fails
because Marvin's alleged promise to repair lacked consideration.
See Geffon v. Micrion Corp., 249 F.3d 29, 35 (1st Cir. 2001) (court
of appeals may affirm a grant of summary judgment on any ground
supported by the record). A contract must have consideration to be
enforceable and "[i]n order for a contract to have valid
consideration, the contract must be a bargained-for exchange in
which there is a legal detriment of the promisee or a corresponding
benefit to the promisor." See Hinchey v. NYNEX Corp., 144 F.3d 134,
142 (1st Cir. 1998) (quotations and citations omitted).
The Neuhoffs allege three types of consideration: (1)
forbearance of their legal claims, (2) the time and labor expended
assisting Marvin in connection with Marvin's promise to replace the
defective windows, and (3) the benefit Marvin received to their
reputation by agreeing to replace the windows.
It is well-settled that "abandonment of a claim believed
to be well founded . . . is the surrender of a thing of value and
is a sufficient consideration for a contract." Blair v. Cifrino,
247 N.E.2d 373, 375 (Mass. 1969) (quotations and citations omitted).
The claim need not be "of such character in law or fact or both as
finally to commend itself to the judgment of the tribunal of last
resort," rather it need only be "well founded and made in good faith
and not frivolous, vexatious or unlawful." Id. (internal quotations
and citations omitted). But, "[m]ere forbearance to sue a claim,
-6-
without any promise either in express terms or by fair implication
from all of the circumstances, does not form sufficient
consideration . . . ." Merrimac Chem. Co. v. Moore, 181 N.E. 219,
222 (Mass. 1932). It is undisputed that the Neuhoffs never
expressed their willingness to forbear suit before or after the
promise to replace the defective windows was made. Nonetheless, the
Neuhoffs argue that their willingness to forbear suit could be
implied. An "agreement to forbear to sue may be implied when the
circumstances are such as to lead to the reasonable conclusion that
the . . . thing of value was given to induce the [other party] to
forbear." Id. The record shows that the alleged promise to replace
all of the windows was not given to induce the Neuhoffs to
relinquish a claim against Marvin. Thus, the Neuhoffs' claims of
forbearance is not sufficient for consideration since such
forbearance was neither express nor could be found by fair
implication from all the circumstances.
The Neuhoffs also claim that the time and labor expended
assisting Marvin in connection with Marvin's promise to replace the
defective windows was consideration. Actions can constitute
consideration when a promisee gives "up something which immediately
prior thereto the promisee was privileged to retain, or doing or
refraining from doing something which he was then privileged not to
do, or not to refrain from doing." Graphic Arts Finishers, Inc. v.
Boston Redevelopment Auth., 255 N.E.2d 793, 795 (Mass. 1970)
-7-
(internal citation omitted). The record contains scant evidence
indicating any time or labor expended assisting Marvin in connection
with Muirhead's promise to replace the remaining defective windows.
Rather, the record demonstrates that the actions taken by the
Neuhoffs were a result of Muirhead's letter stating that Marvin
would replace the first 33 windows. Pursuant to Marvin's letter,
for example, the Neuhoffs obtained construction bids, but only for
the first 33 windows.
The only effort expended by the Neuhoffs that related
specifically to Muirhead's alleged oral promise to replace the
remaining defective windows was effort relating to allowing a second
inspector to view the defective windows. This action was taken as
a result of the Neuhoffs' agent contacting Marvin in 2000
complaining of further window deterioration. It was not an action
that could serve as consideration for Muirhead's oral promise made
years earlier. Further, any actions taken by the Neuhoffs were
actions that they would have taken regardless of the alleged
promise. Since the Neuhoffs did not do anything which they were
privileged not to do in relation to Muirhead's promise, the
Neuhoffs' actions do not constitute consideration.
The Neuhoffs lastly claim that the benefit to Marvin's
reputation by agreeing to replace the windows was consideration for
the promise. The allegation that Marvin wanted to improve its
reputation or that the alleged promise did improve its reputation
-8-
is not supported by the record. Regardless, not every benefit is
consideration. See 2 A. Corbin, Corbin on Contracts § 5.9 (J.M.
Perillo & H.H. Bender eds., rev. ed. 1995) (stating that the joy a
grandfather receives in promising to give a child money each week
is not consideration for the promise to give him money). We cannot
conclude, based on the record, that a hypothetical and tangential
benefit to Marvin's reputation is sufficient consideration to make
Marvin's statement a binding contract.
As a result, the Neuhoffs' breach of contract claim fails
because Marvin's alleged promise to replace the remaining defective
windows lacked consideration.
