United States Court of Appeals
For the First Circuit
Nos. 08-2156
08-2246
NORTHERN INSURANCE COMPANY OF NEW YORK; NICHOLAS PICCHIONE,
Plaintiffs-Appellants/Cross-Appellees,
v.
POINT JUDITH MARINA, LLC,
Defendant-Appellee/Cross-Appellant,
ALBIN MANUFACTURING, INC., STANDISH BOATYARD, INC.,
Defendants.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. William E. Smith, U.S. District Judge]
Before
Lynch, Chief Judge,
Torruella, Circuit Judge,
and Ebel,* Senior Circuit Judge.
Frederick A. Lovejoy, with whom Lovejoy & Associates, was on
brief for appellants/cross-appellees.
Michael J. Rauworth, with whom Carl E. Fumarola and Cetrulo &
Capone LLP, were on brief for appellee/cross-appellant.
August 27, 2009
*
Of the Tenth Circuit, sitting by designation.
TORRUELLA, Circuit Judge. After a bench trial, the
district court entered judgment for defendant Point Judith Marina
("PJM") on claims for damages by plaintiff Nicholas Picchione and
subrogee-plaintiff Northern Insurance Company of New York
("Northern"). The claims arose as a result of the sudden sinking
of a recreational boat ("Eveready") owned by Northern's insured,
Picchione. The district court also rejected PJM's counterclaim
against Picchione for attorney's fees based on a slip rental
agreement between Picchione and PJM. Each of these parties appeals
the unfavorable aspects of the judgment. After careful review, we
affirm in all respects.
I. Background
Picchione bought Eveready in 1996 from Standish Boatyard,
Inc. ("Standish"). Eveready is a 35-foot vessel made by Albin
Manufacturing, Inc. ("Albin"). It is undisputed that, as
purchased, the vessel's exhaust hoses ran through the hull over a
plywood bulkhead without any chafing gear or strain relief. And
the engine room's bilge pumps did not include anti-siphon loops or
check valves, features which would prevent or limit backflow of
water through the exhaust. These precautions are recommended by
the American Boat & Yacht Council ("ABYC"). As detailed below,
plaintiffs assert that these alleged design deficiencies led to
Eveready's sinking.
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Picchione docked his boat at PJM. PJM also undertook to
store the boat on land in the winter, commission it in the spring,
and decommission it in the fall. In the course of these
activities, PJM conducted repairs on some of the boat's components.
Nonetheless, in a finding at issue on this appeal, the district
court concluded that "aside from work that [PJM] contracts to
perform specifically, it does not provide general preventative
maintenance or care for the vessels in the Marina."
During the 2004-2005 off-season, Picchione hired "Dan,"
an independent mechanic, to work on Eveready's engines. Then, on
April 21, 2005, PJM moved the vessel to its slip. PJM employee
Joseph Stroker worked on commissioning Eveready on Friday,
April 22, 2005.1 PJM refused to work on the engine as part of the
commissioning because of Dan's work. PJM also refused to conduct
a sea-test of Eveready until Dan tested the engines. But Stroker
did examine the bilge pumps. He noticed six to eight inches of
water in the bilge, which he pumped out. After pumping, he noted
that the engine room bilge would not stop running. He then turned
off what he insists was the engine room bilge pump by switching one
of three switches to the off position. Consistent with his notes
made at the time, Stroker testified that he left the automatic
1
Plaintiffs suggest that Stroker may have been on the vessel the
next day, since his work slip indicated he worked for 13.4 hours.
But plaintiffs point to no evidence clearly establishing the
proposition that he worked on Saturday. Rather, Stroker's
testimony suggests otherwise.
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bilge pump switch on and that he tested to make sure a bilge would
activate.
Picchione visited the boat on April 21, 22, and 23 to
stock the vessel. Picchione testified that he checked the
automatic bilge switch on April 22 and that it was on. He further
testified that he did not recall checking it or the water in the
bilges on April 23. The district court found this testimony
inconsistent with his deposition, where he testified that he always
checked the bilges for water, and would have done so on Saturday,
April 23. He also said at deposition that he would have left the
automatic bilge switch turned on.
