
USCA1 Opinion

	




                            United States Court of Appeals                                For the First Circuit                                 ____________________        No. 95-1104                               JOHN P. MURRAY, ET AL.,                               Plaintiffs - Appellants,                                          v.                               ROSS-DOVE COMPANY, INC.,                                Defendant - Appellee.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF RHODE ISLAND                    [Hon. Ronald R. Lagueux, U.S. District Judge]                                             ___________________                                 ____________________                                        Before                               Torruella, Chief Judge,                                          ___________                            Cyr and Lynch, Circuit Judges.                                           _______________                                 ____________________            Robert M. Duffy, with whom Michael P. Defanti  and Hinckley, Allen            _______________            __________________      _______________        & Snyder were on brief, for plaintiffs.        ________            Michael  B.  Waitzkin,  with  whom  Russell M.  Frank,  Robert  S.            _____________________               _________________   __________        Whitman, Nussbaum & Wald, Marc  C. Hadden and Gidley, Sarli  & Marusak        _______  _______________  _______________     ________________________        were on brief, for defendant.                                 ____________________                                  December 21, 1995                                 ____________________                      Per Curiam.   In its second  appearance before this                      Per Curiam.                      __________            court,  this  case  involves  an  attempt  by  investors  who            invested several  millions into a failing  company to recover            their losses  from the  appraisal company on  whose valuation            they relied.  Because the amount awarded by the jury may have            been the result of  a misapprehension of the nature  of joint            tortfeasor  liability aided  by an  incomplete and  therefore            misleading jury instruction, we reverse and remand  for a new            trial on damages.                 We  once again repeat what we said earlier in this case,            which is  now almost five  years old:   "On remand  this case            should be settled, if humanly possible. . . .  Money spent on            further  litigation is a loss to both sides regardless of the            outcome . .  . .  We  think counsel would not  be serving the            interests  of their clients if they failed to make an earnest            effort  to settle this case."  Murray v. Ross-Dove Co., Inc.,                                           ______    ___________________            5  F.3d  573,  581   (1st  Cir.  1993)  (paragraph  structure            omitted).                      The facts of this case are set forth in our earlier            opinion.   Id. at  575-76.  In short,  plaintiffs, a group of                       ___            investors (the "Crawford  Group"), charged Ross-Dove Company,            Inc.  ("Ross-Dove"), an industrial appraiser, with negligence            and negligent misrepresentation as to the value of the assets            of a  company, Bevmar  Industries, Inc. ("Bevmar"),  in which            the  group invested  in reliance  on the  appraisal.   At the                                         -2-                                          2            second  trial,  after our  remand of  the case  following the            first  trial, the  jury found  that  Ross-Dove was  liable to            plaintiffs   on    both   the   negligence    and   negligent            misrepresentation theories and awarded damages of $753,800.                      Ross-Dove  was not  the only  potential tortfeasor.            Also  potentially  responsible  were  the  promoters  of  the            venture and the  attorneys who had provided counseling on the            deal,  none of whom  is a party  in this case.   By agreement            between the parties, Ross-Dove  was to be treated as  a joint            tortfeasor with the promoters and the attorneys.  The parties            agreed  that any  damages  against Ross-Dove  would be  later            reduced  by  the court  by  a  $1.55 million  settlement  the            plaintiffs had  previously entered  into with  the attorneys.            After the jury returned its  damages award, the court reduced            the  $753,800  by the  $1.55 million  settlement, effectively            reducing the plaintiffs' award to zero.                      The plaintiffs  claim that  the jury award  was the            result  of confusion that may have been caused by the court's            jury  instructions.    The  court instructed  on  damages  as            follows:                           The measure of  damages in this case                      is  basically  simple.    The  measure of                      damages   is   the  monetary   loss  that                      plaintiffs suffered as a proximate result                      of defendant's wrongful conduct.   So the                      investment,  or  part of  the investment,                      that plaintiffs made  in Bevmar,  because                      of  the   defendant's  wrongful  conduct,                      minus  any returns on that investment, is                                         -3-                                          3                      the  maximum  amount that  plaintiffs can                      recover in this case.                           So if  you  find for  plaintiffs  in                      this  matter, then  you  shall  award  to                      plaintiffs  a  sum  of money  which  will                      fairly and reasonably compensate them for                      losses   suffered   by  them   that  were                      proximately   caused   by  the   wrongful                      conduct of  the defendant.   