Southworth v. F

• Court: Court of Appeals for the First Circuit
• Decided: June 2, 1993
• Docket: 92-1693
• Status: Published

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

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        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]
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                                 ____________________

                                        Before

                        Selya, Cyr and Boudin, Circuit Judges.
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                                 ____________________

            John H. Ronan for appellants.
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            D.  Alice  Olsen with  whom Joseph  A. Regan,  Debra A.  Joyce and
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        Morrison, Mahoney and Miller were on brief for appellees.
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                                     June 2, 1993
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BOUDIN, Circuit Judge.   On October 19, 1987, Southworth
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            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
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            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

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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

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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"

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                 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.

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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,
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            1393-94   (1st   Cir.   1991);      Smith-Bey   v.   Hospital
                                                _________        ________

            Administrator, 841 F.2d 751, 756 (7th Cir. 1988).
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                 The  only seemingly  unresolved  matter that  may be  of

            lingering  interest to  the  parties is  Southworth's in  rem
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            claim against the  Corey Pride  under a maritime  lien.   The

            magistrate judge's opinion did  not explicitly address the in
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            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
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            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

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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
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            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.
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            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

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                 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.

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the other way.   International Fidelity  Ins. Co. v.  Wilson,
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            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.  

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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
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            v. Automated  Broadcast Controls,  799 F.2d 230,  235-36 (5th
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            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,
            ____________________________      ____________

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                 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
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            considered  a source  for federal  admiralty law.   Interpool
                                                                _________
            Ltd.  v.  Char  Yigh Marine, S.A.,  890 F.2d  1453, 1459 (9th
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            Cir. 1989), amended,  918 F.2d  1476 (9th Cir.  1990);   Clem
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            Perrin Marine Towing, Inc. v. Panama Canal Co., 730 F.2d 186,
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            189 (5th Cir.), cert. denied, 469 U.S. 1037 (1984). 
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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),
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            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,
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            250 (1st Cir.) cert. denied, 474 U.S. 1021 (1985); Goodman v.
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            1973 26 Foot Trojan Vessel, 859 F.2d 71, 74 (8th Cir. 1988).
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                 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
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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
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            requires that the substantive remedies afforded by the States

            conform to governing federal  maritime standards."   Offshore
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            Logistics,  Inc. v.  Tallentire,  477 U.S.  207, 223  (1986).
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            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
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            of Admiralty    1-17,  at 49-50  (2d  ed. 1975);   Austin  v.
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            Unarco Industries, Inc., 705 F.2d 1, 6 n. 1 (1st Cir.), cert.
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            dismissed, 463 U.S. 1247 (1983).
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                 Pertinently, in Templeman, 770 F.2d at 250, we held that
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            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
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              114, at  n.2 (1993  Supp.) (approving Sosebee).   See  also
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            Carey  v. Bahama Cruise Lines, 864 F.2d 201, 206-08 (1st Cir.
            _____     ___________________

            1988)  (Massachusetts bar  to recovery  if plaintiff  is more

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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
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            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

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

            provision,  being inconsistent with  maritime law,  cannot be

            applied in this case.

                 Affirmed.
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