United States Court of Appeals

                     For the First Circuit











No. 98-1744



            FHS PROPERTIES LIMITED PARTNERSHIP, ETC.,



                       Plaintiff, Appellee,



                                v.



                      BC ASSOCIATES, ET AL.,



                     Defendants, Appellants.







           APPEAL FROM THE UNITED STATES DISTRICT COURT



                FOR THE DISTRICT OF MASSACHUSETTS



       [Hon. Morris E. Lasker, Senior U.S. District Judge]







                              Before



                      Selya, Circuit Judge,

                   Cyr, Senior Circuit Judge,

                   and Stahl, Circuit Judge.

                                

                                

                                

                                

     John D. Donovan, Jr., with whom Randall W. Bodner, Brian G.

Murphy, and Ropes & Gray, were on brief for appellants.

     Mitchell H. Kaplan, with whom Thomas F. Maffei, Robert

DiAdamo, and Choate, Hall & Stewart, were on brief for appellee.











April 29, 1999







                                

                                



  STAHL, Circuit Judge.  In this diversity case,

defendants-appellants BC Associates, et al. ("appellants") appeal

a final judgment of the district court, issued in part on a jury

verdict and in part as a matter of law.  Appellants also challenge

the court's denial of their motion for a new trial on damages.  We

reverse the district court's judgment as a matter of law and affirm

the court's denial of the motion for a new trial.

                           I.  Facts

  On appeal, two partners dispute whether a 1991 settlement

payment made to third parties by one of the partners should be

characterized under the partnership agreements as a "Deficit Loan"

or as an indemnification obligation.  Insofar as appellants are

challenging the judgment entered against them as a matter of law by

the district court, we view the evidence in the light most

favorable to them.  See Gibson v. City of Cranston, 37 F.3d 731,

733 (1st Cir. 1994).  But insofar as they are challenging the

jury's verdict, we view the evidence in the light most favorable to

the verdict.  See Dichner v. Liberty Travel, 141 F.3d 24, 27 (1st

Cir. 1998).  Defendants BCA-1 and BCA-2 (together "BCA") and

plaintiff-appellee FHS Properties Limited Partnership ("FHS"), are

respectively the managing partners and sole other general partner

of two partnerships that developed and now own International Place,

a two-tower office complex in downtown Boston.  FHS has a sixty-

percent interest in the two partnerships.  BCA has a forty-percent

interest.  The partners envisioned developing the complex in two

distinct phases and therefore formed Fort Hill Square Associates

("Partnership 1") to develop Phase 1 of the project and Fort Hill

Square Phase 2 Associates ("Partnership 2") to develop Phase 2. 

The partners signed two partnership agreements ("Partnership

Agreements"), essentially identical in their terms, which provided

that the agreements would be construed in accordance with

Massachusetts law.

  Phase 1 of the project was initially financed through a

construction loan from Bank of Boston.  When construction was

complete, the construction loan was "taken out" and replaced with

permanent financing by Teachers' Insurance and Annuity Association

("TIAA").  When the partners decided to proceed with Phase 2, Bank

of Boston again agreed to finance the construction, subject to a

permanent "take out" commitment from TIAA.  The second construction

loan was secured by all of the partnerships' assets, including a

mortgage on Phase 1.  Notwithstanding its security interest, Bank

of Boston, in May 1990, approved a plan to distribute $15 million

of partnership cash to the partners on three future distribution

dates, provided that certain conditions were satisfied on those

dates.

  The settlement obligation at issue in this case arose in

January 1991, when two entities, who were then limited partners of

BCA-1 and who shared an interest in Phase 1 but not Phase 2 of the

project, sued defendants Partnership 1, BCA-1, FHS, Donald

Chiofaro, Theodore Oatis, Bank of Boston, and TIAA, claiming that

the general partners of BCA-1 had misused partnership assets by

pledging them as security for the construction of Phase 2 (the

"Dimeo" suit).  The initiation of the suit distressed the

partnerships' lenders.  Bank of Boston sought an assurance from

TIAA that notwithstanding the pendency of the suit, it would honor

its promise to pay off the bank's construction loan and replace it

with permanent financing once Phase 2 was complete.  TIAA refused

to give such an assurance.  Bank of Boston responded by threatening

to cease financing Phase 2 construction and insisted that the

partnerships sign a "Forbearance Agreement," which became effective

on March 14, 1991.  That agreement stated that it would be an event

of default under the construction loan if the Dimeo suit was not

settled by April 15, 1991; and pending the April 15 deadline, the

bank would finance only fifty percent of the requisitions made

under the loan agreement, forcing the partnerships to cover the

balance from other funds, which could potentially include the $15

million earmarked for distribution.

