Fiumara v. Fireman's Fund Ins. Companies, s. 84-1270-1271

• Decision Date: 11 October 1984
• Docket Number: Nos. 84-1270-1271,s. 84-1270-1271
• Citation: 746 F.2d 87
• Parties: Joseph J. FIUMARA, Plaintiff, Appellant, v. FIREMAN'S FUND INSURANCE COMPANIES, et al., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 87

746 F.2d 87

Joseph J. FIUMARA, Plaintiff, Appellant, v. FIREMAN'S FUND INSURANCE COMPANIES, et al., Defendants, Appellees.

Nos. 84-1270-1271.

United States Court of Appeals First Circuit.

Argued Sept. 6, 1984.

Decided Oct. 11, 1984.

Steven Eric Feld, Portsmouth, N.H., for appellant.

Donald E. Gardner, Manchester, N.H., with whom George F. Gormley, Alice A. Hanlon, Boston, Mass., Michael Lenehan, Concord, N.H., and Devine, Millimet, Stahl & Branch, Manchester, N.H., were on brief, for Fireman's Fund Ins. Companies and Dorchester Mut. Fire Ins. Co.

Anthony A. McManus, Dover, N.H., with whom Edmund J. Boutin, Fryer, Boutin, Warhall & Solomon, Londonderry, N.H., and Burns, Bryant, Hinchey, Cox & Shea, Dover, N.H., were on brief, for James Blomley, Jr., Arson Detection Specialists, Inc.

Katherine M. Hanna, Manchester, N.H., with whom Theodore Wadleigh and Wadleigh, Starr, Peters, Dunn & Chiesa, Manchester, N.H., were on brief, for New York Testing Laboratories, Inc.

Before COFFIN and BOWNES, Circuit Judges, and SELYA, ^* District Judge.

SELYA, District Judge.

In the early morning hours of March 1, 1980, the Drop Anchor Motel in Hampton, New Hampshire was damaged by fire. The property had been administered by its beneficial owner and operator, plaintiff-appellant Joseph J. Fiumara, and insured for fire and other casualty on a pooled-risk basis by Dorchester Mutual Fire Insurance Company (DMFIC) and Fireman's Fund Insurance Company (FFIC). DMFIC and FFIC, both of which are appellees in this proceeding, are sometimes collectively referred to herein as "the insurers."

After the fire had been extinguished, the authorities conducted an investigation and determined that the blaze was of suspicious origin. The State Fire Marshall's office mounted a more intensive inquiry and filed a report confirming the incendiary nature of the conflagration. Their interest sparked by reports of the fire's untoward origin, the insurers employed Arson Detection Specialists, Inc. (ADS) to carry out an independent investigation. ADS did so, and the appellees Morris J. Torf, Lawrence L. Keenan, and James Blomley, Jr. all participated in various ways in that indagation. As this effort progressed, ADS removed samples from the charred remains of the motel and sent them to New York Testing Laboratories (NYTL) for screening to determine the presence of accelerants. NYTL's ensuing conclusion was positive.

As a result of these investigations, the insurers were confident that accelerants had been present, that the fire had multiple points of origin, and that there was more to the incident than a garden-variety mishap. These beliefs, in turn, fueled the presentiment that the damage to the motel had been caused by arson. Their suspicions thus kindled, the insurers declined to pay under the policies.

In 1981, inflamed by the refusal of the insurance carriers to honor their contracts and to cover the loss, Fiumara filed two actions for breach of contract against FFIC, and a matching pair of suits against DMFIC. These proceedings were brought in a New Hampshire state court, viz., Rockingham County Superior Court. Fiumara was a named plaintiff in all of the cases. The complaints sought not only to recover the policy proceeds, but also to secure enhanced damages attributable to the bad faith which the insurers had allegedly displayed in their handling of the claims. DMFIC and FFIC answered the complaints, denied liability, and asserted that the causes of action were barred by the arson exclusion provisions of their respective policies.

In accordance with local practice, the four suits were consolidated and an evidentiary hearing was held before a master. On August 23, 1982, the master issued a detailed report (Report) in which he recommended to the court that Fiumara recover the amounts due on the policies for the fire damage, with interest thereon; but that there be no incremental award "for any consequential damages, attorneys' fees or other recovery that would necessarily be predicated upon proof of bad faith [inasmuch as] the master finds that bad faith on the part of the defendants was not established as a matter of fact or law." Report at 7. In his subsidiary findings, the master noted that the insurers had "conducted an extensive, good-faith investigation," id. at 3-4; and that

Under the circumstances the defendant companies would have been derelect [sic] in their duties and responsibilities not to have conducted and carried out the thorough and detailed investigation which they did. While this procedure may have generated a sense of impatience in the plaintiff, and while such investigation necessarily consumed more than the normal and usual amount of time necessary to investigate and resolve a routine, simple or ordinary fire loss claim, the evidence fails to support the plaintiffs' contention that the defendants' actions under the circumstances as found here were either unjustified or conducted in bad faith.

