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

Companion was authorized to license space in Wal-Mart stores to companies that sell durable medical equipment and entered into licensing agreements with defendants. In 2007, defendants shut down operations. Companion sued. Problems arose during discovery, including defense counsel motions to withdraw, allegations of inadequate responses to discovery requests, objections to the scope of discovery, refusal to attend depositions, motions to compel, multiple extensions, and claims of obstruction. After three years, the district judge imposed a default as to all counts, based on discovery violations by the defendants. The court eventually lifted the default except as to Companion's veil piercing claim, allowing the substantive claims to go to trial. A jury found for Companion and awarded more than $1 million in damages. Defendants, personally liable as a result of the default, appealed. The First Circuit vacated the default and remanded, "because the district court imposed such a severe sanction based on a very limited slice of the relevant facts." View "Companion Health Servs, v. Majors Mobility, Inc." on Justia Law

In 2008, MDS purchased a vessel and executed a note in favor of FirstBank, secured by a preferred ship mortgage, under an agreement that required that they maintain insurance. In 2009, Customs and Border Protection seized the vessel as part of a drug enforcement action. The search and seizure damaged the vessel, significantly decreasing its value. Customs notified FirstBank, which initiated an administrative forfeiture proceeding, intervened in the criminal case, obtained voluntary dismissal of the indictment against the vessel, then submitted an insurance claim for "loss of the vessel including, without limitation, the value of the Bank's collateral, legal fees incurred in attempting to secure its release, as well as any applicable costs and interests." The insurer denied the claim. The district court granted FirstBank partial summary judgment and awarded $74,512.50 in attorneys' fees for costs and expenses incurred in securing release of the vessel and defending the validity of the policy. The First Circuit affirmed, finding no genuine issues of material fact.View "Markel Am. Ins. Co. v. Diaz-Santiago" on Justia Law

Vicor manufacturers electronic equipment, including power converters. Ericsson designs, manufactures and sells electronic equipment, including radio base stations (RBSs) used to operate cellular telephone towers and networks. Ericsson purchased Vicor power converters for use in RBSs sold to wireless providers worldwide. The power converters began failing due to a manufacturing change in a component computer chip. Severe outages occurred in wireless networks. Ericsson sued Vicor and obtained a settlement of $50 million. Vicor's insurers paid $13 million. Vicor sought the additional $37 million. A jury awarded $17.3 million. The district court reduced the verdict by $4 million. The First Circuit vacated. The policies refer to "loss of use of property that is not physically injured." The district court should fashion jury instructions making clear that classic loss of use damages (lost profits or rental value of substitute property) incurred while repairs are pending may be recovered, but the actual costs of repairs may not. The court also may instruct the jury regarding the duty to mitigate loss and explain that costs of reasonable mitigation measures are recoverable, provided that the mitigation measures are distinguishable from ordinary repairs and result in a net savings. View "Vicor Corp. v. Vigilant Ins. Co." on Justia Law

Defendant sells brokerage and investment products and services, typically to registered broker-dealers and investment advisers that trade securities for clients. One of its services, NetExchange Pro, an interface for research and managing brokerage accounts via the Internet, can be used for remote access to market dynamics and customer accounts. A firm may make its clients' personal information, including social security numbers and taxpayer identification numbers, accessible to end-users in NetExchange Pro. Some of defendant's employees also have access to this information. Plaintiff, a brokerage customer with NPC, which made its customer account information accessible in NetExchange Pro, received notice of the company's policy and filed a putative class action, alleging breach of contract, breach of implied contract, negligent breach of contractual duties, and violations of Massachusetts consumer protection laws. The district court dismissed. The First Circuit affirmed. Despite "dire forebodings" about access to personal information, plaintiff failed to state any contractual claim for relief and lacks constitutional standing to assert a violation of any arguably applicable consumer protection law. View "Katz v. Pershing, LLC" on Justia Law

