United States Court of Appeals
For the First Circuit
No. 09-2630
ANALYSIS GROUP, INC.,
Plaintiff, Appellee,
v.
CENTRAL FLORIDA INVESTMENTS, INC.,
Defendant, Appellant.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge]
Before
Lynch, Chief Judge,
Boudin and Howard, Circuit Judges.
Richard W. Epstein, with whom Victor S. Kline was on brief,
for appellant.
David B. Mack, with whom Thomas N. O'Connor was on brief, for
appellee.
December 9, 2010
LYNCH, Chief Judge. This case concerns a client's
failure to pay for an expert's expedited services in an underlying
litigation.
Central Florida Investments, Inc. (CFI) appeals from a
Massachusetts jury verdict on a breach of oral contract claim
awarding Analysis Group, Inc. (AGI) fees for expert services it
provided to CFI in connection with a Florida case between CFI and
its competitor, the Bluegreen Corporation (Bluegreen). CFI
unsuccessfully argued to the jury in this case that AGI was not
entitled to fees it sought for its own work on the Bluegreen
litigation because, while CFI authorized the retention of Professor
Lucian Bebchuk as an expert witness through AGI, CFI did not
authorize the retention of AGI itself to provide Professor Bebchuk
with the expert support services it did.
On appeal, CFI argues that the district court erred in
instructing the jury that CFI's counsel, Michael Marder and the
firm of Greenspoon Marder, acted as CFI's agent during the relevant
period. CFI argues this was prejudicial error that entitles it to
judgment as a matter of law, or, alternatively, a new trial. CFI
also argues the district court erred in awarding prejudgment
interest. AGI has filed a motion for sanctions, alleging CFI's
appeal is frivolous. We affirm the judgment and the award of
interest. We deny AGI's motion for sanctions.
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I.
The facts are recited in a light most favorable to the
jury's verdict. Wilson v. City of Boston, 421 F.3d 45, 47 (1st
Cir. 2005). In August 2006, CFI, a Florida-based time-share
operator, was sued by its competitor, Bluegreen. Bluegreen alleged
CFI had violated securities laws by attempting to secure a majority
stake in Bluegreen without complying with securities reporting
requirements. CFI was represented in the Bluegreen litigation by
its long-time counsel, the Florida law firm of Greenspoon Marder,
of which CFI's general counsel, Michael Marder, was a partner. CFI
also retained White & Case, LLP of New York as co-counsel.
Greenspoon Marder, together with White & Case, determined
that CFI needed a corporate governance expert to testify in support
of its motion for a temporary restraining order against Bluegreen,
which it filed in late August 2006. On or about September 7, 2006,
John Chung, a White & Case attorney, contacted Pierre Cremieux of
AGI, a consulting services firm, in hopes of finding a suitable
expert. Cremieux quickly identified Professor Lucian Bebchuk of
the Harvard Law School as an ideal candidate. Cremieux arranged a
phone call between himself, Professor Bebchuk, Chung, and another
White & Case attorney on September 9, 2006. Following the call,
Chung and the other White & Case attorney indicated to Cremieux
that they would seek authorization to retain Professor Bebchuk.
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Chung then recommended to attorneys Michael Marder and Richard
Epstein of Greenspoon Marder that Professor Bebchuk be retained.
From the start, the White & Case attorneys understood
that, should Professor Bebchuk be retained, AGI "had to play a very
pivotal role as the consulting expert" by supporting Professor
Bebchuk with research and other assistance. In White & Case's
view, AGI's support services were especially necessary given that
the deadline for submission of CFI's expert report was September
18, 2006, only eleven days after Chung's initial call to AGI.
After a September 10, 2006 settlement conference between
CFI and Bluegreen proved unsuccessful, Epstein left a voicemail
message for Chung, authorizing Professor Bebchuk's retention.
Chung testified that he believed Epstein's message also authorized
White & Case to retain AGI's support services.
