Pahlavi v. Palandjian

• Decision Date: 21 January 1987
• Docket Number: No. 86-1534,86-1534
• Citation: 809 F.2d 938
• Parties: 4 UCC Rep.Serv.2d 1133 Chahram PAHLAVI, Plaintiff, Appellee, v. Petros PALANDJIAN, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 938

809 F.2d 938

4 UCC Rep.Serv.2d 1133

Chahram PAHLAVI, Plaintiff, Appellee, v. Petros PALANDJIAN, Defendant, Appellant.

No. 86-1534.

United States Court of Appeals, First Circuit.

Argued Oct. 9, 1986.

Decided Jan. 21, 1987.

M. Frederick Pritzker with whom Elizabeth A. Ritvo, Steven L. Feldman and Brown, Rudnick, Freed & Gesmer, Boston, Mass., were on brief, for defendant, appellant.

Gene K. Landy with whom Joyce S. Samet and Widett, Slater & Goldman, P.C., Boston, Mass., were on brief, for plaintiff, appellee.

Before CAMPBELL, Chief Judge, COFFIN and BREYER, Circuit Judges.

COFFIN, Circuit Judge.

For the second time in two years defendant Petros A. Palandjian appeals a decision of the district court awarding summary judgment to plaintiff Chahram Pahlavi. See Pahlavi v. Palandjian, 744 F.2d 902 (1st Cir.1984). These parties last came before us when the district judge granted summary judgment on Pahlavi's complaint and, pursuant to Fed.R.Civ.P. 54(b), certified the judgment as final and appealable despite Palandjian's pending counterclaims. Id. We vacated the court's order, but on remand Pahlavi pressed for summary judgment on Palandjian's counterclaims as well, contending that these claims are barred by the relevant statutes of limitation. The district court first denied Pahlavi's motion, ruling that whether Palandjian's claim of duress tolled the statutes of limitation was a genuine issue of material fact. Pahlavi v. Palandjian, 638 F.Supp. 9 (D.Mass.1985). Later, however, the court reconsidered and granted Pahlavi's renewed motion for summary judgment, stating in summary fashion that the evidence of Palandjian's asserted fears was not "adequate to raise an issue of fact of duress." This appeal followed. We affirm.

I. Factual Setting.

The events culminating in this appeal began during the late 1960s. Defendant Palandjian, then a dual national with both Iranian and American citizenship, was at that time engaged in the construction business in the United States. In 1966, with the assistance of his brother Leon, Palandjian became acquainted with Princess Ashraf, twin sister of the late Shah of Iran. Thereafter, Palandjian entered several substantial business transactions with Princess Ashraf and other members of Iran's royal family, including the Princess' son, plaintiff Chahram Pahlavi. The instant case, initiated by Pahlavi in 1983, involves claims by Pahlavi related to a dishonored check in 1979 as well as counterclaims by Palandjian regarding business dealings during 1969 and 1970. We first review the events that form the foundation for Palandjian's counterclaims, then turn to the facts underlying Pahlavi's claims.

Palandjian contends that Pahlavi has long owed him approximately $125,000 for debts accrued during 1969 and 1970. This debt serves as the basis for Palandjian's three counterclaims and also contributes to his defenses against Pahlavi's claim. First, Palandjian claims to have performed over $100,000 worth of excavation, landscaping, and construction work at Pahlavi's new palace in Sadabad, Iran during 1969 and 1970. Second, Palandjian claims to have provided aircrafts and pilots for Pahlavi's personal use on numerous occasions during 1970 without receiving compensation. Third, Palandjian alleges that Pahlavi borrowed a pair of gold and diamond cufflinks during a business trip to Dublin, Ireland in 1970 and has refused to return them to Palandjian despite repeated requests. According to Palandjian, these debts remained unpaid in 1979, when the events that precipitated Pahlavi's claim occurred.

Upon Palandjian's recommendation, Pahlavi had purchased stock in a Texas corporation known as New Optron, Inc. and held the stock until 1979, when New Optron redeemed the shares at a favorable price. Palandjian acted as Pahlavi's agent in the United States for the purpose of this transaction and was therefore the recipient of New Optron's check, payable to Pahlavi, in the amount of $127,400. After Palandjian received the New Optron check, he spoke with Pahlavi on the telephone. The two men discussed both the funds generated by the sale of the stock and the monies allegedly owed to Palandjian by Pahlavi. Palandjian contends that Pahlavi directed him to "sign the [New Optron] check and keep it." Accordingly, Palandjian heeded these instructions, endorsed the check, and deposited it in his personal account on March 15, 1979.

