Massachusetts Asset Financing Corporation v. Harter, Secrest & Emery, Llp, Sardone, Robinson & Schnell

United States Court of Appeals
For the First Circuit
No. 04-2541
MASSACHUSETTS ASSET FINANCING CORPORATION,
Plaintiff, Appellant,
v.
HARTER, SECREST & EMERY, LLP,
SARDONE, ROBINSON & SCHNELL, and
MB VALUATION SERVICES, INC.,
Defendants, Appellees,
and
WANDA KINNEY-CANARY, d/b/a TRITECH APPRAISAL SERVICES,
Defendant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Robert B. Collings, U.S. Magistrate Judge]
Before
Boudin, Chief Judge,
Torruella and Selya, Circuit Judges.
Michael E. Schoeman, with whom Schoeman, Updike & Kaufman,
LLP, was on brief, for appellant.
John J. O'Connor, with whom Robert T. Gill and Peabody &
Arnold, LLP, were on brief, for appellee MB Valuation Services,
Inc.
Goulston & Storrs, on brief for appellee Harter, Secrest &
Emery, LLP.
Donovan Hatem, LLP, on brief for appellee Sardone, Robinson &
Schnell.
December 1, 2005

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TORRUELLA, Circuit Judge. This case arises from a loan
made by Plaintiff Massachusetts Asset Financing Corp. ("Plaintiff")
to American Mold Corporation ("American Mold"). The loan was
secured by American Mold's manufacturing equipment, which had been
appraised at $1.1 million dollars, but eventually sold for $30,000
after American Mold defaulted on the loan and went bankrupt.
Plaintiff filed suit against American Mold's lawyers, American
Mold's accountants, and two appraisal companies. This appeal
concerns Plaintiff's claim against the appraisal company MB
Valuation Services, Inc. ("MB Valuation"). On August 29, 2002, the
court below allowed MB Valuation's motion for summary judgment.
Mass. Asset Financing Corp. v. Harter, Secrest & Emery, LLP, 220 F.
Supp. 2d 20, 25 (D. Mass. 2002). On September 30, 2004, the court
below entered an order for final judgement pursuant to Federal Rule
of Civil Procedure 54(b). For the reasons stated herein, we
reverse the decision of the district court and remand the case for
trial.
I.
Plaintiff is in the business of making loans. The loans
are secured by the borrower's assets, which are appraised before
the loan is made. On numerous occasions, MB Valuation had
performed appraisals for Plaintiff. To secure the loan to American
Mold, Plaintiff called Scott Creel ("Creel") at MB Valuation about
appraising American Mold's equipment. The parties disagree as to

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The quoted language is from Plaintiff's brief and is not an 1
actual quotation of Creel.
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Creel's actual involvement after this request. According to
Plaintiff, Creel stated that "he could not himself perform the
appraisal" but that "he would find another appraiser and would
supervise and review that appraiser's work." Plaintiff states 1
that Creel then put Plaintiff in touch with an appraiser from
another company, Tri-Tech Appraisal Services, and that "Creel
reviewed the appraisal as he had promised and increased some
specific equipment appraisal amounts and reduced others."
According to MB Valuation, Creel referred Plaintiff to another
appraisal company and had no further involvement in the appraisal.
The final appraisal valued American Mold's equipment at
about $1.1 million. MB Valuation and Creel did not receive payment
from Plaintiff or any other source for their involvement with this
appraisal. Several months after the closing of the loan, American
Mold defaulted on the loan and filed for bankruptcy. The
equipment, which had been appraised at a value of about $1.1
million, sold for about $30,000.
Plaintiff claims damages of about $1.2 million, resulting
from professional negligence on the part of MB Valuation.
Significantly, Plaintiff's complaint alleged only negligence on the
part of MB Valuation and did not allege gross negligence. MB
Valuation moved for summary judgment. The court below granted

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summary judgment because it found that the factual dispute
described above was not material to the outcome of the case. The
court found that because Plaintiff had never paid MB Valuation for
the appraisal -- regardless of the dispute over Creel's involvement
-- any act by MB Valuation was gratuitous. Under Massachusetts
law, liability for a gratuitous act arises only from gross
negligence. Thus, since Plaintiff alleged only negligence and not
gross negligence, Plaintiff could not recover as a matter of law.
We review a district court's grant of summary judgment de
novo. Tum v. Barber Foods, Inc., 360 F.3d 274, 279 (1st Cir.
2004). Since MB Valuation has moved for summary judgment, we
construe the record in the light most favorable to Plaintiff. Id.
II.
"A basic principle of negligence law is that ordinarily
everyone has a duty to refrain from affirmative acts that
unreasonably expose others to a risk of harm." Tobin v. Norwood
Country Club, Inc., 661 N.E.2d 627, 637 (Mass. 1996). In contrast,
a person generally "does not have a duty to take affirmative
action." Commonwealth v. Levesque, 766 N.E.2d 50, 56 (Mass. 2002).
For example, "a mere passerby who observes a fire [has no
obligation] to alert authorities." Id. at 57. If, however, a
person voluntarily assumes a duty, that duty must be performed with

