USCA1 Opinion
United States Court of Appeals
United States Court of Appeals
For the First Circuit
For the First Circuit
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No. 95-2095
GEORGE LABARRE AND CHERLINE LABARRE,
Plaintiffs, Appellees,
v.
MERRILL J. SHEPARD AND THOMAS M. PARKS,
Defendants, Appellants.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Charles S. Swartwood, III, U.S. Magistrate Judge]
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Before
Selya, Circuit Judge,
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Campbell, Senior Circuit Judge,
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and Stahl, Circuit Judge.
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Timothy G. Kerrigan with whom Hamblett & Kerrigan, P.A. was on
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brief for appellants.
David V. Shablin with whom Raymond J. Reed and Reed & Reed were
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on brief for appellees.
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May 28, 1996
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STAHL, Circuit Judge. Merrill J. Shepard and
STAHL, Circuit Judge.
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Thomas M. Parks appeal from the judgment against them in
favor of George LaBarre and Cherline LaBarre. A jury found
that Shepard and Parks: (1) improperly and unfairly
foreclosed the mortgage they held on the LaBarres' residence;
(2) breached an agreement to avert the foreclosure; committed
(3) misrepresentation and (4) fraud; and (5) engaged in an
unfair trade practice in violation of New Hampshire's
Consumer Protection Act. On appeal, Shepard and Parks raise
two narrow issues: first, that admission of evidence of an
alleged oral agreement, whereby the LaBarres would deliver a
deed in lieu of foreclosure, violated the Statute of Frauds;
and, second, that the damages awarded were improperly
duplicative. Disagreeing with the appellants' first
contention, but agreeing as to the second, we affirm in part,
reverse in part, and remand for correction of the damages
award.
I.
I.
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Background
Background
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On October 20, 1989, the LaBarres purchased a newly
erected house and surrounding land in Weare, New Hampshire,
from Shepard and Parks, the builders.1 The purchase price
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1. This is a unusual case. The record reveals a number of
anomalies in the underlying real estate transaction, the
foreclosure process, and the litigation in the state and
federal trial courts. Because none of these irregularities
is material to the narrow issues on appeal, we merely point
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was $229,000; the LaBarres paid $11,450 cash and gave Shepard
and Parks a promissory note in the amount of $217,550,
secured by a first mortgage on the premises. No payments of
principal or interest were due on the note until either the
LaBarres sold certain other real estate or the passage of two
years from the date of the note's execution.2
In October 1990, the LaBarres sued Shepard and
Parks in New Hampshire state court for defective
construction, seeking recision and money damages. Shepard
and Parks counterclaimed for principal and interest allegedly
due on the mortgage note. After a bench trial, the court
denied recision, but found defective construction that would
cost $38,000 to repair. Accordingly, on June 7, 1993, the
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them out in footnotes to help the reader understand the odd
posture of this case.
2. The promissory note, while providing for a deferral of
payments for up to two years, did not provide for any
installment payments thereafter nor for a balloon payment.
The parties, however, do not raise any issues concerning the
note and agree on the amount due thereunder.
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court entered judgment,3 deducting the cost of repairs from
the mortgage balance.4
In the summer of 1993, Shepard and Parks initiated
foreclosure proceedings against the LaBarres for the balance
then due on the mortgage note.5 A foreclosure sale was
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3. This judgment is impossible to decipher. The state trial
judge found that the LaBarres had "sustained their burden of
proof on their claim of damages" and "assessed" those damages
at $38,000. The judge then stated that "[d]efendants'
counterclaim is DENIED without prejudice to assert a separate
action, if necessary." In spite of denying the counterclaim
for the mortgage balance due, the judge did not make an award
of money damages, but rather deducted the $38,000 damage
award from the balance due on the note. The judge went on to
present "the correct methodology for recalculation of the
promissory note," arriving at a "[t]otal due under terms of
promissory note" of $239,729. The decree ended: "Judgment
entered in accordance with the foregoing."
Inexplicably, both parties and the magistrate judge
consider this to be a judgment for Shepard and Parks for
$239,729, when the state court judge expressly denied their
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counterclaim. We ignore this problem, though, because the
magistrate judge ultimately used the state court "judgment"
to measure the proper award on the mortgage deficiency
counterclaim brought by Shepard and Parks; hence, there was
no award on the state judgment itself. Neither party raises
any question about the state court judgment on appeal. Given
this posture, we too shall refer to the state court mortgage
balance calculation as a "judgment," though it seems at best
to be a finding of fact.
