Court Opinion

ID: 2961726
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:46:59.076568+00
Date Added: 2024-06-11T11:40:34.306813
License: Public Domain

USCA1 Opinion

	

          February 5, 1993                                [NOT FOR PUBLICATION]                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 92-1349                                     PETER GRABLER,                                Plaintiff, Appellant,                                          v.                               ISRAEL ROIZMAN, ET AL.,                                Defendants, Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                     [Hon. William G. Young, U.S. District Judge]                                             ___________________                                 ____________________                                        Before                                Selya, Cyr and Boudin,                                   Circuit Judges.                                   ______________                                 ____________________            Peter Grabler on brief pro se.            _____________            Brian P.  Flaherty  and  Wolf, Block,  Schorr and  Solis-Cohen  on            __________________       _____________________________________        brief for appellee Israel Roizman.                                 ____________________                                 ____________________            Per Curiam.     On  March  7,  1991,  appellant Peter  Grabler,  a            __________        resident of  Massachusetts, filed a complaint  against appellee Israel        Roizman, a  resident  of  Pennsylvania.   Jurisdiction  was  based  on        diversity of citizenship.   Grabler essentially  claimed that  Roizman        had breached an agreement to  purchase all of Grabler's  shareholdings        in  Benchmark  Broadway  Corporation and  Benchmark  Developers,  Inc.        Among other  forms of relief, Grabler  requested damages (unspecified)        and  an accounting.   He  also included  allegations that  Roizman had        committed fraud, engaged in economic duress and had violated M.G.L. c.        93A and Section  10(b) and Rule 10b-5 of the  1934 Securities Exchange        Act.   The details  of the complaint  are not relevant  to this appeal        because Roizman  agreed to pay  Grabler approximately $96,000  for the        stock.            In May  1991, Roizman  filed an  answer and  a counterclaim.   The        counterclaim,  which  essentially forms  the  basis  for this  appeal,        concerns  the  deterioration  in  the  business  relationships   among        Grabler,  Roizman  and  a third  person,  David  Kohen.   These  three        individuals  are  the  sole   shareholders  in  Benchmark   Properties        Corporation ("Benchmark").*   Benchmark  is  in the  business of  real        estate  development.   Specifically, it  is a  general partner  in two        housing projects -- Elm Hill Limited Partnership ("Elm Hill") and Blue        Hill  Limited Partnership ("Blue Hill").  Benchmark has a 50% interest        in each project.   The other general partners are  Benchmark Financial        Group, Ltd. ("BFGL")  and an  individual, Frank Jones.   Each  project        also has a  limited partnership as  its limited partner.   Grabler and        Kohen are the sole shareholders of BFGL.                                    ____________________        *Grabler and  Kohen  are  directors of  Benchmark;  Roizman  holds  no        office.  All  decisions concerning  Benchmark must be  by a  unanimous        vote of the three shareholders.            In June 1991, the parties reached a  final settlement and the case        was dismissed.   Paragraphs 2 through 4 of the  settlement concern how        much Roizman  owed Grabler for the stock  purchase and how Roizman was        to effect payment to Grabler.  Paragraph 7 of the settlement stated:            After Grabler  and Roizman have  reached agreement  regarding            the allocation  of expenses and partnership  distributions in            connection  with Elm  Hill Housing Limited  Partnership, Blue            Hill  Housing Limited  Partnership and  Benchmark Properties,            Inc., Grabler  shall add Roizman  as a required  signatory on            the  Massachusetts escrow  account, as  well as  all savings,            checking and other  banking accounts maintained  by Elm  Hill            Housing  Limited  Partnership,   Blue  Hill  Housing  Limited            Partnership  and  Benchmark  Properties, Inc.    Grabler  and            Roizman  agree that they will proceed in good faith to affect            [sic] a resolution of this issue.        Unfortunately, the obligation to  use good faith failed to  ensure the        settlement  of  the  disputes  concerning  Elm  Hill,  Blue  Hill  and        Benchmark  pursuant to  the  above paragraph.    Also in  dispute  was        whether  Grabler was  due  interest  on  the  payment  for  the  stock        purchased by Roizman.   Thus, on October 15, 1991,  the district court        granted Roizman's motion to reopen and set the case for hearing.            