If you  find                      that defendant was at fault, but that its                      fault was not the  proximate cause of the                      financial  loss to the  extent claimed by                      plaintiffs,  then plaintiffs  may recover                      only that portion of their financial loss                      which    resulted     proximately    from                      defendant's wrongful conduct.                      Although plaintiffs concede that these instructions            were  not incorrect,  they  say they  were incomplete  and so            misleading.    They argue  that the  instructions potentially            suggested to  the  jury that  it  was entitled  to  apportion            damages among  all three groups of tortfeasors and award only            that   which  they  apportioned  to  Ross-Dove's  negligence.            According to  the plaintiffs,  such an apportionment  was not            appropriate for the  jury to  do given that  the parties  had            agreed  to  treat  Ross-Dove  as  a  joint  tortfeasor.   The            plaintiffs had asked for  an additional jury instruction that            the  measure of damages should be the total amount of damages            and should not  be reduced by amounts attributable to others'            wrongdoing.    The  district  court  declined  to  give  this            instruction.                      We believe that the failure to instruct the jury to            award  total damages  was  erroneous and  necessitates a  new            trial on damages because the  instructions given to the jury,                                         -4-                                          4            taken as a whole, may have confused or misled the jury on the            measure  of  damages.    See Sullivan  v.  National  Football                                     ___ ________      __________________            League, 34 F.3d 1091, 1106-07  (1st Cir. 1994), cert. denied,            ______                                          ____________            115 S. Ct. 1252 (1995); Jerlyn Yacht Sales, Inc. v.  Wayne R.                                    ________________________     ________            Roman  Yacht  Brokerage, 950  F.2d  60,  69 (1st  Cir.  1991)            _______________________            (requiring  new trial  where instructions  could have  misled            jury  as to  fraudulent  misrepresentation  claim); see  also                                                                _________            Allen  v. Chance Mfg. Co., Inc., 873  F.2d 465, 469 (1st Cir.            _____     _____________________            1989) (requiring  reversal if  the error in  the instructions            could have affected the  result of the jury's deliberations).            On the record as a  whole, we cannot say that the  jury would            have awarded the  same amount of damages  had the plaintiffs'            instructions been given.  See Jerlyn Yacht Sales, 950 F.2d at                                      ___ __________________            69.                      The  instructions  given invited  the jury  to find            damages based on  the "part of the investment" loss or on the            "portion of  the investment"  loss proximately caused  by the            defendant's negligent  conduct.  They did not inform the jury            that where a joint  tortfeasor causes harm and is found to be            liable, it  is liable for all of the harm even if others also            contributed to the harm.  See, e.g., McInnis v. A.M.F., Inc.,                                      _________  _______    ____________            765 F.2d 240, 249-50 (1st Cir.  1985).  The failure to inform            the  jury on  this point  was troublesome  on the  particular            facts   of  this   case   because  Ross-Dove   had  presented            considerable evidence and argument about the wrongful actions                                         -5-                                          5            of the  other tortfeasors.   While this  evidence technically            was presented for the  sole purpose of sustaining Ross-Dove's            defense to  liability (i.e., that it  was not a cause  of the                        _________  ____            injury),  the   evidence,  when   combined   with  the   jury            instructions, potentially misled the jury into believing that            it should  apportion the damages  among the  three groups  of            tortfeasors.                      This, agree the parties, exactly may have happened.            Even  Ross-Dove's justification for  the damages award relies            in considerable part on an apportionment theory.  Indeed,            Ross-Dove has argued  that the case was tried to  the jury on            an  apportionment theory.   We  read the  record differently.            Before trial, the parties had agreed that Ross-Dove would  be            treated as a joint tortfeasor and  would be entitled to a pro                                                                      ___            tanto reduction in damages  to be granted by the  judge after            _____            the jury verdict  in the amount of the plaintiffs' settlement            with  the attorneys.   Ross-Dove reserved  only the  right to            present evidence  or to  cross-examine on  the  topic of  the            wrongdoing of the  other tortfeasors in  order to prove  that            Ross-Dove's  appraisal  was not  the  cause  of the  Crawford            Group's injuries.   Ross-Dove  did not  reserve the  right to            argue that the evidence of the other wrongdoers could be used            to apportion damages, nor  could it have, given how  the case            was tried.                                         -6-                                          6                      The  district court  ran  the trial  under a  joint            tortfeasor  theory.  When presented with the agreement of the            parties,  the court responded "I'm  satisfied that .  . . the            reduction in  the total  amount  of damages  suffered by  the            plaintiff because  of a  settlement with a  joint tort-feasor                                                        _________________            comes off the  verdict. . . .  I know  how to apply the Joint            Tort-Feasor's Contribution Act.  . .  .  The  correct way  to            apply the settlement amount paid by a joint-tort feasor [sic]                                                  _________________            is to determine what  the total amount of damages  is against            the tort-feasor being sued, and then that award is reduced by            the  amount of  the settlement,  or  50% whichever  is higher            [emphases  added]."   In  a Memorandum  and  Order after  the            verdict, the court denied the defendant's motion for judgment            as a matter of law and proceeded to reduce the verdict by the            settlement amount, stating:   "Since  the plaintiffs  settled            with a joint  tortfeasor for $1,500,000 on a joint tortfeasor                   _________________                     ________________            release,  the parties  agreed before  trial[] that  the Court            would reduce any verdict for plaintiffs by the amount of that            settlement [emphasis added]."1                                            ____________________            1.  At oral argument, Ross-Dove argued that the references to            a joint tortfeasor reduction were not controlling because the            parties  had  agreed  specifically  to  allow  Ross-Dove  the            benefit of both a joint  tortfeasor reduction in damages  and                       ____                                           ___            an  apportionment of damages.   Not only does  the record not            support  such  a novel  theory of  the  agreement, but  it is            difficult  to see  what, if  anything, plaintiffs  would have            gained under such  an agreement.   Ross-Dove has argued  that            the plaintiffs gained because Ross-Dove waived its right to a            pro  rata reduction in  damages under the  Rhode Island joint            _________            tortfeasor  statutes  (it  was  entitled to  a  reduction  in                                         -7-                                          7                      Given that Ross-Dove was a joint tortfeasor and the            case, by agreement,  was tried on a joint  tortfeasor theory,            the  failure to  instruct  the jury  to  award total  damages            likely  misled  the jury  into  thinking  it could  apportion            damages.  Under  these circumstances, there is  no reason for            any confidence that the jury instructions did not  affect the            results  of  the jury's  deliberations  as to  damages.   The            liability finding  is unscathed.   Liability and  damages are            not  so interwoven in this case that one cannot be determined            without the other.   See Fed. R. Civ. P.  59(a) (permitting a                                 ___                                            ____________________            damages  in the amount of the settlement or the proportion of            reduction provided  for  in  the  joint  tortfeasor  release,            whichever was higher,  under R.I. Gen. Laws    10-6-7 (1985),            which the  district court  suggested, without objection  from            the parties,  would  otherwise apply).   This  justification,            however, is something  of a  non sequitur.   The decision  to            choose between a pro tanto or  a pro rata reduction does  not                             _________       ________            change  the   fact  that   some  type  of   joint  tortfeasor            arrangement  was  made.   If the  case had  been tried  on an            apportionment  theory,  there  should  have   been  no  joint            tortfeasor reduction in damages  at all.  See R.I.  Gen. Laws                                                      ___              10-6-7  (reduction  only  for  joint  tortfeasor  release);            Restatement (Second) of Torts     433A, 433B, 434, 879,  881,            885 (1964 & 1977)  (if harm can be apportioned,  liable party            is  not a  joint  tortfeasor and  there  is no  reduction  in            liability); see also  McInnis v. A.M.F., Inc.,  765 F.2d 240,                        ________  _______    ____________            250 (1st Cir.  1985) (applying  Rhode Island  law in  holding            that damages  cannot be segregated between joint tortfeasors,            who by definition  have caused the same harm).   Furthermore,            the parties thought that their agreement "seem[ed] to dispose            of  the joint tort-feasor issue with the exception of [how to            treat  interest]."  The record as to the agreement shows only            that  the  defendant  was  concerned  that  evidence  of  the            settlement should not come before the jury.  If the agreement            indeed  permitted   defendant  to  pursue  a  trial  strategy            inconsistent with the joint tortfeasor reduction  in damages,            the  record should have reflected  that.  We  decline to give            any  weight to  defendant's post-trial  recharacterization of            the case.                                         -8-                                          8            new trial  on "all or  part of the  issues"); cf.  Allen, 873                                                          ___  _____            F.2d at 473 (court remanded for retrial of liability, but not            damages).  After two  trials already, we take as  settled the            question of Ross-Dove's  liability and we  thus remand for  a            new trial on damages alone.                      The judgment of damages is vacated, and the case is                      ___________________________________________________            remanded for proceedings not inconsistent with this opinion.            ____________________________________________________________                                         -9-                                          9
