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

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.

In 2005, plaintiffs, residents of Puerto Rico, contracted with defendants, Florida corporations, to purchase condominiums to be built in Florida, and submitted earnest money. Because of the financial crisis, the units were not completed and defendant terminated the agreements. Plaintiffs sued for return of the earnest money. The district court dismissed, finding the defendants did not have minimum contacts with Puerto Rico necessary to establish jurisdiction. The First Circuit vacated and remanded, noting that there certain contacts that could establish jurisdiction that were not adequately addressed at trial.

Hospital records state that decedent died of a nonsurvivable head injury following an accidental fall at a casino. An insurer refused to pay, claiming that the fall was likely caused by a stroke, so that death was not "accidental" within the meaning of the policy. The company's expert testified accordingly. The district court entered judgment in favor of the company. The First Circuit affirmed. The district court did not err in admitting the expert's testimony; it fell within the scope of his previously disclosed report. The estate was not prejudiced by any difference between the report and testimony.

A employee made a series of attempts to obtain benefits under the company's long-term disability policy. A copy of the plan, which he obtained during internal appeals, contained no limitation on filing suit to challenge denials, but did reserve the right to make alterations to the plan. The plan was later amended to include a one-year limitation on bringing suit. Employee did not receive notice of the change. In 2005 the plan issued a final written rejection. In 2008 the employee filed suit under the Employee Retirement Income Security Act, 29 U.S.C. 1109 and 1132. The district court dismissed. The First Circuit reversed. While the plan did not engage in deceptive conduct that would implicate equitable estoppel, equitable tolling applies based on the failure to give notice of the change. The employee was reasonably diligent.

In 1999 plaintiff pled guilty to making false statements while working on a project funded by the Federal Highway Administration (18 U.S.C. 2, 1014, and 1020). The agreement prohibited plaintiff from participating in any FHWA-funded project for a year. Plaintiff challenged Puerto Rico agencies' subsequent actions. The parties negotiated settlements; plaintiff entered into an agreement allowing it to bid on FHWA projects. Puerto Rico then enacted Law 458, which prohibits award of government contracts to any party convicted of a crime constituting fraud, embezzlement, or misappropriation of public funds and requires rescission of any contract with a party convicted of a specified offense. The statute states that it does not apply retroactively. One agency cancelled plaintiff's successful bids, another withdrew its consent to the settlement. The district court rejected claims of violation of the federal Contracts Clause and breaches of contract under Puerto Rico law. The First Circuit affirmed with respect to the constitutional claim. Any breach of the settlement agreements did not violate the Contracts Clause, even if committed in an attempt to unlawfully enforce Law 458 retroactively; defendants have not impaired plaintiff's ability to obtain a remedy for a demonstrated breach. Given the stage of the litigation, the district court should have retained the breach of contract claims.

Hackers breached the security of the database for the grocery store where plaintiffs shop. The district court determined that plaintiffs failed to state a claim under Maine law for breach of fiduciary duty, breach of implied warranty, strict liability, and failure to notify customers. Although the court concluded that plaintiffs adequately alleged breach of implied contract, negligence, and violation of the unfair practices portion of the Maine Unfair Trade Practices Act, it dismissed those claims because alleged injuries were too unforeseeable and speculative to be cognizable under Maine law. The First Circuit affirmed in part, but reversed dismissal of the negligence and implied contract claims. Mitigation damages are available under those claims, for card replacement costs and credit insurance.