Levin v. Dalva Brothers, Inc.

• Decision Date: 15 August 2006
• Docket Number: No. 05-2284.,05-2284.
• Citation: 459 F.3d 68
• Parties: Mark LEVIN and Becky Levin, Plaintiffs, Appellants, v. DALVA BROTHERS, INC., Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

459 F.3d 68

Mark LEVIN and Becky Levin, Plaintiffs, Appellants, v. DALVA BROTHERS, INC., Defendant, Appellee.

No. 05-2284.

United States Court of Appeals, First Circuit.

Heard June 7, 2006.

Decided August 15, 2006.

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Anthony A. Scibelli, with whom Brian E. Whiteley, C. Alex Hahn, and Scibelli, Whiteley and Stanganelli, LLP, were on brief, for appellants.

Philip M. Chiappone, with whom McCanliss & Early LLP, Robert Hillman, and Deutsch Williams, were on brief, for appellee.

Before SELYA, LIPEZ, and HOWARD, Circuit Judges.

HOWARD, Circuit Judge.

Through an agent, Mark and Becky Levin purchased several antiques from Dalva Brothers, Inc. (Dalva), an antiques dealer located in New York City. Later the Levins obtained information suggesting that the antiques were not as Dalva described them and were worth less than the approximately $750,000 that they paid. The Levins subsequently brought a diversity action in the District of Massachusetts against Dalva alleging fraud, negligent misrepresentation, breach of express warranties, unjust enrichment, and a violation of Mass. Gen. Laws ch. 93A. After a two-week trial, a jury found for Dalva on the misrepresentation and warranty claims, and the court found for Dalva on the Chapter 93A and unjust enrichment claims. The Levins appeal, challenging the district court's choice of law, the jury instructions and certain rulings on the admissibility of expert testimony.

I.

The Levins relocated from California to Massachusetts in 1992. They purchased a home on Boylston Street in Boston in 1992 and bought a historic mansion in Middleton, Rhode Island in 2000. The Levins retained Roger Harned, an interior designer based in California, to decorate these homes. Mrs. Levin directed Harned to travel around the United States and Europe to locate "outrageous" antiques for purchase.

In 1999 and 2000, Harned visited the Dalva gallery in New York City. On both occasions, Harned stated that he was a decorator but did not tell Dalva that he represented the Levins. Harned identified the antiques that he was interested in purchasing and received written and oral descriptions of the items. He then asked Dalva to send the "tear sheets" (descriptions and pictures) for the antiques to his office in California.

In 1999, Dalva sent Harned tear sheets for two vases, and in 2000, it sent Harned tear sheets for a grandfather clock and two commodes. Both times, after receiving these documents, Harned traveled to Massachusetts to discuss the items with the Levins. At Harned's urging, the Levins authorized him to purchase all of the items. The Levins wired the funds for the purchase price to Harned's bank account in California, and Harned paid Dalva with checks drawn from the account. At no time prior to the consummation of these transactions did Dalva know that Harned was buying the items on behalf of Massachusetts residents. After the purchases, Harned arranged to have the items shipped to Massachusetts for storage. Eventually, the vases were displayed at the Levins' Boston condominium, and the clock and commodes were displayed at their Rhode Island mansion.

The Levins' claims against Dalva stem from their allegation that the tear sheets and invoices misrepresented the antiques. The vase tear sheets described them as "fine and rare . . . probably St. Petersburg, early 19th century," and the invoices more definitively described them as "Russian, 19th century." The Levins claim that these vases were in fact French in origin, and less valuable than represented.

The tear sheet for the clock described it as an "exceptionally rare Regence grandfather's clock with superb vernis Martin decoration depicting Peace and Justice above a panel showing cupid and psyche . . . French, 18th Century." The Levins claim that the clock was in fact an amalgam of parts and pieces from the late 18th and 19th centuries and originated in Italy. The Levins' expert testified that they overpaid for the clock by more than $500,000.

The tear sheets for the commodes described one of them as a "fine transitional marquetry commode . . . French 18th century," and the other as a "transitional Louis XV/XVI marquetry commode with pictoral marquetry depicting ruins . . . French 18th century." The Levins claim that, in fact, these were 19th and 20th century pieces of furniture that were worth a fraction of what they paid.

II.

A. Choice of Law

The first issue on appeal is whether the district court erred in applying New York law (and not Massachusetts law). The Levins challenge this ruling on two grounds: (1) the court abused its discretion by considering Dalva's argument for New York law because Dalva did not raise the argument until the first day of trial, and (2) the court erred by deciding that New York law governs. We begin with the waiver issue.

