Berkshire Medical Center, Inc. v. U.w. Marx, Inc.

United States Court of Appeals
For the First Circuit
No. 10-1841
BERKSHIRE MEDICAL CENTER, INC.,
Plaintiff, Appellee,
v.
U.W. MARX, INC.,
Defendant-Third Party Plaintiff, Appellant.
__________
ROCHESTER LINOLEUM AND CARPET CENTER, INC.,
d/b/a Rochester Flooring Resource,
Third Party Defendant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Kenneth P. Neiman, U.S. Magistrate Judge]
Before
Lynch, Chief Judge,
Boudin and Thompson, Circuit Judges.
John Egan with whom Scott A. Aftuck and Rubin and Rudman LLP
were on brief for defendant-third party plaintiff, appellant.
Dennis M. LaRochelle with whom Cain Hibbard & Myers P.C. was
on brief for appellee.
July 7, 2011

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BOUDIN, Circuit Judge. This is an appeal from a jury
verdict in favor of Berkshire Medical Center, Inc. ("Berkshire"),
against its former general contractor, U.W. Marx, Inc. ("Marx"),
over problems in the renovation and expansion of Berkshire's
hospital facilities in Pittsfield, Massachusetts.
What happened is largely but not entirely undisputed. In
2002, Berkshire began a significant overhaul of its facility. The
project aimed to renovate 70,000 square feet of existing hospital
space and construct 40,000 square feet of new space, including an
entirely new set of eight surgical operating rooms. The surgical
suite accounted for approximately 8,000 square feet of the new
construction.
Berkshire engaged Marx, a New York based construction
company, as the general contractor for the entire project.
Berkshire also hired Bovis Land Lease ("Bovis") to serve as its
expert manager for the construction and Cannon Design to serve as
its architect. Berkshire and Marx signed a comprehensive contract
(the "Trade Contractor Agreement") that set forth, among other
things, Marx's warranty obligation. In substance, Marx promised to
repair--at no cost to Berkshire--any defects due to faulty
workmanship or materials that appeared within one year of the
completion of the work.
As general contractor, Marx was responsible for the
flooring installed throughout the project. In the operating rooms,

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the flooring was to consist of vinyl tiles on top of concrete
slabs. Marx laid the concrete slabs, but it subcontracted with a
commercial flooring contractor, Rochester Flooring Resource
("Rochester"), to install the vinyl tiles. Prior to installing the
vinyl in the operating rooms, Rochester advised Marx that the base
layer of concrete had noticeable waves.
A finished floor product like vinyl should be directly
glued to the base layer of concrete only when the surface of the
concrete is smooth and level; vinyl installed on an uneven or wavy
surface will itself be visibly uneven and, under heavy wear, may
come loose from the concrete. After Rochester's warning, Marx
undertook to smooth the concrete surface by applying "flash
patch"--a cement-like powder mixed with water or another
additive--to fill in the imperfections.
Applying flash patch is a standard fix, and the resulting
intermediate layer between the concrete and finished floor is
commonly called an "underlayment." Rochester remained concerned
about installing the vinyl tiles in the operating rooms--even after
Marx attempted the flash patch fix--and went so far as to request
a release of liability from Marx. A less formal understanding was
worked about between the two contractors.
Berkshire noticed problems with the floor in the new
operating rooms as early as December 2003, even before the rooms
were occupied. The hospital was especially concerned about

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ruptures in the seams between vinyl tiles--which could harbor
dangerous bacteria--and with the numerous air bubbles that had
formed underneath the vinyl tiles--which could themselves rupture,
creating more cracks for bacteria and a tripping hazard for
hospital personnel working in surgical suites.
Marx apparently addressed these pre-occupancy problems
with individual repairs, and Berkshire's architect certified in
January 2004 that the construction of the new operating rooms was
substantially complete--triggering the start of Marx's warranty
period. Berkshire took control of the operating rooms that same
month. Contemporaneous records show some flooring issues in the
rooms at the time but no waves or bubbles.
However, new bubbles and split seams appeared in the
operating rooms' flooring within the first three months of
Berkshire's occupancy. Berkshire informed Marx of the problems,
and Marx paid Rochester to fix them. One Berkshire representative
estimated that more than fifty bubbles appeared at some point after
the January 2004 turn-over; that some were quite substantial,
including one four or five feet long; and that Marx had to send
workers to fix the floors more than ten times. But Marx and
Rochester never refused to address the problems.
In the repair process, the offending piece of vinyl would
be cut out, the underlayment beneath it scraped up, new flash patch
laid down, and new vinyl installed on top. Rochester's onsite

