HSBC Realty Credit Corp. v. O'Neill, 1st Cir. (2014)

7/26/2019 HSBC Realty Credit Corp. v. O'Neill, 1st Cir. (2014)

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United States Court of AppealsFor the First Circuit

No. 13- 1214

HSBC REALTY CREDI T CORPORATI ON ( USA) ,

Pl ai nt i f f , Appel l ee,

v.

J . BRI AN O' NEI LL,

Def endant , Appel l ant .

APPEAL FROM THE UNI TED STATES DI STRI CT COURTFOR THE DI STRI CT OF MASSACHUSETTS

[ Hon. Ri char d G. St ear ns, U. S. Di st r i ct J udge]

Bef or e

Tor r uel l a, Ri ppl e, * and Thompson,Ci r cui t J udges.

J ohn J . J acko I I I , wi t h whomAl an S. Fel l hei mer and Fel l hei mer& Ei chen LLP wer e on br i ef , f or appel l ant .

Davi d J . McNamara, wi t h whomPet er C. Obershei mer and Phi l l i psLyt l e LLP wer e on br i ef , f or appel l ee.

Febr uary 7, 2014

* Of t he Sevent h Ci r cui t , si t t i ng by desi gnat i on.


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THOMPSON, Circuit Judge.

OVERVIEW

Today' s case a di ver si t y sui t gover ned, t he par t i es

agr ee, by Massachuset t s subst ant i ve l aw ar i ses f r om t he ef f or t s

of pl ai nt i f f HSBC Real t y Cr edi t Cor por at i on ( USA) t o r ecover $8. 1

mi l l i on f r om def endant J . Br i an O' Nei l l under a guar ant y. A

di st r i ct j udge st r uck O' Nei l l ' s def enses, di smi ssed hi s

count er cl ai ms, deni ed hi m l eave t o repl ead, and gr ant ed HSBC

j udgment on t he pl eadi ngs. O' Nei l l appeal s. But af t er sayi ng what

needs t o be sai d, we af f i r m.

HOW THE CASE GOT HERE

Gi ven t he l i t i gat i on' s pr esent post ur e, we descr i be t he

f act s al l eged i n t he pl eadi ngs di scussi ng t oo t he document s

f ai r l y i ncor por at ed wi t hi n t hem i n t he l i ght most agr eeabl e t o

O' Nei l l , dr awi ng ever y r easonabl e i nf er ence i n hi s f avor . See,

e. g. , Gr aj al es v. P. R. Por t s Aut h. , 682 F. 3d 40, 44 ( 1st Ci r .

2012) .

The Players and the Project

HSBC i s a Del awar e cor por at i on wi t h i t s pr i nci pal pl ace

of busi ness i n New Yor k. O' Nei l l i s a Pennsyl vani a r esi dent who i s

a pr i nci pal of a company cal l ed Br andywi ne Par t ner s, LLC. 1 Back i n

1 A qui ck "f yi ": Ci t i zenshi p i s what mat t er s f or di ver si t y-j ur i sdi ct i on pur poses, see 28 U. S. C. 1332( a) ( 1) and acor por at i on i s a ci t i zen of bot h t he st at e wher e i t i s i ncor por at edand t he st at e wher e i t has i t s pr i nci pal pl ace of busi ness, i d. 1332( c) ( 1) , whi l e a per son i s a ci t i zen of t he st at e wher e he i s

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t he mi d- 2000s, Br andywi ne want ed t o buy a part i cul ar pi ece of

i ndust r i al pr oper t y i n Del awar e and r edevel op i t f or r esi dent i al

use. Because of some f ai r l y ser i ous envi r onment al pr obl ems wi t h

t he Del awar e si t e, Br andywi ne concl uded af t er an extensi ve

i nvest i gat i on t hat t he best cour se of act i on was t o r aze t he

exi st i ng bui l di ngs and st ar t f r om scrat ch. Event ual l y Br andywi ne

t urned t o HSBC f or a l oan. And HSBC agr eed t o dol e out $15. 9

mi l l i on pur suant t o a pr oj ect - l oan agr eement between t hem.

The Project-Loan Agreement

Among ot her t hi ngs, t he pr oj ect - l oan agr eement r equi r es

Br andywi ne t o pay f or an appr ai sal of t he pr oper t y. And t he

agr eement says t hat t hi s appr ai sal has t o yi el d a l oan- t o- val ue

r at i o of no more t han 60%. That condi t i on, t he document cont i nues,

i s f or HSBC' s " sol e benef i t , " meani ng "no ot her per son" has " t he

r i ght t o rel y on" i t s "sat i s f act i on. "2 Usi ng t hat r at i o, t he

domi ci l ed, whi ch ( at t he r i sk of over si mpl i f i cat i on) i s t he pl acewher e he i nt ends t o remai n, see Rodr guez v. Seor Fr og' s de l aI sl a, I nc. , 642 F. 3d 28, 32 ( 1st Ci r . 2011) .

2 As a heads- up, whenever we quot e a document i n the t ext , wedo away wi t h unnecessar y capi t al i zat i on or bol di ng of wor ds. Butt o gi ve t he reader a bet t er sense of t he document s' set up, wepr esent some of t he r el evant pr ovi si ons ( l i ke t hese ones) i nf oot not es, r epr oduci ng t hem essent i al l y as t hey appear i n t hepapers:

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pr oper t y' s appr ai sed val ue had t o be at l east $26. 5 mi l l i on t o

suppor t t he $15. 9 mi l l i on l oan or so O' Nei l l al l eges. 3 Al so

r el evant , Br andywi ne expr essl y "acknowl edges" i n t he pr oj ect - l oan

agr eement t hat HSBC was " r el [ yi ng] on t he exper i ence of

[ Br andywi ne] and i t s gener al par t ner s, member s, [ and] pr i nci pal s

. . . i n owni ng and oper at i ng" pr oper t i es l i ke t hi s and t hat HSBC

"ha[ s] a val i d i nt er est i n mai nt ai ni ng" t he pr oper t y' s "val ue . . .

t o ensure that , shoul d [ Br andywi ne] def aul t i n t he repayment and

II. THE LOAN

. . .

Section 2.9 Conditions Precedent to Disbursement of

Project Loan Proceeds.

2.9.1 Conditions of Advances. . . .

. . .

( p) Appr ai sal . [ HSBC] shal l have r ecei ved [ an]

. . . appr ai sal of t he Pr oper t y, commi ssi oned by [ HSBC]at [ Br andywi ne' s] cost and expense, t hat i ndi cat es an "asi s" Loan- t o- Val ue Rat i o whi ch does not exceed 60% andt hat i s ot her wi se sat i sf actor y t o [ HSBC] i n i t s sol edi scr et i on.

. . .

2.9.3 No Reliance. Al l condi t i ons and r equi r ement sof t hi s Agr eement ar e f or t he sol e benef i t of [ HSBC] andno ot her Per son . . . shal l have t he r i ght t o r el y on t hesat i sf act i on of such condi t i ons and r equi r ement s by

[ Br andywi ne] .

3 The l oan document s say nothi ng about t he pr opert y' s val ue.But O' Nei l l t heor i zes t hat HSBC must have pegged the pr oper t y' sval ue at $26. 5 mi l l i on, because t he pr oj ect - l oan agr eement pr ovi dest hat t he $15. 9 mi l l i on l oan amount cannot exceed 60% of t hepr oper t y' s val ue.

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per f or mance of t he obl i gat i ons under t he pr oj ect l oan document s,

[ HSBC] can r ecover t he obl i gat i ons" by sel l i ng t he pr oper t y. 4 Of

not e t oo, Br andywi ne si gned a pr omi ssory not e and gave HSBC a

mort gage on the Del aware pr oper t y ( among ot her t hi ngs) .

The Guaranty

Because, as he acknowl edged, HSBC woul d not l end

Br andywi ne a cent unl ess he "uncondi t i onal l y" guar ant eed t he l oan' s

r epayment , O' Nei l l si gned an "absol ut [ e] " per sonal guar ant y f or t he

l oan, agr eei ng t hat he had a "di r ect or i ndi r ect i nt er est " i n

Br andywi ne ( and so woul d "di r ect l y benef i t " f r omt he l oan) and t hat

he occupi ed t he st at us of "pr i mar y obl i gor " of t he "guar ant eed

obl i gat i ons" ( def i ned as t he "prompt and uncondi t i onal payment by

4 That pi ece of t he pr oj ect - l oan agr eement i s set out t hi sway:

VI. TRANSFERS

Section 6.1 Agent's and Lenders' Reliance.