The specific  claims presented  at that  time by  Roizman were  as        follows:  (1) Grabler and Kohen caused Benchmark to pay all of certain                                                                ___        expenses incurred by  Blue Hill and  Elm Hill, despite  the fact  that        Benchmark only had a fifty percent  interest in each project, and  the                             _____________        excess costs  should be deducted from the profits of Blue Hill and Elm        Hill; (2) Grabler and  Kohen each received salaries from  Benchmark to        which they were not entitled and, having reimbursed Benchmark for part        of the salaries, still owed  Benchmark approximately $23,000; (3) Blue        Hill incurred  expenses for deleading  and $18,200  of these  expenses        were  "double deducted" from the  profits of Blue  Hill; (4) Benchmark        paid  for Grabler's  personal phone  calls in  an estimated  amount of        $2563;  and (5)  Benchmark,  at  the  end  of  1989,  had  $50,529  in                                          3        development  cash (profits  from both  Elm Hill  and Blue  Hill) which        should have been  distributed to the  Benchmark shareholders,  Roizman        being entitled to one-third of that amount.            The district court ultimately  found in Roizman's  favor on  these        five  claims,  holding that  he "is  owed the  sum  of $37,335  as the        appropriate allocation  of expenses  and partnership  distributions in        connection  with Elm  Hill  Housing  LP,  Blue  Hill  Housing  LP  and        Benchmark Properties  Corporation  ("BPC") .  . .  ."   See Order  and                                                                ___        Judgment,   2.  This order also provided that            [s]ubject  to  making  provision  for  the  payment  of   the            reasonable  expenses  of  BPC  in  the  ordinary  course   of            business, Peter Grabler  and Israel Roizman  are directed  to            take  all appropriate action to effect  the prompt payment of            $37,335 to  Israel Roizman  from the future  profits of  BPC,            such payments to  be arranged in such fashion as  to have the            same  economic effect as if  these payments had  been made in            the ordinary course.        Id.   3.  The judgment finally stated that if Grabler and Roizman were        ___        not able to  agree on  a method to  effect the payment  of $37,335  to        Roizman, the court  would appoint an independent auditor  to recommend        how the payment should be made.  Id.   4.                                         ___                                          4                                      DISCUSSION                                      __________            Grabler attacks the district court's findings  on four out of  the        five  claims asserted  by Roizman.**   He also  argues that  he should        have been awarded  interest on the $96,000  owed to him  for Roizman's        failure to  pay for the stock.  We review the district court's factual        findings under the clearly erroneous standard.            "If the district court's account of the evidence is plausible            in light of  the record viewed in its entirety,  the court of            appeals  may not reverse it even though convinced that had it            been sitting as the trier of fact, it would have  weighed the            evidence differently.  Where there are two permissible  views            of the evidence, the factfinder's choice between them  cannot            be clearly erroneous."        Anderson v. Beatrice Foods Co., 900 F.2d 388, 392  (1st Cir.) (quoting        ________    _________________        Anderson v. City of Bessemer City, 470 U.S. 564, 573-74 (1985)), cert.        ________    _____________________                                ____        denied., 111 S. Ct. 233 (1990).  In this case, which depends heavily on        ______        the inferences to be drawn from conflicting views of the facts, we may        not substitute our opinion  as to conclusions reached by  the district        court absent clear  error.    Id. at  392.  Keeping  this standard  in                                      __        mind, we turn to the disputed findings.            A.  The Counterclaims                _________________            1.   Roizman asserts  that during 1988,  1989  and  1990 Benchmark        incurred certain expenses connected with its operation of Elm Hill and        Blue  Hill.  Pages D, E  and F of Trial Exhibit  6 reflect these costs        for each year.   In total,  Benchmark paid $221,454  for the years  in        question.   Roizman's basic claim  is that Benchmark  should have been                                    ____________________        **  Grabler  does  not  challenge  on  appeal   the  district  court's        conclusion that, at the end of 1989, Benchmark should have distributed        to  the shareholders $50,529 as profits.   