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There are exceptions, not relevant to this case, to the rule 2
that a person has no duty to take affirmative action. See Mullins,
449 N.E.2d at 336.
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due care. Mullins v. Pine Manor College, 449 N.E.2d 331, 336
(Mass. 1983).2
For a duty voluntarily undertaken, the standard of due
care depends upon the nature of the action. The Supreme Judicial
Court (SJC) has noted that "[j]ustice requires that the one who
undertakes to perform a duty gratuitously should not be under the
same measure of obligation as one who enters upon the same
undertaking for pay." Massaletti v. Fitzroy, 118 N.E. 168, 177
(Mass. 1917). A person undertaking a nongratuitous duty, such as
one for pay, has a duty to refrain from ordinary negligence.
Wheatley v. Peirce, 238 N.E.2d 858, 860 (Mass. 1968). In contrast,
a person undertaking a gratuitous duty must refrain only from gross
negligence. Id. Therefore, in order to determine whether a duty
of care has been breached, we must first determine whether the duty
was gratuitous or not. In a number of cases, Massachusetts courts
have undertaken the task of distinguishing gratuitous and
nongratuitous acts. An important factor is whether there was a
"social nature in the relations of the parties." Beaulieu v.
Lincoln Rides, Inc., 104 N.E.2d 417, 418 (Mass. 1952). A
gratuitous act is more likely to occur when an act is of a social
nature rather than a business nature. See id.

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By statute, the standard of care owed by drivers of motor 3
vehicles to their passengers is that of ordinary negligence. Mass.
Gen. Laws ch. 231, § 85L.
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The line between gratuitous and nongratuitous acts is
relatively clear in the social context. In a social context, when
a person does a favor for another person, whether a friend or a
stranger, and receives no consideration other than "those
intangible advantages arising from mere social intercourse," Comeau
v. Comeau, 189 N.E. 588, 589 (Mass. 1934), the act will be
gratuitous. For example, in Bagley v. Buckholder, the plaintiff
and defendant were both truck drivers for different trucking
companies, and plaintiff sued defendant for injuries that occurred
while defendant was helping plaintiff move his truck. 149 N.E.2d
143, 144 (Mass. 1958). The court found that defendant's act was
gratuitous because the evidence showed no business purpose and "no
immediate advantage to the defendant of his helpful action." Id.
at 146. Similarly, in a personal context, when a person offers to
give another person a ride without any consideration, the act will
be gratuitous. See Ruel v. Langelier, 12 N.E.2d 735, 736 (Mass. 3
1938); Massaletti, 118 N.E. at 177; cf. Taylor v. Goldstein, 107
N.E.2d 14 (Mass. 1952) (finding the giving of a ride to be a
nongratuitous act where the objective of the ride was to benefit
the driver and not the passenger). Finally, when a host receives
a guest "as a visitor for social purposes," the act will be
gratuitous. O'Brien v. Shea, 96 N.E.2d 163, 164 (Mass. 1951).

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In the business context, the line between gratuitous and
nongratuitous acts is more difficult to discern. The dispositive
question is whether the allegedly gratuitous act had a business
purpose. See Onofrio v. Dept. of Mental Health, 562 N.E.2d 1341,
1346 (Mass. 1990) ("[Defendant] was furthering its own business
interests . . . ."); Falden v. Crook, 172 N.E.2d 686, 688 (Mass.
1961) ("[Defendant] was doing a kind act rather than building up
good will for his business."); Beaulieu v. Lincoln Rides, Inc., 104
N.E.2d 417, 418 (Mass. 1952) ("[T]here is nothing in the record to
indicate that the defendant, a business corporation, undertook to
give the plaintiff a pure gratuity."); Foley v. McDonald, 185 N.E.
926, 927 (Mass. 1933) ("[A] business purpose could be found in the
transportation of the plaintiffs by the defendants in the course of
an attempt by the defendants to sell an automobile to the
plaintiffs . . . .").
For an act to have a business purpose it need only be
"incidental to the [defendant's] business." Foley, 185 N.E. at
926-27. For example, when a car salesman drove a prospective buyer
home, the court found that the act was incidental to the business
purpose of selling automobiles and therefore nongratuitous. Id. at
926-27. In contrast, where an ice cream truck driver gave a
customer a ride home, the act was not incidental to the defendant's
business as the court found that the driver "was doing a kind act