[ Br andywi ne] acknowl edges t hat [ HSBC] ha[ s] exami nedand r el i ed on t he exper i ence of [ Br andywi ne] and i t sgener al par t ner s, member s, [ and] pr i nci pal s . . . i nowni ng and oper at i ng pr oper t i es such as t he Pr oper t y i nagr eei ng t o ent er i nt o t hi s Agr eement and make t hePr oj ect Loan, and wi l l cont i nue t o r el y on [ Br andywi ne' s]ownershi p of t he Pr oper t y as a means of mai nt ai ni ng t heval ue of t he Proper t y as secur i t y f or r epayment and

perf or mance of t he Obl i gat i ons under t he Proj ect LoanDocument s. [ Br andywi ne] acknowl edges t hat [ HSBC] ha[ s]a val i d i nt er est i n mai nt ai ni ng t he val ue of t he Pr oper t yso as t o ensur e t hat , shoul d [ Br andywi ne] def aul t i n t her epayment and per f ormance of t he Obl i gat i ons under t heProj ect Loan Document s, [ HSBC] can r ecover t heObl i gat i ons by a sal e of t he Pr oper t y.

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[ Br andywi ne] of t he l oan and i nt er est t her eon") . 5 The guarant y' s

l i mi t at i ons- on- guar ant eedobl i gat i ons cl ause caps O' Nei l l ' s

l i abi l i t y at $8. 1 mi l l i on, however . 6

5 Thi s par t of t he guar ant y i s l ai d out l i ke so:

GUARANTY OF PAYMENT

. . .

. . . [ HSBC] i s not wi l l i ng t o make t he Loan, orot her wi se ext end cr edi t , t o [ Br andywi ne] unl ess [ O' Nei l l ]uncondi t i onal l y guarant ees payment and per f ormance t o[ HSBC] of t he Guar ant eed Obl i gat i ons ( as her ei ndef i ned) [ . ]

. . .

ARTICLE I

NATURE AND SCOPE OF GUARANTY

1.1 Guaranty of Obligation. Subj ect t o t hel i mi t at i ons cont ai ned i n Sect i on 6. 15, [ O' Nei l l ] her ebyi r r evocabl y, absol ut el y and uncondi t i onal l y guar ant ees t o[ HSBC] . . . t he payment and per f ormance of t he

Guar ant eed Obl i gat i ons as and when t he same shal l be dueand payabl e, whet her by l apse of t i me, by accel er at i on ofmat ur i t y or ot her wi se. [ O' Nei l l ] her eby i r r evocabl y anduncondi t i onal l y covenant s and agr ees t hat [ he] i s l i abl ef or t he Guar ant eed Obl i gat i ons as a pr i mar y obl i gor .

6 That sect i on r eads:

ARTICLE VI

MISCELLANEOUS

. . .

6.15 Limitations on Guaranteed Obligations.Not wi t hst andi ng anythi ng i n t hi s Guar ant y or any of t heLoan Document s t o t he cont r ar y, t he l i abi l i t y of[ O' Nei l l ] under t hi s Guar ant y shal l be l i mi t ed t o ( a) t heGuarant eed Amount ( as herei naf t er def i ned) and ( b)

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Per t i nent l y t oo, t he guar ant y l i st s a bunch of

r epr esent at i ons and war r ant i es that O' Nei l l made t o HSBC. For

exampl e, he af f i r med bot h t hat he was " f ami l i ar wi t h, and ha[ d]

i ndependent l y revi ewed books and r ecor ds r egardi ng, " Br andywi ne' s

"f i nanci al condi t i on" and al so t hat he was " f ami l i ar wi t h t he

val ue" of t he pr oper t y of f er ed as col l at er al . He conf i r med t hat

nei t her Br andywi ne' s condi t i on nor t he pl edge of col l at er al i nduced

hi m t o si gn t he guar ant y. And he decl ar ed t hat HSBC sai d not hi ng

t o i nduce hi m t o execut e that document , ei t her . 7

amount s due under Sect i on 1. 8 of t hi s Guarant y. As usedher ei n, t he "Guaranteed Amount" shal l mean an amountequal t o $8, 100, 000.

Sect i on 1. 8, whi ch makes O' Nei l l l i abl e f or payment of expensest hat HSBC i ncur s i n seeki ng t o enf or ce t he guar ant y, pr ovi des i nf ul l :

1.8 Payment of Expenses. I n t he event t hat[ O' Nei l l ] shoul d br each or f ai l t o t i mel y per f or m any

pr ovi s i ons of t hi s Guar ant y, [ O' Nei l l ] shal l , wi t hi n f i ve( 5) busi ness days af t er r ecei pt of wr i t t en demand f r om[ HSBC] , pay [ HSBC] al l act ual and r easonabl e cost s andexpenses ( i ncl udi ng cour t cost s and at t or neys' f ees)i ncur r ed by [ HSBC] i n the enf orcement her eof or t hepr eser vat i on of [ HSBC' s] r i ght s her eunder . The covenantcont ai ned i n t hi s Sect i on shal l sur vi ve t he payment andper f ormance of t he Guarant eed Obl i gat i ons.

7 Here i s how t hese pr ovi si ons show up i n t he guarant y:

ARTICLE III

REPRESENTATIONS AND WARRANTIES

. . .

3.2 Familiarity and Reliance. [ O' Nei l l ] i sf ami l i ar wi t h, and has i ndependent l y r evi ewed books and

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The guar ant y al so has a "no dut y t o pur sue ot her s"

cl ause, whi ch st r esses t hat HSBC need not enf or ce i t s r i ght s or

exhaust i t s r emedi es agai nst Br andywi ne or t he pr opert y and t hat

O' Nei l l gi ves up whatever r i ght s he "may have" t o f orce HSBC t o do

ei t her of t hese t hi ngs. 8 But t her e i s mor e. O' Nei l l ' s guar ant y

decl ar es t hat he "wai ves any common l aw, equi t abl e, st at ut or y or

ot her r i ght s" t hat he may have because of " [ a] ny act i on . . .

r ecor ds r egar di ng, t he f i nanci al condi t i on of

[ Br andywi ne] and i s f ami l i ar wi t h t he val ue of any andal l col l at er al i nt ended t o be creat ed as secur i t y f or t hepayment of t he Note or Guarant eed Obl i gat i ons; however ,[ O' Nei l l ] i s not r el yi ng on such f i nanci al condi t i on ort he col l at er al as an i nducement t o ent er i nt o t hi sGuar ant y.

3.3 No Representation by Lender. Nei t her [ HSBC]nor any ot her part y has made any r epr esent at i on, warr ant yor st at ement t o [ O' Nei l l ] i n or der t o i nduce [ O' Nei l l ] t oexecut e t hi s Guar ant y.

8

Al so appear i ng i n Ar t i cl e I of t he guar ant y, whi ch, agai n,i s t i t l ed "Nat ur e and Scope of Guar ant y, " t hi s passage reads i nr el evant par t :

1.6 No Duty to Pursue Others. I t shal l not benecessar y f or [ HSBC] ( and [ O' Nei l l ] her eby wai ves anyr i ght s whi ch [ he] may have t o r equi r e [ HSBC] ) , i n or dert o enf or ce t he obl i gat i ons of [ O' Nei l l ] her eunder , f i r stt o ( i ) i nst i t ut e sui t or exhaust i t s r emedi es agai nst[ Br andywi ne] or ot her s l i abl e on t he Loan or t heGuar ant eed Obl i gat i ons or any ot her per son, ( i i ) enf or ce[ HSBC' s] r i ght s agai nst any col l at er al whi ch shal l ever

have been gi ven t o secur e t he Loan, . . . ( v) exhaust anyr emedi es avai l abl e t o [ HSBC] agai nst any col l at er al whi chshal l ever have been gi ven t o secur e the Loan, or ( vi )r esort t o any ot her means of obt ai ni ng payment of t heGuar ant eed Obl i gat i ons. [ HSBC] shal l [ not ] be r equi r edt o mi t i gate damages or t ake any ot her act i on t o reduce,col l ect or enf or ce t he Guar ant eed Obl i gat i ons.

