COMPANION HEALTH SERVICES, INC. v. Kurtz

United States Court of Appeals
For the First Circuit

Nos. 11-1493, 11-1657

COMPANION HEALTH SERVICES, INC.,

Plaintiff, Appellee/Cross-Appellant,

v.

GEORGE KURTZ and MARY KAY REID,

Defendants, Appellants/Cross-Appellees.

MAJORS MOBILITY, INC., MAJORS MEDICAL, INC., MMS NORTHERN
DETROIT, INC, MAJORS MOBILITY-ZANESVILLE, LLC, STUART SHERMAN,
JACOB & WEINGARTEN, P.C., J.P. MORGAN CHASE BANK, N.A.,

Defendants.

APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. George A. O'Toole, U.S. District Judge]

Before

Selya, Boudin and Stahl, Circuit Judges.

Scott McConchie, with whom Thomas F. Maffei and Griesinger,
Tighe & Maffei, LLP were on brief, for appellants, cross-appellees.
Dustin F. Hecker, with whom Ian H. Moss and Posternak
Blankstein & Lund, LLP were on brief, for appellee, cross-
appellant.

March 29, 2012
 STAHL, Circuit Judge. After three years of drawn-out

proceedings in this contract dispute between plaintiff-appellee

Companion Health Services, Inc. (Companion) and defendants-

appellants George Kurtz and Mary Kay Reid and their various

business entities, the district judge imposed a default as to all

counts based on discovery violations by the defendants. The

district court eventually lifted the default except as to

Companion's veil piercing claim, allowing the substantive claims to

go to trial. After a jury found for Companion and awarded over $1

million in damages, Kurtz and Reid, who were personally liable,

appealed the district court's various orders pertaining to the

default on the veil piercing claim. In this close case, because

the district court imposed such a severe sanction based on a very

limited slice of the relevant facts, we vacate the sanction and

remand for further proceedings. We, however, deny Companion's

cross-appeal for prejudgment interest.

I. Facts & Background

This appeal relates to the discovery process during the

litigation of a Massachusetts state law contract dispute between

Companion and George Kurtz and Mary Kay Reid (together, the

individual defendants), as well as Majors Medical, Inc., Majors

Mobility, Inc., Majors Mobility-Zanesville, LLC, and MMS Northern

Detroit, Inc. (the corporate defendants) stemming from a deal to

sell durable medical equipment (DME) in Wal-Mart stores. Companion

-2-
was authorized to license space within Wal-Mart stores to companies

that sell DME. In 2005 and 2006, Companion entered into licensing

agreements with the defendants for three locations in Ohio and

Indiana. In January 2007, Companion contracted with the defendants

to take over twenty additional locations from a failing licensee,

entering into what the parties denote as "the Master Agreement."1

By March 31, 2007, the defendants, having failed to perform, shut

down operations in all locations. Thereafter, on November 7, 2007,

Companion sued the defendants in the United States District Court

for the District of Massachusetts, alleging various breach of

contract and related tort claims under state law,2 and,

significantly, requesting to pierce the corporate veil, such that

the liability of the companies would also be imposed on the

individual defendants, the two principals of all of the companies.3

The litigation began fairly smoothly. After the

complaint and answers were filed in November and December of 2007,

1
The parties also entered into other agreements which they
call the Evansville and Zanesville Agreements.
2
Companion's claims included breach of contract, breach of
the covenant of good faith and fair dealing, promissory estoppel,
misrepresentation, unjust enrichment, and violations of Mass. Gen.
Laws ch. 93A.
3
Kurtz owns 70% of Majors Mobility, a Michigan corporation,
and Reid owns the remaining 30%. Majors Mobility is the only
member of Majors Mobility-Zanesville, LLC, a Michigan limited
liability company. Reid is the owner of MMS Northern Detroit, a
Michigan corporation. Companion also sued a supposed Michigan
corporation called "Majors Medical," but Kurtz and Reid denied
having knowledge of that company.

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respectively, the district court held a scheduling conference on

January 28, 2008. The parties submitted their initial disclosures

on schedule on February 29, 2008. However, on May 6, 2008, the day

after submitting their first responses to Companion's

interrogatories and document requests, the defendants' attorneys

(from Hanify & King) moved to withdraw, citing an "irretrievable

breakdown in the attorney-client relationship."4 Companion opposed

the motion to withdraw, noting that local rules prevented the

corporate defendants from appearing before the court without

representation, and urged the court to deny the motion unless the

withdrawal could be contingent upon the appearance of successor

counsel. The district court agreed, noting that the motion would

not be allowed until successor counsel had filed an appearance.

