
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                FOR THE FIRST CIRCUIT                                 ____________________        No. 93-1993                                  EUGENE DESJARDINS,                                Plaintiff, Appellant,                                          v.                            VAN BUREN COMMUNITY HOSPITAL,                                 Defendant, Appellee.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                              FOR THE DISTRICT OF MAINE                     [Hon. Morton A. Brody, U.S. District Judge]                                            ___________________                                 ____________________                                        Before                                 Breyer,* Chief Judge,                                          ___________                        Torruella and Boudin, Circuit Judges.                                              ______________                                 ____________________            Paul F. Macri  with whom Berman & Simmons,  P.A. was on brief  for            _____________            _______________________        appellant.            June A.  Jackson with whom Paul  W. Chaiken and  Rudman & Winchell            ________________           ________________      _________________        were on brief for appellee.                                 ____________________                                   October 12, 1994                                 ____________________                                    ____________________        *Chief  Judge Stephen Breyer heard  oral argument in  this matter, but        did not  participate in  the drafting or  the issuance of  the panel's        opinion.   The remaining  two panelists  therefore issue  this opinion        pursuant to 28 U.S.C.   46(d).                 BOUDIN,  Circuit  Judge.    In 1989,  Eugene  Desjardins                          ______________            brought suit against Van Buren Community Hospital, Inc. ("the            Hospital"), a Maine Corporation, for federal and state claims            arising from Desjardins' discharge from the Hospital in 1988.            After  trial, the  jury found  that the  Hospital was  liable            under  Federal Rehabilitation Act of 1973, 29 U.S.C.   794 et                                                                       __            seq., two  Maine statutes,  and a  pair of common-law  counts            ____            under  Maine law.   Desjardins was awarded  almost $18,000 in            damages,  $5,000 in "front  pay," and  substantial attorney's            fees.                   The  Hospital  appealed to  this  court  but during  the            course  of  the appeal,  the  Hospital  ceased operation  for            financial reasons.  Further,  the Van Buren Hospital District            ("the  District"), a  municipal  entity  authorized by  Maine            statute to provide medical services in the Town of Van Buren,            Maine,  filed for  bankruptcy.   The District,  technically a            separate legal  entity with taxation powers,  owned the land,            building  and  equipment  used  by  the  Hospital.    In  the            bankruptcy  pleadings,  the  District styled  itself  as "Van            Buren Hospital District, d/b/a Van Buren Community Hospital."                 The   District's  chapter  11  petition  was  eventually            dismissed  by the  bankruptcy court  on the  ground that  the            District  was a government entity not  entitled to chapter 11            protection.    However, before  the  dismissal, the  Hospital                                         -2-                                         -2-            secured  a temporary stay of its own appeal in the Desjardins            case  on  the   ground  that  the  Hospital  had   filed  for            bankruptcy;  in fact, it was  the District that  had so filed            for  bankruptcy.  Ultimately, the stay was lifted and in July            1992, this court upheld judgment in favor of Desjardins.                   Since  the  Hospital  took  the  position  that  it  was            virtually without assets,  Desjardins requested a  disclosure            hearing before the magistrate judge.  The hearing was held in            December 1992.  After hearing testimony, the magistrate judge            assigned  the Hospital's  checking-account  balance  and  its            accounts receivable to  Desjardins, but the  magistrate judge            refused  Desjardins'  request  to hold  the  District legally            responsible  for  the Hospital's  debt  to  Desjardins.   The            district court upheld the  magistrate judge and also declined            to approve further discovery.  Desjardins now appeals to this            court.                 On  appeal,  Desjardins  argues  that  several different            doctrines allow him to hold the District liable for the debts            of  the  Hospital.   The  magistrate judge  rejected  such an            attempt on two grounds:  that the District was not a party to            the disclosure proceeding and,  further, that in the original            action  the   claims  against  the  Hospital   had  not  been            separately  asserted against the  District, a  distinct legal            entity.  