  Not surprisingly, BCA and FHS jointly worked to resolve

the Dimeo suit by the April 15 deadline.  They negotiated on

multiple occasions with the Dimeo plaintiffs' lawyers and met with

Bank of Boston and TIAA in an effort either to borrow funds with

which to settle the suit or to eliminate the terms of the

Forbearance Agreement.  On each occasion, the lenders refused to

lend the necessary money or to change the terms of the Forbearance

Agreement.

  On April 12, 1991, the last business day before the

bank's deadline, BCA and FHS reached an oral agreement with the

Dimeo plaintiffs to settle the suit for $5.6 million.  Payment was

due in one week, on April 19.  The partners promptly informed Bank

of Boston and TIAA that the case had been resolved.  

  On April 18, however, FHS informed BCA, by notice to

BCA's general partner Chiofaro, that BCA was forbidden from using

Partnership 1 or Partnership 2 funds to satisfy the settlement, and

threatened to remove BCA as managing general partner should it do

so.  FHS added that it would notify Bank of Boston and TIAA of its

position.  According to FHS, partnership funds could not be used to

pay the settlement because the settlement was solely BCA's

obligation.

  After deliberating through the evening of April 18,

Chiofaro decided on the morning of April 19 to use only BCA funds

to pay the settlement.  That day, he paid the Dimeo plaintiffs

$5.6 million.  In return, the Dimeo plaintiffs forfeited to BCA

their small, indirect equity interests in Phase 1, represented by

the limited partnership interests in BCA-1.  

  Section 5.2 of the Partnership Agreements permits a

partner to lend the partnerships certain amounts as "Deficit Loans"

if four conditions are met: (1) there must exist a "financial

requirement" of the partnership, that (2) "cannot . . . reasonably

be satisfied from partnership capital, additional capital,

financing proceeds, revenues and other partnership moneys," (3)

"the parties [have] use[d] their best efforts to obtain reasonable

non-recourse institutional financing . . . of the required amounts"

but have been unable to "obtain such financing," and (4) a partner

has "elect[ed] . . . in its sole discretion" to loan the

partnership the necessary funds."  In November 1991, some six

months after satisfying the Dimeo settlement, BCA sent a letter to

FHS, asserting that its settlement payment constituted a "Deficit

Loan," accruing interest at 18%.  FHS responded that no such

Deficit Loan had been made, and that BCA was not entitled to

indemnification for any part of the $5.6 million payment.  FHS then

filed the instant action seeking a declaration that neither

Partnership 1 nor Partnership 2 owed any sum to BCA.

                     II.  Prior Proceedings

  The parties tried the case to a jury over twelve days

beginning October 14, 1997.  Although denominated defendants,

appellants assumed the burden of proof and proceeded through trial

effectively as plaintiffs.  Upon the close of appellants' evidence,

FHS moved for judgment as a matter of law on the Deficit Loan

issue, contending that the second requirement of Section 5.2 had

not been met because "[t]here can be no question before the jury

that the partnership[s] had money with which to pay this

obligation."  The court reserved ruling on the motion and submitted

the question to the jury.  The district court also instructed the

jury on damages, advising that damages should reflect the $5.6

million settlement payment made by BCA, less the value of any

benefits obtained by it, including the limited partnership

interests in Phase 1 obtained in the settlement and the value, if

any, of the release from the lawsuit.  Appellants did not object to

this instruction. 

  After deliberation, the jury answered special

interrogatories establishing that appellants had proved each of the

four conjunctive elements for a "Deficit Loan;" and alternatively,

that appellants were entitled to be indemnified by the partnerships

for the settlement payment.  Following the return of the special

verdict, the court gave a number of additional instructions on

damages.  In the end, the jury returned a verdict establishing

appellants' damages at $2.1 million.

