Murray v. Ross-Dove Company

• Court: Court of Appeals for the First Circuit
• Decided: December 21, 1995
• Docket: 95-1104
• Status: Published

Opinion

USCA1 Opinion

United States Court of Appeals

                                For the First Circuit

                                 ____________________


No. 95-1104



                               JOHN P. MURRAY, ET AL.,



                               Plaintiffs - Appellants,



                                          v.



                               ROSS-DOVE COMPANY, INC.,



                                Defendant - Appellee.


____________________



                     APPEAL FROM THE UNITED STATES DISTRICT COURT



                           FOR THE DISTRICT OF RHODE ISLAND



                    [Hon. Ronald R. Lagueux, U.S. District Judge]
                                             ___________________



                                 ____________________



                                        Before



                               Torruella, Chief Judge,
                                          ___________



                            Cyr and Lynch, Circuit Judges.
                                           _______________



                                 ____________________



            Robert M. Duffy, with whom Michael P. Defanti  and Hinckley, Allen
            _______________            __________________      _______________

        & Snyder were on brief, for plaintiffs.
        ________

            Michael  B.  Waitzkin,  with  whom  Russell M.  Frank,  Robert  S.
            _____________________               _________________   __________

        Whitman, Nussbaum & Wald, Marc  C. Hadden and Gidley, Sarli  & Marusak
        _______  _______________  _______________     ________________________

        were on brief, for defendant.


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                                  December 21, 1995

                                 ____________________



Per Curiam.   In its second  appearance before this
                      Per Curiam.
                      __________



            court,  this  case  involves  an  attempt  by  investors  who



            invested several  millions into a failing  company to recover



            their losses  from the  appraisal company on  whose valuation



            they relied.  Because the amount awarded by the jury may have



            been the result of  a misapprehension of the nature  of joint



            tortfeasor  liability aided  by an  incomplete and  therefore



            misleading jury instruction, we reverse and remand  for a new



            trial on damages.



                 We  once again repeat what we said earlier in this case,



            which is  now almost five  years old:   "On remand  this case



            should be settled, if humanly possible. . . .  Money spent on



            further  litigation is a loss to both sides regardless of the



            outcome . .  . .  We  think counsel would not  be serving the



            interests  of their clients if they failed to make an earnest



            effort  to settle this case."  Murray v. Ross-Dove Co., Inc.,
                                           ______    ___________________



            5  F.3d  573,  581   (1st  Cir.  1993)  (paragraph  structure



            omitted).



                      The facts of this case are set forth in our earlier



            opinion.   Id. at  575-76.  In short,  plaintiffs, a group of
                       ___



            investors (the "Crawford  Group"), charged Ross-Dove Company,



            Inc.  ("Ross-Dove"), an industrial appraiser, with negligence



            and negligent misrepresentation as to the value of the assets



            of a  company, Bevmar  Industries, Inc. ("Bevmar"),  in which



            the  group invested  in reliance  on the  appraisal.   At the


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second  trial,  after our  remand of  the case  following the



            first  trial, the  jury found  that  Ross-Dove was  liable to



            plaintiffs   on    both   the   negligence    and   negligent



            misrepresentation theories and awarded damages of $753,800.



                      Ross-Dove  was not  the only  potential tortfeasor.



            Also  potentially  responsible  were  the  promoters  of  the



            venture and the  attorneys who had provided counseling on the



            deal,  none of whom  is a party  in this case.   By agreement



            between the parties, Ross-Dove  was to be treated as  a joint



            tortfeasor with the promoters and the attorneys.  The parties



            agreed  that any  damages  against Ross-Dove  would be  later



            reduced  by  the court  by  a  $1.55 million  settlement  the



            plaintiffs had  previously entered  into with  the attorneys.



            After the jury returned its  damages award, the court reduced



            the  $753,800  by the  $1.55 million  settlement, effectively



            reducing the plaintiffs' award to zero.



                      The plaintiffs  claim that  the jury award  was the



            result  of confusion that may have been caused by the court's



            jury  instructions.    The  court instructed  on  damages  as



            follows:



                           The measure of  damages in this case

                      is  basically  simple.    The  measure of

                      damages   is   the  monetary   loss  that

                      plaintiffs suffered as a proximate result

                      of defendant's wrongful conduct.   So the

                      investment,  or  part of  the investment,

                      that plaintiffs made  in Bevmar,  because

                      of  the   defendant's  wrongful  conduct,

                      minus  any returns on that investment, is


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the  maximum  amount that  plaintiffs can

                      recover in this case.

