USCA1 Opinion
United States Court of Appeals
For the First Circuit
____________________
No. 94-1601
FRANK SIMON, II,
Plaintiff, Appellee,
v.
GERSHON NAVON,
Defendant, Appellant.
____________________
No. 94-1602
FRANK SIMON, II,
Plaintiff, Appellee,
v.
JONATHAN NAVON,
Defendant, Appellant.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Morton A. Brody, U.S. District Judge] ___________________
____________________
Before
Selya, Circuit Judge, _____________
Coffin, Senior Circuit Judge, ____________________
and Boudin, Circuit Judge. _____________
____________________
James D. Poliquin for appellants. _________________
C. Donald Briggs, III, with whom Joseph M. Cloutier was on _____________________ __________________
brief for appellee.
____________________
November 27, 1995
____________________
COFFIN, Senior Circuit Judge. This case arises out of a _____________________
failed business relationship between the plaintiff, Frank Simon,
and defendants, Gershon and Jonathan Navon, the sole owners and
officers in Maine Coast Trading Company, a fish brokerage firm.
A jury found the Navons liable for breach of contract, defamation
and abuse of process, and awarded Simon approximately $3.3
million in compensatory and punitive damages. The district court
granted defendants' motion for new trial unless Simon agreed to
remit $1.2 million, which he did. The defendants now appeal,
claiming a host of errors. After a careful review of the record
and caselaw, we affirm the court's rulings on the contract
claims, but reverse the judgment on abuse of process and remand
for a new trial on defamation.
I. Background __________
At this juncture, we shall provide only a brief sketch of
the facts underlying the case, elaborating in subsequent
sections of the opinion as necessary to inform our discussion of
specific issues. Maine Coast Trading Company ("Maine Coast
Trading" or "MCTC") was formed in November 1990 after Gershon
Navon approached Simon about creating a company to broker fish.
Navon provided most of the capital to form the business, and he
originally received 60 percent of the company's equity. Simon,
who had considerable experience in the fish brokerage business,
was president of the company and ran its business office in
Wiscasset, Maine. A smaller office at Gershon Navon's home in
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Connecticut primarily handled checking account and line of credit
matters. Jonathan Navon, Gershon's son, was treasurer.
Maine Coast Trading entered into two significant brokerage
agreements, one with a company in which Gershon Navon was the
sole shareholder (Mariculture Products, Ltd., "Mariculture"), and
one with a company in which Simon had a lesser interest
(Aquacorporacion Internacional Sociedad Anonima, "ACI").
Although Maine Coast Trading apparently operated smoothly through
1991, the Navons and Simon early in 1992 were discussing ways to
wind down the company's affairs. On March 24, 1992, the parties
signed a letter agreement that addressed issues that had arisen
between them in the preceding months, outlining the future
handling of MCTC business.
The agreement did not resolve matters, however, and the
parties' relationship grew even more acrimonious. Disagreements
arose over which vendors should be paid what amounts and how much
money was available in the company's account at Israel Discount
Bank in New York. The ensuing events, most of which occurred
between April and June of 1992 but whose sequence is in some
cases disputed, included:
--Simon began holding Maine Coast Trading's receivables
in Wiscasset, contrary to the letter agreement's
provision that he send those funds "directly to IDB
with no delay";
--Jonathan Navon issued a check in the amount of
$36,000 as accumulated salary to himself, and a $9,000
check to Mariculture, Gershon Navon's other company,
for office rent and expenses. He did not seek Simon's
approval for these expenditures, as required by the
letter agreement. No previous payments for such items
ever had been made;
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--Simon opened a checking account at Camden National
Bank in Maine, deposited accumulated receivables of
$68,000, and immediately wired the entire sum to ACI,
the company in which he had an interest. Over the next
few weeks, other receivables collected by Simon were
deposited in this account and checks were issued to
various vendors;
--Israel Discount Bank froze Maine Coast Trading's
account at Simon's request;
--At a telephonic meeting of MCTC's board of directors,
convened by an attorney in Portland, Maine, the Navons
voted to remove Simon as president and elected Gershon
to replace him. Simon initially participated in the
telephone call, but complained about lack of notice and
hung up before the vote;
--Several litigations were initiated: ACI filed a civil
action against Maine Coast Trading in state court in
Maine; an involuntary petition for bankruptcy, signed
by Simon as ACI's representative, was filed against
Maine Coast Trading; Maine Coast Trading (through the
Navons) sued Israel Discount Bank in New York for
freezing its account, and later added Simon as a
defendant, increasing the damages request from $87,000
(the amount of funds in the account) to $30 million.
