18 F.

3d 1

CRELLIN TECHNOLOGIES, INC., Plaintiff, Appellant,

v.
EQUIPMENTLEASE CORP., Defendant, Appellee.
No. 93-1615.

United States Court of Appeals,

First Circuit.
Heard Nov. 1, 1993.
Decided March 8, 1994.

Jeffrey C. Schreck, with whom Neal J. McNamara and Flanders &

Medeiros, Inc. were on brief, Providence, RI, for appellant.
Netti C. Vogel, with whom Vogel, Souls & Woodbine was on brief,
Providence, RI, for appellee.
Before SELYA, Circuit Judge, BOWNES, Senior Circuit Judge, and
CYR, Circuit Judge.
SELYA, Circuit Judge.

This appeal teaches that, just as "negotiations and love songs are often mistaken
for one and the same," Paul Simon, Train in the Distance, on Negotiations and
Love Songs (Warner Bros. Records 1981), so, too, negotiations and binding
contracts readily can be confused. The lyrics follow.

I. BACKGROUND
2

Plaintiff-appellant Crellin Technologies, Inc. (Cretco), a Rhode Island

corporation, sells, rents, services, and provides parts for lift trucks and other
materials handling equipment. In 1990, Crellin suffered from a serious cash
flow malady. In order to stanch the financial hemorrhaging caused by steep
monthly payments to institutional lenders, Richard Crellin, Cretco's chief
executive officer and part owner, began exploring various options. Crellin knew
that, on occasion, defendant-appellee Equipmentlease Corporation (ELC), a
Massachusetts firm, had provided financing for certain of Cretco's customers.

Consequently, Crellin sought to interest an ELC representative, Mark Patterson,

in structuring a sale and leaseback.1 Cretco proposed to sell its fleet of lift
trucks to ELC and then lease back the fleet, keeping the equipment available
for use in the ordinary course of Cretco's business. Cretco planned to apply
some or all of the sale proceeds to pay down its institutional debt, thereby
easing the cash flow crunch and enhancing the prospect that its principal
lender, Old Stone Bank (Old Stone), would provide long-term financing on less
onerous terms.
3

After reviewing what it thought were Cretco's complete financial statements, 2

ELC agreed that a sale/leaseback transaction might prove feasible. In
November of 1990, ELC prepared the paperwork that it needed to start a formal
commitment process. But ELC's overtures went unrequited, for Old Stone had
not agreed to release its security interest in the fleet. Thus, Cretco refused to
sign ELC's documents.

During the period from November 1990 to February 1991, Cretco and ELC
maintained an ongoing dialogue. Although Cretco now portrays these
communications as reassurances that ELC was committed to a sale and
leaseback, the trial court supportably found them to be mere expressions of a
continuing mutual interest directed toward finding agreeable terms on which to
do a deal of some undetermined magnitude.

In February of 1991, Cretco made its peace with Old Stone and received the
long-awaited agreement for release of the bank's security interest. Cretco
relayed the good news to ELC on or about March 1, and requested a meeting.
On March 11, 1991, Richard Crellin travelled to ELC's Worcester
(Massachusetts) office and signed papers prepared by ELC. At the same time,
ELC executed subordination and option agreements prepared by Cretco.3

The parties dispute the legal significance of these events. In one corner, Cretco
contends that, in the March 1 call, Richard Crellin gave the green light to
consummating the sale/leaseback contract negotiated between the parties in
November 1990--and that he reinforced this clearance by executing the
documents proffered to him on March 11. In the opposing corner, ELC
contends that neither the March 1 telephone conversation nor the March 11
signing carried any legal weight; the call was purely informational and the
documents were designed merely to restart the formal commitment process for
a new, albeit resurrected, sale and leaseback. ELC points out that the proffered
papers were in different dollar amounts and on different terms than the
documents prepared in late 1990, and that, at any rate, it never signed them.

The record is at sixes and sevens regarding the reasons why ELC applied the
brakes. Richard Crellin testified that ELC led him to believe that the documents
would be signed soon after March 11, and Cretco viewed ELC's failure to do so
as a breach of contract. ELC's witnesses told a much different story. They said
ELC informed Richard Crellin that, in pursuance of its customary practice, the
document package had to be submitted to ELC's funding source, BayBank, for
approval before ELC would enter a firm agreement. According to these
witnesses, a final set of contract documents ultimately would have been
generated if, having been assured that funds were available, management made
a binding decision to do the deal.

It is undisputed that ELC approached BayBank to supply the needed funds, and
that BayBank turned thumbs down. Thereafter, ELC requested additional
information from Cretco and submitted a revised request. BayBank again
refused to open the purse strings, reportedly due to Cretco's anemic financial
status. It was for this reason, then, that ELC decided not to go forward with a
sale and leaseback.

To make a tedious tale tolerably terse, Cretco eventually invited ELC to honor
what it perceived as a binding contract. ELC declined the invitation, saying that
no contract ever existed. Invoking diversity jurisdiction, 28 U.S.C. Sec. 1332
(1988), Cretco sued ELC in the United States District Court for the District of
Rhode Island. It charged, inter alia, that ELC ignored a binding obligation,4 ]
dishonored the implied covenant of good faith and fair dealing that formed part
of the contractual relationship, and violated a Massachusetts unfair trade
practices statute by deceptive dealing.

