2004 | Cited 0 times | D. Massachusetts | August 17, 2004

1 With the parties' consent, on June 6, 2002 this case wasreferred and reassigned to the undersigned for all purposes,including trial and the entry of judgment, pursuant to28 U.S.C. § 636(c).


On June 3, 2004, the Court issued a Procedural Order On TheEntry Of Separate And Final Judgment On Certain Of Greenwich'sCounterclaims (#114) directing the parties to file memorandaaddressing the Court's proposed course of action. After dueconsideration of the parties' submissions (##115, 116), the Court has determined to enter a separate and final judgment onvarious claims in this case as follows: Judgment shall enter forthe plaintiff Liberty Mutual Insurance Company ("Liberty") onCount I of the amended complaint as well as Counts I, II, III,IV, V, VI, VII and VIII, ¶ 55(a)-(f), of defendant GreenwichInsurance Company's ("Greenwich") counterclaim for declaratoryrelief and accounting. The remaining claims in the amendedcomplaint and counterclaim relate either to post-bankruptcy oraccounting issues.

The breach of contract claim alleged in Count I of the amendedcomplaint was resolved via the Further Memorandum And Order OnLiberty's Motion For Summary Judgment (#82) issued on October 3,2003. In that count, Liberty claimed that, upon the happening ofcertain events of default under an agreement between Liberty andAmerican Tissue, Greenwich became liable to pay Liberty the fullpenal amount of a security bond it has issued to secure AmericanTissue's performance, but failed to do so after demand The Courtconcluded that American Tissue's filing of a petition forbankruptcy on September 10, 2001 did constitute a default and,consequently, that Liberty's claim under the terms of theagreement for the full penal amount of the bond was valid.2

Count II of the amended complaint sets forth a claim forviolation of Massachusetts General Laws chapter 93A andMassachusetts General Laws chapter 176D. The substantiveallegation is that "Greenwich's several failures timely to payLiberty the full penal sum of the Bond constitute unfair claimssettlement practices and unfair and deceptive acts or practices."(#24 ¶ 26) The first time Liberty submitted a claim on the bondwas by certified letter dated October 9, 2001, approximately onemonth after American Tissue filed for bankruptcy. (#22 at 8; #24¶ 20) Given this timing, it is clear that the claims in Count Iand II are factually, legally and temporally distinct.

Like the affirmative defenses, Counts I, II, III, IV, V, VI andVII of the counterclaim were rendered moot or effectively deniedby the summary judgment decision. Count VIII is a claim underMassachusetts General Laws chapter 93A, part of which will bedismissed as explained more fully hereinafter. Counts IX and Xare accounting claims and a claim for declaratory reliefrespectively which, while related to the breach of contract claimin Count I of the amended complaint, are nevertheless readily separablefactually.

Greenwich's chapter 93A claim has been broken down intosubparts and so will be addressed in similar fashion. Liberty'salleged unfair and deceptive acts include the following: "Seekingto require Greenwich to pay $3,700,000, which Liberty assertedwas the full penal amount of the Bond, where Liberty had agreedwith American Tissue to reduce the amount of the Bond to$1,777,500." (#20 ¶ 55(a)) That claim was specifically denied inthe summary judgment opinion when the Court concluded that "[i]twas within Liberty's discretion whether to reduce the amount ofthe bond, and that discretion was never exercised." (#59 at 13)

The next purported unfair act was Liberty "[s]eeking to enforceremedies under the Bond that are inapplicable to the specificEvent of Default asserted against American Tissue." (#20 ¶55(b)). To the extent that this claim was not mooted by thesummary judgment decision, it is unavailing because Greenwich hasnot identified any "loss of money or property, real or personal"flowing from this conduct. See Mass. Gen. L. c. 93A, § 11;Warner-Lambert Co. v. Execuquest Corp., 427 Mass. 46, 48,691 N.E.2d 545, 547 (1998) ("In order to succeed on the G.L. c. 93Aclaim, the plaintiff must prove that it suffered `loss of moneyor property.' G.L. c. 93A, § 11. Alternatively, if it has notsuffered any loss of money or property, it may obtain an injunction `if it can be shown thatthe aforementioned unfair method of competition, act or practicemay have the effect of causing such loss of money or property.'Id.");3 Lord v. Commercial Union Ins. Co.,60 Mass. App. Ct. 309, 317, 801 N.E.2d 303, 310-311, rev. denied,441 Mass. 1104, 805 N.E.2d 45 (2004).