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project manager, Thomas Urbano, noticed that the underlayment
itself had crumbled into something resembling dust, which could
cause the vinyl to come loose and form a bubble. In his
experience, the crumbling could result from installing the vinyl
flooring before the flash patch had properly dried out. Crumbling
underlayment could also cause the seam to split between tiles.
Records from January 2005 show eighteen split seams and
three bubbles in the floors of the operating rooms. The date is
significant because Marx's one-year warranty expired that month.
Other language in the warranty might have been read to extend it
further, but Berkshire has not pressed that broader reading. By
March 2005, all of the individual problems documented in January
were apparently fixed by Marx and Rochester.
In Marx's view, this represented "satisfactory completion
of all the outstanding flooring issues" covered by the warranty.
Nevertheless, Marx and Rochester continued without charge to
Berkshire to patch defects in the operating room floors--including
new split seams and bubbling--as the problems persisted in 2005 and
early 2006. Marx's principal, Peter Marx, claimed at trial that
Marx performed these repairs (or, more precisely, paid Rochester to
perform them) because it wanted to maintain its reputation for
quality workmanship and thought it would be wrong "to run away from
the problem."

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Berkshire, however, was becoming increasingly concerned
that the persistent flooring problem presented a serious threat to
its operations. In June 2006, the hospital instructed its new
director of facility management, Joseph LaRoche, to investigate the
bubbles and split seams. After removing the offending vinyl, in
several instances he discovered problems with the consistency of
the underlayment--sometimes liquified and oozing rather than dry,
sometimes broken up and chalky, sometimes stuck to the vinyl but
not the concrete.
LaRoche's report convinced Berkshire to hire David Cowen,
an architect employed by an expert-witness firm, to further
investigate the flooring problems. Cowen confirmed that the
operating room floors were beset with split seams and bubbles and
recommended that the entire operating-suite floor be replaced. In
the summer of 2006 Berkshire contacted vinyl flooring manufacturers
and a contractor and, by the end of 2006, committed itself to
replacing the floor, albeit without a conclusive explanation for
the cause of the observed problems.
Just when Marx came to know that its further services
would not be required is unclear. In late 2006, Bovis expressed
concern that Berkshire aimed to replace the floor without Marx's
involvement. John Rogers, general counsel to the hospital, replied
that there was no other choice, given the failure of previous
repair efforts and his concern that continued bubbles and split

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Although there were four other counts, two were dismissed by 1
the court on the eve of trial and the other two were rejected by
the jury. Marx had attempted to implead Rochester but was held
barred by a forum-selection clause in Rochester's contract with
Marx.
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seams in the operating room floors could imperil the hospital in
upcoming accreditation inspections. By the end of December, Marx
had been officially told.
Berkshire ultimately had the floor replaced by other
companies at a cost of $398,070--a higher figure than the total
amount Marx paid Rochester to install all the floors in the initial
110,000 square feet project. The steep price was largely due to
need to construct and remove containment systems so the floors
could be renovated one part at a time while medical procedures
continued. After replacing the floors, Berkshire observed no split
seams or bubbles in the operating rooms.
In May 2008, Berkshire brought the present lawsuit
against Marx to recover the cost of replacing the operating room
floors. The complaint, invoking diversity jurisdiction, included
a claim for breach of the express warranty given in the Trade
Contractor Agreement. By mutual consent, the case was tried before
a magistrate judge. 28 U.S.C. § 636(c)(1) (2006). The jury
awarded Berkshire $331,835 in damages on the express warranty
count, and the district court entered judgment in that amount, plus
prejudgment interest.1