                           So if  you  find for  plaintiffs  in

                      this  matter, then  you  shall  award  to

                      plaintiffs  a  sum  of money  which  will

                      fairly and reasonably compensate them for

                      losses   suffered   by  them   that  were

                      proximately   caused   by  the   wrongful

                      conduct of  the defendant.   If you  find

                      that defendant was at fault, but that its

                      fault was not the  proximate cause of the

                      financial  loss to the  extent claimed by

                      plaintiffs,  then plaintiffs  may recover

                      only that portion of their financial loss

                      which    resulted     proximately    from

                      defendant's wrongful conduct.



                      Although plaintiffs concede that these instructions



            were  not incorrect,  they  say they  were incomplete  and so



            misleading.    They argue  that the  instructions potentially



            suggested to  the  jury that  it  was entitled  to  apportion



            damages among  all three groups of tortfeasors and award only



            that   which  they  apportioned  to  Ross-Dove's  negligence.



            According to  the plaintiffs,  such an apportionment  was not



            appropriate for the  jury to  do given that  the parties  had



            agreed  to  treat  Ross-Dove  as  a  joint  tortfeasor.   The



            plaintiffs had asked for  an additional jury instruction that



            the  measure of damages should be the total amount of damages



            and should not  be reduced by amounts attributable to others'



            wrongdoing.    The  district  court  declined  to  give  this



            instruction.



                      We believe that the failure to instruct the jury to



            award  total damages  was  erroneous and  necessitates a  new



            trial on damages because the  instructions given to the jury,


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taken as a whole, may have confused or misled the jury on the



            measure  of  damages.    See Sullivan  v.  National  Football
                                     ___ ________      __________________



            League, 34 F.3d 1091, 1106-07  (1st Cir. 1994), cert. denied,
            ______                                          ____________



            115 S. Ct. 1252 (1995); Jerlyn Yacht Sales, Inc. v.  Wayne R.
                                    ________________________     ________



            Roman  Yacht  Brokerage, 950  F.2d  60,  69 (1st  Cir.  1991)
            _______________________



            (requiring  new trial  where instructions  could have  misled



            jury  as to  fraudulent  misrepresentation  claim); see  also
                                                                _________



            Allen  v. Chance Mfg. Co., Inc., 873  F.2d 465, 469 (1st Cir.
            _____     _____________________



            1989) (requiring  reversal if  the error in  the instructions



            could have affected the  result of the jury's deliberations).



            On the record as a  whole, we cannot say that the  jury would



            have awarded the  same amount of damages  had the plaintiffs'



            instructions been given.  See Jerlyn Yacht Sales, 950 F.2d at
                                      ___ __________________



            69.



                      The  instructions  given invited  the jury  to find



            damages based on  the "part of the investment" loss or on the



            "portion of  the investment"  loss proximately caused  by the



            defendant's negligent  conduct.  They did not inform the jury



            that where a joint  tortfeasor causes harm and is found to be



            liable, it  is liable for all of the harm even if others also



            contributed to the harm.  See, e.g., McInnis v. A.M.F., Inc.,
                                      _________  _______    ____________



            765 F.2d 240, 249-50 (1st Cir.  1985).  The failure to inform



            the  jury on  this point  was troublesome  on the  particular



            facts   of  this   case   because  Ross-Dove   had  presented



            considerable evidence and argument about the wrongful actions


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of the  other tortfeasors.   While this  evidence technically



            was presented for the  sole purpose of sustaining Ross-Dove's



            defense to  liability (i.e., that it  was not a cause  of the
                        _________  ____



            injury),  the   evidence,  when   combined   with  the   jury



            instructions, potentially misled the jury into believing that



            it should  apportion the damages  among the  three groups  of



            tortfeasors.



                      This, agree the parties, exactly may have happened.



            Even  Ross-Dove's justification for  the damages award relies



            in considerable part on an apportionment theory.  Indeed,



            Ross-Dove has argued  that the case was tried to  the jury on



            an  apportionment theory.   We  read the  record differently.



            Before trial, the parties had agreed that Ross-Dove would  be



            treated as a joint tortfeasor and  would be entitled to a pro
                                                                      ___



            tanto reduction in damages  to be granted by the  judge after
            _____



            the jury verdict  in the amount of the plaintiffs' settlement



            with  the attorneys.   Ross-Dove reserved  only the  right to



            present evidence  or to  cross-examine on  the  topic of  the



            wrongdoing of the  other tortfeasors in  order to prove  that



            Ross-Dove's  appraisal  was not  the  cause  of the  Crawford



            Group's injuries.   Ross-Dove  did not  reserve the  right to



            argue that the evidence of the other wrongdoers could be used



            to apportion damages, nor  could it have, given how  the case



            was tried.