Issues not raised on appeal        are waived. Cf. Pignons S.A. de  Mecanique v. Polaroid Corp., 701 F.2d                    __  __________________________    _____________        1, 3  (1st  Cir. 1983)  (issues  not presented  in initial  brief  are        waived).  As for Grabler's contention that Roizman did not have "clean        hands," it  was not  raised below  and  is thus  forfeited on  review.        Johnston v. Holiday Inns, Inc., 595 F.2d 890, 894 (1st Cir. 1979).        ________    _________________                                          5        charged  for only  half of  this amount  because it  only had  a fifty        percent  interest in each  project.  That  is, Elm Hill  and Blue Hill        should have absorbed  half of  these expenses.   As Roizman  explained        during trial:              The basis is  as follow[s]:   When  in this  industry of  low            income housing  when you have a  partnership [Benchmark] that            operates two projects, and that's it, and this partnership is            supposed to  get income for  management fee[s], but  does not            receive any management fee because the project is not healthy            financially to  pay  the  management  fee, and  there  is  an            expense of rent, taxes, interest, copying, office supply, and            everything else  that shows in RD,  E and F.   When you don't            have an income  to this  project, to this  company, there  is            someplace where  the money has to be paid from.  And the only            place where the  money can be paid is from  profit that comes            in from the two entities and that's Elm Hill and Blue Hill.        App. I, Tab 1, at 40.             As  a result,  Roizman  concludes,  the  profits of  both  limited        partnerships should  have been reduced  by their respective  shares of        the $221,454  in expenses incurred by Benchmark.  Accordingly, Note #1        on page A  of Trial Exhibit 6  reflects a deduction in the  profits of        Blue Hill of $112,942.  Similarly, Note #1 of page B of Trial  Exhibit        6 shows a reduction in Elm Hill's profits of $108,512.***            Grabler  claims  that  these calculations  are  wrong.   He  first        argues that because Benchmark was running projects in addition to Blue        Hill and Elm Hill, see Trial Exhibit 6, at pages J  and K, these other                           ___        projects also should have absorbed some of Benchmark's costs. Although        not entirely clear, Roizman's accountant, Stuart Briefer (who also had        been  the  accountant for  Benchmark  and  the limited  partnerships),        testified  that the costs  listed in Trial  Exhibit 6 were  not all of                                                                        ___        Benchmark's costs  for the  years 1988-1990.   App. I,  Tab 2,  at 64.                                    ____________________        ***Although Benchmark has  a fifty percent  interest in each  project,        Blue  Hill was charged with fifty-one percent of Benchmark's costs and        Elm Hill was charged  forty-nine percent. There is no  explanation for        this difference but, in any event, it is not challenged on appeal.                                          6        Rather, the  inference from the testimony is that the amounts on pages        D, E and F were Benchmark expenses that related solely to Elm Hill and                                                        ______        Blue Hill.  Id.  at 64-65.  Grabler  did not submit any  evidence that                    __        would contradict Briefer's testimony.****             Next, Grabler contends that  an independent auditor's  report, see                                                                           ___        App. III, Tab 7, at 7 and Tab 8, at 9, demonstrates that Blue Hill and        Elm  Hill  each   paid  about   $57,811  for   their  own   respective        organizational   costs.    However,  Grabler  did  not  point  to  any        documentary  or other evidence that  this money was  spent on the same        items listed on pages D, E and F of Trial Exhibit 6.  Indeed, there is        no explanation concerning exactly how the independent auditor's report        relates to the payment of Benchmark's expenses.                                   ___________            Grabler also  alleges that Benchmark  in fact  received income  in        the form of management fees for 1988-1990, but assigned this income to        another company,  Benchmark Apartment  Management  Corp.   As  Grabler        never put in evidence any agreements concerning the assignment of such        fees or any documents indicating the dollar amounts of these fees,  we        cannot say that the district court's decision to credit Roizman's view        of the evidence was plainly wrong.            2.   Roizman claims that $18,200  -- which reflects  a payment for        deleading at the Blue Hill housing project -- was erroneously "double-        deducted" from the profits of Blue Hill.  Thus, as reflected on page A        of  Trial Exhibit  6, $18,200  was added  to  the calculation  of Blue        Hill's profits.  