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Marx now appeals, having preserved various claims by
moving for judgment as a matter of law at trial and again after the
verdict. Its appeal covers multiple topics: the one-year time
limit on the warranty; the warranty's requirement of written notice
to the contractor and an opportunity to cure the problem; an
alleged failure of Berkshire to show that the incident was caused
by faulty workmanship or material; and the amount of damages. The
terms of the agreement frame these arguments and are central to the
first two.
The agreement, so far as it bears on this appeal, has a
bit of the chaotic character of insurance policies, with
overlapping and sometimes redundant provisions in different places,
including a cross-reference in the main document--the Trade
Contractor Agreement--to a separate statement of "General
Conditions" for the entire project. However, the pertinent
conditions are consistent with the main warranty set forth in
article 7.1 of the Trade Contractor Agreement, which provides that:
The Trade Contractor [i.e., Marx] agrees to
promptly make good, without cost to the Owner
[i.e., Berkshire] or Architect, any and all
defects, due to faulty workmanship and/or
materials, which may appear within the
guarantee or warranty period so established in
the Contract Documents. If no such period be
stipulated in the Contract Documents, then
such guarantees shall be for a period of one
(1) year from the date of (a) the date of
completion and acceptance of work by the
Owner, or (b) the date upon which the defect
was, or with reasonable due diligence could
have been, discovered by the Owner.

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A subparagraph beneath this language provides that Marx will make
warranty repairs "promptly after receipt of a written notice from
the Owner to do so," which the owner shall give "promptly after
discovery of the defective work or condition."
Deferring two final issues (fault and damages), Marx's
main objections are that the floor replacement remedied problems
that developed after the one-year period and, to the extent later
bubbles or seam separations were within the warranty, the warranty
required that Marx be given the opportunity itself to do the repair
work--as it had previously done without complaint. Marx also
complains that it had no "written notice" as called for in the
Trade Contractor Agreement.
The three concerns all relate to a common question,
namely, whether the bubbles and splits should be viewed as separate
events or as a single episode. Although contract interpretation is
a matter for the court, e.g., Lumber Mut. Ins. Co. v. Zoltek Corp.,
647 N.E.2d 395, 396 (Mass. 1995), the agreement here--unlike some
insurance policies--makes no effort to address the definitional
question explicitly, and both the judge and the jury have something
separate to contribute to answering it. As to legal rulings or
instructions, our review is de novo; as to the jury, the more
deferential standards associated with fact-finding are applied.
Juries commonly engage both in finding raw "what
happened" facts and in applying general rubrics or standards to

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those facts--the classic example is negligence--which in some sense
is law-making in miniature. Restatement (Second) of Torts § 328C
cmt. b (1965). Where the verdict does not allow the reviewing
court to distinguish, the jury is taken to have found disputed
facts favorable to the verdict and the court asks whether a
reasonable jury could have so found. E.g., Mandel v. Bos. Phoenix,
Inc., 456 F.3d 198, 207-08 (1st Cir. 2006).
In this case, the trial judge's instructions effectively
allowed the jury to conclude, if the facts so warranted, that the
splits and bubbles, whether they occurred before or after the end
of the one-year period, were a manifestation of the same underlying
problem. In closing, Berkshire's trial counsel used the term
"systematic" (probably he meant "systemic"), and on appeal
Berkshire likens the visible flaws to mere "symptoms" of a single
"disease." Either way, a reading of the contract to permit the
possibility of systemic failure makes good sense and is not
inconsistent with the language of the warranty.
The bubbles and seam splits can be viewed, depending on
diverse factors, either as individual "defects" (in the words of
the agreement), or as that and also as manifestations of a larger
"defect"--for example, deficient preparation of the underlayment so
serious and widespread as to be more than an assortment of initial
blemishes calling for individual repair. The considerations might

