Northern Voyager v. Cross Sound Ferry ( 2003 )

Not For Publication in West's Federal Reporter
Citation Limited Pursuant to 1st Cir. Loc. R. 32.3
United States Court of Appeals
For the First Circuit
No. 02-1860
NORTHERN VOYAGER LIMITED PARTNERSHIP;
ONEBEACON AMERICA INSURANCE COMPANY f/k/a/
COMMERCIAL UNION INSURANCE COMPANY,
Plaintiffs, Appellants,
v.
CROSS SOUND FERRY, INC. AND JOHN WRONOWSKI,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Rya W. Zobel, U.S. District Judge]
Before
Torruella, Circuit Judge,
Campbell and Stahl, Senior Circuit Judges.
Michael J. Rauworth, with whom Cetrulo & Capone LLP were on
brief, for appellants.
Thomas J. Muzyka, with whom Robert E. Collins and Clinton &
Muzyka, P.C. were on brief, for appellees.
August 5, 2003
TORRUELLA, Circuit Judge. Plaintiffs-Appellants Northern
Voyager Limited Partnership ("Northern Voyager") and OneBeacon
America Insurance Company appeal the dismissal of their claims
against Defendants-Appellants Cross Sound Ferry ("Cross Sound") and
its president, John Wronowski, in litigation related to the 1997
sinking of the F/T NORTHERN VOYAGER ("NORTHERN VOYAGER"). The
district court determined that the plaintiffs, who alleged two
violations of Mass. Gen. Laws ch. 93A for unfair trade practices,
failed to state a claim for which relief can be granted. We agree.
I.
The NORTHERN VOYAGER sank off the coast of Gloucester,
Massachusetts on November 2, 1997. The sinking was the result of
an allegedly faulty rudder dropping out of the vessel, causing
severe flooding aboard the NORTHERN VOYAGER.
The NORTHERN VOYAGER, and a sister ship, the F/T NORTHERN
TRAVELER ("NORTHERN TRAVELER") were managed by Atlantic Trawlers,
Inc., principally by its employee, Jerry Shervo. At some point in
1997, Shervo contacted Thames Shipyard & Repair Company ("Thames")
to have repair work performed on the two vessels. Thames is owned
and operated by John Wronowski, who also owns Cross Sound. Thames
agreed to perform repair work on the NORTHERN VOYAGER and NORTHERN
TRAVELER; the repair work included, among other things,
withdrawing, refurbishing and reinstalling both rudders in each
vessel. During the course of these repairs, the appellants allege
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that two separate incidents occurred which constituted unfair trade
practices by the appellees. For clarity's sake, we will present
the appellants' two factual scenarios separately and then assess
whether either scenario is sufficient to support a claim under
Chapter 93A.
1. Cross Sound's Subordination of the
NORTHERN VOYAGER's Service Needs
The NORTHERN VOYAGER and NORTHERN TRAVELER were delivered
to Thames's shipyard in May and June of 1997 and were raised on
drydock together with a third vessel, the NEW LONDON. The NEW
LONDON is a passenger and freight ferry owned and operated by
Wronowski and Cross Sound. To remove a vessel from drydock, a
drydock must be flooded to permit the vessel to float free of the
dock. Consequently, when vessels share a drydock, none of the
vessels can be returned to service until the repair work for all of
them is complete, since prematurely flooding the drydock would also
flood any vessel that still had holes in its hull.
Thames completed its repairs of the NEW LONDON prior to
completing work on the NORTHERN VOYAGER. According to the
appellants, Wronowski and Cross Sound diverted work away from the
NORTHERN VOYAGER in favor of completing work on the NEW LONDON.
Further, the appellants claim that appellees caused the work on the
NORTHERN VOYAGER to be hastened to allow the drydock to be flooded,
so that Wronowski could return the NEW LONDON to service more
quickly. According to appellants, the appellees' haste resulted in
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improper performance on the work of the NORTHERN VOYAGER's
starboard rudder. Therefore, under the appellants' theory, the
subordination of NORTHERN VOYAGER's interests to those of the NEW
LONDON should be deemed an unfair business practice that eventually
resulted in the loss of the NORTHERN VOYAGER.
2. Failure to Disclose Information Relevant
to the Condition of the NORTHERN VOYAGER
The appellees performed similar rudder work on the
NORTHERN VOYAGER's sister ship, the NORTHERN TRAVELER, a few weeks
prior to the repairs on the NORTHERN VOYAGER. In October 1997, the
NORTHERN TRAVELER began to experience steering problems. Cross
Sound supervisor Tom Shaughnessy was sent out to investigate. It
turned out that the steering problem was caused by the loosening of
a retaining nut on the vessel's port rudder. The nut had loosened
to the point that the NORTHERN TRAVELER's rudder was on the verge
of dropping out of the vessel.
Shaughnessy notified Wronowski about the NORTHERN
TRAVELER's rudder problem. Wronowski dispatched Brian Laffey, a
Cross Sound employee, to correct the problem. Laffey boarded the
NORTHERN TRAVELER, raised the rudder, tightened the rudder nut, and
secured it by welding it into place.
When Shervo became aware that the rudder nut had been
improperly secured by Thames during the May repairs, he asked
Shaughnessy if he should arrange to bring the NORTHERN VOYAGER into
port to have her rudders checked. Shaughnessy told him that this
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was unnecessary because the problem with the NORTHERN TRAVELER's
port rudder was a one-time anomaly.
