Interstate Litho Corp. v. Brown
| Citation | 255 F.3d 19 |
| Decision Date | 07 June 2001 |
| Docket Number | N,No. 00-2344,00-2344 |
| Parties | (1st Cir. 2001) INTERSTATE LITHO CORP., PLAINTIFF, APPELLANT, v. MARC A. BROWN, A/K/A MOSHE BROWN, INTEGRA TECHNICAL SERVICES, INC., AND FREIDEL'S MANUFACTURING, INC., DEFENDANTS, APPELLEES. o. 00-2522 Heard |
| Court | United States Courts of Appeals. United States Court of Appeals (1st Circuit) |
APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Joseph L. Tauro, U.S. District Judge] [Copyrighted Material Omitted]
[Copyrighted Material Omitted] Thomas A. Tarro III, with whom Christine M. Curley was on brief, for appellant.
Keith A. Minoff, with whom John E. Garber and Robinson Donovan Madden & Barry, P.C., were on brief, for appellee Marc A. Brown.
Paul R. Wood, with whom James R. Miller, Matthew D. Macy, and Miller Wood Welch, Llc, were on brief, for appellee Freidel's Manufacturing, Inc.
Before Selya, Lynch, and Lipez, Circuit Judges.
This commercial dispute concerns a failed attempt by the plaintiff, Interstate Litho Corporation, to acquire printing presses from a broker, defendant Marc A. Brown, doing business as Integra Technical Services, Inc. Trial resulted in a jury verdict against Interstate on its claims for return of a portion of its deposit from the seller of one press, defendant Freidel's Manufacturing, Inc., and for Brown on his counterclaims seeking lost profits on the deal. On appeal, Interstate argues that: (1) Brown lacked the capacity to sue because Integra had been dissolved at the time of the transactions at issue; (2) the purported contract with Brown for purchase of the presses was invalid; (3) its deposit to secure the presses was refundable; and (4) the award of lost profits resulted from flawed jury instructions and was not supported by the evidence. We affirm the judgment, and we grant Freidel's motion, but deny Brown's motion, for attorney's fees and double costs against Interstate.
In 1995, Interstate Litho Corporation engaged in negotiations with Marc A. Brown, a broker in used printing equipment, and his company, Integra Technical Services, concerning Interstate's potential acquisition of two used printing presses. One press, an eight color press, was owned by Freidel's Manufacturing, Inc. of Illinois; the other, a four color press, was owned by Graphic Engineering and located in Malaysia. The two presses were to be refurbished in Rhode Island by E.R. Smith Associates to Interstate's specifications.
Several proposals were prepared, and finally a proposal reflecting a $2.6 million price was signed by Henry Becker, Interstate's President, on August 25, 1995. At Brown's instructions, Interstate advanced a $75,000 deposit to ensure that the presses would be held. Fifty thousand dollars of the deposit was wired to Freidel's on August 29, 1995, to secure the eight color press; the remaining $25,000 was sent to Brown in his capacity as Integra's principal (of which $15,000 was forwarded to John Dulla, a broker assisting Brown with the purchase of a second press, the remainder staying with Brown). Freidel's pulled the eight color press off the market, turning away other prospective buyers. On September 27, 1995, Brown signed a contract to buy the eight color press from Freidel's. However, Brown never purchased the press from Freidel's because the deal with Interstate fell apart. Freidel's retained the deposit and eventually sold the press for less than it would have received from Brown.1
Interstate then sued Brown, Integra, and Freidel's, seeking the return of its $75,000 deposit. Integra counterclaimed for its lost commissions and profits on the deal, asserting claims against Interstate for breach of contract, fraud, and violation of Mass. Gen. Laws ch. 93A. Cross-motions for summary judgment were filed by the parties. Brown argued that Interstate had failed to provide evidence to allow a jury to pierce the corporate veil and hold him personally liable as an officer of Integra. Brown asserted that at all times he had acted in his representative capacity as an agent of Integra and that nothing in the record indicated otherwise. Interstate initially opposed Brown's summary judgment motion on the grounds that there was sufficient evidence that Brown, as Integra's only shareholder, officer, and director, had pervasive control over the corporation, and that Brown maintained no separation between the corporation and his home, where the corporation exclusively operated.