  Following the jury's verdict, FHS renewed its motion for

judgment as a matter of law and appellants filed a motion for a new

trial on damages.  The court, on May 13, 1998, entered final

judgment, ruling that a Deficit Loan did not exist under the

partnership agreements as a matter of law and that appellants were

only entitled to indemnification.  According to the court, "the

facts established at trial show that the Dimeo suit could

reasonably have been paid from partnership funds."  Additionally,

the court denied appellants' motion for a new trial.  In the end,

the court entered judgment awarding appellants indemnification

payments in the amount of $2.1 million accruing interest at 6% per

annum.  By contrast, as a Deficit Loan, the amount the partnerships

owed appellants would have accrued interest at 18% per annum.  

  Appellants appeal both the judgment as a matter of law

and the denial of their motion for a new trial.  

                        III.  Discussion

  A.  Judgment as a Matter of Law

  We review a district court's granting of judgment as a

matter of law de novo.  See Correa v. Hospital San Francisco, 69

F.3d 1184, 1191 (1st Cir. 1995).  "A judgment as a matter of law

may be granted only if the evidence, viewed from the perspective

most favorable to the nonmovant, is so one-sided that the movant is

plainly entitled to judgment, for reasonable minds could not differ

as to the outcome."  Gibson, 37 F.3d at 735.  In considering the

evidence, we, like the district court, "cannot evaluate the

credibility of witnesses, resolve conflicts in testimony, or

evaluate the weight of evidence."  Criado v. IBM Corp., 145 F.3d

437, 441 (1st Cir. 1998) (citation and internal quotation marks

omitted).  

  During trial, appellants contended that the partnerships'

admittedly plentiful funds were not reasonably available to pay the

Dimeo settlement because of restrictions imposed by the loan

agreements.  Appellants also argued that FHS's refusal to permit

BCA to use partnership funds further hindered these funds from

being reasonably available.  

  The court, however, rejected these theories as a matter

of law because it regarded as undisputed two facts: (1) Bank of

Boston had permitted Partnership 1 to distribute up to $15 million

to the partners and this money could have been used to fund the

settlement; and (2) Chiofaro's and Oatis's testimony that before

FHS's objection on April 18, 1991, they intended to pay the

settlement from partnership funds without obtaining bank approval

demonstrated that loan restrictions did not hinder the use of

funds.  The court additionally found that FHS's refusal to permit

the use of partnership funds was irrelevant because BCA, as

managing general partner, had the authority to settle the lawsuit

with partnership funds regardless of FHS's position.

  Reviewing the record in the light most favorable to

appellants, we disagree with the district court's assessment of the

evidence as undisputed.  In our view, the jury verdict was

adequately supported by appellants' evidence that partnership funds

were not reasonably available because of loan restrictions and

FHS's lack of cooperation.  The partnerships' loan documents

provided that all of the partnerships' assets served as collateral

for the construction loan.  Specifically, section 14(c) of the

Construction Loan Agreement and the related Pledge and Escrow

Agreement of Cash Account stated that Bank of Boston had a security

interest in all of the partnerships' assets and that neither

partnership could apply funds for any purpose without bank consent. 

Witness testimony further supported this documentary evidence:

Chiofaro and Oatis testified that funds could not be used to pay

the settlement without bank permission, which was not forthcoming;

and Coleman Benedict, an FHS representative, testified that the

partnerships did not have enough free cash to fund the settlement.

  It is true that Bank of Boston authorized the

disbursement of $15 million to the partners, but appellants

introduced evidence that these funds were not reasonably available

to pay the Dimeo settlement.  Fifteen million dollars had been

earmarked for distribution on three dates: $8 million on June 5,

1990, $3 million six months thereafter, and $4 million six months

thereafter.  According to loan documents and Oatis's testimony,

these earmarked funds could not be distributed without bank

approval on each disbursement date.  Moreover, according to Oatis,

the earmarked funds were not sufficient on April 19, 1991 to pay

the $5.6 million settlement.  Eight million dollars had already

been distributed to the partners as of the first release date and

therefore were no longer part of the partnership assets.  The next

$3 million were not distributed on the scheduled second

disbursement date because that amount had been used to fund fifty

percent of the Phase 2 construction expenses during the pendency of

the Forbearance Agreement.  Finally, the last $4 million were

earmarked for distribution in May 1991, after the settlement

payment was due.  While BCA theoretically could have used the $4

million in anticipation of the forthcoming release date, the jury

could have found that FHS's threats, as well as uncertainty

regarding the bank's required consent, rendered the funds not

reasonably available on April 19, 1991.  In all events, simple

arithmetic proves that $4 million is not $5.6 million.

