Court Opinion

ID: 2961980
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:50:50.61887+00
Date Added: 2024-06-11T13:14:13.169634
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 92-1693                           SOUTHWORTH MACHINERY CO., INC.,                                 Plaintiff, Appellee,                                          v.                               F/V COREY PRIDE, ET AL.,                                Defendants, Appellees,                                 ____________________                         ALL TRAWL, INC. AND ROBERT ANDERSON,                               Defendants, Appellants.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Marianne B. Bowler, U.S. Magistrate Judge]                                             _____________________                                 ____________________                                        Before                        Selya, Cyr and Boudin, Circuit Judges.                                               ______________                                 ____________________            John H. Ronan for appellants.            _____________            D.  Alice  Olsen with  whom Joseph  A. Regan,  Debra A.  Joyce and            ________________            ________________   _______________        Morrison, Mahoney and Miller were on brief for appellees.        ____________________________                                 ____________________                                     June 2, 1993                                 ____________________                 BOUDIN, Circuit Judge.   On October 19, 1987, Southworth                         _____________            Machinery, Inc. ("Southworth") filed in the district court an            admiralty  suit in  rem against  the vessel  F/V Corey  Pride                            _______            ("Corey Pride") and in personam against All Trawl, Inc. ("All                                ___________            Trawl"),  Robert  Anderson, and  James  Corey  for breach  of            contract.   All Trawl  is a Massachusetts  commercial fishing            corporation which owns  the Corey Pride  and Anderson is  All            Trawl's president.  James Corey is identified in Southworth's            complaint as either an agent or principal of All Trawl.                   Southworth sought to recover a balance of $12,148.28 due            for  its assembly  and installation  of a  refurbished diesel            engine  for the  Corey  Pride pursuant  to  an oral  contract            between itself and  Anderson.  Shortly  after the engine  was            installed  on the  vessel by  a Southworth  employee, a  fire            broke out  on the Corey  Pride while it was  out at sea  on a            fishing expedition.   Claiming  that the  fire was caused  by            defective  engine parts  and faulty  installation, defendants            Corey  Pride,  All Trawl,  and  Anderson filed  counterclaims            against Southworth for breach  of contract, breach of express            and  implied  warranties,  and breach  of  the  Massachusetts            Consumer  Protection Act,  Mass.  Gen. L.  ch. 93A  ("chapter            93A").  An additional claim for negligence was later asserted            at trial.                   Southworth's  claims against  Anderson  and James  Corey            were dismissed  without  objection  prior to  trial.    As  a                                         -2-                                         -2-            result,  James  Corey  was out  of  the  case altogether  and            Anderson continued only as  a counterclaimant.  The remaining            claims were tried in December  1990 before a magistrate judge            by  consent of the  parties.   28 U.S.C.    636(c).    At the            conclusion  of the  trial,  the magistrate  judge found  that            Southworth had  breached express and implied  warranties, its            duty of care, and chapter 93A in connection with its sale and            installation of  the engine,  and that these  breaches caused            the  fire   aboard  the  Corey  Pride.     Specifically,  the            magistrate  judge  found  that  the  fire  was  caused  by  a            defective makeshift oil pressure line connected to the engine            and installed by Southworth's agent.   All Trawl and Anderson            were awarded  $38,509 in  damages together with  interest and            costs.                 The magistrate judge declined to  award multiple damages            under chapter 93A  for willful or  knowing violations of  the            statute.    The  magistrate  judge  also  declined  to  award            attorney's fees  to All Trawl and Anderson under chapter 93A,            concluding  that such  an award  would conflict  with general            federal maritime law  under which the parties bear  their own            legal  fees.    Lastly,  the magistrate  judge held  that All            Trawl was liable to Southworth for the $12,148.28 balance due            under  the contract  for the  purchase of  the engine,  which                                         -3-                                         -3-            remained in workable condition  after the fire and  which the            Corey Pride continued to use.1                 Judgment  was entered  by separate  order on  January 3,            1992.   In this appeal,  All Trawl and  Anderson contend that            the magistrate  judge erred  in disallowing multiple  damages            and attorney's  fees  and  in  holding All  Trawl  liable  to            Southworth for the  balance due under  the purchase and  sale            contract.   Southworth has not appealed  the judgment against            it.                 We  address  at the  outset  a  question concerning  our            appellate  jurisdiction.     