No evidence showed that anyone else boarded Eveready
after Picchione, though Picchione admitted that his friends
occasionally boarded the boat without checking with him first. On
the evening of Sunday, April 24, another marina-goer did not notice
anything wrong with Eveready as she sat in her slip. That
individual awoke the next morning to see the vessel gone and
replaced by a spreading oil slick. By that afternoon, Eveready was
hauled from the bottom and inspected. During an inspection that
day, the harbormaster noticed the bilge pump switches were all in
the off position. At a joint survey conducted on May 3, with
experts representing both sides, a small steady stream of water was
observed running down the starboard interior hull in the engine
compartment. The source of the leak could not be determined at the
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time. The vessel was reconditioned and re-hauled in October 2007.
At that time, no water was observed entering. During
reconditioning, when the fuel tanks were removed, a cut was found
in the bottom side of the starboard exhaust hose. Evidence showed
that the cut would not have been visible without removing the fuel
tanks and disassembling the exhaust system. Northern theorizes
that the cut was caused by the lack of anti-chafing gear at the
point where the hoses passed through the hull.
Northern, through its expert, posits that water entered
the vessel through this leak. PJM took the position that the hole
could not have caused the leaking. The district court did not
resolve this dispute, but concluded that whatever the source of the
initial leak, water began to accumulate in the bilge and the vessel
sank in the water until the exhaust portal became submerged,2
causing significant back-flooding, which led to the boat's sinking.
Expert testimony established that one working bilge pump would have
prevented this chain of events.
After Northern paid money to Picchione under an insurance
policy between the two of them, these two parties filed a complaint
against PJM, Standish, and Albin.3 The complaint invoked the
2
Some evidence suggested that Eveready normally sat in the water
with her exhaust portals submerged or partially submerged. This
issue will be discussed below.
3
Default judgment ultimately entered against Albin. Standish
settled on the eve of trial.
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district court's admiralty jurisdiction, 28 U.S.C. § 1333(1), and,
as amended,4 asserted claims against PJM for failure to warn,
breach of the warranty of workmanlike service, "breach of
contract/negligence," and "bailment." PJM filed a counter-claim
for indemnification against Picchione, based on the language of
their slip rental agreement. That agreement provides, in relevant
part:
18. Tenant hereby covenants, warrants, and
agrees to indemnify and hold Marina harmless
from any loss or injury, including death, to
any person, including the Tenant, arising out
of any incident occurring on or about the
Tenant's vessel, a vessel of any patron of the
Marina, or on the premises of the Marina.
PJM essentially contends that it suffered attorneys fees as a
result of the sinking and that Picchione should provide
indemnification for this "loss." PJM has not contended on appeal
that this provision bars plaintiffs' claims against it.
The case proceeded to a five-day bench trial. The
district court grouped plaintiffs' claims into two categories:
those arising out of PJM's failure to detect the cause of the
initial leak, and those arising out of PJM's alleged responsibility
for turning off the automatic bilge pump. As to the first group,
the district court held plaintiffs' tort claims barred by the
4
An amended complaint later listed only Northern as a plaintiff
in the caption, but continued to name Picchione as a plaintiff
elsewhere. In light of this confusion, and in light of PJM's
counterclaim against Picchione, the district court continued to
view Picchione as a plaintiff and counter-defendant.
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economic loss doctrine. It further found no evidence of a specific
contract for "inspection, general maintenance, and repair of all
the vessel's component parts" and no evidence "to support the
proposition that such alleged defects should have been discovered
and corrected as part of the general warranty of workmanlike
performance." The district court deemed the ABYC recommendations
non-binding and found that PJM never agreed to perform preventative
maintenance.
As to the claims related to the bilge pump, the district
court first concluded it would not apply a presumption against PJM
based on bailment law since PJM did not have exclusive control of
the vessel. The district court then concluded that someone had
turned off the automatic switch, but that the court "simply cannot
conclude with any certainty who turned off the automatic bilge pump
switch, and when." The court concluded that Northern had not met
its burden to show that PJM's agent, Stroker, was responsible.
Specifically, the court relied on Picchione's admission at
deposition that he would have checked when he was on the boat on
Saturday that the automatic pump was on. Given that, the court
could not find by a preponderance that Stroker turned the automatic
pump off on Friday.