Companion's attorney felt that the May 5 responses to the

interrogatories and document requests, which were in large part

related to the veil piercing claim, were inadequate, and relayed

this concern to Hanify & King on May 14, 2008, via a discovery

letter.5 On May 19, 2008, Hanify & King told Companion's attorney

4
Hanify & King moved to withdraw its representation of both
the corporate and the individual defendants.
5
In their May 5 responses, the defendants made general
objections to the time period of the requested information,
alleging that only post-contract information was relevant.
Companion countered that pre-contract information was relevant to
the veil piercing claim. The defendants also objected to
Companion's definition of terms for purposes of setting the scope
of the discovery requested. Further, the defendants made specific
objections to various interrogatories and document requests,

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that they were close to getting successor counsel and that it would

respond to the discovery letter by May 23, 2008. However, they did

not respond, and on June 2, 2008, Companion filed its first motion

to compel responses, asserting that the responses had been

inadequate and that not a single document had been produced. The

district court did not immediately rule on the motion.

Four months after Hanify & King's motion to withdraw, the

defendants finally succeeded in obtaining new counsel, and

attorneys from Crowe & Dunn filed their appearances on September 2,

2008.6 On November 4, the district court granted Hanify & King's

motion to withdraw.

Proceeding with discovery, Companion's attorney and the

defendants' attorneys from Crowe & Dunn agreed that Kurtz and Reid

would be deposed on November 11 and 12, 2008, in Boston.7 On

November 10, Crowe & Dunn called Companion's counsel and informed

him that Kurtz and Reid had decided they would not attend their

claiming that many of the requests were overbroad, that much of the
information requested was irrelevant to Companion's claims, or that
the information and documents requested did not exist or were
protected by attorney-client privilege. Reid refused to answer one
particular interrogatory, claiming that a referred-to affidavit was
not attached. However, the defendants asserted that they would
make some documents requested available to Companion and answered
some interrogatories in whole or in part.
6
Like Hanify & King, Crowe & Dunn represented both the
corporate and individual defendants.
7
Kurtz's and Reid's depositions had initially been noticed in
July 2008 and were again noticed in September 2008, after Crowe &
Dunn's appearance.

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depositions. After confirming on November 17 that Kurtz and Reid

continued to refuse to come to Boston for their depositions, on

November 19, Companion filed a motion to compel the depositions of

Kurtz and Reid in Boston. The individual and corporate defendants

opposed the motion collectively, making jurisdictional arguments as

to why the depositions should not take place in Boston.

On December 5, while the motion to compel depositions was

pending, Crowe & Dunn provided Companion with a sparse supplemental

response to the pending interrogatories and document requests,

which did not give Companion a single new piece of information.8

On December 18, 2008, the parties filed a joint motion to extend

the scheduling order, citing the difficulty in carrying out the

depositions.9 On December 22, 2008, the district court granted the

8
The supplemental response contained ten general objections
to the interrogatories and document requests. Further, the
response stated a combination of one or more of the following
objections to each of Companion's thirty-three requests: (1) the
information requested was subject to attorney-client privilege or
the work-product doctrine or was otherwise confidential; (2) all
responsive documents had previously been produced or there were
none in the defendants' possession; (3) the request was overly
broad and unduly burdensome; (4) the requested information was not
reasonably calculated to lead to discovery of evidence admissible
at trial; (5) the requested information inappropriately pertained
to matters related to post-judgment relief; (6) the documents were
a matter of public record equally accessible by Companion; and (7)
the definition of a term in the request was ambiguous.
9
Companion had previously filed two assented-to motions to
extend the scheduling order. The first motion to extend was filed
July 18, 2008, and was based on the defendants' allegedly
inadequate discovery responses. The second, filed October 17,
2008, was based on the defendants having recently retained
successor counsel. A fourth motion to extend was eventually filed

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motion to compel the depositions without explanation, ordering that

the individual defendants appear for their depositions in Boston

within forty-five days. A day later, on December 23, the district

court granted the December 18 motion to extend the scheduling

order, setting a new deadline of February 27, 2009, for the end of

discovery.

On January 7, 2009, allegedly in reliance on promises by

Crowe & Dunn that discovery responses beyond the December 5

supplemental response were forthcoming, Companion withdrew its

motion to compel discovery responses. The motion had been filed on

June 2, 2008, and was never ruled on by the district court.

However, no further responses came. With little progress being

made, on March 11, Companion renewed its motion to compel

responses, which was opposed separately by each of the individual

defendants as well as by the corporate defendants, largely for the

same reasons as were stated in their initial objections.10

Meanwhile, Companion had sought the names and addresses

of the corporate defendants' former employees in its

on February 23, 2009, based in part on the inability of Companion's
president, Kimberly Mairs, to attend her deposition as initially
scheduled.
10
On March 30, 2009, before any order by the district court
on Companion's motion to compel, the corporate defendants filed
their own motion to compel, alleging that Companion's discovery
responses had been inadequate. Companion opposed the motion, but
it agreed to provide some further discovery to the extent that the
discovery was not confidential, while still objecting to some
requests as irrelevant or burdensome.

