Northern Ins. Co. of NY v. Point Judith Marina

United States Court of Appeals
For the First Circuit

Nos. 08-2156
08-2246

NORTHERN INSURANCE COMPANY OF NEW YORK; NICHOLAS PICCHIONE,
Plaintiffs-Appellants/Cross-Appellees,

v.

POINT JUDITH MARINA, LLC,
Defendant-Appellee/Cross-Appellant,

ALBIN MANUFACTURING, INC., STANDISH BOATYARD, INC.,
Defendants.

APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. William E. Smith, U.S. District Judge]

Before

Lynch, Chief Judge,
Torruella, Circuit Judge,
and Ebel,* Senior Circuit Judge.

Frederick A. Lovejoy, with whom Lovejoy & Associates, was on
brief for appellants/cross-appellees.
Michael J. Rauworth, with whom Carl E. Fumarola and Cetrulo &
Capone LLP, were on brief for appellee/cross-appellant.

August 27, 2009

*
Of the Tenth Circuit, sitting by designation.
 TORRUELLA, Circuit Judge. After a bench trial, the

district court entered judgment for defendant Point Judith Marina

("PJM") on claims for damages by plaintiff Nicholas Picchione and

subrogee-plaintiff Northern Insurance Company of New York

("Northern"). The claims arose as a result of the sudden sinking

of a recreational boat ("Eveready") owned by Northern's insured,

Picchione. The district court also rejected PJM's counterclaim

against Picchione for attorney's fees based on a slip rental

agreement between Picchione and PJM. Each of these parties appeals

the unfavorable aspects of the judgment. After careful review, we

affirm in all respects.

I. Background

Picchione bought Eveready in 1996 from Standish Boatyard,

Inc. ("Standish"). Eveready is a 35-foot vessel made by Albin

Manufacturing, Inc. ("Albin"). It is undisputed that, as

purchased, the vessel's exhaust hoses ran through the hull over a

plywood bulkhead without any chafing gear or strain relief. And

the engine room's bilge pumps did not include anti-siphon loops or

check valves, features which would prevent or limit backflow of

water through the exhaust. These precautions are recommended by

the American Boat & Yacht Council ("ABYC"). As detailed below,

plaintiffs assert that these alleged design deficiencies led to

Eveready's sinking.

-2-
 Picchione docked his boat at PJM. PJM also undertook to

store the boat on land in the winter, commission it in the spring,

and decommission it in the fall. In the course of these

activities, PJM conducted repairs on some of the boat's components.

Nonetheless, in a finding at issue on this appeal, the district

court concluded that "aside from work that [PJM] contracts to

perform specifically, it does not provide general preventative

maintenance or care for the vessels in the Marina."

During the 2004-2005 off-season, Picchione hired "Dan,"

an independent mechanic, to work on Eveready's engines. Then, on

April 21, 2005, PJM moved the vessel to its slip. PJM employee

Joseph Stroker worked on commissioning Eveready on Friday,

April 22, 2005.1 PJM refused to work on the engine as part of the

commissioning because of Dan's work. PJM also refused to conduct

a sea-test of Eveready until Dan tested the engines. But Stroker

did examine the bilge pumps. He noticed six to eight inches of

water in the bilge, which he pumped out. After pumping, he noted

that the engine room bilge would not stop running. He then turned

off what he insists was the engine room bilge pump by switching one

of three switches to the off position. Consistent with his notes

made at the time, Stroker testified that he left the automatic

1
Plaintiffs suggest that Stroker may have been on the vessel the
next day, since his work slip indicated he worked for 13.4 hours.
But plaintiffs point to no evidence clearly establishing the
proposition that he worked on Saturday. Rather, Stroker's
testimony suggests otherwise.

-3-
bilge pump switch on and that he tested to make sure a bilge would

activate.

Picchione visited the boat on April 21, 22, and 23 to

stock the vessel. Picchione testified that he checked the

automatic bilge switch on April 22 and that it was on. He further

testified that he did not recall checking it or the water in the

bilges on April 23. The district court found this testimony

inconsistent with his deposition, where he testified that he always

checked the bilges for water, and would have done so on Saturday,

April 23. He also said at deposition that he would have left the

automatic bilge switch turned on.