10

After a bench trial, the district judge found that appellant had not proven any of
its three claims. On the breach of contract count, the judge determined that
there had been no mutuality of obligation and, therefore, no binding contract. In
this vein, he noted, inter alia, that Cretco had not purported to make a timely
acceptance of ELC's proposal; that, throughout the negotiations, Cretco
endeavored to keep any agreement contingent upon its ability to secure new
(and more manageable) bank financing; that Cretco could not have sold the
fleet without first obtaining Old Stone's consent to the release of its security
interest--a consent that did not materialize in 1990; that, before litigation
became an option of choice, Cretco had not viewed the November 1990
documents as binding; and that Cretco had shopped around in the ensuing
months for a better interest rate. The judge found that ELC, too, had kept its
powder dry, for it intended all along--though it had not informed Cretco about
this contingency in the fall of 1990--to condition any sale and leaseback upon
approval by its own funding source. Hence, since both parties believed the

transaction to be contingent upon other occurrences, controllable by them-Cretco, for example, did not have to accede to Old Stone's terms, and, similarly,
ELC did not have to accede to the terms demanded by its funding source-mutuality of obligation did not exist.
11

In a commendable effort to cover the waterfront, the judge identified an

alternative ground for dismissing the contract claim. Even if one assumed, for
argument's sake, that a contract had been formed and that ELC had broken it,
Cretco's first count sought only compensatory damages, not specific
performance, and Cretco had not proven that it suffered or sustained any
recoverable damages.

12

Cretco's other two counts fared no better. In regard to good faith and fair
dealing, the judge reasoned that, because no enforceable contract existed, there
could be no breach of an implied covenant arising out of that non-contract. As
to chapter 93A, the judge found that the deceptive practices of which Cretco
complained, if they occurred at all, did not occur in the course of trade or
commerce, and, therefore, did not transgress the cited statute.

13

Cretco appeals. We affirm.

II. THE BREACH OF CONTRACT CLAIM

14

We divide our discussion of this issue into segments, first addressing choice of
law and then confronting the merits of appellant's claim.

A. Choice of Law.
15
16

17

It is, of course, a black-letter rule that state substantive law must be applied by
a federal court sitting in diversity jurisdiction. See Erie R.R. Co. v. Tompkins,
304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938). In determining what
state law pertains, the court must employ the choice-of-law framework of the
forum state, here, Rhode Island. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313
U.S. 487, 491, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Putnam Resources v.
Pateman, 958 F.2d 448, 464 (1st Cir.1992). Choice-of-law judgments are legal
in nature, and courts of appeals exercise plenary oversight in respect thereto.
See Soo Line R.R. Co. v. Overton, 992 F.2d 640, 643 (7th Cir.1993);
Waggoner v. Snow, Becker, Kroll, Klaris, & Krauss, 991 F.2d 1501, 1505 (9th
Cir.1993); Putnam Resources, 958 F.2d at 466. Consequently, a de novo
standard of review obtains.5
1. The Local Landscape. Rhode Island law anent contract conflict-of-law

17

1. The Local Landscape. Rhode Island law anent contract conflict-of-law

principles is sparse and leaves the proper choice-of-law test for contract cases
shrouded in uncertainty. In 1969, Rhode Island's highest court made use of the
lex loci contractus doctrine in such a context. See Union Sav. Bank v.
DeMarco, 105 R.I. 592, 254 A.2d 81, 83 (1969) (holding a loan granted in
Massachusetts to be a Massachusetts contract governed by Massachusetts law).
Three years later the court, when asked to endorse the neoteric interestweighing approach to contract conflict issues as enunciated in the Restatement
(Second) of the Conflict of Laws Sec. 188 (1971) (hereinafter "Restatement"),
expressly declined to choose between the new and the old choice-of-law rules.
See A.C. Beals Co. v. Rhode Island Hosp., 110 R.I. 275, 292 A.2d 865, 871 n.
5 (1972). Two subsequent Rhode Island cases that touch upon the question
transmit mixed signals. In Matarese v. Calise, 111 R.I. 551, 305 A.2d 112
(1973), a case calling for a choice between local law and the law of a foreign
sovereign, the court cited with approval a statement favoring resort to the law of
the place of contracting. See id. 305 A.2d at 118 n. 4 (dictum; citing
Annotation, 72 A.L.R. 250 (1931)). Two decades later, the court indicated a
preference for an interest-weighing analysis.6 See Gordon v. Clifford Metal
Sales Co., 602 A.2d 535, 539 (R.I.1992) (dictum; implying approval of rule
enunciated in Restatement Sec. 6 for choice of law involving "a simple
contracts issue governed by general contract principles").

18

Federal district courts sitting in Rhode Island have spoken to the issue in
differing tones. Some have invoked the law of the place of contracting, see,
e.g., Everett/Charles Contact Prods., Inc. v. Gentec, S.A.R.L., 692 F.Supp. 83,
89 (D.R.I.1988); SW Indus., Inc. v. Aetna Cas. & Sur. Co., 653 F.Supp. 631,
639 (D.R.I.1987), and some have invoked the interest-weighing test, see, e.g.,
Marshall Contractors, Inc. v. Peerless Ins. Co., 827 F.Supp. 91, 94
(D.R.I.1993); Albany Ins. Co. v. Wisniewski, 579 F.Supp. 1004, 1013
(D.R.I.1984).

19

2. Discussion. We need not attempt to resolve this impasse by venturing an

informed prophecy as to which test will emerge triumphant in the Rhode Island
courts. Here, providentially, Rhode Island law must prevail under either choiceof-law format.