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interrogatories; this information was never provided. Companion

eventually obtained the names of two former employees from a non-

involved third party and scheduled their depositions to be taken on

April 3, 2009. On April 2, 2009, the defendants filed a motion for

a protective order, seeking to prevent Companion from conducting

the two depositions the next day. The defendants' objection to the

depositions was that Kurtz and Reid allegedly would have been

unavailable to listen in on the phone. On April 3, 2009, the day

for which the depositions were scheduled, Companion filed its

opposition to the motion for the protective order, and the judge

denied the motion without explanation.

The depositions went forward on April 3, and during the

depositions, Companion obtained the names of additional former

employees. On April 14, 2009, Companion filed a motion to extend

the time for filing summary judgment petitions in order to allow

time to depose those additional employees. The next day, the

district court granted the motion to extend.

On May 20, 2009, the defendants filed five separate

motions for summary judgment, arguing that it was clear that the

contract with Companion did not contain all material terms and was

therefore not binding on them, and further, that piercing the

corporate veil was inappropriate.11 On June 26, 2009, Companion

11
Companion here asserts, in support of its argument that the
defendants were obstructionist throughout the discovery process,
that some of the documents that the defendants attached to their

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filed its opposition to the motions for summary judgment, arguing

that an agreement between the parties was reached and that the

evidence merited a trial as to piercing the corporate veil.

On October 2, 2009, while the motions for summary

judgment were still pending, Crowe & Dunn moved to withdraw as

counsel for all of the defendants, citing a substantial breakdown

of the attorney-client relationship and an unreasonable financial

burden on the firm given that the defendants "remain[ed] in

substantial arrears for their legal fees."12 Companion "responded"

to (but did not "oppose") the motion; Companion did not request

that the motion's grant be contingent on the appearance of

successor counsel as it had previously done but instead focused on

its desire that the summary judgment hearing take place on December

2, 2009, as scheduled.

On November 17, 2009, the district court responded in a

single order to Companion's pending motion to compel and to the

recent motion to withdraw. As to Companion's motion to compel, the

judge considered each of the defendants' objections, overruling

summary judgment motion were responsive to the previously
unanswered discovery requests. Companion cites to the corporate
documents pertaining to MMS Northern Detroit and Majors Mobility,
Inc. However, it is unclear to us to which request these documents
were responsive or when they ought to have been produced, because
Companion has not enlightened us. Because this argument does not
affect our holding, we do not address it further.
12
Thomas Maffei, the defendants' third attorney, later told
the district court that their previous attorneys had been paid
hundreds of thousands of dollars.

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both general objections13 as well as many of the specific

objections, ordering responses and production, while finding that

no further answer or production was required for some of

Companion's interrogatories and requests.14 The district court

granted the motion to withdraw without explanation and without

requiring the appearance of successor counsel.15

On December 2, 2009, with the summary judgment hearing

set to go forward that day, Kurtz, who was in Michigan at the time,

called the district court's clerk and told him that he was

unrepresented and would be unable to attend the hearing. The clerk

informed Kurtz that the judge had a "mountain" of paper and was

ready to proceed with the hearing on the fully briefed motion. The

clerk told Kurtz to call back later that day to find out the

results of the hearing.

The hearing in fact proceeded later that day. At the end

of the hearing, Companion's counsel requested that a deadline be

13
The first general objection was to the timeline of the
requests; Companion had offered a compromise start date of January
1, 2004, which the district judge adopted. As to the second
general objection pertaining to Companion's definition of terms,
the district court overruled it without further comment.
14
The district court also addressed the corporate defendants'
motion to compel in the same order, denying it in its entirety,
stating only that "the answers provided [by Companion] are
adequate."
15
The defendants were then unrepresented for about four
months, until March 8, 2010, when attorneys from Griesinger, Tighe
& Maffei entered their appearances.

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set for compliance with the order granting the motion to compel.

Mindful of the fact that the defendants were unrepresented, the

district court named December 11, 2009 (nine days later) as the

deadline. On December 15, 2009, the district court denied the

defendants' various motions for summary judgment "substantially for

the reasons stated in the plaintiff's opposition memorandum."

On December 17, 2009, having received nothing by the

December 11 production/response deadline, Companion filed a motion

for sanctions under Federal Rule of Civil Procedure 37, requesting

default on all counts. In the alternative, as most of the

discovery sought pertained to veil piercing, Companion requested

default on that count alone.