The decision to retain Professor Bebchuk was reached
despite the recognition of a potential conflict regarding AGI's
involvement in the Bluegreen litigation. Shortly after Chung
recommended Professor Bebchuk's retention to Greenspoon Marder,
Glenn Kurtz, another White & Case attorney, notified Greenspoon
Marder that opposing counsel in the Bluegreen litigation had
contacted AGI to find an expert. Given the role AGI would play in
the preparation of Professor Bebchuk's report, Kurtz feared that
opposing counsel's contact with AGI would render any report drafted
by Professor Bebchuk vulnerable to a motion to disqualify.
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Nonetheless, Kurtz believed the risk of disqualification to be
small, and advised that Professor Bebchuk still be retained.
Kurtz testified that he had two telephone conversations
with Michael Marder regarding this potential conflict issue. Kurtz
recalled that, during the first conversation, Marder suggested the
conflict issue could be resolved if AGI "pulled out" of its role in
the Bluegreen litigation. Kurtz asked Cremieux whether that was a
viable possibility, but Cremieux responded that Professor Bebchuk
could not complete the report on CFI's expedited schedule without
AGI's assistance. Kurtz testified that, during his second
conversation with Marder, he informed Marder that "Bebchuk was
. . . unable to take the engagement without the assistance of [AGI]
and [Marder] said, OK. Let's go forward." At trial, Marder
disputed this testimony.
Professor Bebchuk, aided by AGI, worked on the expert
report from September 9, 20061 until its submission on September
18, 2006.2 During this time, Professor Bebchuk's and AGI's primary
contact was White & Case, not Greenspoon Marder or CFI. However,
White & Case and Greenspoon Marder frequently communicated about
1
Because CFI needed the expert report by September 18,
2006, Professor Bebchuk began work on the report on September 9,
2006, even though he had yet to be officially retained. AGI had
agreed to repay Professor Bebchuk for his pre-retention services if
CFI ultimately declined to retain his services.
2
The court presiding over the Bluegreen litigation denied
CFI's requested relief, and CFI and Bluegreen reached an out-of-
court resolution of their dispute.
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the progress of the report, including AGI's work, and Greenspoon
Marder received numerous documents clearly originating from AGI.
Neither Greenspoon Marder nor CFI questioned AGI's
involvement during this period. Greenspoon Marder inquired once as
to the scope of AGI's involvement, but never questioned the fact
that AGI was participating in the creation of the report in the
first place. In a September 17, 2006 email exchange between
Epstein and White & Case attorneys, Epstein asked, "Anything from
Bebchuk yet?" A White & Case attorney replied, "AG just told me
within the next half hour," to which Epstein responded, "Is AG
separately doing an economic analysis of the rights plan?"
Because of the expedited schedule, AGI did not send an
engagement letter to White & Case until after the conclusion of its
work, on September 21, 2006.3 Kurtz signed the engagement letter
on October 2, 2006, at which time there was "no question" in his
mind that CFI, through Greenspoon Marder, had authorized AGI's
retention. The engagement letter was sent to CFI on October 3,
2006. CFI did not raise any question as to AGI's engagement at
this juncture.
On October 27, 2006, AGI sent an invoice to CFI in the
amount of $318,952.43 for services it had rendered in connection
with the Bluegreen litigation. This amount included $88,500 in
3
The engagement letter was nonetheless dated September 11,
2006, the original date Cremieux had drafted it.
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fees for Professor Bebchuk. By letter dated November 16, 2006,
Greenspoon Marder asked AGI to provide additional records regarding
the invoice, which AGI provided on November 27 and December 4,
2006. Within its November 16 request, Greenspoon Marder neither
asserted that CFI was unaware of AGI's involvement, nor questioned
whether CFI had authorized AGI's work.
Months later, on January 31, 2007, Epstein informed AGI
that CFI would not pay AGI its requested fees. Following further
correspondence, Epstein wrote to AGI in March 2007, stating that
CFI was unaware of AGI's retention, was not consulted prior to
AGI's retention, did not consent to AGI's engagement, and would
therefore not pay AGI's "grossly excessive" fees. CFI did pay
Professor Bebchuk's fee in full.