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t aken" r egar di ng t he l oan or t he col l at er al t hat "i ncreases t he

l i kel i hood t hat [ he] wi l l be r equi r ed t o pay t he guar ant eed

obl i gat i ons. " 9 Toppi ng t hi ngs of f , t he guar ant y has an i nt egr at i on

cl ause sayi ng t hat t hi s document i s t he " f i nal and compl et e"

expr essi on of i t s t er ms, t hat t her e ar e "no or al agr eement s"

9 Her e ar e those pr ovi si ons:

ARTICLE II

EVENTS AND CIRCUMSTANCES NOT REDUCING

OR DISCHARGING [O'NEILL'S] OBLIGATIONS

[ O' Nei l l ] her eby consent s and agr ees t o each of t hef ol l owi ng and agr ees t hat [ hi s] obl i gat i ons under t hi sGuar ant y shal l not be r el eased, di mi ni shed, i mpai r ed,r educed or adver sel y af f ect ed by any of t he f ol l owi ng andwai ves any common l aw, equi t abl e, st atut ory or otherr i ght s . . . whi ch [ he] mi ght ot her wi se have as a resul tof or i n connect i on wi t h any of t he f ol l owi ng:

. . .

2.13 Other Actions Taken or Omitted. Any ot heract i on t aken or omi t t ed t o be taken wi t h r espect t o theLoan Document s, t he Guarant eed Obl i gat i ons, or t hesecur i t y and col l at er al t her ef or , whet her or not suchact i on or omi ssi on pr ej udi ces [ O' Nei l l ] or i ncreases t hel i kel i hood t hat [ he] wi l l be r equi r ed t o pay t heGuar ant eed Obl i gat i ons pur suant t o t he t er ms her eof , i ti s t he unambi guous and unequi vocal i nt ent i on of [ O' Nei l l ]t hat [ he] shal l be obl i gat ed t o pay t he Guar ant eed

Obl i gat i ons when due, notwi t hst andi ng any occurr ence,ci r cumst ance, event , act i on, or omi ssi on what soever ,whet her contempl at ed or uncontempl at ed, and whet her ornot ot her wi se or par t i cul ar l y descr i bed her ei n, whi chobl i gat i on shal l be deemed sat i sf i ed onl y upon t he f ul land f i nal payment and sat i sf act i on of t he Guar ant eedObl i gat i ons.

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bet ween the par t i es, and t hat no one can use ext r i nsi c evi dence of

any ki nd to "cont r adi ct " or "modi f y" any t er m. 10

The Default and the Lawsuit

Br andywi ne def aul t ed on i t s r epayment obl i gat i ons, so

HSBC demanded t hat O' Nei l l make good on hi s $8. 1 mi l l i on guarant y.

But he t ur ned a deaf ear , causi ng HSBC t o f i l e sui t on t he guar ant y

agr eement . O' Nei l l r et ur ned f i r e wi t h 18 def enses and 8

count er cl ai ms. Some of hi s def enses def y si mpl e l abel s. Ot her s do

not , l i ke hi s def enses of mi t i gat i on, pr omi ssor y est oppel , br each

10 That pr ovi si on decl ar es:

ARTICLE VI

MISCELLANEOUS

. . .

6.11 Entirety. THIS GUARANTY EMBODIES THE FINAL,

ENTIRE AGREEMENT OF [O'NEILL AND HSBC] WITH RESPECT TO[O'NEILL'S] GUARANTY OF THE GUARANTEED OBLIGATIONS AND

SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,

REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR

ORAL, RELATING TO THE SUBJECT MATTER HEREOF. THIS

GUARANTY IS INTENDED BY [O'NEILL AND HSBC] AS A FINAL AND

COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO

COURSE OF DEALING BETWEEN [O'NEILL AND HSBC], NO COURSE

OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF

PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR

DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE

SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFYANY TERM OF THIS GUARANTY AGREEMENT. THERE ARE NO ORAL

AGREEMENTS BETWEEN [O'NEILL AND HSBC].

The bol di ng and capi t al i zat i on her e ar e not mi st akes on our par t t he pr ovi si on act ual l y l ooks t hi s way, whi ch we guess was done soeven a l ackadai si cal r eader coul d not mi ss i t .

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of f i duci ar y dut y, br each of an i mpl i ed covenant of good- f ai t h

deal i ng, f r audul ent i nducement , dur ess and undue i nf l uence,

unconsci onabl e cont r act of adhesi on, no meet i ng of t he mi nds, and

f ai l ur e t o st at e a cl ai m f or whi ch r el i ef may be gr ant ed. As f or

hi s count er cl ai ms, t hey wer e f or f r audul ent i nducement , pr omi ssory

est oppel , negl i gent mi sr epr esent at i on, unf ai r and decept i ve

busi ness pract i ces under Mass. Gen. Laws Ch. 93A, br each of an

i mpl i ed covenant of good- f ai t h deal i ng, br each of dut y t o mi t i gat e

damages, decl ar at or y and i nj unct i ve rel i ef , and br each of cont r act .

Convi nced t hat t her e wer e no mat er i al f act s i n di sput e

and that j udgment shoul d ent er enf or ci ng the guar ant y' s expr ess

t er ms, HSBC moved t he j udge to st r i ke O' Nei l l ' s def enses and t o

gr ant i t j udgment on t he pl eadi ngs under Fed. R. Ci v. P. 12( c) .

O' Nei l l r esi st ed by sayi ng t hat hi s def enses and count er cl ai ms

barr ed t he guarant y' s enf orcement . 11 I n t he al t er nat i ve, he asked

t he j udge f or l eave t o repl ead hi s def enses and count er cl ai ms under

Fed. R. Ci v. P. 15( a) . 12

Taki ng up HSBC' s mot i on, t he j udge sai d t hat a common

t heme per vaded O' Nei l l ' s def enses and count er cl ai ms: " t hat HSBC

must seek t o r ecover any amount owed by Br andywi ne by pr oceedi ng

agai nst t he [ Del awar e] pr oper t y bef or e t ur ni ng t o O' Nei l l ' s

11 The part i es had at t ached t he key document s t o t hei rr espect i ve pl eadi ngs.

12 O' Nei l l di d not submi t pr oposed amended pl eadi ngs wi t h t hi sr equest .

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per sonal [ g] uar ant y, " s i nce "HSBC al l egedl y r epr esent ed t o hi mt hat

i t woul d i n t he f i r st i nst ance seek recour se agai nst t he col l at er al

pr oper t y i n t he event of a def aul t . " And when al l was sai d and

done, t he j udge concl uded t hat t he guarant y' s unambi guous l anguage

wi ped out t hat t heor y. So t he j udge r ej ect ed O' Nei l l ' s def enses

and count ercl ai ms and gr ant ed HSBC j udgment on t he pl eadi ngs t oo.

Concl udi ng t hat any at t empt t o amend woul d be an exerci se i n

f ut i l i t y, t he j udge al so deni ed O' Nei l l ' s pl ea t o r epl ead.

Whi ch get s us t o t he her e and now.

OUR VIEW OF THE MATTER

O' Nei l l hur l s a bar r age of ar gument s our way, chal l engi ng

t he gr ant of j udgment on t he pl eadi ngs and t he deni al of hi s

r equest t o r epl ead. We r evi ew a Rul e 12( c) di smi ssal l i ke we woul d

a Rul e 12( b) ( 6) di smi ssal : de novo, t aki ng as t r ue t he l osi ng

par t y' s wel l - pl eaded f act s and seei ng i f t hey add up t o a pl ausi bl e

cl ai m f or r el i ef . See, e. g. , Gr aj al es 682 F. 3d at 44. And as a

general r ul e, we r evi ew a deci si on r egardi ng amendment s of

pl eadi ngs f or abuse of di scr et i on, t hough when as i s t he case

her e f ut i l i t y i s t he l i nchpi n f or t he j udge' s rul i ng and t he

l eave- t o- r epl ead r equest came bef or e the cl osi ng of di scover y and

t he f i l i ng of any summar y- j udgment mot i on, t he corr ect ness of t he

"f ut i l i t y" t ag i s t est ed under t he Rul e 12( b) ( 6) st andar d. See,

e. g. , Hat ch v. Dep' t f or Chi l dr en, Yout h & Thei r Fami l i es, 274 F. 3d

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12, 19 ( 1st Ci r . 2001) . Ul t i mat el y, however , none of O' Nei l l ' s

ar gument s per suades.

