United States District Court, D. Massachusetts
MEMORANDUM AND ORDER
ALLISON D. BURROUGHS U.S. DISTRICT JUDGE
case concerns a construction project in which Defendants
Phillip DePaulis and Lisa DePaulis engaged Plaintiff
Christopher Skehel to manage the renovation of a vacation
home in Nantucket. Mr. Skehel sued the DePaulises for breach
of contract and related claims, and the DePaulises
counterclaimed for breach of contract, associated claims, and
violations of Mass. Gen. Laws ch. 93A, §§ 2, 11. On
July 26, 2016, after a six-day trial, a jury found that the
DePaulises breached their contract with Mr. Skehel and
breached the covenant of good faith and fair dealing, and
awarded Mr. Skehel $475, 000. As to the DePaulises'
counterclaims, the jury concluded that Mr. Skehel did not
breach the contract, did not breach the covenant of good
faith and fair dealing, and was not negligent in the
renovation of the home.
Court reserved judgment on the DePaulises' Chapter 93A
counterclaim pending the outcome of the jury trial. On
December 7, 2016, the Court entered judgment for $475, 000 on
the counts tried to the jury. [ECF No. 194]. The DePaulises
now move to amend the judgment to address the Chapter 93A
claim. [ECF No. 195]. Mr. Skehel opposes the motion on the
basis that the December 7 judgment is only a partial
judgment, as the Chapter 93A claim has not yet been
addressed. [ECF No. 196].
Skehel is correct that the December 7 judgment is a partial
judgment that does not dispose of the Chapter 93A claim.
Therefore, the Court enters the following findings of facts
and conclusions of law concerning the Chapter 93A claim,
enters judgment on the Chapter 93A claim for Mr. Skehel, and
denies the motion to amend the judgment as moot.
FINDINGS OF FACT
Court makes the following findings of fact, consistent with
the jury verdict. Phillip and Lisa DePaulis are a married
couple who reside in New Jersey. Mr. DePaulis worked in the
homebuilding industry and owned a construction company for 35
years, and Mrs. DePaulis worked as a bookkeeper for Mr.
DePaulis' business. In October 2010, the DePaulises
purchased a vacation home on Nantucket through a real estate
trust for $2.3 million in cash. Prior to finalizing the
purchase of the house, they contacted Mr. Skehel, who is a
contractor and resides in Nantucket. The DePaulises explained
that they wanted to renovate the entire house with high-end
materials. Mr. Skehel gave the DePaulises a rough estimate of
$790, 000 to complete the job. Later, Mr. Skehel met with the
DePaulises and explained that he would charge between $40 and
$60 per hour for labor, depending on the skill level required
for the task; all materials would be provided at cost; and he
would charge an additional 15 percent general
contractor's fee. The DePaulises agreed to these terms
prior to finalizing the purchase of the house. The parties
never put their agreement in writing.
beginning work on the home, Mr. Skehel realized that the
project would require the services of an architect to handle
certain structural engineering issues. The DePaulises
assented, and Mr. Skehel hired an architect. In February
2011, the DePaulises approved the plans drawn up by the
architect. In March 2011, Mr. Skehel explained to Mr.
DePaulis that the project would cost more than the initial
estimate, and he stated the total would be closer to $1.5
million. Mr. DePaulis agreed to the higher sum. A document
prepared by Mr. Skehel's company dated March 8, 2011
reflected that, at that time, the renovation was projected to
cost $1.5 million. Afterward, the DePaulises requested other
modifications to the project.
Skehel sent the DePaulises an invoice every month during the
time that he worked on the renovation. The DePaulises
regularly paid the monthly bills, without objection, until
July 2012. Mr. Skehel continued to work on the project for
several months after the DePaulises ceased payment, based on
the DePaulises' assurances that they would eventually pay
the balance. After the project was complete, Mr. Skehel's
office conducted a reconciliation of the invoices and
discovered about $15, 000 in overcharges, less undercharges,
so Mr. Skehel credited $15, 000 to the DePaulises'
Court found the testimony of both sides to be reasonably
credible, but the Court ultimately credits Mr. Skehel's
version of events. As relevant to deciding the Chapter 93A
claim, the Court notes that the DePaulises' story differs
from Mr. Skehel's in a few key respects. The DePaulises
claimed that their agreement with Mr. Skehel was simply that
they would pay Mr. Skehel's costs plus 15%. Mr. DePaulis
testified that he believed that $1.5 million figure provided
by Mr. Skehel in March 2011 was a final total for the
project, not an estimate. The DePaulises claim that the March
8, 2011 document supports this version of events, because it
uses the word “budget, ” not
“estimate.” The parties also dispute the
magnitude and cost of the modifications requested by the
DePaulises after March 2011; Mr. Skehel claims that the
modifications were significant, while the DePaulises assert
that they were minimal. Lastly, the DePaulises claimed that
the bills prepared by Mr. Skehel included numerous mistakes
and misstatements, including charging the DePaulises for
labor at a higher rate than what Mr. Skehel actually paid to
the subcontractors who worked on the project.