Simon filed this lawsuit in October 1992, alleging breach of
contract, defamation, negligent and intentional infliction of
emotional distress, tortious interference with contract and
malicious prosecution. The district court granted summary
judgment for defendants on the tortious interference claim, and
granted judgment as a matter of law on the claims for negligent
and intentional infliction of distress. At the close of all
evidence, the court recharacterized the malicious prosecution
claim as a claim for abuse of process. The jury found both
Navons liable on each of the three remaining claims -- breach of
contract, defamation and abuse of process -- and awarded a total
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of $2.3 million in compensatory damages and punitive damages of
$1 million against Gershon and $36,000 against Jonathan.
In acting on defendants' post-judgment motions, the district
court found the $2.3 million in compensatory damages "clearly
excessive and against the weight of the evidence," and ordered a
new trial if Simon failed to accept a remittitur of $1.2 million.
He agreed to the remittitur, and this appeal by the Navons
followed. They claim entitlement to judgment or a new trial on
each of the substantive claims, as well as on damages. They
further argue that they are entitled to a new trial on all issues
based on a series of circumstances that infected the jury's
verdict with undue passion or prejudice.
We address each of these issues in turn, after briefly
considering the relevant standards of review.
II. Standard of Review __________________
The district court rejected the Navons' post-trial motion
for judgment as a matter of law because they failed to make that
request at the close of all evidence, thus forfeiting the right
to such a determination. See Keisling v. Ser-Jobs for Progress, ___ ________ ______________________
Inc., 19 F.3d 755, 758-59 (1st Cir. 1994); Della Grotta v. Rhode ____ ____________ _____
Island, 781 F.2d 343, 349 (1st Cir. 1986); Fed. R. Civ. P. 50(b). ______
Once abandoned, a claim for judgment as a matter of law may not
be revived on appeal except upon a showing of plain error
resulting in a manifest miscarriage of justice. Shell v. _____
Missouri Pac. R.R. Co., 684 F.2d 537, 540 (8th Cir. 1982); ________________________
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Martinez Moll v. Levitt & Sons of Puerto Rico, Inc., 583 F.2d ______________ ____________________________________
565, 570 (1st Cir. 1978).
The court did reach the merits of defendants' alternative
request for a new trial, which may be granted notwithstanding the
failure to make a pre-deliberations request for judgment as a
matter of law. See Wells Real Estate v. Greater Lowell Bd. of ___ __________________ ______________________
Realtors, 850 F.2d 803, 810 (1st Cir. 1988); Fed. R. Civ. P. 59; ________
9A C.A. Wright & A. Miller, Federal Practice and Procedure ________________________________
2539, at 362 (1995). The court denied a new trial on the
substantive claims, but, as noted earlier, granted a new trial on
damages contingent on the remittitur. Defendants now challenge
the court's refusal to further disturb the jury's verdict. Our
review, however, is extremely circumscribed; we may reverse the
court's decision only for an abuse of discretion. Sanchez v. _______
Puerto Rico Oil Co., 37 F.3d 712, 717 (1st Cir. 1994). With this ___________________
limitation in mind, we turn to appellant's claims of error.
III. Malicious Prosecution and Abuse of Process __________________________________________
In his complaint, Simon alleged a cause of action for
malicious prosecution based on the lawsuit filed by the Navons in
New York in the name of Maine Coast Trading. That action, first
brought against Israel Discount Bank to obtain release of $87,000
frozen in the company's account, later was amended to include a
claim against Simon seeking $30 million in damages and injunctive
relief. Twice during the trial, the parties and the district
court displayed confusion about the malicious prosecution claim
and its elements, and considered whether the claim would be more
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aptly characterized as one for a related tort, abuse of process.
Ultimately, over the defendants' objection, the court amended the
pleadings to substitute abuse of process for the malicious
prosecution count, and the jury returned a verdict for Simon on
that claim.1
The Navons argue that the district court's handling of this
issue was erroneous in two respects. First, they claim that
amendment of the pleadings after the close of evidence was
unfairly prejudicial because their strategy was based on the
assumption that Simon would be unable to prove a necessary
element of malicious prosecution, namely, that the challenged
litigation had terminated in his favor.2 Second, they claim
that Simon failed as a matter of law to prove the elements of
abuse of process.
