Sea-Land Service, Inc. v. R.V. D'Alfonso Co., Inc., SEA-LAND

• Decision Date: 03 February 1984
• Docket Number: SEA-LAND,No. 83-1625,83-1625
• Citation: 727 F.2d 1
• Parties: SERVICE, INC., Plaintiff, Appellee, v. R.V. D'ALFONSO CO., INC., Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 1

727 F.2d 1

SEA-LAND SERVICE, INC., Plaintiff, Appellee, v. R.V. D'ALFONSO CO., INC., Defendant, Appellant.

No. 83-1625.

United States Court of Appeals First Circuit.

Argued Jan. 4, 1984.

Decided Feb. 3, 1984.

F. Joseph Gentili, Lexington, Mass., with whom Russian & Labonte, Lexington, Mass., was on brief, for defendant, appellant.

Bertram E. Snyder, Boston, Mass., with whom Harold W. Pskowski, and Hoch, Flanagan & Snyder, P.C., Boston, Mass., were on brief, for plaintiff, appellee.

Before CAMPBELL, Chief Judge, ALDRICH, Circuit Judge, and PETTINE, ^* Senior District Judge.

BAILEY ALDRICH, Senior Circuit Judge.

In December, 1980 plaintiff Sea-Land Service, Inc., an ocean freight forwarder, arranged for the shipment of goods belonging to defendant R.V. D'Alfonso, Inc., from Italy to Boston. Defendant paid the freight charges, but on receipt of the goods, on January 12, 1981, claimed damage in transit in the amount of $16,226. Six other shipments were made for defendant, the charges coming to $15,320. Plaintiff declined to pay the damage claim, and defendant, in turn, declined to pay the $15,320.

In November, 1981 plaintiff filed the present complaint to recover the freight charges. Prior to the date defendant's response was due, the parties agreed to extend the time. The content of the document filed was as follows.

"It is hereby stipulated by the plaintiff, Sea-Land Service, Inc., and the defendant R.V. D'Alfonso Co., Inc., that the time within which defendant may respond to plaintiff's Complaint be extended up to and including December 31, 1981." (Emphasis suppl.)

Two more stipulations were filed, identical except as to date, ultimately extending the time to respond to January 19, 1981. On that day defendant filed an answer to the complaint, and a counterclaim demanding the $16,226. On January 29 plaintiff filed its answer to the counterclaim, asserting, inter alia, the statute of limitations. This being a COGSA claim, the statute had, indeed, run one week before the counterclaim was filed. Carriage of Goods by Sea Act, 46 U.S.C. Sec. 1303(6).

After various discovery procedures, it appearing that there was no defense offered to any of the freight bills, plaintiff moved for summary judgment on the complaint on the merits--the granting of which was not objected to--and on the counterclaim on the ground of the statute. With respect to the counterclaim, the court held that the burden was on defendant to show that plaintiff intended a waiver of the statute, and that it failed because the language of the stipulation, having been chosen by defendant, must be construed against it. Hence there was "no genuine issue of fact."

The court, at the same time, acknowledged the possibility of further evidence changing the result, and offered the parties the opportunity of filing affidavits. This was done, but the court, in a second memorandum, concluded they effected no change. From the resulting summary judgment, defendant appeals. We reverse.

The court was correct that there was a burden on defendant. The burden was not to show an affirmative intent to waive the statute, but merely to show conduct leading defendant to believe there would be no consequences from a late filing. Bergeron v. Mansour, 1 Cir., 1945, 152 F.2d 27, 30. See also, Garfinkle v. Chestnut Hill Mort. Corp., 1 Cir., 1982, 679 F.2d 276, 277; LaBonte v. New York, New Haven & Hartford R. Co., 1960, 341 Mass. 127, 167 N.E.2d 629. As we said in Bergeron, ante, at 30,

"A person is estopped from denying the consequences of his conduct where that conduct has been such as to induce another to change his position in good faith or such that a reasonable man would rely upon the representations made. [Citation omitted.] Nor is an express promise to waive the statute of limitations necessary to estop a party from pleading the statute as a defense."

Obviously, defendant changed its position; had plaintiff declined to stipulate, there would have been ample time to file the counterclaim before the statute had run. To let defendant believe it need not do this, and then take advantage of the delay, would seem the heighth of unfairness. The only question to us, accordingly, was whether plaintiff reasonably understood, either from the language, or the circumstances, that a counterclaim was within the purview of the stipulation's word "respond."