20

For purposes of the older "place of contracting" test, the Rhode Island Supreme
Court has held that the place of contracting is the place in which the last act
that forms the contract is performed. See Tim Hennigan Co. v. Anthony A.
Nunes, Inc., 437 A.2d 1355, 1357 (R.I.1981); A.C. Beals, 292 A.2d at 870-71.
Counsel for Cretco maintained at oral argument in this court that the contract
solidified on or about March 1, 1991, when Richard Crellin telephoned ELC to
relay the news of Old Stone's agreement to release its security interest. This

telephone call originated in Rhode Island. Thus, even though ELC received the
call in Massachusetts, the final act of contract formation took place in Rhode
Island. The rule is that, when a contract is cinched in the course of an interstate
telephone call, the contract will be deemed to have been made in the state
where the decisive words were spoken. See, e.g., Perry v. Mount Hope Iron
Co., 15 R.I. 380, 5 A. 632, 633 (1886) (holding that an offer accepted by
telegraph will be deemed accepted where telegram is sent, not where it is
received); see also John E. Murray, Jr., Murray on Contracts Sec. 47G, at 152
(3d ed. 1990) (explaining proper rule for acceptance of offer by telephone;
where parties are at a distance, "acceptance will have occurred where and when
the acceptance was spoken or sent"). Hence, under the place of contracting rule,
Rhode Island law applies to the breach of contract count.
21

The functional interest-weighing approach to conflict analysis for contract

issues yields the same result. This approach requires a court to take cognizance
of overall policy goals even as it evaluates the significance of the parties'
contacts with various jurisdictions and their conduct as a contract is negotiated,
consummated, and performed. See Restatement Secs. 6, 188. On the policy
side, the Restatement suggests that a court inquiring into choice of law consider
(1) the needs of the interstate system; (2) relevant policies of the forum; (3)
policies of other affected states and their interest in the outcome of the
litigation; (4) protection of the parties' justified expectations; (5) uniformity and
predictability of results; and (6) ease in determining and applying different
bodies of law, see id. Sec. 6. This panoply of policy considerations is to be
assessed against a more traditional, more concrete backdrop comprised of (1)
the place of contracting; (2) the situs of negotiations; (3) the place of
performance; (4) the location, if any, of the contract's subject matter; and (5)
the business locations and states of incorporation of corporate parties, see id.
Sec. 188.7

22

Under an interest-weighing analysis, appellant's contract claim is governed by

Rhode Island law. Cretco is a Rhode Island corporation. ELC, albeit
headquartered in Massachusetts, maintains an office in Providence, Rhode
Island. Cretco initiated and continued negotiations with ELC's representative,
Mark Patterson, in Providence. 8 Although performance of the sought-after
contract would have overspread a wide geographic area, the cash infusion
generated by the sale and leaseback was to have taken place in Rhode Island
and was to have been used in large part to retire debt owed to a Rhode Island
lender. The fleet would continue to be based in Rhode Island and to be
monitored by Cretco's Rhode Island headquarters.

23

In addition, an application of Rhode Island law furthers the general principles

and policy goals limned in the Restatement. Rhode Island is the forum state. It
has a legitimate stake in the outcome of the suit: Cretco is domiciled in Rhode
Island and its economic viability is at risk. This interest clearly outweighs
Massachusetts' interest in the suit (which is limited to the impact of one soured
relationship between an in-state defendant and one of its many out-of-state
clients). The combination of appellant's home base, ELC's presence in Rhode
Island, and the incidence of negotiations involving a Rhode Island
representative of ELC should have led thoughtful parties to expect that Rhode
Island law would govern their dealings. Last, the law of the forum, other things
being equal, is ordinarily to be preferred; Rhode Island's is the most natural,
and, therefore, the easiest law for the district court to apply. We think it follows
that, under an interest-weighing analysis, the substantive law of Rhode Island
controls appellant's contract claim.
24

To recapitulate, regardless whether lex loci contractus or an interest-weighing

approach prevails, a Rhode Island court would apply Rhode Island substantive
law to appellant's contract claim. Thus, the federal district court, sitting in
Rhode Island, was obliged to do the same. In turn, this court must also utilize
Rhode Island law--and we must do so without deference to the district court's
construction of that law. See Salve Regina Coll. v. Russell, 499 U.S. 225, 230,
111 S.Ct. 1217, 1221, 113 L.Ed.2d 190 (1991).

B. The Merits.
25
26

The district judge, sitting without a jury, found that the end product of the
negotiations between Cretco and ELC lacked mutuality of obligation, and,
consequently, did not achieve the status of a contract. Appellant polemicizes the
court's ruling that no enforceable contract existed between the parties, claiming
that the court grossly undervalued the evidence showing that ELC actively
demonstrated its continuing interest in, and commitment to, a sale and
leaseback.

27

1. Standard of Review. When a case is tried to the bench, we review the trial
court's findings of fact with considerable solicitude, disturbing those findings
only for mistake of law or clear error. See Cumpiano v. Banco Santander, 902
F.2d 148, 152 (1st Cir.1990); Reliance Steel Prods. Co. v. National Fire Ins.
Co., 880 F.2d 575, 576 (1st Cir.1989); see also Fed.R.Civ.P. 52(a). To be sure,
appellant strives to blunt the force of this rule by pointing out that mistakes of
state law are subject to plenary review, see Salve Regina Coll., 499 U.S. at 230,
111 S.Ct. at 1221, and then dressing quintessentially factual matters in the garb
of "legal error." But factual issues are demonstrably different than legal issues,
and no amount of slick costumery can transform the one into the other.

