
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                FOR THE FIRST CIRCUIT                                 ____________________        Nos.  95-1061              95-1145              95-1570              95-1648                       CIGNA FIRE UNDERWRITERS COMPANY, ET AL.,                       Plaintiffs, Appellees, Cross-Appellants,                                          v.                              MACDONALD & JOHNSON, INC.,                        Defendant, Appellant, Cross-Appellee.                                 ____________________                    APPEALS FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                 [Hon. Frank H. Freedman, Senior U.S. District Judge]                                          __________________________                                 ____________________                                        Before                                 Selya, Circuit Judge,                                        _____________                            Bownes, Senior Circuit Judge,                                    ____________________                              and Boudin, Circuit Judge.                                          _____________                                 ____________________            John B. Stewart, with whom Edward  V. Leja and Moriarty,  Donoghue            _______________            _______________     ___________________        & Leja, P.C. were on brief for CIGNA Fire Insurance, et al.        ____________            F.  Michael Joseph,  with whom  Joseph, St.  Clair &  Cava was  on            __________________              __________________________        brief for MacDonald & Johnson, Inc.                                 ____________________                                    June 28, 1996                                 ____________________                      BOWNES,  Senior  Circuit  Judge.    Before  us  are                      BOWNES,  Senior  Circuit  Judge.                               ______________________            appeals  by both parties after  two jury trials.   CIGNA Fire            Insurance   Company   ("CIGNA")    is   a   large   insurance            conglomerate.    MacDonald &  Johnson,  Inc.,  ("M&J") is  an            independent  insurance  agent  that sold,  inter  alia, CIGNA                                                       ___________            insurance.   CIGNA sued M&J  for breach of  contract alleging            failure  to  remit insurance  premiums due  it  by M&J.   M&J            brought  a  counterclaim against  CIGNA  alleging:  breach of            contract;    intentional   interference    with   contractual            relations; intentional interference  with economic gain;  and            violation of Mass. Gen. L. ch. 93A,   11, and 93A generally.                      After a four-day trial,  the jury returned  special            verdicts:                      Judgment for the defendant on plaintiffs'                      claim of breach of contract.                      Judgment  for  the defendant  against the                      plaintiffs  on its  counterclaim alleging                      breach of contract  with damages  awarded                      in the amount of $780,000.00.                      Judgment  for  the defendant  against the                      plaintiffs  on its  counterclaim alleging                      interference  with  contractual relations                      with  damages awarded  in  the amount  of                      $500,000.00.            Adding   interest,   the  total   award   to   M&J  came   to            $1,544,106.73.       The  district court  found  for  CIGNA on            M&J's claimed violations of Mass. Gen. L. ch. 93A.                      After a  hearing, the district court  set aside the            jury verdict and ordered a new trial.                                         -2-                                          2                      After another four-day trial the  second jury found            in  favor of  M&J and  awarded it  damages  in the  amount of            $250,000.00. Judgment  for M&J, including  interest, came  to            $321,333.28.  Early in the second trial, the district  judge,            based on a  stipulation by  the parties, ruled  that M&J  had            breached  its contract  with  CIGNA and  that the  amount due            CIGNA was $169,798.14.  Adding interest to this resulted in a            judgment  for CIGNA  in the  sum of  $219,888.60.   The judge            denied both parties' post-trial motions.                      Before starting our exposition of the evidence  and            analysis  of the issues, we state the standard of review that            controls our  assessment of the district  court's decision to            set aside  the jury  verdicts and  order a new  trial in  the            first case and decline to do so the second time around.  Fed.            R. Civ. P. 59(a) provides in pertinent part:                         (a)    Grounds.  A  new  trial may  be                         (a)    Grounds.                        granted to all or  any of the parties and                      on  all or part  of the issues  (1) in an                      action in which there has been a trial by                      jury,  for any  of the reasons  for which                      new trials have  heretofore been  granted                      in actions  at law  in the courts  of the                      United States;                      The Court has  described the scope  of the rule  as            follows:                      The motion for a new trial may invoke the                      discretion of  the court in so  far as it                      is bottomed on the claim that the verdict                      is  against the  weight of  the evidence,                      that the damages are excessive,  or that,                      for other reasons, the trial was not fair                      to  the  party   moving;  and  may  raise                                         -3-                                          3                      questions of law  arising out of  alleged                      substantial   errors   in  admission   or                      rejection of evidence or  instructions to                      the jury.            Montgomery Ward & Co. v. Duncan, 311 U.S. 243, 251 (1940).            _______________________________                      First Circuit precedent is clear.                         A  district  court  may  set  aside  a                      jury's verdict and order a new trial only                      if the verdict is so clearly against  the                      weight of the evidence  as to amount to a                      manifest  miscarriage  of justice.   See,                                                           ___                      e.g., Lama v.  Borras, 16  F.3d 473,  477                      ____  _______________                      (1st Cir. 1994).  A trial judge's refusal                      to  disturb a  jury  verdict is  reversed                      only for abuse of discretion.            Federico  v. Order of Saint Benedict in Rhode Island, 64 F.3d            ____________________________________________________            1, 5  (1st Cir. 1995).   See also Fleet Nat'l  Bank v. Anchor                                     ___ ____ ___________________________            Media Television, Inc., 45 F.3d 546, 552 (1st Cir. 1995).            ______________________                      There can  be no doubt that the district court here            understood  the  constraints applicable  to  setting aside  a            verdict  and  ordering a  new trial.    