The Levins are asking us to order a new trial on the ground that the district court permitted Dalva to raise an argument too late in the proceeding. Such orders are rare. Loinaz v. EG & G, Inc., 910 F.2d 1, 6 (1st Cir.1990). "Decisions regarding the management of the trial calendar and the courtroom proceedings are particularly within the province of the trial judge, and her determination[s] will not be disturbed absent a finding that she abused her discretion." Id. Reversal because of a district court's case management ruling also requires the appealing party to demonstrate prejudice. See id. at 7 ("If we believe that the trial judge's discretionary decisions have resulted in undue prejudice to the appellant's case, we will reverse.").

The parties each cite cases where a court either permitted or forbade a party from raising a choice-of-law argument late in the proceedings. E.g., Bergin v. Dartmouth Pharm., Inc., 326 F.Supp.2d 179, 180 n. 1 (D.Mass.2004) (deeming choice-of-law argument waived); PI, Inc. v. Ogle, 932 F.Supp. 80, 82 (S.D.N.Y.1996) (same); Torah Soft Ltd. v. Drosnin, 224 F.Supp.2d 704, 718-19 (S.D.N.Y.2002) (permitting choice of law argument to be raised late in litigation). The cases cited do not establish a definitive point by which a litigant must raise a choice-of-law argument; rather, each was decided based on the case's own facts and equities. These dueling citations serve only to illustrate the essential point: case supervision is the primary responsibility of the trial court.

Here, Dalva raised the choice of law argument on the first day of trial. But prior to that point in the litigation the issue of choice of law had never been squarely presented by either party, and the court had not issued any ruling on the issue.¹ Moreover, there is nothing in the record suggesting that Dalva intentionally waited to raise the choice-of-law issue to gain an unfair advantage. In these circumstances, we think that the district court was within its discretion in permitting Dalva to raise the argument when it did. See Gen. Signal Corp. v. MCI Telecomm. Corp., 66 F.3d 1500, 1505 (9th Cir. 1995) (affirming ruling that a party did not waive choice of law argument offered late in the litigation where there was no evidence of an intentional delay and "there was no earlier ruling on choice of law").

Even if we questioned the court's ruling (which we do not), the Levins have failed to demonstrate prejudice. They contend that Dalva's late argument harmed them because it required them to "wrestle with new jury instructions and related issues under New York law." In complex civil litigation, legal issues frequently arise mid-trial as the court prepares jury instructions and makes other rulings. The court notified the parties on the first day of a two-week trial (during which it was holding only half-day sessions) that it wanted briefing on choice of law. To expect counsel to meet this requirement does not appear unreasonable and, if the Levins needed more time, they should have asked for it. Cf. JOM, Inc. v. Adell Plastics, Inc., 193 F.3d 47, 52 n. 2 (1st Cir.1999) (per curiam) ("[A] party claiming prejudice resulting from its belated receipt of evidence is poorly positioned on appeal if it elected to forego a request for [a] continuance below.").

The Levins also seek to establish prejudice by identifying several ways in which they believe that applying New York law was unfavorable to them. But these arguments do not establish prejudice flowing from the consideration of the choice-of-law issue, they suggest only that the district court's decision to apply New York law, if incorrect, was not harmless error. See P.R. Hosp. Supply, Inc. v. Boston Scientific Corp., 426 F.3d 503, 507 (1st Cir.2005).

We turn next to whether the district court erred by deciding that New York law governed the Levin's claims. We review choice-of-law determinations de novo. See Reicher v. Berkshire Life Ins. Co. of Am., 360 F.3d 1, 4 (1st Cir.2004). A federal court sitting in diversity applies state substantive law. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). To determine the applicable substantive law, the federal court applies the choice-of-law principles of the forum state, here, Massachusetts. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941).

An initial task of a choice-of-law analysis is to determine whether there is an actual conflict between the substantive law of the interested jurisdictions. See Millipore Corp. v. Travelers Indem. Co., 115 F.3d 21, 29 (1st Cir.1997). The parties agree that such a conflict exists concerning the fraud claims. Compare Crigger v. Fahnestock & Co., Inc., 443 F.3d 230, 234 (2d Cir.2006) (stating that, under New York law, fraud must be proven by clear and convincing evidence), with Compagnie De Reassurance D'Ile de France v. New England Reinsurance Corp., 57 F.3d 56, 72 (1st Cir.1995) (stating that the preponderance of the evidence standard applies to fraud claims under Massachusetts law). Moreover, as discussed infra, under New York...