Ed Peters Jewelry Co. v. C & J Jewelry Co.

United States Court of Appeals
For the First Circuit

No. 99-1800

ED PETERS JEWELRY CO., INC.,

Plaintiff, Appellant,

v.

C & J JEWELRY CO., INC., ET AL.,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND

[Hon. Ronald R. Lagueux, U.S. District Judge]

Before

Boudin, Circuit Judge,
Bownes, Senior Circuit Judge,
and Stahl, Circuit Judge.

Robert C. Corrente, with whom Hinckley, Allen & Snyder LLP,
Sanford J. Davis, and McGovern & Associates were on brief for
appellant.
Thomas C. Angelone, with whom Hodosh, Spinella & Angelone,
James McGair, and McGair & McGair were on brief for appellees.

June 23, 2000
 BOWNES, Senior Circuit Judge. Plaintiff-appellant, Ed

Peters Jewelry Co., Inc., ("Peters") appeals from a judgment by

the district court for all of the defendants-appellees: C & J

Jewelry Co. Inc., Anson, Inc., William Considine, Sr., Little

Bay Realty Co., L.L.C., and Gary J. Jacobsen. Peters, a jewelry

sales agent, sued the defendants to recover sales commissions

owed it by the defendant Anson. Peters claims, under various

legal theories, that, in addition to Anson, the other defendants

are also liable for the unpaid commissions. Jurisdiction is

based on diversity of citizenship. 28 U.S.C. § 1332(a)(1)

(1999).

This is the second time this case has been before us.

See Ed Peters Jewelry Co. v. C & J Jewelry Co., 124 F.3d 252

(1st Cir. 1997) (hereinafter, "Ed Peters I"). There is a

difference in the cast of defendants. In the prior case, Fleet

National Bank and Fleet Credit Corporation were defendants.

They were found not liable in our prior opinion and are no

longer parties in this case. After remand in the prior case,

Peters filed an amended complaint adding Little Bay Realty Co.,

L.L.C. and Jacobsen as defendants.

In the case at bar, there were four counts before the

district court at the close of the evidence. The court ruled

sua sponte, without prior notice to the parties, that neither

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party was entitled to a jury trial on Counts I and II (successor

liability) and Count IV (fiduciary duty) because these counts

sounded in equity. Count III, which alleged tortious

interference with contractual relations by defendants C & J

Jewelry, Considine and Jacobsen, was submitted to the jury for

a determination of liability only. Count I was also submitted

to the jury but as advisory only.

On the tortious interference claim, the jury found C

& J and Considine liable; it found Jacobsen not liable. On the

advisory Count I (successor liability), the jury found for

Peters against C & J and Little Bay.

The two defendants found liable by the jury on the

tortious interference count (Count III) brought motions for

judgment as a matter of law, which were granted. The district

court found for all defendants on the three equity counts. This

appeal followed.

Peters has raised six issues on appeal: (1) The

district court abused its discretion by ruling sua sponte at the

end of the trial that neither party was entitled to a jury trial

on Counts I, II, and IV. (2) The district court erred in ruling

that there was no cause of action under Rhode Island law for

successor liability based on fraud, and that Peters was not

damaged because he was a junior creditor. (3) The district court

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was "clearly wrong" in holding that adequate consideration was

paid for the transfer of assets to the successor entities. (4)

The district court erred in holding that no fiduciary duty was

owed to Peters because he was a junior unsecured creditor. (5)

The district court "wrongly" granted defendants' Rule 50 motion

on the tortious interference count. (6) The district court

erred in its instructions to the jury on the tortious

interference count.

We affirm, but on different grounds than the district

court for Counts Two (successor liability) and Three (tortious

interference with contract).

Although the facts are not seriously disputed, the

implications and results flowing from them are hotly contested.

I.

Our rehearsal of the facts is taken from the record,

our prior opinion, and the district court opinion. Anson, a

Rhode Island manufacturer of jewelry and writing instruments,

emerged from a Chapter 11 bankruptcy proceeding in 1983. From

then on, Fleet Bank and Credit Company extended Anson revolving

credit loans secured by first liens covering Anson's real estate

and personal property assets.