Judgment on the Pleadings

( a)Fr audul ent I nducement

O' Nei l l l oudl y pr ot est s t hat hi s f r audul ent - i nducement

cl ai mshoul d have been enough t o def eat HSBC' s di smi ssal ef f or t s.

Hi s t heor y r i ses or f al l s on hi s bel i ef t hat t wo pr ovi si ons i n t he

pr oj ect - l oan agr eement const i t ut e f al se st at ement s of mat er i al f act

made t o i nduce hi m t o si gn the guar ant y and that he reasonabl y

r el i ed on t hose f al se st at ement s t o hi s det r i ment . See, e. g. ,

Hogan v. Ri emer, 619 N. E. 2d 984, 988 ( Mass. App. Ct . 1993) ( l ayi ng

out t he el ement s of a f r audul ent - i nducement cl ai m) . Hi s theor y

f al l s, as we now expl ai n.

The f i r st provi si on he poi nt s t o i nvol ves t he 60% l oan-

t o- val ue r at i o, whi ch he al l eges put t he col l at er al pr oper t y' sval ue at $26. 5 mi l l i on and i s an HSBC r epr esent at i on t hat t he

chance of i t s havi ng t o cal l t he $8. 1 mi l l i on guar ant y was

basi cal l y zero. HSBC made t hat r epr esent at i on, he adds, even

t hough HSBC and not he knew t hat t hi s was not t he pr opert y' s

r eal val ue. He does not say what t he pr oper t y' s act ual val ue was,

but he i nt i mates t hat i t had t o have been l ess when he si gned t he

guarant y and t hat HSBC had t o have known i t was l ess. Thi s t heor y,

however , f l i es i n t he f ace of t he guar ant y t he ver y document

wher e ( t he r eader wi l l r ecal l ) he expr essl y conf i r med t hat he was

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f ami l i ar wi t h t he pr oper t y' s val ue, t hat he was not r el yi ng on t he

proper t y as an i nducement t o si gn t he guarant y, and t hat HSBC made

no repr esent at i ons t o i nduce hi m t o execut e that document .

The second proj ect - l oan- agr eement provi si on he har ps on

pr ovi des ( emphasi s our s) t hat i f Br andywi ne def aul t s, HSBC "can

r ecover t he obl i gat i ons" by sel l i ng t he pr oper t y. He r eads t hi s

cont r act l anguage as an HSBC r epr esent at i on t hat i t woul d move

agai nst t he pr oper t y bef or e t ur ni ng t o hi s guar ant y a

r epr esent at i on ( he cont i nues) made even t hough HSBC i nt ended al l

al ong t o col l ect onl y agai nst t he guar ant y. We ar e unmoved.

Mer el y t o st at e t he obvi ous, t hat pr ovi so says t hat HSBC "can"

pr oceed f i r st agai nst t he pr oper t y, not t hat i t must do so.

Anyway, what dr i ves a st ake t hr ough t he hear t of t hi s par t of hi s

i nducement t heor y i s hi s agr eei ng i n t he guar ant y t hat HSBC sai d

nothi ng t o i nduce hi mt o make t he guarant y. And do not f orget t hat

hi s guar ant y speci f i cal l y pr ocl ai ms t hat i t i s t he "ent i r e

agr eement " bet ween t he par t i es, super sedi ng al l pr i or

"under st andi ngs, " and expl i ci t l y pr ovi des t hat HSBC may enf or ce i t s

r i ght s agai nst hi m ( t he pr i mar y obl i gor ) wi t hout f i r st t r yi ng t o

r ecover t he debt f r om any pl edged col l at er al .

Ul t i mat el y and unhappi l y f or O' Nei l l we must enf or ce

t he guar ant y accor di ng t o i t s t er ms, wi t h t he par t i es' r i ght s

"ascer t ai ned" f r om t he wr i t t en t ext . See Fi r st Nat ' l Bank of

Bost on v. I bar r a, 716 N. E. 2d 647, 649 ( Mass. App. Ct . 1999) ( ci t i ng

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Mer r i mack Val l ey Nat ' l Bank v. Bai r d, 363 N. E. 2d 688 ( Mass. 1977) ,

and Shawmut Bank, N. A. v. Wayman, 606 N. E. 2d 925 ( Mass. App. Ct .

1993) ) . But hang on a mi nut e, says O' Nei l l , a Massachuset t s r ul e

hol ds t hat one cannot i nduce a cont r act by f r aud and t hen use

cont r actual cont r i vances t o duck l i abi l i t y. See, e. g. , St ar r v.

For dham, 648 N. E. 2d 1261, 1268 ( Mass. 1995) ( ci t i ng Bates v.

Sout hgate, 31 N. E. 2d 551 ( Mass. 1941) , and not i ng, f or exampl e,

t hat "[ a] n i nt egr at i on cl ause i n a cont r act does not i nsul at e

aut omat i cal l y a par t y f r om l i abi l i t y wher e he i nduced anot her

per son t o ent er i nt o a cont r act by mi sr epr esent at i on") . Tr ue

enough. But anot her r ul e t he one t hat hol ds sway her e, f or

r easons we wi l l di scuss i n a mi nut e decl ar es t hat r el i ance on

supposed mi sr epr esent at i ons t hat cont r adi ct t he t er ms of t he

part i es' agr eement i s unr easonabl e as a mat t er of l aw and so cannot

suppor t a f r audul ent - i nducement cl ai m. I d. ( quot i ng Tur ner v.

J ohnson & J ohnson, 809 F. 2d 90, 97 ( 1st Ci r . 1986) ) ; accor d

Masi ngi l l v. EMC Cor p. , 870 N. E. 2d 81, 89 ( Mass. 2007) ( cal l i ng

t hi s second r ul e "a r ul e of l ong st andi ng") . And as we have j ust

shown, t he cont r act - i nduci ng mi sr epr esent at i ons t hat O' Nei l l

t r umpet s are i r r econci l abl y at odds wi t h t he guar ant y' s expr ess

t erms. To r epeat ( and we apol ogi ze f or t he monotony of our

anal ysi s) : O' Nei l l speci f i cal l y war r ant ed i n t he guar ant y t hat he

was f ami l i ar wi t h t he col l at er al pr oper t y' s val ue, t hat t he

pr oper t y di d not oper at e as an i nducement f or hi m t o make t he

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uarant y, and t hat HSBC sai d not hi ng t o i nduce hi m t o execut e t he

guar ant y al l of whi ch dest r oys hi s f r audul ent - i nducement t hesi s

cent er ed on t he pr oj ect - l oan agr eement ' s l oan- t o- val ue- r at i o

pr ovi si on. 13 See St ar r , 648 N. E. 2d at 1268. He al so agr eed wi t h

t he guar ant y' s t aggi ng hi m as t he pr i mar y obl i gor and wi t h i t s

al l owi ng HSBC t o go af t er hi mf i r st t o r ecoup t he debt pr ovi si ons

t hat put t he ki bosh on hi s other suggest i on t hat HSBC must f i r st

seek r ecour se agai nst t he pr oper t y. See i d.