4. The balance was recalculated as follows:
Original Principal balance on mortgage note $217,500
less: Cost to repair defects 38,000
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Net principal due on mortgage note $179,500
plus: Interest due on net principal as of 5/20/93 59,609
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TOTAL DUE AS OF 5/20/93 $239,109
Interest Per Diem: $34.32
TOTAL DUE AS OF JUDGMENT DATE 6/7/93 $239,729
5. The record does not reveal whether Shepard and Parks
initiated the foreclosure proceedings before or after the
entry of the state court judgment recalculating the mortgage
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scheduled for September 22, 1993. At some point prior to the
foreclosure sale, Shepard and Parks obtained a "drive-by"
appraisal that indicated a fair market value of $150,000, and
the LaBarres were informed of that appraisal.
According to the LaBarres, their lawyer orally
agreed with the lawyer for Shepard and Parks that the
LaBarres would deliver a deed in lieu of foreclosure, and in
return, Shepard and Parks would credit the full $150,000
appraised value of the property in determining the deficiency
owed under the state court judgment. In consideration for
the agreement, the LaBarres allegedly offered Shepard and
Parks access to their home for a more thorough appraisal.
Shepard and Parks assert that no such agreement was made.
There is no written agreement, nor any other writing or notes
concerning the alleged oral agreement between the lawyers.
The LaBarres claim to have been seeking financing
to facilitate a bid on the property at the foreclosure sale,
but say that they abandoned those efforts when the agreement
to deliver the deed in lieu of foreclosure was reached. One
day before the scheduled foreclosure sale, however, the
LaBarres received a faxed appraisal from Shepard and Parks
indicating that the property was worth only $125,000, and
that they would give the LaBarres credit for 70% of that
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balance. Thus, it is unclear whether the foreclosure was an
attempt to collect on the judgment or the note; we will treat
it as a mortgage foreclosure on the note.
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amount, i.e., $87,500 against the amount due.6 The LaBarres
apparently rejected that offer, and the foreclosure sale went
ahead as scheduled. The only bidders were Shepard and Parks,
who, upon the advice of counsel, jointly purchased the
property for $87,500.
Sometime later, the LaBarres paid Shepard and Parks
$17,500 to obtain the release of an attachment on the
Labarres' property in Massachusetts; this was the only
payment made by the LaBarres other than their initial down
payment.
II.
II.
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Proceedings Below
Proceedings Below
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The LaBarres brought this diversity action in
federal district court in Massachusetts, seeking redress for
the refusal of Shepard and Parks to honor their promise to
accept, on terms acceptable to the LaBarres, a deed in lieu
of foreclosure. The LaBarres' complaint, as amended, was
framed in five counts: (I) unfair and improper foreclosure,
(II) breach of contract, (III) intentional misrepresentation,
(IV) fraud, and (V) unfair and deceptive trade practice under
New Hampshire's Consumer Protection Act, N.H. Rev. Stat. Ann.
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6. It is unclear from the record, and neither party has
explained, whether the credit was to be applied to the
outstanding balance on the mortgage note or to the state
court judgment. Given the cryptic nature of that judgment,
see supra note 3, this lack of precision is not surprising.
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For simplicity, we will speak in terms of credit toward the
balance on the mortgage note.
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ch. 358-A ("RSA 358-A"). Shepard and Parks brought
counterclaims for (I) the deficiency on the foreclosed
mortgage and (II) the judgment debt on the earlier New
Hampshire state court judgment.
The parties consented to a jury trial with the
magistrate judge presiding. The magistrate judge determined
that the case was governed by New Hampshire law. Prior to
trial, Shepard and Parks moved in limine to exclude all
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evidence of the alleged oral agreement, which they claimed
was barred by New Hampshire's Statute of Frauds, N.H. Rev.
Stat. Ann. 506:1 ("RSA 506:1") (precluding actions to
enforce oral contracts for the conveyance of land). The
magistrate judge ruled that the statute did not bar the
LaBarres' breach of contract claim. After the trial, the
magistrate judge explained that, under New Hampshire law, the
Statute of Frauds did not bar a cause of action for breach of
an oral settlement agreement between attorneys.
After a three-day trial in March of 1995, the jury
found for the LaBarres on all five counts. Through special
interrogatories, the jury specifically found that the fair
market value of the property at the time of foreclosure was
$170,000, and that Shepard and Parks breached an agreement to
accept a deed in return for credit of $150,000 toward the
LaBarre's mortgage obligation. The jury also found that
Shepard and Parks committed an unfair trade practice in
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violation of the Consumer Protection Act, RSA 358-A, and that
the LaBarres suffered actual damages of $82,500 as a result.
