Hatch v. Trail King Indus., Inc.

• Decision Date: 02 November 2012
• Docket Number: No. 12–1473.,12–1473.
• Citation: 699 F.3d 38
• Parties: Dean F. HATCH; Mary L. Hatch, Plaintiffs, Appellants, v. TRAIL KING INDUSTRIES, INC., Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

699 F.3d 38

Dean F. HATCH; Mary L. Hatch, Plaintiffs, Appellants,

v.TRAIL KING INDUSTRIES, INC., Defendant, Appellee.

No. 12–1473.

United States Court of Appeals, First Circuit.

Heard Oct. 2, 2012.

Decided Nov. 2, 2012.

J. Michael Conley, with whom Kenney & Conley, P.C. was on brief, for appellants.

Myles W. McDonough, with whom Christopher M. Reilly and Sloane and Walsh, LLP were on brief, for appellee.

Before LYNCH, Chief Judge, BOUDIN and LIPEZ, Circuit Judges.

LYNCH, Chief Judge.

This case involves the doctrine of claim preclusion.

Dean Hatch was severely injured in a workplace accident and sued Trail King, the custom manufacturer of the trailer involved in the accident, in October 2007. The sad details of the accident and resulting injuries are set forth in our opinion in Hatch v. Trail King Industries, Inc., 656 F.3d 59 (1st Cir.2011).

There, we affirmed a jury's finding, in September of 2010, that defendant had not been negligent nor in breach of any warranty, against claims of instructional error and error in the ruling on a motion in limine. Id. at 60–61. On January 19, 2010, in the trial court in that diversity case, plaintiffs had belatedly attempted to amend their complaint to add another claim, one under Mass. Gen. Laws c. 93A for unfair and deceptive trade practices. The trial judge denied the motion, finding the effort to amend untimely. The plaintiffs did not appeal this denial in their earlier appeal.

This case, which started in 2010 and was stayed during the 2007 suit, concerns whether the plaintiffs may now maintain an independent suit for the c. 93A claims against Trail King. The district court thought not, for two reasons: (1) this case constituted impermissible claim-splitting; and (2) “having heard the evidence in the jury trial, [it] s[aw] no basis on which it could reach a different result,” because “the issues tried to the jury ... are identical to any meriting 93A consideration.” The trial court dismissed those claims with prejudice.

On appeal, plaintiffs argue broadly that Mass. Gen. Laws c. 93A, § 9(8) provides an exception to the normal rules of res judicata, a question the state's highest court has not directly addressed. But context is everything, and on the facts of this case, we think that both the federal courts and the state courts would agree that the plaintiffs may not now bring this c. 93A claim because of the failure to appeal from the denial of the motion to amend. That resolution satisfies any concerns under Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), and avoids extensive discussion of the effects of the Supreme Court's opinion in Semtek International Inc. v. Lockheed Martin Corp., 531 U.S. 497, 121 S.Ct. 1021, 149 L.Ed.2d 32 (2001).

I.

The procedural history is important, so it is set forth in some detail. In October 2007, plaintiffs filed a complaint against Trail King asserting negligence, breach of warranty, and loss of consortium (the “2007 action”). On February 21, 2008, the parties submitted a joint statement to the district court setting a joint discovery plan and motion schedule, which in relevant part set a deadline of May 15, 2009 for amending or supplementing the pleadings. The district court accepted that proposed date as the deadline for filing amendments. Plaintiffs never requested an extension of the deadline to amend the pleadings and the court never altered it, although the trial court granted a number of extensions for the completion of discovery.

On January 15, 2010, Trail King moved for summary judgment. Four days later, on January 19, 2010, more than eight months after the deadline for amending the pleadings, and more than four months after the deadline for completion of fact discovery, plaintiffs moved the court for leave to file a second amended complaint, asserting claims under Mass. Gen. Laws c. 93A, § 2.

Specifically, plaintiffs sought to add c. 93A unfair and deceptive act or practice claims for Trail King's alleged breach of warranty as well as for certain post-delivery conduct.¹ Defendant opposed the motion for leave to amend, arguing that the amendment was futile because it failed to state a claim upon which relief could be granted.

The district court, on March 2, 2010, denied plaintiffs' motion for leave to amend, stating that “under the discovery schedule amendments to the pleadings were due in May of 2009.”

