Court Opinion

ID: 2963134
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:06:55.422175+00
Date Added: 2024-06-11T11:21:02.245518
License: Public Domain

USCA1 Opinion

	

          March 14, 1995                                [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 94-1577                                     DELA, INC.,                                Plaintiff, Appellant,                                          v.                                CNA INSURANCE COMPANY,                                 Defendant, Appellee.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Edward F. Harrington, U.S. District Judge]
                                               ___________________                                 ____________________                                        Before                                Cyr, Boudin and Stahl,                                   Circuit Judges.
                                   ______________                                 ____________________            Stuart  M. Holber,  Russell  S. Channen  and Phillips,  Gerstein &
            _________________   ___________________      _____________________        Holber on brief for appellant.
        ______            Thomas M. Elcock, James T. Hargrove,  Debra A. Joyce and Morrison,
            ________________  _________________   ______________     _________        Mahoney & Miller on brief for appellee.
        ________________                                 ____________________                                 ____________________

                 Per  Curiam.    Plaintiff  Dela, Inc.,  a  Massachusetts
                 ___________            company  engaged  in  the  business  of  laminating  fabrics,            suffered  nearly $80,000  in  damages when  its building  was            flooded  on  March 17,  1990.   When  its  insurance carrier,            defendant  CNA Insurance  Co., disclaimed  coverage  for such            losses,  plaintiff brought  the instant  declaratory judgment            action.  That suit  was filed on April 17,  1992, twenty-nine            days  after  the  expiration  of the  applicable  limitations            period  on March 19, 1992.   The district  court proceeded to            award summary judgment for  defendant on the ground  that the            action  was time-barred.   The  sole issue  now on  appeal is            whether defendant should be  equitably estopped from  relying            on the limitations defense.                 Under  Massachusetts   law,  which  we  apply   in  this            diversity action, the doctrine  of equitable estoppel is well            established.  Inasmuch as the doctrine is designed to prevent            results  "contrary  to  good  conscience  and  fair dealing,"            McLearn v. Hill,  276 Mass.  519, 524 (1931),  there are  "no
            _______    ____            rigid   criteria"  governing   its  application,   Libman  v.
                                                               ______            Zuckerman,  33  Mass. App.  Ct.  341,  346  (1992).   Broadly
            _________            stated, estoppel seeks to prevent  a person "from denying the            consequences of his conduct where that conduct has been  such            as to induce another to change his position in  good faith or            such   that   a   reasonable   man  would   rely   upon   the            representations made."   Bergeron v. Mansour, 152 F.2d 27, 30
                                     ________    _______

            (1st Cir. 1945) (applying Massachusetts law).  In the statute            of limitations context, the doctrine requires proof "that the            defendants  made representations  they  knew or  should  have            known  would induce the plaintiffs to put off bringing a suit            and that the  plaintiffs did in fact delay in reliance on the            representations."   White v.  Peabody Constr. Co.,  386 Mass.
                                _____     ___________________            121, 134 (1982);  accord, e.g., Whitcomb v. Pension Dev. Co.,
                              ______  ____  ________    ________________            808  F.2d 167,  172 (1st  Cir. 1986)  (applying Massachusetts            law).  It is unnecessary that defendant intentionally mislead            or deceive  the plaintiff,  see, e.g., MacKeen  v. Kasinskas,
                                        ___  ____  _______     _________            333 Mass. 695, 698  (1956), or even that defendant  intend by            its  conduct to induce delay, see,  e.g., LaBonte v. NY, NH &
                                          ___   ____  _______    ________            Hart. R.R., 341  Mass. 127, 131  (1960) ("one is  responsible
            __________            for the word or act which he knows, or ought to know, will be
                                                ________________            acted  upon  by  another")  (emphasis added);  accord,  e.g.,
                                                           ______   ____            Clauson v. Smith, 823 F.2d 660, 663 n.3 (1st Cir.  1987).  It
            _______    _____            is  necessary, however,  that  "[t]he reliance  of the  party            seeking   the  benefit  of  estoppel  [be]  ...  reasonable."            O'Blenes  v.  Zoning Board  of  Appeals, 397  Mass.  555, 558
            ________      _________________________            (1986).                 In  seeking  to  invoke this  doctrine  here,  plaintiff            points  to communications  between  the  parties'  attorneys,            particularly to  a  telephone conversation  that occurred  on            January  27,   1992.    In  an   affidavit  submitted  below,            plaintiff's  trial  counsel   (John  James)  described   that                                         -3-