28

We have consistently held that, so long as the evidence does not point
unerringly in a single direction but is capable of supporting conflicting
inferences, the question of whether a contract has been formed between two
parties is a question of fact to be determined by the factfinder. See, e.g.,
Bushkin Assocs., Inc. v. Raytheon Co., 815 F.2d 142, 145, 151 (1st Cir.1987);
Chedd-Angier Prod. Co. v. Omni Pub'ns Int'l, Ltd., 756 F.2d 930, 935 (1st
Cir.1985). Here, appellant's argument centers around the issue of contract
formation and questions the district court's findings anent mutuality of
obligation. These questions are appropriately classified as questions of fact,
subject to clear-error review. Within this paradigm, a finding concerning a
party's intent to contract is a finding of fact. See Gel Systems, Inc. v. Hyundai
Eng'g & Constr. Co., 902 F.2d 1024, 1027 (1st Cir.1990); Reliance Steel, 880
F.2d at 576.

29

In reaching this conclusion, we expressly reject appellant's asseveration that the

issue of mutuality demands de novo review simply because it involves a mixed
question of law and fact. While such an issue does present a "mixed" question,
mixed questions, to the extent that they are fact-dominated, are subject to clearerror review, not de novo review. See In re Howard, 996 F.2d 1320, 1328 (1st
Cir.1993); Roland M. v. Concord Sch. Comm., 910 F.2d 983, 990 (1st
Cir.1990), cert. denied, 499 U.S. 912, 111 S.Ct. 1122, 113 L.Ed.2d 230 (1991).
Therefore, unless appellant can show that the district court incorrectly applied a
legal rule or standard--and, here, no such mistake of law looms--the court's
findings in regard to mutuality must be upheld so long as they are not clearly
erroneous. See Roland M., 910 F.2d at 990; Thrifty Rent-A-Car Sys., Inc. v.
Thrift Cars, Inc., 831 F.2d 1177, 1181-82 (1st Cir.1987); RCI Northeast Servs.
Div. v. Boston Edison Co., 822 F.2d 199, 202 (1st Cir.1987).

30

2. Mutuality of Obligation. The law requires mutuality of obligation as a

prerequisite to a binding bilateral contract. See B & D Appraisals v. Gaudette
Mach. Movers, Inc., 733 F.Supp. 505, 507 (D.R.I.1990); Law v. Law Trucking
Co., 488 A.2d 1225, 1228 (R.I.1985); see generally 1 Richard A. Lord,
Williston on Contracts Sec. 1:17, at 44 (4th ed. 1990). This mutuality can be
evidenced by an exchange of promises. See B & D Appraisals, 733 F.Supp. at
508; Judd Realty, Inc. v. Tedesco, 400 A.2d 952, 956 (R.I.1979); see generally
Murray on Contracts, supra, Sec. 65, at 269 n. 48.

31

Appellant argues that this benchmark has been achieved. It seems to be saying
that the documents submitted to it by ELC in 1990 embodied an offer, duly
accepted by a return promise at the time, subject, however, to a contingency
(Old Stone's consent to releasing its security interest); and that removal of the
contingency took place on or about March 1, 1991, when appellant informed

ELC of Old Stone's acquiescence.9 But this scenario overlooks--or, at least,

impermissibly discounts--the district court's factfinding.
32

To show mutuality of obligation, both parties must have been legally bound
through the making of reciprocal promises. Here, the court thought that both
ELC and Cretco intended any agreement to be tentative, ergo, nonbinding, until
other things happened. As to ELC, the court found that it intended agreement to
await approval by one of its funding sources--an approval that never
materialized. This finding is amply supported. After all, ELC never signed the
documents it proffered to Cretco in 1990. The next spring, ELC declined to
sign the new set of lease documents. At that time, ELC asked for, and Cretco
supplied, additional financial information for the sole purpose of attempting to
convince BayBank, an ELC funding source, to underwrite the transaction. The
record is barren of evidence that ELC received a funding commitment at any
time. The record is similarly barren of evidence that ELC did major deals
without outside funding. These facts strongly support the district court's finding
that ELC did not intend to bind itself through the submission of preliminary
transactional paperwork in 1990.

33

As to Cretco, the court concluded that it, too, lacked the requisite intent to be
bound. From its standpoint, entering into a binding contract had to await two
developments: the extraction of a piece of paper from Old Stone and, in Judge
Torres's words, the obtaining of "satisfactory supplementary financing." We
believe that the court's subsidiary findings on these points are sustainable;
indeed, it was for these very reasons that Cretco refused to execute the
documents tendered to it in 1990.

34

In an effort to undermine the court's determination that it was not bound,

appellant argues that its acceptance of the November offer required it to do its
utmost to gain the Old Stone release. This argument will not wash. For one
thing, it glosses over the parallel, equally lethal finding that appellant viewed
any relationship with ELC as subject to the obtaining of supplementary
financing (in amounts, and on terms, satisfactory to appellant). For another
thing, both parties to a bilateral contract must have made more than illusory
promises for the agreement to be binding. See John D. Calamari & Joseph M.
Perillo, Contracts Sec. 4-17, at 160 (2d ed. 1977). It is settled law that, when
the promised act is conditional on the occurrence of a future event within the
control of the promisor, the promise is illusory. See Vickers Antone v. Vickers,
610 A.2d 120, 123 (R.I.1992); see also Calamari & Perillo, Contracts Sec. 4-17,
at 160. We see nothing in the 1990 "Equipment Lease Agreement" that would
indicate that appellant bound itself to have Old Stone release its security
interest in the fleet or to make any particular efforts in this regard. Moreover,

even if such an obligation can somehow be implied out of thin air--and we do

not think it can be--the documents certainly impose no time limit on when
appellant would have to bring about this event, or what concessions it would
have to endure. Therefore, the procuring of Old Stone's release, like the
obtaining of supplementary financing, was in appellant's unbridled discretion.
At the most, then, appellant gave ELC a mirage of a promise.
35

