Liberty Leather Corp. v. Callum

• Decision Date: 18 May 1981
• Docket Number: No. 80-1553,80-1553
• Citation: 653 F.2d 694
• Parties: LIBERTY LEATHER CORPORATION, Plaintiff-Appellant, v. Richard CALLUM and Willard Helburn, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 694

653 F.2d 694

LIBERTY LEATHER CORPORATION, Plaintiff-Appellant, v. Richard CALLUM and Willard Helburn, Inc., Defendants-Appellees.

No. 80-1553.

United States Court of Appeals, First Circuit.

Argued Feb. 10, 1981.

Decided May 18, 1981.

Edward R. Lev, Boston, Mass., with whom Louis A. Rodriguez, and Sullivan & Worcester, Boston, Mass., were on brief, for plaintiff-appellant.

J. Owen Todd, Boston, Mass., with whom John J. Regan, and Hale & Dorr, Boston, Mass., were on brief, for defendant-appellee Richard Callum.

John P. White, Jr., Boston, Mass., with whom Michael H. Riley and White, Inker, Aronson, Connelly & Norton, P. C., Boston, Mass., were on brief, for defendant-appellee Willard Helburn, Inc.

Before COFFIN, Chief Judge, WINTER, Circuit Judge, ^* and SKINNER, District Judge. ^**

WINTER, Circuit Judge.

Liberty Leather Corporation (Liberty) appeals from orders of the district court (a) directing a verdict for defendants Richard Callum and Willard Helburn, Inc. (Helburn) on Counts I (fraud), II (breach of promise), and III (tortious interference with a business relationship) of Liberty's amended complaint, and (b) denying Liberty leave to amend its complaint to include a cause of action for interference with its discovery efforts. The district court also entered judgment for the defendants on the jury's verdict on Count IV alleging defamation and Liberty does not appeal from this action on its merits. It does argue that if entitled to a new trial on any other count a complete new trial, including a new trial on Count IV, should be ordered. We find no merit in its several contentions, and we affirm.

I.

This diversity action arises from Liberty's unsuccessful attempt to purchase all of the stock of Helburn. Both Liberty and Helburn are corporations which buy animal hides for tanning and resale to makers of leather goods. Callum was president, a director, and owner of 38 percent of Helburn's stock. Rene Perrone is president and sole shareholder of Liberty. Beginning in 1978, with business failing, the Helburn shareholders sought purchasers of all of the corporation's stock. In January 1979, Callum met several times with Perrone to negotiate a purchase of Helburn stock by Liberty. On February 12, 1979, Perrone signed a written offer to purchase 100 percent of Helburn's stock for $688,000. At that meeting Perrone also agreed to employ Callum at $30,000 per year, but refused to assure Callum that he could continue to work in Maine or Massachusetts, the sites of Helburn's operations, rather than move to New York, the site of Liberty's.

Callum agreed to submit Liberty's offer to the Helburn shareholders. The dispute in this case centers around other representations which Perrone alleges Callum also made at that time and soon thereafter. The complaint alleges that Callum promised Liberty an opportunity to increase its $688,000 bid if another purchaser offered more. Perrone testified that Callum stated that he was "positive" Liberty's offer would be accepted. Perrone further testified that Callum called him on February 13, 1979, assured him that completion of the deal was "imminent," and advised him to stop purchasing New Zealand sheepskins because Helburn had a substantial inventory of such skins.

Two days later, on February 15, 1979, Callum met with Arnold Saltzman, of Seagrave, Inc., and secured a written offer by Seagrave to purchase all Helburn stock for $690,000. Saltzman agreed to employ Callum for about $30,000 per year and agreed that Callum could continue to work in Maine or Massachusetts. Callum admitted at trial that he preferred to remain in Maine or Massachusetts rather than move to New York.

According to Perrone, Callum telephoned him on February 15 or 16 to ask if Perrone would raise his offer to $750,000 and Perrone agreed. ¹ Perrone asked whether he should communicate his new offer directly to other Helburn shareholders, but, he testified, Callum advised him not to do so because it would hurt his chances for success.

On February 20, Callum met with the Helburn Board of Directors and then with the shareholders. At neither meeting did he state that Liberty had offered $750,000 for Helburn stock. According to the testimony of two stockholders, Callum told the assembled shareholders that Liberty was backed by "Mafia money." The Helburn shareholders voted unanimously to reject Liberty's offer and accept the Seagrave bid.

