DCPB, Inc. v. City of Lebanon
| Decision Date | 06 January 1992 |
| Docket Number | 91-1693,Nos. 91-1692,s. 91-1692 |
| Parties | DCPB, INC., Plaintiff, Appellee, v. CITY OF LEBANON, Defendant, Appellant. DCPB, INC., Plaintiff, Appellant, v. CITY OF LEBANON, Defendant, Appellee. . Heard |
| Court | U.S. Court of Appeals — First Circuit |
Thomas W. Costello, with whom Thomas W. Costello, P.C., Battleboro, Vt., Garfield H. Miller, and Hughes, Miller & Candon, Norwich, Vt., were on brief, for plaintiff, appellee.
Mark T. Kremzner, with whom Law Office of Laurence F. Gardner, Lebanon, N.H., was on brief, for defendant, appellant.
Before BREYER, Chief Judge, BOWNES, Senior Circuit Judge, and SELYA, Circuit Judge.
In a rancorous dispute that seems to have been fueled as much by indignation as by the dollars involved, the plaintiff prevailed before the jury, but the extent of its victory was curtailed somewhat by the judge's trimming of the award. At this juncture, both parties solicit our intervention. DCPB, Inc., a Vermont corporation, plaintiff below, beseeches us to restore the jury's verdict to full flower in one of two ways: either by rejecting the district court's vision of New Hampshire law anent enhanced damages or by allowing the pleadings to be amended nunc pro tunc. The City of Lebanon, a New Hampshire municipality, defendant and unsuccessful counterclaimant below, seeks an overall new trial based on allegedly erroneous evidentiary rulings. The City also asks that we set aside a monetary sanction levied against its lead counsel. For the reasons that follow, we leave the litigants exactly where we found them.
In 1987, the City hired DCPB as an engineering consultant to review proposed water and sewer improvements in connection with ongoing construction at the Dartmouth-Hitchcock Medical Center (the Center). DCPB billed the City directly for its services (although the City backcharged the Center for these costs under a separate agreement). Through the summer of 1988, all was serene: DCPB rendered services; the City paid DCPB when and as billed; and the Center reimbursed the City.
This tranquil interlude proved to be the calm before the storm. On September 18, 1988, DCPB submitted two final invoices to the City, totalling $53,612.15. Neil Cannon, the City's coordinator on the project, reviewed the invoices and found them reasonable. The Center reimbursed the City for the relevant work. Nonetheless, the City did not pay DCPB. The record permits an inference that the City attempted to use the withheld payment as a bargaining chip in negotiations for the possible settlement of an unrelated dispute with DCPB.
Eventually, DCPB grew weary of the City's stonewalling. Invoking diversity jurisdiction, 28 U.S.C. § 1332 (1988), it brought suit for breach of contract in the United States District Court for the District of New Hampshire. The City counterclaimed to recoup alleged overpayments. After a six-day trial, the case went to the jury on a special verdict form. The jury defenestrated the counterclaim and awarded DCPB the full $53,612.15 plus $53,000 in enhanced compensatory damages.
A flurry of post-trial activity befell. For simplicity's sake, we merely summarize the results insofar as they are pertinent to the appeals. The district court effectively halved the verdict, holding enhanced damages to be unavailable in contract actions. The court denied the remaining post-trial motions, including the defendant's motion for an unconditional new trial. Premised largely on a finding that the City's principal attorney, Laurence F. Gardner, had unreasonably multiplied the proceedings by causing a bogus counterclaim to be filed, the court sanctioned him.
The plaintiff contends that the jury's award of enhanced damages should have remained intact. The contention is dichotomous. Neither part suffices.
The parties agree that the substantive law of the forum attaches in this diversity action. Mulling New Hampshire law, the district court granted judgment n.o.v. on the claim for enhanced damages. Our review is plenary. See Wagenmann v. Adams, 829 F.2d 196, 200 (1st Cir.1987).
Punitive damages are not allowed in New Hampshire except in specific instances enumerated by the state legislature. 1 See N.H.Rev.Stat.Ann. § 507:16 (Supp.1990). In 1972, however, the New Hampshire Supreme Court authorized the augmentation of compensatory damages in certain cases. See Vratsenes v. N.H. Auto, Inc., 112 N.H. 71, 289 A.2d 66 (1972). This premium, known colloquially as "enhanced damages," differs from punitive damages in that the premium is designed not to punish the wrongdoer but to reflect the aggravating circumstances of an injury caused to the plaintiff. In practical operation, it is only when a wrongdoer's actions are "wanton, malicious, or oppressive" that enhanced damages become appropriate. Id. 289 A.2d at 68.