No evidence showed that anyone else boarded Eveready

after Picchione, though Picchione admitted that his friends

occasionally boarded the boat without checking with him first. On

the evening of Sunday, April 24, another marina-goer did not notice

anything wrong with Eveready as she sat in her slip. That

individual awoke the next morning to see the vessel gone and

replaced by a spreading oil slick. By that afternoon, Eveready was

hauled from the bottom and inspected. During an inspection that

day, the harbormaster noticed the bilge pump switches were all in

the off position. At a joint survey conducted on May 3, with

experts representing both sides, a small steady stream of water was

observed running down the starboard interior hull in the engine

compartment. The source of the leak could not be determined at the

-4-
time. The vessel was reconditioned and re-hauled in October 2007.

At that time, no water was observed entering. During

reconditioning, when the fuel tanks were removed, a cut was found

in the bottom side of the starboard exhaust hose. Evidence showed

that the cut would not have been visible without removing the fuel

tanks and disassembling the exhaust system. Northern theorizes

that the cut was caused by the lack of anti-chafing gear at the

point where the hoses passed through the hull.

Northern, through its expert, posits that water entered

the vessel through this leak. PJM took the position that the hole

could not have caused the leaking. The district court did not

resolve this dispute, but concluded that whatever the source of the

initial leak, water began to accumulate in the bilge and the vessel

sank in the water until the exhaust portal became submerged,2

causing significant back-flooding, which led to the boat's sinking.

Expert testimony established that one working bilge pump would have

prevented this chain of events.

After Northern paid money to Picchione under an insurance

policy between the two of them, these two parties filed a complaint

against PJM, Standish, and Albin.3 The complaint invoked the

2
Some evidence suggested that Eveready normally sat in the water
with her exhaust portals submerged or partially submerged. This
issue will be discussed below.
3
Default judgment ultimately entered against Albin. Standish
settled on the eve of trial.

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district court's admiralty jurisdiction, 28 U.S.C. § 1333(1), and,

as amended,4 asserted claims against PJM for failure to warn,

breach of the warranty of workmanlike service, "breach of

contract/negligence," and "bailment." PJM filed a counter-claim

for indemnification against Picchione, based on the language of

their slip rental agreement. That agreement provides, in relevant

part:

18. Tenant hereby covenants, warrants, and
agrees to indemnify and hold Marina harmless
from any loss or injury, including death, to
any person, including the Tenant, arising out
of any incident occurring on or about the
Tenant's vessel, a vessel of any patron of the
Marina, or on the premises of the Marina.

PJM essentially contends that it suffered attorneys fees as a

result of the sinking and that Picchione should provide

indemnification for this "loss." PJM has not contended on appeal

that this provision bars plaintiffs' claims against it.

The case proceeded to a five-day bench trial. The

district court grouped plaintiffs' claims into two categories:

those arising out of PJM's failure to detect the cause of the

initial leak, and those arising out of PJM's alleged responsibility

for turning off the automatic bilge pump. As to the first group,

the district court held plaintiffs' tort claims barred by the

4
An amended complaint later listed only Northern as a plaintiff
in the caption, but continued to name Picchione as a plaintiff
elsewhere. In light of this confusion, and in light of PJM's
counterclaim against Picchione, the district court continued to
view Picchione as a plaintiff and counter-defendant.

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economic loss doctrine. It further found no evidence of a specific

contract for "inspection, general maintenance, and repair of all

the vessel's component parts" and no evidence "to support the

proposition that such alleged defects should have been discovered

and corrected as part of the general warranty of workmanlike

performance." The district court deemed the ABYC recommendations

non-binding and found that PJM never agreed to perform preventative

maintenance.

As to the claims related to the bilge pump, the district

court first concluded it would not apply a presumption against PJM

based on bailment law since PJM did not have exclusive control of

the vessel. The district court then concluded that someone had

turned off the automatic switch, but that the court "simply cannot

conclude with any certainty who turned off the automatic bilge pump

switch, and when." The court concluded that Northern had not met

its burden to show that PJM's agent, Stroker, was responsible.