Peters' relationship with Anson started in 1981 as a

salaried salesman for a distributor that sold Anson's products

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to Tiffany. Tiffany was at that time, and probably still is,

one of the most well-known retail jewelry stores in the country.

Tiffany was Anson's largest customer, buying several millions of

dollars worth of jewelry annually. The distributor for whom

Peters worked had the exclusive right to sell Anson products to

Tiffany. In 1987, Peters purchased the Anson-Tiffany account

and formed a new corporation, Ed Peters Jewelry Co. Inc.1 Sales

of Anson products to Tiffany accounted for more than 90% of

Peters' business. Anson and Peters entered into a sales

contract on January 1, 1988, which was extended to December 31,

1990, and then further extended to December 31, 1994. By the

end of 1990 Anson owed Peters $120,000 for unpaid commissions.

In 1991 Fleet restructured Anson's loan repayment

schedule because of its precarious financial condition, and

assessed Anson an $800,000 referral fee. In 1992 Fleet waived

Anson's default under the restructured loan agreement and loaned

Anson more money, expressly reserving its right to rely on a

future default. Anson never gained solvency. By August of

1992, Fleet had charged off $3.7 million of Anson's debt. There

were further restructuring negotiations in 1993, and Fleet gave

Anson formal written notice of default on March 23, 1993. Anson

1 We will continue to refer to the plaintiff as Peters.

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had a negative net income for the years 1988 through July 1993,

the last date for such information.

Although Anson's debt to Peters continued to grow,

Peters kept selling for Anson into 1993. In 1993, Peters

commenced an arbitration proceeding against Anson under the

provisions of the sales contract between them. He was awarded

$451,426.03 for commission arrearage and received a judgment for

that amount against Anson from the Rhode Island Superior Court

on April 21, 1994. Peters obtained a second state judgment for

commission arrearage against Anson for $407,652.84 on November

20, 1995.

After the default notice to Anson by Fleet on March 25,

1993, defendants Considine and Jacobsen worked out a plan to

save the operating assets and real estate of Anson. Considine

was the sole director of Anson and controlled all of Anson's

voting stock. Jacobsen had been hired by Considine as Anson's

C.E.O. in the summer of 1992. The other principal player in the

plan was, of course, Fleet. Negotiations between Anson's two

officers and Fleet were carried on from May, 1993 to October of

1993. The plan finally accepted by Fleet was essentially as

follows. Two new companies would be formed: C & J Jewelry Co.,

Inc. (C & J) and Little Bay Realty Co., L.L.C. (Little Bay).

Fleet would foreclose on all of the assets of Anson and conduct

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a secured party private sale of the operating assets to C & J;

the real estate formerly belonging to Anson would be sold to

Little Bay.

The record shows that Considine and Jacobsen never

intended that the new company, C & J, would assume Anson's debt

to Peters. They planned that only the debts of those creditors

essential to the new business would be assumed. Fleet, of

course, would be the primary secured creditor of the new

business.

The plan was carried out. On October 22, 1999, Fleet

held a secured party's sale of Anson's operating assets to C &

J, the new jewelry company. Fleet sought no competing bids

because the parties did not want Tiffany to learn that Anson was

defunct. Fleet, Considine and Jacobsen were very dependent on

Tiffany, their golden goose. C & J notified Tiffany of the

transfer of the business assets and assured it that the quality

of the jewelry would be the same as under Anson and that C & J

would be financially stable. Fleet also informed Tiffany that

the new company had its approval. The manufacture of jewelry

formerly done by Anson continued without pause by C & J.

In December of 1993, Fleet foreclosed on Anson's real

estate and sold it to Little Bay, another defendant. Anson was

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now an empty shell. C & J carried on Anson's business with the

same persons at the controls.

The financing details reveal that none of the

participants in the plan were the least bit deterred by the fact

that Anson had steadily and increasingly lost money since 1989.