We add that appellant's actions belie its current contention that the parties were
bound in 1990 and thereafter. During the critical period, appellant tried
valiantly to forge arrangements with other lending institutions--arrangements
that would have left ELC out in the cold. Richard Crellin testified that, as late as
February of 1991, he approached Fleet Bank to see if it would "offer a more
attractive deal." He admitted on cross-examination that he would have looked
favorably upon Fleet replacing both ELC and Old Stone in Cretco's plans had
an offer been forthcoming on comely terms.10 Thus, despite the fact that
appellant claims it was only scouting out supplemental financing, the evidence
is adequate to warrant the district court's contrary finding that appellant
continued to seek other financing options as a surrogate for, rather than as a
supplement to, an alliance with ELC. When, as in this case, the proof supports
more than one plausible view of the relevant events, and the district court
chooses one such view over another, the court's choice cannot be clearly
erroneous. See Anderson v. City of Bessemer City, 470 U.S. 564, 574, 105
S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985); Dedham Water Co. v. Cumberland
Farms Dairy, Inc., 972 F.2d 453, 457 (1st Cir.1992).

36

This finding is significant. Although appellant may have exercised good

business sense when it shopped the financial markets for better terms in the
winter of 1990-91, it cannot plausibly claim that ELC was bound although it
had no corresponding obligation. Given, especially, three things--the
discretionary nature of appellant's "obligation" to procure the Old Stone release
and the needed supplementary financing, its concession that, in and after
November of 1990, it believed that "if it had wanted to, it could have gone
elsewhere" for financing,11 and the evidence that it acted on this stated belief-we do not perceive clear error in the district court's finding that no obligation
inured on Cretco's part.

37

To sum up, the trial court found that neither ELC nor Cretco undertook a
binding obligation to the other. Either half of this disjunctive finding is
sufficient to warrant judgment for the defendant on the breach of contract
count. Both halves are sustainable. Hence, the court's ultimate conclusion--that
no enforceable contract existed because no mutuality of obligation existed--is
unimpugnable. 12

38

3. Unilateral Offer. Before leaving the breach of contract claim, we close one
last door. Were we to characterize the initial document submission as a
unilateral offer--a characterization that appellant, for the most part, has
assiduously resisted--appellant's lot would not be improved. As the district
court observed, the documents that ELC delivered in November 1990 did not
specify a time within which appellant had to accept any offer they might have
contained. It, therefore, would have had a reasonable time within which to do
so, for an offer that does not contain a deadline for acceptance will lapse after a
reasonable time if it is not accepted. See Mathewson Corp. v. Allied Marine
Indus., Inc., 827 F.2d 850, 853 (1st Cir.1987) ("It is hornbook law that an
offeree's power of acceptance vanishes at the time specified in the offer, and if
no deadline is prescribed, 'at the end of a reasonable time.' ") (quoting
Restatement (Second) of Contracts Sec. 41(1) (1979)); see also Minneapolis &
St. Louis Ry. v. Columbus Rolling Mill, 119 U.S. 149, 151, 7 S.Ct. 168, 169,
30 L.Ed. 376 (1886); Thermo Electron Corp. v. Schiavone Constr. Co., 958
F.2d 1158, 1164 (1st Cir.1992). What amount of time is reasonable within the
context of a particular case is "a classic example of a decision that the law
leaves to a district court, not to this court, to decide." Thermo Electron, 958
F.2d at 1166; see also Murray on Contracts, supra, Sec. 41C, at 102.

39

Appellant concedes that, generally, four months is an unreasonably long time

for a financing offer to remain open. We agree with the district court that, in a
period of rapidly fluctuating interest rates and with no extenuating
circumstances, this case falls comfortably within the sweep of that generality.
Because it would have been thoroughly unreasonable for appellant to believe
that a sale/leaseback proposal made in November and not then accepted would
linger on the table until the following March, a "unilateral offer" theory leads
down a blind alley. And, moreover, we discern no clear error in the trial court's
rejection of appellant's claim that the "offer" was periodically refreshed by what
appellant--but not the court--viewed as continuing reassurances.

III. THE IMPLIED COVENANT CLAIM

40

Appellant next claims that ELC breached an implied covenant of good faith and
fair dealing when it refused to proceed with the alleged contract, and, adding
insult to injury, gave apocryphal reasons for its refusal to perform. When, as
now, a duty of good faith and fair dealing is alleged to arise from a contractual
relationship, a claim for breach of that duty sounds in contract rather than in
tort. See Bertrand v. Quincy Market Cold Storage & Warehouse Co., 728 F.2d
568, 571 (1st Cir.1984). This, in turn, dictates choice of law: the same
substantive law that governs the contract claim also governs the implied
covenant claim.

41

In this instance, then, Rhode Island law controls. Rhode Island recognizes that
virtually every contract contains an implied covenant of good faith and fair
dealing between the parties. See A.A.A. Pool Serv. & Supply, Inc. v. Aetna
Cas. & Sur. Co., 121 R.I. 96, 395 A.2d 724, 725 (1978); Ide Farm & Stable,
Inc. v. Cardi, 110 R.I. 735, 297 A.2d 643, 645 (1972); see also Fleet Nat'l Bank
v. Liuzzo, 766 F.Supp. 61, 67 (D.R.I.1991); Landry v. Farmer, 564 F.Supp.
598, 611 (D.R.I.1983). Because the implied covenant exists "so that the
contractual objectives may be achieved," Ide Farm, 297 A.2d at 645, it
necessarily follows that where there is no contract, there is no duty. In such
circumstances, there is nothing from which the covenant can be implied. Or,
phrased differently, the law does not require persons to act in particular ways in
order to achieve illusory contractual objectives.