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rather than building up good will for his business." Falden, 172
N.E.2d at 688.
For an act to be nongratuitous, "it is only necessary for
a jury to find some business advantage to the defendant."
Beaulieu, 104 N.E.2d at 418. In Beaulieu, the defendant was the
operator of an amusement park ride who gave free rides before 2:00
p.m. and charged for rides after 2:00 p.m. Id. at 417-18. The
court found that a "jury could find that the purpose of giving free
rides . . . was merely to interest customers and increase
business." Id. at 418. A "conjectural future benefit," however,
will not establish an otherwise nonexistent business purpose.
Bagley, 149 N.E.2d at 146. In Bagley, the plaintiff truck driver
argued that the defendant truck driver's assistance was not
gratuitous because, had he not given assistance, the defendant
would receive a bad reputation and other truck drivers would not
help the defendant in the future. Id. at 145. The Bagley court
found this karmic claim meritless. Id. at 146.
An act may have a business purpose even though "no
pecuniary benefit actually resulted to the defendants." Foley, 185
N.E. at 927. It is enough that "the object of the [act] was
pecuniary benefit to the defendants and this fact if found would
take the [act] out of the category of gratuitous transactions."
Id. For example, in Foley, a car salesman gave a potential buyer
a ride home, and the court found a business purpose even though the

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sale was merely prospective and not ultimately made. Id. at 926-
27. Similarly, the operator of an amusement park ride who gave
free rides to children had the business purpose of enticing more
paying customers even though he had no guarantee of success. See
Beaulieu, 104 N.E.2d at 417-18.
The court below stated without citation that to render an
act nongratuitous, the defendant must have "acted for a specific
business purpose" that resulted in an "immediate and obvious
business benefit." Mass. Asset Financing Corp., 220 F. Supp. 2d at
25 (internal quotation marks omitted). This is not the law in
Massachusetts. See Taylor, 107 N.E.2d at 15 ("Although the most
obvious benefit to a defendant is one of a direct pecuniary nature,
an indirect pecuniary benefit or an undertaking which holds out the
hope of a pecuniary benefit may be sufficient to entitle the
plaintiff to recover for ordinary negligence."); Beaulieu, 104
N.E.2d at 418 ("[I]t is only necessary for a jury to find some
business advantage to the defendant."). We therefore cannot affirm
the district court's summary judgment order based on the reasoning
presented by the district court.
III.
Since "we may affirm [a summary judgment] order on any
ground revealed by the record," we will now consider Plaintiff's
arguments against summary judgment. Houlton Citizens' Coalition v.
Town of Houlton, 175 F.3d 178, 184 (1st Cir. 1999). Plaintiff

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makes three arguments against summary judgment. The first argument
is simply that whether MB Valuation and Creel's involvement with
the appraisal was gratuitous is a question of fact for the jury to
decide. The second argument is that because of the previous
business dealings between Plaintiff and MB Valuation, the instant
appraisal was "an indispensable part of the bundle of services"
between the parties. The third argument is that the parties had a
"special relationship" that requires MB Valuation to refrain from
ordinary negligence. We need only address Plaintiff's first
argument.
In doing so, we first consider whether the relationship
between the parties was of a business nature or of a social nature.
We cannot but conclude that the parties had a business relationship
as MB Valuation had previously completed appraisals for Plaintiff
for a fee. The parties have put forth no evidence of anything
other than a business relationship between Plaintiff and MB
Valuation and Creel. We thus find only a business relationship
between the parties.
We now consider whether we can determine as a matter of
law that MB Valuation or Creel acted gratuitously by their alleged
undertaking of an appraisal without charging a fee. The
Massachusetts cases make it clear that whether a party had a
business purpose in performing an allegedly gratuitous act is a
question of fact for the jury to decide. See Beaulieu, 104 N.E.2d

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at 418 ("[I]t is only necessary for a jury to find some business
advantage to the defendant."). Massachusetts courts have found
that when businesses give out free services or products, the acts
were not gratuitous but rather an effort to entice more customers
or create goodwill. See id. (amusement park ride operator giving
free rides to children); Foley, 185 N.E. at 926 (car salesman
giving a customer a ride home). We see no distinction in this case
that would allow us to state as a matter of law that the alleged
involvement of MB Valuation and Creel in the appraisal had no
business purpose.
In addition, the parties contest the extent of Creel's
involvement in the appraisal of American Mold's equipment. Whether
MB Valuation or Creel had a business purpose clearly depends on
Creel's actual involvement and the extent of that involvement. If
Creel merely referred Plaintiff to another company, then a business
purpose is less likely, but if Creel supervised and reviewed the
appraisal, then a business purpose is more likely. Thus, in order
to determine whether MB Valuation or Creel had a business purpose
in their involvement with the appraisal, a jury must first
determine Creel's involvement and then determine whether there was
a business purpose. We thus find a genuine dispute as to a
material fact that precludes summary judgment.