Fleet financed the purchase of Anson's assets in the amount of

$2.7 million. Considine and Jacobsen obtained one-half

ownership of C & J and Little Bay because of their contribution

of $500,000 each to the assets purchased. Fleet obtained new

first-lien security interests on the same operating assets and

real estate that it had from Anson. C & J and Little Bay paid

Considine a consulting fee of $200,000 for negotiating the sale

and obtaining Fleet's financing. Jacobsen was not paid anything

for his role in the deal. After the liquidation of all of

Anson's assets, its debt to Fleet totaled nearly $8 million.

II.

A. Equity or Jury

The first issue, whether the district court abused its

discretion by ruling sua sponte at the close of the trial that

neither party was entitled to a jury trial on Counts I, II, and

IV, has two parts: One, whether the court was correct legally

in its ruling, and two, whether the procedure it followed

constituted an abuse of discretion.

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 We start with the equitable ruling. We have read our

prior opinion carefully. Although it does mention "jury"

several times, see Ed Peters I, 124 F.3d at 262, 268, 269, 270,

275, it is obvious that we were not deciding whether the counts

alleged were equitable or came within the ambit of the Seventh

Amendment right to a jury trial. Moreover, in discussing

successor liability we stated that it "is an equitable doctrine

both in origin and nature." 124 F.3d at 267. It is important

to point out that our prior opinion was on an appeal from

judgment as a matter of law under Fed. R. Civ. P. 50(a).

Neither party adverted to the equity versus jury issue.

We think the district court in the case at bar was

correct in ruling that Counts I, II, and IV were equitable. In

Gallagher v. Wilton Enters., 960 F.2d 120 (1st Cir. 1992), we

stated:

"Maintenance of the jury as a fact-
finding body is of such importance and
occupies so firm a place in our history and
jurisprudence that any seeming curtailment
of the right to a jury trial should be
scrutinized with the utmost care."
Chauffeurs, Teamsters & Helpers Local No.
391 v. Terry, 494 U.S. 558, 565, 110 S. Ct.
1339, 1345, 108 L. Ed. 2d 519 (1990)
(quoting Dimick v. Schiedt, 293 U.S. 474,
486, 55 S. Ct. 296, 301, 79 L. Ed. 603
(1935)). The touchstone of our inquiry is
the Seventh Amendment, which, while it does
not apply to state court proceedings,
nonetheless controls when a federal court
is enlisted to adjudicate a claim brought

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 pursuant to a state's substantive law. See
Byrd v. Blue Ridge Rural Elec. Coop., Inc.,
356 U.S. 525, 536-38, 78 S. Ct. 893, 900-01,
2 L. Ed. 2d 953 (1958), overruled on other
grounds, Hanna v. Plumer, 380 U.S. 460, 85
S. Ct. 1136, 14 L. Ed. 2d 8 (1965).

Id. at 122 (footnote omitted). We further ruled "that the right

to a jury trial in the federal courts is to be determined as a

matter of federal law in diversity as well as other actions."

Id. We also directed that "[a] federal court must look first to

state law to determine the elements of the cause of action and

the propriety of the remedies sought." Id.

In In Re Frank J. Evangelist, Jr., 760 F.2d 27, 29 (1st

Cir. 1985), Justice Breyer, then Circuit Judge, stated:

"Actions for breach of fiduciary duty, historically speaking,

are almost uniformly actions 'in equity' – carrying with them no

right to trial by jury."

We point out that this case does not involve the

computation of damages, which is often considered a

determination to be made by a jury. Cf. Gallagher, 960 F.2d at

122. This is an action to recover on debts, the amounts of

which have been reduced to judgments by the courts of Rhode

Island.

We uphold the district court's ruling that the

successor liability and breach of fiduciary duty counts were

equitable and not subject to jury determination for the reasons

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stated in its opinion. See Ed Peters Jewelry Co. v. C & J

Jewelry Co., 51 F. Supp. 2d 81, 89-90 (D.R.I. 1999) (hereinafter

"Ed Peters II").

The second part of this issue is whether the district

court abused its discretion in not submitting three of the four

counts to the jury. We reiterate what occurred. At the close

of the evidence and before the case went to the jury the

district court sua sponte, without prior notice to the parties,

ruled that Counts One, Two, and Four sounded in equity and would

not be submitted to the jury. The district court subsequently

ruled that Count One would be submitted to the jury but on an

advisory basis, and that Count Three, tortious interference,

would be decided by the jury.

