H1 Lincoln, Inc. v. S. Wash. St.

236 N.E.3d 136

104 Mass.App.Ct. 256

H1 LINCOLN, INC.

v.SOUTH WASHINGTON STREET, LLC & others.¹

Nos. 23-P-359 & 23-P-885.

Appeals Court of Massachusetts, Hampden.

Argued January 8, 2024

Decided June 5, 2024

Contract, Lease of real estate, Performance and breach, Implied covenant of good faith and fair dealing, Specific performance, Damages. Consumer Protection Act, Lease, Damages, Attorney’s fees, Businessman’s claim, Interest. Real Property, Lease. Damages, Attorney’s fees, Consumer protection case, Interest, Mitigation. Interest. Waiver. Practice, Civil, Damages, Interest, Attorney’s fees, Consumer protection case.

Civil action commenced in the Superior Court Department on December 27, 2017.

Following review by the Supreme Judicial Court, 489 Mass. 1 (2022), motions to amend or for relief from judgment, for an award of prejudgment interest on appellate fees and costs, for postjudgment interest, and for postrescript attorney’s fees and costs were heard by Mark D. Mason, J.

Richard E. Briansky, Boston, for the defendants.

Michael G. McDonough, Springfield, (John J. Egan also present) for the plaintiff.

Present: Vuono, Blake, & Toone, JJ.

TOONE, J.

₂₅₇Aptly describing this dispute as "bitter and protracted," the Supreme Judicial Court affirmed judgments entered in favor of the plaintiff on claims involving violation of G. L. c. 93A and breach of contract. H1 Lincoln, Inc. v. South Washington St., LLC, 489 Mass. 1, 2-4, 27, 179 N.E.3d 545 (2022) (H1 Lincoln). The litigation nevertheless continued, and in this consolidated appeal the defendants challenge four postjudgment orders that awarded prejudgment interest, postjudgment interest, and attorney’s fees. We affirm.

Background. We briefly summarize the circumstances that gave rise to this dispute to provide context for our decision. The plaintiff, H1 Lincoln, Inc., is a car dealership doing business as Majestic Honda (Majestic). Majestic entered into a commercial lease with the defendants² to rent two adjacent parcels in North Attleborough on which it intended to develop and operate a car dealership. H1 Lincoln, 489 Mass. at 4-5, 179 N.E.3d 545. The defendants then ₂₅₈engaged in a prolonged "scheme of commercial extortion," using "their leverage over Majestic to coercively extract from Majestic additional concessions." Id. at 16-17, 179 N.E.3d 545. In response, Majestic filed suit in the Superior Court for breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of c. 93A. Following a jury trial, a judgment entered in favor of Majestic on its claims for breach of contract and breach of the implied covenant. The jury awarded Majestic $3,762,500 in damages in compensation for the delay in operating its dealership. The judge awarded Majestic $425,912 in attorney’s fees and costs based on a fee-shifting provision in the lease.

Following a bench trial, the judge found that the defendants acted with willful and knowing disregard for their contractual obligations in violation of c. 93A, and awarded Majestic an additional $700,000 in delay damages.³ The judge doubled the total amount of damages (awarded by the jury and the judge) under G. L. c. 93A, § 11. In addition, the judge ordered that, if Majestic elected specific performance of the lease (which it subsequently did), the defendants had to pay additional monthly damages of $175,000 until they complied with the terms of the lease. The judge awarded Majestic an additional $222,454 in attorney’s fees and costs, pursuant to the terms of the lease and under c. 93A.

In July 2019, Majestic submitted a proposed judgment that included more than $1 million in prejudgment interest on delay damages. In response, the defendants filed what they styled as a motion to strike the proposed judgment and to preclude the award of prejudgment interest, arguing that it was improper to award prejudgment interest on a judgment for delay damages. They also argued that the award of prejudgment interest would result in a windfall for Majestic. The judge took no action on the motion; a judgment entered on August 6, 2019, that included a provi- sion for "statutory interest thereon as provided by law from the date of the breach of the contract." Thereafter, the defendants filed a motion to amend or for relief from judgment pursuant to Mass. R. Civ. P. 59 (e), 365 Mass. 827 (1974), and 60 (a), 365 Mass. 828 (1974), challenging the application of prejudgment interest to delay damages and attorney’s fees and costs.

₂₅₉As a result of what it claimed were additional c. 93A violations, Majestic filed, and the judge allowed, a motion to reopen the evidence.⁴ An amended judgment issued on June 16, 2020, that included additional delay damages of $1,592,250, which the judge doubled under G. L. c. 93A, § 11. The amended judgment also provided that "[i]nterest on the original [j]udgment dated August 6, 2019 will continue to run separately as previously ordered."