The new  trial ruling            states, inter alia:                      _____ ____                      A jury verdict may not be set aside as  a                      matter of law under Fed. R. Civ. P. 50(b)                      except  on  a  "determination   that  the                      evidence could lead  a reasonable  person                      to only one conclusion."  Acevedo-Diaz v.                         ___________________    _______________                      Aponte,  1 F.3d  62, 66  (1st Cir.  1993)                      ______                      (quoting  Hiraldo-Cancel  v. Aponte,  925                                _________________________                      F.2d 10, 12 n.2 (1st Cir. 1991)).                                          I.                                          I.                             ISSUES COMMON TO BOTH TRIALS                             ISSUES COMMON TO BOTH TRIALS                             ____________________________                      The evidence adduced at both trials was essentially            the same.  CIGNA has raised two issues on appeal which are                                          -4-                                          4            common to both trials:                      (1)   Whether the district court  erred in refusing            to grant its motions for judgment as a matter of law on M&J's            breach of contract claim at the conclusion of both trials.                      (2)   Whether  the district  court erred  in ruling            that M&J's  claims "were not  barred or  diminished" for  its            failure to exhaust its administrative remedies provided under            Mass. Gen. L. ch. 175,   163.                              Submission of M&J's Breach of                            Submission of M&J's Breach of                            _____________________________                              Contract Claim to the Jury                              Contract Claim to the Jury                              __________________________                      The  question,  of  course, is  whether  there  was            sufficient evidence for  M&J's breach of contract claim to be            decided by  the  juries.   The  relevant evidence  which  was            substantially  the  same for  both  trials  is summarized  as            follows.    Frank  Lombard,   president  and  owner  of  M&J,            testified that  M&J  encountered serious  financial  problems            when  the Bank of New England collapsed causing M&J's line of            credit  to terminate on May 30, 1991.  Lombard testified that            it  was usual for M&J,  and other insurance  agencies, to use            bank  loans  to meet  its  premium  obligations to  insurance            companies for premiums owed by the insureds.  In other words,            the  agency would carry its clients by borrowing money from a            bank,  pay the premiums due the company and wait for payments            from the clients.   The collapse of  the Bank of New  England            stripped  M&J of any  cash reserves.   Lombard testified that            other insurance  companies with whom M&J  did business agreed                                         -5-                                          5            to accept monthly  installment premium  payments or  extended            the due date for the payment of premiums.                      Another  factor that  impacted  on M&J's  financial            condition was the loss of its biggest insurance account, F.L.            Roberts Co.  ("Roberts").  Premiums on  this account amounted            to between $800,000.00 and $1,000,000.00 a year.  Roberts was            a  large wholesaler  and retailer  of petroleum  products and            operator of service stations and  car washes in southern  New            England.                        The  evidence discloses  the following  sequence of            events.  Lombard was an insurance consultant for Roberts, not            an agent, from 1979 through 1986.  In late  1986, Roberts did            not  have a carrier for 1987.  Lombard suggested that Roberts            try to obtain insurance coverage for a three-year period with            the  premiums being determined on the  basis of the carrier's            expenses  and  Roberts' losses.    Under such  a  program the            insured, who paid a deposit premium initially,  might be owed            refunds by the carrier  at the end  of the insurance year  or            vice versa.   The amount  due either the  carrier or  Roberts            would  be determined each  year.  In January  of 1987, such a            program was entered into between  Roberts and CIGNA for three            years with M&J  acting as agent.  The amount  of premiums due            would  be determined in September  1988, 1989, and  1990.  In            July or  August of 1990  Lombard calculated  that CIGNA  owed            Roberts $200,000.00 under the program.  He contacted CIGNA on                                         -6-                                          6            September 30,  1990, and was told that it would look into it.            Lombard  called the CIGNA department in charge of the program            and was reprimanded  for doing so.  A new  program was set to            go into effect in January of 1991.  The down payment required            by  CIGNA from  Roberts  was $250,000.00.   Roberts  informed            Lombard that it would  not pay the $250,000.00 unless  it was            credited with  the $200,000.00  refund.  Laurie  Scanlan, who            worked in  the special  risk division of  CIGNA, acknowledged            that CIGNA  owed Roberts money  under the program,  but would            not  pay it  because she  asserted that  Roberts also  owed a            surcharge of $56,000.00.   Lombard told Scanlan the surcharge            was  not part  of  the insurance  program.   She told  him to            collect it.  He refused.                      An inter-office CIGNA memo states its position:                      Per   our   discussion,   the   following                      strategy will be utilized in  solving the                      F.L. Roberts FVC surcharge dispute.                         Number one, Insured Meeting.  Set up a                      meeting  with F.L. Roberts and invite the                      agent.                         Number two, Program  Intent.   Discuss                      the  need  for  the  surcharge  in  vague                      terms.  Provide the  proposal for the '89                      and  '90 years  to  document  the  stated                      surcharge, in parentheses,  '87 and  '88:                      FVC not mentioned.  Close parentheses.                         Number 3, CIGNA's Needs.  If we cannot                      collect the  surcharge,  we cannot  be  a                      market for such coverages.                         Number 4, Payment  Intentions.   After                      discuss needs for surcharge, determine if                                         -7-                                          7                      F.L. Roberts is  willing to  pay the  FVC                      surcharge.                         Number five, Refusal to Pay.  Legally,                      we cannot enforce the payment of the  FVC                      surcharge.  Therefore,  back-off if  they                      refuse  to  pay.    But  we  should  then                      seriously consider non-renewal.                         Hopefully, we can satisfy  our insured                      and  collect the  surcharge  at the  same                      time.  Good luck.                      