After learning that his bid had been rejected, Perrone requested and was granted permission to address a March 9 meeting of Helburn's stockholders called for the purpose of reconsidering the Seagrave and Liberty offers. Perrone related to the shareholders the entire history of his communications with Callum, including his offer of $750,000 for the Helburn stock. In spite of Perrone's representations, the Helburn shareholders voted 60 percent to 40 percent to confirm their acceptance of the Seagrave offer. According to at least one shareholder, however, the vote was influenced by a statement of Helburn's corporate counsel that the earlier acceptance of the Seagrave offer was legally binding. On April 19, 1979, Helburn shareholders executed the final agreement to sell their stock to Seagrave. Liberty then instituted this suit.

II.

Count I of the complaint stated a cause of action for fraud and deceit, alleging that Callum knowingly made false representations upon which Liberty reasonably relied to its detriment. This count rested upon three statements allegedly made to Perrone: (1) Callum's assurance that a deal was "imminent" and that he was "positive the deal would go through;" (2) Callum's promise that Perrone would be given an opportunity to increase his $688,000 bid to match subsequent offers from other buyers; and (3) Callum's promise to convey and recommend the $750,000 offer to the Helburn shareholders. At the end of trial, the district court directed a verdict for Callum on the grounds that the first of the representations was not actionable and that the evidence failed to show that the other representations were ever made.

In reviewing the granting of a directed verdict, we have followed the generally accepted rule that, "(w)hen the evidence is such that without weighing the credibility of the witnesses there can be but one reasonable conclusion as to the verdict," a directed verdict is proper. Trinidad v. Pan American World Airways, Inc., 575 F.2d 983, 984 (1 Cir. 1978), quoting Brady, Administratrix v. Southern Railway Co., 320 U.S. 476, 479-80, 64 S.Ct. 232, 234-35, 88 L.Ed. 239 (1943). We have emphasized that "a scintilla of evidence is not enough to warrant submission of an issue to the jury." Id., quoting Federal Ins. Co. v. Summers, 403 F.2d 971, 974 (1 Cir. 1968). This is particularly true where, as in this case, the party seeking a directed verdict does not bear the burden of proof.

The district court found no legally sufficient evidence that Callum ever expressly promised Perrone that Liberty would have the opportunity to modify its $688,000 bid in the event that another prospective buyer offered a higher price. This finding is correct. The complaint alleges that the representation was made at the February 12 meeting. Although Perrone testified at length about that meeting on both direct and cross-examination, he never stated that Callum made such a representation at that time. The sole reference to any such representation occurs in Perrone's testimony concerning his conversation with Callum soon after the February 20 stockholders' meeting:

I (Perrone) asked him (Callum) two things: Why was our bid turned down, as he had told me previously that we would get another chance to increase our bid?

Perrone's testimony fails to state when or where the alleged promise was made or what sort of "chance" Perrone was to be given. No other witness made reference to the statement and Callum denied having made it. Perrone's single passing reference to Callum's statement constitutes at most only a scintilla of proof that the representation was ever made. Moreover, since we know nothing about the circumstances under which it was made, there is no evidence to suggest that Callum made the statement with the then present intent of breaking his "promise," and element essential to Liberty's cause of action for fraud. Barrett Associates, Inc. v. Aronson, 346 Mass. 150, 190 N.E.2d 867 (1963).

The district court likewise found no evidence to show that Callum expressly agreed to convey the $750,000 offer to the Helburn shareholders or to recommend the offer. Liberty does not dispute this conclusion but argues instead that a promise to present the offer may be implied from Callum's actions in soliciting the $750,000 offer during the telephone conversation of February 15 or 16, while simultaneously advising Perrone not to communicate personally with other shareholders.

We decline to disturb the judgment of the district court regarding this alleged misrepresentation. Perrone's version of the facts does not support a reasonable inference that Callum made the alleged implied promise with the then present intention not to perform. It defies logic to believe that Callum, if he intended at the time of the February 15 or 16 phone call not to deliver the $750,000 offer to the shareholders, would bother to solicit the offer from Perrone in the first place. Moreover, even if we were to ignore the logical inconsistency in Liberty's allegations, we could not adopt its position. Liberty's complaint and its arguments in the district court all related to alleged express promises. ² Its "implied misrepresentation" theory arises for the first time on appeal and, consequently, cannot form a proper basis for reversal. See George R. Whitten, Jr., Inc. v. Paddock Pool Builders, Inc., 508 F.2d 547, 558 n.17 (1 Cir. 1974), cert. denied, 421 U.S. 1004, 95 S.Ct. 2407, 44 L.Ed.2d 673 (1975).

Finally, the district court refused to submit to the jury the misrepresentation claim based on...