To support his position, Roizman relies on a document        entitled "Calculation of Syndication Profits,"  Exhibit RO, #5, and  a                                    ____________________        ****Similarly, Grabler's claim that there were no charges for ordinary        expenses  such  as telephone,  rent and  copying  listed on  the pages        concerning these other projects seems irrelevant, without more, to the        question  whether Elm Hill and Blue Hill should have been charged with        some of Benchmark's expenses.                                          7        record  of  Syndication Account  Transactions  for Blue  Hill.   Trial        Exhibit 7, at 4.              It is  undisputed that Blue Hill  has two  accounts -- syndication        and operations.   Under  this arrangement,  the operations account  is        funded by the syndication account.  It also is undisputed that most of        the expenses for the deleading were paid from the syndication account,        except  for the  $18,200 which,  for some  reason, was  paid  from the        operations account.  According to Briefer's testimony, in  calculating        Blue  Hill's profits,  one  of the  expenses  listed in  RO  #5 is  an        "operating deficit" of $75,000.   App. I, Tab 3, at 17-19 and App. II,        Tab 1, at 17-20.  However, this deficit was reduced  by $18,200 -- the        amount  for  deleading  which had  been  paid  out  of the  operations                                                                    __________        account.  Id.                  __            Although not free from doubt, it  appears that Roizman is  arguing        that the "double deduction"  occurred when $75,000 was wired  from the        syndication account to the  operations account in December 1990.   See                                                                           ___        Trial  Exhibit 7, at  4.  Briefer  testified that only  $56,800 should        have been transferred.   App. I, Tab 2, at 61.   As a result, not only        did  the  operations account  lay out  $18,200  for deleading,  but by        transferring the  full  $75,000,  the  syndication  account  also  was        charged $18,200.              Grabler  first argues  that  Exhibit  RO  was  never  admitted  in        evidence  and that,  in any event,  it was "superseded"  by Exhibit 7.        Exhibit RO  contains the underlying documents from which Trial Exhibit        6 was prepared  by Roizman and  Briefer.  The district  court admitted        Exhibit 6 in evidence on the second day  of trial.  App. I, Tab 2,  at        32.  It later described RO as "part of exhibit 6,"   App. I, Tab 2, at        59, and referred to it during the course of the trial.  As such, it is                                          8        plain that RO was considered  as admitted in evidence by  the district        court.              As for Exhibit 7,  it is a  memorandum, dated September 20,  1991,        from Kohen to  Roizman.  Page 4 reflects Blue Hill syndication account        transactions for 1990  and 1991.   Grabler points  out that Exhibit  7        does not list  $18,200 as a deduction.  He  then makes the observation        that  RO #5  reflects  only an  "estimate"  of Blue  Hill  syndication        profits.   From this  he concludes that the  $18,200 was accounted for        only once -- when it was paid out from the operations account.            Based on  the evidence and testimony,  we think  that the district        court's  decision  to credit  Roizman's  explanation  was not  clearly        erroneous.  Exhibit RO  #5 was prepared on February 8,  1991.  At this        time,  the  operations  account  already  had  paid  the  $18,200  for        deleading.  Indeed, according to Grabler, the  operations account paid        this amount in December 1990.  This is the same time that $75,000 from        the  syndication account  was wired  to the  operations account.   See                                                                           ___        Trial  Exhibit  7, at  4.    To  this  extent,  it  appears  that  the        calculation concerning the operations deficit of $56,800 (the  $75,000        minus $18,200) is not an estimate.            3.  Roizman's  claim that Grabler  and Kohen  agreed to return  to        Benchmark  salaries  they  had  received  is  well  supported  by  the        evidence.  In fact, in his brief, Grabler candidly admits  that he and        Kohen "repaid all but $7,800  of the salary they had each  received in        1989"   to  Benchmark.*****     Appellant's   Brief,  at  33.     This        admission lends direct support to Roizman's  contention that Kohen and                                    ____________________        *****  Grabler's  argument  that he  and  Kohen  each retained  $7,800        because  Roizman allegedly  received  $7,800 in  extra  salary is  not        relevant  to the  question whether  an agreement  concerning repayment        existed.                                          9        Grabler had, in fact, agreed  to repay the salaries they  had received        in 1989.  