Specifically, the court relied on Picchione's admission at

deposition that he would have checked when he was on the boat on

Saturday that the automatic pump was on. Given that, the court

could not find by a preponderance that Stroker turned the automatic

pump off on Friday.

As to PJM's counterclaim, the district court reasoned

that the contract pertained only to the slip rental and not to

allegations of negligence in the performance of other service

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contracts. Accordingly, judgment entered for PJM on plaintiffs'

claims and for Picchione on PJM's counterclaims. Each side

appeals.

II. Discussion

"Where, as here, the district court conducts a bench

trial and serves as the factfinder, its determinations of

negligence, proximate cause, and similar issues are entitled to

considerable deference." Jackson v. United States, 156 F.3d 230,

232 (1st Cir. 1998). Specifically, such review is for clear error.

Id. "Thus, a trial court's factual determinations will be set

aside only if, after careful evaluation of the evidence, we are

left with an abiding conviction that those determinations and

findings are simply wrong." Id. at 232-33 (internal quotation

marks omitted). "On clear-error review, we cannot second-guess the

trier's choices among those competing inferences even if, had we

been sitting as triers of the facts, we might have arrived at a

different set of judgments." Id. at 233; see also Anderson v.

Bessemer City, 470 U.S. 564, 574 (1985) ("Where there are two

permissible views of the evidence, the factfinder's choice between

them cannot be clearly erroneous."). Nonetheless, we review

questions of law de novo. LPP Mortg., Ltd. v. Sugarman, 565 F.3d

28, 31 (1st Cir. 2009).

Though there was some dispute in the district court about

the import of the economic loss doctrine to plaintiffs' tort

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claims, this case ultimately does not turn on this issue, which

plaintiffs do not separately challenge on appeal. Rather, relying

on PJM's obligations under the warranty of workmanlike performance,

plaintiffs attack the specific conclusions of the district court.

Namely, at issue is whether the district court erred (1) in finding

PJM had no obligation to discover defects in Eveready, (2) in not

finding PJM responsible for the disabled automatic bilge pump, (3)

in making various other factual findings, and, finally, on the

cross-appeal, (4) in ruling that the contract between Picchione and

PJM did not provide for indemnification on these facts.

We evaluate plaintiffs' claims under federal maritime

law. See La Esperanza de P.R. v. Pérez y Cía. de P.R., 124 F.3d

10, 16 (1st Cir. 1997). As discussed below, the slip rental

agreement provides that it shall be governed by Rhode Island law.

A. Did PJM have an obligation to detect defects?

Plaintiffs advance their claim under a theory that PJM

breached the implied warranty of workmanlike performance inherent

in federal maritime law. This doctrine provides that a maritime

contractor "who contracts to provide services impliedly agrees to

perform in a diligent and workmanlike manner." Parks v. United

States, 784 F.2d 20, 26 (1st Cir. 1986) (internal quotation marks

omitted). "[T]he implied warranty of workmanlike performance

parallel[s] a negligence standard rather than imposing . . . strict

liability," but "a shipowner may receive indemnity from a marine

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contractor for breach of implied warranty of workmanlike service,

albeit that such performance was done without negligence." La

Esperanza, 124 F.3d at 17 (internal quotation marks omitted).

"[T]his warranty need not be express to bind the ship repairer to

use the degree of diligence, attention and skill adequate to

complete the task." Id. at 19 (internal quotation marks and

emphasis omitted).

For example, where an agreement effectively required a

party to assume maintenance, and specifically required it to

"conduct a condition survey," we affirmed a district court's

finding that the warranty of workmanlike performance was breached

by failure to detect a defect that later injured a sailor. Parks,

784 F.2d at 27. Similarly, when a shipyard contracted to perform

hull repair and held itself out as so-qualified, the shipyard was

found liable for failing to complete repairs as a result of making

a welding mistake which "should have been readily apparent to any

reasonably competent ship repair professional." La Esperanza, 124

F.3d at 17-19.