Most of the cases cited by Peters as evidence of abuse

of discretion are ones in which the ruling disqualifying the

jury came after the jury had returned verdicts and/or answered

interrogatories. These cases are inapposite.

We are bothered by the lack of notice to the parties

and any discussion with the parties by the court prior to its

ruling. We first examine Fed R. Civ. P. 39 to determine if the

court's conduct was in any way proscribed by the rule. The rule

states:

Rule 39. Trial by Jury or by the Court

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 (a) By Jury. When trial by jury has been
demanded as provided in Rule 38, the action
shall be designated upon the docket as a
jury action. The trial of all issues so
demanded shall be by jury, unless (1) the
parties or their attorneys of record, by
written stipulation filed with the court or
by an oral stipulation made in open court
and entered in the record, consent to trial
by the court sitting without a jury or (2)
the court upon motion or of its own
initiative finds that a right of trial by
jury of some or all of those issues does not
exist under the Constitution or statutes of
the United States.

(b) By the Court. Issues not demanded
for trial by jury as provided in Rule 38
shall be tried by the court; but,
notwithstanding the failure of a party to
demand a jury in an action in which such a
demand might have been made of right, the
court in its discretion upon motion may
order a trial by a jury of any or all
issues.

(c) Advisory Jury and Trial by Consent.
In all actions not triable of right by a
jury the court upon motion or of its own
initiative may try any issue with an
advisory jury or, except in actions against
the United States when a statute of the
United States provides for trial without
jury, the court, with the consent of both
parties, may order a trial with a jury whose
verdict has the same effect as if trial by
jury had been a matter of right.

(Emphasis added.)

Rule 39(a)(2) clearly authorized the district court to

take the action it did. There is nothing in the balance of the

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rule that prohibits the court from doing what it did or

requiring advance notice to the parties.

Nor do we find any bar to the district court's

procedure in the applicable case law. Although there are cases

suggesting that earlier notice is required,2 we find the Second

Circuit's approach in Merex A.G. v. Fairchild Weston Sys., Inc.,

29 F.3d 821 (2d Cir. 1994), more applicable to the instant facts

and more persuasive. Merex was also a case for the collection

of a commission. The court held that the district court did not

abuse its discretion by declaring the jury finding to be

advisory after plaintiff rested its case. Id. at 822. The

first question was whether Merex's promissory estoppel claim was

legal or equitable. The district court had found it to be

equitable. The Court of Appeals found that Merex's claim was

"equitable rather than legal and, consequently, that Merex was

not entitled to a jury trial on its claim for promissory

estoppel." Id. at 826.

In finding that the trial court did not abuse its

discretion in declaring the jury advisory, the court discussed

most of the cases we have adverted to and examined carefully the

wording of Fed. R. Civ. P. 39(c). The court first pointed out

2
See, e.g., Bereda v. Pickering Creek Indus. Park, Inc.,
865 F.2d 49, 53 (3d Cir. 1989); Hildebrand v. Board of Trustees
of Mich. State Univ., 607 F.2d 705, 711 (6th Cir. 1979).

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that the district judge did not wait until the jury returned the

verdict before deciding that it would be advisory.

"Accordingly, there was no danger that the trial judge would

veto the jury's verdict." Id. at 827. The same reasoning

applies to the case before us.

We agree with the Second Circuit's reading of Rule

39(c).

Nor do we read Rule 39(c)'s provision for
"trial by consent" to mandate the court's
acceptance of the jury's verdict in this
case. Rule 39(c) provides that the court,
"with the consent of both parties, may order
a trial with a jury whose verdict has the
same effect as if trial by jury had been a
matter of right." Thus, when both parties
consent, Rule 39(c) invests the trial court
with the discretion–but not the duty–to
submit an equitable claim to the jury for a
binding verdict. While the litigants are
free to request a jury trial on an equitable
claim, they cannot impose such a trial on an
unwilling court. . . .

Finally, although Rule 39(c) does not
expressly require advance notice to the
parties of the court's intention to treat
the jury as advisory, we agree that such
notice is preferable. In the absence of an
express statutory mandate, however, we are
not inclined to reverse on this basis alone,
at least absent some demonstrable prejudice
to the complaining party. Given the minimal
strictures of federal pleading, it will
sometimes not be clear until well into the
trial whether an issue is equitable or
legal.