We address only this latter claim. Preliminarily, however,
we must determine whether, unlike other grounds asserted in the
____________________
1 We note that some jurisdictions distinguish in
nomenclature between claims alleging malicious instigation of
process in criminal and civil cases. Where the distinction is
recognized, "malicious prosecution" refers to criminal
proceedings and "malicious use of process" or "wrongful civil
proceedings" applies to civil cases. See W. Page Keeton, et al., ___
Prosser and Keeton on The Law of Torts 120, at 892 (5th ed. _________________________________________
1984); Note, "The Nature and Limitations of the Remedy Available
to the Victim of a Misuse of the Legal Process: The Tort of Abuse
of Process," 2 Val. U.L. Rev. 129, 130 (1967). To the extent
there are differences between the two causes of action, see ___
Restatement (2d) of Torts 653, 674 (1977), they are irrelevant _________________________
to our discussion here.
2 It appears that that action was stayed because of Maine
Coast Trading's bankruptcy. So far as we can ascertain, neither
the original complaint nor the amended complaint naming Simon is
a part of the record in this case.
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post-trial motion for judgment as a matter of law, the issue was
preserved by timely request at the close of evidence. The
parties' final discussion with the court on the malicious
prosecution claim occurred during a chambers conference after the
close of all the evidence. The conference, focusing on the
difference between claims for malicious prosecution and abuse of
process, occupied seven pages of transcript. The court concluded
the conference with the following statements:
I think it's a very, very thin argument, frankly, on
abuse of process . . . . But I'm going to let this case
go to the jury because I'm not going to try this case
again if I can help it. And then we'll see what the
jury does with it subject to a motion for a judgment
N.O.V. after we see how they answer the interrogatories
on the case. And you can take your objection.
Tr. at 835. Counsel then promptly stated, "I object."
In its post-judgment opinion, the district court stated that
defense counsel could not reasonably have believed that this
colloquy preserved the issue for post-verdict review but noted
the argument by defendants' new counsel that the chambers
discussion had served as the functional equivalent of a motion
for judgment as a matter of law. The court observed, however,
that treating that dialogue as a de facto motion relating to __ _____
abuse of process nonetheless would be unavailing because the
evidence legally was sufficient to go to the jury.
Even in the light of our own stringent adherence to the
requirement of a timely formal motion, we think the abuse of
process issue was adequately preserved. The lengthy discussion
on this point, taken together with the judge's expressed
-8-
assumption that he would revisit the question in the event of a
motion for judgment notwithstanding the verdict, and his
statement to the attorney that he could "take [an] objection,"
could not but have led counsel to believe that what had been done
thus far was enough to preserve the issue for post-judgment
review. Indeed, the colloquy in chambers was the type of
exchange that one would expect to follow a motion for judgment as
a matter of law on the abuse of process claim. Cf. Bayamon Thom ___ ____________
McAn, Inc. v. Miranda, 409 F.2d 968, 971-72 (1st Cir. 1969).3 __________ _______
In these circumstances, we conclude that the legal
sufficiency of the abuse of process claim warrants appellate
consideration.4 We thus turn to the substantive inquiry, which
____________________
3 Bayamon Thom McAn and several subsequent cases, see ___________________ ___
Keisling v. Ser-Jobs for Progress, Inc., 19 F.3d 755, 759 (1st ________ ____________________________
Cir. 1994); Della Grotta v. Rhode Island, 781 F.2d 343, 349-50 ____________ ____________
(1st Cir. 1986); Beaumont v. Morgan, 427 F.2d 667, 670 (1st Cir. ________ ______
1970), recognize a limited exception to the requirement that a
motion for judgment as a matter of law -- though made at the
close of plaintiff's case -- must be renewed at the close of all
the evidence. The exception is permitted "in a case combining .
. . judicial assurance concerning preservation of rights at the
time of motion and . . . brief and inconsequential evidence
following the motion. . . ." Bayamon Thom McAn, 409 F.2d at 972. _________________
The instant case seems to us an even more modest departure from
the formal procedures for preserving a claim for judgment as a
matter of law.
4 Our decision in Martinez Moll v. Levitt & Sons of Puerto _____________ ________________________
Rico, Inc., 583 F.2d 565, 568-70 (1st Cir. 1978), refusing to __________
consider appellant's sufficiency argument, is not inconsistent
with this result. In that case, the appellant had moved for a
directed verdict on other grounds at the close of all the
evidence, but had failed to question the sufficiency of the
evidence. Because the issue had never been raised until after
the jury's verdict, we concluded that there was "no basis . . .