            conversation  with  defendant's   counsel  (Frank  Toto)   as            follows.    The attorneys  there  discussed  the  need for  a            declaratory judgment action  in the event the  matter was not            settled.  James said he had been authorized to bring suit but            would  await  defendant's  response to  a  pending settlement            demand.  When  asked if  defendant intended to  file suit  to            resolve the coverage issue,  Toto "unequivocally" stated that            "if the matter did not settle CNA would be bringing an action            for  declaratory  judgment."   James  replied  that he  would            accept service of process on behalf of his client and that he            "would not  file the action in  anticipation of [defendant's]            filing  suit."   (Attached  to  the  affidavit was  a  letter            written by Toto  to James three  days later, which  mentioned            that "[i]n  our last conversation,  ... you agreed  to accept            service  of any  declaratory judgment  action CNA  might file            over the coverage issue.")   In his affidavit, James  went on            to explain that he had  believed, based on this  conversation            and his amicable relationship with Toto, that defendant would            be  filing suit; that he had relied  on this agreement in not            bringing  suit himself;  and  that he  immediately filed  the            action when it  became apparent that defendant  was not going            to do so.                 On  appeal, defendant contends  that James'  reliance on            Toto's   promise   was   unreasonable   in   light   of   the                                         -4-

            "clarification"  that  appeared  in  the  latter's  follow-up            letter.1    In   its  view,  the  reference  there   to  "any            declaratory judgment  action that CNA  might file"  (emphasis
                                                   _____            added) was  sufficient  to  call  into  question  defendant's            intentions in this regard.   A more plausible interpretation,            we think, is that Toto's choice of language  simply reflected            the  possibility  that the  case  would  be  settled  in  the            interim.   We find nothing in his letter that would seriously            undercut an "unequivocal" promise voiced three days earlier.                 We nonetheless  agree that plaintiff's  reliance on that            representation was unreasonable as a matter of law.  From all            that appears, Toto conveyed this pledge in a single telephone            conversation,  at  a time  when  nearly  two months  remained            before the limitations period  expired.  The follow-up letter            contained no explicit  confirmation thereof,  and the  matter            was never addressed again.  Most important, plaintiff took no            steps thereafter  to ascertain whether defendant  had in fact            fulfilled  its  promise.   This  last  factor proves  largely            dispositive.                    The instant  case is unusual in  that the representation            at issue--a  promise to  file suit--concerned an  action that            was  to  be  performed  before  the  statute  of  limitations
                                    ______            expired, not afterwards.  Plaintiff was thus in a position to
                         __________                                
            ____________________            1.  Defendant offered no response below to James' affidavit--            perhaps because its summary judgment motion was granted eight            days after that affidavit was filed.                                         -5-

            confirm, prior to the March 19, 1992 deadline, that defendant            had followed through on its  pledge.  Yet no such  steps were            taken.  As that date approached, with no notice of any filing            having  been  received,  plaintiff  failed even  to  place  a            telephone  call to ascertain the status of events.  No matter            how "unequivocal"  Toto's statement  had been, and  no matter            how cordial  the attorneys'  relationship was, we  think that            such a  lack of  diligence precluded invocation  of equitable            estoppel as a matter of law.  See,  e.g., O'Blenes, 397 Mass.
                                          ___   ____  ________            at 558-59 (holding that  it was unreasonable for  attorney to            rely on statement  by zoning  board clerk as  to when  appeal            period expired; attorney "had an obligation to determine" the            relevant facts); cf. Irwin v. Dep't of Veterans Affairs,  498
                             ___ _____    _________________________            U.S.  89,  96  (1990)  ("We have  generally  been  much  less            forgiving in receiving late filings where the claimant failed            to exercise  due diligence in preserving  his legal rights.")            (quoted in McKinney v. Waterman S.S. Corp., 925 F.2d 1, 6 n.6
                       ________    ___________________            (1st Cir. 1991)).                 The judgment is affirmed.  See Loc. R. 27.1.
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