As the district court found, this case is quite

different. PJM's duties in commissioning the vessel did not

obligate it to appraise the overall condition of the vessel or

search for defects in hidden exhaust hoses or the design of the

bilge pumps. Though the implied warranty of workmanlike

performance is a legal standard, the question of what is required

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in a workmanlike performance is necessarily a factual question that

naturally varies from case to case based on the scope and nature of

the service being undertaken. See id. at 19 (affirming a finding

of breach where the "evidence in the record substantiates that

similarly situated ship repairers" would have been able to properly

weld the hull plates at issue); SS Amazonia v. New Jersey Exp.

Marine Carpenters, Inc., 564 F.2d 5, 8-9 (2d Cir. 1977) (reviewing

a maritime workmanlike performance claim and treating as a factual

issue the question of how tractors should be secured for shipping).

First of all, unlike in Parks, no explicit agreement of the parties

provided for such an inspection. 784 F.2d at 27. In fact,

plaintiffs have failed to show any written service agreement at all

covering the commissioning.5

Second, there is no clear error in the district court's

finding that no such obligation was implied. This is not to say

that PJM had no implied obligations. As we have stated, our

precedent provides that obligations under warranty of workmanlike

performance apply to implied agreements. Nonetheless, evidence in

the record, namely testimony from PJM's manager, supports the

district court's conclusion that no implied obligation to fully

inspect all components inheres in PJM's agreement to undertake

commissioning Eveready. And plaintiffs point to no evidence which

5
At oral argument, we asked Northern's counsel to file a
supplemental letter addressing this point, but he failed to do so.

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would clearly establish that a reasonable worker would conduct a

complete inspection during commissioning.

Plaintiffs do point to certain snippets of testimony to

challenge this conclusion. But in no case do they show (or even

explicitly argue) that the district court's dispositive findings

were clearly erroneous. Specifically, plaintiffs note that PJM's

manager admitted that the commissioning process normally includes

inspecting components including hoses and bilge pumps. But close

examination of his testimony reveals that he simply said that a

technician should report visible defects in exhaust hoses and the

like, and that "[i]f we can't see items, we can't do anything about

them." Thus, such testimony does not show the commissioning was

meant to be comparable to a full inspection. And evidence

supported the district court's conclusion that the exhaust hose

hole that Northern alleges led to the initial leak was not visible.

Plaintiffs argue that even if the hose hole was not visible, the

absence of chafing gear would have been visible. But the district

court did not so find, and the evidence does not require that

conclusion. Further, even if the hoses were inspected, the

evidence does not require the conclusion that the absence of

chafing gear is something a workmanlike boat commissioner should

have noticed.

Plaintiffs also point to PJM's manager's statement that

commissioning includes checking for leaks. But, the evidence

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showed that Stroker did check for water in the bilge, and pumped it

out. And he reasonably did not conduct a sea test, which might

have revealed further leaks, because the engines had not been

tested by Dan, Picchione's independent contractor.

Next, plaintiffs suggest that there were prior occasions

where PJM fixed an exhaust hose or adjusted the bilge pump during

commissioning. Plaintiffs can point to a checklist from a prior

commissioning which shows that PJM checked for old hoses. But the

fact that PJM agents previously made repairs to a particular

component does not compel the conclusion that a workmanlike

commissioning process should include an inspection of such

components. Rather, the district court's conclusion about the

scope of PJM's responsibilities was supported by testimony from

PJM's manager that PJM did not assume general responsibility for

servicing vessels it commissions at its slips.

Third, plaintiffs theorize that the district court

committed error by failing to put enough weight on the ABYC

standards recommending certain preventative gear to guard against

hose chafing and bilge pump backflow. Plaintiffs argue that PJM,

as a repairer, should not be allowed to depart from industry

standards. This argument fails for at least two reasons. First,

this argument misses a step by assuming that PJM had an obligation

to inspect for compliance with such standards. The district court

did not find such inspection to be part of the commissioning

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process, and for the reasons we have explained, we see no clear

error. Second, even if PJM had some duty to conduct a general

inspection, the standards would not automatically establish a duty

to detect a lack of the specified precautions. Rather, we

recognize such standards as some evidence of what a reasonable

person would do, not as a definitive statement of PJM's

obligations. See Getty Petroleum Mktg., Inc. v. Capital Terminal

Co., 391 F.3d 312, 326 (1st Cir. 2004) ("These voluntary standards

do not irrefutably establish the standard of care in a negligence

case. Rather, they constitute one more piece of evidence upon

which the jury could decide whether the defendant acted as a

reasonably prudent person in the circumstances of th[e] case."