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The  district court  ran  the trial  under a  joint



            tortfeasor  theory.  When presented with the agreement of the



            parties,  the court responded "I'm  satisfied that .  . . the



            reduction in  the total  amount  of damages  suffered by  the



            plaintiff because  of a  settlement with a  joint tort-feasor
                                                        _________________



            comes off the  verdict. . . .  I know  how to apply the Joint



            Tort-Feasor's Contribution Act.  . .  .  The  correct way  to



            apply the settlement amount paid by a joint-tort feasor [sic]
                                                  _________________



            is to determine what  the total amount of damages  is against



            the tort-feasor being sued, and then that award is reduced by



            the  amount of  the settlement,  or  50% whichever  is higher



            [emphases  added]."   In  a Memorandum  and  Order after  the



            verdict, the court denied the defendant's motion for judgment



            as a matter of law and proceeded to reduce the verdict by the



            settlement amount, stating:   "Since  the plaintiffs  settled



            with a joint  tortfeasor for $1,500,000 on a joint tortfeasor
                   _________________                     ________________



            release,  the parties  agreed before  trial[] that  the Court



            would reduce any verdict for plaintiffs by the amount of that



            settlement [emphasis added]."1



                                
            ____________________



            1.  At oral argument, Ross-Dove argued that the references to

            a joint tortfeasor reduction were not controlling because the

            parties  had  agreed  specifically  to  allow  Ross-Dove  the

            benefit of both a joint  tortfeasor reduction in damages  and
                       ____                                           ___

            an  apportionment of damages.   Not only does  the record not

            support  such  a novel  theory of  the  agreement, but  it is

            difficult  to see  what, if  anything, plaintiffs  would have

            gained under such  an agreement.   Ross-Dove has argued  that

            the plaintiffs gained because Ross-Dove waived its right to a

            pro  rata reduction in  damages under the  Rhode Island joint
            _________

            tortfeasor  statutes  (it  was  entitled to  a  reduction  in



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Given that Ross-Dove was a joint tortfeasor and the



            case, by agreement,  was tried on a joint  tortfeasor theory,



            the  failure to  instruct  the jury  to  award total  damages



            likely  misled  the jury  into  thinking  it could  apportion



            damages.  Under  these circumstances, there is  no reason for



            any confidence that the jury instructions did not  affect the



            results  of  the jury's  deliberations  as to  damages.   The



            liability finding  is unscathed.   Liability and  damages are



            not  so interwoven in this case that one cannot be determined



            without the other.   See Fed. R. Civ. P.  59(a) (permitting a
                                 ___



                                
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            damages  in the amount of the settlement or the proportion of

            reduction provided  for  in  the  joint  tortfeasor  release,

            whichever was higher,  under R.I. Gen. Laws    10-6-7 (1985),

            which the  district court  suggested, without objection  from

            the parties,  would  otherwise apply).   This  justification,

            however, is something  of a  non sequitur.   The decision  to

            choose between a pro tanto or  a pro rata reduction does  not
                             _________       ________

            change  the   fact  that   some  type  of   joint  tortfeasor

            arrangement  was  made.   If the  case had  been tried  on an

            apportionment  theory,  there  should  have   been  no  joint

            tortfeasor reduction in damages  at all.  See R.I.  Gen. Laws
                                                      ___

              10-6-7  (reduction  only  for  joint  tortfeasor  release);

            Restatement (Second) of Torts     433A, 433B, 434, 879,  881,

            885 (1964 & 1977)  (if harm can be apportioned,  liable party

            is  not a  joint  tortfeasor and  there  is no  reduction  in

            liability); see also  McInnis v. A.M.F., Inc.,  765 F.2d 240,
                        ________  _______    ____________

            250 (1st Cir.  1985) (applying  Rhode Island  law in  holding

            that damages  cannot be segregated between joint tortfeasors,

            who by definition  have caused the same harm).   Furthermore,

            the parties thought that their agreement "seem[ed] to dispose

            of  the joint tort-feasor issue with the exception of [how to

            treat  interest]."  The record as to the agreement shows only

            that  the  defendant  was  concerned  that  evidence  of  the

            settlement should not come before the jury.  If the agreement

            indeed  permitted   defendant  to  pursue  a  trial  strategy

            inconsistent with the joint tortfeasor reduction  in damages,

            the  record should have reflected  that.  We  decline to give

            any  weight to  defendant's post-trial  recharacterization of

            the case.



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new trial  on "all or  part of the  issues"); cf.  Allen, 873
                                                          ___  _____



            F.2d at 473 (court remanded for retrial of liability, but not



            damages).  After two  trials already, we take as  settled the



            question of Ross-Dove's  liability and we  thus remand for  a



            new trial on damages alone.



                      The judgment of damages is vacated, and the case is
                      ___________________________________________________



            remanded for proceedings not inconsistent with this opinion.
            ____________________________________________________________


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