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include the severity, scope, and persistence of the problems and
the likelihood of a common source or set of sources.
Some cases will fall in the systemic or "symptoms of a
disease" category and others will not; but where the former
situation exists, the idea of a warranty would be undone if the
manifestations occurring within the first year could be remedied
but--the underlying cause left untreated--further manifestations
would be the buyer's problem because they occurred sequentially
rather than simultaneously. That the notion could be extended too
far--Marx evokes a leaking roof twenty years after the initial
job--just shows that there must be an outer limit.
Here, it was for the jury to find the facts and, also
within reason, to apply the label, and we think that the jury could
reasonably find that notice was given within one year of an
underlying structural problem that Marx never resolved. Assuming
this was a "defect" of faulty workmanship--we deal with this
below--Marx was placed on notice of it once a succession of bubbles
and splits appeared and was called to its attention even if neither
side then fully understood the full scope of the problem.
No one disputes that notice of the initial problem was
given to Marx and then acted upon, albeit (in hindsight)
inadequately. How much of the notice was in writing is unclear but
does not matter: any such failure was likely not a "material

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A writing requirement avoids disputes about whether (and 2
what) notice was given, e.g., Seaboard Sur. Co. v. Town of
Greenfield ex rel. Greenfield Middle Sch. Bldg. Comm., 370 F.3d
215, 223 (1st Cir. 2004), but here notice even if oral was plainly
given and acted upon. See Restatement (Second) of Contracts §§
237, 241 (1981) (materiality); cf. Taylor v. Int'l Indus., Inc.,
398 N.E.2d 501, 502 (Mass. App. Ct. 1979).
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breach," and, in any event, was "excused" when Marx accepted 2
whatever notice was given and started to make the repairs. See
Restatement (Second) of Contracts, supra note 2, § 246(1). Marx
does not seriously press the issue of writing, relegating it to a
footnote.
Marx's central complaint about notice is that it never
got notice of a proposed replacement of the entire floor, nor was
it given the opportunity to fix the floor itself. Again, there is
both a contract interpretation problem and, beyond that, a
standards-application and fact-finding problem. Both article 7.1
and cognate language elsewhere in the agreement make clear that the
contractor is entitled to be told of and given a chance to remedy
the defect by itself; nowhere does the agreement suggest that the
contractor's obligation is to let the owner choose some other
contractor to implement some other remedy.
But, while the contractor gets first crack, there has to
be some end point. If the contractor refused to do anything, the
owner could do the job itself and sue for the cost; the result
cannot be otherwise if, after repeated efforts over an extended
period (here, between January 2004 and December 2006), the

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This is implicit, although not developed in detail, in a 3
number of cases. E.g., Int'l Prod. Specialists, Inc. v. Schwing
Am., Inc., 580 F.3d 587, 600-01 (7th Cir. 2009); Pennington v.
Rhodes, 929 S.W.2d 169, 171, 172-73 (Ark. Ct. App. 1996); Hebert v.
McDaniel, 479 So. 2d 1029, 1031-32, 1034-35 (La. Ct. App. 1985).
Nothing like this occurred in the two cases on which Marx 4
primarily relies: Weyerhaeuser Corp. v. D.C. Taylor Co., No.
C02-141-LRR, 2005 WL 1800083 (N.D. Iowa July 29, 2005), and
Chrysler Realty Co. v. Design Forum Architects, Inc., 544 F. Supp.
2d 609 (E.D. Mich. 2008), aff'd in part, rev'd in part, 341 F.
App'x 93 (6th Cir. 2009).
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contractor has attempted to provide a fix and failed to do so.3
Whether it was unreasonable of Berkshire not to wait longer or
offer Marx a chance to replace the entire floor are the kind of
issues properly left to the jury.
We think a reasonable jury could find, even if not
compelled to do so, that Berkshire properly invoked the warranty.
Two years and a number of spot repair efforts by Marx had not led
to any solution; a hospital can hardly be expected to tolerate
indefinitely unsafe conditions; and Thomas Urbano--of Rochester,
not Berkshire--had earlier told Marx's on-site representative that
the failings of the underlayment in the operating rooms were
systemic and that they ought to be addressed by replacing the
floors rather than continuing with isolated fixes.4
As for giving Marx the option of doing the replacement
job itself, Berkshire had little reason to think that Marx either
could be trusted to do it or would have any interest in doing so.
Replacing the entire floor in phases, while the hospital continued