As to PJM's counterclaim, the district court reasoned
that the contract pertained only to the slip rental and not to
allegations of negligence in the performance of other service
-7-
contracts. Accordingly, judgment entered for PJM on plaintiffs'
claims and for Picchione on PJM's counterclaims. Each side
appeals.
II. Discussion
"Where, as here, the district court conducts a bench
trial and serves as the factfinder, its determinations of
negligence, proximate cause, and similar issues are entitled to
considerable deference." Jackson v. United States, 156 F.3d 230,
232 (1st Cir. 1998). Specifically, such review is for clear error.
Id. "Thus, a trial court's factual determinations will be set
aside only if, after careful evaluation of the evidence, we are
left with an abiding conviction that those determinations and
findings are simply wrong." Id. at 232-33 (internal quotation
marks omitted). "On clear-error review, we cannot second-guess the
trier's choices among those competing inferences even if, had we
been sitting as triers of the facts, we might have arrived at a
different set of judgments." Id. at 233; see also Anderson v.
Bessemer City, 470 U.S. 564, 574 (1985) ("Where there are two
permissible views of the evidence, the factfinder's choice between
them cannot be clearly erroneous."). Nonetheless, we review
questions of law de novo. LPP Mortg., Ltd. v. Sugarman, 565 F.3d
28, 31 (1st Cir. 2009).
Though there was some dispute in the district court about
the import of the economic loss doctrine to plaintiffs' tort
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claims, this case ultimately does not turn on this issue, which
plaintiffs do not separately challenge on appeal. Rather, relying
on PJM's obligations under the warranty of workmanlike performance,
plaintiffs attack the specific conclusions of the district court.
Namely, at issue is whether the district court erred (1) in finding
PJM had no obligation to discover defects in Eveready, (2) in not
finding PJM responsible for the disabled automatic bilge pump, (3)
in making various other factual findings, and, finally, on the
cross-appeal, (4) in ruling that the contract between Picchione and
PJM did not provide for indemnification on these facts.
We evaluate plaintiffs' claims under federal maritime
law. See La Esperanza de P.R. v. Pérez y Cía. de P.R., 124 F.3d
10, 16 (1st Cir. 1997). As discussed below, the slip rental
agreement provides that it shall be governed by Rhode Island law.
A. Did PJM have an obligation to detect defects?
Plaintiffs advance their claim under a theory that PJM
breached the implied warranty of workmanlike performance inherent
in federal maritime law. This doctrine provides that a maritime
contractor "who contracts to provide services impliedly agrees to
perform in a diligent and workmanlike manner." Parks v. United
States, 784 F.2d 20, 26 (1st Cir. 1986) (internal quotation marks
omitted). "[T]he implied warranty of workmanlike performance
parallel[s] a negligence standard rather than imposing . . . strict
liability," but "a shipowner may receive indemnity from a marine
-9-
contractor for breach of implied warranty of workmanlike service,
albeit that such performance was done without negligence." La
Esperanza, 124 F.3d at 17 (internal quotation marks omitted).
"[T]his warranty need not be express to bind the ship repairer to
use the degree of diligence, attention and skill adequate to
complete the task." Id. at 19 (internal quotation marks and
emphasis omitted).
For example, where an agreement effectively required a
party to assume maintenance, and specifically required it to
"conduct a condition survey," we affirmed a district court's
finding that the warranty of workmanlike performance was breached
by failure to detect a defect that later injured a sailor. Parks,
784 F.2d at 27. Similarly, when a shipyard contracted to perform
hull repair and held itself out as so-qualified, the shipyard was
found liable for failing to complete repairs as a result of making
a welding mistake which "should have been readily apparent to any
reasonably competent ship repair professional." La Esperanza, 124
F.3d at 17-19.