After both plaintiff and her employer purported to terminate plaintiff's employment contract, the employer sought a declaratory judgment in the court of the Commonwealth of Puerto Rico, concerning a release that it wanted plaintiff to sign. While the case was pending, plaintiff filed suit for breach of contract in federal court, invoking diversity jurisdiction. The district court dismissed without prejudice. After the declaratory judgment action was resolved in favor of the employee, the court denied a motion to set aside the dismissal. The First Circuit reversed, holding that the case does not present the extraordinary circumstances required under the Colorado River doctrine to justify surrender of federal jurisdiction. View "Nazario-Lugo v. Caribevision Holdings, Inc." on Justia Law

Defendant was injured in 2007 while driving an automobile insured under an ASIC policy that indemnifies against injuries caused by negligent uninsured or underinsured motorists. After determining that the tortfeasors were underinsured, defendant received authorization from ASIC to settle pursuant to Rhode Island's UM/UIM insurance statute, R.I. Gen. Laws 27-7-2.1. Within three months, defendant and the tortfeasors agreed to a settlement of $1 million. ASIC refused to pay under the UM/UIM provisions and sought a declaratory judgment that the claim did not comply with a policy requirement that a claim be made within three years after the date of the accident. The district court granted ASIC judgment on the pleadings. The First Circuit certified to the state supreme court the question of whether the policy limitation is enforceable under state law. The court noted that, by requiring the three-year limitations period to run from the date of the accident, the policy may require some insureds to file suit before their claims are ripe--before the insurer determines whether it will cover the claim. The limitations period may even require some insureds to file suit before it becomes clear that the tortfeasor is underinsured.

Airline insurance (USAUI) issued to Pace covered certain risks assumed by Pace in contractual arrangements with other companies, which generally consisted of charter programs. The policy referenced "legally obligated to pay as damages." Pace entered into a charter program contractual arrangement with Patriot, which entered into an agreement to transport L&M customers to destinations that L&M had booked for travelers. L&M purchased a required surety bond. In 2002, L&M claimed that Patriot had unlawfully refused to provide aircraft for scheduled flights, and Patriot contended that L&M not fulfilled payment obligations. Patriot terminated the agreement and, two months later, filed for bankruptcy under Chapter 11. L&M filed a proof of claim. The bankruptcy court disallowed the claim. In 2005, L&M filed suit, claiming coverage by policies, including the USAUI policy. The district court held that the policy did not provide coverage for a breach of contract claim. The First Circuit affirmed, finding no ambiguity in policy language.

In 2005, plaintiff began consulting for defendant and signed an agreement prohibiting disclosure of proprietary information to third parties, and a non- competition covenant effective during his employment and for two years thereafter. In July, 2006, he left the company. In January 2007, he began consulting for another company. Defendant sued under the agreement. The company filed for bankruptcy. A purchaser moved to substitute itself as plaintiff, but the state court dismissed without prejudice for failure to prosecute. After the court reinstated the case, plaintiff filed in federal court, alleging that the state court suit constituted abuse of process under Massachusetts law and seeking to enjoin the proceedings. He alleged that the amount in controversy was "at least $1,000,000," based on "emotional distress" and harm to his reputation, emotional tranquility, and privacy. The district court dismissed. The First Circuit affirmed. Plaintiff failed to allege damages with substantial particularity to establish jurisdiction. He provided no substantiation for or valuation of any of the alleged economic, emotional or physical damages and could not meet the "good faith" requirement with respect to his assertions.

In 1995, plaintiff, a popular psychic and astrologer, and defendant entered into a contract for production and distribution of materials featuring plaintiff's psychic and astrological services. Plaintiff granted defendant the right to use his trademark, name, and likeness. After a 2006 dispute led to litigation; a jury rejected plaintiff's claim that he had validly terminated the agreement, found that he had violated the agreement, and found that defendant owed him no compensation. In 2009, both parties sought injunctive relief to prevent the other party from using the trademark. The district court entered a preliminary injunction in favor of defendant, finding that plaintiff had assigned the trademark in perpetuity. The First Circuit affirmed. The district court did not abuse its discretion in issuing a preliminary injunction, based on its interpretation of the agreement and application of collateral estoppel, based on the prior litigation.

Defendant failed to close on a real estate contract. The seller retained his $25,000 earnest money, resold the property, and assigned his claim for the $400,000 price differential to plaintiff. The district court rejected a claim that the contract showed an intent that the earnest money serve as liquidated damages. The First Circuit affirmed, finding the contract unambiguous.