Opinion
16-P-206
01-12-2017
Douglas E. RODRIGUES v. David J. TUCK.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
Induced by the defendant David J. Tuck, the plaintiff Douglas E. Rodrigues agreed to loan $25,000 toward some sort of enterprise involving minerals in Arizona. When the loan was not repaid, Rodrigues brought an action against Tuck pursuant to G. L. c. 93A. After a jury-waived trial, a Superior Court judge ruled against Rodrigues on the c. 93A claim, but allowed him to amend his complaint to allege a contract claim based on Tuck's express agreement to be a "guarantor of this transaction." Judgment entered requiring Tuck to repay Rodrigues the $25,000. On appeal, Tuck's lead argument is that the judge abused his discretion in allowing the late amendment of the complaint. He additionally argues that there could not be a guaranty here because there was no underlying contract to guarantee. We affirm.
In part, Tuck seeks to cast this argument as a failure by the judge to make sufficient written findings pursuant to Mass.R.Civ.P. 52, as amended, 423 Mass. 1408 (1996), with respect to whether there was an underlying contract.
Background . Rodrigues is an accountant who did work for Tuck and companies owned by Tuck, such as preparing tax returns. In that capacity, Rodrigues saw that Tuck had made, or was slated to make, substantial profits by investing in various "quick money" schemes. On more than one occasion, Rodrigues expressed to Tuck an interest in investing in such schemes.
Tuck had invested substantial money of his own in ventures run by someone named Woody Davis allegedly involving minerals in Arizona. Although the trial record reveals little about the scheme or about Davis, it establishes that Davis kept insisting that Tuck provide additional funds in order to deal with various problems that Davis reported had arisen. As part of that pattern, in October, 2010, Davis told Tuck that he was in "immediate" need of additional funds. Tuck was unable or unwilling to provide those funds. He therefore approached Rodrigues about his supplying the money to Davis in what amounted to a high interest loan. The arrangement was memorialized in a written document entitled "funds release/loan agreement" (hereinafter, the loan agreement), which Tuck presented to Rodrigues to sign. Under the terms of the loan agreement, Rodrigues was to loan $25,000 to borrowers identified only as "Mr. and Mrs. Davis." The principal was to be repaid within sixty days, together with $5,000 of what effectively was interest. The Davises themselves did not sign the document, and the line for Tuck to sign on their behalf as "liaison" was left blank. At Rodrigues's insistence, Tuck did sign the agreement as "guarantor of this transaction."
The loan agreement stated that "Tuck is handling the transaction as liaison on behalf of the parties and both parties agree to this arrangement."
After the loan agreement was executed by Tuck and Rodrigues, Rodrigues provided Tuck with the $25,000 in cash. Tuck deposited the money and then, by wire transfer, passed along the bulk of the funds to Davis. Both Rodrigues's money and the funds that Tuck himself had invested vanished.
It appears from the trial record that the theory of Rodrigues's c. 93A claim was that Davis never existed and that Tuck simply absconded with Rodrigues's funds. Tuck was able to present evidence, which the judge credited, that Tuck did indeed pass along the funds to Davis, and that, in effect, both he and Rodrigues had been duped by Davis. The judge nevertheless found Tuck liable because he had agreed to serve as "guarantor of this transaction."
The subject of the guarantor provision came up at various points in the brief trial. For example, when Tuck was asked about it during his testimony, he tried to explain away the provision as meaning that he was guaranteeing only "that the cash [that Rodrigues gave him] would be transferred [to Davis]." In contrast, Rodrigues, during his testimony, offered the more natural reading that Tuck had agreed to guarantee repayment of the loan. The subject also came up during closing arguments. Even though the c. 93A claim was at that point the only one pleaded in the complaint, Tuck's counsel addressed the contract issues proactively as follows:
"And even if you considered it as a contract case, the underlying contract—you can't have a guaranty contract guaranteeing the underlying contract unless there's an underlying contract; there's no underlying contract; it's not signed by Mr. Davis; there's no agreement. Moreover, there's no consideration here, I mean, my guy was just acting as a liaison; collect the money, I'm going to send it off to Davis; there's proof of that. So there's no fraud, and even if you could find it's a contract, there isn't a case for a contract; there's no contract either.
Rodrigues's counsel began his own closing argument by requesting that his client be allowed to amend his complaint to conform to the trial evidence. Tuck made no objection to that request, even though he later acknowledged that he understood that Rodrigues was asking that he be allowed to plead a guaranty claim. When the judge issued a judgment that allowed Rodrigues to amend his complaint to add a claim based on contract and, specifically, the guarantor provision, Tuck filed a "motion for relief from judgment and/or to reconsider the judgment." In an accompanying memorandum, Tuck repeated the argument he made at trial that there could be no guaranty (between Rodrigues and Tuck) when there was no underlying contract (between Rodrigues and Davis). He did not argue that the late amendment otherwise prejudiced him (e.g., by leaving him unable to produce evidence to rebut the claim of contractual liability). The judge summarily denied the motion.
Specifically, in a postjudgment filing, Tuck recognized that Rodrigues had "made an oral motion to amend his complaint to add a count for breach of contract," and, in the same paragraph, offered a responding argument based on the legal requirements "essential to the enforcement of a guarantee [sic ] contract."