On appeal from the judgment and amended judgment, the Supreme Judicial Court concluded that the defendants’ conduct violated c. 93A and affirmed the judgments. H1 Lincoln, 489 Mass. at 3-4, 179 N.E.3d 545. The court awarded Majestic $163,851 in appellate fees and costs. The defendants did not raise, and H1 Lincoln did not address, any issues involving prejudgment interest.

In the present appeal, the defendants argue that the judge erred in entering four postjudgment orders. As discussed in detail infra, the four orders at issue are (1) the denial of the defendants’ renewed motion to amend or for relief from judgment based on previous awards of prejudgment interest, (2) an award of prejudgment interest on the appellate fees and costs awarded by the Supreme Judicial Court, (3) the accrual of postjudgment interest on an encumbered portion of their payment of the monetary judgment to Majestic, and (4) an award of $92,294 in "attorneys’ fees and costs arising out of the post-rescript litigation."⁵ We consider each of the defendants’ arguments in turn.

[1] Discussion. 1. The first order: waiver of the defendants’ challenge to prejudgment interest on delay damages. The defendants claim that the judge erred in ruling that they waived their challenge to the award of prejudgment interest on delay damages and certain awards of attorney’s fees and costs because they failed to raise those issues in their first appeal. We are not persuaded.

The holding in City Coal Co. of Springfield, Inc. v. Noonan, 424 Mass. 693, 677 N.E.2d 1141 (1997), is controlling. In that case, after both parties unsuccessfully appealed a judgment stemming from the sale of an oil business, the judgment entered after rescript "in the same language as that appealed from." Id. at 694, 677 N.E.2d 1141. The judge ₂₆₀awarded interest "according to law." Id. The defendant then filed a second appeal, which was transferred to the Supreme Judicial Court on its own initiative, in which he argued for the first time that prejudgment interest on an award of damages in the judgment should have been calculated at a lower rate. Id. The court held that, "[w]hatever the merits of that argument, it is too late to make it. The point could have been raised, but was not, on [the defendant’s] appeal to the Appeals Court because the issue was apparent on the face of the judgment." Id. at 695, 677 N.E.2d 1141, citing Frank D. Wayne Assocs., Inc. v. Lussier, 394 Mass. 619, 621-623, 477 N.E.2d 124 (1985). See also Gutierrez v. Massachusetts Bay Transp. Auth., 442 Mass. 1041, 1042-1043, 817 N.E.2d 738 (2004) (party foreclosed from raising issue that could have been raised in first appeal).

Here, the application of prejudgment interest to delay damages and attorney’s fees and costs was apparent on the face of the judgments from which the defendants initially appealed. After the judge entered a judgment on August 6, 2019, which provided for "statutory interest thereon as provided by law from the date of the breach of the contract," the defendants filed on August 12 a motion pursuant to Mass. R. Civ. P. 59, 365 Mass. 827 (1974), contending that the judgment should be amended to exclude prejudgment interest on "the award of Majestic’s attorney’s fees, expert fees or other costs." The defendants reiterated their position at a hearing on August 15, arguing that "there’s no interest on attorneys’ fees," and that the imposition of prejudgment interest to delay damages was "penal in nature" and not what the statute was "designed to protect." As the judge later summarized, he "took the defendants’ motion under advisement," but "ultimately took no action" on it. The defendants’ timely opposition to the application of prejudgment interest shows that this issue was apparent on the face of those judgments.

The defendants concede that they did not raise the issue of prejudgment interest in their first appeal, but argue that under Mass. R. A. P. 4 (a) (3), as appearing in 481 Mass. 1606 (2019), the judge’s failure to rule on their rule 59 motion barred them from doing so. Rule 4 (a) (3) provides that any notice of appeal filed before the disposition of a timely Rule 59 motion to alter or amend a judgment "shall have no effect." Notwithstanding that rule, the defendants made a deliberate decision to proceed with their appeal as if their rule 59 motion had been denied. They did not seek a ruling on their motion after filing it on August 12, 2019, and arguing it three days later. Nor did they object to the ₂₆₁application of prejudgment interest when the amended judgment issued on June 16, 2020, reiterating that "[i]nterest on the original [j]udgment dated August 6, 2019 will continue to run separately as previously ordered." On July 3, 2020, they filed a notice of appeal of the August 6, 2019 judgment (as well as the June 16, 2020 amended judgment). In the civil docketing statement filed on September 10, 2020, in connection with the first appeal, the defendants did not identify prejudgment interest as an issue for appeal, and under the heading, ...