John's Insulation, Inc. v. L. Addison and Associates, Inc.

Decision Date06 April 1998
Docket NumberNo. 97-2286,97-2286
PartiesJOHN'S INSULATION, INC., Etc., Plaintiff, Appellant, v. L. ADDISON AND ASSOCIATES, INC., et al., Defendants--Appellees. . Heard
CourtU.S. Court of Appeals — First Circuit

Barry J. Byrnes for appellant.

Paul M. Rezendes, with whom Nelson P. Lovins, Sarah T. Paine and Lovins & Metcalf were on brief for appellees.

Before TORRUELLA, Chief Judge, BOWNES, Senior Circuit Judge, and STAHL, Circuit Judge.

TORRUELLA, Chief Judge.

Plaintiff-appellant John's Insulation, Inc., appeals from the dismissal of its complaint against defendant-appellee L. Addison and Associates, Inc., and from the default judgment entered on Addison's counterclaims against John's Insulation. John's Insulation also appeals from several interlocutory orders. Although the appeal from the interlocutory orders presents some worrisome questions, we are constrained to affirm the judgment.

I. Background

John's Insulation, Inc., an asbestos removal specialist, was retained as a subcontractor by L. Addison and Associates, Inc., a plumbing contractor, to assist in the performance of certain fire and safety work at a Veteran's Affairs Hospital located in Jamaica Plains, Boston. In April 1991, after experiencing delays and other construction problems, John's Insulation filed a complaint in the U.S. District Court for the District of Massachusetts against Addison and the Hartford Casualty & Insurance Company (the underwriter of the payment and performance bonds), alleging a claim against Hartford under the Miller Act, 40 U.S.C. §§ 270a-270d, and breach of contract and quantum meruit claims under Massachusetts law against Addison. Addison, in turn, asserted three counterclaims against John's Insulation based on breach of contract.

Several intervening events complicated the picture. In 1994, John's Insulation filed a Chapter 11 petition for reorganization in the United States Bankruptcy Court for the Eastern District of New York. All proceedings in the original suit were automatically stayed. Addison, however, filed a notice of claim with the bankruptcy court for damages arising from John's Insulation's alleged contract violations, and moved to modify the stay to permit the district court action to proceed. The bankruptcy court granted the motion to modify the stay, allowing Addison to assert its claims as a set-off to John's Insulation's claims. Any recovery beyond the set-off, however, would remain subject to the stay.

On the twelfth day of trial, September 22, 1995, the district court declared a mistrial because it had determined, as a matter of law, that the plaintiff's chief witness, John's Insulation Secretary and Treasurer John Fenn, lacked any credibility. After the jury exited the courtroom, plaintiff's counsel, Mr. Barry J. Byrnes, asked for the names and addresses of all the jurors. After being advised of Mr. Byrnes' request, the court responded that no jurors could be interviewed without its express permission, and that counsel would be held in contempt if any attempts were made to interview the jurors without such permission. The counselor replied that he would research the law on that issue and make a formal application for permission to interview the jurors. The court noted that any such motion would be denied because the practice of the court was not to interview jurors. The court then said: "My next ruling is that your motion to appear before this Court is revoked." Finally, the court also noted that Fenn should not appear as a witness in any future trial in this case.

In a written order memorializing its bench rulings, the district court held "as a matter of law that [Fenn] is absolutely incredible and without sufficient personal knowledge of the events concerning which he testified." The court therefore declared a mistrial, "in order that the plaintiff's cause of action be not prejudiced, ... [and] so that the plaintiff is able to present his evidence before a new jury untainted by the witness Fenn's incredible testimony." Id. Furthermore, the district court revoked the authorization it had previously granted to Barry Byrnes, the plaintiff's attorney, to appear pro hac vice. Finally, the district court stayed all further proceedings in the case pending the resolution of John's Insulation's bankruptcy petition. The written order, however, did not indicate whether Fenn had been permanently barred from appearing as a witness in any future proceedings in this case.