Discussion . Late amendment . Pursuant to Mass.R.Civ.P. 15(a), 365 Mass. 761 (1974), leave to amend pleadings generally is to be freely given. Whether to allow such an amendment falls to the discretion of the trial judge, and our review is limited to whether the judge abused his discretion. Audubon Hill S. Condominium Assn . v. Community Assn. Underwriters of Am., Inc ., 82 Mass. App. Ct. 461, 471-472 (2012). We discern no such abuse here.
As noted, when Rodrigues brought up during his closing argument the option of amending his complaint, Tuck raised no objection. Even in his postjudgment motion, Tuck raised no concerns that allowing such an amendment amounted to unfair surprise. Moreover, the relevant facts regarding the insertion of the guarantor provision into the loan agreement that Tuck and Rodrigues executed were not in dispute. The import of that addition was in dispute, but Tuck took the opportunity to address that issue at trial. To the extent that Tuck suggests for the first time on appeal that he might have encountered undue prejudice as a result of the late amendment, it is too late for him to do that. See NES Rentals v. Maine Drilling & Blasting, Inc ., 465 Mass. 856, 860 n.8 (2013), citing Mass.R.A.P. 16(a), as amended, 367 Mass. 921 (1975). In any event, "prejudice to the non-moving party is the touchstone for the denial of an amendment" under Mass.R.Civ.P. 15. Hamed v. Fadili , 408 Mass. 100, 105 (1990) (quotation omitted). On the record before us, Tuck has not demonstrated any prejudice to his ability to defend against the guaranty claim. Under these circumstances, Tuck has shown no abuse of discretion.
Whether there was an underlying contract . As Tuck accurately points out, a party seeking to enforce a guaranty ordinarily must prove the existence of the underlying contract that the guarantor had agreed to guarantee. See Cadle Co . v. Webb , 66 Mass. App. Ct. 269, 273 (2006) (explaining that guaranty is secondary contract "predicated on ... the contract expressed in the guaranty" [quotation omitted] ). Tuck argues, as he did below, that Rodrigues did not, and on this record cannot, prove that Rodrigues and Davis (with or without his wife) ever entered into the underlying contract memorialized in the loan agreement. In making this argument, Tuck focuses on the undisputed facts that the Davises themselves never signed the loan agreement, and that Tuck never expressly signed the document on their behalf. Of course, two parties may have entered into a binding contract regardless of whether they have executed a written contract. See, e.g., Situation Mgmt. Sys., Inc . v. Malouf, Inc ., 430 Mass. 875, 879-880 (2000) (although intention to execute written agreement signifies that parties do not intend to be bound until it is executed, "if all the material terms ... have been agreed upon, it may be inferred that the writing to be drafted and delivered is a mere memorial of the contract" [quotation omitted] ). See also LiDonni, Inc . v. Hart , 355 Mass. 580, 583 (1969) ("In the absence of an express agreement, a contract implied in fact may be found to exist from the conduct and relations of the parties").
Nevertheless, there is at least some force to Tuck's argument that we cannot reasonably say, on this record, that the Davises had entered into a binding contract that Rodrigues could enforce against them. After all, Rodrigues's interactions were with Tuck, not the Davises, and the record reveals little about the scope of Tuck's authority to make binding promises on the Davises' behalf.
At trial, Rodrigues testified that he had never met the Davises, nor spoken to them by telephone. Tuck testified that there was one occasion when he briefly patched Davis into a conference call. The judge did not resolve this factual dispute.
In the end, however, under the particular circumstances of this case, whether Rodrigues could enforce a binding agreement against the Davises does not matter with respect to Tuck's own liability. Even if no enforceable contract existed between Rodrigues and the Davises, that does not mean that Tuck therefore could escape liability. Under the facts found by the judge, there was, at a minimum, a bilateral contract between Rodrigues and Tuck through which Rodrigues agreed to put up the $25,000 toward Davis's scheme, and Tuck promised that in any event, Rodrigues would get his principal back. The judge's findings therefore support Tuck's contractual liability to Rodrigues even if the particular agreement between them did not fit the classic form of a guaranty. See Commonwealth v. Va Meng Joe , 425 Mass. 99, 102 (1997) ("An appellate court is free to affirm a ruling on grounds different from those relied on by the motion judge if the correct or preferred basis for affirmance is supported by the record and the findings").
There is no merit to Tuck's argument that such a contract would fail for want of consideration. Faced with Davis's claims that more money needed to be loaned to the venture in order to protect Tuck's existing investments in that scheme, Tuck had ample incentive to get Rodrigues to loan the funds, as the judge explicitly found.
To the extent that Tuck seeks to augment his claim of error by arguing that the judge violated Mass.R.Civ.P. 52 by not making express written findings about whether there was an underlying contract between Rodrigues and the Davises, we discern no merit in that argument. "The judge's findings of fact and rulings of law satisfy the three purposes underlying the requirement in Mass.R.Civ.P. 52(a) for written findings." Geraci v. Crown Chevrolet, Inc ., 15 Mass. App. Ct. 935, 937 (1983), citing Cormier v. Carty , 381 Mass. 234, 236 (1980).
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Judgment affirmed .