ON APPEAL FROM THE BANKRUPTCY APPELLATE PANEL FOR THE FIRST CIRCUIT
The opinion of the court was delivered by: Thompson, Circuit Judge.
Before Boudin, Circuit Judge, Souter, Associate Justice,*fn1 and Thompson, Circuit Judge.
What happened in this bankruptcy case is probably every homeowner's worst nightmare. We start, naturally, with the facts, which are either undisputed or based on the bankruptcy judge's not-clearly-erroneous findings.
Having just moved with his 14-year-old son from Anchorage, Alaska to Acton, Massachusetts, David Sharfarz started talking to contractors in the summer of 2006 about building an addition to his new home. Sharfarz ended up hiring Peter Goguen, who drafted up a contract. Stripped to its essentials, the contract specified different construction phases, requiring Goguen to pour the foundation by October 15, 2006, for example. It required Goguen to obtain the necessary town permits too. It also required Sharfarz to make progress payments to Goguen totaling roughly $171,000. And it set a completion date of March 15, 2007.
Sharfarz made no secret of the fact that he needed Goguen to start the project right away, for these reasons: first, he wanted his son to settle into his new life as quickly as possible, and second, he wanted the foundation poured before winter because he feared that a cold-weather concrete pouring could cause the foundation to crack. Sitting in Sharfarz's living room, the two signed the contract and Sharfarz handed Goguen a $25,693 check as the first installment payment. And Sharfarz again stressed why sticking to the schedule was so important to him.
A week or so later Goguen emailed Sharfarz that he had "filed" a building-permit application with the town and was "in wait mode." But that was not true, and Goguen did his best to keep Sharfarz from finding that out. Over the next couple of months, for example, every time a worried Sharfarz asked him for a permit update, Goguen blamed the delay on foot-dragging town bureaucrats. And when Sharfarz offered to talk to the town manager or a member of the board of selectmen, a nervous Goguen called it "the worst thing we could do." No need to "aggravate" the building inspector by going over the inspector's head, Goguen said. We just have sit tight until the town acts, he added.
That did little to calm Sharfarz, who had a gnawing belief that project delays would expose him to the risk of concrete damage due to the onset of winter. One of Sharfarz's November 2006 emails to Goguen made this perfectly plain: "I would . . . like a better understanding as to how we will keep the foundation warm" to help the concrete strengthen and harden after a cold-weather pouring, he wrote. "I know there are ways to do it, but I assume that they all cost money." "This," he wrote, "is pretty much the only aspect of a wintertime start-up that is concerning me." Goguen replied that "weather protection [won't be] an issue until night time temperatures" dip below freezing.
With the cold season fast approaching, Goguen did little to advance the project. Misled into thinking that the town was at fault for the permit holdup and still convinced that they would be inviting trouble if they poured concrete in the cold, Sharfarz proposed the following solution: They would shut down the project for now. Goguen would keep $5,000 of the $25,693 payment for his "troubles" and refund the remaining money to Sharfarz. When the warm weather returned, they would restart the project, and Goguen would get back the rest of the initial payment. This made good "sense," Sharfarz said. But not to Goguen. He assured Sharfarz that the foundation would not crack from a cold-weather pouring, explaining that "New England is a lot warmer than Alaska" and that "we put additives" in the concrete to prevent cracking. Cold-weather pourings are done "routinely" throughout New England all winter long - it's no big deal, Goguen said (or words to that effect). And rather than give Sharfarz any money back, Goguen instead offered a 5-year warranty against "structural defect[s]" in the "new footing and concrete foundation." All of this persuaded Sharfarz to continue with the contract. Goguen "was the expert," Sharfarz later explained, "and I just relented."
Goguen finally applied for the building permit on November 29, 2006 - two months after he said he had - and he asked the town to "expedite" things so that he could "move forward on the foundation before the cold of winter sets in." He knew that it gets "tougher and tougher" to pour concrete with each passing winter day, you see. The town issued the permit 12 days later, on December 11. Critically, had Goguen not duped Sharfarz into thinking that he had filed the application way back in September 2006, Sharfarz would have confronted Goguen and (depending on how that went) either canceled the contract or put the project off to the spring. But not knowing the truth, Sharfarz let Goguen pour the concrete around Christmas 2006, despite the "very cold weather." Unfortunately, the foundation would eventually crack - just as Sharfarz feared it would. And Sharfarz did and does blame Goguen and his cold-weather concrete pouring for this.
In any event, Sharfarz continued making progress payments, even though Goguen made little progress: Goguen would start a new phase of the project, ask for and receive money without finishing the work, and then do the same thing over and over again - all the while trying to keep Sharfarz in the dark. At one point Goguen asked Sharfarz for more money so that he could hire another worker to get the project back on track. Sharfarz ponied up the extra money, but Goguen never hired extra help. Goguen also recommended that Sharfarz upgrade the home's electrical service. Sharfarz came up with the additional cash for the upgrade, but Goguen never did the work.
Things went from bad to worse for Sharfarz. By November 2007 he had paid Goguen the full contract price, and then some. Yet Goguen threatened not to finish the project unless he got more money. Sharfarz said no. Goguen walked. And Sharfarz had to pay other contractors $88,000 to finish the job.
Sharfarz sued Goguen in Massachusetts state court, relying on certain consumer-protection laws. See Mass. Gen. Laws ch. 93A; Mass. Gen. Laws ch. 142A. Goguen did not appear. After entering a default judgment against him, a state judge held an evidentiary hearing to assess damages. Sharfarz testified there. But Goguen was a no-show, despite being notified about the proceeding.
As part of his findings of fact and conclusions of law (a document admitted as an exhibit at the bankruptcy trial), the state judge wrote that Goguen was "both deceptive and unfair, almost from the beginning and to the end," and that his "violations" had been "willful ...