(internal quotation marks omitted)). Plaintiffs have not shown

that the district court should have been required to accept the

standards as conclusive evidence of the standard of care PJM owed

Picchione.

In conclusion, we make clear that we make no per se rule

about what precise obligations a boat-commissioner will owe to a

boat-owner under the warranty of workmanlike performance. This is

a factual question which depends on the scope of the work

contemplated in the parties' explicit agreement and on obligations

implied through the surrounding circumstances. Here, plaintiffs

have failed to establish that PJM had explicitly or implicitly

undertaken to inspect the vessel for hidden defects or compliance

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with a particular standard. Thus, plaintiffs cannot succeed on

their claim that PJM's failure to do so was a breach of its implied

warranty of workmanlike performance.

B. Is PJM responsible for the turned-off bilge pumps?

No party challenges the district court's conclusion that

PJM was serving as Picchione's bailee. Rather, the question

centers around whether Picchione may benefit from a presumption of

fault against his bailee. The district court found PJM did not

have "exclusive" possession of the boat and, so, refused to apply

this presumption.

Generally, under bailment law, "when the bailor shows

delivery to a bailee and the bailee's failure to return the thing

bailed, he makes out a prima facie case of negligence against the

bailee." Goudy & Stevens, Inc. v. Cable Marine, Inc., 924 F.2d 16,

18 (1st Cir. 1991) (internal quotation marks omitted). This law

essentially creates a presumption against the bailee, which can be

rebutted. See id. This presumption is based on the rationale that

"since the bailee is generally in a better position than the bailor

to ascertain the cause of the loss, the law lays on it the duty to

come forward with the information it has available." Id. at 19.

But this rule admits an exception. "[N]o inference or

presumption of negligence can arise against a bailee if [its]

possession of the damaged bailed property was not exclusive of that

of the bailor." Id. (internal quotation marks omitted). The

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dispute in this case regards the term "exclusive." We have said

that the requirement "does not mean that any act of dominion by the

bailor over the vessel would also negate the inference." Id.; see

also id. at 19 n.3 (citing cases holding that a bailor's "mere

access" is insufficient to defeat the presumption). Rather, for

the presumption to attach, exclusivity must only "be of such a

nature as to permit a reasonable trier of fact to infer that the

bailee is in the better, or sole, position to explain what actually

happened." Id. Where both parties have "equally unrestricted

access," a district court commits no error by rejecting the

presumption. Id.

As just described, we view the question of exclusivity as

one to be found by a "trier of fact," so review is for clear error.

See id. Plaintiffs contend that the district court erred in

finding no exclusivity because Picchione performed no work on the

vessel and had mere access to it only to stock provisions.

Further, plaintiffs reason, Stroker was the only one to admit

touching the bilge pump switches, and PJM did not warn Picchione of

Stroker's actions, so PJM is better situated to explain what

happened.

But again, plaintiffs have failed to meet their high

burden of showing clear error. Picchione was on the vessel on the

Thursday, Friday, and Saturday before the sinking. He had equal

access to and power over the bilge pump switch, which, by his own

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admission, he checked on Saturday. Next, he had hired an

independent mechanic who was responsible for a portion of the boat,

which prevented PJM from fully exercising control. Finally,

Picchione admitted that his friends had his implied permission to

access the boat without his prior approval. This is not "mere

access." Rather, it is the kind of activity which, through its

interference with PJM's control over the boat, would cast doubt on

the fairness of presuming PJM was responsible. The district

court's rejection of plaintiffs' exclusivity claim was not clear

error.

Plaintiffs suggest in the opening of their brief to this

court that, aside from the law of bailment, the district court made

a factual error in not finding Stroker responsible for turning off

the automatic bilge pump. But plaintiffs fail to develop any

argument as to how the district court clearly erred in reaching a

contrary conclusion in reliance on Picchione's deposition testimony

that he would have checked the bilge switch on Saturday.

Accordingly, any such argument is waived. See United States v.