42

On this basis, the covenant is left without visible means of support, and no
claim for a breach of it will lie. See Jordan-Milton Mach., Inc. v. F/V Teresa
Marie, II, 978 F.2d 32, 36 (1st Cir.1992); cf. Gleason v. Merchants Mut. Ins.
Co., 589 F.Supp. 1474, 1477 (D.R.I.1984) (applying same principle in
insurance context).

IV. THE UNFAIR TRADE PRACTICES CLAIM

43

We come, finally, to appellant's unfair trade practices claim. This claim invokes
a Massachusetts statute that provides in relevant part:

44

[A]ny person who engages in the conduct of any trade or commerce and who
suffers any loss of money or property, real or personal, as a result of the use or
employment by another person who engages in any trade or commerce of an
unfair method of competition or an unfair or deceptive act or practice ... may, as
hereinafter provided, bring an action ... for damages....

45

Mass.Gen.L. ch. 93A, Sec. 11 (1984). The district court, without making an
explicit choice-of-law determination, dismissed the claim on the ground that
the interdicted conduct did not occur in trade or commerce.

46

Appellant's chapter 93A claim is really two separate but related claims. We deal
with them seriatim. The first initiative fails to state a cause of action even if
chapter 93A applies, and we dispose of it on that basis.13 The second initiative
is a horse of a different hue; if chapter 93A applies, it arguably states a claim.
Consequently, we treat the choice-of-law question that necessarily precedes
substantive consideration of this initiative.

A. The First Half of the Chapter 93A Claim.

47

48

Appellant's initial charge--that ELC, by blaming the collapse of the deal on

Cretco's financial plight rather than on its own empty coffers, misrepresented
its reason for refusing to proceed with the sale and leaseback--need not detain
us. Although Judge Torres found that ELC had not informed appellant that its
participation in the deal would hinge upon the availability of funding, there is
no credible evidence that ELC ever made express representations to the
contrary. Thus, even if we assume the truth of the charge, no reasonable
factfinder could conclude that ELC's conduct in this respect descended to the
level of rascality required for a successful chapter 93A suit. See, e.g., Gooley v.
Mobil Oil Corp., 851 F.2d 513, 515-16 (1st Cir.1988) (explaining that, "[i]n
Massachusetts, the litmus test for transgression of chapter 93A involves
behavior which falls within 'the penumbra of some ... established concept of
unfairness' ") (quoting Massachusetts cases); Levings v. Forbes & Wallace,
Inc., 8 Mass.App.Ct. 498, 396 N.E.2d 149, 153 (1979) (explaining that
"objectionable conduct must attain a level of rascality that would raise an
eyebrow of someone inured to the rough and tumble of the world of commerce"
in order to support a chapter 93A action); see also Maruho Co. v. Miles, Inc.,
13 F.3d 6, 10 (1st Cir.1993); Quaker State Oil Refining Corp. v. Garrity Oil
Co., 884 F.2d 1510, 1513 (1st Cir.1989); Whitinsville Plaza, Inc. v. Kotseas,
378 Mass. 85, 390 N.E.2d 243, 251 (1979); Rex Lumber Co. v. Acton Block
Co., 29 Mass.App.Ct. 510, 562 N.E.2d 845, 850 (1990). Whether or not full
disclosure during arm's-length business negotiations is more likely the
exception than the rule, a failure fully to disclose, standing alone, while
sometimes actionable in tort, ordinarily will not transgress chapter 93A. So it is
here.

B. The Second Half of the Chapter 93A Claim.

49
50

The second basis for the appellant's chapter 93A claim arguably consists of
sterner stuff. During pretrial discovery, ELC produced a handwritten credit
decision memorandum (CDM) dated November 2, 1990. Attached to the CDM
was a note purportedly written to Mark Patterson, advising him that the
handwritten memo superseded a typed CDM of the same vintage. The
difference between the two memoranda is of import. The typed CDM stated
that the sale and leaseback had been approved.14 The handwritten version,
however, conditioned the approval on a thoroughgoing review of appellant's
financial status and a favorable reaction by an ELC funding source. By the time
the case reached trial, appellant had integrated ELC's gamesmanship during
discovery with its other purported peccadilloes, and charged that the
handwritten CDM was a fake, manufactured after the fact in order to lay the
groundwork for ELC's defense.

51

Even if we assume, arguendo, that the described conduct might infract chapter

51

Even if we assume, arguendo, that the described conduct might infract chapter
93A, see generally Quaker State, 884 F.2d at 1513-14 (discussing when tactics
in, and related to, ongoing litigation may prove actionable under chapter 93A),
we nevertheless must pause at the choice-of-law threshold. Recognizing that a
defendant in a contract case governed by one state's law nonetheless may be
subject to the provisions of another state's unfair trade practices statute, see,
e.g., Computer Sys. Eng'g, Inc. v. Qantel Corp., 740 F.2d 59, 64 nn. 6, 7 (1st
Cir.1984), that result will obtain only if the forum state's choice-of-law rules so
dictate, see id. at 70. Considering this possibility brings into play the principle
of depecage, which we have described as "the framework under which different
issues in a single case ... may be decided according to the substantive law of
different states." Putnam Resources, 958 F.2d at 465.

