Knapp v. Sylvania Shoe

CourtCourt of Appeals for the First Circuit
DecidedFebruary 15, 1994
Docket93-1527
StatusPublished

This text of Knapp v. Sylvania Shoe (Knapp v. Sylvania Shoe) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Knapp v. Sylvania Shoe, (1st Cir. 1994).

Opinion

USCA1 Opinion


UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________

No. 93-1527

KNAPP SHOES, INC.,

Plaintiff, Appellant,

v.

SYLVANIA SHOE MANUFACTURING CORPORATION,

Defendant, Appellee.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Lawrence P. Cohen, U.S. Magistrate Judge]
_____________________

____________________

Before

Breyer, Chief Judge,
___________

Boudin and Stahl, Circuit Judges.
______________

____________________

Timothy C. Blank with whom Bernard J. Bonn III, Dina Warner and
_________________ ___________________ ___________
Dechert Price & Rhoads were on brief for appellant.
______________________
Joseph B. Green with whom Bennett H. Klein and Kotin, Crabtree &
________________ _________________ _________________
Strong were on brief for appellee.
______

____________________

February 10, 1994
____________________

BOUDIN, Circuit Judge. Knapp Shoes Inc., the plaintiff
_____________

in this commercial dispute, appeals from the district court's

order dissolving a preliminary injunction. That injunction

had frozen assets of the defendant, Sylvania Shoe Manufac-

turing Corp., in an amount sufficient to satisfy a potential

judgment in Knapp's favor. Because we find that the primary

ground of the court's order is a defense that was waived by

Sylvania, and that the court's findings were insufficient to

support its action on the alternative ground urged by

Sylvania, we vacate the order dissolving the preliminary

injunction.

I.

Knapp sells work shoes at both the wholesale and retail

levels, including a line of shoes with a patented slip-

resistant rubber sole. Beginning in 1986 or 1987, Knapp

placed orders with Sylvania for the latter to manufacture and

supply Knapp with several different styles of shoes

incorporating Knapp's slip-resistant sole. Knapp intended to

resell the shoes both through its retail outlets and directly

to large customers in the restaurant, hotel and other

industries. Between 1987 and 1989, Sylvania manufactured and

delivered over 250,000 pairs of shoes to Knapp.

Sometime in 1987, Knapp became concerned about the

quality of the shoes manufactured by Sylvania. The primary

problem was the tendency of the sole to separate from the

-2-
-2-

leather body of the shoe. Although the parties disagreed

(both then and now) as to the extent of the problem, Sylvania

made a number of changes in construction of the shoes in

order to eliminate the problem. According to its later

complaint, Knapp was assured by Sylvania on various occasions

between 1987 and 1989 that the sole adhesion problem had been

remedied. These assurances, Knapp asserts, were untrue; it

says that the proportion of defects remained high and in some

periods approached 100% for certain styles.

On April 10, 1990, Knapp filed this diversity action

under Massachusetts law for breach of contract (count 1),

breach of express warranty and implied warranties of

merchantability and fitness (counts 2-4), breach of the duty

of good faith and fair dealing (count 5), fraud and negligent

misrepresentation (counts 6 and 7), and violation of Mass.

Gen. Laws Ann. ch. 93A (count 8).1 The gravamen of all

these claims was that too many of the shoes manufactured by

Sylvania and sold to Knapp were defective.

Knapp's complaint was quite detailed in setting forth

the categories of damages it claimed to have suffered. These

included increased costs of inspection and for handling and

returning defective shoes; lost profits due to Knapp's

____________________

1Chapter 93A outlaws "[u]nfair methods of competition
and unfair or deceptive acts or practices in the conduct of
any trade or commerce." Mass. Gen. Laws Ann. ch. 93A, 2(a),
and it permits awards of multiple damages and attorney's
fees. Id. 11.
___

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inability to fill orders for customers; losses due to

Sylvania's refusal to give credit for certain shoes that

Knapp did return or attempted to return; increased costs

because Knapp was forced to make substitute purchases from

other manufacturers; credits and price concessions Knapp had

to afford its own customers because of their dissatisfaction

with defective shoes; and losses in good will and in customer

orders due to Sylvania's conduct.

Sylvania filed an answer and counterclaim. The answer

denied virtually all of the incriminating allegations. It

also asserted 13 affirmative defenses, including estoppel,

disclaimer of warranties, unclean hands, laches and

contributory negligence. Sylvania's counterclaim alleged

that Knapp still owed Sylvania about $277,000 for shoe orders

not yet paid (Sylvania also claimed multiple damages and

attorney's fees under Chapter 93A). The counterclaim

suggested that any defects were due to Knapp's own

specification of materials to be used in manufacturing its

shoes.

Both parties consented to proceed before a magistrate

judge and waived a jury trial. The trial was bifurcated,

with the liability phase covering nine trial days in January

1991. At the conclusion of this phase, the magistrate judge

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