John's Insulation appealed these orders. On February 28, 1996, a prior panel of this court dismissed, as a premature appeal from interlocutory orders, the appeal as to all district court orders except the order staying the proceedings until the resolution of the appellant's bankruptcy case. With regard to the stay order, we directed the district court to specify its reasons therefor. On March 26, 1996, the district court responded to our order, stating that it refused to lift the stay. The full text of the body of its answer reads as follows:

To allow the plaintiff to proceed to trial while in Bankruptcy Court provides it with the tactical advantage over the defendants of being in a "no lose" situation, a status which the plaintiff has used to conduct itself in a most antagonistic and unprofessional manner toward the Court and toward the defendants during the course of these proceedings. Such a manner might well be designed to cover up a case lacking in any merit. In addition, plaintiff itself has moved in the United States Court of Appeals to stay the proceedings in the District Court. It should also be noted that plaintiff's attorney Byrnes' permission to appear in the District Court has been revoked and plaintiff has failed to designate another attorney to represent it. This Court shall not try this case as long as Attorney Byrnes continues to unauthorizedly appear as counsel of record for the plaintiff.

Upon receipt of the district court's answer, we vacated the stay and remanded the case to the district court for further proceedings. In the meantime, John's Insulation filed a motion requesting that the district court transfer the proceedings to the U.S. Bankruptcy Court for the Eastern District of New York, in which its bankruptcy case was pending. On remand, the district court denied the motion to transfer the case, and granted John's Insulation's local counsel leave to withdraw from representing John's, leaving it without an attorney of record.

In November 1996, Addison moved to return the case to the trial list and for an order requiring plaintiff's counsel to make an appearance, on penalty of the dismissal of John's Insulation's complaint and of entry of default judgment on Addison's counterclaims. Mr. Fenn responded to the motion by means of a letter dated January 3, 1997, in which he stated that John's Insulation had no intention of abandoning its complaint, and that it was still searching for replacement counsel.

In March 1997, approximately one year after the stay had been vacated and the case remanded to the district court, the court held a conference in chambers, during which Mr. Fenn appeared on behalf of John's Insulation to request additional time to obtain new counsel. The court granted John's Insulation until June 3, 1997, to retain replacement counsel, and denied Addison's request to have the case returned to the trial list. Mr. Fenn responded by filing an affidavit in which he requested that, if John's Insulation were unable to hire new counsel, and the court were to dismiss its complaint, the counterclaims be transferred to the bankruptcy court. On May 20, 1997, the court scheduled a status conference on July 7, 1997. On May 30, 1997, Mr. Fenn wrote a letter to the court requesting that the conference be rescheduled because he had previously arranged a business trip for that date and therefore would be unable to attend. He also advised the court that John's Insulation had been unable to retain an attorney due to its financial situation, and requested additional time to hire an attorney who would request a smaller retainer. After the defendants opposed the motion on the basis that a corporation, such as John's Insulation, cannot be represented by a non-lawyer, and that John's had been aware since September 1995 that it was required to obtain new counsel, the district court denied the request.

At the status conference, no one made an appearance on behalf of John's Insulation. Three days later, the defendants moved to dismiss John's Insulation's remaining causes of action and for the entry of default judgment on their counterclaims. The district court granted the motion, advised that it would hold a hearing to assess damages on Addison's counterclaims, and ordered the defendants to submit documentation in support of their claim for damages. The district court did not indicate whether the sanction was imposed under Fed.R.Civ.P. 37, 41(b), or 55(b)(2), or, instead, pursuant to its inherent power to sanction abuses. On September 22, 1997, upon receipt of the documentation, the court directed the entry of default judgment on Addison's counterclaims in the amount of $734,825.87, plus pre-judgment interest at the rate of 5.58%, and costs.

John's Insulation now seeks review of the final orders dismissing the complaint and entering default judgment on Addison's counterclaims, as well as from a number of the district court's interlocutory orders, including the order declaring a mistrial, the order revoking Mr. Byrnes' authorization to appear pro hac vice before the court, and the order disqualifying Mr. Fenn from testifying as an expert witness.

II. Jurisdiction

The notice of appeal in this case indicates that John's Insulation is appealing from the judgment dated September 22, 1997, "and each and every part thereof." Because the judgment conclusively settled all disputes in this case, it is a final decision appealable as of right. See Coleman v....

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