Our case bear s a st r i ki ng r esembl ance t o Tur ner an

opi ni on ment i oned i n a case par ent het i cal above. Appl yi ng

Massachuset t s l aw, t her e we af f i r med a l ower cour t ' s deci si on

r ej ect i ng pl ai nt i f f s' f r audul ent - i nducement cl ai ms. See Tur ner ,

809 F. 2d at 95- 98. Tur ner ' s key f act s may be swi f t l y summari zed.

The Turner pl ai nt i f f s sol d an el ect r oni c- t her momet er

busi ness t o def endant f or cash consi der at i ons and r oyal t i es based

on f ut ur e sal es. I d. at 93. Pl ai nt i f f s l at er cl ai med t hat

def endant had i nduced t hem t o sel l by mi sst at i ng var i ous t hi ngs

dur i ng negot i at i ons, i ncl udi ng t hat i t woul d pr omot e t he

t her momet er ' s sal e. I d. at 94. I mpor t ant l y, however , t he

cont r act ' s f i nal ver si on st at ed t hat def endant had no obl i gat i on t o

market t he t hermometer . I d. at 93. Canvass i ng t he cases, we f ound

13By t he way, t hi s pr ovi so was a condi t i on pr ecedent t o HSBC' spr ovi di ng l oan f unds t o Br andywi ne, conf er r i ng no l egal l yenf or ceabl e r i ght s on ei t her Br andywi ne or O' Nei l l as we not edseveral pages ago.

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t hat " t he gi ve- and- t ake of negot i at i ons woul d become meani ngl ess

i f , af t er maki ng concessi ons i n or der t o obt ai n cont r act ual

pr ot ect i ons, a knowl edgeabl e par t y" can l at er " r ecl ai mwhat i t had

gi ven away by al l egi ng t hat i t had, i n f act , r el i ed not on t he

wr i t i ng but on t he pr i or oral st at ement s. " I d. at 96. So we sai d

t hat Massachuset t s' s Supr eme J udi ci al Cour t ( "SJ C, " f or shor t )

"undoubt edl y woul d f i nd t hat t he t hr eat t o cont r act ual cer t ai nt y

usual l y woul d out wei gh t he possi bl e i nj ust i ce of denyi ng a cl ai mof

f r aud. " I d. We added:

[ T] he [ SJ C] woul d r ej ect as a mat t er of l awpl ai nt i f f s' f r aud cl ai mbased on [ def endant ' s]al l eged pr omi se t o aggr essi vel y mar ket [ t het her momet er ] . Cer t ai nl y i n t hi s case, wher ebot h par t i es wer e exper i enced i n busi ness andt he cont r act was f ul l y negot i at ed andvol unt ar i l y si gned, pl ai nt i f f s may not r ai seas f r audul ent any pr i or or al asser t i oni nconsi st ent wi t h a cont r act pr ovi si on t hatspeci f i cal l y addr essed t he par t i cul ar poi nt ati ssue.

I d. at 97. And we concl uded:

Whi l e we do not condone mi sr epr esent at i ons i ncont r act negot i at i ons, we al so r ej ect t henot i on t hat cour t s or j ur i es shoul d r ewr i t e af ul l y negot i at ed cont r act ual agr eement t hat sopr eci sel y set s out t he r i ght s and obl i gat i onsof t wo sophi st i cat ed par t i es. We do notbel i eve t hi s r ul e of l aw awar ds unduepr ot ect i on agai nst f r aud cl ai ms. I t meansonl y t hat a knowl edgeabl e buyer shoul d not

si gn a cont r act t hat conf l i ct s wi t h hi s or herunderst andi ng of t he agr eement .

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I d. at 97- 98. Tur ner st ands on al l f our s wi t h t hi s case, gi ven

t hat t he mi sr epr esent at i ons her e ar e at odds wi t h t he guar ant y' s

t erms.

Desper at e f or a way ar ound t hi s r eal i t y, O' Nei l l spends

a l ot of t i me t r yi ng t o convi nce us t hat t he SJ C r ej ect ed Tur ner i n

McEvoy Travel Bur eau, I nc. v. Nort on Co. , 563 N. E. 2d 188 ( Mass.

1990) . He al so bel i eves t hat t he f act s of hi s case f i t snugl y

wi t hi n McEvoy, whi ch, he adds, obl i ges us t o f ol l ow McEvoy anyway.

He i s wr ong on both scor es.

The McEvoy def endant , Nor t on Company, was a huge

i nt er nat i onal congl omer at e. 563 N. E. 2d at 191. The pl ai nt i f f ,

McEvoy Tr avel Bur eau, I nc. , was a smal l t r avel agency i n Wor cest er ,

Massachuset t s. I d. For decades McEvoy had pr ovi ded t r avel

ser vi ces t o Nor t on, al ways wi t hout a wr i t t en cont r act . I d.

Event ual l y t he t wo reached an or al agr eement cal l i ng f or McEvoy t o

become Nor t on' s excl usi ve t r avel agent f or al l of Nor t on' s

Wor cest er - ar ea busi ness. I d. Thi s woul d be a " l ong- t er m"

arr angement , t hey agr eed. I d. Based on t hi s underst andi ng, McEvoy

moved i nt o Nort on' s bui l di ng and hi r ed ext r a personnel and bought

ext r a equi pment necessar y t o handl e t he ext r a busi ness. I d.

McEvoy had been f ul l y per f ormi ng under t he agr eement f or

t wo mont hs when Nort on sent over a wr i t t en ver si on of t he cont r act .

I d. McEvoy at f i r st r ef used t o si gn i t , compl ai ni ng t hat t he

document st at ed t hat Nor t on coul d t er mi nat e i t on 60 days' not i ce

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and t hat i t was r enewabl e year l y. I d. Nor t on r epl i ed t hat t he

t er mi nat i on cl ause was " i noper at i ve" and "meani ngl ess, " a mer e

t echni cal i t y added t o make i t s l awyer s happy t hough at t hat ver y

t i me, Nor t on was secret l y consi der i ng an " i n- house" opt i on t hat

coul d make McEvoy expendabl e. I d. at 191- 92. An obvi ousl y i n- t he-

dar k McEvoy si gned t he cont r act . I d. at 191.

Three years l at er , Nor t on i nvoked t he t er mi nat i on cl ause

t hat i t had pr evi ousl y pooh- poohed as poi nt l ess. I d. at 192.

Unwi l l i ng t o l et i t s duper of f t he hook, McEvoy sued Nor t on i n

st at e cour t f or ( among ot her t hi ngs) f r aud i n i nduci ng t he

cont r act . I d. at 190. A j ur y f ound f or McEvoy. I d. And t he SJ C

af f i r med, sayi ng, most r el evant l y, f i r st , t hat "st at ement s of

pr esent i nt ent i on as t o f ut ur e conduct " l i ke a f r audul ent pr omi se

not t o use t he ter mi nat i on cl ause "may be the basi s f or a f r aud

act i on i f . . . t he st at ement s mi sr epr esent t he act ual i nt ent i on of

t he speaker and were r el i ed upon by the r eci pi ent t o hi s damage, "

i d. at 192; and second, t hat McEvoy' s r el i ance was r easonabl e,

because " t he l ong exi st i ng r el at i onshi p bet ween t he par t i es"

ent i t l ed i t t o t ake Nor t on' s " st at ement s at f ace val ue and cr edi t

t hem, " i d. at 194.

Now back t o O' Nei l l ' s McEvoy- based ar gument s. Sur e, i n

r eachi ng i t s r esul t , t he SJ C r eaf f i r med t hat cont r act i ng par t i es,

"whet her exper i enced i n busi ness or not , shoul d deal wi t h each

ot her honest l y, " and that no one shoul d "be per mi t t ed t o engage i n

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f r aud to i nduce t he cont r act " meani ng the SJ C saw "no reason t o

cr eat e, as Tur ner suggest s, a new r ul e or an except i on" f or cases

wher e t he pl ayer s ar e consi der ed "sophi st i cat ed busi ness

ent er pr i ses. " I d. But McEvoy di d not br ush of f Tur ner ' s cor e

hol di ng. And cases af t er McEvoy have embr aced i t , agr eei ng wi t h

Turner t hat " i f ' t he cont r act was f ul l y negot i at ed and vol unt ar i l y

si gned, [ t hen] pl ai nt i f f s may not r ai se as f r audul ent any pr i or

or al asser t i on i nconsi st ent wi t h a cont r act pr ovi si on t hat

speci f i cal l y addr essed t he par t i cul ar poi nt at i ssue. ' " St ar r , 648

N. E. 2d at 1267 ( quot i ng Tur ner , 809 F. 2d at 97) ; see al so

Masi ngi l l , 870 N. E. 2d at 89 ( same) . And despi t e what he says, our

f act s l ook not hi ng l i ke McEvoy' s. For one t hi ng, he i dent i f i es no

speci f i c st at ement si gni f yi ng HSBC' s t hen- pr esent i nt ent i on t hat i t

i n t he f ut ur e woul d t r eat a cont r act pr ovi si on as so much hot ai r .