B. Promissory estoppel
To prove a claim of promissory estoppel under
Massachusetts law, "a plaintiff must allege that (1) a promisor
makes a promise which he should reasonably expect to induce action
or forbearance of a definite and substantial character on the part
of the promisee, (2) the promise does induce such action or
forbearance, and (3) injustice can be avoided only by enforcement
of the promise." Carroll v. Xerox Corp., 294 F.3d 231, 242 (1st
Cir. 2002) (citing Loranger Const. Corp. v. E. F. Hauserman Co., 374
N.E.2d 306, 308 (Mass. App. Ct. 1978)).1
1
Despite adopting what is commonly known as promissory estoppel
as part of its jurisprudence, Massachusetts eschews the label
"promissory estoppel." See Loranger Constr. Corp. v. E. F.
Hauserman Co., 384 N.E.2d 176, 179 (Mass. 1979) (holding that
"[w]hen a promise is enforceable in whole or in part by virtue of
-9-
Viewing the facts in the light most favorable to the
Neuhoffs, it is clear from the record that Marvin's agent, Greg
Muirhead, promised to replace all of the decaying windows.2 The
district court believed, however, that any promise to the Neuhoffs
was ambiguous and therefore could not support a claim for promissory
estoppel. We disagree.
The traditional theory of promissory estoppel
differentiates between a promise, an offer, and a bargain. See 3
Corbin, Corbin on Contracts § 8.9. Courts applying promissory
estoppel doctrine sometimes confuse an offer with a promise by
requiring that a promise be "clear, definite and unambiguous." Id.
Massachusetts courts, however, use the terms "promise" and "offer"
interchangeably. See R.I. Hosp. Trust Nat'l Bank v. Varadian, 647
N.E.2d 1174, 1179 (Mass. 1995). As a result, "an action based on
reliance is equivalent to a contract action, and the party bringing
such an action must prove all the necessary elements of a contract
other than consideration." Id.
According to contract law, "[i]t is not required that all
terms of [an] agreement be precisely specified, and the presence of
reliance, it is a 'contract,' and it is enforceable pursuant to a
'traditional contract theory' antedating the modern doctrine of
consideration.").
2
Although not affecting our summary judgment analysis, it is
interesting to note that Mr. Muirhead made this same alleged
promise to other homeowners. Cf. Coady v. Marvin Lumber & Cedar
Co., 167 F. Supp. 2d. 166, 168 (D. Mass. 2001).
-10-
undefined or unspecified terms will not necessarily preclude the
formation of a binding contract." Situation Mgmt. Sys. v. Malouf,
Inc., 724 N.E.2d 699, 703 (Mass. 2000). The fact that "the parties
may have chosen to leave one of the terms of the contract indefinite
does not render it unenforceable." Associated Credit Servs., Inc.
v. City of Worcester, 596 N.E.2d 388, 389 (Mass. 1992). These
provisions of contract law apply equally to promissory estoppel,
considering that in Massachusetts what is elsewhere called
promissory estoppel is nothing but a contract absent consideration.
See Loranger Constr. Corp., 384 N.E.2d at 179.
Muirhead informed the Neuhoffs that the Marvin factory
was experiencing a severe backlog due to the number of defective
windows they had to replace. Thus, Muirhead informed the Neuhoffs
that Marvin would first replace the most defective windows and would
then replace the remaining windows "in the near future . . . [once]
their [backlog] problem had abated and [once] they would be able to
get back to production standards." Muirhead also informed the
Neuhoffs that Marvin was closing down one of their factories for a
month to take care of the defective window problem.
Muirhead's statements contain a time frame for when the
remaining windows would be replaced and details regarding which
windows would be replaced -- namely, the deteriorating windows not
replaced in the first batch. Such a promise contains enough
essential terms so as not to be ambiguous.
-11-
Since a promise was made, we next must analyze if a
promisor making such a promise should reasonably expect to induce
action or forbearance of a definite and substantial character on the
part of the promisee and if the promise did induce such action or
forbearance. See Carroll, 294 F.3d at 242. We believe there is a
genuine issue of material fact on this issue. See Cataldo Ambulance
Serv. v. City of Chelsea, 688 N.E.2d 959, 962 (Mass. 1998) (stating
that the "question whether a party's reliance on a promise by
another is reasonable is often a question of fact"). The Neuhoffs
were promised that their remaining defective windows would be
replaced. Such a promise coincided with Marvin's policy and
practice of replacing defective windows. We, therefore, believe
that Muirhead could have reasonably expected the Neuhoffs to rely
on such a promise.
We are unpersuaded by the argument that the Neuhoffs
could not reasonably rely on Muirhead's promise because other
written documents did not contain such a promise. But cf. Trent
Partners & Assocs., Inc. v. Digital Equip. Corp., 120 F. Supp. 2d
84, 105 (D. Mass. 1999) (holding that reliance is unreasonable when
a representation is in direct contradiction of a written contract).
In this case, no written communication stated that the remaining
windows would not be replaced. The only communications involved the
replacement of the first batch of windows and verification that the
replacement of the first batch was 100% complete. Such written
-12-
documents do not contradict the promise to replace the remaining
windows.