M&J  expected a  proposal from  CIGNA for  the 1992            Roberts insurance  program.  Scanlan was supposed  to work up            the  figures.   Lombard  received a  letter  from Scanlan  on            December 16, stating  that CIGNA would not  negotiate renewal            terms  unless  CIGNA was  paid the  1991  premiums due.   The            letter further  stated  that CIGNA  would issue  cancellation            notices  the next day, but  if Roberts paid  CIGNA within ten            days, the notices would be rescinded.  Roberts' insurance was            cancelled  as per the  letter.  Lombard  immediately faxed to            CIGNA  a statement by CIGNA  showing a credit  due Roberts of            $28,903.58  as of  December 20, 1991.   After the  fax, CIGNA            reinstated Roberts' insurance.                      CIGNA sent  a renewal  proposal for 1992  that cost            about  $500,000.00 more than the  prior program.  Lombard was            given until noon the next day to  make up his mind.  He found            the proposal totally unacceptable.  Lombard tried to work out            an alternative program  with CIGNA.   With the permission  of            Joann White  of CIGNA, he issued  temporary binders effective            January 1, 1992.  Scanlan notified Roberts that the temporary                                         -8-                                          8            policies  were  not valid.   Lombard  received a  letter from            Scanlan  that a new agent, Palmer Goodell Insurance, would be            Roberts' new broker unless  Lombard was notified otherwise by            the  close of business on  January 17.   No such notification            was  received.   M&J's  commissions  on  the Roberts  account            amounted to about $80,000.00 per year.                      The  third  aspect  of the  evidence  involved  two            unexecuted promissory  notes  from M&J  to CIGNA.   As  M&J's            financial  problems increased, it  approached CIGNA and asked            to   pay  the   premiums  due   in  twelve   regular  monthly            installments.   CIGNA told M&J  in September of  1991 that it            would  draw up a promissory note providing for payment of the            past due premiums in regular monthly installments.  The  note            was brought to Lombard by Charles Glaser on February 6, 1992.            Lombard approved it orally,  but did not sign it  because the            word "draft" was written across the top of it.  This note had            a principal sum of $115,507.05.   During his discussion  with            Glaser, Lombard told him  about the Roberts account.   Glaser            asked Lombard what he  was planning to do.   Lombard replied,            "I  don't know, I'm  seeking a legal remedy."   A second note            was  presented to Lombard on  March 23 by  Robert Purdy.  The            principal was $105,324.14, but the payment terms and interest            were  the same  as  the first  note.1   This   note, however,                                            ____________________            1.  There   is  no  explanation  in  the  record  as  to  the            difference between the principal in each note.                                         -9-                                          9            included  a waiver and release  of all claims  that M&J might            have against CIGNA.   Lombard, still smarting because  of the            loss of the Roberts account, refused to sign the note.  Remmy            Martens, a  marketing official for CIGNA, who  had dealt with            Lombard  for an appreciable length of time, told Purdy at the            time  the waiver  and release  were added  to the  note that,            based  on   his  knowledge  of  Lombard,   Purdy  would  have            difficulty getting Lombard to sign the note as redrafted.                      CIGNA  cancelled  its   agency  contract  with  M&J            forthwith  after Lombard refused to  sign the note.   It shut            down all of M&J's computers wired into the CIGNA net.  It put            all  of the  policies  heretofore handled  by  M&J on  direct            billing; i.e., premiums were paid directly to CIGNA.                      M&J notified CIGNA that the  forthwith cancellation            was prohibited  by Massachusetts law,  which it  was.   Mass.            Gen.  L.  ch. 175,    163  prohibits  the cancellation  of an            agency  contract  without  180  days notice.2    After  CIGNA                                            ____________________            2.           No company shall cancel  the authority                      of  any  independent insurance  agent for                      fire or casualty  insurance, or both,  if                      said  agent is  not  an employee  of said                      company and  no  company shall  modify  a                      contract  with such  an agent  unless the                      company  gives  written  notice   of  its                      intent to cancel such agent or its intent                      to  modify such  contract  at  least  one                      hundred  and  eighty   days  before   the                      proposed  effective  date  of   any  such                      cancellation or modification.                                         -10-                                          10            checked   the  Massachusetts   statute,   it   deferred   the            cancellation for 180 days.                        We  rule that  there  was sufficient  evidence from            which  a jury  could  find  that  CIGNA breached  the  agency            contract with  M&J.   The evidence  provided two  grounds for            such  a finding.  One, that  the "forthwith" cancellation was            contrary  to  Massachusetts  law,  of  which  CIGNA  must  be            presumed  to have  knowledge.   It also  could be  found that            CIGNA cancelled its agency  contract with M&J by refusing  to            honor  the  binders that  one  of its  officials  (White) had            authorized.                     The Application of Mass. Gen. L. ch. 175,   163                   The Application of Mass. Gen. L. ch. 175,   163                   _______________________________________________                      This  issue does  not  merit  extended  discussion.            CIGNA  claims  "that  the  unexhausted  administrative remedy            available  under  M.G.L.  ch.   175,  Sec.  163  eclipsed  or            diminished  M&J's claim  for damages."   CIGNA  brief  at 37.            First, we  do  not understand  what  the terms  "eclipsed  or            diminished"  mean in the context  of this case.   The statute            provides in pertinent part:                      Except as otherwise provided  herein, any                      agent    receiving    notice   of    such                      cancellation, modification  or expiration                      MAY,  within  fifteen days  after receipt                      ___                      thereof,  make  a   written  demand   for                      reference  to  three   referees  of   the                      question  as  to  whether  or   not  such                      cancellation, modification or  expiration                      will so affect the  renewal, continuation                      or  replacement  of  any policies  placed                      with the company  through the efforts  of                      the agent, or the services  needed by any                                         -11-                                          11                      policyholder  doing   business  with  the                      company as a result of the efforts of the                      agent,   as   to   justify   renewal   or                      continuation  of  any  policies  then  in                      effect  having  been  placed   with  such                      company by such agent.              (Emphasis added.)                      It cannot be reasonably doubted that the statute is            permissive.  M&J had no duty to invoke it.                      CIGNA  has cited no cases holding even tangentially            that  the statute applies in  a situation similar  to the one            that confronts us.   The  two cases it  cites are  completely            inapposite;  they involve  different  statutes and  different            claims.    We have  been  unable to  find any  cases  in this            Circuit  or in  Massachusetts  requiring an  agent to  invoke            Mass. Gen. L. Ch. 175   163 prior to asserting claims against            an  insurance  company, and  CIGNA has  cited none.   CIGNA's            argument is without merit.                                         II.                                         II.                                   THE FIRST TRIAL                                   THE FIRST TRIAL                                   _______________                      The district  court ordered  a new trial  for three            reasons.   It ruled that  the jury  finding that M&J  had not            breached its contract with  CIGNA to pay premiums as  due "is            against  the clear weight  of the  evidence and  enforcing it            would result in a  miscarriage of justice."  The  court found            that the jury "rendered an improper 'sympathy' verdict."                      The  court found that the amount awarded M&J on its            breach  of contract claim was "outrageous."  It held that M&J                                         -12-                                          12            "failed to  introduce evidence at trial  that established its            entitlement to over $700,000 in damages."                      The  court  set  aside  the  jury  verdict awarding            $500,000.00 to M&J for intentional interference by CIGNA with            M&J's contractual  relations with Roberts.   It ruled:   that            "there  was  no  evidence  of  a  contract  between  M&J  and            Roberts;" that "even if there was a contract . .  . there was            no  evidence that  CIGNA knowingly  induced Roberts  to break            that  contract," and  that M&J  failed to  show that  even if            there was a contract  and interference with it by  CIGNA, M&J            "failed  to show  that CIGNA's  interference was  improper in            motive or means."                      The court concluded:                         In fine, after considering  the jury's                      verdict in conjunction with its ruling on                      CIGNA's breach of contract  claim, above,                      the  Court  surmises   that  the   jury's                      decision  on  the  MacDonald   &  Johnson                      breach of contract claim "could only have                      been a  sympathy" verdict.   See Phav  v.                                                   ___ ________                      Trueblood,  Inc., 915  F.2d at  767.   In                      ________________                      addition, because the issues of liability                      and damages are so interwoven both issues                      must be re-tried.                      M&J, as  would be expected, objects  strenuously to            the district court's  rulings and findings.   We discuss them            seriatim.                          The Jury Verdict that M&J did not                          The Jury Verdict that M&J did not                          _________________________________                            Breach its Contract with CIGNA                            Breach its Contract with CIGNA                            ______________________________                      The  question   is,  could  the  evidence   lead  a            reasonable person  to only  one conclusion.   Acevedo-Diaz v.                                                          _______________                                         -13-                                          13            Aponte, 1 F.3d 62, 66 (1st Cir. 1993).  We think so.   As the            ______            district  court pointed  out in  its memorandum  opinion, the            evidence was clear and not disputed by M&J that it owed CIGNA            about $111,000.00  in premiums.  This evidence  came not only            from  CIGNA  but from  the  testimony  of John  Januska,  the            comptroller  and assistant treasurer of M&J.   He stated that            there  was no question that $111,000.00 was due CIGNA in July            of 1991.  And although strictly speaking it was not evidence,            counsel for M&J told  the jury in his opening  statement that            premiums due CIGNA had not been paid.                      In its  appellate argument, M&J seeks  to shift the            focus from  the agency contract to  the unexecuted promissory            notes.  It contends that the notes constituted a modification            of  the  agency contract  and  that  both parties  agreed  to            payment  of the  overdue premiums  in   monthly installments.            Lombard  testified that he agreed  to the terms  of the first            note and that CIGNA did also.  CIGNA says that the first note            was only a tentative proposal for Lombard's consideration and            therefore  the note was not  signed by the  parties.  Lombard            refused  to  sign the  second note,  the  one with  the added            waiver and  release.  Lombard's  assumption that he  would be            given  an opportunity  to  pay  the  premiums owed  CIGNA  in            monthly installments may have caused  him not to pursue other            options for  payment, but it is not a valid basis for finding            either  a  modification of  the  agency  contract  or  a  new                                         -14-                                          14            contract between the parties.   Such a finding  is foreclosed            by the two  unexecuted promissory notes.  The  district court            did not err in ruling that the jury's verdict was contrary to            the evidence  and upholding it would result  in a miscarriage            of justice.                      Moreover, there is another reason for upholding the            district court on this issue.  Early in the second trial  the            parties stipulated  that judgment would be  entered for CIGNA            against M&J on CIGNA's breach of contract claim in the amount            of  $169,798.14 plus interest.   By so doing,  M&J waived any            objections to CIGNA's contract claim in the first trial.                        The Amount of Damages Awarded on M&J's                        The Amount of Damages Awarded on M&J's                        ______________________________________                        Breach of Contract Claim Against CIGNA                        Breach of Contract Claim Against CIGNA                        ______________________________________                      The jury  awarded M&J $780,000.00 on  its breach of            contract  claim.   The  court  set this  aside  because M&J's            evidence failed  to establish  that it was  entitled to  over            $700,000.00  in  damages  and  because it  was  a  "sympathy"            verdict.   