Cf . McEvoy, 563 N. E. 2d at 191. For anot her , he al l eges no hi st or y

of per f ormance wi t h HSBC t hat coul d make hi s r el i ance on t he

compl ai ned- of dupi ng conduct r easonabl e. Cf . i d. Gi ven al l t hi s,

McEvoy of f er s hi m no hel p.

O' Nei l l , however , has anot her Massachuset t s f r audul ent -

i nducement deci si on up hi s s l eeve t hat he says suppor t s hi s

posi t i on, t hi s one penned by a st at e- cour t t r i al j ust i ce Li near

Retai l Danver s #1, LLC v. Casat ova, LLC, No. 07- 3147, 2008 WL

2415402 ( Mass. Super . Ct . J une 11, 2008) . Li near ar ose f r om an

al l eged def aul t on a commer ci al l ease by def endant s- l essees. I d.

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at *1. When def endant s si gned t he l ease, t hey al so si gned a

per sonal guar ant y of t he l ease. I d. Cl ai mi ng t hat def endant s

br eached t he l ease by not payi ng r ent as r equi r ed, pl ai nt i f f - l essor

sued t hem i n Massachuset t s st at e cour t , ar gui ng t hat t hey, as

guar ant or s of t he rent obl i gat i on under t he l ease, wer e absol ut el y

l i abl e f or t he r ent owed. I d. at *1- 2. To f end of f pl ai nt i f f ' s

summary- j udgment mot i on, def endant s argued t hat pl ai nt i f f had dr awn

t hem i nt o t he l ease by f al sel y r epr esent i ng t hat i t woul d i mpr ove

t he l eased pr emi ses i n cer t ai n ways. I d. at *3. The cour t deni ed

t he mot i on, concl udi ng t hat " [ w] het her t hese r epr esent at i ons wer e

made, and whet her , i f made, t hey mi sr epr esent ed [ pl ai nt i f f ' s]

act ual i nt ent i ons, ar e f act ual i ssues r i pe f or det er mi nat i on" by a

f act f i nder . I d. But t her e i s a di st i nct i on bet ween t hat case and

O' Nei l l ' s t hat makes al l t he di f f er ence: Li near never says whet her

t he per t i nent cont r act t her e ( t he l ease) had any pr ovi si on di r ect l y

cont r adi ct or y t o t he compl ai ned- of mi sr epr esent at i ons.

Cont r ast i ngl y, t he per t i nent cont r act her e ( t he guar ant y) has

pl ent y of t hose. Cl ear l y, t hen, Li near cannot t ur n t he t i de f or

O' Nei l l .

The net r esul t of al l t hi s i s t hat O' Nei l l ' s i nducement -

based argument s f ai l . So we pr ess on.

( b)Ambi gui t y

O' Nei l l al so bel i eves t hat j udgment on t he pl eadi ngs was

a no- no because, he says, t he guar ant y' s l i mi t at i ons- on- guar ant eed-

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obl i gat i ons cl ause i s ambi guous on i t s f ace. As a r ef r esher , we

not e agai n t hat t hi s pr ovi si on ( so f ar as r el evant ) pr ovi des t hat

" [ n] ot wi t hst andi ng anyt hi ng i n t hi s guar ant y or any of t he l oan

document s t o t he cont r ar y, " O' Nei l l ' s l i abi l i t y under t he guar ant y

"shal l be l i mi t ed t o . . . t he guar ant eed amount , " def i ned as " an

amount equal t o $8, 100, 000. " O' Nei l l sees ambi gui t y because he

t hi nks t hat t hi s pr ovi so can ei t her mean t hat he i s r esponsi bl e f or

t he "f i r st " $8. 1 mi l l i on of t he $15. 9 mi l l i on l oan ( whi ch i s HSBC' s

pr ef er r ed r eadi ng, he says) or t he "l ast " $8. 1 mi l l i on ( whi ch i s

hi s pr ef er r ed r eadi ng, nat ur al l y) .

Unf or t unat el y f or O' Nei l l , ambi gui t y does not ar i se

si mpl y because cont r act i ng par t i es bi cker over a pr ovi si on' s

meani ng, see, e. g. , Suf f ol k Const . Co. v. Lanco Scaf f ol di ng Co. ,

716 N. E. 2d 130, 133 ( Mass. App. Ct . 1999) i f i t di d t hen r educi ng

a cont r act t o wr i t i ng woul d gi ve par t i es "l i t t l e or no pr ot ect i on, "

see Fed. Deposi t I ns. Cor p. v. W. R. Gr ace & Co. , 877 F. 2d 614, 621

( 7t h Ci r . 1989) ( Posner , J . ) , maki ng cont r act dr af t i ng a r eal t i me-

wast er . I nst ead, ambi gui t y ar i ses onl y i f a r easonabl e per son

coul d r ead t he pr ovi si on mor e t han one way. See, e. g. , Br i gade

Lever aged Capi t al St r uct ur es Fund Ltd. v. PI MCO I ncome St r at egy

Fund, 995 N. E. 2d 64, 69 ( Mass. 2013) . Of cour se, whether a

pr ovi si on i s ambi guous i s a quest i on of l aw t hat we must answer

our sel ves, see, e. g. , Ei ger man v. Put nam I nvs. , I nc. , 877 N. E. 2d

1258, 1263 ( Mass. 2007) , mi ndf ul of t hi s: t hat we must r ead t he

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pr ovi si on "i n t he cont ext of t he ent i r e cont r act r at her t han i n

i sol at i on, " because the i nt er pl ay bet ween di f f er ent pr ovi si ons may

cast some l i ght on t hei r meani ng, see Gen. Convent i on of t he New

J er usal emi n t he U. S. A. v. Mackenzi e, 874 N. E. 2d 1084, 1087 ( Mass.

2007) , and t hat a dose of " ' [ c] ommon sense i s as much a par t of

cont r act i nt er pr et at i on as i s t he di ct i onar y or t he ar senal of

canons, ' " see Rober t s v. Ent er . Rent - A- Car Co. of Bost on, 779

N. E. 2d 623, 629 ( Mass. 2002) ( quot i ng Fi shman v. LaSal l e Nat . Bank,

247 F. 3d 300, 302 ( 1st Ci r . 2001) ) .

These basi c pr i nci pl es spel l doomf or O' Nei l l ' s ambi gui t y

cl ai m. Not hi ng i n t he cont est ed pr ovi si on or el sewher e i n t he

guar ant y, f or t hat mat t er l i mi t s hi s guar ant y obl i gat i on as

pr i mar y obl i gor on t he not e t o t he " l ast " $8. 1 mi l l i on of t he $15. 9

mi l l i on l oan. The cl ause' s l anguage i s cr yst al cl ear , put t i ng an

$8. 1 mi l l i on cei l i ng on hi s l i abi l i t y wi t hout pr ovi di ng even t he

f ai nt est whi sper of a suggest i on t hat he i s r esponsi bl e onl y f or

t he l oan' s f i nal $8. 1 mi l l i on. What O' Nei l l has done i s pul l hi s

r eadi ng of t he pr ovi si on out of t hi n ai r , r el yi ng on ment al

gymnast i cs i nconsi st ent wi t h t he guar ant y' s actual wor ds ( and wi t h

common sense) . That hi s i nt er pr et at i on i s not pl ausi bl e wi pes out

hi s ambi gui t y t heor y. See, e. g. , Ci t at i on I ns. Co. v. Gomez, 688

N. E. 2d 951, 952- 53 ( Mass. 1998) ; Mi t cheson v. I zdepski , 585 N. E. 2d

743, 745 ( Mass. App. Ct . 1992) .