52

For choice-of-law purposes, we treat appellant's chapter 93A initiative as a

species of tort claim. At least one federal court has made the across-the-board
assessment that chapter 93A claims "should be treated uniformly, rather than on
a case-by-case basis, in the same way as tort claims." Computer Sys. Eng'g, Inc.
v. Qantel Corp., 571 F.Supp. 1365, 1371 (D.Mass.1983), aff'd, 740 F.2d 59 (1st
Cir.1984). We need not go so far. We hold that, at minimum, when a chapter
93A claim and the requested remedy are highly analogous to a tort claim and
remedy, the chapter 93A claim should be considered as a tort for choice-of-law
purposes. See id. at 1370-71; see also Michael C. Gilleran, The Law of Chapter
93A Sec. 12:8, at 413 (1989); cf. Northeast Data Sys., Inc. v. McDonnell
Douglas Computer Sys. Co., 986 F.2d 607, 609 (1st Cir.1993) (holding that a
chapter 93A claim may trigger a contractual conflicts analysis where it is
essentially an "embroidered" contract claim).

53

In applying these principles, we focus only on the arguably actionable conduct,

i.e., appellant's second chapter 93A initiative.15 In that initiative, appellant
claimed that ELC manufactured evidence in an attempt to justify its
nonperformance. This charge resembles the tort of fraudulent
misrepresentation. Similarly, appellant asked for a tort-like remedy (multiple
damages and attorneys' fees). Thus, we consider this species of chapter 93A
claim as falling under the tort rubric for purposes of our choice-of-law
assessment.

54

In tort cases, Rhode Island uses a multipart analysis to determine which of two
states has the more significant interest in the resolution of the issue presented in
the case. See Pardey v. Boulevard Billiard Club, Inc., 518 A.2d 1349, 1351
(R.I.1986); accord Brown v. Church of the Holy Name of Jesus, 105 R.I. 322,
252 A.2d 176, 178 (1969); Woodward v. Stewart, 104 R.I. 290, 243 A.2d 917,
923, cert. dism'd, 393 U.S. 957, 89 S.Ct. 387, 21 L.Ed.2d 371 (1968); see also

Putnam Resources, 958 F.2d at 464; Fashion House, Inc. v. K Mart Corp., 892
F.2d 1076, 1092 (1st Cir.1989); Montaup Elec. Co. v. Ohio Brass Corp., 561
F.Supp. 740, 744-45 (D.R.I.1983).
55

General choice-of-law principles that should guide a court in making such a

determination include (1) predictability of results; (2) maintenance of interstate
order; (3) simplification of the judicial task; (4) advancement of the forum's
governmental interests; and (5) application of the better rule of law. See
Putnam Resources, 958 F.2d at 464-65; Brown, 252 A.2d at 178; Woodward,
243 A.2d at 923; see also Restatement Sec. 6. In considering these general
principles, tort conflict-of-law analysis weighs more heavily the needs of the
interstate system, the policies of the interested states as well as the forum, and
the ease of determination and application of the law. See Restatement Sec. 145,
cmt. b. In the tort context, these overarching tenets may take into account a
number of other factors, including (1) the place of injury; (2) the place where
the conduct which caused the injury occurred; (3) the place of incorporation
and place of business of each party; and (4) the locus, or center of gravity, of
the parties' relationship. See Putnam Resources, 958 F.2d at 464; Fashion
House, 892 F.2d at 1092; Brown, 252 A.2d at 179; see also Restatement Sec.
145(2).

56

An application of these factors reveals that Rhode Island has a more significant
interest than Massachusetts in the resolution of this claim. Appellant initiated
negotiations with ELC in Rhode Island--and interstate policy does not dictate
prosecution under the Massachusetts statute of every deceptive trade allegation
brought against a company headquartered in Massachusetts but doing business
in another state. Rhode Island has a substantial interest in protecting its resident
companies from deceptive representations or unfair trade practices, especially
those that may occur within its borders. As it is the forum state, an application
of Rhode Island's tort law would be more easily accomplished than an
application of Massachusetts law.

57

Then, too, in addition to the Rhode Island locus of the claimed injury, the
allegedly tortious conduct also possesses substantial links to Rhode Island.
Appellant's claim arose when Douglas Crellin visited Mark Patterson at his
Rhode Island home and saw the typed version of the CDM. The coverup itself-if one took place--must have been crafted in the course of pretrial discovery in a
Rhode Island forum. Even if we assume that the handwritten version of the
CDM was created in Massachusetts--and there is no proof of that fact--such a
contact, standing alone, would not be enough to overcome Rhode Island's
interest in compensating a Rhode Island company whose financial well-being
was compromised through deceptive acts of a company doing business within

Rhode Island.16
58

We conclude, therefore, that to the extent appellant presents a potentially viable

unfair trade practices claim, the claim is governed by the substantive law of
Rhode Island. Because that is so, appellant's claim under chapter 93A is not
actionable.17 See, e.g., Eastland Bank v. Massbank for Savings, 767 F.Supp.
29, 35 (D.R.I.), aff'd mem., 953 F.2d 633 (1st Cir.1991); cf. Qantel, 740 F.2d at
70. Accordingly, we affirm the district court's dismissal of this claim on
different, but equally dispositive, grounds, see generally Polyplastics, Inc. v.
Transconex, Inc., 827 F.2d 859, 860-61 (1st Cir.1987) (explaining that an
appellate court, in affirming a judgment, is not limited to the trial court's
rationale, but can affirm on any independent ground made manifest in the
record), without reaching the question of whether the alleged coverup can be
said to have been aimed at influencing Cretco "in the conduct of any [ongoing]
trade or commerce." Mass.Gen.L. ch. 93A, Sec. 2.