for treating the present case as one where there was substantial
compliance with the Rule." Id. at 570. We noted, in addition, ___
that "the court did nothing that could reasonably have caused
[defendant] to believe that all had been done that was necessary
-9-
is governed by a de novo standard of review. Gibson v. City of __ ____ ______ _______
Cranston, 37 F.3d 731, 735 (1st Cir. 1994). ________
It is not surprising that the court and parties were
uncertain about how to characterize Simon's claim based on the
New York litigation. The torts of abuse of process and malicious
prosecution frequently are confused because of their close
relationship, see, e.g., Lambert v. Breton, 127 Me. 510, 514, 144 ___ ____ _______ ______
A. 864 (1929); Board of Education of Farmingdale Union Free Sch. _________________________________________________
Dist. v. Farmingdale Classroom Teachers Ass'n, 38 N.Y.2d 397, _____ ______________________________________
400, 343 N.E.2d 278, 280-81, 380 N.Y.S.2d 635, 639-40 (1975);
Note, "Abuse of Process," 13 Clev.-Mar. L. Rev. 163, 163 (1964)
("Abuse"); Note, "Torts -- Abuse of Process Defined," 28 Ark. L.
Rev. 388 (1974) ("Defined"), and abuse of process has been
described as "one of the most obscure torts in the law," see ___
Note, "The Nature and Limitations of the Remedy Available to the
Victim of a Misuse of the Legal Process: The Tort of Abuse of
Process," 2 Val. U.L. Rev. 129, 129 (1967) ("Tort of Abuse").
To establish a claim for malicious prosecution, a party must
show that the challenged litigation was initiated without
probable cause and with malice, and that it terminated in the
plaintiff's favor. See, e.g., Nadeau v. State, 395 A.2d 107, 116 ___ ____ ______ _____
(Me. 1978). The two basic elements of abuse of process are a bad
motive, and the use of a legal process for an improper,
collateral objective. See, e.g., id. at 117. ___ ____ ___
____________________
to preserve the issue for review." Id. In both of those ___
respects, this case is distinguishable.
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The difference between the two often is explained as a
matter of timing and scope: malicious prosecution is the
appropriate cause of action for challenging the whole of a
lawsuit -- i.e., asserting that the suit has no basis and should
not have been brought -- while abuse of process covers the
allegedly improper use of individual legal procedures after a _____
suit has been filed properly. See Packard v. Central Maine Power ___ _______ ___________________
Co., 477 A.2d 264, 267 (Me. 1984); Nadeau, 395 A.2d at 117; Wade, ___ ______
J., "On Frivolous Litigation: A Study of Tort Liability and
Procedural Sanctions," 14 Hofstra L. Rev. 433, 450 (1986).
Typical abuse of process cases involve misuse of such procedures
as discovery, see Twyford v. Twyford, 63 Cal. App. 3d 916, 923- ___ _______ _______
24, 134 Cal. Rptr. 145, 148-49 (1976); subpoenas, see Board of ___ ________
Education of Farmingdale Union Free Sch. Dist., 38 N.Y.2d at 403- ______________________________________________
04, 343 N.E.2d at 283, 380 N.Y.S.2d at 642-43; and attachment,
see Saliem v. Glovsky and Fogg, 132 Me. 402, 404 172 A. 4 (1934). ___ ______ ________________
The abuse tort often is given a wider berth, however, and
courts typically will recognize such a claim, regardless of
timing, if a plaintiff can show an improper use of process "for
an immediate purpose other than that for which it was designed
and intended," Restatement (2d) of Torts 682, at 475 (1977). __________________________
See W. Page Keeton, et al., Prosser and Keeton on The Law of ___ ___________________________________
Torts 121, at 898 (5th ed. 1984) (cases requiring an act after _____
process has issued "probably stand only for the narrower
proposition that there must be an overt act and that bad purpose
-11-
alone is insufficient"). This results in an overlap between
malicious prosecution and abuse of process: a defendant who
explicitly threatened to file a baseless lawsuit solely for the
purpose of forcing the plaintiff's action in an unrelated matter,
and then did commence suit, could be held liable for either
tort.5 In such a case, the otherwise normal procedure of filing
a lawsuit is transformed into an act of abuse by the coincidence
of the threat.6
Recognizing these two approaches puts the confusion below
into perspective, but we need not dwell on their relative merits
and applicability here because not even the broader view provides
Simon with a basis for recovery. Simon's claim is premised on
the Navons' amendment of the New York litigation to include him
as a defendant. Even if Maine law, which applies to this
diversity case, would recognize an abuse of process claim based
____________________
5 Interestingly, the Georgia courts and legislature have
merged the two torts into a new abusive litigation tort. See ___
Yost v. Torok, 256 Ga. 92, 95-96, 344 S.E.2d 414, 417-18 (1986); ____ _____
Block v. Brown, 199 Ga. App. 127, 130, 404 S.E.2d 288, 291 _____ _____
(1991).