Id. (Internal citation omitted.)

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 For essentially the same reasons advanced by the Second

Circuit, we find that the procedure followed by the district

court here did not constitute an abuse of discretion. It would

have been preferable for the court to give some prior notice of

its ruling and discuss it with counsel. But viewing the ruling

as a fait accompli, we cannot discern any prejudice to either

party and particularly to Peters. Peters was understandably

miffed when the district court changed the rules of the game at

the last minute. On the assumption that this would be a jury

trial, both parties undoubtedly spent more time in preparation

for trial and during trial in explaining the issues carefully

than would have been expended if notice of the ruling had been

given prior to trial. But this, in our opinion, is not

sufficient reason for establishing a hard and fast time rule

limiting the judge's discretion for ruling whether issues sound

in equity or law. This is certainly not the case for such a

proscription. This is a unique case. Both parties and the

district court assumed that the remand was for a jury trial. At

some time prior to trial the parties, as well as the judge,

should have recognized that there were equitable factors

involved. But neither the lawyers nor the trial judge can be

faulted for accepting the case on remand as a jury case.

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 We do not want our decision to be read as a blanket

approval of the procedure followed by the district court. We

think that advance notice should be given, if at all possible,

of a ruling disqualifying a jury from considering issues in what

was considered at the outset to be a jury trial. We hold only

that under the special circumstances of this case, the district

court did not abuse its discretion.

B. Successor Liability

This issue is based on two separate and distinct

theories, each giving rise to its own count in the complaint.

First, Peters argues that successor liability should attach

because C & J is a "mere continuation" of Anson. Second, he

argues that successor liability applies because Considine,

Jacobsen, and C & J defrauded him. This is known as the "actual

fraud" theory of successor liability. We begin with Count I,

mere continuation.

1. Mere Continuation

The essence of the claim under Count I is that "[w]here

a new corporation is merely a continuation or a reorganization

of another, and the business or property of the old corporation

has practically been absorbed by the new, the latter is

responsible for the debts or liabilities of the former."

Cranston Dressed Meat Co. v. Packers Outlet Co., 190 A. 29, 31

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(R.I. 1937) (quoted in Ed Peters II, 51 F. Supp. 2d at 91). As

the district court correctly noted, whether successor liability

based on mere continuation should apply under Rhode Island law

is based on a five-factor test.3 See Ed Peters II, 51 F. Supp.

2d at 91 (citing H.J. Baker & Bro., Inc. v. Orgonics, 554 A.2d

196, 205 (R.I. 1989)). Only one factor of the five-factor

test for successor liability is in dispute in this case: whether

C & J paid less than adequate consideration for Anson's assets.

The district court ruled that C & J paid sufficient

consideration, and that this was fatal to Peters claim.4 See Ed

Peters II, 51 F. Supp. 2d at 95 ("Plaintiff has failed to carry

3 This test examines the following: (1) whether there has
been a transfer of corporate assets, (2) whether less than
adequate consideration was paid for those assets, (3) whether
the acquiring entity continues the divesting corporations
business, (4) whether there is at least one officer or director
instrumental to the transaction who is common to both entities,
and (5) whether the divesting corporation is unable to satisfy
its creditors because of the transfer. See Ed Peters II, 51 F.
Supp. 2d at 91-92.
4 The district court, without stating so, seems to have
assumed that inadequate consideration is the sine qua non of
mere continuation liability. We do not decide the issue today,
but instead leave it to the courts of Rhode Island to grapple
with. See Ed Peters I, 124 F.3d at 269 n.16 ("We assume
arguendo that Rhode Island law would require Peters to make
adequate showings on all five Baker factors, even though Baker
expressly adopted the New Jersey model . . . under which not all
these factors need be present." (internal quotation marks and
brackets omitted)). We are able to decide the specific question
before us without reaching that question because it has not been
preserved for review and presented in this court.

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its burden of demonstrating inadequate consideration, and with

this failure, the cause of action for successor liability based

on 'mere continuation' dies on the vine.").