On January 5, 2010, while the motion for sanctions was

pending but before a hearing date had been set, Kurtz again called

the clerk. The clerk informed Kurtz that the summary judgment

issue had been decided.16 Kurtz requested that the papers be sent

to him and provided the clerk with his address; shortly thereafter,

he received the docket sheet in the mail. Kurtz's address was

handwritten on the envelope. He did not receive any other

documents at that time or up to the point when he retained

Griesinger, Tighe & Maffei in March. In addition to the December

15 decision denying summary judgment, the docket sheet reflected

16
It is unclear from the record whether the clerk told Kurtz
that the motions had been denied or simply that a decision had been
reached.

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that the court had ordered that discovery be produced by December

11 and also that a motion for sanctions had been filed on December

17. The docket sheet did not reflect any hearing on the motion for

sanctions.

On January 15, 2010, the court scheduled a hearing on the

motion for sanctions for February 3, 2010. The docket sheet noted

that the corporate defendants had to be represented by counsel in

order to appear and that notice of the hearing was mailed to all

defendants. However, none of the defendants received the notice,

as the corporate address had changed as of September 2009, and the

court did not have the new address on record.17 The notice was not

sent to Kurtz at the address that he had provided to the clerk

during the January 5, 2010 call.18

17
Local Rule 83.5.2(e) mandates that attorneys and pro se
parties notify the court of any changes in address; however, the
corporate defendants, as unrepresented corporate parties, did not
fall squarely into either of these categories. See LR, D. Mass.
83.5.2(d) ("The court will not recognize the appearance of a firm
or professional corporation unless it is accompanied by the
appearance of at least one (1) attorney."); Schreibman v. Walter E.
Heller & Co. of P.R. (In re Las Colinas Dev. Corp.), 585 F.2d 7, 13
(1st Cir. 1978) ("One of the time-hallowed restrictions on
corporations has been that, in court proceedings, they must be
represented by a licensed attorney."). Because this issue is not
necessary to our holding, we do not address it further.
18
The individual defendants, who unlike the corporate
defendants were clearly pro se parties, had an obligation to notify
the court of their address and Kurtz's informal attempt to give the
clerk his address did not satisfy the rule, as it was not filed.
See LR, D. Mass. 83.5.2(e)(2) ("[E]ach party appearing pro se is
under a continuing duty to notify the clerk of any change of
address and telephone number. Notice under this rule shall be
filed in this case."). Therefore, the individual defendants, at

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 No one appeared for any of the defendants at the February

3 hearing, and with little argument or discussion, the district

court orally granted the motion in full, imposing default as to all

counts. On February 22, 2010, the court set a date of March 9,

2010, for a hearing on damages.

According to Kurtz, he first contacted his lawyer in

Michigan about retaining a new lawyer in Boston on February 10,

2010, and got in touch with the office of his eventual third

attorney, Thomas Maffei of Griesinger, Tighe & Maffei, in

mid-February 2010. Maffei and Kurtz first spoke sometime between

Wednesday, March 3 and Friday, March 5, 2010. Maffei then

consulted PACER and realized that the damages hearing was to take

place on the following Tuesday, March 9. He entered his appearance

for all the defendants on Monday, March 8, 2010, and also requested

that the damages hearing be continued. Companion opposed the

continuance. The hearing began on March 9 as scheduled, but at the

hearing, the district court agreed to continue to May 19, 2010,

stating its expectation that the defendants would file a motion to

lift the default.

The defendants filed their motion to lift the default on

March 31, 2010. They argued that the sanction of default judgment

least, were not entitled to notice of proceedings at their current
addresses. See id. ("Any . . . party appearing pro se who has not
. . . provided the clerk with his current address in accordance
with this rule shall not be entitled to notice.").

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was overly harsh, because it required "more than mere negligence,"

such as willfulness or bad faith. They also argued that they had

substantially complied with Companion's discovery requests, and

would further comply "in short order." Further, they argued that

they were unaware of their obligations regarding discovery or

responding to the motion for sanctions, as they were unrepresented

and did not understand the implications of the information on the

docket sheet. Finally, the defendants argued that they had

legitimate defenses to Companion's claims on the merits. Companion

opposed lifting the default, arguing that the sanction was

appropriate, and that there was no good cause to lift the default

under Federal Rule of Civil Procedure 55(c).

On June 9, 2010, after the agreed-upon continuance, the

hearing on the motion to lift the default took place before the

district court. The court heard argument from the parties and then

issued a somewhat lengthy oral decision. First, the district court

explicitly stated that it did not take Maffei's "benign [] view" of

the situation. Instead of viewing the individual defendants as

negligent, the district court found that their discovery violations

had been willful. Once Kurtz had the docket in early January, "it

was apparent from the docket that a deadline for complying with the

document request had passed and a motion for sanctions had been

filed in response to it." The district court noted that while it

was not clear that Kurtz knew of the date of the hearing on the

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motion for sanctions, "the record indicates he was aware of the

jeopardy and didn't do anything about it."