  We also disagree with the district court's decision that

Chiofaro's and Oatis's testimony that they had initially intended

to pay the settlement from partnership funds without obtaining bank

approval is conclusive evidence that bank restrictions did not

encumber partnership funds.  While such testimony tends to prove

that partnership funds were reasonably available, it is not

conclusive evidence on this point.  The jury could have credited

Oatis's testimony that he did not intend to obtain bank permission

before April 19 because it was not until that date that he realized

the distribution of funds necessary for payment could not occur

without FHS's cooperation. 

  The testimony introduced at trial therefore sufficiently

supported the jury's finding that funds were not reasonably

available to settle the Dimeo suit on April 19, 1991.  Under these

circumstances, the district court erred in ruling as a matter of

law that the conditions for a Deficit Loan had not been met.  Thus,

we reverse the court's judgment as a matter of law, reinstate the

jury's finding that the conditions for a Deficit Loan were met, and

remand so that judgment may be entered in accordance with this

opinion.  

  B.  Motion for New Trial

  Appellants also challenge the district court's refusal to

grant a new trial on damages, contending that the court's

instructions to the jury on damages were erroneous and

alternatively, that the jury's valuation of their damages at only

$2.1 million is not supported by the evidence.  We review the

court's denial of a motion for a new trial for an abuse of

discretion.  See Air Safety v. Roman Catholic Archbishop of Boston,

94 F.3d 1, 4 (1st Cir. 1996).

  According to appellants, the district court erred in

instructing the jury that it could deduct the value of the limited

partners' release from its base damages when there was no evidence

of the value of the release in the record.  See Kelliher v. General

Transp. Serv., Inc., 29 F.3d 750, 754 (1st Cir. 1994) (jury

instruction may not be given if there is insufficient evidence to

support it).  

  Appellants, however, did not preserve this argument for

appeal.  Fed. R. Civ. P. 51 states, in relevant part, that "[n]o

party may assign as error the giving or the failure to give an

instruction unless the party objects thereto before the jury

retires to consider its verdict, stating distinctly the matter

objected to and the grounds of the objection."  

  Although appellants contend that they objected to the

jury instruction and further submission of the issue, we have been

unable to discern any such objection.  Rather, our reading of the

record indicates that appellants failed to object when the court,

at the close of the evidence, instructed the jury: 

    In calculating damages, I instruct you that

  the base figure on which your calculation is

  made is the 5.6 million paid to settle the

  suit.  From that amount, you should deduct the

  value, if any, of the assets which you find

  that Chiofaro purchased from [the limited

  partners] in settlement of the suit, that is,

  what you find to be the value, again, if any,

  of the 22« percent interest in the BCA[-1]

  partnership, as well as the value of the

  release given Chiofaro by [the limited

  partners].



Appellants also failed to object when the jury, after a period of

deliberation, requested by note that the court "supply parameters

'for the value of the release.'"  Appellants' assertion that during

a resulting lobby conference, they "stated that there existed no

testimony in the record as to the value of the release [and]

objected to additional instruction concerning the value of the

release and to further submission of the issue to the jury"

misstates the record.  During the lobby conference, the court asked

the parties whether there was testimony on the value of the

releases.  Counsel for appellants responded: "The only testimony,

I believe, was opinion testimony on the value of the interest.  So

subtraction works, but I think that's unfair."  Counsel did not,

however, object to the court's instructing the jury to subtract the

value of the release from the $5.6 million base figure.  Rather,

the only so-called objection noted by counsel at that time was

"[y]ou've got to repeat your [earlier] instruction and say the

evidence is the evidence."  These comments, together, fall short of

Rule 51's requirement that the objection "stat[e] distinctly the

matter objected to and the grounds of the objection."