In the absence of any evidence to the contrary, the district        court's finding that Benchmark still is owed approximately $23,000 for        salary reimbursement is not clearly erroneous.            4.    Roizman claims  that  during 1988,  1989  and part  of  1990        Grabler charged all of  his personal calls  to Benchmark.  To  support        this assertion, Roizman submitted four cellular  one phone bills dated        November  11, 1988, January  8, 1989,  July 6,  1989 and  September 7,        1989.  According to Briefer's testimony,  see App. I, Tab 1, at 65-70,                                                  ___        he  reviewed  the above  bills,  identified  Grabler's personal  phone        charges,  added them  up,  determined an  average  monthly figure  and        multiplied  it by  the number  of  covered months.   Page  L of  Trial        Exhibit 6 contains Briefer's  calculations.  It reveals that  based on        the four phone  bills, the average  amount of personal phone  calls is        $82.66.  Thus,  for the period June  1988 to December  1990, Benchmark        allegedly  paid  approximately  $2,563  for  Grabler's  personal phone        calls.   Page H of Trial Exhibit 6,  which contains the summary of how        the profits of Benchmark should  be adjusted, therefore indicates that        Grabler owes Benchmark $2563.  Grabler  first  argues  that the  claim        must fail because the telephone bills should not have been admitted in        evidence under Fed. R.  Evid. 1006 (admission of summaries).   Second,        he  points  out that  Briefer testified  that  he had  no recollection        concerning whether Benchmark actually  had paid these bills.   App. I,        Tab 3, at 25.  Indeed, Briefer  stated that he could not "recall  what        entity paid  for the  bills."  Id.   We believe  that, even  under the                                       __        clearly  erroneous standard, this claim  must fail.   Therefore, we do        not address the evidentiary question.                                          10            Simply stated,  how much  Roizman might  be due  in damages  would        depend  on  which entity  paid the  phone  bills.   Assuming Roizman's        figures are accurate, and Grabler owes Benchmark $2,563, Roizman might        be  entitled to recover as much as  one-third.  However, if Blue Hill,        Elm Hill or some  other entity paid these bills, the  $2,563 repayment        would not  go directly to Benchmark.   As a result,  Roizman would not        receive  one-third.  For example,  if one of  the limited partnerships        paid the phone bills, Grabler would reimburse the limited partnership,        and Benchmark, as a fifty percent  owner, might be entitled to as much        as one-half of $2,563 or $1,281.50.   Roizman's share would be reduced        to approximately  $427.  As  Roizman failed to establish  who paid the        phone bills, on the present  record it is impossible to  calculate the        amount of any damages due.            B.  Interest on the Stock Transaction                _________________________________            The final order of the district  court regarding the  disbursement        of  the  purchase price  of  the stock  (which  had been  held  in the        registry  of  the   district  court),  stated,   subject  to   certain        preconditions not relevant to this appeal, that                     the sum of $96,333.84 shall be released by the Clerk from the            Registry of  this Court to Peter  Grabler, representing final                                                       __________________            payment  to Grabler  for his  100 shares  of common  stock of            _______            Benchmark  Broadway  Corporation  and  Benchmark  Developers,            Inc., each,  pursuant to  paragraph 2 of  the Stipulation  of            6/28/91.         Order of  Court, dated November 1991,  reproduced in App.  III, Tab 17        (emphasis added).              Grabler  argues that  the  November  1991  Order only  applies  to        paragraph 2  -- the  underlying obligation  of Roizman  concerning the        purchase  price for  the stock  -- and  not to  paragraph 5  which, he                                          11        asserts, addresses interest on the purchase price.  Grabler also avers        that contrary to  Roizman's statement in Roizman's  draft order (which        the  district court adopted) he (Grabler) never agreed to the language        in  Roizman's draft.   Grabler  points  out that  the  draft order  he        submitted  to the court,  App. III, Tab  18, did not  specify that the        $96,000 was a "final payment."            We are  unable to ascertain any basis in the  record for Grabler's        claim that  he is due  interest on  the purchase price  for the  stock        notwithstanding    the   final    judgment    of   the    court.******        Specifically, he  has not  carried  his burden  of demonstrating  that        paragraph 5 of the June Stipulation applied to the stock purchase.  