USCA1 Opinion
UNITED STATES COURT OF APPEALS
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT
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No. 93-1993
EUGENE DESJARDINS,
Plaintiff, Appellant,
v.
VAN BUREN COMMUNITY HOSPITAL,
Defendant, Appellee.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Morton A. Brody, U.S. District Judge]
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Before
Breyer,* Chief Judge,
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Torruella and Boudin, Circuit Judges.
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Paul F. Macri with whom Berman & Simmons, P.A. was on brief for
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appellant.
June A. Jackson with whom Paul W. Chaiken and Rudman & Winchell
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were on brief for appellee.
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October 12, 1994
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*Chief Judge Stephen Breyer heard oral argument in this matter, but
did not participate in the drafting or the issuance of the panel's
opinion. The remaining two panelists therefore issue this opinion
pursuant to 28 U.S.C. 46(d).
BOUDIN, Circuit Judge. In 1989, Eugene Desjardins
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brought suit against Van Buren Community Hospital, Inc. ("the
Hospital"), a Maine Corporation, for federal and state claims
arising from Desjardins' discharge from the Hospital in 1988.
After trial, the jury found that the Hospital was liable
under Federal Rehabilitation Act of 1973, 29 U.S.C. 794 et
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seq., two Maine statutes, and a pair of common-law counts
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under Maine law. Desjardins was awarded almost $18,000 in
damages, $5,000 in "front pay," and substantial attorney's
fees.
The Hospital appealed to this court but during the
course of the appeal, the Hospital ceased operation for
financial reasons. Further, the Van Buren Hospital District
("the District"), a municipal entity authorized by Maine
statute to provide medical services in the Town of Van Buren,
Maine, filed for bankruptcy. The District, technically a
separate legal entity with taxation powers, owned the land,
building and equipment used by the Hospital. In the
bankruptcy pleadings, the District styled itself as "Van
Buren Hospital District, d/b/a Van Buren Community Hospital."
The District's chapter 11 petition was eventually
dismissed by the bankruptcy court on the ground that the
District was a government entity not entitled to chapter 11
protection. However, before the dismissal, the Hospital
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secured a temporary stay of its own appeal in the Desjardins
case on the ground that the Hospital had filed for
bankruptcy; in fact, it was the District that had so filed
for bankruptcy. Ultimately, the stay was lifted and in July
1992, this court upheld judgment in favor of Desjardins.
Since the Hospital took the position that it was
virtually without assets, Desjardins requested a disclosure
hearing before the magistrate judge. The hearing was held in
December 1992. After hearing testimony, the magistrate judge
assigned the Hospital's checking-account balance and its
accounts receivable to Desjardins, but the magistrate judge
refused Desjardins' request to hold the District legally
responsible for the Hospital's debt to Desjardins. The
district court upheld the magistrate judge and also declined
to approve further discovery. Desjardins now appeals to this
court.
On appeal, Desjardins argues that several different
doctrines allow him to hold the District liable for the debts
of the Hospital. The magistrate judge rejected such an
attempt on two grounds: that the District was not a party to
the disclosure proceeding and, further, that in the original
action the claims against the Hospital had not been
separately asserted against the District, a distinct legal
entity. These threshold objections are not without force but
for various reasons we prefer to track the district court's
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disposition, which addresses the merits of Desjardins'
attempts to impute liability to the District.
Desjardins' first claim on appeal is that the doctrine
of judicial estoppel prevented the District from denying that
it and the Hospital were one and the same. Judicial estoppel
may apply to bar a litigant from engaging in "intentional
self-contradiction . . . as a means of obtaining unfair
advantage . . . ." Patriot Cinemas, Inc. v. General Cinema
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Corp., 834 F.2d 208, 212 (1st Cir. 1987) (quoting Scarano v.
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Central R. Co., 203 F.2d 510, 513 (3rd Cir. 1953)). Here,
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Desjardins says that the Hospital and District have been
engaged in such self-contradiction in three respects: at the
outset, the Hospital asserted a governmental immunity defense
applicable only to the District; the District's petition for
bankruptcy styled the District as "d/b/a Van Buren Community
Hospital" and listed Desjardins as a creditor; and the
Hospital requested and obtained a stay of its appeal from the
Desjardins verdict during the District's bankruptcy
proceedings.
Since the district court rejected this judicial estoppel
claim, the Hospital argues that the rejection should be
affirmed because not clearly erroneous. Desjardins responds
that judicial estoppel presents a matter of the law that
should be reviewed de novo. In reality, judicial estoppel is
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not extrinsically a matter of fact or law; the issues that
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arise may turn out to be ones of raw fact, abstract law, or
something in between, e.g., the application of a general
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standard to a known set of facts. Here, fine distinctions
make no difference because we would affirm on the judicial
estoppel issue even if every aspect of it were open to de
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novo review.