  Absent a timely objection, an erroneous jury instruction

warrants a new trial only where the assigned error "'caused a

miscarriage of justice or . . . undermined the integrity of the

judicial process.'"  Play Time, Inc. v. LDDS Metromedia

Communications, Inc., 123 F.3d 23, 29 (1st Cir. 1997) (quoting

Scarfo v. Cabletron Sys., Inc., 54 F.3d 931, 940 (1st Cir. 1995)). 

We see no miscarriage of justice here and therefore hold that

appellants have waived their objection to the jury instruction. 

See, e.g., Play Time, 123 F.3d at 30, n.8 (no miscarriage of

justice where the issue "implicates only the question of damages

for breach of a private agreement between the litigants;" and no

damage to integrity of the judicial process where "the proceedings

below were conducted with meticulous attention to the rights of

both parties").

  Appellants also make the argument that even if the value

of the release played no role in the jury's reduction of its

recovery   so that the $3.5 million reduction represents the value

of limited partnership interests only   they are still entitled to

a new trial on damages because the jury's valuation is not

supported by the record.  In challenging the jury's damage award,

appellants face a daunting task.  Our review "is limited to

examining whether evidence in the record supports the verdict.  If

the jury award has a rational basis in evidence, we must affirm

it."  Air Safety, 94 F.3d at 4  (citation and internal quotation

marks omitted).  "While 'the jury may not render a verdict based on

speculation or guesswork,' a reviewing court will not tinker with

the jury's assessment of money damages as long as it does not fall

outside the broad universe of theoretically possible awards that

can be said to be supported by the evidence."  Dopp v. Pritzker, 38

F.3d 1239, 1249 (1st Cir. 1994) (citation omitted).  In the end,

"[w]e will not disturb an award of damages for economic loss

provided it does not violate the conscience of the court or strike

such a dissonant chord that justice would be denied were the

judgment permitted to stand."  Vera-Lozano v. Int'l Broadcasting,

50 F.3d 67, 71 (1st Cir. 1995) (citation and internal quotation

marks omitted). 

  Here, the jury's valuation of the limited partnership

interests falls within the broad universe of awards supported by

the evidence.  Together, the limited partners had a 22.5% interest

in BCA-1, which in turn had a 40% interest in Phase 1.  Thus, the

limited partners had a 9% interest in Phase 1.  Oatis testified

during trial that, in 1989, he prepared for FHS a valuation of

Phase 1 for $150 to $200 million.  Using the 9% figure, the limited

partnership interests in this amount would have been $13 to $18

million.  Francis McCarthy, former comptroller of Chiofaro Company,

one of Chiofaro's interests, testified that, some time after August

1990, Chiofaro asked him to calculate certain tax consequences of

acquiring one of the limited partner's interest at purchase prices

ranging from $1.96 to $4 million.  The jury could have determined

that this testimony reflected a proper valuation of one of the

limited partner's interest.  Appellants themselves introduced into

evidence a letter from Richard Renehan, lead trial counsel for

defendants in Dimeo, to Earl Cooley, counsel for plaintiffs,

stating that defendants were "prepared to buy your clients out for

cash at the fair market value of their interests" and offering $1.6

million.  Kevin Currier, the Chief Financial Officer of Dimeo

Construction Company ("Dimeo"), a limited partner with a 20%

interest in BCA-1, testified that, based on this letter, he valued

the sale of Dimeo's interest at $1.5 million on Dimeo's 1991 tax

return (and the IRS challenged this valuation as insufficient). 

Finally, Coleman Benedict testified that during settlement

negotiations he discussed with Chiofaro the limited partners'

interest at values ranging from zero to $15 million, depending on

"assumptions you used about the condition of the market in the

future."  Based on the sum of this evidence, the jury could have

reasonably valued the limited partnership interests in BCA-1 at

$3.5 million.  We will not second-guess its decision to do so.

                        IV.  Conclusion

  For the foregoing reasons, we reverse the decision of the

district court in part and affirm in part.  No costs.