Gloucester Marine Railways Corp. v. Charles Parisi, Inc., 93-P-234

• Decision Date: 28 June 1994
• Docket Number: No. 93-P-234,93-P-234
• Parties: GLOUCESTER MARINE RAILWAYS CORP. v. CHARLES PARISI, INC., & others. 1
• Court: Appeals Court of Massachusetts

Page 1021

631 N.E.2d 1021

36 Mass.App.Ct. 386

GLOUCESTER MARINE RAILWAYS CORP. v. CHARLES PARISI, INC., & others. ¹

No. 93-P-234.

Appeals Court of Massachusetts Essex.

Argued Feb. 11, 1994.

Decided April 26, 1994.

Further Appellate Review Denied June 28, 1994.

Mary P. Harrington, Salem (Jacob S. Segal with her), for plaintiff.

Robert L. Burke, Lowell, for Charles Parisi, Inc.

Before KASS, KAPLAN and PORADA, JJ.

PORADA, Justice.

After the United States Court of Appeals for the First Circuit reversed for lack of jurisdiction a judgment of the United States District Court for the District of Massachusetts, declaring that the plaintiff, Gloucester Marine Railways Corp. (Gloucester), had satisfied in full a State court judgment for $145,000 plus interest and costs against it held by the defendant, Charles Parisi, Inc. (Parisi), Gloucester filed an action in the Superior Court for a declaratory judgment seeking the same determination as in the Federal District Court. By agreement of the parties, the action was submitted to a Superior Court judge for decision on the basis of ninety-five exhibits, oral arguments, and written submissions of counsel. The judge determined that Gloucester's claim was barred by claim and issue preclusion and dismissed the action. We affirm based on the doctrine of claim preclusion.

For an understanding of our decision, we recite the complicated and lengthy procedural and factual history gleaned from the trial judge's colorful and comprehensive decision.

In February of 1975, the fishing vessel, St. Anthony, which was owned by Parisi, was being repaired in drydock on the premises of Gloucester when it was damaged by fire. At the time of the fire, Parisi carried a $135,000 hull insurance policy on the vessel issued by Glacier General Assurance Company (Glacier) and obtained through its insurance broker, Trans-Atlantic Marine, Inc. (Trans). Gloucester carried a $100,000 liability policy by insurers identified only as "London and American Companies." That policy also had been obtained through the same insurance broker, Trans. Unbeknownst to Gloucester at the time, two-thirds of its liability policy was written by Glacier and one-third by various underwriters at Lloyd's of London. Consequently, Glacier was both Parisi's hull insurance carrier and Gloucester's liability carrier, setting the stage for this legal imbroglio.

In May, 1975, Parisi brought an action in the Superior Court against Gloucester to recover damage to its vessel, which the complaint alleged had been caused by the negligence of Gloucester's employees. Glacier filed a motion to intervene in that action alleging, among other things, that the hull policy gave it the right to control the litigation initiated by Parisi and that Parisi was failing to cooperate. Glacier did not disclose to the court that it was also Gloucester's liability carrier and that its attorney was defending Gloucester in the action. The motion was allowed. In March, 1976, Parisi and Glacier reached a settlement as to the hull insurance. Under the agreement, Glacier agreed to pay out under its policy $100,000 as follows: $89,003.60 to the United States government, which held a lien on the vessel, and the balance to Parisi. In return for the payment, Parisi assigned to Glacier by way of subrogation its claim against Gloucester to the extent of $100,000, retained control of the litigation and title to the damaged vessel, and agreed that Glacier would receive the first $100,000 of any recovery Parisi obtained from Gloucester.

A jury awarded Parisi $145,000 in the tort action. Judgment entered in the Superior Court in the amount of $222,462.24 of which $77,462.24 amounted to interest. Gloucester filed a motion to amend the judgment to reduce it to $45,000 and interest in the sum of $24,039, alleging an accord and satisfaction in the amount of $100,000 between Glacier and Gloucester's liability insurers (Glacier and Lloyd's of London) as a result of the settlement agreement between Parisi and Glacier. The Superior Court judge allowed the motion and reduced the judgment to $45,000 plus interest of $24,039. On appeal to this court by Parisi, we reversed the amended judgment and reinstated the original judgment on the grounds that there was no exact identity between Parisi's hull insurance carrier and the underwriters of Gloucester's liability policy and no assignment of subrogation rights from Glacier to Gloucester. Charles Parisi, Inc. v. Gloucester Marine Rys., 16 Mass.App.Ct. 538, 540, 453 N.E.2d 459 (1983).

Gloucester then filed an appeal in the Appeals Court over the applicable interest rate to be applied to the judgment and Parisi's entitlement to the prejudgment interest on the first $100,000 of the judgment. In an unpublished opinion, Charles Parisi, Inc. v. Gloucester Maine Rys., 20 Mass.App.Ct. 1103, 480 N.E.2d 59 (1985), we held that the applicable interest rate was eight percent and not twelve percent but refused to consider Gloucester's assertion that Parisi was not entitled to interest on the judgment on the grounds that Gloucester had failed to raise that issue in its postjudgment motion before the Superior Court and had not filed a cross appeal from the amended judgment entered in the Superior Court.

Following the Appeals Court decisions, the president of Trans purportedly acting on behalf of Glacier, executed an assignment of Glacier's subrogation rights to Gloucester under its settlement agreement of March, 1976, with Parisi. At the time of the execution of that agreement, Trans had no authority to act for Glacier, which was in receivership.

Gloucester then initiated an action in the United States District Court for the District of Massachusetts (No. 86-603-K) seeking the same declaratory and injunctive relief as that presently sought in this action. The Federal judge ruled in favor of Gloucester on these identical claims. Specifically, he determined that the Superior Court and the Appeals Court in the earlier decision did not have before them the issues of Glacier's and its attorney's conflict of interest and Parisi's knowledge of that conflict. He found that Glacier's dual capacity as the hull insurer and one of the underwriters of Gloucester's liability policy precluded Parisi, who had knowledge of Glacier's dual role, from recovering the first $100,000 of the judgment. He also found that to allow Parisi to collect interest on the first $100,000 of the judgment in addition to the benefits from the previous payment of the $100,000 by Glacier under the March, 1976, settlement would be unconscionable and should not be permitted. Since Gloucester had already paid Parisi $45,000 on account of the judgment as well as interest thereon, the United States District Court declared that Gloucester's liability under the judgment had...