Although the jury was not asked how it arrived at that actual
damages figure, $82,500 is the difference between the
property's fair market value of $170,000 and the $87,500 that
Shepard and Parks bid at the foreclosure sale. The jury also
answered that the Consumer Protection Act damages should be
trebled.7
The magistrate judge directed a verdict for Shepard
and Parks on their counterclaims, and then ruled, in essence,
that the mortgage balance due, as calculated in the state
court judgment, was the proper measure for a single, non-
duplicative recovery, satisfying both counterclaims.8
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7. In his memorandum of decision dated September 5, 1995,
the magistrate judge explained that, although he should have
decided whether to double or treble the Consumer Protection
Act damages rather than the jury, Shepard and Parks had
waived the issue. Shepard and Parks raised no objection at
trial, and they now concede that the error has not been
preserved for appeal. We express no opinion whether the
multiplication of damages under New Hampshire's Consumer
Protection Act is for the jury or the judge.
8. The special interrogatory form indicated that Shepard and
Parks were entitled to recover on the state court judgment,
specifying that amount as $239,109; the actual calculation in
that judgment was $239,729. See supra note 4. The
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difference between the two figures is the interest applied
for the period from May 20, 1993 (apparently the date of a
stipulated interest calculation) through June 7, 1993 (the
date of the state court judgment). Neither figure includes
interest from mid-1993 through the March 1995 judgment in
this case.
The parties, however, do not assert any error in
the calculation of the counterclaim recovery by Shepard and
Parks.
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Recognizing that the claims for breach of contract,
misrepresentation, and fraud were, in essence, alternative
theories of improper foreclosure, the magistrate judge
treated Counts II, III, and IV as subsumed in Count I, the
improper foreclosure count. Rather than awarding damages
outright on Count I, the magistrate judge implemented the
jury's findings on Counts I through IV by crediting the
LaBarres with the full fair market value of the property,
$170,000, in calculating the amount due to Shepard and Parks
on their counterclaims.
The magistrate judge then awarded treble damages of
$247,500 to the LaBarres on Count V, the Consumer Protection
Act count, in accordance with the jury's special
interrogatory answers. The judge ruled that although Count V
was "based on the same factual allegations as were alleged in
each of the other four counts of the LaBarres' Complaint,
they are entitled to an independent recovery under Count V
for violation of the New Hampshire Consumer Protection
statute." The magistrate judge also awarded costs and
reasonable attorney fees to the LaBarres, as provided in the
Consumer Protection Act.
Shepard and Parks moved for a new trial under
Federal Rule of Civil Procedure 59(a), to no avail. On
appeal, Shepard and Parks raise two of the issues they
asserted in their Rule 59(a) motion. First, they argue that
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evidence of the alleged oral agreement should have been
excluded from trial under the Statute of Frauds. Second,
they maintain that the award of damages under the Consumer
Protection Act must be reduced by $82,500. They assert that
the award of full market value credit against the balance
owed on the mortgage note, in addition to trebled Consumer
Protection Act damages, constituted an improperly duplicative
recovery because all the counts were based on the same
factual allegations. In effect, they point out, the LaBarres
received a quadruple recovery, but were entitled only to the
damages under the largest single count, i.e., the trebled
Consumer Protection Act damages.
III.
III.
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Discussion
Discussion
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1. The Statute of Frauds
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The same factual allegation underlies all five
counts: Shepard and Parks orally promised to accept a deed in
lieu of foreclosure on terms acceptable to the LaBarres, but
then reneged on that agreement the day before the foreclosure
sale. Shepard and Parks assert that New Hampshire's Statute
of Frauds barred all testimony and evidence of the alleged
oral agreement. The statute, RSA 506:1, provides: "No
action shall be maintained upon a contract for the sale of
land unless the agreement upon which it is brought, or some
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memorandum thereof, is in writing and signed by the party to
be charged, or by some person authorized by him in writing."
Because the magistrate judge awarded damages only
on Count I (improper foreclosure) and Count V (Consumer
Protection Act), Shepard and Parks recognize that the
judgment was not based on enforcement of the contract. They
argue, rather, that the "entire trial proceeding was tainted"
by the introduction of evidence of the oral agreement,
requiring reversal.
The parties agree that the Statute of Frauds is
applicable on its face to the oral agreement in question
here. They expend much energy, however, disagreeing about
whether one or more exceptions to the statute apply in these
factual circumstances. In doing so, the parties miss the
real issue and misunderstand the operation of the Statutes of
Frauds.