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( c)Chapter 93A

andGood- Fai t h Deal i ng

We can make qui ck work of O' Nei l l ' s char ge t hat hi s

pl eadi ngs al l eged enough t o push hi s chapt er - 93A and good- f ai t h-

deal i ng cl ai ms across the pl ausi bi l i t y l i ne. For t hose not i n t he

know, we poi nt out t hat chapt er 93A pr ohi bi t s " [ u] nf ai r met hods of

compet i t i on and unf ai r or decept i ve act s or pr act i ces i n t he

conduct of any t r ade or commerce, " see Mass. Gen. Laws ch. 93A,

2( a) , and t hat cour t s r ead a dut y of good- f ai t h deal i ng i nt o

ever y Massachuset t s cont r act , see, e. g. , Har r i son v. Net Cent r i c

Cor p. , 744 N. E. 2d 622, 629 ( Mass. 2001) ; Ant hony' s Pi er Four , I nc.

v. HBC Assocs. , 583 N. E. 2d 806, 820 ( Mass. 1991) . Now, as ar gued

on appeal , O' Nei l l pr emi ses t hese cl ai ms on hi s al r eady- r ej ect ed

f r aud t heor y, whi ch we st at e agai n r uns l i ke t hi s: f i r st , t hat t he

60% l oan- t o- val ue rat i o i n t he pr oj ect - l oan agr eement i s an HSBC

r epr esent at i on t hat i t woul d not need t o col l ect on hi s guar ant y

an ent i r el y f al se r epr esent at i on, he al l eges; and second, t hat t he

pr oj ect - l oan agr eement ' s sayi ng t hat HSBC "can r ecover " agai nst t he

col l at er al pr oper t y i f Br andywi ne def aul t s i s an HSBC

r epr esent at i on t hat i t woul d pr oceed agai nst t he pr oper t y rat her

t han agai nst hi m as guar ant or anot her ent i r el y f al se

r epr esent at i on, he posi t s. But because as we have expl ai ned

hi s f r aud t heor y f ai l s, so t oo does hi s chapt er - 93A cl ai m. See,

e. g. , Macovi ak v. Chase Home Mort g. Corp. , 667 N. E. 2d 900, 903

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( Mass. App. Ct . 1996) ( hol di ng t hat a l i t i gant cannot succeed on a

chapt er - 93A t heor y based on a f r aud cl ai m t hat i s i nsuf f i ci ent as

a mat t er of l aw) . And because he i s not a par t y t o t he pr oj ect -

l oan agr eement between HSBC and Br andywi ne, hi s good- f ai t h- deal i ng

cl ai m necessar i l y f ai l s as wel l . See, e. g. , Ayash v. Dana- Far ber

Cancer I nst . , 822 N. E. 2d 667, 684 ( Mass. 2005) ( st r essi ng t hat

" [ t ] hi s i mpl i ed covenant " of good- f ai t h deal i ng "may not be

' i nvoked t o cr eat e r i ght s and dut i es not ot her wi se pr ovi ded f or i n

t he exi st i ng cont r actual r el at i onshi p' " ( quot i ng Uno Rest s. , I nc.

v. Bost on Kenmore Real t y Corp. , 805 N. E. 2d 957, 964 ( Mass. 2004) ) ) .

Looki ng t o def l ect at t ent i on f r om t hi s power f ul body of

Massachuset t s casel aw, O' Nei l l t al ks up sect i ons 37 and 51 of t he

Rest at ement ( Thi r d) of Sur et yshi p and Guar ant y, whi ch we wi l l

si mpl y cal l t he "Rest at ement " t o save some keyst r okes. As he t el l s

i t , bot h sect i ons bol st er hi s chapt er - 93A and good- f ai t h- deal i ng

cl ai ms. Not so, we concl ude.

Reader al er t : When perusi ng t he next t wo paragr aphs,

keep i n mi nd t hat HSBC her e i s t he "obl i gee, " Br andywi ne i s t he

"pr i nci pal obl i gor , " and O' Nei l l i s t he "secondar y obl i gor " at

l east t hat i s how he sees t hi ngs.

Br oadl y speaki ng, sect i on 37 pr ovi des t hat i f an "obl i gee

act s t o i ncrease t he secondar y obl i gor ' s r i sk of l oss by i ncreasi ng

i t s pot ent i al cost of per f or mance or decreasi ng i t s pot ent i al

abi l i t y t o cause t he pr i nci pal obl i gor t o bear t he cost of

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per f or mance, t he secondar y obl i gor i s di schar ged as descr i bed i n

subsect i ons (2) and ( 3) . " See Rest at ement 37( 1) . Subsect i on ( 2)

al l ows a di schar ge i f t he obl i gee "r el eas[ es] t he pr i nci pal obl i gor

f r om a dut y ot her t han t he payment of money" or "agr ee[ s] " t o

modi f y " t he dut i es of t he pr i nci pal obl i gor t hat ei t her amount s t o

a subst i t ut ed cont r act or i mposes a r i sk on t he secondar y obl i gor

f undament al l y di f f er ent " t han t hose i mposed bef or e t he

modi f i cat i on. I d. 37( 2) . Subsect i on ( 3) pr ovi des a l i st of act s

t hat al l ow a di schar ge, but t he gi st of t hi s subsect i on i s t hat a

di schar ge i s i n or der i f t he "obl i gee" commi t t ed "any . . . act or

omi ssi on t hat i mpai r s t he pr i nci pal obl i gor ' s dut y of per f or mance,

t he pr i nci pal obl i gor ' s dut y t o r ei mbur se, or t he secondar y

obl i gor ' s r i ght of r est i t ut i on or subr ogat i on. " I d. 37( 3) .

O' Nei l l i s adamant t hat hi s case f i t s sect i on 37 t o a T. But he

makes no at t empt t o expl ai n why t hi s i s so, al l egi ng not hi ng

showi ng how HSBC' s conduct comes wi t hi n t he ambi t of subsect i ons

( 2) or ( 3) . Hi s ar gument t her ef or e goes nowhere. 14 See, e. g. ,

Rui z- Snchez v. Goodyear Ti r e & Rubber Co. , 717 F. 3d 249, 253 ( 1st

Ci r . 2013) ( st r essi ng t hat cl ai ms " woven ent i r el y out f l i msy

14 Somet i mes we al l ow l i t i gant s " some l at i t ude" i f a pl ausi bl e

cl ai m may be shown "based on what i s known, " at l east where "someof t he i nf or mat i on needed may be" i n t he ot her par t y' s " cont r ol . "Pr uel l v. Car i t as Chr i st i , 678 F. 3d 10, 15 ( 1st Ci r . 2012) . ButO' Nei l l does not make t hi s ar gument . So i t i s wai ved. See, e. g. ,Rodr guez v. Muni ci pal i t y of San J uan, 659 F. 3d 168, 175 ( 1st Ci r .2011) ; Or t i z v. Gast on Cnt y. Dyei ng Mac. Co. , 277 F. 3d 594, 598( 1st Ci r . 2002) .

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st r ands of specul at i on and sur mi se" do not sat i sf y t he pl ausi bi l i t y

st andar d) ; Mor al es- Cr uz v. Uni v. of P. R. , 676 F. 3d 220, 225 ( 1st

Ci r . 2012) ( expl ai ni ng t hat "specul at i on, unaccompani ed by any

f act ual pr edi cat e, i s not suf f i ci ent t o conf er pl ausi bi l i t y") .