Two months later, Pahlavi called Palandjian to request that the funds from the stock sale be forwarded to him. Pahlavi allegedly stated that the money he owed Palandjian and the stock sale are "separate matters and let's treat them separately." According to Palandjian, Pahlavi also stated: "I will have your monies paid. You send me the check." Finally, Palandjian contends that when he questioned Pahlavi's sincerity concerning the transaction, Pahlavi responded by threatening him: "You people still have a lot left in Iran. I don't know what you are thinking about."

After seeking and receiving assurances from Princess Ashraf that the monies would be paid, Palandjian sent Pahlavi a personal check in the amount of $127,400 on May 18, 1979. The check was first presented to Palandjian's bank for payment on May 28, 1979, but the bank refused payment due to Pahlavi's improper endorsement. When the check was presented for a second time on June 5, Palandjian, who had not yet received the payment he expected in return from Pahlavi, directed the bank not to make payment on the check. Following several unsuccessful attempts to reach a private resolution to this dispute, Pahlavi filed suit on February 18, 1983.

Pahlavi's complaint contends that Palandjian wrongfully negotiated the New Optron check and, alternatively, that he wrongfully dishonored the May 18 check when it was presented for payment. Palandjian asserted an estoppel defense to Pahlavi's first claim and four defenses to Pahlavi's second claim: want of consideration, failure of consideration, inducement, and duress. In 1984, the court below awarded Pahlavi summary judgment on his second claim, finding that Palandjian had not raised a genuine issue of material fact with regard to any of his four defenses. Later, in 1986, the court granted Pahlavi summary judgment on Palandjian's counterclaims, ruling that they were barred by the statute of limitations and that there were not sufficient disputed facts to permit the statute to be tolled by reason of duress. Both decisions of the district court are before us on this appeal. We turn first to the propriety of the more recent award of summary judgment on Palandjian's counterclaims.

II. Palandjian's Counterclaims.

As noted above, Palandjian's three counterclaims all concern events that occurred during 1969 and 1970, and it is undisputed that the relevant statutes of limitation for these claims had long expired by the time these counterclaims were raised below. ¹ Nevertheless, Palandjian argues on appeal that his counterclaims are timely for two reasons. First, he asserts that his delay in commencing litigation on these claims was caused by duress and that, therefore, the statute of limitations must be tolled. Second, he contends that his counterclaims are "compulsory counterclaims" and, hence, are not even governed by the relevant statutes of limitation. See Mass.Gen.L. ch. 260, Sec. 36. We treat these issues separately.

A. Duress.

The record on appeal contains only two factual references that pertain to the issue of duress. First, defendant Palandjian alleges in his affidavit that "[b]ecause of the power of the Iranian royal family and my fears for the safety of my family and property in Iran, I took no legal actions to enforce payment of my claim[s] while the Pahlavis were still in power in Iran." Second, Palandjian alleges that Pahlavi threatened him during a 1979 telephone conversation: "You people still have a lot left in Iran. I don't know what you are thinking about." In addition to these two references contained in the material considered by the court below, Palandjian has moved to enlarge the record on appeal by adding a supplemental appendix comprised of deposition testimony referring to threats allegedly made by Princess Ashraf. Palandjian, however, did not submit these portions of his deposition to the district court when it was ruling on Pahlavi's motion for summary judgment. We therefore refuse to consider this material as pertinent to his appeal.

We make two assumptions, favorable to Palandjian, for the purpose of deciding this issue. The first is that Massachusetts courts would recognize duress as tolling the statute of limitations in at least certain situations. See Babco Industries, Inc. v. New England Merchants National Bank, 6 Mass.App.Ct. 929, 930, 380 N.E.2d 1327, 1328 (1978) ("It is possible to imagine circumstances in which duress might toll the statute...."). But see 51 Am.Jur.2d Limitation of Actions Sec. 138 at 708 (1970) ("[Most courts] will not, as a general rule, read into statutes of limitation an exception which has not been embodied therein, however reasonable such exception may seem and even though the exception would be an equitable one.") Second, we also assume that Massachusetts would use a subjective standard for evaluating fear. See, e.g., Omansky v. Shain, 313 Mass. 129, 130, 46 N.E.2d 524, 525 (1943) ("[T]he evidence warranted a finding that the plaintiff obtained the note by threats that were in fact sufficient to overcome the will of the defendant, in the condition in which he was, whether or not they would have been sufficient to overcome the will of a person of ordinary courage and firmness.") See also Allen v. Plymouth, 313 Mass. 356, 360, 47 N.E.2d 284, 287 (1943).

Even with these assumptions, however, we must conclude that the facts taken in the light most favorable to Palandjian are insufficient as a matter of law to establish duress that would toll the statute of limitations. Except for the case of Ross v. United States, ...