The district court then considered whether the sanction

of default judgment was proportionate to the offense. Determining

that the discovery sought went to the veil piercing claim, the

district court decided that the "intermediate sanction" of default

judgment only as to that count was appropriate. That way, the

contract claims could be addressed on the merits.

After the district court announced its decision, the

parties made further arguments. Maffei argued that Reid should be

treated differently from Kurtz, as she appeared to have less

involvement, but the judge reiterated that he saw the violations as

"knowing and willful" and did not change his order. The district

court did not make any other material factual findings, and did not

make clear exactly which discovery violations were the basis of its

ultimate sanction.19

19
On June 10, 2010, the next day, the individual defendants
filed a motion for reconsideration, again arguing that the sanction
was too harsh and that Reid should receive different treatment.
Companion opposed the motion, which it stated "merely rehashe[d]
the arguments that the [district court] already ha[d] considered
and rejected." Companion's opposition described Reid's involvement
in the underlying contract and deal, but offered no evidence of her
involvement in the discovery abuses. On July 6, 2010, the district
court denied the motion with little explanation, and did not
address the issue of different treatment of Reid.

Thereafter, on July 14, 2010, Companion filed a motion for
attorneys' fees and costs incurred in connection with the motion
for sanctions, requesting a total of $7,763.13. All of the
defendants opposed the motion. On March 31, 2011, after trial, the

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 Beginning on August 16, 2010, the district court presided

over a seven-day jury trial. On August 25, 2010, the jury returned

a verdict for Companion, awarding over $1 million in damages,

including $86,073 more than Companion had requested in lost profits

and other contract damages. Various post-trial motions, including

Companion's motion to amend the judgment to include prejudgment

interest that is now the subject of Companion's cross-appeal,20 took

place over the course of the next ten months. On May 2, 2011, the

individual defendants filed the current appeal, challenging the

district court's imposition of the veil piercing sanction;21 on June

7, 2011, Companion cross-appealed the denial of the motion to amend

the judgment and the judgment itself.

district court granted the motion, awarding Companion a sum of
$5,000.00.
20
On March 31, 2011, the district court entered its findings
of fact and conclusions of law to accompany its order of judgment.
In that order, the district court awarded Companion prejudgment
interest only on the amount of damages it had requested but not on
the additional $86,073 that the jury had awarded, considering this
amount likely to represent attorney's fees and other fees. On
April 4, 2011, Companion filed its motion to amend the judgment
under Federal Rule of Civil Procedure 60(a), asking the court to
award prejudgment interest as to all damages. The defendants
opposed the motion. On May 17, 2011, the district court denied the
motion electronically and without comment.
21
In their notice of appeal, Kurtz and Reid also appealed the
district court's failure to lift the sanction of default and the
denial of the motion for reconsideration. However, in their briefs
on appeal, the parties analyze the issue holistically, asking for
a global review of the imposition of the default as to the veil
piercing count. We accept their invitation to structure our
analysis around the imposition of the default sanction and do not
address the other two orders.

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 II. Discussion

A. The Appeal by Kurtz and Reid

This court reviews for abuse of discretion a district

court's imposition of default as a sanction under Federal Rule of

Civil Procedure 37. Crispin-Taveras v. Municipality of Carolina,

647 F.3d 1, 7 (1st Cir. 2011) (citing Remexcel Managerial

Consultants, Inc. v. Arlequín, 583 F.3d 45, 51 (1st Cir. 2009)).

We review the factual findings upon which the sanction is based for

clear error. Koken v. Black & Veatch Constr., Inc., 426 F.3d 39,

53 (1st Cir. 2005). A court of appeals is not concerned with

whether it would have itself imposed the particular sanction chosen

by the district court, Nat'l Hockey League v. Metro. Hockey Club,

Inc., 427 U.S. 639, 642 (1976) (per curiam), and instead typically

defers to the district court, as "the trial judge . . . is usually

the person most familiar with the circumstances of the case and is

in the best position to evaluate the good faith and credibility of

the parties . . . ," Remexcel, 583 F.3d at 51 (citing KPS &

Assocs., Inc. v. Designs by FMC, Inc., 318 F.3d 1, 13 (1st Cir.

2003)). The party challenging the imposition of a default judgment

"bears a heavy burden of demonstrating that the trial judge was

clearly not justified in entering an order of default under Rule

37." Id. (quotation marks and alterations omitted). But in

evaluating the appropriateness of the sanction, we need not examine

evidence in the record beyond that considered by the district court

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when it imposed the sanction. See Robson v. Hallenbeck, 81 F.3d 1,

3 (1st Cir. 1996). Further, while we give deference to the

district court, we will not "rubber-stamp" the imposition of a

sanction. See Benitez-Garcia v. Gonzalez-Vega, 468 F.3d 1, 5 (1st

Cir. 2006) (quoting Tower Ventures, Inc. v. City of Westfield, 296

F.3d 43, 46 (1st Cir. 2002)).