As the district court found, this case is quite
different. PJM's duties in commissioning the vessel did not
obligate it to appraise the overall condition of the vessel or
search for defects in hidden exhaust hoses or the design of the
bilge pumps. Though the implied warranty of workmanlike
performance is a legal standard, the question of what is required
-10-
in a workmanlike performance is necessarily a factual question that
naturally varies from case to case based on the scope and nature of
the service being undertaken. See id. at 19 (affirming a finding
of breach where the "evidence in the record substantiates that
similarly situated ship repairers" would have been able to properly
weld the hull plates at issue); SS Amazonia v. New Jersey Exp.
Marine Carpenters, Inc., 564 F.2d 5, 8-9 (2d Cir. 1977) (reviewing
a maritime workmanlike performance claim and treating as a factual
issue the question of how tractors should be secured for shipping).
First of all, unlike in Parks, no explicit agreement of the parties
provided for such an inspection. 784 F.2d at 27. In fact,
plaintiffs have failed to show any written service agreement at all
covering the commissioning.5
Second, there is no clear error in the district court's
finding that no such obligation was implied. This is not to say
that PJM had no implied obligations. As we have stated, our
precedent provides that obligations under warranty of workmanlike
performance apply to implied agreements. Nonetheless, evidence in
the record, namely testimony from PJM's manager, supports the
district court's conclusion that no implied obligation to fully
inspect all components inheres in PJM's agreement to undertake
commissioning Eveready. And plaintiffs point to no evidence which
5
At oral argument, we asked Northern's counsel to file a
supplemental letter addressing this point, but he failed to do so.
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would clearly establish that a reasonable worker would conduct a
complete inspection during commissioning.
Plaintiffs do point to certain snippets of testimony to
challenge this conclusion. But in no case do they show (or even
explicitly argue) that the district court's dispositive findings
were clearly erroneous. Specifically, plaintiffs note that PJM's
manager admitted that the commissioning process normally includes
inspecting components including hoses and bilge pumps. But close
examination of his testimony reveals that he simply said that a
technician should report visible defects in exhaust hoses and the
like, and that "[i]f we can't see items, we can't do anything about
them." Thus, such testimony does not show the commissioning was
meant to be comparable to a full inspection. And evidence
supported the district court's conclusion that the exhaust hose
hole that Northern alleges led to the initial leak was not visible.
Plaintiffs argue that even if the hose hole was not visible, the
absence of chafing gear would have been visible. But the district
court did not so find, and the evidence does not require that
conclusion. Further, even if the hoses were inspected, the
evidence does not require the conclusion that the absence of
chafing gear is something a workmanlike boat commissioner should
have noticed.
Plaintiffs also point to PJM's manager's statement that
commissioning includes checking for leaks. But, the evidence
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showed that Stroker did check for water in the bilge, and pumped it
out. And he reasonably did not conduct a sea test, which might
have revealed further leaks, because the engines had not been
tested by Dan, Picchione's independent contractor.
Next, plaintiffs suggest that there were prior occasions
where PJM fixed an exhaust hose or adjusted the bilge pump during
commissioning. Plaintiffs can point to a checklist from a prior
commissioning which shows that PJM checked for old hoses. But the
fact that PJM agents previously made repairs to a particular
component does not compel the conclusion that a workmanlike
commissioning process should include an inspection of such
components. Rather, the district court's conclusion about the
scope of PJM's responsibilities was supported by testimony from
PJM's manager that PJM did not assume general responsibility for
servicing vessels it commissions at its slips.
Third, plaintiffs theorize that the district court
committed error by failing to put enough weight on the ABYC
standards recommending certain preventative gear to guard against
hose chafing and bilge pump backflow. Plaintiffs argue that PJM,
as a repairer, should not be allowed to depart from industry
standards. This argument fails for at least two reasons. First,
this argument misses a step by assuming that PJM had an obligation
to inspect for compliance with such standards. The district court
did not find such inspection to be part of the commissioning
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process, and for the reasons we have explained, we see no clear
error. Second, even if PJM had some duty to conduct a general
inspection, the standards would not automatically establish a duty
to detect a lack of the specified precautions. Rather, we
recognize such standards as some evidence of what a reasonable
person would do, not as a definitive statement of PJM's
obligations. See Getty Petroleum Mktg., Inc. v. Capital Terminal
Co., 391 F.3d 312, 326 (1st Cir. 2004) ("These voluntary standards
do not irrefutably establish the standard of care in a negligence
case. Rather, they constitute one more piece of evidence upon
which the jury could decide whether the defendant acted as a
reasonably prudent person in the circumstances of th[e] case."
