Cambridge Plating Co., Inc. v. Napco, Inc.
| Decision Date | 06 February 1996 |
| Docket Number | 95-1782,Nos. 95-1781,s. 95-1781 |
| Citation | 85 F.3d 752 |
| Parties | , 30 UCC Rep.Serv.2d 815 CAMBRIDGE PLATING CO., INC., Plaintiff-Appellee, v. NAPCO, INC., Defendant-Appellant. CAMBRIDGE PLATING CO., INC., Plaintiff-Appellant, v. NAPCO, INC., Defendant-Appellee. . Heard |
| Court | U.S. Court of Appeals — First Circuit |
Thomas K. Christo, Rye, NH, with whom David B. Chaffin and Hare & Chaffin, Boston, MA, were on brief, for Cambridge Plating Co., Inc.
Lawrence S. Robbins, with whom Gary A. Winters, Mayer, Brown & Platt, Washington, DC, Richard L. Burpee and Burpee & DeMoura, Boston, MA, were on brief, for Napco, Inc.
Before SELYA, BOUDIN and LYNCH, Circuit Judges.
These cross-appeals arise out of the sale of a defective wastewater treatment system for use in an electroplating operation. For want of a $620 part, there was a damages verdict of over $7 million. The purchaser of the system, Cambridge Plating Co., Inc., sued the seller, Napco, Inc., for, among other things, failing to reveal that it had knowingly omitted a critical part from the system. The complaint alleged breach of contract, intentional misrepresentation, negligent misrepresentation and a violation of Mass. Gen. L. ch. 93A, §§ 2, 11 ("Chapter 93A"). After a twelve-day trial, Cambridge Plating won on all counts, with a jury finding liability on the common law counts and the district court finding liability under Chapter 93A. Both the jury and the district court awarded Cambridge Plating significant damages. Napco now raises various challenges to the verdicts. We believe there was error in the striking of post-judgment motions and that the claims were timely filed under the Massachusetts discovery rule; we find the evidence sufficient and affirm on liability (but reverse the multiple damages under Chapter 93A), and vacate and remand the award of damages.
We recite the facts as the jury and district court could have found them. See Sampson v. Eaton Corp., 809 F.2d 156, 157 (1st Cir.1987).
Cambridge Plating, as part of its metal plating and metal finishing operations, uses large quantities of water for bath solutions and rinsing. This water becomes contaminated with chemicals and metals. Environmental regulations require that Cambridge Plating decontaminate the wastewater before discharging it into the sewers.
Napco manufactures and sells wastewater treatment systems for commercial users. In January 1984, Cambridge Plating entered into a contract to purchase, for approximately $398,000, a wastewater treatment system that would remove the contaminants from the water. As part of the contract, Napco provided a "performance warranty" under which Napco warranted that the system, if operated within certain defined limits, would meet all Massachusetts and federal pollution abatement requirements. The warranty, however, excluded liability for all consequential damages or business losses Cambridge Plating might incur in the event of a breach.
The system Napco sold to Cambridge Plating used a precipitation process to remove the contaminants from the water. The wastewater was fed through pipes, and injected with a polymer solution. The polymers were to attach to the contaminants and then aggregate them to form larger particles, known as "floc." The floc was to settle out of the water and form sludge at the bottom of a clarifying tank. The clean water layer on top would be discharged into the sewer and Cambridge Plating would properly dispose of the sludge left behind in the tank. "Flocculation," the joining of the smaller particles into bigger ones, was absolutely critical to the success of the wastewater treatment system. Absent proper flocculation, contaminants would remain suspended in the water and the water could not be discharged into the sewer.
For proper flocculation to occur, the polymer solution had to be thoroughly mixed into the wastewater stream. The system needed some means of creating turbulence in the stream sufficient to perform that mixing. One mechanism designed to create the necessary turbulence is a "static mixer." A static mixer is a section of pipe containing a series of "baffles," small metal plates placed at an angle inside the pipe which create resistance and, consequently, turbulence. The polymer solution is injected into the waste stream just before the water reaches the static mixer. Once the water with the polymer solution hits the baffles, mixing occurs.