This same rationale applies to subsections (c), (d) and(e).4 These aspects of Greenwich's chapter 93A claim wererendered irrelevant or moot by the entry of judgment as a matterof law on Count I of the amended complaint. Moreover, again, noloss of money or property resulted from the acts alleged.

The unfair act alleged in ¶ 55(f), "[s]eeking payments fromGreenwich grossly in excess of any actual damages sustained byLiberty", was denied or mooted by the Court's decision that, infact, Liberty was entitled to the full penal amount of the bondunder the terms of the agreement.

In its Memorandum With Respect to Its 93A Claim (#115),Greenwich argues that the issues raised in ¶ 55(b)-(f) are "more complex"than the Court describes. (#115 at 2) Specifically, Greenwichcontends that "Liberty's wrongful actions may have forcedAmerican Tissue to seek protection under the Bankruptcy Code,causing substantial loss to both American Tissue andGreenwich."5 (#115 at 2) Further, it is asserted that"Liberty pursued a wrongful course of conduct for the solepurpose of `creating' an Event of Default by American Tissue sothat Liberty could attempt to cancel the American Tissueinsurance policies and collect the full amount of the bond."(#115 at 3)

The fundamental problem with Greenwich's position is that thecontentions advanced in its memorandum quite simply are not pledin its 93A claim. Subparts (b) through (f) of paragraph 55 arealleged as discrete acts in the counterclaim. There is noallegation whatsoever that these acts should be viewed as apattern of conduct designed for the purpose of ultimatelycollecting the full sum of the bond from Greenwich. Similarly,there is no allegation that Liberty's conduct somehow forcedAmerican Tissue into filing for bankruptcy, nor can what isalleged fairly be read to support that theory. From all that appears Greenwich is engaging in a revisionist interpretation ofits allegations in a last-ditch effort to avoid the entry ofjudgment on its claim. Its attempt is unavailing.

The bottom line is that the facts and theories argued inGreenwich's brief are not alleged in Count VIII of itscounterclaim. The claim as alleged in ¶ 55(b)-(f) is subject todismissal.

The final portion of the chapter 93A claim, ¶ 55(g), relates tothe accounting issues which remain in the case.6

In Count IX of its counterclaim, Greenwich requests anaccounting with respect to "the nature and extent of the lossesin connection with the American Tissue insurance policies andwith respect to the payments that are actually due and owing fromAmerican Tissue." (#20 ¶ 59) The underlying insurance policies atissue are workmen's compensation policies. Due to the nature ofthe claims made under these types of policies, the parties agreethat the final numbers will not be known for years to come.

In the claim recently added to the counterclaim, Count X,Greenwich seeks a declaration regarding the aggregate limit of the 1999workers' compensation insurance policies. In the summary judgmentmotion the Court determined that Liberty is presently entitled tothe full penal amount of the bond. The aggregate limit willestablish how much of that bond properly can be applied forpayments under the 1999 policies. Thus the claim advanced inCount X of the counterclaim is factually and legally distinctfrom the claim decided on summary judgment. Indeed, discovery onthe issues involved in this claim has just recently begun.

The entry of a separate and final judgment on the claims asdescribed hereinabove is warranted under the law. In pertinentpart Rule 54(b), Fed.R. Civ. P., provides that: When more than one claim for relief is presented in an action, . . . or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no reason for delay and upon an express direction for the entry of judgment.Fed.R. Civ. P. 54(b).