The  judgment  entered   by  the            magistrate on  January 3, 1992,  did not formally  dispose of            all of the  claims against all of the parties.   See  Fed. R.                                                             ___            Civ.  P. 54(b).  Accordingly,  this court issued  an order to            the  parties  raising  the  subject of  our  jurisdiction  to            consider this appeal.   Southworth responded with a motion to            dismiss  the  appeal,  contending  that the  judgment  was  a            nonfinal and hence unappealable order.  See 28 U.S.C.   1291.                                                    ___                 Our subsequent  review of  the record has  revealed that            certain  claims  omitted from  the  January  3 judgment  were            dismissed prior to trial  and others were disposed of  in the            magistrate judge's written decision.  The "separate document"                                            ____________________                 1The magistrate judge also held that Anderson was liable            for the balance of the  purchase price.  At oral argument  in            this  court, Southworth  conceded that  the judgment  against            Anderson was incorrect since  all claims against Anderson had            been dismissed before trial.                                         -4-                                         -4-            rule does  not defeat  appellate jurisdiction where  a timely            appeal is filed and  the parties do not suffer  any prejudice            from the absence of a  separate document entering judgment on            claims  that were  clearly disposed of  in an  earlier order.            Smith v.  Massachussetts Dep't of Correction,  936 F.2d 1390,            _____     __________________________________            1393-94   (1st   Cir.   1991);      Smith-Bey   v.   Hospital                                                _________        ________            Administrator, 841 F.2d 751, 756 (7th Cir. 1988).            _____________                 The  only seemingly  unresolved  matter that  may be  of            lingering  interest to  the  parties is  Southworth's in  rem                                                                  _______            claim against the  Corey Pride  under a maritime  lien.   The            magistrate judge's opinion did  not explicitly address the in                                                                       __            rem  claim.  However, under  28 U.S.C.    1292(a)(3), we have            ___            jurisdiction over interlocutory decrees in admiralty cases as            long as the order appealed from finally determines the rights            and  liabilities of  the  parties on  a  particular claim  or            issue.   See  Martha's Vineyard  Scuba Headquarters,  Inc. v.                     ___  ____________________________________________            Unidentified,  Wrecked &  Abandoned  Steam Vessel,  833  F.2d            _________________________________________________            1059,  1062-64 (1st Cir. 1987).  Since the claims involved in            this  appeal were  conclusively  decided  by  the  magistrate            judge, we have jurisdiction over them.                   Turning  to  the  merits,  we  affirm  the  magistrate's            disallowance of multiple damages under chapter 93A.   Section            11 of chapter 93A governing business disputes provides for up            to three times the  amount of actual damages for  "willful or            knowing" violations  of section 2, which  prohibits unfair or                                         -5-                                         -5-            deceptive trade  practices.2  Anderson and  All Trawl premise            their claim  for multiple damages on  Southworth's failure to            adequately  investigate the cause of  the fire and  to make a            reasonable   settlement  offer.     This  failure   to  fully            investigate, say  Anderson and  All Trawl, constituted  a bad            faith response to their demand for relief under chapter 93A.                 It  is unclear  whether section  11 permits  recovery of            multiple damages  under  such a  theory  where bad  faith  is            proved.   Section 9  provides for  multiple  damages where  a            demand is refused in bad faith, but section 9 is by its terms            inapplicable (see note 2,  above) and section 11 has  no such                          ___          _____            counterpart language.  Massachusetts case  law is murky as to            whether  the bad  faith  refusal  concept  can be  read  into            section 11.  Glickman v. Brown, 21 Mass. App. Ct. 229, 238 n.                         ________    _____            7, 486 N.E.2d 737, 743 n. 7 (1985), expressly holds  that the            bad faith  response provision "has no  application" to claims            governed by section 11.  On the other hand, the Massachusetts            Supreme Judicial  Court has  employed language that  may look                                            ____________________                 2Section 11  applies to claims brought  by "[a]ny person            who engages in  the conduct of any trade or  commerce and who            suffers any loss  of money or property  . . . as  a result of            [unfair  competition or  unfair  or deceptive  practices]  by            another person  who engages in any trade or commerce . . . ."            Mass.  Gen.  L. ch.  93A,     11.   Section  9,  which has  a            different  multiple  damage   provision,  applies  to  "[a]ny            person, other than a person entitled to bring an action under            section eleven  of this chapter  . . .  ."  Mass. Gen.  L. ch            93A,   9(1).  There is no question that the parties here were            acting in a  business context.  