AGI's suit against CFI was tried to a federal jury in
Massachusetts from May 4, 2009 to May 8, 2009. In instructing the
jury, the district court stated: "In this case, it's not disputed
. . . that the Marder law firm, Marder being general counsel to
[CFI], the Marder law firm was [CFI's] agent. So, they were acting
on behalf of [CFI]." The court continued: "If [CFI] said either
directly or through its agent, the Marder firm, if it said, go
ahead, hire [AGI] . . . and White & Case then went ahead and did it
with that express authority," then "CFI is bound . . . ." The
court also referred to Greenspoon Marder as CFI's "undoubted
agent."
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CFI timely raised an objection to the jury instructions,
stating: "The only objection, just for the record, is that the
instruction assumes that Greenspoon Marder was CFI's agent for all
purposes . . . ." The court overruled the objection, reasoning
that "the admissions justify" such an instruction. This referred
to an admission CFI had made earlier in response to an AGI
discovery request. Upon being asked to admit that "at no time
during the Bluegreen litigation did Greenspoon Marder, P.C. act
without authority on behalf of CFI," CFI responded in part: "CFI
admits that [Greenspoon Marder] remained one of CFI's litigation
counsel throughout the Bluegreen litigation and acted throughout
such litigation only as directed and authorized by CFI."
The jury returned a verdict in favor of AGI for
$460,964.86, twice the amount AGI requested, plus legal fees and
expenses that AGI never sought. The court entered judgment
awarding the full $460,964.86, but without any attorney's fees.
CFI filed a motion for judgment as a matter of law and a motion for
new trial, both of which were denied. CFI also filed a motion for
remittitur, which the court granted. The court lowered the award
to $230,452.43, plus prejudgment interest from November 27, 2006,
a date thirty days after AGI's demand.
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II.
CFI appeals the district court's denial of CFI's motion
for judgment as a matter of law and alternative motion for a new
trial, as well as the district court's prejudgment interest award.
A. Denial of Judgment as a Matter of Law and New Trial
Motions
A district court's denial of a motion for judgment as a
matter of law is reviewed de novo. Che v. Massachusetts Bay
Transp. Auth., 342 F.3d 31, 37 (1st Cir. 2003). But "[o]ur review
is 'weighted toward preservation of the jury verdict' because a
verdict should be set aside only if the jury failed to reach the
only result permitted by the evidence." Quiles-Quiles v.
Henderson, 439 F.3d 1, 4 (1st Cir. 2006) (quoting Crowley v. L.L.
Bean, Inc., 303 F.3d 387, 393 (1st Cir. 2002)). We review the
denial of a motion for a new trial for abuse of discretion.
Granfield v. CSX Transp., Inc., 597 F.3d 474, 488 (1st Cir. 2010).
CFI's appeal from the denial of both of its post-verdict
motions is predicated on its assertion that the district court
erred in instructing the jury. The question of whether CFI
adequately objected to the instructions at trial--and the
contingent question of whether we review the instructions de novo
or for plain error--is complicated by CFI's equivocation as to what
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element of the jury instructions it challenges on appeal.4 We
bypass the question of preservation of the objection. Each of the
particular jury instructions that CFI's claim on appeal can be read
as contesting--that Greenspoon Marder was CFI's "undoubted agent"
and that Greenspoon Marder acted only as authorized by CFI
throughout the Bluegreen litigation--were supported by the record.
Under either de novo or plain error review, neither of those
instructions constitutes error.5
4
CFI initially portrays its claim regarding the jury
instructions as centered on the district court's declaration that
Greenspoon Marder acted as CFI's "undoubted agent" throughout the
Bluegreen litigation. Were this so, CFI's objection at trial--
"that the instruction assumes that Greenspoon Marder was CFI's
agent for all purposes"--would likely be sufficient to preserve its
claim, and we would review that instruction de novo, reversing only
if any error "is determined to have been prejudicial based on a
review of the record as a whole." Massachusetts Eye & Ear
Infirmary v. QLT Phototherapeutics, Inc., 552 F.3d 47, 72 (1st Cir.