The seminal case in this Circuit detailing "the preferredpractice under Rule 54(b)"7 is Spiegel v. Trustees of Tufts College,843 F.2d 38 (1 Cir., 1988). In Spiegel, the Court detailed theprocess to be undertaken by the district court: When considering the wisdom of Rule 54(b) certification in a given case, the trial court must first assess the finality of the disputed ruling. Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 43, 100 S.Ct. 1460, 1464, 64 L.Ed.2d 1 (1980); United States General, Inc. v. Albert, 792 F.2d 678, 680-81 (7th Cir. 1986); Bank of New York, 108 F.R.D. at 186. If the ruling lacks the necessary finality, the application must fail. As the Court has said, "[t]he District Court cannot, in the exercise of its discretion, treat as `final' that which is not `final' within the meaning of [28 U.S.C.] § 1291." Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 437, 76 S.Ct. 895, 900, 100 L.Ed. 1297 (1956) (emphasis in original). As an adjunct of this inquiry, of course, it must be shown that the ruling, at a bare minimum, disposes fully "of at least a single substantive claim." Acha v. Beame, 570 F.2d 57, 62 (2d Cir. 1978). Once the finality hurdle has been cleared, the district court must determine whether, in the idiom of the rule, "there is no just reason for delay" in entering judgment. Fed.R.Civ.P. 54(b). The court's role becomes that of a "dispatcher," Sears, Roebuck, 351 U.S. at 435, 76 S.Ct. at 900, exercising its discretion to decide which "final" decisions in a multi-claim action should be sent upstairs immediately and which withheld pending resolution of the entire controversy in the district court. See Pahlavi, 744 F.2d at 904. The process, tilted from the start against fragmentation of appeals, is necessarily case-specific. It entails an assessment of the litigation as a whole, and a weighing of all factors relevant to the desirability of relaxing the usual prohibition against piecemeal appellate review in the particular circumstances. If, in consequence of this examination, the district court concludes that entry of judgment under Rule 54(b) is appropriate, it should ordinarily make specific findings setting forth the reasons for its order. Knight v. Mills, 836 F.2d 659, 661 n. 2 (1st Cir. 1987); Santa Maria, 808 F.2d at 854-55; Pahlavi, 744 F.2d at 904-05. Doing so, we hasten to add, serves a twofold purpose: it helps the district judge to sort out and weigh the competing considerations in his own mind, and it permits the appellate court effectively to review the ruling.Spiegel, 843 F.2d at 42-43 (footnotes omitted); see also ClairInternational, Inc. V. Mercedes-Benz Of North America, Inc.,124 F.3d 314, 318(1 Cir., 1997); Nichols v. The Cadle Co.,101 F.3d 1448, 1449 (1 Cir., 1996); State Street Bank & Trust Co. v.Brockrim, Inc., 87 F.3d 1487, 1489 (1 Cir., 1996); CreditFrancais International, S.A., 78 F.3d 698, 706 (1 Cir., 1996);Maldonado-Denis v. Castillo-Rodriguez, 23 F.3d 576, 580 (1Cir., 1994).

The Spiegel court further admonished that: notwithstanding the order of dismissal, the action remains pending for trial in the district court as to all of the parties. This circumstance alone counsels hesitation in the use of Rule 54(b). Brunswick Corp. v. Sheridan, 582 F.2d 175, 183 (2d Cir. 1978); Bank of New York, 108 F.R.D. at 187. It will be a rare case where Rule 54(b) can appropriately be applied when the contestants on appeal remain, simultaneously, contestants below.Spiegel, 843 F.2d at 4; Nichols, 101 F.3d at 1449; CreditFrancais International, 78 F.3d at 707. The Court finds that the pertinent criteria have been met in theinstant case.

First, all the claims upon which judgment shall enter arefinal. As earlier delineated, the judgment will enter upon claimsbetween the parties which can be clearly segregated, factuallyand legally, from the claims remaining in the case. Whilerecognizing that the same parties, Liberty and Greenwich, willremain as parties here in the trial court, the Court is of thefirm belief that the circumstances of this case warrant theaction being taken.