There is no need here to decide the existence,
scope, or applicability of the asserted common-law exceptions
to the Statute of Frauds (the so-called "oral settlement
agreement between attorneys" exception and the part-
performance exception). We hold instead that, under New
Hampshire law, the Statute of Frauds is only a bar to the
enforcement of certain oral contracts; it is not a rule of
evidence. Evidence of the oral agreement in this case was
relevant to the counts alleging improper foreclosure,
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misrepresentation, fraud, and unfair trade practice in
violation of the Consumer Protection Act. Shepard and Parks
raise no claim that the Federal Rules of Evidence barred its
admission. Thus, we find no reversible error.
We find clear guidance in New Hampshire caselaw.
The New Hampshire Supreme Court held in Munson v. Raudonis,
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387 A.2d 1174, 1176 (N.H. 1978), that the Statute of Frauds,
RSA 506:1, did not bar an action for deceit even though the
oral promise that was breached could not be enforced because
of the lack of a writing. In reaching that holding, the
Munson court expressly rejected the argument pressed here by
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Shepard and Parks, i.e., that evidence of the oral agreement
should have been excluded because the four non-contract
counts were merely a back-door attempt to circumvent the
Statute of Frauds. The court in Munson reasoned as follows:
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"Barring an action in deceit because of the Statute of
Frauds, however, would not further the policy of the statute.
Quite the contrary, it would foster an injustice." Id. In
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our view, Munson embodies New Hampshire law on the question,
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and the argument raised by Shepard and Parks must fail. See
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also Morgan v. Morgan, 47 A.2d 569, 571 (N.H. 1946) (Statute
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of Frauds did not bar action for misrepresentation even if
agreement was unenforceable as a contract).
The Restatement (Second) of Contracts, a source
often relied upon by the New Hampshire Supreme Court,
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provides additional support for this result. See, e.g.,
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Tsiatsios v. Tsiatsios, 663 A.2d 1335, 1339 (N.H. 1995)
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(following the Restatement); Patch v. Arsenault, 653 A.2d
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1079, 1082 (N.H. 1995) (same); Simpson v. Calivas, 650 A.2d
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318, 327 (N.H. 1994) (same). Section 143 of the Restatement
provides that "[t]he Statute of Frauds does not make an
unenforceable contract inadmissible in evidence for any
purpose other than its enforcement in violation of the
statute." Restatement (Second) of Contracts 143 (1981).
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The Comment to Section 143 explains that "the Statute,
despite occasional statements to the contrary, does not lay
down a rule of evidence, and an unenforceable contract may be
proved for any legitimate purpose." Id. 143 cmt. a.
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It does not matter that the magistrate judge's
reason for admitting evidence of the alleged oral agreement
was his conclusion that a purported "lawyer's settlement
agreement" exception (or alternatively, the part-performance
exception) put the agreement outside the Statute of Frauds.
While we are skeptical whether that conclusion was correct,
we can affirm the admission of evidence on any proper basis,
even if the trial judge relied on a different ground. See
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United States v. Nivica, 887 F.2d 1110, 1127 (1st Cir. 1989)
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(no reversal where trial court admits evidence on an
incorrect basis, if properly admissible for same purpose
under different rule of evidence), cert. denied, 494 U.S.
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1005 (1990); cf. Ticketmaster-New York, Inc. v. Alioto, 26
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F.3d 201, 204 (1st Cir. 1994) (appellate court free to affirm
the district court's judgment on any independently sufficient
ground manifest in the record).
Because the evidence of the alleged oral agreement
was admissible for purposes other than enforcing that
agreement, i.e., to prove the four non-contract counts, and
because the breach of contract count did not affect the
judgment, there is no reversible error in the magistrate
judge's ruling on the applicability of the Statute of Frauds.
2. Duplicative Damages
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The jury found that the fair market value of the
LaBarres' property was $170,000 at the time of foreclosure.
As damages for Counts I through IV, the magistrate judge gave
the LaBarres credit for the full $170,000 as an offset
against the judgment for Shepard and Parks on the mortgage
balance. This placed the LaBarres in an even better position
than if they had delivered a deed in lieu of foreclosure for
$150,000 credit, as the parties had allegedly agreed.
Shepard and Parks have not appealed the award of the $170,000
credit for Counts I through IV.
Because Shepard and Parks had bid only $87,500 at
the foreclosure sale, the $170,000 credit is the equivalent
of a damages award of $82,500, placing the LaBarres in the
position they would have been in if Shepard and Parks had bid
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fair market value at the foreclosure. There is no doubt that
this award made the LaBarres whole, or better, for the
improper foreclosure.