6 When abuse of process is based on conduct subsequent to
initiation of the lawsuit, the requirement of an "act" of abuse
typically would be satisfied by showing use of the individual
legal process in an improper manner. See, e.g., Board of ___ ____ _________
Education of Farmingdale Union Free Sch. Dist. v. Farmingdale _________________________________________________ ___________
Classroom Teachers Ass'n, 38 N.Y.2d 397, 343 N.E.2d 278, 380 _________________________
N.Y.S.2d 635 (1975) (subpoenas issued for 87 teachers for the
same day, paralyzing normal operations of the schools); Saliem v. ______
Glovsky and Fogg, 132 Me. 402, 172 A. 4 (1934) (excessive __________________
attachment).
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on the instigation of a lawsuit,7 Simon can prevail only if he
proves the two requisite elements of the cause of action:
ulterior motive and an act of abuse. See Nadeau, 395 A.2d at ___ ___ ______
116; Saliem, 132 Me. at 405. ______
Filing of a lawsuit is a "regular" use of process, and
therefore may not on its own fulfill the requirement of an
abusive act, even if the decision to sue was influenced by a
wrongful motive, purpose or intent. Saliem, 132 Me. at 405-06; ______
see also, e.g., Vahlsing v. Commercial Union Ins. Co., 928 F.2d ___ ____ ____ ________ _________________________
486, 490 (1st Cir. 1991) (applying Texas law); Baubles & Beads v. _______________
Louis Vuitton, S.A., 766 S.W.2d 377, 379 (Tex. Ct. App. 1989); ____________________
Grell v. Poulson, 389 N.W.2d 661, 663-64 (Iowa 1986). And, _____ _______
although wrongful motive in the context of an abuse of process
claim may be inferred from an improper act, the reverse is not
true. Saliem, 132 Me. at 405; Sage Int'l, Ltd. v. Cadillac Gage ______ ________________ _____________
Co., 556 F. Supp. 381, 389 (E.D. Mich. 1982) (citing Prosser). ___ _______
It therefore may not be presumed that the Navons filed the New
York lawsuit solely to achieve a collateral objective based on
evidence of motive alone. Simon needed to produce evidence
independent of motive to prove that an improper act occurred in
the Navons' pursuit of the litigation.
____________________
7 For purposes of the timing distinction drawn by the courts
and commentators, we think it evident that amendment of the
complaint against Israel Discount Bank to include a claim against
Simon must be viewed as the initiation of process, rather than as
a subsequent act. Process against Simon originated with the new
complaint, and that is logically where the analysis of any
litigation-related tort claim by him must begin as well.
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Simon has failed to offer such evidence. As an initial
matter, it is not seriously disputed that the allegations in the
complaint, which sought to state a cause of action for malicious
prosecution, are inadequate to make out an abuse of process
claim. The complaint alleges only that the defendants filed a
lawsuit maliciously "and probable cause for said lawsuit was
lacking." Lack of probable cause is an element of a malicious
prosecution claim, but is not a prerequisite for recovery for
abuse of process.
In his brief, Simon supports the abuse of process claim by
pointing to trial evidence of the deteriorating business
relationship with the Navons and testimony indicating that the
Navons routinely used litigation in business disputes. Simon
highlights the amendment of the bank suit and the request for $30
million in damages and injunctive relief. He further claims that
"activities took place in New York causing the Plaintiff to
expend $60,000 in his own funds to defend himself from a baseless
lawsuit."
Although Simon suggests that the demand for high damages and
the imposition of defense costs were "abusive," there is nothing
per se irregular in a plaintiff's filing a complaint that seeks ___ __
high -- even unrealistic -- damages,8 or in causing a litigation
opponent to spend money in defense. Indeed, at one point during
____________________
8 To the contrary, a multi-million-dollar damage request
strikes us as a fairly routine feature of modern lawsuits. We
would not like to contemplate the litigious scene if the law
recognized inflated ad damnum requests as meeting the "act"
requirement of abuse of process.
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colloquy with the court, Simon's counsel acknowledged that the
bringing of a $30 million lawsuit is not in itself an abuse of
process, and argued that what was significant was the evidence of
motive.
