Appeals Court of Massachusetts.

FALVEY CARGO UNDERWRITING, LTD.,

v.

METRO FREEZER & STORAGE, LLC.

July 2, 2004.

MEMORANDUM AND ORDER PURSUANT TO RULE 1:28

The plaintiff, Falvey Cargo Underwriting, Ltd. (Falvey), appeals the entry of partial summary judgment in favor of the defendant, Metro Freezer & Storage, LLC (Metro). Falvey is acting for Underwriters at Lloyds of London, as subrogee of Focal, Inc. (Focal). Focal developed, manufactured, and distributed biomedical devices which it stored in negative-forty-degree-Fahrenheit (-40° F) cold storage owned and maintained by Metro. Focal obtained insurance from Falvey to cover the stored products. Between September 4 and September 6, 1999, Metro’s freezer failed, resulting in irreparable damage to two lots of Focal’s product and a loss of $446,797.

Falvey compensated Focal for the damaged goods, and filed a complaint in Superior Court alleging negligence, breach of contract, and breach of warranty, and seeking to recover from Metro what it paid to its insured. The motion judge determined that Metro’s warehouse receipt limited its liability for damages, and she therefore entered partial summary judgment for Metro limiting the amount of damages recoverable by Falvey to the sum of $41.25. On appeal, Falvey argues the judge erred when she determined that the warehouse receipts limited Metro’s liability for damages because the parties’ letter of intent prohibited Metro from unilaterally limiting its liability.

Background. The following facts are undisputed. Focal manufactures biomedical products, including bioabsorbable polymers used to seal tissue postsurgery. At the relevant time, Focal manufactured the raw polymer and then shipped it to Indiana, where it was sterilized, filtered, and placed into syringes. The product was frozen in Indiana, and shipped back frozen to Focal’s facility in Lexington, Massachusetts, where it was stored in a -40° F freezer.

In 1998, Focal sought additional cold storage space. In June of that year, Focal began to store products at Wilmington Cold Storage, Inc. (Wilmington); the cold storage facility available there maintained a temperature of only negative twenty degrees Fahrenheit (-20° F). The terms of that storage were discussed by Janet Desaulniers, Focal’s Associate Director of Purchasing, and Peter Lewis, president of Wilmington and president of Metro. Focal stored products at Wilmington from June 9, 1998, until March 18, 1999. During that time, Wilmington sent and Focal received warehouse receipts which included the following provision, “Liability for loss or damage shall be limited to the actual value of the goods stored; and in no case shall the liability exceed 50¢ per pound or $12 per cubic foot unless an excess value is declared by the storer at the time the good are stored. There will be a charge of 1 per cent per month on the excess valuation in addition to the base storage rate.”

At the end of 1998 and the beginning of 1999, Desaulniers and Lewis began to discuss the possibility of Metro constructing a special -40° F freezer for Focal’s product. (Negative-forty-degree-Fahrenheit cold storage was not generally commercially available at that time.) On April 2, 1999, Metro and Focal signed a letter of intent, setting forth the terms of the construction of a 200-square-foot -40° F freezer in Metro’s Natick warehouse. Paragraph sixteen of the letter of intent stated, in part, “Modifications shall only be made by a written instrument(s) signed by authorized individuals for each party.” The letter of intent did not address liability for damages to product stored. Paragraph nine of the letter of intent stated, in part, “Handling, storage and other warehouse charges are to be mutually determined by Metro and Focal. Said charges shall not exceed and are anticipated to be less than the standard rates.”

In July of 1999, the -40° F Metro freezer was completed and Focal began to store its product there on August 5, 1999. The freezer failed approximately one month later, between September 4 and September 6, 1999. Metro had sent warehouse receipts to Focal dated August 5, 1999, August 13, 1999, and September 2, 1999. These receipts contained the same liability provision as the receipts from the Wilmington facility.

Discussion. We review the entry of summary judgment to ascertain whether all material facts were established, and whether Metro was entitled to judgment as matter of law. See Augat, Inc. v.. Liberty Mut. Ins. Co., 410 Mass. 117, 120 (1991).

Falvey argues that the judge erred as matter of law when she interpreted the letter of intent and warehouse receipts, because the receipts were a unilateral modification in violation of paragraph sixteen of the binding letter of intent. A letter of intent will bind the signatories to perform the recited obligations if it was the intent of the parties to be bound. Situation Mgmt. Sys., Inc. v. Malouf, Inc., 430 Mass. 875, 878 (2000). Hunneman Real Estate Corp. v. Norwood Realty, Inc., 54 Mass.App.Ct. 416, 421 (2002). Here, the parties clearly intended to be bound by the letter of intent. However, liability for damages was not determined by the letter of intent. In fact, the letter of intent deliberately carved out questions of operating or storage rates for determination at a future time. Accordingly, provisions of the warehouse receipts regarding liability for damages did not modify the letter of intent because liability had not been part of its subject matter.

General Laws c. 106, § 7-204(2), moreover, permits a warehouser to limit liability for damages by terms in a warehouse receipt. [FN1] Falvey does not contend that Metro was not a warehouser, nor does Falvey contend that Focal declared an excess value (pursuant to the warehouse receipt) for any of its medical products in storage. Instead, Desaulniers, whose responsibilities included reviewing and approving invoices for the Metro freezer, testified that Focal understood that Metro’s insurance for damages was limited, which was the reason that Focal had obtained additional insurance coverage. [FN2] Desaulniers’s deposition testimony was to the effect that Lewis had verbally informed her of Metro’s limited insurance in early or mid-1999, and that, in response, she had informed him that Focal would obtain additional insurance to cover its product. After the damage to its product, Focal filed a claim with its own insurance company, not with Metro, because, as Desaulniers explained, “[W]e had our own insurance and, [we were] pursuing a claim process there.”

FN1. “Damages may be limited by a term in the warehouse receipt or storage agreement limiting the amount of liability in case of loss or damage, and setting forth a specific liability per article or item, or value per unit of weight, beyond which the warehouseman shall not be liable.” G.L. c. 106, § 7-204(2), inserted by St.1957, c. 765, § 1.

FN2. Q: “Did you ever say anything to the people at Metro like oh, that 50 cents a pound is unacceptable to us? [ … ]

A: “We didn’t say it wasn’t acceptable. We said it wasn’t adequate for our needs and they knew that and we knew that from the outset.

Q: “Is that why you had your own insurance?

A: “That’s why we had additional insurance, yes.”

The warehouse receipts permissibly limited Metro’s liability for damages; Focal knew of this limitation and accordingly obtained additional insurance. For these reasons and substantially those set forth in the judge’s memorandum of decision, we discern no error in the entry of partial summary judgment limiting Metro’s liability for damages to fifty cents per pound, for a total of $41.25. [FN3]

FN3. Although Falvey argues that it should recover on a theory of promissory estoppel, no such argument was raised before the motion judge. We need not and do not consider this newly-raised theory on appeal. See Poly v. Moylan, 423 Mass. 141, 149 (1996); Cheschi v. Boston Edison Co., 39 Mass.App.Ct. 133, 138-139 (1995).

Judgment affirmed