Federal Rule of Civil Procedure 37(b) provides a

"veritable arsenal of sanctions" in the context of discovery,

Crispin-Taveras, 647 F.3d at 7 (internal quotation marks omitted),

including the imposition of "default judgment against [a]

disobedient party" for failure to obey a court order, Fed. R. Civ.

P. 37(b)(2)(A)(vi). The district court can also apply this

sanction where a party fails to provide answers to interrogatories

or produce documents for inspection, or for failure of a party to

attend its own deposition. See Fed. R. Civ. P. 37(d)(3). While

default judgment is considered a "drastic sanction," its entry

"provides a useful remedy when a litigant is confronted by an

obstructionist adversary and plays a constructive role in

maintaining the orderly and efficient administration of justice."

Crispin-Taveras, 647 F.3d at 7 (quoting Remexcel, 583 F.3d at 51)

(internal quotation marks omitted). As this remedy is "contrary to

the goals of resolving cases on the merits and avoiding harsh or

unfair results," the district court, in its superior on-the-ground

position, must balance these "competing considerations" before

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entering default. Remexcel, 583 F.3d at 51 (quoting KPS, 318 F.3d

at 13) (internal quotation marks omitted). A district court need

not consider or try lesser sanctions before imposing default,

Diaz-Fonseca v. Puerto Rico, 451 F.3d 13, 25 (1st Cir. 2006)

(quoting Damiani v. R.I. Hosp., 704 F.2d 12, 15 (1st Cir. 1983)),

but a failure to do so can contribute to a finding that the

district court abused its discretion, Benitez-Garcia, 468 F.3d at

6 (citing Crossman v. Raytheon Long Term Disability Plan, 316 F.3d

36, 39-40 (1st Cir. 2002)). As always, the goal of a sanction is

both to penalize wrongful conduct and to deter future similar

conduct by the particular party and others "who might be tempted to

such conduct in the absence of such a deterrent." Nat'l Hockey

League, 427 U.S. at 643.

Here, the district court imposed the sanction of default

as to the veil piercing count based on a combination of oral

orders: first, when it granted the motion for sanctions, and

second, when it denied in part the motion to lift the default. In

both cases, the district judge restricted its analysis to Kurtz's

and Reid's failure to respond to the December 11, 2009

production/response deadline, the only basis for Companion's motion

for sanctions. That deadline had been set nine days earlier,

during which time the individual defendants, here, the appellants,

were unrepresented by counsel. However, the district judge found

the failure to comply with the deadline to be "willful," where at

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least Kurtz was "aware of the jeopardy [of sanctions] and didn't do

anything about it." Though there was perhaps enough litigation

misconduct by Kurtz and Reid for a default sanction if the totality

of their behavior during the entire history of the case had been

considered, the district court based the sanction on a single

instance, for which there were significant and legitimate

mitigating excuses, and did not make sufficient factual findings to

support its ultimate sanction. Under those circumstances, we

decline to extend our precedent to find that the sanction of

default on the veil piercing count was appropriate.

This sanction apparently was based on a single instance

of misconduct, although arguably a continuing one. Our precedent

makes clear that a severe sanction, such as default or dismissal,

is inappropriate in most cases when based on one incident. See

Crossman, 316 F.3d at 39 ("A single instance of prohibited conduct

cannot be a basis for [a severe sanction] if the conduct was not

particularly egregious or extreme.") (quoting Top Entm't, Inc. v.

Ortega, 285 F.3d 115, 118 (1st Cir. 2002)) (internal quotation

marks omitted). The conduct here cannot qualify as "particularly

egregious," where the defendants were unrepresented and unaware of

the deadline at the time it was set. And while we generally "give

a wide berth to the presider's judgment that, under all the

circumstances, [a] proffered justification [for failure to comply

with a court order] is insufficient," Tower Ventures, 296 F.3d at

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47, this is a case where we must ask more of the district court

before affirming the imposition of such a harsh sanction apparently

based on such a thin slice of misconduct.