But, as we have seen, a showing of bad motive in connection
with "regular" process is not enough. See supra at 12-13. To ___ _____
satisfy his burden, Simon needed to show a specific link between
the New York lawsuit with an impermissible, collateral purpose of
the Navons. This requirement could have been satisfied, for
example, with evidence of a threat made explicitly to Simon or a
disclosure confided to a third party that the Navons planned to
file suit solely to hurt Simon's credit rating. See Sage Int'l, ___ ___________
556 F. Supp. at 388-90 ("Plaintiff must allege that defendant
committed a specific act which was directed at the collateral,
ulterior objective. . . . In sum, there must be some basis [for
finding]. . . that the improper act was the means to further the
improper purpose.")9
We think it fairly evident that Simon did not present such
evidence because it does not exist, and that the claim he
originally brought -- malicious prosecution -- was better suited
to the facts. His problem, as the district court recognized, was
that a claim for malicious prosecution would remain premature as
____________________
9 Although not cited in Simon's brief, during colloquy
concerning the Navons' motion for judgment as a matter of law at
the end of plaintiff's case, Simon's counsel referred to a
statement by Gershon Navon to his client that "I'm going to crush
you." This was simply evidence of motive; Simon provided no link
between the statement and the New York litigation.
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a matter of law until the New York lawsuit ended. Revising the
claim into one for abuse process, however, involved something
like trying to fit the proverbial square peg into a round hole.
The facts and the law simply were incompatible.10
In the malicious prosecution context, the requirements of
lack of probable cause and favorable termination of the
litigation ensure that a defendant is not found liable simply for
having a bad motive; these elements support a finding that the
lawsuit was baseless. Similarly, proof of a specific act in an
abuse of process setting provides concrete assurance that a
process actually has been abused, and that liability will not be
based on the badly motivated use of procedures that perhaps were
burdensome but not improper -- a basis that would indeed
dramatically lower the threshold of viable abuse of process
litigation. See Westmac, Inc. v. Smith, 797 F.2d 313, 321 (6th ___ ______________ _____
Cir. 1986) (Merritt, J., dissenting) (proof of specific conduct
"limits the dangers of inquiry into . . . subjective purpose").
Significantly, the need to prove an act also distinguishes a
claim for abuse of process in initiating litigation from a
premature claim for malicious prosecution; if the factfinder were
permitted to infer abuse, a plaintiff able to show bad motive
____________________
10 The only case cited by Simon in support of his contention
that amending the suit, seeking injunctive relief, and imposing
excessive legal fees constitute acts of abuse of process is
Baubles & Beads v. Louis Vuitton, S.A., 766 S.W.2d 377 (Tex. Ct. _______________ ___________________
App. 1989). That case could not be more unhelpful to his
position. Not only was the claim there based on a typical post-
filing procedure -- an ex parte seizure order -- but both the
trial and appeals courts found that there had been no abuse of
process.
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often would be able to offer a convincing argument that the
challenged litigation was brought for an improper purpose
connected to the bad feelings. This is, in essence, what Simon
sought to do. Such an approach, however, renders the malicious
prosecution tort irrelevant.
This is not to say that a plaintiff can litigate with
impunity, so long as he does so without explicit threats
concerning collateral matters. Rule 11 of the Federal Rules of
Civil Procedure authorizes judges to sanction parties or
attorneys who file pleadings, motions or other papers "for any
improper purpose, such as to harass or to cause unnecessary delay
or needless increase in the cost of litigation," a determination
left to the considered judgment of the court. Fed. R. Civ. P.
11(b), (c). Federal courts have inherent power to sanction
parties and attorneys for abuse of the litigation process, even
in diversity cases, Chambers v. Nasco, Inc., 501 U.S. 32, 44-55 ________ ___________
(1991), and trial courts in Maine likewise have such authority,
Chiapetta v. LeBlond, 544 A.2d 759, 760 (Me. 1988). Tort _________ _______
recovery, however, is limited to those instances in which
plaintiffs are able to prove the elements of the abuse of process
cause of action.
Because Simon presented no evidence of "an act in the use of
process other than such as would be proper in the regular
prosecution of the charge," Saliem, 132 Me. at 405, the jury's ______
verdict on that count must be reversed.
IV. Defamation __________
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Simon alleged that the Navons defamed him by telling several
creditors of MCTC that he was responsible for the company's
lingering debts, and by causing an attorney to write a letter in
July 1992 to Camden National Bank stating that the account Simon
had opened there was unauthorized and was being used "to divert
and dispose of a substantial amount of payments received by him
in collecting MCTC's receivables."11
The Navons argue that the letter, which was the primary
element of the defamation count,12 cannot as a matter of law
support the claim because its contents were both true and
privileged and because the Navons as individuals could not be
deemed responsible for the content of a letter written by someone
else. We reach only the first of these contentions.
____________________
11 The full text of the letter, which was signed by Attorney
Andrew A. Cadot and addressed to the bank's president, is as
follows:
We are attorneys for Maine Coast Trading Co., Inc.
("MCTC"). We understand that an account was opened in
the name of MCTC by Frank Simon II. This account was
not authorized by MCTC, but, we understand, has been
used by Mr. Simon to divert and dispose of a
substantial amount of payments received by him in
collecting MCTC's receivables.