At trial,  Anderson testified            that he purchased the engine for business reasons.                                         -6-                                         -6-            the other way.   International Fidelity  Ins. Co. v.  Wilson,                             ________________________________     ______            387 Mass. 841, 857, 443 N.E.2d 1308, 1318 (1983).                  We  need not  pursue  the issue  because the  magistrate            judge  found that Southworth did not act  in bad faith.   The            magistrate  judge agreed  that Southworth  did not  conduct a            full investigation  of the accident when  rejecting liability            but found that this  was due to its reasonable  belief, after            some  amount of investigation, that the cause of the fire was            electrical.   Shortly  after  receiving notice  of the  fire,            Southworth sent its employee who had  installed the engine to            investigate.   The employee did not observe any problems with            the  engine and reported that the fire was possibly caused by            an electrical  failure.   An electrician not  associated with            Southworth had installed temporary  wiring on the Corey Pride            days before the fire broke out.                 All  Trawl's own investigator  determined that  the fire            was  caused by oil leaks  from the engine  but Southworth not            surprisingly  chose  to rely  on  its employee's  assessment.            Based on  this evidence  the magistrate judge  concluded that            Southworth's  belief that it was not responsible for the fire            was  "not  unfounded,"  and   thus  its  failure  to  conduct            additional  investigation did  not warrant  multiple damages.            The magistrate  judge's finding  is supported by  the record,            has not  been challenged on  appeal, and  therefore ends  the            matter.                                           -7-                                         -7-                 We also affirm the magistrate judge's determination that            All  Trawl is liable for  the unpaid portion  of the purchase            price of the  engine.  Because the engine was  not damaged by            the  fire  aside from  some  minor paint  peeling,  All Trawl            decided to  keep the engine for  use on the Corey  Pride.  At            trial, Anderson  testified that the  engine was still  in use            and that he was satisfied with its operation.   Under section            2-607  of the Uniform  Commercial Code,3 a  buyer who accepts            goods is  liable for the  contract price, although  the buyer            may recover damages resulting  from any defect.   4 Anderson,            Uniform Commercial Code    2-607:15 (3d ed. 1983); Micromedia            _______________________                            __________            v. Automated  Broadcast Controls,  799 F.2d 230,  235-36 (5th               _____________________________            Cir. 1986).                  All Trawl argues that the contract is a service contract            and  therefore is not governed  by the policies  of the UCC's            sale of goods  provisions.  The  magistrate judge found  that            the  predominant purpose of  the contract  was to  provide an            engine and that the supply of labor was only incidental.  See                                                                      ___            Cambridge  Plating Co.,  Inc.  v. Napco,  Inc., No.  92-2242,            ____________________________      ____________                                            ____________________                 3Although   the   contract  (involving   the   sale  and            installation  of a  rebuilt  engine for  use  on an  existing            commercial  vessel)  is  maritime  in  nature  and  therefore            governed   by  general  federal  maritime  law,  1  Friedell,            Benedict  on Admiralty    186-87  (7th ed. 1993),  the UCC is            ______________________            considered  a source  for federal  admiralty law.   Interpool                                                                _________            Ltd.  v.  Char  Yigh Marine, S.A.,  890 F.2d  1453, 1459 (9th            ____      _______________________            Cir. 1989), amended,  918 F.2d  1476 (9th Cir.  1990);   Clem                        _______                                      ____            Perrin Marine Towing, Inc. v. Panama Canal Co., 730 F.2d 186,            __________________________    ________________            189 (5th Cir.), cert. denied, 469 U.S. 1037 (1984).                             ____________                                         -8-                                         -8-            slip. op. at 7 (1st Cir., April 22, 1993).   In any event, by            retaining  the engine and obtaining damages for the harm done            through misinstallation,  All Trawl has been  restored to the            position  it  would  have  been  in  had  the  contract  been            performed.  This  is the  general aim of  suits for  contract            damages, Farnsworth, Contracts   12.8, at 871 (2d  ed. 1990),                                 _________            and there  is no reason why  All Trawl should be  placed in a            position  even   better  than  it  would   have  obtained  if            Southworth had flawlessly performed the original contract.                   The  remaining  issue  concerns  attorney's  fees  under            chapter  93A.   Prevailing  claimants under  chapter 93A  are            ordinarily  entitled to  recover  reasonable attorney's  fees            incurred  in connection  with the chapter  93A claim.   Mass.            Gen. L. ch. 93A,   11.   Although finding that Southworth had            breached chapter 93A, the  magistrate judge declined to award            attorney's  fees.  