Lombard  estimated  that  he  lost a  little  over            $200,000.00  as a  result of  the termination  of the  agency            contract  by CIGNA.    He managed  to  salvage $30,000.00  to            $40,000.00,  making a net loss  of $160,000.00.  In addition,            Lombard testified that he  lost $161,158.00 on his commercial            accounts,  $39,046.00   on  "Market  Dyne"  Business,  and  a            $215,490.00  loss was  sustained on  personal accounts.   The            loss  of   commissions  on   the  Roberts  account   came  to            $80,000.00, and there was a loss of profit sharing with CIGNA                                         -15-                                          15            amounting to  $44,000.00.  Lombard testified  that his salary            dropped about $60,000.00 a  year after the CIGNA termination.            These  figures, even  if  taken at  face  value and  with  no            allowance  for  what appears  to  be  double counting,  total            $699,694.00, not including the reduction in Lombard's salary.            The suit was brought  in the name of  M&J so we do  not think            that Lombard's reduction  in salary  is a proper  item to  be            considered.    Thus,  the  total amount  of  damages,  taking            Lombard's testimony at face  value, did not, as the  district            court pointed out, exceed $700,000.00.                      It  was not  error for  the  district court  to set            aside  as excessive  the breach  of contract  damages awarded            M&J.   We point out that the  court found that the verdict on            damages for M&J was infected by the jury's complete disregard            of  the evidence on CIGNA's  breach of contract  claim.  This            appears  to  be a  sensible  assessment of  the  first jury's            verdict.  The second jury was not so influenced.                      The Jury Award of $500,000.00 for CIGNA's                      The Jury Award of $500,000.00 for CIGNA's                      _________________________________________                            Intentional Interference with                            Intentional Interference with                            _____________________________                     M&J's Contractual Relationship with Roberts                     M&J's Contractual Relationship with Roberts                     ___________________________________________                      The district court correctly  applied Massachusetts            law to a claim  for intentional interference with contractual            relations.   The  party  making  the  claim must  prove  four            elements:  (1)  that there was a contract with a third party;            (2) that defendant knowingly induced that party to  break the            contract; (3) that  defendant's interference was  intentional                                         -16-                                          16            and  improper in motive or  means; and (4)  that the claimant            was  harmed  by  defendant's  action.   Wright  v.  Shriner's                                                    _____________________            Hospital  for  Crippled Children,  412  Mass.  469, 476,  589            ________________________________            N.E.2d 1241, 1245 (1992); see also G.S. Enterprises, Inc.  v.                                      ___ ____ __________________________            Falmouth Marine, Inc.,  410 Mass. 262, 272,  571 N.E.2d 1363,            _____________________            1369 (1991); United Truck Leasing Corp. v. Geltman, 406 Mass.                         _____________________________________            811, 812, 551 N.E.2d 20, 21 (1990).                      Our reading  of the  record confirms the  ruling of            the district court that there was no contract between Roberts            and  M&J.   A  long-standing business  relationship does  not            become a contractual relationship automatically, as M&J seems            to  argue.  The last  insurance program issued  to Roberts by            CIGNA through M&J was for a term of three years.  None of the            parties  had   a  contractual  obligation  to   continue  the            insurance  coverage after  its  term expired.   The  evidence            suggests strongly that  Roberts decided to use a broker other            than M&J because it would be less  expensive.  There was also            evidence  that one  of the  owners  of the  new agency  was a            neighbor of the president  of Roberts.  We need go no further            than the lack of a contract between Roberts and M&J to uphold            the  ruling of  the  district court  setting  aside the  jury            verdict awarding M&J $500,000.00 for intentional interference            with a contractual relationship by CIGNA.                      At  the  trial the  court  reserved  to itself  the            decision  on the claim by M&J against CIGNA for violations of                                         -17-                                          17            Mass. Gen.  L. ch. 93A.   It  found in favor  of CIGNA.   M&J            moved for a new trial.   Our review of the record  reveals no            basis for reversing the  judgment of the district court.   We            do not find it necessary to delve into the nuances of chapter            93A law.  Suffice it to say that the sparsity of the evidence            was  a  firm basis  for the  court to  conclude that  M&J had            failed to meet its burden of proof on its 93A claims.                           Denial of M&J's Motion to Amend                           Denial of M&J's Motion to Amend                           _______________________________                            Count III of its Counterclaim                            Count III of its Counterclaim                            _____________________________                      This issue requires some  exposition.  Count III of            M&J's  counterclaim  was entitled,  "Intentional Interference            with  Economic Gain."   In  a pretrial  memorandum  and order            dated February 17, 1993, the district court said:                         Defendant's third counterclaim against                      CIGNA admittedly is mislabeled,  but this                      problem is  not fatal.    The Court  will                      interpret the cause of action  as one for                      intentional       interference       with                      advantageous business  relations, a claim                      recognized by  the Massachusetts courts.2                      Here,  too,  defendant  has  pleaded  the                      requisite elements.                        The footnote stated:   "Defendant  shall amend  its            counterclaim  within  ten   days,  substituting  the  correct            nomenclature."     Inexplicably,  M&J  did   not  amend   the            counterclaim as ordered.                      At  a  pretrial conference  on  the  day the  trial            started,  the  court pointed  out to  M&J's counsel  that the            counterclaim had not  been amended as ordered.   The attorney            said:   "I  thought that  was  right in  there."   The  court                                         -18-                                          18            replied, "No."  The  judge's law clerk then  said, "According            to  the  documents, that  was  never  filed."   The  attorney            responded  by saying, "Okay."  No objection was taken nor was            permission requested to amend the counterclaim nunc pro tunc.                                                           ____ ___ _____                      After  the conclusion  of the  trial, M&J  moved to            amend  its counterclaim.  The motion  was denied as untimely,            but the court said:                         In  the  event that  this case  is re-                      tried,   the    Court   will   reconsider                      MacDonald  &  Johnson's request  to amend                      its  pleadings  to  include  a  claim for                      intentional       interference       with                      advantageous business relations.                      Six days  prior to  the second  trial, M&J filed  a            motion  to amend their  counterclaim to  include a  claim for            intentional    interference   with    advantageous   business            relations.    The  court  denied  the  motion  on  timeliness            grounds,  also noting  that  the pleadings  failed to  allege            facts to support the claim,  that CIGNA presented no evidence            at the first trial (nor offered any at the second) to support            the inference  that CIGNA knowingly induced  Roberts to break            its contract with M&J  or that any interference by  CIGNA was            improper.                      We review a denial  of leave to amend for  abuse of            discretion.   A  district court,  in denying such  leave, may            properly consider a party's undue delay, repeated failures to            cure deficiencies in  the pleadings, and the futility  of the            proposed  amendment.   Foman  v.  Davis,  371 U.S.  178,  192                                   _____      _____                                         -19-                                          19            (1962). Without deciding whether CIGNA had presented evidence            at  the first  trial sufficient to  enable a jury  to find an            intentional    interference   with    advantageous   business            relations, we  hold that the district court  acted within its            discretion in denying the motion to amend.                      The district court told  M&J before the first trial            that  its  complaint should  be  amended  if  M&J  wanted  it            considered; M&J failed to do so.  It was proper for the judge            to  deny leave to amend  after the first  trial where counsel            was instructed to amend  the complaint, failed to do  so, and            failed to correct  this error when it was pointed  out by the            court.   Having left an  opening for  M&J to  try again,  the            court  could well find that M&J had failed to exercise proper            diligence because it waited virtually  until the eve of trial            before  submitting   its  motion  to  amend.     Under  these            circumstances, we will not disturb the ruling of the district            court.                                   The Second Trial                                   The Second Trial                                   ________________                      As  already explained,  the second  jury  trial was            limited to M&J's breach of contract claim against CIGNA.  M&J            moved for a new trial, which was denied.  Both parties object            to the damages award so we start with that.                                       Damages                                       Damages                                       _______                      CIGNA attacks the damages on two grounds:  that the            evidence  should not have been  admitted because it was based                                         -20-                                          20            on hearsay and speculation  and that the award was  too high.            M&J  asserts that  the award  was too  low because  the court            improperly  limited  M&J's damages  to  the  period from  the            initial  date  of cancellation  of  the  agency contract,  to            October 15, 1992, the  extended date of cancellation required            under Massachusetts law.                      Before  discussing the  claims of  the parties,  we            rehearse  the evidence on  damages as reported  in the second            trial transcript.   The evidence  on damages came  in through            the testimony of Frank Lombard.   He testified essentially as            follows.  Up  to 1992, M&J's average commissions  on premiums            it received  was "in the  $250,000 a year range."   After the            cancellation, clients  of M&J who were insured  by CIGNA were            sent letters  notifying them  that M&J's contract  with CIGNA            had  been  cancelled and  all premiums  due  were to  be paid            directly to CIGNA.  Most of these clients did not renew their            policies  with  M&J.   Lombard  kept  a  record  of all  such            clients.  From the date of the initial cancellation, April 2,            1992, to October 15, 1992, premiums from the affected clients            aggregated $1,720,495.00; M&J's loss in  commissions totalled            $201,294.00.   This  was broken  down into  three categories:            commercial   commissions   --   $175,138.00;    Market   Dyne            commissions  --  $13,281.00;  and  personal   commissions  --            $12,875.00.  In addition, M&J lost its annual  profit sharing            income from  CIGNA of $12,871.00.   Lombard further testified                                         -21-                                          21            that the  commission loss to  the end of the  year would have            been  $215,393.00.3      Lombard  testified   that  loss   of            commissions was the same as loss  of profits and that M&J had            a renewal rate of 93% on insurance policies purchased through            it.                      He started to testify  about future loss of profits            when  there was an objection  followed by a bench conference.            The  court  reminded  counsel  for M&J  that  it  had limited            damages to October 15, 1992.  M&J's counsel  made an offer of            proof that damages would be $215,000.00 in lost commissions a            year plus loss of profit sharing of $56,000.00 for a total of            $271,000.00 a year "ad infinitum."                      We  start our  analysis of  M&J's objection  to the            court's ruling  on damages  with the  observation that  it is            obvious that an "ad infinitum" claim for damages has no basis            in  law and confounds common  sense.  Confining our analysis,            however, to the claim by M&J that  the court's ruling that no            damages could be awarded  after October 15, 1992, was  error,            we point out  that the  transcript of  the jury  instructions            shows that no such instruction was given.   The court left it            entirely up to the  jury to determine the period  of time for            which damages could be awarded:                        In  considering  any  claim  for  loss of                      anticipated  profits   resulting  from  a                                            ____________________            3.  These amounts  are considerably  lower than the  items of            damages claimed in the first trial.                                         -22-                                          22                      breach of contract,  you should  consider                      the  length of  time that  parties  had a                      right  to expect to  receive the benefits                      of the contract.                         