Zannino, 895 F.2d 1, 17 (1st Cir. 1990) (documenting the "settled

appellate rule that issues adverted to in a perfunctory manner,

unaccompanied by some effort at developed argumentation, are deemed

waived").

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 C. Do any other alleged errors require vacatur?

Plaintiffs contend that the district court's findings

rely on an expert report which was never admitted into evidence.

Specifically, plaintiffs point to PJM's expert's conclusion (1)

that the exhaust hose could not have caused the leak and (2) that

a single bilge pump would have saved Eveready. Any reliance by the

district court on such testimony would be entirely harmless. The

district court's holding was not based on any finding about the

cause of the initial leak. In fact, the district court explicitly

made no determination on that issue. As to the second conclusion,

the district court did find the proposed fact: that a single bilge

pump would have saved the vessel. But such testimony was entirely

cumulative with Northern's own expert, who also proposed the same

conclusion. These errors epitomize harmlessness, and are not a

basis for reversal. See 28 U.S.C. § 2111. Plaintiffs have

essentially no developed arguments of prejudice with which to

challenge this conclusion.

Plaintiffs next contend that the district court erred

when it (1) concluded that no evidence showed the rate of the leak

before the sinking,6 (2) stated that Northern's expert could not

6
This is also not clear error. The only testimony plaintiffs
point to showed the rate of the leak after the vessel was recovered
and inspected. While one could accept such testimony as
circumstantial evidence of the rate of leaking before the sinking,
the district court was not required to so infer, and was correct
that there was no direct evidence of the pre-sinking leakage rate.

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rule out another source of the leak (namely hull damage), and

(3) confused testimony regarding the rear as opposed to the engine

room bilge. But none of these facts are material to the

dispositive questions of PJM's duty to detect defects or leaks or

to PJM's liability for the turned-off automatic bilge pump.7 So

these contentions provide no basis to justify vacatur.

Finally, plaintiffs challenge the district court's

finding that the sinking was caused when the boat sank to such a

point that water backflowed through the exhaust ports. Plaintiffs

point to some evidence showing that Eveready normally sat in the

water with her exhaust ports submerged. Even if plaintiffs could

show clear error, their claim here is confusing at best. It was

plaintiffs' own expert who proposed the backflow theory, and one of

plaintiffs' chief theories is that PJM was negligent in not

detecting flaws in the bilge design that would have prevented such

backflow. It is strange for plaintiffs to now challenge the

district court's backflow findings. Plaintiffs are essentially

arguing that the boat did not sink in the way they suggested that

7
In their reply brief, plaintiffs argue that a proper finding as
to the rate of the leak, combined with evidence of a scum lime that
formed on Eveready, would lead to a conclusion that the bilge pump
must have been turned off before Saturday. Plaintiffs do not
adequately develop this technical argument. Nor did they raise it
in their initial briefs. It is waived. See Waste Mgmt. Holdings,
Inc. v. Mowbray, 208 F.3d 288, 299 (1st Cir. 2000) ("We have held,
with a regularity bordering on the monotonous, that issues advanced
for the first time in an appellant's reply brief are deemed
waived.").

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it did. But plaintiffs propose no other explanation for the

sinking, let alone a theory that would show that PJM should have

detected this unspecified defect. Therefore, plaintiffs challenge

to this finding also fails on harmlessness grounds.

Plaintiffs undoubtedly hoped to tarnish the district

court's conclusions by trying to cast doubt on these subsidiary

findings. But their failure to meaningfully engage the rule of

harmless error review dooms their claims.

D. Must Picchione Indemnify PJM?

PJM essentially argues that Picchione promised, in

Paragraph 19 of the Slip Rental Agreement, to indemnify PJM for

"any loss," including attorney's fees, arising out of "any incident

occurring on or about the Tenant's vessel . . . or on the premises

of the Marina," including its sinking. PJM challenges the district

court's rejection of its indemnification counterclaim, asserting

that it improperly imposed an additional limitation that the

liability arise out of the Slip Rental Agreement.8

The parties selected Rhode Island law to govern their

contract. No party has challenged (or even mentioned) that

selection, and we see no policy interest which would override this

contractual choice. Cf. Restatement (Second) of Conflict of Laws

8
We note that though PJM also cites language from another
provision dealing more explicitly with attorney's fees, Paragraph
39, PJM develops no argument regarding this section. So, any such
argument is waived.