To date, the New Hampshire cases have limited enhanced damages to particular causes of action sounding in tort--and even then, the remedy has been reserved for intentional torts committed under exceptionally unsavory circumstances. See, e.g., Aubert v. Aubert, 129 N.H. 422, 529 A.2d 909, 914-15 (1987) (); Crowley v. Global Realty, Inc., 124 N.H. 814, 474 A.2d 1056, 1058 (1984) (); see also Munson v. Raudonis, 118 N.H. 474, 387 A.2d 1174, 1177 (1978) ().
The court below ruled that this doctrine, as heretofore formulated by the New Hampshire Supreme Court, had no bearing on the case as pleaded. We agree. DCPB sued for breach of contract, charging nonpayment of its last two invoices. Under New Hampshire law, failure to make timely payment under a contract does not amount to a tort, unless the plaintiff can demonstrate the breach of some duty independent of the obligations owed under the contract. See Lawton v. Great Southwest Fire Ins. Co., 118 N.H. 607, 392 A.2d 576, 580 (1978); Barrett v. New England Tel. & Tel. Co., 80 N.H. 354, 117 A. 264, 265 (1922). Since DCPB's complaint limned no independent duty, and the jury found none, the City's purposeful breach of contract, standing alone, while willful and, indeed, inexcusable, could not present a basis for enhanced damages under the traditional tort rubric.
In grudging recognition of the doctrinal limitations to which the New Hampshire courts have thus far subscribed, DCPB strives valiantly to convince us that, in a proper case, state law would permit enhanced damages not only for egregious torts but also for an egregious breach of contract. We are unpersuaded. No New Hampshire case has so held. Rather, the state courts have limited contract damages to the amount due under the contract, plus interest, plus consequential damages foreseeable at the time of contract formation. See, e.g., Salem Eng'g and Constr. Corp. v. Londonderry School Dist., 122 N.H. 379, 445 A.2d 1091, 1093-94 (1982); Petrie-Clemons v. Butterfield, 122 N.H. 120, 441 A.2d 1167, 1170 (1982); Martin v. Phillips, 122 N.H. 34, 440 A.2d 1124, 1125-26 (1982).
To be sure, this compendium may include consequential damages for breach of an implied duty of good faith and fair dealing. See Drop Anchor Realty Trust v. Hartford Fire Ins. Co., 126 N.H. 674, 496 A.2d 339, 342 (1985). Even assuming, however that DCPB's contract with the City implied good-faith performance by both parties, 2 it in no way follows that enhanced damages are a concinnous remedy for a breach of that implied covenant. Breaches of the covenant of good faith and fair dealing have historically been redressed by awarding consequential damages, which DCPB chose not to seek, as opposed to enhanced damages. See, e.g., id.; Lawton, 392 A.2d at 580.
We will not flog an expired equine. There is no viable precedent in New Hampshire permitting the imposition of enhanced damages in a pure breach-of-contract suit. Since the case at bar is engulfed within this generality, judgment n.o.v. was duly entered on this aspect of DCPB's claim. 3
We add an allonge of sorts. It was the plaintiff who bypassed the state courts in favor of selecting a federal forum. We have warned, time and again, that litigants who choose to sue in a federal court under diversity jurisdiction, shunning an available state forum, cannot realistically expect the federal court to open new state-law frontiers. See, e.g., Carlton v. Worcester Ins. Co., 923 F.2d 1, 3 (1st Cir.1991); Ryan v. Royal Ins. Co., 916 F.2d 731, 744 (1st Cir.1990); Porter v. Nutter, 913 F.2d 37, 40-41 (1st Cir.1990); Taylor v. Aetna Cas. & Sur. Co., 867 F.2d 705, 706 (1st Cir.1989) (per curiam). This case is a marvelous example of the genre.
Finding the usual channel blocked, the plaintiff attempts to reach safe harbor by sailing a more circuitous route. After judgment n.o.v. was granted and an appeal taken, the plaintiff moved pursuant to Fed.R.Civ.P. 15(b) to conform the pleadings to the proof. 4 In embracing Rule 15(b), DCPB proposed to rewrite its complaint, adding a count which, arguably, might support the award of enhanced damages. The district judge, recognizing that the filing of the notices of appeal had served to transfer jurisdiction over the case from the trial court to the court of appeals, Hovey v. McDonald, 109 U.S. 150, 157, 3 S.Ct. 136, 140, 27 L.Ed. 888 (1883), refused to act upon the motion. DCPB invites us either to grant the motion outright or to direct that the district judge consider it. We decline both invitations.
The plaintiff's belated attempt to validate the jury's award of enhanced damages rests on the optimistic theorem that conforming the complaint to the proof will do the trick. This theorem, in turn, rests...
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