The district court's finding on adequacy of

consideration was a factual finding. See Nisenzon v. Sadowski,

689 A.2d 1037, 1042-43 (R.I. 1997) (under Rhode Island

fraudulent conveyance statute, adequacy of consideration is a

factual finding, reviewable for clear error). Despite the near-

insurmountable hurdle that the clear error standard usually

presents, Peters proffers such an argument on appeal. He argues

that the district court's finding of adequate consideration was

clearly erroneous as a matter of fact because its calculation

was based explicitly on a mistake of law.

The district court found that C & J and Little Bay,

collectively, paid $3.29 million for Anson's assets. See Ed

Peters II, 51 F. Supp. 2d at 95. The court also found that

Anson's assets were worth approximately $3 million. See id.

The new Fleet loans were a significant part of the district

court's $3.29 million figure. This portion, which was well over

half the consideration,5 is the crux of the dispute on appeal.

5 According to the district court, the new Fleet loans
amounted to $2.9 million of the consideration. See Ed Peters
II, 51 F. Supp. 2d at 95. The Ed Peters I court appears to have
believed that the new loans constituted closer to $2 million.
See Ed Peters I, 124 F.3d at 270-71. Of course, the actual

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Peters argues that this ruling cannot stand in light of our

previous decision in Ed Peters I, which, he maintains, ruled as

a matter of law that the new Fleet loans were not consideration.

As support for this, Peters points to our statement in Ed Peters

I:

[T]hough normally loans obtained by buyers
to finance asset acquisitions would be
considered in calculating the total
consideration paid, here the two newly-
formed acquiring companies actually incurred
no "new" indebtedness to Fleet . . . .
Since the "new" Fleet loans cannot count as
"consideration," at least as a matter of
law, C & J and Little Bay paid a combined
total of only $1 million in addition cash
consideration.

Ed Peters I, 124 F.3d 270-71 (emphasis added). Peters' argument

is that the Ed Peters I court ruled that the new loans from

Fleet were not legally consideration at all, because they were

not, in fact, "new," but were simply old loans repackaged as new

ones.

The district court considered this argument and

properly rejected it. The district court did so by interpreting

Ed Peters I to mean that the previous district court could not

figures offered by the Ed Peters I court are irrelevant; as an
appellate tribunal it is not the province of this court to find
facts, which the Ed Peters I court clearly understood. See id.
at 277 n.24. What is relevant, however, is the both courts
agreed that the loans formed a large part of the consideration.

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state, as a matter of law, that the Fleet loans were

consideration; whether they were consideration was instead a

matter of fact. This, the district court stated, was evident in

light of the procedural posture of the case. The district court

stated:

The First Circuit's decision must be
understood within the context of that
appeal's procedural posture. In that
decision, the Court of Appeals reviewed the
trial court's grant of judgment as a matter
of law in favor of the defendants. The
ruling of the appellate panel merely
explained what was improper for a trial
court to find as a matter of law . . . . Of
course, the First Circuit was not commanding
the trial court to make a particular finding
of fact on the amount of consideration paid,
since it did not have the benefit of
defendants, evidence before it . . . . The
task before the Court of Appeals was not the
calculation of the consideration paid Fleet,
rather, it was the determination of whether
the trial court erred in concluding that as
a matter of law the consideration paid was
adequate.

Ed Peters I, 51 F. Supp. 2d at 94-95. A close review of our

statement in Ed Peters I reveals that the district court is

correct. The district court's decision is supported by the

plain language of our previous opinion. Peters' reading of the

words "Since the 'new' Fleet loans cannot count as

'consideration,' at least as a matter of law," Ed Peters I, 124

F.3d 270-71 (emphasis added), ignores the import of the words

"at least," which imply that while as a matter of law they

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cannot be said to amount to adequate consideration, they may do

so as a matter of fact after trial.

Accordingly, the district court's entry of judgment as

a matter of law on Count I is affirmed.