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to perform surgeries in less blemished segments of the suite, was
obviously a drastic and very expensive proposition. Marx never
volunteered to do it and even now does not suggest that it would
have done so if asked.
The last major issue on appeal is whether the jury could
conclude, without expert testimony, that the splits and bubbles
were "due to faulty workmanship and/or materials" for which Marx
was responsible under the warranty. Marx does not deny
responsibility for the concrete and the underlayment that was
applied; Rochester laid the tile but Marx was responsible for its
subcontractors' work. And there was evidence in the record to
suggest that the most likely of possible causes had to do with
putting tile on wave-ridden concrete whose underlayment had not
fully dried.
Although factual testimony from Urbano, LaRoche, and
Cowen pointed in this direction, LaRoche's attempt to state his
opinion was defeated when Marx objected to lack of expertise.
Cowen's similar attempt was excluded in limine as unreliable under
Federal Rule of Evidence 702 and Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579 (1993). Urbano testified only
that the problems could be caused by improper installation of the
underlayment.
But even if the jury lacked evidence sufficient to assign
a precise cause, it could rely on its common sense to conclude that

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a newly laid vinyl floor that immediately began to bubble and split
was the product of faulty workmanship and/or materials supplied by
those who prepared the surface or laid the tile. See Nemet v. Bos.
Water & Sewer Comm'n, 775 N.E.2d 750, 755 (Mass. App. Ct. 2002).
Res ipsa loquitur, applied in negligence cases, reflects the same
idea. E.g., Gelinas v. New Eng. Power Co., 268 N.E.2d 336, 339
(Mass. 1971).
This is not because no other explanation can be imagined.
In another case, the cause might be unreasonably rough use after
the turn-over to the owner; but here the problems began before the
turn-over and Marx never offered an explanation to rebut the
obvious inference of faulty workmanship or material. As with res
ipsa, an inference can be compelling enough--and was so here--to
impose liability without knowing the precise cause or negating
every other non-inculpatory possibility.
Finally, Marx argues that the measure of damages--the
cost to replace the operating room floors--was disproportionate to
the diminution in value suffered by Berkshire and was "wildly out
of line with what should have been considered reasonable." Marx
paid Rochester $377,317 to install flooring throughout the 110,000
square feet of the project; Berkshire sought to recover $398,070
for replacing the 8,000 square feet of operating room flooring; and
the jury awarded $331,835.

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Restatement (Second) of Contracts, supra note 2, § 348(2) & 5
cmt. c; see, e.g., Peevyhouse v. Garland Coal & Mining Co., 382
P.2d 109, 111-14 (Okla. 1962) (cost of remedying fault exceeded
difference in market value), cert. denied, 375 U.S. 906 (1963);
Jacob & Youngs, Inc. v. Kent, 129 N.E. 889, 890-91 (N.Y. 1921)
(same).
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The "all flooring" figure was for Rochester's part in
laying down whatever surface was specified on a prepared base; the
damages awarded by the jury were for replacement of what the
evidence permitted it to conclude was a faulty base, further
complicated by the need to complete the entire job in phases while
operations were continuing. So Marx's raw numbers do not show that
the repair work was over-priced and Marx offers nothing more.
Marx's argument on damages occupies two paragraphs and it
is something of a throw-away at the end of the brief. Some
arguments are so powerful that nothing more is needed, but this is
hardly of that character. See United States v. Zannino, 895 F.2d
1, 17 (1st Cir.), cert. denied, 494 U.S. 1082 (1990). The defects
in the comparison are obvious; Marx points to no evidence that it
was unreasonable for Berkshire to proceed in stages or that the
repairs went beyond what was necessary.
Although "the market price of completing or correcting
the performance" is a standard remedy in warranty cases,
24 R. Lord, Williston on Contracts § 66:17 (4th ed. 2002), courts
sometimes disallow it where the cost will exceed the increased
value of the property. But the extra cost incurred in this case 5

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to permit surgery to continue can be better justified, and Marx's
counsel--who ably pressed several other serious arguments on
appeal--reasonably omitted any attack along these lines.
Affirmed.

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