2009).
But CFI's briefing, including its statement that it
"unequivocally admits Greenspoon Marder's agency," suggests that
CFI does not actually take issue with the "undisputed agent"
instruction at all. Rather, on appeal CFI often argues as if its
challenge is to a different component of the jury instructions,
namely, the court's instruction that it is "undisputed that
everything Marder did, that was from authority from Central
Florida." CFI's unspecific objection at trial would be
insufficient to preserve a challenge to the instructions on this
ground. Linn v. Andover Newton Theological Sch., Inc., 874 F.2d 1,
5 (1st Cir. 1989) ("If there is a problem with the instructions,
the judge must be told precisely what the problem is, and as
importantly, what the attorney would consider a satisfactory
cure."). Framing CFI's claim in this way, we would thus review the
jury instructions under the more deferential plain error standard.
See Estate of Keatinge v. Biddle, 316 F.3d 7, 16 (1st Cir. 2002).
5
At oral argument, we requested supplemental briefing from
both parties on the issue of whether CFI adequately alerted the
district court to its objections to the jury instructions. Our
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CFI's admission that "Greenspoon Marder remained one of
CFI's litigation counsel throughout the Bluegreen litigation and
acted throughout such litigation only as directed and authorized by
CFI" removed from trial any question of whether Greenspoon Marder
had acted as CFI's agent in the underlying litigation. By its
plain meaning, the admission sufficiently establishes that if
Greenspoon Marder acted, it necessarily did so with full authority
from CFI. See Brook Village North Assocs. v. Gen. Elec. Co., 686
F.2d 66 (1st Cir. 1982) (citing Fed. R. Civ. Proc. 36). The jury
instruction goes no further.
That Greenspoon Marder's agency to act for CFI was never
in dispute at trial is also manifest in CFI's pretrial memorandum.
CFI identifies the crucial agency issue for trial as:
Whether [AGI] can demonstrate that CFI
actually authorized White & Case to act as its
agent and to enter into the contract with
[AGI] where . . . White & Case did not
consult with Greenspoon Marder or CFI on the
decision to contact [AGI] regarding expert
services [and] White & Case did not consult
with Greenspoon Marder or CFI before
interviewing AGI.
(Emphasis added.) This implicitly makes clear that, if Greenspoon
Marder in fact authorized White & Case to retain AGI, that
authorization would have sufficed.
In sum, whether instructing White & Case to hire AGI fell
within the scope of Greenspoon Marder's authority from CFI was
opinion reflects our consideration of the supplemental briefing.
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never an issue at trial; the issue was whether Greenspoon Marder
did authorize White & Case to hire AGI.6 That question of fact was
properly left for the jury to decide. CFI cannot now pursue an
alternate defense merely because the one it put forth at trial
failed. The jury instructions do not entitle CFI to judgment as
a matter of law or a new trial.7
B. Award of Prejudgment Interest
We review an award of prejudgment interest for abuse of
discretion, see Hogan v. Bangor & Aroostook R.R. Co., 61 F.3d 1034,
1038 (1st Cir. 1995), but legal issues relating to the prejudgment
6
CFI itself insists that this was the only material issue
at trial. In its briefing on appeal, CFI urges that AGI's
arguments on appeal miss the mark because CFI "never suggested and
specifically rejected that Greenspoon Marder acted without
authority."
7
To the extent that CFI's motion for judgment as a matter
of law can be construed as a challenge to the sufficiency of the
evidence supporting the jury's verdict, we also affirm its denial.