(internal quotation marks omitted)). Plaintiffs have not shown
that the district court should have been required to accept the
standards as conclusive evidence of the standard of care PJM owed
Picchione.
In conclusion, we make clear that we make no per se rule
about what precise obligations a boat-commissioner will owe to a
boat-owner under the warranty of workmanlike performance. This is
a factual question which depends on the scope of the work
contemplated in the parties' explicit agreement and on obligations
implied through the surrounding circumstances. Here, plaintiffs
have failed to establish that PJM had explicitly or implicitly
undertaken to inspect the vessel for hidden defects or compliance
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with a particular standard. Thus, plaintiffs cannot succeed on
their claim that PJM's failure to do so was a breach of its implied
warranty of workmanlike performance.
B. Is PJM responsible for the turned-off bilge pumps?
No party challenges the district court's conclusion that
PJM was serving as Picchione's bailee. Rather, the question
centers around whether Picchione may benefit from a presumption of
fault against his bailee. The district court found PJM did not
have "exclusive" possession of the boat and, so, refused to apply
this presumption.
Generally, under bailment law, "when the bailor shows
delivery to a bailee and the bailee's failure to return the thing
bailed, he makes out a prima facie case of negligence against the
bailee." Goudy & Stevens, Inc. v. Cable Marine, Inc., 924 F.2d 16,
18 (1st Cir. 1991) (internal quotation marks omitted). This law
essentially creates a presumption against the bailee, which can be
rebutted. See id. This presumption is based on the rationale that
"since the bailee is generally in a better position than the bailor
to ascertain the cause of the loss, the law lays on it the duty to
come forward with the information it has available." Id. at 19.
But this rule admits an exception. "[N]o inference or
presumption of negligence can arise against a bailee if [its]
possession of the damaged bailed property was not exclusive of that
of the bailor." Id. (internal quotation marks omitted). The
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dispute in this case regards the term "exclusive." We have said
that the requirement "does not mean that any act of dominion by the
bailor over the vessel would also negate the inference." Id.; see
also id. at 19 n.3 (citing cases holding that a bailor's "mere
access" is insufficient to defeat the presumption). Rather, for
the presumption to attach, exclusivity must only "be of such a
nature as to permit a reasonable trier of fact to infer that the
bailee is in the better, or sole, position to explain what actually
happened." Id. Where both parties have "equally unrestricted
access," a district court commits no error by rejecting the
presumption. Id.
As just described, we view the question of exclusivity as
one to be found by a "trier of fact," so review is for clear error.
See id. Plaintiffs contend that the district court erred in
finding no exclusivity because Picchione performed no work on the
vessel and had mere access to it only to stock provisions.
Further, plaintiffs reason, Stroker was the only one to admit
touching the bilge pump switches, and PJM did not warn Picchione of
Stroker's actions, so PJM is better situated to explain what
happened.
But again, plaintiffs have failed to meet their high
burden of showing clear error. Picchione was on the vessel on the
Thursday, Friday, and Saturday before the sinking. He had equal
access to and power over the bilge pump switch, which, by his own
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admission, he checked on Saturday. Next, he had hired an
independent mechanic who was responsible for a portion of the boat,
which prevented PJM from fully exercising control. Finally,
Picchione admitted that his friends had his implied permission to
access the boat without his prior approval. This is not "mere
access." Rather, it is the kind of activity which, through its
interference with PJM's control over the boat, would cast doubt on
the fairness of presuming PJM was responsible. The district
court's rejection of plaintiffs' exclusivity claim was not clear
error.
Plaintiffs suggest in the opening of their brief to this
court that, aside from the law of bailment, the district court made
a factual error in not finding Stroker responsible for turning off
the automatic bilge pump. But plaintiffs fail to develop any
argument as to how the district court clearly erred in reaching a
contrary conclusion in reliance on Picchione's deposition testimony
that he would have checked the bilge switch on Saturday.
Accordingly, any such argument is waived. See United States v.