As stated earlier, in addition to a promisor's reasonably
expecting the promisee to act or to forbear based on the promise,
a promissory estoppel claim also requires a promisee to rely on the
promise. See Hinchey, 144 F.3d at 143. In this case, it is clear
that the Neuhoffs relied on Marvin's promise, and they did so to
their detriment. The record shows, for example, that as a result
of Muirhead's promise to replace some of the windows immediately and
the others at a later time, the Neuhoffs only obtained contractors
to bid on replacing the first batch of windows. But for Muirhead's
promise to replace the remaining windows at a later date, the
Neuhoffs might have obtained a bid for the entire project. The
Neuhoffs may have suffered economic damages because replacing the
windows in two stages may have been more expensive than replacing
all of the windows at once.
We find it sufficient to conclude that there is a
question of fact regarding whether the Neuhoffs relied on Marvin's
promise to their detriment and leave it to the district court and
to the jury to determine the extent of the damage that resulted from
the promise.
C. Breach of implied warranty
In 1998 and 1999, Marvin replaced 33 windows in the
Neuhoffs' home free of charge. By 2000, four of the replacement
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windows had rotted. The Neuhoffs contend that these windows should
be replaced because they came with implied warranties.
Article 2 of the U.C.C. applies to all "transactions in
goods." See Mass. Gen. Laws ch. 106, § 2-102. Typically, the
U.C.C. only implies warranties in connection with goods that are
involved in a "sale." See Mass. Gen. Laws ch. 106, § 2-314. In
contrast, gifts do not receive implied warranties under Article 2.
See Mason v. General Motors Corp., 490 N.E.2d 437, 440 (Mass. 1986)
(stating "that a warranty of merchantability is implied in two
situations: (1) when title to goods passes for a price, and (2) when
a contract is made for the future passing of title to goods for a
price.").
The question in this case is whether providing free
replacement windows is more akin to a sale or to a gift. We believe
that the replacement windows are more akin to a gift and that thus
there was no implied warranty on the windows.
Some courts have held that a good that is given for free
can be a "sale." See, e.g., E.I. du Pont De Nemours & Co., Inc. v.
Kaufman & Chernick, Inc., 148 N.E.2d 634, 636 (Mass. 1958)(free
anti-freeze with purchase of tires is a sale); Levondosky v. Marina
Assoc., 731 F. Supp. 1210, 1213 (D.N.J. 1990) (complimentary drinks
with purchase of chips is a sale). Such holdings, however, were
made in cases where there was a "combined sale of both [a free good]
and [a purchased good] for a single price." E.I. du Pont De Nemours,
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148 N.E.2d at 636. In such a situation, the free good is provided
in a package with the paid for good. In the Neuhoffs' situation,
the replacement windows were not coupled with any other transaction.
They were provided in 1998, seven years after any sale between the
Neuhoffs and Marvin took place. Thus, the replacement windows do
not receive the implied warranty protection afforded by
Massachusetts law.
D. Mass. Gen. Laws ch. 93A
The district court concluded that any claim under chapter
93A was time-barred because the four year statute of limitations
expired before this suit commenced. The Neuhoffs contend, however,
that their chapter 93A claim is not time-barred since their chapter
93A claim is based on Marvin's actions and empty promises between
1998 and 2001. We conclude that the Neuhoffs' chapter 93A claim is
time-barred.
Pursuant to chapter 93A, a claimant seeking relief must
send a written demand "reasonably describing the unfair or deceptive
act or practice relied upon" by the claimant. Mass. Gen. Laws ch.
93A, § 9(3). The Neuhoffs' attorneys submitted such a letter to
Marvin notifying them of their claims relating to the "defective
Marvin doors and windows." The Neuhoffs' claims were described to
Marvin as "regarding your unfair or deceptive act or practice of
selling defective windows." The act or practice of selling
-15-
defective windows took place in 1991, and any claims relating to
such a sale were time-barred by 1996.
The Neuhoffs never asserted a claim in their chapter 93A
notification letter regarding deceptive or false promises.
Regardless of whether such a claim has merit, it is waived because
the Neuhoffs failed to assert such a claim in their notification
letter. See Entrialgo v. Twin City Dodge, Inc., 333 N.E.2d 202, 204
(Mass. 1975)(holding that failure to complain of a specific
violation is a bar to suit); Bressel v. Jolicoeur, 609 N.E.2d 94,
98 (Mass. App. Ct. 1993) (holding that related claim not mentioned
in the demand letter is waived).
IV. Conclusion
For the forgoing reasons, the judgment of the district
court is affirmed in part and reversed in part. We remand for
proceedings consistent with this opinion. Each party shall bear its
own costs.
Affirmed, reversed and remanded.
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