Court Opinion

ID: 194758
Source: CourtListenerOpinion
Date Created: 2011-02-07 02:24:10+00
Date Added: 2024-06-11T15:28:49.184492
License: Public Domain

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-

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-

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-

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-

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-

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-

     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-

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-

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-

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-

existing  maritime  law,  and  chapter 93A's  attorney's  fee

provision,  being inconsistent with  maritime law,  cannot be

applied in this case.

     Affirmed.