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IV.
We reverse the district court's grant of summary judgment
and remand the case for trial.
Reversed and Remanded.
"Concurrence follows"

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BOUDIN, Chief Judge, and SELYA, Circuit Judge,
Concurring. The present facts, taking the version most favorable
to MAFCO as the nonmoving party, lie partway between preexisting
Massachusetts cases which point in different directions.
In Bagley v. Burkholder, 149 N.E.2d 143 (Mass. 1958), the
mis en scene was work related, but the truck driver who moved a
truck as a favor to a rival driver acted gratuitously and without
any reason to expect future benefits. By contrast, in Beaulieu v.
Lincoln Rides, Inc., 104 N.E.2d 417, 418 (Mass. 1952), the "free
rides" were part of the amusement park's business, and the car
salesman in Foley v. McDonald, 185 N.E. 926 (Mass. 1933), who drove
the plaintiffs home to demonstrate the features of the new car he
hoped to sell them, was surely doing so for purposes of selling the
car and not as a gesture of kindness.
Our own situation has the look and feel of a business
context but without the immediate benefit of enticing visitors into
the amusement park or giving a specific sale a push in the right
direction, as in the car salesman case. If Creel did as claimed by
MAFCO, he probably was building good will for future business, but
perhaps also there was a measure of friendly accommodation in his
efforts.
This is not an area in which the rationale of the Good
Samaritan rule makes it easy to resolve close cases. If MAFCO were
concerned solely with whether the negligently performed gesture had

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occurred without any payment or promise of remuneration, MAFCO's
claim would fail; but Foley and Beaulieu refute so narrow a
reading. They show that Massachusetts aims to protect a truly
disinterested Good Samaritan but takes a more skeptical view in a
business context when there is some prospect of recompense. Bagley
shows that the benefit cannot be too speculative, but how much is
too much is open to debate.
The strongest argument for Creel is Justice Cutter's
statement in Bagley that to move from gross negligence to a
negligence standard, "more than a conjectural future benefit to the
defendant from his gratuitous act of helpfulness must be shown."
149 N.E.2d at 146. If taken literally, this general statement
could doom MAFCO's claim since no evidence exists that Creel had
some concrete or immediate hope of gain from any apple-polishing
efforts. But the quoted language goes well beyond the facts of
Bagley, where the supposed benefit (through reciprocity) was nearly
imaginary.
Against Justice Cutter's generalization must be weighed
the emphasis in the Massachusetts cases on the purpose of the
supposed gratuitous act. If Creel had merely offered a
recommendation of a substitute appraiser, this would look enough
like the kind of referral that he might do for anyone, regardless
of the prospect of future business. But crediting (for the moment)
MAFCO's further allegations that Creel reviewed the completed

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appraisal and made modifications of his own, the scene is one in
which a reasonable jury might conclude that efforts of this kind
are not typical of "personal kindheartedness," Bagley, 149 N.E.2d
at 145, and that they bespoke an expectation of further custom for
Creel that the jury might find adequate.
Arguably, such a close problem of law application ought
be left to Massachusetts juries. One would hope for instructions
that gave the jury some guidance as to the variables; but community
attitudes may have some role in shaping the law in a case like this
one. Cf. Dalis v. Buyer Adver., Inc., 636 N.E.2d 212, 214 (Mass.
1994). One further argument for this course is that factual
nuances as to the extent of the effort by Creel, and the extent of
expectations for future benefit, could have a bearing on the
outcome.
The case before us poses what is essentially an open
question under Massachusetts law. Apparently, neither party in the
district court sought to certify the issue to the Massachusetts
courts, and there are no special circumstances (e.g., Pyle v. S.
Hadley Sch. Comm., 55 F.3d 20, 22 (1st Cir. 1995)) that would
warrant us in insisting on such a reference. Absent certification,
existing case law does not appear to justify summary judgment on
the current record, although the issue is admittedly close.

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