Quaker State Oil Refining Corp. v. Garrity Oil Co., Inc.

• Decision Date: 04 August 1989
• Docket Number: Nos. 89-1258,89-1296,s. 89-1258
• Citation: 884 F.2d 1510
• Parties: QUAKER STATE OIL REFINING CORPORATION, Plaintiff, Appellee, v. GARRITY OIL COMPANY, INC., Defendant, Appellant. QUAKER STATE OIL REFINING CORPORATION, Plaintiff, Appellant, v. GARRITY OIL COMPANY, INC., Defendant, Appellee. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1510

884 F.2d 1510

14 Fed.R.Serv.3d 864

QUAKER STATE OIL REFINING CORPORATION, Plaintiff, Appellee, v. GARRITY OIL COMPANY, INC., Defendant, Appellant.

QUAKER STATE OIL REFINING CORPORATION, Plaintiff, Appellant, v. GARRITY OIL COMPANY, INC., Defendant, Appellee.

Nos. 89-1258, 89-1296.

United States Court of Appeals First Circuit.

Heard Aug. 4, 1989.

Decided Sept. 14, 1989.

Robert G. Levy, with whom Berryl A. Speert, Frank, Bernstein, Conaway & Goldman, Brian W. LeClair, Ann Johnston, and Fordham & Starrett, Boston, Mass., were on brief for Garrity Oil Co., Inc.

Donald B. Gould, with whom Hilary S. Schultz, Robert M. Duffy, and Goodwin, Procter & Hoar, Boston, Mass., were on brief for Quaker State Oil Refining Corp.

Before BOWNES, TORRUELLA and SELYA, Circuit Judges.

SELYA, Circuit Judge.

Invoking diversity jurisdiction, 28 U.S.C. Sec. 1332(a), Quaker State Oil Refining Corporation (QSOR) sued a former distributor, defendant Garrity Oil Company (Garrity), in the United States District Court for the District of Massachusetts. Disenfranchised and disaffected, Garrity counter-sued. The district court ended the hostilities short of trial and the belligerents both appeal. We affirm.

I. BACKGROUND

Certain basic facts brook no disagreement. For several years, Garrity was an authorized nonexclusive distributor for plaintiff. In 1984, its sales of QSOR's products began to decline. Eventually, a QSOR executive, Monterosso, sent word that a second distributor might be appointed in Essex County, Massachusetts (a part of Garrity's territory). Defendant requested and received a six-month reprieve. But the business drain was not stanched. In July 1985, QSOR named Quality Lubricants (Quality) as an additional distributor.

Garrity was upset no little and quite some--particularly since Quality's principals, William Coletti and Francis Mills, were Garrity's ex-employees. Only the previous month, Garrity had filed a state court suit against Coletti and Mills, alleging unfair competition and worse. ¹ Thereafter, the tension mounted as Garrity's sales continued to decline--a drop which the firm attributed not only to Quality's improper activities, but to the complicity therein of Michael Sugrue, a QSOR employee. Garrity continued to order products and handle the line, but began ignoring plaintiff's billings and no longer honored a half-dozen promissory notes evidencing loans made by QSOR to defendant during happier times.

Cutting off the flow of cash in this fashion produced a fairly predictable result: in 1986, QSOR sued Garrity to recover the balances due on a variety of unpaid invoices (count 1) and promissory notes (count 2). The complaint was subsequently amended to allege unfair trade practices violative of Mass.Gen.L. ch. 93A (count 3). Garrity responded with counterclaims positing unfair competition, breach of contract, and interference with both contractual and prospective business relations. ² More than thirty months of skirmishing ensued, requiring over one hundred entries on the district court docket.

We see no purpose in retracing the parties' steps in exquisite detail. The denouement occurred when QSOR's motion for summary judgment on all claims and counterclaims was heard and decided. At that time, the district court determined the entire controversy: it granted summary judgment in QSOR's favor on counts 1 and 2 (the invoice and promissory note claims), QSOR v. Garrity, No. 86-1446-T, slip op. at 4-5 (D.Mass. Jan. 30, 1989) (D.Ct.Op.), and on the four counterclaims, id. at 6-13. The court denied the motion as to count 3, instead entering judgment in defendant's favor, sua sponte, on that claim. Id. at 5-6. In a separate order entered the same day, the court refused to allow defendant to add a fifth counterclaim. Plaintiff then successfully sought prejudgment interest, the district court obliging on the authority of Mass.Gen.L. ch. 231, Sec. 6C (1985).

On these appeals, not every determination of the district court is challenged. QSOR finds fault only with the abrupt termination of its chapter 93A claim. Garrity assigns error to (1) use of Massachusetts' prejudgment interest rule, (2) interdiction of the four counterclaims, and (3) denial of leave to add the proposed fifth counterclaim. We limit our inquiry to these specifications.