These threshold objections are not without force but            for  various reasons we prefer  to track the district court's                                         -3-                                         -3-            disposition,   which  addresses  the  merits  of  Desjardins'            attempts to impute liability to the District.                 Desjardins' first  claim on appeal is  that the doctrine            of judicial estoppel prevented the District from denying that            it and the Hospital were one and the same.  Judicial estoppel            may apply  to bar a  litigant from  engaging in  "intentional            self-contradiction  .  . .  as  a means  of  obtaining unfair            advantage . . . ."  Patriot  Cinemas, Inc. v. General  Cinema                                ______________________    _______________            Corp.,  834 F.2d 208, 212 (1st Cir. 1987) (quoting Scarano v.            _____                                              _______            Central  R. Co., 203 F.2d  510, 513 (3rd  Cir. 1953)).  Here,            _______________            Desjardins  says that  the  Hospital and  District have  been            engaged in such self-contradiction in three respects:  at the            outset, the Hospital asserted a governmental immunity defense            applicable only to the  District; the District's petition for            bankruptcy styled the District  as "d/b/a Van Buren Community            Hospital"  and  listed  Desjardins  as a  creditor;  and  the            Hospital requested and obtained a stay of its appeal from the            Desjardins   verdict   during   the   District's   bankruptcy            proceedings.                    Since the district court rejected this judicial estoppel            claim,  the  Hospital argues  that  the  rejection should  be            affirmed because not clearly erroneous.   Desjardins responds            that  judicial estoppel  presents a  matter of  the law  that            should be reviewed de novo.  In reality, judicial estoppel is                               __ ____            not  extrinsically a matter of  fact or law;  the issues that                                         -4-                                         -4-            arise  may turn out to be ones  of raw fact, abstract law, or            something  in between,  e.g.,  the application  of a  general                                    ____            standard  to a known set  of facts.   Here, fine distinctions            make no difference  because we would  affirm on the  judicial            estoppel issue  even if  every aspect of  it were open  to de                                                                       __            novo review.            ____                 The phrases "self-contradiction" and  "unfair advantage"            used  in Patriot Cinemas  are not self-executing.   There are                     _______________            many situations,  especially  at the  outset  of  litigation,            where  a party  is free  to assert a  position from  which it            later withdraws--or  even to assert, in  the alternative, two            inconsistent positions of its  potential claims or  defenses.            Of  course, what is legitimate pleading in one context may be            negligent or even fraudulent in  another.  Lawyers and judges            are not beyond making the necessary distinctions.                 Here, the  relationship  between the  Hospital  and  the            District is surely one  open to different interpretations and            susceptible  to argument.  We  do not see  any wrongful self-            contradiction, let  alone unfair advantage, in  the fact that            the  Hospital  initially  asserted  a  governmental  immunity            defense that was thereafter  abandoned or that the District's            bankruptcy petition  used a  d/b/a reference to  the Hospital            and  mentioned  Desjardins as  a  creditor,  even though  the            District now presumably rejects both these implications.                                           -5-                                         -5-                 One could be more critical of the Hospital's request for            a  stay  of   its  own  appeal  because  of   the  District's            bankruptcy.   The  request not  only implied  an identity  of            entities but it also led a court to take action,  namely, the            grant of a temporary stay.  But again, there is no indication            of  deliberate  dishonesty  by   the  Hospital  nor  has  the            temporary  stay  been  shown   to  have  caused  any  serious            prejudice  to judicial  proceedings  or the  position of  the            opposing  party.   Cf.  Wang  Laboratories,  Inc. v.  Applied                               ___  _________________________     _______            Computer  Sciences,  Inc., 958  F.2d  355,  358-59 (1st  Cir.            _________________________            1992).  We do not think this is a proper case for estoppel.                 Desjardins's next argument is  that he should be allowed            to  "pierce  the  corporate  veil" to  reach  the  District's            assets.  Desjardins  brought out that the  District owned the            land,  building and equipment of the  Hospital; that the five            trustees  of the District  automatically became  directors of            the Hospital (although not the only ones);  and--based on the            testimony   of  one  current  trustee  of  the  District--the            Hospital was the "operating  entity" and the meetings  of the            District  trustees were only a "formality."  "I guess I would            have to say", said  the testifying trustee, "that we  kind of            wear two hats."                 This testimony shows a considerable overlap  between the            two entities but hardly  an identity so complete as  to merge            automatically   what   are  formally   two   different  legal                                         -6-                                         -6-            organizations.  That  one entity holds  property used by  the            other  is hardly unique, and  obviously one who  is a trustee            and  a director  wears  "two hats."    The reference  to  the            trustees' meetings as a "formality" might be sinister in some            contexts but here there is  nothing surprising in the thought            that an  operating hospital  should be the  busy organization            and  that meetings  of  the titleholding  District should  be            routine.  "Formality" is not quite the same as "subterfuge."                 Equally  important, Maine  law  requires something  more            than overlap for  an adversary of  one corporation to  pierce            the veil and reach  another.  Maine's highest court  has said            that  its  courts "pierce  the  corporate  veil only  if  the            corporate form  is used fraudulently or  illegally."  LaBelle                                                                  _______            v. Crepeau, 593  A.2d 653, 655 (Me. 1991).   Maine courts may               _______            also disregard  separate corporate identities  where separate            treatment would  "justify  a wrong",  Bonnar-Vawter, Inc.  v.                                                  ___________________            Johnson, 173 A.2d 141 (Me. 1961), or would defeat legislative            _______            policy or  statutory aims.  See Brennan v. Saco Construction,                                        ___ _______    __________________            Inc.,  381 A.2d 656, 662 (Me. 1978).   But it is difficult to            ____            see a "wrong" here, and no legislation is at issue.                 Desjardins is in substance seeking to impose liabilities            of one entity  on a closely related entity, the  two of which            have   close  connections,  including   a  number  of  common            directors, but is in  other respects distinct.  In  Curtis v.                                                                ______            Lehigh Footwear, Inc.,  516 A.2d 558  (Me. 1986), the  former            _____________________                                         -7-                                         -7-            employees of  a bankrupt  subsidiary company sued  the parent            corporation for  severance pay.   Even though  the subsidiary            parent shared several common directors, and corporate parents            can   usually  determine  the  ultimate  direction  of  their            subsidiaries,  the  Maine  court held  that  corporate entity            would not be disregarded in the absence  of bad faith.  There            is no showing of bad faith here.                 Finally,  Desjardins  protested  the   district  court's            treatment of possible further  discovery.  Desjardins reads a            comment of  the district judge as  precluding Desjardins from            engaging in any further discovery.  The Hospital replies that            a law permits the debtor to be summoned for  a new disclosure            hearing after six  months, six months  have passed since  the            last  hearing, and  Desjardins is  now free  to subpoena  the            Hospital again.  The parties appear to agree  that Desjardins            can now summon and  interrogate the Hospital again as  to its            assets.                 Even  with the  aid of  the district court  decision and            three briefs, we are not able to tell what exactly remains of            the  dispute between  the  parties as  to further  discovery.            Desjardins does say that he used the Maine procedures for the            post-judgment investigation,  as permitted by Fed  R. Civ. P.            69,  but  might now  like to  use  Federal Rule  methods; the            district judge  did express some disagreement  on this point.            But instead  of pursuing this issue,  Desjardins' reply brief                                         -8-                                         -8-            refers  instead  to  the  possibility  of  seeking  discovery            against nonparties, as well as attachment, trustee process or            other liens.                 We  think that we do not have an adequately framed issue            before us on  the discovery question.   Desjardins' effort to            impose  liability on  the  District or  obtain its  assets or            utilize its taxing authority has now been resolved.  We think            that further discovery addressed to  this issue is barred  on                                                 ____            the  ground that the matter has already been adjudicated.  As            to Desjardins' use  of any  type of discovery  for any  other            purpose,  we make  no  pronouncements and  will address  such            issues if and when presented by a specific controversy.                 Affirmed.                 ________                                         -9-                                         -9-