V. CONCLUSION
59

We need go no further.18 Finding, as we do, that appellant mistook mere

negotiations for a binding contract, and that it has no legal recourse against
ELC, we uphold the district court's disposition of its suit.

60

Affirmed. Costs to appellee.

Patterson, who worked out of ELC's Rhode Island office, was a friend of
Richard Crellin's brother, Douglas Crellin, and previously had done business
with Cretco

When Cretco submitted financial data to ELC in the fall of 1990, it omitted
certain relevant segments of its financial history and projections. The omitted
material would have revealed both a lower net worth and a decreased likelihood
of future profitability. At trial, the district judge found that this omission came
about through inadvertence, not through intentional misrepresentation.
Nevertheless, the financial statements, as presented, were both misleading and
incomplete

Unless and until a sale and leaseback transpired, these two documents were
meaningless; neither of them had any independent force

At various times, Cretco has argued either that a bilateral contract underpinned
the breach of contract count--ELC made a firm offer in November of 1990 and

Cretco accepted the offer at that time, subject to a condition (the procuring of
Old Stone's consent) that was fulfilled the following March--or, alternately, that
ELC extended a unilateral offer, subject to Cretco's later acceptance. Whichever
way the scenario is viewed, the upshot of the litigation remains unaffected
5

In this case the district court, while leaving spoor for the cognoscenti, made no
explicit choice of law. We, therefore, write on a pristine page

Courts and commentators use a variety of compound adjectives, such as

"interest-weighing" and "locus-of-interests," to describe the more modern
approach. For ease in reference, we employ the term "interest-weighing."

Choice of law in a contract case requires a court to make a threshold

determination as to the efficacy of any choice-of-law provision that the parties
may have included in the contract documents. Here, the draft lease submitted
by ELC to Cretco in November 1990 contained a provision for construction and
enforcement according to Massachusetts law. We disregard this provision for
three reasons. First, Cretco never signed the document in question, and the
provision did not reappear in later documents. Second, neither party mentioned
the provision in appellate briefs nor argued that it should be given effect. Third,
while section 187 of the Restatement indicates that an effective choice-of-law
provision in a contract document generally should be respected, that rule "is
applicable only in situations where it is established to the satisfaction of the
forum that the parties have chosen the state [to be the source] of the applicable
law." Restatement Sec. 187, cmt. a. This is not such a case

After the initial discussions, negotiations continued in Rhode Island,

Massachusetts, and Connecticut

From time to time, appellant shifts gears. On those occasions, it seems to be

saying that ELC's offer was unilateral and remained open until March 1, 1991,
when appellant accepted the arrangement. We cover this possibility in Part
II(B)(3), infra

10

Mark Patterson testified that in early 1991 he believed Cretco was "shopping
around" for better financing terms and biding its time in anticipation of a lower
prime rate. It is obvious from this and other evidence that ELC knew of
Cretco's ongoing forays into the financial markets

11

Appellant's counsel made the quoted statement to the district court in final
argument. Appellant, therefore, cannot disclaim the statement on appeal. See,
e.g., United States v. Dietz, 950 F.2d 50, 55 (1st Cir.1991) (explaining that a
party who, in hindsight, finds dissatisfaction with the arguments he advanced in
the district court "cannot switch horses mid-stream in hopes of locating a

swifter steed"); see also Patriot Cinemas, Inc. v. General Cinema Corp., 834
F.2d 208, 214 (1st Cir.1987) (stating that when a litigant "asserts inconsistent
statements of fact" at different junctures in litigation, the doctrine of "judicial
estoppel" prevents unfair advantage)
12

Even if Massachusetts law supplies the rule of decision, the result remains the
same. Massachusetts also requires mutuality of obligation as a prerequisite to
the formation of a binding contract. See, e.g., Graphic Arts Finishers, Inc. v.
Boston Redev. Auth., 357 Mass. 40, 255 N.E.2d 793, 796 (1970); Gill v.
Richmond Co-op Ass'n, 309 Mass. 73, 34 N.E.2d 509, 513-14 (1941); see also
Eliopoulos v. Makros, 322 Mass. 485, 77 N.E.2d 777, 779 (1948) (stating that
mutuality of obligation is required for a binding contract, although the parties'
obligations need not be of equal value)

13

Thus, we make no choice-of-law determination as to whether the substantive

law of Massachusetts would apply to the conduct underlying this first initiative

14

Although ELC did not produce the typed version in pretrial discovery, appellant
knew of its existence through viewing an informal file that Patterson kept at
home. At trial, Patterson testified that he had never seen either the handwritten
CDM or the accompanying note

15

We express no opinion as to what choice-of-law analysis might have applied to

appellant's first chapter 93A initiative, or how the conflicts issue would have
played out, for such matters are beyond the scope of this opinion, see supra
note 13

16

Although they do not bear repeating, many of the factors that dictate using
Rhode Island law vis-a-vis appellant's contract claim, see supra pp. 6-7, also
militate in favor of using that law vis-a-vis its chapter 93A claim

17

Appellant has not pointed to a Rhode Island counterpart to chapter 93A, nor has
it identified any theory grounded in Rhode Island law under which its unfair
trade practices claim might prosper. We, therefore, eschew the temptation to
rummage through Rhode Island's jurisprudence. In our estimation, litigants
have an independent responsibility to do their homework

18

Our conclusion that the end product of the parties' negotiations lacked a
necessary element of contract formation, see supra Part II(B), obviates any need
to consider the lower court's alternative holding that the contract claim likewise
fails for want of actual damages. Similarly, our conclusion that ELC is not
liable in any way eliminates any necessity to determine whether the lower court
erred in excluding expert testimony offered by appellant in an effort to prove
damages