If you determine the contract was only                      for a certain period of time, or could be                      terminated by  notice to the  other party                      after  a  certain  period,  you  may only                      award damages for losses  incurred during                      that limited period of time.                      CIGNA did not object to the failure of the court to            limit the time period for awarding damages.                      M&J  argues that this  unexpected volte-face by the                                                        __________            court on damages prevented it from introducing more extensive            evidence  on damages.   The  answer to  this is  that Lombard            testified:  "Your  [sic] damages are, our  loss of commission            both  for 1992,  and these people,  based on  our experience,            would  have  renewed  their  insurance each  year  and  these            customers  are  gone."   It is  hard  to see  what additional            evidence could have been introduced.  This sum of $271,000.00            for  annual  lost profits  was in  evidence  for the  jury to            consider and  there was no restriction in the charge limiting            the  period of damages.  We have  read the final argument for            M&J carefully and there is  no discussion in it of any  time-            period limitations on damages.  The attorney for M&J, without            objection, stated, "a  whole year's commission was  $215,000,            not 201."   Based on  the evidence  before the  jury and  the            court's instructions, we find that M&J was not  prejudiced by            the court's bench  ruling that damages  could not be  awarded                                         -23-                                          23            after October 15, 1992, because this  ruling was not conveyed            to the jury.                        We are not impressed by CIGNA's objections that the            evidence on damages was based on speculation and hearsay  and            should  have  been  excluded.   As  the  court  pointed  out,            Lombard's  testimony  was  based   on  his  own  records  and            experience in the insurance business.  That the testimony was            self-serving went to  its credibility not its  admissibility.            Lombard  was  subjected   to  rigorous  cross-examination  on            damages and  CIGNA introduced testimony  through experts that            contradicted  Lombard's  testimony.   The  jury's verdict  of            $250,000.00 in  damages for  M&J strikes  us as  a reasonable            assessment  of the  evidence.   Moreover,  even if  Lombard's            testimony was hearsay in part, it did not affect the verdict.            The $250,000.00 award could only have been for the year 1992.            As to what  happened to  M&J's clients in  1992, Lombard  had            first-hand information.  He testified as follows:                      A.   I kept track from the day this event                      occurred in March of 1992.  I was the one                      in charge.  I was the  one that talked to                      the  people  that  got  the  letter  from                      CIGNA. I was the one that handled all the                      commercial  accounts, so  I knew  who was                      affected by that action.                      Any violation of the hearsay rule was de minimis.                                                            __________                      CIGNA's other objection that the award was too high            does  not  fare  any  better.    CIGNA  argues  that  Lombard            testified only as to lost revenues but ignored the other side                                         -24-                                          24            of the ledger  -- savings  in ongoing expenses  -- thus,  the            damages were  higher than  what normally would  be the  case.            Lombard  did   testify  specifically,  however,   that  M&J's            expenses  did  not contract  after  the loss  of  the Roberts            account but continued at  the same level.  He  testified that            no one  was terminated, and  that expenses  continued at  the            same rate.   Lombard  was cross-examined intensively  on this            point  but  did not  give ground.    It was  well  within the            province of the jury to believe Lombard's testimony.                        Our rulings and findings on damages negate  CIGNA's            argument  that its motion  for a remittitur  should have been            allowed.                               The Conduct of the Judge                               The Conduct of the Judge                               ________________________                      M&J's main  attack on  the jury  verdict is  a two-            pronged condemnation  of the  conduct of the  district judge.            It asserts that  the judge should  have recused himself  from            presiding over the second trial because of bias and prejudice            against  M&J.     It  also  accuses  the  judge  of  secretly            communicating with the jury  during its deliberations.  These            are serious charges.                                       Recusal                                       Recusal                                       _______                      In its motion for recusal filed prior to the second            trial, M&J states three specific reasons for recusal:                      1.  The very nature of a retrial order is                      such that it should  be considered by one                      other than the original trial judge.                                         -25-                                          25                      2.  At  the pretrial  conference held  on                      March 13, 1994,  Judge Freedman stated in                      open  court  that  he  thought  that  the                      Defendant,  Plaintiff  in   counterclaim,                      Frank Lombard, was insincere.                      3.   At  the pretrial conference  held on                      March 13, 1994,  Judge Freedman stated in                      open court that if a jury finds similarly                      on  retrial, that he  would order a third                      trial.                                         -26-                                          26                      In its brief, M&J has expanded its reasons:                           The  trial judge  not only  stated his                      bias,   but  allowed  it  to  infect  his                      rulings.  As indicated in prior arguments                      in this  brief, he took away  verdicts in                      favor of M & J after the first trial even                      though  there  was   ample  evidence   to                      support them.  In ruling on these motions                      he  denied the  existence of  evidence of                      damages  which  was  clearly  before  the                      jury.   He failed to apply  proper law in                      finding  against  M  & J  for  the  claim                      arising out  of  the  loss  of  the  F.L.                      Roberts account.  He failed  to adhere to                      the  rules  of civil  procedure regarding                      notice   pending    and   amendments   to                      pleadings.  He found against M & J on the                      c.  93A count without making any findings                      of fact to support his decision.            M&J's Brief at 42-43.                      