Nevertheless, despite Shaughnessy's reassurances, there
is some evidence that he and Laffey considered the rudder-nut
problem to be more than a mere one-time anomaly. Laffey had
concerns about the NORTHERN TRAVELER's other rudder. As a result,
he sought permission from Shaughnessy to inspect the NORTHERN
TRAVELER's starboard rudder. Shaughnessey authorized the
inspection and Laffey tightened and rewelded the starboard rudder
nut to prevent it from loosening.
The appellants claim that no one from Thames ever
informed them of Laffey's concerns. It is the appellants'
contention that Cross Sound and Wronowski had a duty to inform
Shervo of the likelihood that the NORTHERN VOYAGER was at risk of
experiencing the same rudder problem as the NORTHERN TRAVELER.
Accordingly, the appellants argue that Shaughnessy's statement that
the rudder nut problem was a one-time anomaly, combined with his
failure to notify Shervo of the additional repair work performed by
Laffey, deprived the appellants of the opportunity to perform the
same preventative maintenance on the NORTHERN VOYAGER's rudders as
had been performed on the NORTHERN TRAVELER's starboard rudder.
II.
We review the district court's findings of fact for clear
error and its conclusions of law de novo. E.g., Commercial Union
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Ins. Co. v. Seven Provinces Ins. Co., 217 F.3d 33, 40 (1st Cir.
2000). While the question of "whether a particular set of acts, in
their factual setting, is unfair or deceptive is a question of
fact, the boundaries of what may qualify for consideration as a
[Chapter 93A] violation is a question of law." Saint-Gobain Indus.
Ceramics v. Wellons, Inc., 246 F.3d 64, 73 (1st Cir. 2001)
(citation omitted).
1. Chapter 93A Standard
Chapter 93A grants a cause of action to persons engaged
in commerce who suffer a loss because of "[u]nfair methods of
competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce." Mass. Gen. Laws ch. 93A, § 2.
Though the statute does not define the term "unfair," courts
applying Chapter 93A have established that a claimant must show
"objectionable conduct [that] must attain a level of rascality that
would raise an eyebrow of someone inured to the rough and tumble of
the world of commerce." Saint-Gobain, 246 F.3d at 73 (quotation
omitted); Leings v. Forbes & Wallace, Inc., 396 N.E.2d 149, 153
(Mass. App. Ct. 1979). Mere negligence is not sufficient to
trigger liability under the statute; instead, the statute was
enacted to punish "truly inequitable marketplace behavior" that
"unmistakably reeks of callousness." Vmark Software, Inc. v. EMC
Corp., 642 N.E.2d 587, 597 (Mass. App. Ct. 1994) (quotations and
citations omitted). Thus, in order to prevail under the statute,
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a claimant must show that the defendant's conduct falls "'within at
least the penumbra of some common-law, statutory, or other
established concept of unfairness' or is 'immoral, oppressive or
unscrupulous'" PMP Assoc. v. Globe Newspaper Co., 321 N.E.2d 915,
917 (1975), (quoted in Cambridge Plating Co. v. Napco, Inc., 85
F.3d 752, 769 (1st Cir. 1996)).
2. Discussion
The district court concluded that neither of the factual
scenarios described by the appellant set forth facts sufficient to
support a claim under Chapter 93A. We agree. While the repair
work performed on the two vessels obviously left much to be
desired, nothing in the record or in either of the appellants' two
scenarios demonstrates any conduct by Wronowski or Cross Sound that
rises to the level of "rascality," "callousness," or "truly
inequitable marketplace behavior" required by the statute.
Even assuming that the appellants subordinated the
interests of the NORTHERN VOYAGER in favor of the NEW LONDON by
rushing the former's repair schedule, this is not the type of
behavior Chapter 93A was intended to punish. The statute does not
create a cause of action for a breach of contract alone unless it
rises to the level of "commercial extortion" or a similar degree of
culpable conduct. Commercial Union, 217 F.3d at 40. Likewise,
"breach of warranty alone does not necessarily give rise to a
Chapter 93A violation." Saint-Gobain, 246 F.3d at 73. At most,
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the appellants' subordination scenario may support a possible
interference with contractual relations claim; however, even if the
appellants could establish an interference claim, we concur with
the district court that they have not carried their burden of
showing callousness or truly inequitable marketplace behavior.
Likewise, vague allegations of the appellees' duty to
disclose the possible rudder problem on the NORTHERN VOYAGER do not
rise to the necessary level of rascality required by the statute.
While the incident may have proved a basis for a negligence claim
against Wronowski or Thames, negligence alone is insufficient to
create liability under the statute. Vmark Software, 642 N.E.2d at
597.
Finally, appellants also allege that the district court
abused its discretion by denying their motion to amend the
complaint. Having considered appellants' arguments and reviewed
the record, we find that the court's decision was entirely within
its discretion. See LaRocca v. Borden, Inc., 276 F.3d 22, 32 (1st
Cir. 2002).
III.
Because Northern Voyager and OneBeacon have not carried
their burden under the statute, we do not find that any of the
appellees' conduct constitutes unfair trade practices under Chapter
93A.
Affirmed.
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