In        any event,  it is not  clear from the  record how such  interest would        have been calculated and Grabler, in support of his claim to interest,        has not even established  the period during which such  interest would        have  accrued.  Consequently, we decline to disturb the final judgment        of the district court regarding this claim.       C. Rule 19                                                              _______            Grabler finally  argues on appeal  that the  district court failed        to join Kohen,  Benchmark, Blue  Hill, Elm Hill,  BFGL, Jones and  the        limited  partners of Blue Hill  and Elm Hill  as indispensable parties        under Fed. R. Civ. P. 19.   We note in this context that Grabler never        filed a Rule  19 motion for joinder.  Nonetheless,  the district court        was  aware that  it had  only Grabler  and Roizman  before it  when it        entered judgment and acknowledged that it was directing enforcement of                                    ____________________        ******Indeed,  the only  reference  the  district  court  made  to  an        interest claim by Grabler was its  statement that it was not persuaded        that  Roizman was required  to pay  interest on  the sum  of $102,441.        App. II,  Tab 2, at 101, which amount appears to relate to the Flipper        Temple deal  in  Atlanta, not  the  stock purchase  agreement  between        Grabler and Roizman.                                          12        the  June  stipulation  between  Grabler  and  Roizman.*******     For        the reasons stated below,  it would be premature to  address Grabler's        Rule 19 claim at the present time.            First,  Grabler specifically  promised  to exercise  "good  faith"        efforts to  reach an "agreement  regarding the allocation  of expenses        and partnership distributions"  in connection with  Benchmark and  the        limited  partnerships.  June  Stipulation,   7.   He  entered into the        stipulation, which  the court  treated as  an enforceable  contract at        trial, knowing that  the resolution of  the accounting disputes  might        require action on behalf of Benchmark, Blue Hill, Elm Hill and others.            Second,  after both Grabler  and Roizman  filed post-trial motions                                    ____________________        *          *          *          *          *          *          *            Now,  it's important to understand that  there are before the            Court  only Mr.  Grabler  and  Mr.  Roizman.    None  of  the            corporations  have been  joined and  Mr. Kohen  has  not been            joined.  The Court infers, but  makes no finding, that one of            the reasons  these  parties were  not enjoined  was it  would            destroy the  diversity jurisdiction . . .  which is necessary            for this  Court to act  and the disputes  arising out of  the            settlement agreements  would then have  to be disposed  of in            the state court.        App.  II,  Tab 2,  at 94.    As for  Grabler's  ability to  effect the        judgment, the district court stated:            [W]hile  it's certainly  appropriate  for me  to resolve  all            matters  as between  Mr. Grabler  and Mr. Roizman  and indeed            equitably  to make sure that those two parties who are before            the  Court give  effect to  the Court's  judgment, I  have no            right to enter orders, nor have I yet entered . . . any order            against Mr. Kohen. . . .                                       . . . .            So,  I  can  imagine   saying,  and  correct  me,  that   the            accountings  shall be  as  I decreed  them  and I  order  the            parties before the  Court to  give effect  to the  accounting            resolution that I have made and leave it at that.        Id. at 67.        ___                                          13        requesting enforcement  of the court's final  order, Roizman's counsel        filed a letter  with the court indicating that "the  parties have been        able to agree in  [sic] the manner in  which to carry out  the Court's        Order."   Thus, it appears that the  means are available with which to        enable Grabler  to effect payment  to Roizman.   Even if  any Rule  19        claim has not been waived, it  clearly was not addressed below, and is        unripe for review.  For the present, therefore, issues relating to the        enforcement of the district court order are properly presented to that        court in the first instance.            For the  foregoing reasons, the case  is remanded  to the district                                        ______________________________________        court  for further  proceedings  consistent with  this  opinion.   The        _______________________________________________________________    ___        judgment of the  district court  is affirmed, except  as concerns  the        ______________________________________________________________________        award of $2,563 to Roizman.  SO ORDERED.        __________________________   __________                                          14