Please accept this letter as MCTC's instruction
not to permit any further transactions in the account
without our prior approval on behalf of MCTC. In
addition, we request that you provide us with copies of
the documents used to open this account and all records
of transactions in the account.
12 Indeed, it was the sole basis for a finding of defamation
against Jonathan Navon, as all of the other statements were made
by Gershon.
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As explained earlier, our review should be limited to a
determination whether the district court abused its discretion in
rejecting defendants' motion for a new trial. The district
court, however, did not address the defamation issue in its
opinion, although the point was raised in defendants' motion; we
therefore have no basis upon which to evaluate its ruling.
Consequently, we have considered not whether the district court
abused its discretion in denying the Navons' motion, but whether
a new trial is necessary because the jury's verdict was so
clearly against the weight of the evidence as to constitute a
manifest miscarriage of justice. See Quinones-Pacheco v. ___ ________________
American Airlines, 979 F.2d 1, 3-4 (1st Cir. 1992); Wagenmann v. __________________ _________
Adams, 829 F.2d 196, 200-201 (1st Cir. 1987). _____
The Navons assert that the letter was not defamatory because
it was not false. They emphasize that Simon conceded at trial
that MCTC's bylaws reserved check-writing authority to the
Navons. Moreover, they point out, Simon acknowledged that he had
no authorization from MCTC's board of directors to open the
Camden National Bank account. The Navons claim that these
undisputed facts prove the accuracy of Cadot's statements that
the "account was not authorized by MCTC," and that Simon had been
"divert[ing] and dispos[ing]" of MCTC funds.
In response to the evidence regarding his corporate
authority under the bylaws, Simon offered only his subjective
belief that he had the authority to do what he did and the fact
that his lawyer advised him to take such steps. We think this
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falls well below what is necessary to negate the defendants'
showing based on the company's bylaws, which presumably represent
the parties' agreement on the scope of, and limitations on, their
powers. Neither Simon's belief that the actions he took were
justified, nor his lawyer's unexplained concurrence in that
belief, can support a finding that his conduct was authorized by
MCTC. The letter may have been misleading in revealing so little
about the nature of Simon's unauthorized conduct, but, on this
record, it could not be deemed false.
We therefore conclude that the Navons met their burden of
establishing that the challenged statements were true, and thus
not actionable. See, e.g., Haworth v. Feigon, 623 A.2d 150, 158 ___ ____ _______ ______
n.6 (Me. 1993) (truth is an affirmative defense in defamation
action); Picard v. Brennan, 307 A.2d 833, 834-35 (Me. 1973) ______ _______
(same). Even if Simon had some general authority as president to
take actions that he felt were in the best interest of the
company -- a possibility we cannot consider since the record on
appeal contains neither the bylaws nor other evidence of such
authority -- it still would be true that MCTC had not authorized ____
the account. Simon remained a minority shareholder, and the
Navons constituted a majority of the board of directors. In
addition, if the account and check-writing were unauthorized, the
letter also was accurate in reporting that Simon had "divert[ed]
and dispos[ed]" of MCTC receivables, the word "diversion"
typically being associated with the unauthorized use of funds, ____________
see Black's Law Dictionary (6th ed. 1990), at 477. ___ ______________________
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The jury's verdict did not specify the statements on which
defamation liability was premised, and our conclusion that the
Cadot letter could not support the claim on this record therefore
requires a new trial on defamation.13 In addition to the
letter, Simon alleged that Gershon defamed him in several
statements made to his colleagues or customers in the fish
industry.14 Although in our view these statements, too,
provide a flimsy premise for defamation liability, the Navons
have not urged as a basis for appeal that they are inadequate.
In any event, we leave the specific contours of the new trial to
the discretion of the district court after consultation with the
parties.
V. Breach of Contract and Damages ______________________________
The Navons also argue that they are entitled to judgment or
a new trial on the breach of contract claim because the evidence
presented was insufficient to support a finding for Simon. The
district court rejected the motion for new trial on this issue,
____________________
13 The Cadot letter, of course, may be admissible at a
retrial should Simon develop a different record.
14 In closing arguments, counsel for both Simon and the
Navons emphasized in particular an April 14, 1992 letter written
by Gershon to the vice president of ACI, in which Navon blamed
Simon for the delay in MCTC's payments to ACI. Navon also
accused Simon in the letter of various actions that "rob[bed] MCT
from its ability to conduct business." The two other bases for
defamation cited by Simon's counsel in argument involved
statements by Gershon to MCTC creditors laying blame on Simon for
MCTC's delinquent accounts.