Ample evidence supports the verdict, including: Greenspoon Marder's
consideration of the conflict issue involving AGI, the significance
of which largely depends upon AGI's retention; Epstein's September
10, 2006 voicemail to proceed with the retention, which Chung
testified he interpreted as authorizing hiring the complete package
of Professor Bebchuk and AGI's support services; Kurtz's testimony
regarding his phone calls with Marder during which he explained
that Professor Bebchuk was "unable to take the engagement" without
AGI's retention; Greenspoon Marder's failure to question progress
reports that included updates on AGI's work; CFI's and Greenspoon
Marder's failure to question AGI's involvement upon receiving its
engagement letter on October 3, 2006; and Greenspoon Marder's
failure to question AGI's overall involvement upon receiving AGI's
invoice, instead opting to merely request more detailed billing
records.
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interest award are reviewed de novo, Rhode Island Charities Trust
v. Engelhard Corp., 267 F.3d 3, 5 (1st Cir. 2001).
In this diversity action, Massachusetts law governs the
prejudgment interest award. Mass. Gen. Laws ch. 231, § 6C
provides, inter alia, that "interest shall be added by the clerk of
the court to the amount of damages, at the contract rate, if
established, or at the rate of twelve per cent per annum from the
date of the breach or demand." The statute also provides: "If the
date of the breach or demand is not established, interest shall be
added by the clerk of the court, at such contractual rate, or at
the rate of twelve per cent per annum from the date of the
commencement of the action . . . ." Id.
CFI argues that the prejudgment interest award from
November 27, 2006 was error because the date of demand was never
"established." In doing so, CFI cites numerous cases for the
proposition that a prevailing party must establish the date of
breach or the date of demand in order to recover prejudgment
interest. See, e.g., Boston Gas Co. v. Century Indem. Co., 529
F.3d 8, 22 (1st Cir. 2008).
But these cases are beside the point. Here, the date of
demand was established by an admission from CFI at the briefing
stage. In its complaint, AGI alleged: "On or around October 27,
2006, [AGI] submitted a detailed invoice to Thomas F. Dugan of CFI
in the amount of $318,952.43 for services rendered . . . ." CFI
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responded: "Defendant admits that Plaintiff submitted an invoice,
but denies that it is entitled to payment of same." The district
court rightfully based its prejudgment award on this date, as AGI
had no obligation to establish a fact already admitted. Meschino
v. N. Am. Drager, Inc., 841 F.2d 429, 435 (1st Cir. 1988). The
requirements of the Massachusetts prejudgment interest statute have
been satisfied, and the prejudgment interest award was proper.8
III.
AGI filed a motion for sanctions pursuant to Rule 38 of
the Federal Rules of Appellate Procedure and 28 U.S.C. § 1927 on
the basis that CFI's appeal is groundless and intentionally
misleading.
"Appellate sanctions are a means of discouraging
litigants and their lawyers from either wasting an adversary's time
and resources or burdening the court with obviously groundless
appeals." Alternative Sys. Concepts, Inc. v. Synopsys, Inc., 374
F.3d 23, 36 (1st Cir. 2004). Fed. R. App. P. 38 provides that, if
a court of appeals "determines that an appeal is frivolous, it may,
after a separately filed motion or notice from the court and
reasonable opportunity to respond, award just damages and single or
double costs to the appellee." 28 U.S.C. § 1927 provides that any
8
We decline to evaluate the district court's decision to
award prejudgment interest from a date thirty days after the
demand. CFI has not challenged the prejudgment interest award on
this basis.
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attorney "who so multiplies the proceedings in any case
unreasonably and vexatiously may be required by the court to
satisfy personally the excess costs, expenses, and attorneys' fees
reasonably incurred because of such conduct."
Although CFI's appeal fails, we conclude that it was
neither frivolous nor an unreasonable or vexatious multiplication
of proceedings. See United States v. Knott, 256 F.3d 20, 30-31
(1st Cir. 2001) (addressing § 1927 standards); Cronin v. Town of
Amesbury, 81 F.3d 257, 261 (1st Cir. 1996) (addressing Rule 38
standards).
IV.
The district court's judgment is affirmed. AGI's motion
for sanctions is denied.
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