CONCLUSIONS OF LAW
DePaulises claim that Mr. Skehel violated Mass. Gen. Laws ch.
93A, §§ 2, 11 in three ways: exceeding the budget
without approval; telling the DePaulises that all major work
had been billed; and by submitting invoices for work that was
not performed, duplicative, and beyond the scope of the
agreement, and that included costs not actually incurred.
[ECF No. 78 ¶¶ 26-31].
that the Court credits Mr. Skehel's version of events,
there is no basis to find for the DePaulises on their Chapter
93A claims. On the issue of mistakes in the invoices, Mr.
Skehel's office performed a comprehensive audit once the
project was complete that corrected any mistakes and credited
the difference to the DePaulises. To the extent that the
DePaulises complain of work and expenses that exceeded the
budget without their approval, the Court determines that Mr.
Skehel never promised the DePaulises that he would keep the
expenses below $1.5 million. Furthermore, the DePaulises
should have been aware that the additional modifications they
requested in the later stages of the project, in addition to
ordinary unforeseen difficulties and overruns inherent in
home renovation, especially in a town with strict permitting
standards, could reasonably cause the final bill to exceed
$1.5 million. Ultimately, the DePaulises' Chapter 93A
claims are derivative of their unsuccessful claims for breach
of contract, breach of the covenant of good faith and fair
dealing, and negligence, and thus, they cannot succeed.
See, e.g., Murphy v. Nat'l Grange Mut. Ins.
Co., No. CIV. 13-11363-FDS, 2014 WL 5307671, at *6 (D.
Mass. Oct. 16, 2014) (where Chapter 93A claim was
“derivative of the underlying breach of contract
claim[, ] . . . . [s]ummary judgment as to the underlying
contract claim forecloses a derivative chapter 93A
claim”); Pembroke Country Club, Inc. v. Regency
Sav. Bank, F.S.B., 815 N.E.2d 241, 247 (Mass. App. Ct.
2004) (because Chapter 93A claim was “wholly
derivative” of unsuccessful tort claim, there was no
basis for recovery).
even if the Court agreed with the DePaulises that Mr. Skehel
exceeded the budget without permission and did not correct
mistaken invoices, this conduct would not rise to the level
of egregiousness required to constitute a violation of
Chapter 93A. The DePaulises brought their counterclaims
pursuant to Mass. Gen. Laws ch. 93A, § 11, which is
“judged by a standard of unfairness higher than the
standard employed where actions are brought by a consumer
under § 9 of the statute.” Madan v. Royal
Indem. Co., 532 N.E.2d 1214, 1217 n.7 (Mass. App. Ct.
1989). “To be actionable, the challenged misconduct
must rise to the level of an ‘extreme or egregious'
business wrong, ‘commercial extortion, ' or similar
level of ‘rascality' that raises ‘an eyebrow
of someone inured to the rough and tumble of the world of
commerce.'” Peabody Essex Museum, Inc. v. U.S.
Fire Ins. Co., 802 F.3d 39, 54 (1st Cir. 2015) (quoting
Baker v. Goldman Sachs & Co., 771 F.3d 37, 49-51
(1st Cir. 2014) and Zabin v. Picciotto, 896 N.E.2d
937, 963 (Mass. App. Ct. 2008)). In this case, exceeding an
agreed-upon budget would not come close to satisfying the
Chapter 93A, Section 11 standard. The worst conduct that the
DePaulises have alleged is that Mr. Skehel knowingly and
intentionally billed them for labor that was not actually
performed or materials that were not delivered. While this
would certainly reflect poor behavior, if true, it is not so
“extreme” or “egregious” that it is
akin to “extortion.” The DePaulises do not deny
that they received itemized invoices for the work performed,
and they were capable of evaluating the charges and disputing
any items that they believed to be incorrect. Accordingly,
they have not alleged conduct that rises to the level of a
violation of Chapter 93A, Section 11.