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The phrases "self-contradiction" and "unfair advantage"
used in Patriot Cinemas are not self-executing. There are
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many situations, especially at the outset of litigation,
where a party is free to assert a position from which it
later withdraws--or even to assert, in the alternative, two
inconsistent positions of its potential claims or defenses.
Of course, what is legitimate pleading in one context may be
negligent or even fraudulent in another. Lawyers and judges
are not beyond making the necessary distinctions.
Here, the relationship between the Hospital and the
District is surely one open to different interpretations and
susceptible to argument. We do not see any wrongful self-
contradiction, let alone unfair advantage, in the fact that
the Hospital initially asserted a governmental immunity
defense that was thereafter abandoned or that the District's
bankruptcy petition used a d/b/a reference to the Hospital
and mentioned Desjardins as a creditor, even though the
District now presumably rejects both these implications.
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One could be more critical of the Hospital's request for
a stay of its own appeal because of the District's
bankruptcy. The request not only implied an identity of
entities but it also led a court to take action, namely, the
grant of a temporary stay. But again, there is no indication
of deliberate dishonesty by the Hospital nor has the
temporary stay been shown to have caused any serious
prejudice to judicial proceedings or the position of the
opposing party. Cf. Wang Laboratories, Inc. v. Applied
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Computer Sciences, Inc., 958 F.2d 355, 358-59 (1st Cir.
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1992). We do not think this is a proper case for estoppel.
Desjardins's next argument is that he should be allowed
to "pierce the corporate veil" to reach the District's
assets. Desjardins brought out that the District owned the
land, building and equipment of the Hospital; that the five
trustees of the District automatically became directors of
the Hospital (although not the only ones); and--based on the
testimony of one current trustee of the District--the
Hospital was the "operating entity" and the meetings of the
District trustees were only a "formality." "I guess I would
have to say", said the testifying trustee, "that we kind of
wear two hats."
This testimony shows a considerable overlap between the
two entities but hardly an identity so complete as to merge
automatically what are formally two different legal
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organizations. That one entity holds property used by the
other is hardly unique, and obviously one who is a trustee
and a director wears "two hats." The reference to the
trustees' meetings as a "formality" might be sinister in some
contexts but here there is nothing surprising in the thought
that an operating hospital should be the busy organization
and that meetings of the titleholding District should be
routine. "Formality" is not quite the same as "subterfuge."
Equally important, Maine law requires something more
than overlap for an adversary of one corporation to pierce
the veil and reach another. Maine's highest court has said
that its courts "pierce the corporate veil only if the
corporate form is used fraudulently or illegally." LaBelle
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v. Crepeau, 593 A.2d 653, 655 (Me. 1991). Maine courts may
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also disregard separate corporate identities where separate
treatment would "justify a wrong", Bonnar-Vawter, Inc. v.
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Johnson, 173 A.2d 141 (Me. 1961), or would defeat legislative
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policy or statutory aims. See Brennan v. Saco Construction,
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Inc., 381 A.2d 656, 662 (Me. 1978). But it is difficult to
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see a "wrong" here, and no legislation is at issue.
Desjardins is in substance seeking to impose liabilities
of one entity on a closely related entity, the two of which
have close connections, including a number of common
directors, but is in other respects distinct. In Curtis v.
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Lehigh Footwear, Inc., 516 A.2d 558 (Me. 1986), the former
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employees of a bankrupt subsidiary company sued the parent
corporation for severance pay. Even though the subsidiary
parent shared several common directors, and corporate parents
can usually determine the ultimate direction of their
subsidiaries, the Maine court held that corporate entity
would not be disregarded in the absence of bad faith. There
is no showing of bad faith here.
Finally, Desjardins protested the district court's
treatment of possible further discovery. Desjardins reads a
comment of the district judge as precluding Desjardins from
engaging in any further discovery. The Hospital replies that
a law permits the debtor to be summoned for a new disclosure
hearing after six months, six months have passed since the
last hearing, and Desjardins is now free to subpoena the
Hospital again. The parties appear to agree that Desjardins
can now summon and interrogate the Hospital again as to its
assets.
Even with the aid of the district court decision and
three briefs, we are not able to tell what exactly remains of
the dispute between the parties as to further discovery.
Desjardins does say that he used the Maine procedures for the
post-judgment investigation, as permitted by Fed R. Civ. P.
69, but might now like to use Federal Rule methods; the
district judge did express some disagreement on this point.
But instead of pursuing this issue, Desjardins' reply brief
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refers instead to the possibility of seeking discovery
against nonparties, as well as attachment, trustee process or
other liens.
We think that we do not have an adequately framed issue
before us on the discovery question. Desjardins' effort to
impose liability on the District or obtain its assets or
utilize its taxing authority has now been resolved. We think
that further discovery addressed to this issue is barred on
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the ground that the matter has already been adjudicated. As
to Desjardins' use of any type of discovery for any other
purpose, we make no pronouncements and will address such
issues if and when presented by a specific controversy.
Affirmed.
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