Second, the Court finds that there is no just reason for delayin entering the judgment for several reasons. All of the claimsadjudicated to date basically have risen or fallen upon theCourt's determination that the bankruptcy defense was personal toAmerican Tissue such that Greenwich, as surety to AmericanTissue, could not avail itself of its protection. In other words,rather than the ipso facto clause in the agreement being voidas it would have been against American Tissue, the Courtconcluded that the filing of the bankruptcy petition was an eventof default under the agreement such that Liberty was entitled toreceive the full penal amount of the bond from Greenwich. Therewas little guidance to be gleaned from the case law when decidingthis issue, and none on point in this Circuit.

Second, the decision in favor of Liberty on Count I of theamended complaint will likely be rendered moot by the passage of time. Aspreviously noted, it is anticipated that the final numbers on theworkers' compensation claims will not be known for years. Becauseof this unique circumstance, the accounting issues will remainextant for a lengthy, but unknown, period of time. Absent theentry of a final and separate judgment, the Court has no way toenforce its ruling.

Third, it is likely that the claims remaining in this case willbe resolved short of trial. While the avoidance of a trial is nota primary reason for the action being taken, it is nevertheless aconsideration.

To summarize, for all the reasons stated, I find that the entryof judgment under Rule 54(b) is warranted given the constellationof circumstances in this case. I further find that "there is nojust reason for delay". It is therefore ORDERED that judgmententer for the plaintiff Liberty on Count I of the amendedcomplaint8 as well as Counts I, II, III, IV, V, VI, VIIand VIII, ¶ 55(a)-(f), of defendant Greenwich's counterclaim fordeclaratory relief and accounting.

1. The Memorandum And Order On Liberty's Motion For SummaryJudgment (#59) and the Further Memorandum (#82) effectivelydenied or mooted all of Greenwich's affirmative defenses.Familiarity with these opinions is assumed.

2. Greenwich does not plead for injunctive relief in CountVIII of its counterclaim.

3. Paragraph 55(c) reads: "Asserting that American Tissue'sfailure to increase the letter of credit by $250,000 was an Eventof Default where Liberty failed to effectively exercise itsoption under the Agreement to require the increase in the letterof credit. The unfair act alleged in ¶ 55(d) is "[d]emanding thatthe letter of credit be increased by $250,000 where, oninformation and belief, the sole reason for such demand was tocreate an Event of Default." Finally, ¶ 55(e) contends thatLiberty violated chapter 93A by "[a]sserting that AmericanTissue's reimbursement obligations were outstanding where suchobligations had in fact been satisfied by a draw upon a letter ofcredit."

4. The defendant "recognizes that American Tissue eventuallywould have filed for bankruptcy", but contends that the filingcame earlier than what otherwise would have been necessary due toLiberty's threat on September 10, 2001 to cancel AmericanTissue's workers compensation policies if deductible paymentswere not forthcoming. (#115 at 4)

5. Paragraph 55(g) reads: "Failing and refusing to permitGreenwich to examine its books and records, or provide it withother information, to evidence the deductible reimbursements,adjusted or other premiums, or other obligations allegedly owingto Liberty under the Agreement."

6. Feinstein v. Resolution Trust Corporation, 942 F.2d 34,39 (1 Cir., 1991).

7. As previously noted, the face amount of the bond at issuein Count I is $3,700,000.00. The parties agree that as of thisdate Greenwich has paid Liberty a total of $1,738,496.31 on thatbond. Thus, judgment shall enter in the amount of $1,961,503.69,that figure representing the difference between the face amountof the bond and the sum already paid. Prejudgment interest shallrun from the date that Liberty first made a demand to Greenwichfor payment of the full face bond, to wit, October 9, 2001. SeeMass. Gen. L. c. 231, § 6C.

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