Justia U.S. 1st Circuit Court of Appeals Opinion Summaries

Following a remand from the First Circuit, the bankruptcy court approved the Chapter 7 trustee's decision to give priority to holders of senior unsecured debt with respect to principal and pre-petition interest. The priority did not extend to payment of post-petition interest ahead of junior unsecured debt. The district court affirmed. The First Circuit affirmed. The Code provides that a subordination agreement is enforceable to the same extent that such agreement is enforceable under applicable nonbankruptcy law, (11 U.S.C. 510(a)). The bankruptcy court findings as to the intent of the parties were sufficient to support the conclusion, under New York law, that the parties did not intend to subordinate the junior noteholders to post-petition interest.

Plaintiff financed an ice cream hardening system. The lender held title and leased the equipment to plaintiff, but refused to set an end-of-lease purchase price. The final agreement did not refer to an estimate in a side letter or conversations concerning the lease price. Two years after the equipment was installed, plaintiff suggested an early buy-out. When the parties were unable to agree to a price, plaintiff filed suit alleging breach of contract and the covenant of good faith and fair dealing, violation of the Utah Unfair Practices Act, promissory estoppel and fraud. The district court rejected other claims, but held that the lender had fraudulently professed, in a side letter, to have estimated 12 percent as the price when, in fact, it had no estimate. The court ordered the lender to convey the equipment and refund to plaintiff part of the payments made under the agreement. The First Circuit affirmed the award of title, but remanded for recalculation of the refund. The transfer of title was an expected outcome of the contract and the evidence supported a finding of fraud.

Defendant is a valet parking business and executed a letter of intent to buy a competing company for $16 millions. An outline of a financing agreement under negotiation with a private equity group contained exclusivity and confidentiality provisions. While that agreement was in effect, the defendant's founder negotiated financing from a company that owned 24.9 % of defendant company. The private equity company sued. The district court entered judgment in favor of defendant. The First Circuit affirmed. The district court properly declined to instruct the jury on the lost opportunity theory of causation and damages; at most, the equity group was deprived of a contractually guaranteed right to prevent defendant from negotiating financing with others. The court properly instructed the jury that the exclusivity provision reference to discussing financing with "any person or entity" was ambiguous.

The employee of a firm that provides temporary workers signed a confidentiality agreement. After disputes about delays in compensation and reimbursement, he approached the employer's client (for whom he had been working) about the delays. He was terminated for violation of the clause and filed an unfair labor practices charge. The NLRB found the clause overbroad so that the termination violated Section 8(a)(1) of the Act by interfering with rights guaranteed by 29 U.S.C. 158(a)(1). The First Circuit granted the NLRB's motion to enforce its order that the employer rescind the provision, reinstate the employee, and pay damages. The confidentiality language could be fairly read to cover disclosure of terms of employment to union representatives; a more narrowly-drafted provision could serve the employer's legitimate interests. The NLRB did not err in not considering that the employee would have been discharged regardless of violation of the clause.

Defendant was convicted of drug crimes committed and determined to be a career offender under U.S.S.G. 4B1.1, based in part on a state youthful offender adjudication. The Third Circuit affirmed in 2010. On rehearing, the First Circuit vacated, noting that its prior decision had been based on erroneous precedent. For career offender purposes, a conviction for an offense committed before age 18 counts only if classified as an adult conviction under the laws of that jurisdiction. Under the Massachusetts law relevant to defendant's prior adjudications, he was a "youthful offender," not just a "juvenile delinquent;" the classification has some, but not all, characteristics of an adult conviction and is not a career offender predicate. The court remanded, stating that although the sentence was below the career offender range, the designation can be influential even if not treated as controlling.

In 2000 the planning board approved a development and the developer began purchasing land. In 2002, the Department of Justice issued an opinion that the land could be sold without legislative action, although it was gained from the sea. Construction began; the developer invested $200 million. Because of protests, the legislature investigated and concluded that the developer lacked valid title. A 2007 Department of Justice opinion stated that the land belonged to the public domain. The governor suspended permits and froze construction. Pending a hearing, the developer filed a quiet title action. The Regulations and Permits Administration upheld suspension of construction. The Puerto Rico appeals court ordered the administration to hold an evidentiary hearing (which did not occur), but did not lift the stay on construction. The developer succeeded in its quiet title action; in 2008 construction resumed. The supreme court held that the developer's due process rights had been violated. The district court dismissed a suit under 42 U.S.C. 1983. The First Circuit affirmed. Although the plaintiff did state a procedural due process claim, the defendants are entitled to qualified immunity. The defendants were not on clear notice they they were required to hold a meaningful pre-deprivation hearing.

After a generator failed, plaintiff ordered a replacement, believing that no permit was required for changes to its hydroelectric power facility, which is located on plaintiff's property on a non-navigable Massachusetts river. The facility consists of an 87-acre-foot reservoir, a 20-foot-high, 127-foot-long concrete gravity dam, two powerhouses, and appurtenant facilities. The Federal Energy Regulatory Commission concluded that plaintiff required a license under the Federal Power Act, 16 U.S.C. 817(1). The First Circuit affirmed, holding that the facility is in a stream that is subject to Commerce Clause jurisdiction, the proposed changes will constitute "post-1935 construction" under the Act, and the proposed changes will affect interstate commerce. The Commission's interpretation of "construction" as encompassing the work at issue was reasonable and substantial evidence supports a finding that small hydroelectric plants have a cumulative impact on interstate commerce.

The star of a television show left his position with the plaintiff television station for a different television station, where he worked on a television show with the same characters and setting as a show he had worked on for plaintiff. The district court entered summary judgment in favor of plaintiff in a copyright infringement action against the actor. The plaintiff settled with the second television station. The First Circuit affirmed. Even if the actor suggested some of the scripts and characters in the original show, they were not "fixed" as required for protection under 17 U.S.C. 102(a); the scripts, as work-for-hire, belonged to the plaintiff. The shows are strikingly similar. The $700,000 settlement with the television station did not release the actor, but the district court correctly offset damages by the amount of the settlement.

In 2003 the owner executed a second mortgage with a stated term of four months, in favor of defendant to secure performance of a guaranty. The owner later executed a separate mortgage and defaulted. The lender foreclosed and took possession subject to senior mortgages. In 2007 defendant published notice of foreclosure. The then-owner filed bankruptcy under 11 U.S.C. 362(a), triggering a stay before the deadline under the Massachusetts Obsolete Mortgages Statute, which requires the holder of a mortgage to take action to enforce it within five years after the end of its stated term (September 9, 2008). The bankruptcy court held that defendant's failure to record an extension rendered the mortgage void. The district court reversed. The First Circuit affirmed, holding that the bankruptcy statute tolls the limitations period of the state law. Defendant was not required to choose between filing an extension and foreclosure and still had the right to foreclose at the time the stay became effective.

The inmate, convicted in 1978 of murder, gained a reputation as a "jail house lawyer" while serving his life sentence and acquired a number of "separations," a term used to indicate a conflict counseling against assignment of one inmate to the same institution as another inmate or staff member. Because of the separations, Pennsylvania began billeting him in other states' institutions pursuant to the Interstate Corrections Compact. In 2001 he was transferred to Maryland. A letter, written in connection with the transfer, noted that the inmate is not a discipline problem, but is a "nuisance" as a jailhouse lawyer. The district court rejected a suit under 42 U.S.C. 1983. The First Circuit affirmed, holding that there was no evidence of a causal connection between the inmate's protected First Amendment activities and the transfer. The timing of the transfer and the use of the term "nuisance" did not establish retaliatory motive.