There are alternatives to static mixers to create the required turbulence for a precipitation wastewater treatment system. As Joseph Aliota, Napco's expert engineer, testified, proper mixing can occur if the system is designed with a series of significant bends in the piping around the area where the polymer is injected into the stream. Napco did not opt for that design. The engineering drawings (and other items) for the Cambridge Plating system clearly indicate that the system was to include a static mixer.
Napco did not install the static mixer. Nor did it tell Cambridge Plating that the static mixer had not been installed. It did, however, provide Cambridge Plating with a "tech manual" containing blueprints and operating instructions for the system. This manual, given to Cambridge Plating upon completion of the system, purported to show what had actually been built. 1 It contained engineering drawings indicating that the static mixer had been installed in the system. Napco also provided a control panel that depicted the static mixer as being part of the system.
Napco's employees were aware that the static mixer had not been installed. Bob Triplett, Napco's plumbing subcontractor, testified that he was instructed not to install the static mixer at the direction of either Carl Bredfield, a Napco employee, or Bob DeBisschop, Napco's project manager on the Cambridge Plating job. John Eason, Napco's Manager of Pollution Abatement and the person principally responsible for the design of the system, also testified that he knew the static mixer was not there, although he claimed that the static mixer was installed at first but later removed because it had a tendency to clog.
The system was installed in late 1984. For several months after installation, the system generally met the applicable pollution limits. A series of reports from a testing laboratory that Cambridge Plating forwarded to the Massachusetts Water Resources Authority ("MWRA") (the relevant state regulatory body) showed that from roughly March 1985 until September 1985, the system usually met the applicable discharge limits.
As time went on, however, the system regularly failed to meet the applicable pollution limits and Cambridge Plating complained to Napco about the problems. Starting in early 1986, Edward Marullo, a Cambridge Plating employee responsible for running the system, called DeBisschop at Napco to complain about the poor performance. DeBisschop told Marullo to manipulate the polymer and pH levels. In March 1986, Laurence Tosi, Cambridge Plating's President, called DeBisschop "yelling and screaming" about the system's failures. Tosi thought that Napco's equipment might be at fault, but DeBisschop allayed his concerns, saying that operator error was the likely cause of the problem. Based on DeBisschop's assurances, Tosi took no further steps to have the system inspected for defects. Again, in 1987, Marullo called Eason at Napco, who, like his colleague DeBisschop, told Marullo to manipulate the polymer flow and pH level. At some point, Napco told Tosi that it would be willing to send engineers to examine the system or to train further Cambridge Plating's operators. But there was a price tag: Cambridge Plating had to agree to pay $1000 per day for such service. Tosi declined. At no time did Napco inform Cambridge Plating that the static mixer was missing.
During this period, Cambridge Plating hired a series of experts to determine what was wrong. In December 1986, it hired Patrick Hunt, a waste treatment operator for Hewlett-Packard who was also an instructor of a licensing course for wastewater treatment operators at the University of Lowell. Hunt inspected the system, recognized "insufficient floc formation" as a problem, and made numerous suggestions, most of which related to operation. Hunt did not discover that the static mixer was missing. In May 1987, Robert Capaccio, also a wastewater treatment expert, visited Cambridge Plating but failed to detect that the static mixer was missing. A third group of experts from Memtek, which designs and manufactures wastewater treatment systems, examined the system in September 1987 for the purpose of proposing a course of action. They recommended a substantial overhaul of the system at a cost that Cambridge Plating considered prohibitive. During their review, they did not notice that the static mixer was missing.
As Cambridge Plating was trying to identify and solve the problems with the system, it was also becoming a consistent violator of the MWRA's regulations. In December 1988 the MWRA fined Cambridge Plating $682,250 for discharging excessive levels of contaminants. Cambridge Plating challenged the fine, which was later reduced to $128,500, but at a cost of approximately $54,000 in attorneys' fees.
Cambridge Plating tried to manage the system's deficiencies by rigging the system so that the wastewater would be recirculated and retreated in the system. "Closed looping," as this practice was called, gave more time for flocculation to occur. It also slowed down production considerably. When there was closed looping, the system had to process both the retreated wastewater and the incoming wastewater generated by production. From 1985 to February 1989, the closed looping was accomplished by attaching flexible hoses to the system. In February 1989, Cambridge Plating replaced the flexible hoses with hard piping to create permanent closed looping. Cambridge Plating also shut down...
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