Plaintiffs sought reconsideration, representing that “[t]he anticipated amendment would simply be to add a claim pursuant to M.G.L. c. 93A mirroring the existing warranty claims.” In their supporting memorandum of law, plaintiffs represented that “because the 93A claim will essentially rise or fall with Plaintiffs' claim for breach of warranty, the presence of the additional claim will not impact in any way the parties' pending motions for summary judgment.” Finally, in their renewed motion for reconsideration, plaintiffs wrote that “the inclusion of a theory pursuant to Chapter 93A will not change the trial or the evidence in any material respect.” The court denied both the motion for reconsideration and the renewed motion for reconsideration.

After being denied, plaintiffs filed a new action in Massachusetts Superior Court on June 14, 2010. This complaint asserted the exact same grounds for c. 93A relief that had been set forth in the proposed second amended complaint in the 2007 action: that as a matter of law, Trail King's breach of warranty constituted an unfair and deceptive act or practice, and that the four post-sale actions or inactions by defendant did too.

Defendants removed the case to federal court on diversity grounds on July 12, 2010. Trail King moved to dismiss the suit and for a stay in the alternative. The case was then transferred from Springfield to Boston and was assigned to the same judge who was presiding over the 2007 action and who had denied the proposed second amended complaint as untimely. The district court then stayed the c. 93A action, on August 5, 2010, and reserved ruling on defendant's motion to dismiss. In opposing defendant's motion to dismiss, plaintiffs expressly stated that they did not oppose the granting of a stay.

The 2007 action proceeded to a six-day jury trial.² The jury returned a verdict in favor of defendant, rejecting both the negligence and breach of warranty claims, and the court entered judgment for the defendant on September 14, 2010.

Plaintiffs appealed the adverse verdict to this court. Plaintiffs challenged certain jury instructions and a ruling on a motion in limine, but not the trial court's denial of their motion for leave to amend, and we affirmed on August 29, 2011. Hatch, 656 F.3d at 59–61.

As to the action filed in 2010, on March 1, 2012, plaintiffs moved to transfer the stayed c. 93A action to the Springfield Division. The Boston district court denied the motion; it also reinstated Trail King's motion to dismiss. On April 11, 2012, the district court dismissed the case with prejudice, ruling that:

The court agrees with defendant Trail King that by filing a second and separate Chapter 93A case in Superior Court, plaintiffs have engaged in impermissibleclaim-splitting. Further, although the court recognizes that a judge may reach a different result on a 93A claim than the jurys [sic] verdict on non–93A claims, here the issues tried to the jury and reached in favor of the defendant (and affirmed by the First Circuit) are identical to any meriting 93A consideration. The court, having heard the evidence in the jury trial, see [sic] no basis on which it could reach a different result. The case is dismissed with prejudice and the clerk will close the case.

This timely appeal followed.

II.

Plaintiffs present this case as being about whether a separate c. 93A action may be maintained after judgment had entered on the earlier action on non-c.93A claims arising out of the same transaction or occurrence. They argue that the preclusive effect of the decision in the 2007 action is to be determined by Massachusetts res judicata rules pursuant to the Supreme Court's decision in Semtek, 531 U.S. 497, 121 S.Ct. 1021. From that premise, they base their argument on Mass. Gen. Laws c. 93A, § 9(8), which provides that:

Except as provided in section ten, recovering or failing to recover an award of damages or other relief in any administrative or judicial proceeding, except proceedings authorized by this section, by any person entitled to bring an action under this section, shall not constitute a bar to, or limitation upon relief authorized by this section.

They argue this means that claims brought under § 9 are excluded from the traditional rules of preclusion. The Massachusetts Supreme Judicial Court (“SJC”) has not provided an interpretation of this statutory provision. See Anderson v. Phoenix Inv. Counsel of Bos., Inc., 387 Mass. 444, 440 N.E.2d 1164, 1167 (1982) (stating that the SJC need not determine the modifying effect, if any, that the provision has on claim preclusion or issue preclusion).³ Plaintiffs do concede that c. 93A, § 9(8) was passed as part of an effort to supersede the ruling in Gordon v. Hardware Mutual Casualty Co., 361 Mass. 582, 281 N.E.2d 573 (1972), which required the exhaustion of administrative remedies as a condition of a § 9 claim, id. at 577;see Keen v. W. New Eng. Coll., 23 Mass.App.Ct. 84, 499 N.E.2d 310, 311 (1986), but they argue § 9(8) has a broader effect.

The question before us is not whether a separate c. 93A claim that has never been raised in a motion to amend in an earlier action can be maintained in a later separate action. Rather, the core question before us is whether plaintiffs may bring a second action asserting c. 93A claims when they earlier sought leave to amend their complaint to add the c. 93A claims, the proposed amendment was denied as untimely, the underlying case proceeded to a decision on the merits, the denial of leave to amend was not appealed, and judgment was entered. We hold...