2. Actual Fraud

Peters argues that the district court erred in

rejecting its claim in Count II for successor liability based on

actual fraud. See generally Ed Peters II, 51 F. Supp. 2d at 95-

98. The district court based this holding on two alternative

grounds. First, the court concluded as a legal matter that

Rhode Island does not recognize actual fraud as a reason for

successor liability. See id. at 96-97. Second, the court

concluded as a factual matter that Peters could not prevail

because of what it deemed a "factual impossibility." See id. at

97-98.

We first consider the district court's legal ruling.

In Ed Peters I, we held that "[a]ctual fraud is a successor

liability test entirely independent of the circumstantial 'mere

continuation' test." Ed Peters I , 124 F.3d at 271. In response

to this, the district court stated:

[T]his court is unable to locate a single
Rhode Island decision that expressly adopts
the fraud theory of successor liability. In
none of the cases cited in the [Ed Peters I]
decision does the Rhode Island Supreme Court

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 hold that a defendant may be liable as a
successor under any theory other than the
"mere continuation" doctrine.

Ed Peters II, 51 F. Supp. 2d at 96-97.

We do not consider whether the district court's broad

assertions about the state of Rhode Island law are correct.

Rather, we point out that a panel of this court has spoken on

this point, and that forecloses the matter. Absent an en banc

reversal of Ed Peters I, the law of the First Circuit is that

Rhode Island courts recognize the actual fraud theory of

successor liability. 6 We might have been persuaded if the

district court had cited a Rhode Island case holding directly

that actual fraud is not a basis for successor liability. It

did not, and we have been unable to find any such case.

Regardless of the district court's knowledge of Rhode

Island law, its legal rulings on local law deserve no more

appellate deference than any other legal ruling. In Salve

Regina College v. Russell, 499 U.S. 225 (1991), the Supreme

6 We note that in certain circumstances panels of this
court have overruled previous panel opinions, but they have done
so only in certain very limited circumstances. In those cases,
"a departure is compelled by controlling authority . . . [and]
we have chosen to circulate the proposed overruling opinion to
all active members of the court prior to publication even though
the need to overrule precedent is reasonably clear." Ionics v.
Elmwood Sensors, Inc., 110 F.3d 184, 187 n.3 (1st Cir. 1997).
In our view, this procedure would only be called for in this
case if the Rhode Island Supreme Court were to speak directly to
this issue in a manner that was contrary to Ed Peters I.

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Court held that Courts of Appeals could give no deference to

district judge's views on state law. In that case, the district

court stated: "I was a state trial judge for 18 and ½ years, and

I have a feel for what the Rhode Island Supreme Court will do or

won't do." Id. at 229 (quoting Lagueux, J.). The Supreme Court

made clear that the Courts of Appeals were the enunciators of

state law, stating "appellate deference to the district court's

determination of state law is inconsistent with the principles

underlying this Court's decision in Erie." Id. at 234.

Because no deference on the applicable local law is

owed the district court, and because this court has already

spoken on the matter, neither we nor the district court can

nullify the legal rulings of Ed Peters I. See In re Grand Jury

Subpoenas, 123 F.3d 695, 697 n.2 (1st Cir. 1997) ("Ordinarily,

prior panel decisions are binding on future panels and it is for

an en banc court to reexamine the status of a prior opinion.").

Accordingly, we reject the district court's first reason for

granting summary judgment on Count II.

The district court, realizing perhaps the tenuous

ground on which its legal ruling stood, provided an alternate

ground for its decision. In what the court characterized as a

finding of fact, see Ed Peters II, 51 F. Supp. 2d at 97-98, the

court found that the fact that "EPJC had no hope of ever

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recovering from Anson any of the commissions that were due . .

. is fatal to plaintiff's effort." Id. at 98. The district

court, understandably, believed that if, as a matter of fact,

Peters never had any chance of payment, no fraudulent act could

have deprived it of anything. It is open to dispute whether the

district court's alternative ground is fully consistent with Ed

Peters I, but we need not decide that question because we agree

with the district court's result for a somewhat different

reason. Although the possibility of a successful fraud claim

was clearly preserved by Ed Peters I, now with the benefit of a

trial record we see no facts which would add up to fraud under

any of the definitions given it. To be sure, Peters had good

reason to believe that he was being treated unfairly but that is

not the test for actionable fraud.