II. SUMMARY JUDGMENT STANDARD

The yardstick by which allowance of summary judgment must be measured is not in doubt. Summary judgment is warranted only if:

[T]he pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

Fed.R.Civ.P. 56(c). Though the movant's task is daunting, the nonmovant has a threshold burden to "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). A "genuine" dispute requires more than suspicion or bluster. "The evidence illustrating the factual controversy cannot be conjectural or problematic; it must have substance in the sense that it limns differing versions of the truth which a factfinder must resolve at an ensuing trial." Mack v. Great Atlantic & Pacific Tea Co., 871 F.2d 179, 181 (1st Cir.1989). The disagreement must also be material: "The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986) (emphasis in original); see also Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir.1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 754 (1976).

Because the grant of summary judgment calls into play a legal standard--saying, in effect, "there is no fact-specific controversy which must be resolved in order to decide this case"--appellate review is plenary. We can affirm the judgment below "only if we are fully satisfied that there is no genuine dispute as to any relevant fact issue and that the [prevailing party] is, as a matter of law, due the relief which the district court awarded." Advance Financial Corp. v. Isla Rica Sales, Inc., 747 F.2d 21, 26 (1st Cir.1984). In conducting this tamisage, we must grant the benefit of any genuinely disputed datum, and all reasonable inferences plausibly extractable from properly documented facts of record, to the nonmovant. Mack, 871 F.2d at 181; Greenberg v. Puerto Rico Maritime Shipping Auth., 835 F.2d 932, 934 (1st Cir.1987).

Mindful of this astrictive standard, we examine the parties' appeals.

III. QUAKER STATE'S APPEAL

Count 3 contended that Garrity's withholding of the sums admittedly due on the trade debt and promissory notes, coupled with its prosecution of the counterclaims, was a form of "extortion" sufficient to warrant chapter 93A liability. The district court disagreed. QSOR does not contest the court's power to grant summary judgment sua sponte, nor could it do so. See Celotex Corp. v. Catrett, 477 U.S. 317, 326, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1985); Jardines Bacata, Ltd. v. Diaz-Marquez, 878 F.2d 1555, 1560-61 (1st Cir.1989). The only bona fide issue is whether that power was exercised properly according to the rigorous protocol of Rule 56. See Donate-Romero v. Colorado, 856 F.2d 384, 386 (1st Cir.1988).

Litigation under Mass.Gen.L. ch. 93A is rampant, but a common refrain has developed. "The objectionable conduct must attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble of the world of commerce." Levings v. Forbes & Wallace, Inc., 8 Mass.App.Ct. 498, 396 N.E.2d 149, 153 (1979); see also Gooley v. Mobil Oil Corp., 851 F.2d 513, 515-16 (1st Cir.1988) (unscrupulous or unethical conduct usually required); Williams v. Arndt, 626 F.Supp. 571, 581-82 (D.Mass.1985) (similar). In other words, a chapter 93A claimant must show that the defendant's actions fell "within at least the penumbra of some common-law, statutory, or other established concept of unfairness," or were "immoral, unethical, oppressive or unscrupulous," and resulted in "substantial injury ... to competitors or other businessmen." PMP Associates, Inc. v. Globe Newspaper Co., 366 Mass. 593, 321 N.E.2d 915, 917 (1975); accord Pepsi-Cola Metro. Bottling Co. v. Checkers, Inc., 754 F.2d 10, 17-18 (1st Cir.1985); Levings, 396 N.E.2d at 153.

When a party moves for summary judgment and the court, sua sponte, grants judgment the other way, the usual approach to appellate oversight of Rule 56 orders must be inverted. On count 3, therefore, we view the record in the light most flattering to QSOR (the summary judgment loser). So viewed, we do not think that Garrity's conduct--withholding funds and countersuing--was intolerable or sank to the depths of miscreancy required for liability under the statute. No one seriously disputes that Garrity had been damaged or that it had a reasonable basis for suing Coletti and Mills. Given the full panoply of circumstances, it was not preposterous to think that QSOR might be part of the problem. Though Garrity erred in evaluating the strength and prospects of its case, there was a basis for founded suspicion. The mere fact that defendant did not prevail on its counterclaims is no signal that the counterclaims were groundless. Moreover, even if rooted more in hope than reason, there is no indication that Garrity's actions were motivated by any pernicious purpose collateral to winning the suit and ensuring payment of damages sustained. There was no documented attempt at wrongful exaction of something apart from defendant's due, ergo, no "extortion" (or anything sufficiently resembling it). As the court below stated, "a wrongful set-off, without more, cannot violate ch. 93A." D.Ct.Op. at 6. And as we explain below, there was no "more."

First, there has been no satisfactory showing that nonpayment was aimed at pressuring QSOR into doing...