The jury also found that the violation of the
Consumer Protection Act by Shepard and Parks caused the
LaBarres actual damages of $82,500, which the jury trebled
for an award of $247,500. See RSA 358-A:10. Because the net
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effect of the credit toward the mortgage was to award $82,500
above the amount bid by Shepard and Parks, and because the
Consumer Protection Act award was for three times $82,500,
the LaBarres effectively enjoyed a quadruple recovery. The
magistrate judge opined that the Consumer Protection Act
provided an independent recovery, and thus there was no
improper duplication. Shepard and Parks assert that this was
error, and that the Consumer Protection Act award should be
reduced by $82,500 to limit the net award to treble damages.
We agree.
It is evident from the record, and the LaBarres
appear to concede, that the damages under Count I (improper
foreclosure) are based on the same factual allegations as the
damages under Count V (Consumer Protection Act). The award
on Count I (in which all the four common-law counts were
subsumed) was based on the $82,500 difference between the
fair value and the bid price; the same amount, $82,500,
obviously reflecting the same difference between the fair
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value and the bid, was awarded and trebled (to $247,500)
under the RSA 358-A count. Nonetheless, the LaBarres argue
that this quadruple award was proper because they are
entitled to an "independent recovery" under New Hampshire's
Consumer Protection Act.
The LaBarres, however, point to nothing in the
statute or in any New Hampshire case that supports their
contention that the Consumer Protection Act provides an
"independent recovery." We have found no New Hampshire
authority directly on point, but we are confident that New
Hampshire's Supreme Court would follow its general rule
against duplicative recoveries and would find the award in
this case erroneous. See Phillips v. Verax Corp., 637 A.2d
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906, 912 (N.H. 1994) ("[T]he plaintiff is not entitled to
multiple recoveries for the same loss merely because he
alleged alternative theories of recovery."); Clancy v. State,
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185 A.2d 261, 263 (N.H. 1962) ("Duplication of damages should
be avoided."); Burke v. Burnham, 84 A.2d 918, 922 (N.H. 1951)
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(recovery of same damages under two causes of action
impermissible). We hold that the award in this case was
duplicative, and that the LaBarres' recovery may not exceed
the treble damages allowable under the Consumer Protection
Act.
The LaBarres argue that a Massachusetts decision
affirming a damage award under the Massachusetts Consumer
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Protection Act, Mass. Gen. L. ch. 93A, supports by analogy
the magistrate judge's award in this case. The cited case,
Multi Technology, Inc. v. Mitchell Management Sys., Inc., 518
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N.E.2d 854, 857 (Mass. App. Ct.), review denied, 521 N.E.2d
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398 (Mass. 1988), does not, however, provide any support.
The plaintiffs in Multi Technology received Consumer
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Protection Act damages in addition to contract damages
because the separate counts entailed factually separate items
of damage. Id. The plaintiff had agreed to a reduced fee
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based on the defendant's misrepresentations. Accordingly, the
court awarded the agreed amount as contract damages, and also
awarded the difference between the plaintiff's standard fee
and the agreed-upon reduced fee as Consumer Protection Act
damages. Id. Here, there are no factually separate items of
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damage, and the holding in Multi Technology is inapplicable.
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Contrary to the LaBarres' assertions and their
misleading citation of Multi Technology, the quadruple
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recovery in this case is clearly improper under Massachusetts
law, as well as New Hampshire law. In Calimlim v. Foreign
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Car Ctr., Inc., 467 N.E.2d 443, 448 (Mass. 1984), the Supreme
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Judicial Court held that "[w]here injury is incurred because
of conduct which comprises the elements of any common law,
statutory, or regulatory cause of action, and which is also a
violation of the Consumer Protection Act, recovery of
cumulative damages under multiple counts may not be allowed."
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The reasoning and holding in Calimlim would unquestionably
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bar the cumulative recovery in this case, where the factual
allegations and the items of actual damages are identical
under the common law and Consumer Protection Act counts.
Id.; see also Lexton-Ancira Real Estate Fund, 1972 v. Heller,
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826 P.2d 819, 822-24 (Colo. 1992) (en banc) (no double
recovery for violation of Colorado Consumer Protection Act
and common law misappropriation arising out of same set of
facts,and collectingcaseswith similarholdingsin otherstates).
To recapitulate, we hold that the LaBarres were
improperly awarded quadruple damages, when they were entitled
to no more than treble damages.
IV.
IV.
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Conclusion
Conclusion
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For the foregoing reasons, the judgment is affirmed
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in part, and reversed in part. The damages awarded to the
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LaBarres shall be reduced by $82,500, and any interest
awarded on the judgment shall be adjusted accordingly. The
case is remanded to the magistrate judge for entry of a
corrected damages award consistent with this opinion.
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