Id. at 4.

On August 30, 1982, the presiding superior court justice approved the Report and verdicts and decrees were entered in conformity therewith. Shortly thereafter, Fiumara filed a motion for new trial in the state court alleging that "since the time of trial, the plaintiffs have discovered that the defendant's [sic] evidence ... was fabricated." That motion was denied, as was Fiumara's subsequent motion for reconsideration of the denial. While the record reflects that the appellant took exception to the superior court judgment and to the rejection of his post-trial motions, he prosecuted no appeal to the New Hampshire Supreme Court. Thus, the finality of the state court judgments cannot seriously be questioned.

Fiumara's fires were not, however, banked. On February 25, 1983, he filed a complaint against all of the present appellees (and, for good measure, against "John Does 1-20") in the United States District Court for the District of New Hampshire. He was represented by the same counsel who fired away on his behalf in the state court. He professed to assert three distinct statements of claim. Count I alleged that the appellees intentionally inflicted severe emotional distress upon Fiumara by their dastardly attempt to show that he deliberately set the fire. Count II alleged essentially the same intentional imposition of psychological torment by means of statements to third parties to the effect that Fiumara was engaged in illicit activities anent the fire and the resultant insurance claims. Count III alleged invasion of privacy arising out of, and in the course of, the investigation into the blaze. Fiumara's federal suit was premised upon the court's diversity jurisdiction, 28 U.S.C. Sec. 1332, and thereby implicated New Hampshire law. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938).

After some preliminary skirmishing (none of which is material to the instant appeals), the district court on August 31, 1983 granted the insurers' motions for summary judgment and a motion to dismiss which had been filed by Blomley. Thereafter the district court granted NYTL's motion for dismissal; and eventually, to abbreviate a rather long but predictable story, brevis disposition was accorded in favor of each and all of the appellees. Final judgment was entered by the district court on March 28, 1984. These appeals followed in due course.

While the briefs and arguments of the parties have touched upon arcane points of New Hampshire law, particularly those concerning the generic viability of causes of action for intentional imposition of emotional harm, we need not wander so far afield in affirming the judgment below. In our view, this case is governed by well-settled principles of res judicata and collateral estoppel. ¹

The New Hampshire state court judgment in the original suit against the insurers must be given the res judicata effect prescribed by state law. Migra v. Warren City School District, --- U.S. ----, 104 S.Ct. 892, 896, 79 L.Ed.2d 56 (1984); Kremer v. Chemical Construction Corp., 456 U.S. 461, 466-67, 102 S.Ct. 1883, 1889-90, 72 L.Ed.2d 262 (1982); Allen v. McCurry, 449 U.S. 90, 96, 101 S.Ct. 411, 415, 66 L.Ed.2d 308 (1980). We have previously scanned the New Hampshire authorities, and have defined res judicata as applied in that jurisdiction in the following manner:

[W]hen either party prevails in an action concerning a transaction, all of the plaintiff's possible rights to remedies against the defendant arising out of that transaction are extinguished.

Roy v. Jasper Corp., 666 F.2d 714, 717 (1st Cir.1981). See also Seabrook v. New Hampshire, 738 F.2d 10 (1st Cir.1984).

The New Hampshire Supreme Court itself has said that the doctrine "prevents the parties from relitigating matters actually litigated and matters that could have been litigated in the first action." Scheele v. Village District of Eidelweiss, 122 N.H. 1015, 1019, 453 A.2d 1281, 1283 (1982). See also, to like effect, Durham v. Cutter, 121 N.H. 243, 246, 428 A.2d 904, 906 (1981); Bricker v. Crane, 118 N.H. 249, 253, 387 A.2d 321, 323 (1978).

In this instance, the appellant has already prevailed in an action concerning the insurers' joint obligations under their parallel indemnity policies. The circumstances which underlie this subsequent federal initiative either were, or could have been, litigated in those earlier New Hampshire proceedings. In the state court, Fiumara clearly and unambiguously placed in issue the character of the insurance investigation and whether it was...