Zannino, 895 F.2d 1, 17 (1st Cir. 1990) (documenting the "settled
appellate rule that issues adverted to in a perfunctory manner,
unaccompanied by some effort at developed argumentation, are deemed
waived").
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C. Do any other alleged errors require vacatur?
Plaintiffs contend that the district court's findings
rely on an expert report which was never admitted into evidence.
Specifically, plaintiffs point to PJM's expert's conclusion (1)
that the exhaust hose could not have caused the leak and (2) that
a single bilge pump would have saved Eveready. Any reliance by the
district court on such testimony would be entirely harmless. The
district court's holding was not based on any finding about the
cause of the initial leak. In fact, the district court explicitly
made no determination on that issue. As to the second conclusion,
the district court did find the proposed fact: that a single bilge
pump would have saved the vessel. But such testimony was entirely
cumulative with Northern's own expert, who also proposed the same
conclusion. These errors epitomize harmlessness, and are not a
basis for reversal. See 28 U.S.C. § 2111. Plaintiffs have
essentially no developed arguments of prejudice with which to
challenge this conclusion.
Plaintiffs next contend that the district court erred
when it (1) concluded that no evidence showed the rate of the leak
before the sinking,6 (2) stated that Northern's expert could not
6
This is also not clear error. The only testimony plaintiffs
point to showed the rate of the leak after the vessel was recovered
and inspected. While one could accept such testimony as
circumstantial evidence of the rate of leaking before the sinking,
the district court was not required to so infer, and was correct
that there was no direct evidence of the pre-sinking leakage rate.
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rule out another source of the leak (namely hull damage), and
(3) confused testimony regarding the rear as opposed to the engine
room bilge. But none of these facts are material to the
dispositive questions of PJM's duty to detect defects or leaks or
to PJM's liability for the turned-off automatic bilge pump.7 So
these contentions provide no basis to justify vacatur.
Finally, plaintiffs challenge the district court's
finding that the sinking was caused when the boat sank to such a
point that water backflowed through the exhaust ports. Plaintiffs
point to some evidence showing that Eveready normally sat in the
water with her exhaust ports submerged. Even if plaintiffs could
show clear error, their claim here is confusing at best. It was
plaintiffs' own expert who proposed the backflow theory, and one of
plaintiffs' chief theories is that PJM was negligent in not
detecting flaws in the bilge design that would have prevented such
backflow. It is strange for plaintiffs to now challenge the
district court's backflow findings. Plaintiffs are essentially
arguing that the boat did not sink in the way they suggested that
7
In their reply brief, plaintiffs argue that a proper finding as
to the rate of the leak, combined with evidence of a scum lime that
formed on Eveready, would lead to a conclusion that the bilge pump
must have been turned off before Saturday. Plaintiffs do not
adequately develop this technical argument. Nor did they raise it
in their initial briefs. It is waived. See Waste Mgmt. Holdings,
Inc. v. Mowbray, 208 F.3d 288, 299 (1st Cir. 2000) ("We have held,
with a regularity bordering on the monotonous, that issues advanced
for the first time in an appellant's reply brief are deemed
waived.").
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it did. But plaintiffs propose no other explanation for the
sinking, let alone a theory that would show that PJM should have
detected this unspecified defect. Therefore, plaintiffs challenge
to this finding also fails on harmlessness grounds.
Plaintiffs undoubtedly hoped to tarnish the district
court's conclusions by trying to cast doubt on these subsidiary
findings. But their failure to meaningfully engage the rule of
harmless error review dooms their claims.
D. Must Picchione Indemnify PJM?
PJM essentially argues that Picchione promised, in
Paragraph 19 of the Slip Rental Agreement, to indemnify PJM for
"any loss," including attorney's fees, arising out of "any incident
occurring on or about the Tenant's vessel . . . or on the premises
of the Marina," including its sinking. PJM challenges the district
court's rejection of its indemnification counterclaim, asserting
that it improperly imposed an additional limitation that the
liability arise out of the Slip Rental Agreement.8
The parties selected Rhode Island law to govern their
contract. No party has challenged (or even mentioned) that
selection, and we see no policy interest which would override this
contractual choice. Cf. Restatement (Second) of Conflict of Laws
8
We note that though PJM also cites language from another
provision dealing more explicitly with attorney's fees, Paragraph
39, PJM develops no argument regarding this section. So, any such
argument is waived.