This would be a different case if, after allowing Kurtz

and Reid to respond to a much broader charge of misconduct, the

district court had supportably found that they had themselves

engaged in a deliberate pattern of stonewalling with the aim of

frustrating effective discovery and the progress of the case.22 For

example, the court might have found that the four extensions to the

scheduling order resulted from the defendants' misconduct; that the

individual defendants had acted improperly in objecting to their

depositions and those of others; or that they had withheld

documents in bad faith. After giving Kurtz and Reid a specific

opportunity to respond to and explain their conduct as to

individual incidents, and distinguishing between their own actions

and those of their lawyers not directed by Kurtz and Reid, the

court might have been able to find them as individuals willfully

responsible for "a pattern of prolonged and vexatious obstruction

of discovery with respect to highly relevant records." S. New

Eng. Tel. Co. v. Global NAPs Inc. (SNET), 624 F.3d 123, 148 (2d

22
Kurtz and Reid were represented by three sets of attorneys
over the course of the litigation, and their last attorney stated
to the district court that substantial legal fees had been paid to
the previous attorneys. The district court might therefore have
drawn an inference adverse to Kurtz and Reid from this set of
circumstances.

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Cir. 2010) (internal quotation marks and alterations omitted)

(citing this pattern of conduct as a basis for the imposition of

default judgment on a veil piercing count as a sanction); see also

Crispin-Taveras, 647 F.3d at 7 (stating that default judgment

"provides a useful remedy when a litigant is confronted by an

obstructionist adversary and plays a constructive role in

maintaining the orderly and efficient administration of justice").

However, the district court did not mention any of the foregoing as

part of the basis for the sanction, and therefore we do not

consider them in our review. See Robson, 81 F.3d at 3 (declining

to consider potential pattern of litigation misconduct where only

one incident formed the basis for the district court's sanctions

order).

While the imposition of a default judgment on a veil

piercing claim is not unheard of in this circuit, see Global NAPs,

Inc. v. Verizon New Eng. Inc. (Verizon), 603 F.3d 71, 93-95 (1st

Cir. 2010), cert. denied, 131 S. Ct. 1044 (2011), in that case, the

misconduct upon which the default sanction was based was

significantly more extreme than missing a single production

deadline. In Verizon, this court affirmed the imposition of

default judgment on a veil-piercing claim, where "the [district]

court made a number of factual findings that [we]re well supported

in the record" showing that the counterclaim defendants had

"violated [the district court's] orders and committed willful

-22-
discovery misconduct," including the destruction of evidence and

lying to the court. Id. at 93-94. The Second Circuit later also

affirmed the same sanction in a related case, basing its holding on

the willfulness behind the violations and the fact that the conduct

of the sanctioned parties was "not isolated but rather formed a

pattern of prolonged and vexatious obstruction of discovery with

respect to highly relevant records" pertaining to the veil piercing

claim. SNET, 624 F.3d at 147-48 (internal quotation marks and

alterations omitted). The Second Circuit also considered important

the fact that the parties were unmistakably on notice of their

discovery obligations at the time of the violations, given the

clarity of the district court's orders and its previous warnings.

Id. at 148.

Though we by no means suggest that the defendants here

were faultless, for they were not, the facts of this case suggest

less egregious circumstances than those in Verizon and SNET. There

was no destruction of evidence or explicit finding of false

statements to the court. See SNET, 624 F.3d at 147-48; Verizon,

603 F.3d at 94. There were no clear warnings that sanctions were

imminent. See SNET, 624 F.3d at 148 (basing affirmance of default

sanction in part on district court's warning that default would be

imposed); Remexcel, 583 F.3d at 52 (noting that repeated, stern

warnings by the district court supported the appropriateness of

default judgment). Kurtz and Reid were unrepresented by counsel

-23-
from the time of the discovery deadline to the time the default was

originally imposed and therefore were not unmistakably on notice of

their discovery obligations at the time they initially violated the

district court's December 2, 2009 order. See SNET, 624 F.3d at 148

(finding no abuse of discretion in imposition of default judgment

where party was clearly on notice of discovery obligations).

Though not in formal compliance with the local rules, Kurtz did

attempt to leave a current address with the clerk when he called on

January 5, 2010, but received only the single communication

containing the docket sheet (in an envelope bearing a handwritten

address) and thereafter, no further notifications as to the

district court proceedings. Finally, the district court did not

make factual findings that the defendants had engaged in a pattern

of obstruction or stonewalling. See SNET, 624 F.3d at 147-48

(emphasizing importance of pattern of prolonged obstruction in the

determination of default judgment as an appropriate sanction).

While the imposition of default on a veil piercing count

as a Rule 37 sanction could on some evidence be appropriate, here,

the factors distinguishing this case from Verizon and SNET persuade

us that, on the basis of the conduct considered by the district

court and the factual findings it made, such a sanction was not

warranted. Unlike the district court, we do not view such a

sanction as an "intermediate" one. We therefore vacate the default

and remand to the district court for further proceedings, after

-24-
which the court may make additional findings with respect to the

need for additional sanctions beyond the fee sanction already

granted (and if so, the nature of the sanction that it deems

appropriate).