The court was correct that this was a permissive counterclaim. Nonetheless, a permissive as well as a compulsory counterclaim "may ... diminish or defeat the recovery sought by the opposing party," F.R.Civ.P. 13(c), and is considered part of the answer. F.R.Civ.P. 7(a) reads, "(a) Pleadings. There shall be a complaint and an answer; a reply to a counterclaim denominated as such; an answer to a cross-claim ...." Further, F.R.Civ.P. 12(b) uses "responsive pleading" to describe any permitted response to a claim. The court gave no reason why a permissive counterclaim should not be considered a responsive pleading, and we do not share its finding of ambiguity. Cf. Bechtel v. Liberty Nat. Bank, 9 Cir., 1976, 534 F.2d 1335, 1341, "[I]f an extension of time has been allowed for filing a responsive pleading, logic and reason would appear to dictate that the extension should apply to a motion as well." If one states the general, there should be no need to specify the particular; the whole includes all of its parts.

Even, however, if the word "respond" should be considered ambiguous, with its meaning subject to parol evidence and governed by the particular understanding of the parties, we believe the court applied too strict a standard. The principle of construing ambiguous language against the drafter is but one of the rules of construction, see Chelsea Industries, Inc. v. AccuRay Leasing Corp., 1 Cir., 1983, 699 F.2d 58, 61; one must look to all the circumstances. Rizzo v. Cunningham, 1939, 303 Mass. 16, 20-21, 20 N.E.2d 471, cited with approval in Gillentine v. McKeand, 1 Cir., 1970, 426 F.2d 717, 721 n. 13. There were more important circumstances here than the fact that defendant drew the stipulation. The sole issue between the parties from the beginning was the dispute over the $16,228 damage claim; it is apparent that defendant was withholding payment of due freight charges simply as an exercise in self-help to secure what it felt was owed it for damages. Nor was plaintiff's counsel in ignorance; when he agreed to the extension he was aware of there being a further dispute. ¹ These circumstances confirm rather than rebut, what we regard as included within the word "respond" in any event.

This reasoning does not disturb our dissenting brother; the fault is that it fails to go far enough. He agrees that the stipulation "of course extended the 20 days as to all matters which defendant was entitled to file as part of his answer, including under present day rules, permissive counterclaims." He does not dispute, footnote 1, that plaintiff's counsel knew of a factual basis for a counterclaim, a matter of great importance to us, even if counsel did not know the precise details. "But that is not the issue. The issue is whether the lawyers also meant to waive the statute of limitations."

Our brother's concern goes to the ethical impropriety of waiving a client's defense. But what did counsel waive? The statute of limitations is not a matter of dollars and cents; its purpose is to protect against stale claims. Had counsel not consented to a late filing, this claim would have been timely filed. We cannot share the thought that it would be unethical not to assert a defense that would never have existed but for counsel's conduct. The facts in Bergeron v. Mansour differ, but the principle is the same: If one's "conduct has been such as to induce another to change his position in good faith or such that a reasonable man would rely upon representations made," that should be it, no express promise is needed for the statute.

Short extensions of time are normal courtesies between lawyers. We agree with our brother that a lawyer cannot, simply as a matter of courtesy, waive an accrued defense, but that is not the same thing as extending a courtesy when the defense had not accrued, and never would have accrued had the courtesy not been extended. Ethical consideration 7-7, cited by our brother, states that lawyers should not make decisions "substantially prejudicing" the rights of their client. We see no substantial prejudice effected here. The court's ruling resulted in a windfall for the plaintiff and inflicted enormous loss to the defendant. We cannot agree with our brother that both lawyers were in a vise.

We observe, finally, that the court's strict rule could create a serious problem for lawyers vis-a-vis their clients. Must a lawyer assert technical constructions of what was extended as a courtesy, when, later, a substantive advantage for his client is perceived? ² To do so could well be against a lawyer's personal interest in his reputation with the bar. Plaintiff's counsel here was quick to say in his affidavit that he did not intend "sharp" practice. This may well be entirely true, but from defendant's standpoint the result of the court's construction is the same. It is important to be careful with the language of one's agreements, but to apply a rule approaching strictissmi juris to lawyers' daily contacts inter sese would be unfortunate quite apart from and far beyond the result reached in this particular case.

Defendant having reasonably understood that it was not to be penalized for a brief delay in filing its counterclaim, and having used appropriate language therefor, the court should have given that understanding a fair effect.

Reversed.

LEVIN H. CAMPBELL, Chief Judge (dissenting).

I disagree with my colleagues because I believe the stipulation signed by the two attorneys--saying only "that the time within which defendant may respond to plaintiff's Complaint be extended ...."--was, at best, ambiguous as to...