Interstate subsequently learned that Integra had been dissolved by the State of New Hampshire as of November 1, 1993, for failure to file reports and pay necessary fees. Interstate argued that because Brown had held himself out and solicited business under Integra's name after the corporation had been dissolved, Brown was personally liable as to Interstate's claims against Integra. Interstate also maintained that Integra had no capacity to assert any counterclaims against it.
In response, Brown sought leave to amend his counterclaims and substitute himself personally for Integra as the real party in interest.2 Brown recalled receiving letters from the corporate division of New Hampshire's Department of State, but believed he had taken the necessary steps to prevent dissolution. He said that he was not aware of Integra's dissolution at the time of the transactions at issue and did not learn about the dissolution until Interstate raised the issue on summary judgment.
The district court denied all the summary judgment motions as well as Brown's motion to amend and substitute himself personally for Integra. However, upon motion for reconsideration, the court allowed Brown's motion to amend and substitute himself as the real party in interest.
At trial, Interstate's principal claim was that Becker had not signed the purported contract for the sale of the presses. There was a battle of handwriting experts, and the jury rejected Interstate's suggestion that Becker's signature had been forged. Answering three special interrogatories, the jury rejected Interstate's claim for the return of the deposit and awarded Brown $187,500 on his counterclaim; the $50,000 portion of the deposit thus remained with Freidel's. Specifically, the jury determined that: (1) Marc A. Brown d/b/a Integra and Interstate Litho did not form a contract providing that monies paid by Interstate as a deposit were refundable; (2) Freidel's did not have money in its hands belonging to Interstate that in equity and good conscience it ought to pay back to Interstate; and (3) Interstate was in breach of its contract with Brown for the sale of two printing presses. Interstate's motion for a new trial was denied.
Interstate appeals, raising a plethora of arguments, many addressed to the district court's pre-trial and post-trial rulings.3 Most of those issues are subsumed into the contract questions submitted to the jury.4 Interstate initially makes related arguments as to capacity to sue: that Brown should not have been substituted for Integra as a counterclaim plaintiff and that there was no valid and enforceable contract between Brown and Interstate because Integra's dissolution rendered any subsequent contract with Interstate void. Interstate also argues that there was no enforceable contract because the purported contract -- the August 25, 1995 proposal signed by Interstate -- did not contain the contract's essential terms, failed to comply with the statute of frauds, and could not have been performed by Brown. In addition, Interstate maintains that there was insufficient evidence for the jury to reject its claim for return of its $75,000 deposit.
As to damages, Interstate argues that Brown's damage award cannot stand because it was based on speculation, not facts in evidence, and because the district court failed to properly instruct the jury in this regard.
Freidel's has filed a motion for attorney's fees and double costs on the ground that Interstate's appeal was frivolous. Brown has filed a similar motion. Interstate has filed oppositions to both motions.
The parties agree that Massachusetts law applies.
Interstate on appeal makes a series of arguments about capacity to sue. In doing so, it confuses two issues. The first issue is whether the district court abused its discretion by allowing the motion to amend in order to substitute Brown for Integra. The second issue is whether, given that the amendment was allowed, Brown properly stood in Integra's shoes as a matter of fact. As to the second issue, it has been waived because Interstate failed to make it an issue before the jury.
On the first issue, we review the allowance or denial of motions to amend the pleadings for abuse of discretion. See Ruiz v. Posadas de San Juan Assocs., 124 F.3d 243, 250 n.11 (1st Cir. 1997); Resolution Trust Corp. v. Gold, 30 F.3d 251, 253 (1st Cir. 1994).5 Motions for leave to amend "shall be freely given when justice so requires." Fed. R. Civ. P. 15(a); see also Resolution Trust, 30 F.3d at 253 () (internal quotation marks and citations omitted). Here, Brown sought to substitute himself personally for Integra on the ground that he was the real party in interest, Integra having been dissolved by operation of law before the events in issue. See Fed. R. Civ. P. 17(a) (). Brown maintained that at all times relevant he was Integra's sole officer, employee, and shareholder, and that he participated personally and directly in all transactions with Interstate.
The district court had before it conflicting accounts of the events surrounding Integra's dissolution. Interstate said Brown knew or should have known that Integra had already been dissolved for almost two years when it entered into discussions about the presses; Brown claimed that he believed Integra had...
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