She  reasoned  that such  an  award  would            conflict with  federal maritime  law under which  the parties            pay their  own fees absent bad faith or oppressive litigation            tactics. See Templeman  v. Chris Craft  Corp., 770 F.2d  245,                     ___ _________     __________________            250 (1st Cir.) cert. denied, 474 U.S. 1021 (1985); Goodman v.                           ____________                        _______            1973 26 Foot Trojan Vessel, 859 F.2d 71, 74 (8th Cir. 1988).            __________________________                 Under  the  "saving  to  suitors" clause,  28  U.S.C.               1331(1), claimants in an admiralty case are not restricted to            maritime  relief but  may  also pursue  remedies provided  by            state law.  E.g.,  Ellenwood v. Exxon Shipping Co.,  984 F.2d                        ____   _________    __________________                                         -9-                                         -9-            1270,  1279 (1st Cir. 1993).   However, "the  extent to which            state  law  may  be  used  to  remedy  maritime  injuries  is            constrained  by  a  so-called `reverse-Erie'  doctrine  which                                                   ____            requires that the substantive remedies afforded by the States            conform to governing federal  maritime standards."   Offshore                                                                 ________            Logistics,  Inc. v.  Tallentire,  477 U.S.  207, 223  (1986).            ________________     __________            Thus,  where the  subject-matter falls  within the  admiralty            jurisdiction, state law may `supplement' federal maritime law            but may not directly contradict it.  Gilmore & Black, The Law                                                                  _______            of Admiralty    1-17,  at 49-50  (2d  ed. 1975);   Austin  v.            ____________                                       ______            Unarco Industries, Inc., 705 F.2d 1, 6 n. 1 (1st Cir.), cert.            _______________________                                 _____            dismissed, 463 U.S. 1247 (1983).            _________                 Pertinently, in Templeman, 770 F.2d at 250, we held that                                 _________            a Puerto  Rico rule  providing for attorney's  fees, although            part  of  the  substantive   law  of  the  Commonwealth,  was            inapplicable in an  action cognizable in admiralty.  This was            so,  we noted, even though the underlying cause of action was            created  by Puerto  Rico law  and federal  court jurisdiction            happened to be based  on diversity.  Accord Sosebee  v. Rath,                                                 ______ _______     ____            893  F.2d 54 (3d  Cir. 1990) (Virgin  Islands attorney's fees            statute; territorial jurisdiction);   1 Benedict on Admiralty                                                    _____________________              114, at  n.2 (1993  Supp.) (approving Sosebee).   See  also                                                    _______     _________            Carey  v. Bahama Cruise Lines, 864 F.2d 201, 206-08 (1st Cir.            _____     ___________________            1988)  (Massachusetts bar  to recovery  if plaintiff  is more                                         -10-                                         -10-            than  50%  negligent incompatible  with  admiralty  rule that            contributory negligence only mitigates damages).                 State  statutes   providing  for  attorney's   fees  may            sometimes be given effect  in admiralty cases, notably, where            the attorney's fees are awarded incident to a dispute that is            not normally a subject of maritime law.  For example, in Pace                                                                     ____            v.  Insurance Company of North  America, 838 F.2d 572, 578-79                ___________________________________            (1st Cir. 1988), we  held that maritime law did not preempt a            Rhode Island cause of action allowing recovery of damages and            attorney's  fees for an insurer's bad faith refusal to pay or            settle  claims; the refusal to settle claims is normally left            untouched by maritime  law.  More recently,  in Ellenwood, we                                                            _________            held  that admiralty  law  likewise did  not foreclose  state            claims based upon state handicap discrimination statutes, for            maritime  law  did  not   address  the  subject  of  handicap            discrimination.  984 F.2d at 1280.                 Turning  to the  case  at hand,  Southworth's  liability            under chapter 93A was  not predicated on any ground  novel to            or unaddressed by maritime law.  Rather, Southworth was found            liable as a result of its breach of  its express warranty for            parts and workmanship  incident to  the repair of  a ship,  a            standard contractual breach to  which maritime law has always            applied.    See Zych  v.  Unidentified,  Wrecked &  Abandoned                        ___ _____________________________________________            Vessel, 941 F.2d 525, 531 (7th Cir. 1991).  The conduct found            ______            to violate  chapter 93A  falls squarely  within the focus  of                                         -11-                                         -11-            existing  maritime  law,  and  chapter 93A's  attorney's  fee            provision,  being inconsistent with  maritime law,  cannot be            applied in this case.                 Affirmed.                 ________