B. Companion's Cross-Appeal

Companion cross-appeals the district court's order

declining to amend the judgment to impose an award of prejudgment

interest on a portion of the damages, as well as the original

judgment "so unamended." The jury awarded Companion a total of

$1,043,509 in contract damages,23 an amount greater than Companion

had argued it suffered in lost profits. The district court

therefore imposed prejudgment interest only on the portion of the

award that Companion had requested, or a total of $957,429.24

Companion moved to amend the judgment under Federal Rule

of Civil Procedure 60(a), which allows a district court to "correct

a clerical mistake or a mistake arising from oversight or omission

whenever one is found in a judgment, order, or other part of the

record." A Rule 60(a) motion may only be granted where "the

judgment failed to reflect the court's intention." Bowen Inv.,

23
The jury awarded $968,036 in damages with regard to the
Master Agreement, $11,541 with regard to the Zanesville Agreement,
and $63,932 with regard to the Evansville Agreement.
24
This is the sum of $905,729 on the Master Agreement, $7,775
on the Zanesville Agreement, and $43,932 on the Evansville
Agreement. This amounts to $86,073 less than the total damages
awarded by the jury.

-25-
Inc. v. Carneiro Donuts, Inc., 490 F.3d 27, 29 (1st Cir. 2007)

(internal quotation marks omitted). Here, Companion argues that

Massachusetts state law provides for prejudgment interest on the

full amount of damages awarded. See Mass. Gen. Laws ch. 231, § 6C.

However, the district court found that the damages awarded above

and beyond the lost profits requested amounted to an award for

attorney's fees, and therefore intentionally awarded prejudgment

interest on only part of the award. The district court's

determination that Companion was not entitled to prejudgment

interest on damages above and beyond the amount requested for lost

profits was a "deliberate choice of the district judge reflect[ing]

an interpretation of law which, even if erroneous, cannot be

corrected under Rule 60(a)." Elias v. Ford Motor Co., 734 F.2d

463, 466 (1st Cir. 1984).

However, although styled as a motion under Rule 60(a), "a

post-judgment motion made within ten days of the entry of judgment

that questions the correctness of a judgment is properly construed

as a motion to alter or amend judgment under Fed. R. Civ. P.

59(e)." Global NAPs, Inc. v. Verizon New Eng., Inc., 489 F.3d 13,

25 (1st Cir. 2007) (internal quotation marks omitted). We

therefore consider the motion to have been filed pursuant to Rule

59(e) and review the district court's denial for abuse of

discretion, reversing only where "the original judgment evidenced

a manifest error of law . . . or in certain other narrow

-26-
situations." Id. We also review the district court's

determination regarding the award of prejudgment interest in the

initial judgment for abuse of discretion, "but legal issues

relating to the prejudgment interest award are reviewed de novo."

Analysis Grp., Inc. v. Cent. Fla. Inv., Inc., 629 F.3d 18, 24 (1st

Cir. 2010).

Under Massachusetts law, in most circumstances,

prejudgment interest is not awarded for attorney's fees, even where

the attorney's fees are provided for in a contract. See Interstate

Brands Corp. v. Lily Transp. Corp., 256 F. Supp. 2d 58, 63 & n.3

(D. Mass. 2003) (noting that Mass. Gen. Laws ch. 231, § 6C does not

impose prejudgment interest where "attorneys' fees . . . are not

really an element of 'damages' flowing from breach but rather an

additional right of recovery incident to that breach which vests

when a party successfully takes action to enforce its rights").

This is exactly the situation which presents itself here, and is in

contrast to a context where, for example, an insurance company

violates a contract based on its failure to perform its duty to

defend, such that attorney's fees are "part and parcel of 'damages'

for breach of contract." Id. at 63 (citing Sterilite Corp. v.

Cont'l Cas. Co., 494 N.E.2d 1008 (Mass. 1986)). Because the

district court considered the damages awarded in excess of the

amount demanded by Companion to be attorney's fees, there was no

error of law in declining to award prejudgment interest on that

-27-
portion of the award, and therefore no abuse of discretion. We

decline to disturb the ruling of the district court on prejudgment

interest.

III. Conclusion

It remains within the sound discretion of the district

court to decide whether to consider further the adoption of a

default sanction on the veil piercing issue, some other sanction

such as attorneys' fees for unnecessary delays and failure to

complete discovery, or any other measure deemed appropriate; and,

of course, any sanction ultimately imposed should be accompanied by

appropriate findings. Assuming that the issue is not one that can

be otherwise resolved, a trial on the veil piercing count may be

necessary.

The district court committed no error in declining to

award prejudgment interest on the attorney's fees owed to

Companion, so as to its cross-appeal, we affirm.

Each party shall bear its own costs.

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