The hallmarks of fraud are misrepresentation or deceit.

Black's Law Dictionary 670 (7th ed. 1999); Restatement (Second)

of Torts §§ 525-30 (1977); see also 37 Am. Jur. 2d § 1, at 19

(1968) (fraud deemed to comprise anything calculated to

deceive); 37 id. § 4 (stressing requirement of intentional

deception for "actual fraud").

The case law in Rhode Island applies the same basic

principles:

In order for fraudulent misrepresentation or
deceit to be found, the complaining party

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 must show not only that the defendant had an
intention to deceive, but the complainant
also must present sufficient proof that the
party detrimentally relied upon the
fraudulent representation.

Asermely v. Allstate Ins. Co., 728 A.2d 461, 464 (R.I. 1999).

To establish a prima facie damages claim in
a fraud case, the plaintiff must prove that
the defendant "made a false representation
intending thereby to induce plaintiff to
rely thereon" and that the plaintiff
justifiably relied thereon to his or her
damage.

Travers v. Spidell, 682 A.2d 471, 472-73 (R.I. 1996) (citation

omitted).

First Circuit cases regarding mail and wire fraud

similarly emphasize the deceit requirement, even though that

statutory definition of fraud is read to be broader than the

common law definition. See Bonilla v. Volvo Car Corp., 150 F.3d

62, 66-67 (1st Cir. 1998), cert. denied, 119 S. Ct. 1574 (1999)

(mail or wire fraud requires intent to deceive another; use of

loophole is not fraud); McEvoy Travel Bureau, Inc. v. Heritage

Travel, Inc., 904 F.2d 786, 791-92 (1st Cir. 1990).

We have found no evidence of misrepresentation or

deceit by the defendants that either induced Peters to act

contrary to his best interests or fail to take action that could

have resulted in the payment of all or a part of the commissions

due. Peters continued to sell jewelry for Anson to Tiffany on

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a commission basis on credit until Fleet foreclosed and sold all

of Anson's assets which, as we held in Ed Peters I, it had a

legal right to do. The effect of the reorganization plan may

have had an unfortunate effect on Peters but it was not the

result of any misrepresentation or deceit on the part of the

defendants.

We rule as a matter of law that there was no fraud

perpetrated by any of the defendants on Peters.

C. Count III: Tortious Interference with Contract

Peters next argues that the district court erred in

granting a motion for judgment as a matter of law on Count III,

a claim for tortious interference with contract. The district

court granted the motion, setting aside a jury verdict finding

Considine and C & J liable. The issue of damages was not

submitted to the jury.

1. Procedural History

We begin our discussion with a review of the treatment

of the tortious interference claim in our previous opinion. In

Ed Peters I, we reversed the previous district court's entry of

a motion for judgment as a matter of law on the tortious

interference count, holding instead that the count must be

submitted to the jury. We laid out the elements, stating: “the

tortious interference claim required that Peters prove: (1) a

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sales-commission contract existed between Anson and Peters; (2)

Fleet and Considine intentionally interfered with the sales-

commission contract; and (3) their tortious actions damaged

Peters.” Ed Peters I, 124 F.3d at 275 (citations omitted).

Considering these elements, we concluded that, “there is no

dispute that Fleet and Considine knew of Peters’ contract to

serve as Anson’s sales representative to Tiffany’s, or that

Peters sustained damages due to the premature termination of its

contract, without receiving payment for its outstanding

commissions.” Id. Our analysis then turned to the “second and

disputed” element: whether Considine and C & J intentionally

interfered with the sales-commission contract between Peters and

Anson. See id.

Relying on Mesolella v. City of Providence, 508 A.2d

661 (R.I. 1986), we held that, to prove intent, “Peters need

only establish that . . . Considine acted with legal malice – an

intent to do harm without justification.” Ed Peters I, 124 F.3d

at 275. We pointed out that, “[Considine] not only acted

intentionally to evade Anson’s obligation to Peters, but at the

same time negotiated for himself a $200,000 consulting fee.”

Id. Thus, we held that the circumstantial evidence and the

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Considine memorandum to Fleet,7 “generated a trialworthy issue

as to whether Considine acted with