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concluding that the jury instructions properly and completely set
out the relevant law and that the jurors presumably followed the
instructions in reaching their verdict. Having read the trial
transcript in its entirety, we find no abuse of discretion in the
court's denial of a new trial on this issue.
Simon presented ample evidence that the Navons agreed toward
the end of March 1992 to pay certain crucial creditors of MCTC
promptly -- a promise that a jury could find to be implicit in
the written agreement of March 24th -- but then failed to do so
despite Simon's urgent pleas and the availability of adequate
funds. Although the defendants presented a different version of
events -- laying the blame for the delinquencies on Simon for
cancelling the IDB line of credit -- the judgment between the
conflicting accounts was for the jury to make. In addition, the
jury was entitled to believe Simon's testimony that he did not
retain MCTC's receivables and open the account at Camden National
Bank until after the Navons breached an express provision of the _____
March 24th agreement by paying themselves a total of $45,000
without his permission. As we have noted, our review at this
stage is extremely deferential; whether or not we would have
reached the same conclusion were the factual question ours to
resolve in the first instance, we cannot say that the district
court erred in allowing the jury's verdict to stand on the
contract claim.
Nor may we on this record second-guess the district court's
handling of the damages issue. Simon presented evidence, through
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an economist and multiple witnesses involved in the Maine seafood
industry, that MCTC's failure to pay its debts had a lasting
financial impact on him.15 Although the Navons now challenge
as legal error certain premises upon which the economist,
McCausland, relied, they neither objected to this testimony when
it was presented nor argued at the close of the evidence that
Simon had failed as a matter of law to prove breach of contract
damages.16
The district court nevertheless agreed that McCausland's
testimony was flawed, that the jury's verdict accepting his view
was against the weight of the evidence, and that a new trial on
damages should be held unless Simon accepted a substantial
remittitur. We think the court's response was appropriate and
complete; it recognized both that Simon produced evidence of harm
____________________
15 Simon testified that salmon farmers in Eastport, with
whom he did substantial business, won't sell him fish anymore
because they are still owed money by MCTC. One fisherman,
Prenier, stated that he was leery of doing business with Simon in
the aftermath of the MCTC problems, and that Simon's reputation
in the industry has not been repaired. Colon McLernon, owner of
Maine Pride Salmon, testified that "our company has moved product
to other companies and has stayed away from Mr. Simon."
16 One of the Navons' specific complaints centers on
McCausland's reduction of Simon's 1992 and 1993 income by losses
incurred at Rain Forest, the company he partially owned that took
over some of MCTC's business. The Navons note that Simon
answered in the negative when asked the following question: "You
cannot lay the blame for any of the problems of Rain Forest at
the feet of the Navons, isn't that right, for 1992?" Whatever
that question and answer are worth with respect to Simon's 1993 ____
income, we note that the jury could have understood the response
as a misstatement in light of other less ambiguous testimony
concerning the inability to do business with downeast fishermen
following MCTC's demise.
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and that the jury's verdict improperly adopted his exaggerated
claims regarding the extent of that harm. We find no abuse of
discretion.
VI. Undue Passion, Bias, Prejudice ______________________________
The Navons point to eleven events at trial -- including
certain court rulings and comments by opposing counsel -- that
they contend created an atmosphere of bias and prejudice toward
them and led the jury to award grossly excessive damages. They
claim that one or more of these events independently, and
certainly the cumulative effect of all of them, constituted
reversible error requiring a new trial.
We have considered each of their points, many of which were
not raised at the appropriate time before the trial court, but
find that none warrants a total rejection of the jury's verdict.
We do not say that the Navons' argument is entirely without
force; we hold only that we are satisfied that the district court
was within its discretion to reject the claims it considered and
that, particularly in light of the need for a new trial on
defamation, no manifest injustice occurred that would cause us to
disturb any more of the jury's determinations.
VII. Conclusion __________
We summarize our holdings as follows:
(1) Simon has failed, as a matter of law, to prove an abuse
of process, and the judgment of the district court in his favor
is reversed.
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(2) The jury's finding that the Cadot letter was defamatory
was against the weight of the evidence in light of the Navons'
proof that the statements it contained were true. The judgment
for Simon on defamation therefore must be vacated, and the claim
remanded for a new trial.
(3) The compensatory and punitive damages awards on the tort
claims, totaling $1.3 million, are vacated.
(4) The jury's judgment of liability on the contract claim,
and its award of $836,000 in damages, are affirmed.
Affirmed in part, reversed in part, vacated in part, and ____________________________________________________________
remanded for proceedings consistent with this opinion. Each __________________________________________________________ ____
party shall bear its own costs. _______________________________
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