As f or sect i on 51, i t pr ovi des t hat an "obl i gee" may be

r equi r ed t o l i qui dat e col l at er al t o sat i sf y a debt when t o do

ot her wi se woul d " r esul t i n unusual har dshi p t o t he secondar y

obl i gor and enf or ci ng t he secur i t y i nt er est [ woul d] not mat er i al l y

pr ej udi ce or bur den t he obl i gee or ot her benef i ci ar i es of t he

secondar y obl i gat i on. " 15 See Rest at ement 51( 2) ( b) . And, bui l di ng

t o t he ul t i mat e cr escendo, he t heor i zes t hat "har dshi p" and

"pr ej udi ce"/ "bur den" i ssues ar e quest i ons of f act f or a j ur y, not

f or a j udge on a Rul e 12( c) mot i on. Now admi t t edl y, he does say i n

hi s pl eadi ngs ( emphasi s our s) t hat he "wi l l f ace unusual har dshi p"

i f r equi r ed t o pony up t he $8. 1 mi l l i on and t hat HSBC wi l l "not

f ace any har dshi p, nor be mat er i al l y pr ej udi ced or bur dened" i f

f or ced " t o f i r st l ook t o" t he pr oper t y "f or r epayment " of any money

owi ng on t he l oan. But t hese ar e concl usory al l egat i ons, si mpl y

par r ot i ng the l egal ese of t he Rest at ement wi t hout pr ovi di ng any

f act ual suppor t t hat mi ght gi ve t hem pl ausi bi l i t y. Consequent l y,

we need not cr edi t t hem. 16 See, e. g. , A. G. v. El sevi er , I nc. , 732

15 Remember , accor di ng t o O' Nei l l , HSBC i s t he "obl i gee" andhe i s t he "secondar y obl i gor . "

16 O' Nei l l does not even t r y t o ar gue t hat , under t he Pr uel ll i ne of cases, we shoul d cut hi m some sl ack because some of t he

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F. 3d 77, 81 ( 1st Ci r . 2013) ( hol di ng t hat " [ w] hen al l egat i ons,

t hough di sgui sed as f act ual , ar e so thr eadbar e t hat t hey omi t any

meani ngf ul f act ual cont ent , we wi l l t r eat t hem as what t hey ar e:

naked concl usi ons" t hat cannot hel p a par t y pass t he pl ausi bi l i t y

t est ) ; Shay v. Wal t er s, 702 F. 3d 76, 82- 83 ( 1st Ci r . 2012)

( emphasi zi ng t hat i n deci di ng "whet her al l egat i ons cr oss t he

pl ausi bi l i t y t hr eshol d, an i nqui r i ng cour t need not gi ve wei ght t o

bar e concl usi ons, unembel l i shed by per t i nent f act s" ) .

( d)Undue I nf l uence

andUnconsci onabl e Cont r act of Adhesi on

The j udge r ej ect ed O' Nei l l ' s undue- i nf l uence and

unconsci onabl e- cont r act - of - adhesi on cl ai ms, concl udi ng that bot h

t heor i es wer e undone by "O' Nei l l ' s sophi st i cat i on i n r eal est at e

mat t er s and by t he l anguage of t he [ g] uar ant y i t sel f . " O' Nei l l ' s

onl y compl ai nt about t hi s on appeal i s wi t h t he "sophi st i cat i on"

comment . To hi s way of t hi nki ng, t hi s r emark shows t hat t he j udge,

when addr essi ng these t wo cl ai ms, consi der ed mat t er s "out si de t he

pl eadi ngs" and r esol ved "cr edi bi l i t y" i ssues agai nst hi m. See

gener al l y Fed. R. Ci v. P. 12( d) ( decl ar i ng t hat "[ i ] f , on a mot i on

f act s he needs r egardi ng hi s "unusual hardshi p" and HSBC' s

"pr ej udi ce" / "bur den" ar e i n someone el se' s cont r ol . For what i t i swor t h, we doubt t hat he coul d make t hat argument on t he unusual -har dshi p i ssue, par t i cul ar l y si nce he has wi t hi n hi s possessi on t hef act s about hi s per sonal - f i nanci al af f ai r s needed t o pl ead i tadequatel y. Regardl ess, havi ng f ai l ed t o make t he argument , he haswai ved i t . See, e. g. , Rodr guez, 659 F. 3d at 175; Or t i z, 277 F. 3dat 598.

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under . . . Rul e 12( c) , mat t er s out si de t he pl eadi ngs are pr esent ed

t o and not excl uded by t he cour t , t he mot i on must be t r eat ed as one

f or summar y j udgment under Rul e 56, " and addi ng t hat " [ a] l l par t i es

must be gi ven a r easonabl e oppor t uni t y t o pr esent al l mat er i al t hat

i s per t i nent t o t he mot i on") . The pr obl em f or O' Nei l l i s t hat hi s

pl eadi ngs and the undi sput ed document s he at t ached t o t hem showed

hi s r eal - est at e "sophi st i cat i on. " Hi s count er cl ai ms, f or exampl e,

pl ayed up t he " l egal [ l y] and t echni cal [ l y] compl ex[ ] " envi r onment al

pr obl ems t hat Br andywi ne navi gat ed i n i t s quest t o conver t t he

pr oper t y t o r esi dent i al use. And of cour se he acknowl edged i n hi s

guar ant y t hat he hel d an owner shi p i nt er est i n Br andywi ne. He al so

acknowl edged t here t hat he had " i ndependent l y r evi ewed"

Br andywi ne' s f i nanci al r ecor ds and was f ami l i ar wi t h t he col l at er al

pr opert y' s val ue. I f more were needed, Br andywi ne acknowl edged i n

t he pr oj ect - l oan agr eement t hat HSBC had "exami ned and r el i ed on

t he exper i ence of [ Br andywi ne] and i t s general par t ners, members,

[ and] pr i nci pal s . . . i n owni ng and oper at i ng pr oper t i es" l i ke t he

pr oper t y at i ssue. Addi t i onal l y, O' Nei l l never t r i ed t o suppor t

hi s unconsci onabi l i t y and undue- i nf l uence t heor i es by cl ai mi ng t hat

he was a r eal - est at e unsophi st i cat e. The bot t om l i ne i s t hat we

see not hi ng r esembl i ng r ever si bl e er r or her e.

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e. g. , N. I ns. Co. of N. Y. v. Poi nt J udi t h Mar i na, LLC, 579 F. 3d 61,

71 n. 7 ( 1st Ci r . 2009) . We say no mor e about t hat subj ect .

( f )Summi ng Up

O' Nei l l f l oat s an ar r ay of r easons why the j udge st umbl ed

i n gr ant i ng HSBC j udgment on t he pl eadi ngs. But not one can car r y

t he day f or hi m, whi ch i s t he shor t of t hi s ver y l ong sect i on of

our anal ysi s. That l eaves hi s l ast cat egor y of ar gument t hat t he

j udge sl i pped i n denyi ng hi m l eave t o r epl ead hi s def enses and

count ercl ai ms an argument t o whi ch we now t urn.

Leave to Replead

A j udge "shoul d f r eel y gi ve l eave [ t o r epl ead] when

j ust i ce so r equi r es, " as O' Nei l l not es at some l ength. See Fed. R.

Ci v. P. 15( a) ( 2) . But a j udge may deny l eave i f amendi ng t he

pl eadi ng woul d be f ut i l e t hat i s, i f t he pi ned- f or amendment does

not pl ead enough t o make out a pl ausi bl e cl ai m f or r el i ef . SeeHatch, 274 F. 3d at 19; see al so Foman v. Davi s, 371 U. S. 178, 182

( 1962) ( not i ng t hat i n addi t i on t o f ut i l i t y, undue del ay, bad

f ai t h, and the absence of due di l i gence on the movant ' s par t may

j ust i f y denyi ng l eave t o amend) . O' Nei l l never t el l s us what

f ur t her f act s he coul d pl ead t o get ar ound t he pr obl ems hi ghl i ght ed

above. He si mpl y bel i eves t hat hi s pl eadi ngs as cur r ent l y

f ashi oned do t he t r i ck a bel i ef t hat i s bl own away by t he

unambi guous guarant y, f or t he r easons r ecor ded i n t hese pages. I n

ot her wor ds, he has not pr ovi ded ( bel ow or her e) any addi t i onal

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f act s whi ch, i f r epl ed, woul d per mi t hi mt o cross t he pl ausi bi l i t y

t hr eshol d when matched up agai nst t he guarant y' s expr ess l anguage.

Consequent l y, t he j udge' s r ul i ng on t hi s i ssue st ands. See, e. g. ,

Gr ay v. Ever cor e Rest r uct ur i ng L. L. C. , 544 F. 3d 320, 327 ( 1st Ci r .

2008) ( f i ndi ng f ut i l i t y wher e the par t y coul d not al l ege anyt hi ng

t hat coul d r epai r t he pr obl em i n i t s case) .

FINAL WORDS

Concl udi ng, as we do, t hat t he di st r i ct j udge commi t t ed

no rever si bl e er r or , we uphol d t he j udgment t hat ent er ed bel ow.

Affirmed, with HSBC awarded its costs on appeal.

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