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§ 187 (1971) (discussing enforcing parties' choice of law
provisions); see also Littlefield v. Acadia Ins. Co., 392 F.3d 1,
6 (1st Cir. 2004) (noting that state rules of interpretation often
govern maritime contracts absent controlling federal law on point
(citing Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310,
314 (1955))).
The construction of an unambiguous contract is a question
of law, which we review de novo. Lloyd's of London v.
Pagán-Sánchez, 539 F.3d 19, 22 (1st Cir. 2008); Arruda v. Sears,
Roebuck & Co., 310 F.3d 13, 19 (1st Cir. 2002). Under Rhode Island
law, a contract is ambiguous "if it is reasonably susceptible of
different constructions." In re Newport Plaza Assoc., 985 F.2d
640, 645 (1st Cir. 1993) (internal quotation marks omitted).
"Conversely, a contract which within the realm of reason can bear
only a single plausible interpretation can be so construed by the
court as a matter of law." Id. "Where the language of a contract
is clear and unambiguous, the Rhode Island Supreme Court has
generally interpreted the parties' intent based solely on the
written words." Id. "[A] court is duty bound to construe
contractual terms in the context of the contract as a whole." Id.
at 646.
We reject PJM's position regarding Paragraph 19. While
PJM's reading is clever, it is not convincing. PJM does not seek
indemnity for a loss directly resulting from the sinking, but for
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a loss resulting from a lawsuit over the sinking. And this sinking
allegedly resulted not from the mere use of PJM's slip, which was
the subject of the Slip Rental Agreement, but from alleged
negligence in the execution of a separate agreement to commission
the vessel.9
In this way, the context of the contract makes clear that
it should be limited to the slip rental context; PJM's broader
construction simply does not make sense. Under PJM's construction,
it could sue Picchione for attorney's fees if it incurred expenses
defending almost any conceivable suit -- even if the suit arose
from an incident not related to Picchione in the slightest. For
example, if another patron slipped and fell at the Marina and sued
PJM, PJM's construction would allow it to sue Picchione for "loss"
to PJM arising out of the "incident occurring . . . on the premises
of the marina." Even if the construction was limited to incidents
"occurring on or about Tenant's vessel," PJM's construction would
require Picchione to defend PJM if a third party was injured while
9
PJM argues that plaintiffs' complaint alleged negligence
attributable to the mere slip rental. PJM argues that Picchione
should be treated like its insurer, and that Paragraph 19 imposes
on him a duty to defend PJM against any pleadings raising claims
that might be covered under Paragraph 19, even if his ultimate
claims only related to the commissioning. PJM offers no cases to
support its novel theory that such a clause can effectively turn
Picchione into an insurer, and we reject their argument. Further,
after review of the paragraphs of the complaint and amended
complaint upon which PJM relies, we conclude that plaintiffs'
pleadings related to PJM's commissioning responsibilities, not its
slip rental.
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a PJM agent was moving the boat. This is an absurd result, and we
will not so construe the contract. See Dubis v. East Greenwich
Fire Dist., 754 A.2d 98, 101 (R.I. 2000) ("To construe this
unambiguous contract any other way . . . would produce an absurd
result."). Instead, we conclude that a Rhode Island court
interpreting this contract would construe it as limited to
indemnity for loss causally connected to the purpose of the
contract. See Hingham Mut. Fire Ins. Co. v. Heroux, 549 A.2d 265,
267 (R.I. 1988) (observing that a similar limitation could be read
"as intending to limit the scope of coverage to incidents with a
causal connection to the premises, not to incidents that merely
occur on the premises") (citing Hanson v. General Accident Fire &
Life Ins. Corp., 450 So. 2d 1260, 1261-62 (Fla. Dist. Ct. App.
1984)). Here, we agree with the district court that the sinking
was causally connected to the commissioning process and not to the
slip rental agreement.
III. Conclusion
For all of the foregoing reasons, the judgment below is
affirmed in all respects.
Affirmed.
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