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§ 187 (1971) (discussing enforcing parties' choice of law

provisions); see also Littlefield v. Acadia Ins. Co., 392 F.3d 1,

6 (1st Cir. 2004) (noting that state rules of interpretation often

govern maritime contracts absent controlling federal law on point

(citing Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310,

314 (1955))).

The construction of an unambiguous contract is a question

of law, which we review de novo. Lloyd's of London v.

Pagán-Sánchez, 539 F.3d 19, 22 (1st Cir. 2008); Arruda v. Sears,

Roebuck & Co., 310 F.3d 13, 19 (1st Cir. 2002). Under Rhode Island

law, a contract is ambiguous "if it is reasonably susceptible of

different constructions." In re Newport Plaza Assoc., 985 F.2d

640, 645 (1st Cir. 1993) (internal quotation marks omitted).

"Conversely, a contract which within the realm of reason can bear

only a single plausible interpretation can be so construed by the

court as a matter of law." Id. "Where the language of a contract

is clear and unambiguous, the Rhode Island Supreme Court has

generally interpreted the parties' intent based solely on the

written words." Id. "[A] court is duty bound to construe

contractual terms in the context of the contract as a whole." Id.

at 646.

We reject PJM's position regarding Paragraph 19. While

PJM's reading is clever, it is not convincing. PJM does not seek

indemnity for a loss directly resulting from the sinking, but for

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a loss resulting from a lawsuit over the sinking. And this sinking

allegedly resulted not from the mere use of PJM's slip, which was

the subject of the Slip Rental Agreement, but from alleged

negligence in the execution of a separate agreement to commission

the vessel.9

In this way, the context of the contract makes clear that

it should be limited to the slip rental context; PJM's broader

construction simply does not make sense. Under PJM's construction,

it could sue Picchione for attorney's fees if it incurred expenses

defending almost any conceivable suit -- even if the suit arose

from an incident not related to Picchione in the slightest. For

example, if another patron slipped and fell at the Marina and sued

PJM, PJM's construction would allow it to sue Picchione for "loss"

to PJM arising out of the "incident occurring . . . on the premises

of the marina." Even if the construction was limited to incidents

"occurring on or about Tenant's vessel," PJM's construction would

require Picchione to defend PJM if a third party was injured while

9
PJM argues that plaintiffs' complaint alleged negligence
attributable to the mere slip rental. PJM argues that Picchione
should be treated like its insurer, and that Paragraph 19 imposes
on him a duty to defend PJM against any pleadings raising claims
that might be covered under Paragraph 19, even if his ultimate
claims only related to the commissioning. PJM offers no cases to
support its novel theory that such a clause can effectively turn
Picchione into an insurer, and we reject their argument. Further,
after review of the paragraphs of the complaint and amended
complaint upon which PJM relies, we conclude that plaintiffs'
pleadings related to PJM's commissioning responsibilities, not its
slip rental.

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a PJM agent was moving the boat. This is an absurd result, and we

will not so construe the contract. See Dubis v. East Greenwich

Fire Dist., 754 A.2d 98, 101 (R.I. 2000) ("To construe this

unambiguous contract any other way . . . would produce an absurd

result."). Instead, we conclude that a Rhode Island court

interpreting this contract would construe it as limited to

indemnity for loss causally connected to the purpose of the

contract. See Hingham Mut. Fire Ins. Co. v. Heroux, 549 A.2d 265,

267 (R.I. 1988) (observing that a similar limitation could be read

"as intending to limit the scope of coverage to incidents with a

causal connection to the premises, not to incidents that merely

occur on the premises") (citing Hanson v. General Accident Fire &

Life Ins. Corp., 450 So. 2d 1260, 1261-62 (Fla. Dist. Ct. App.

1984)). Here, we agree with the district court that the sinking

was causally connected to the commissioning process and not to the

slip rental agreement.

III. Conclusion

For all of the foregoing reasons, the judgment below is

affirmed in all respects.

Affirmed.

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