28 U.S.C.   455(a) provides:                         (a) Any justice, judge,  or magistrate                      of  the  United  States shall  disqualify                      himself  in any  proceeding in  which his                      impartiality    might    reasonably    be                      questioned.            We turn  to the  case law  to determine  when the  statute is            implicated.  In this Circuit the question is:                      whether   the   charge    of   lack    of                      impartiality  is  grounded on  facts that                      would    create   a    reasonable   doubt                      concerning the  judge's impartiality, not                      in the mind of  the judge himself or even                      necessarily in  the mind of  the litigant                      filing  the motion under 28 U.S.C.   455,                      but rather in the mind  of the reasonable                      man.            United  States v. Arache, 946  F.2d 129, 140  (1st Cir. 1991)            ________________________            (quoting United States v. Cowden, 545 F.2d 257, 265 (1st Cir.                     _______________________            1976), cert. denied, 430 U.S. 909 (1977)).   See also Town of                   _____ ______                          ___ ____ _______                                         -27-                                          27            Norfolk v. United States Army Corps of Eng'rs, 968 F.2d 1438,            _____________________________________________            1460 (1st Cir. 1992); United States v. Lopez, 944 F.2d 33, 37                                  ______________________            (1st Cir. 1991).                      In  In Re  Allied-Signal, Inc.,  891 F.2d  967 (1st                          __________________________            Cir. 1989), Judge  Breyer, now Justice Breyer,  made a number            of observations  that  are  pertinent  here:   The  court  of            appeals  will not reverse a  district judge's decision to sit            unless  such  decision  "cannot  be defended  as  a  rational            conclusion supported by a  reasonable reading of the record."            (quoting In Re  United States,  666 F.2d 690,  695 (1st  Cir.                     ____________________            1981)).  Id. at 970.  He amplified:                     ___                      When  considering  disqualification,  the                      district court is not to use the standard                                        ___                      of  Caesar's wife,  the standard  of mere                      suspicion  .  .  .  that  is  because the                      disqualification  decision  must  reflect                      not   only  the  need  to  secure  public                      __________                      confidence   through   proceedings   that                      appear  impartial, but  also the  need to                                         _________                      prevent parties from too easily obtaining                      the disqualification of a  judge, thereby                      potentially  manipulating the  system for                      strategic  reasons,  perhaps to  obtain a                      judge more to their liking.            Id.             ___                      We end our case  review with a quote from  El Fenix                                                                 ________            de Puerto Rico v. The M/Y Johanny, 36 F.3d 136, 140 (1st Cir.            _________________________________            1994).                         No  permissible reading  of subsection                      455(a)   would   suggest  that   Congress                      intended  to allow  a litigant  to compel                      disqualification   simply  on   unfounded                      innuendo    concerning    the    possible                                                       ________                      partiality of the presiding judge.                                         -28-                                          28                      We start our  analysis by noting  that there is  no            rule  of federal procedure that requires a different judge to            preside over a new  jury trial ordered by the  original trial            judge.   M&J  has cited no  case to  this effect  and we have            found  none.   Absent  a Local  Rule  that so  provides  (and            Massachusetts  has  none),  this   is  a  matter  within  the            discretion  of  the trial  judge.    Although  there  may  be            circumstances  in which a  new judge should  preside over the            second trial,  such substitution  is not the  usual practice.            We find  nothing in the record  here suggesting circumstances            that would make  the trial judge think twice  about presiding            over the new trial.                      Because we  have affirmed the rulings  and findings            of the district court setting aside the verdicts in the first            trial  and ordering  a new  trial, it  would be  pointless to            discuss the asseverations made by M&J  at pages 42 and 43  of            its brief.  Our affirmance of the rulings and findings of the            district court scotches any  bias or prejudice claim on  this            basis.                       This leaves for consideration  the comments made by            the  judge at  the pre-trial  hearing on May  13, 1994.   The            record reads as follows.                           THE  COURT:     Well,  Mr.   Joseph,                      without even thinking  F.L. Roberts  what                      is your client  earnestly, sincerely  and                      so forth believe he's  entitled to on the                      breach of contract on the counter-claim?                                         -29-                                          29                           MR.  JOSEPH:   He is,  believes he's                      entitled  to  the  jury  verdict  on  the                      counter-claim.                           THE COURT:  $500,000?                           MR. JOSEPH:  Oh, indeed.                           THE COURT:  There's  no way to  move                      if that's his thinking.                           MR.  JOSEPH:    Well,  that  is  his                      thinking.                           THE  COURT:    Well,  if  that's his                      thinking then you have no authority to do                      anything.                           MR. JOSEPH:  Well, I have the authority.                           THE COURT:  Then, we'll have to talk                      trial date and go from here.                           MR. JOSEPH:  All right, sir.                           THE COURT:  And I have to advise you                      in advance that if  a second jury went as                      far  as the  first  jury went  as far  as                      $500,000, the  money, I'd take  that away                      as  well.   You have  to know  you're not                      going  to get it.   I don't care what you                      did.  At least not  from this Judge.  You                      could always  take an appeal  and see  if                      you could get  another trial. That  would                      be up to the first circuit.                           MR. JOSEPH:  Okay.                           THE COURT:  I was hoping we might be                      able to be sincere in our thinking and go                      somewhere.  Your client is not sincere in                      my eyes.                           MR.  JOSEPH:   Judge, I  really must                      disagree with you and I insist  my client                      is very  sincere.   Perhaps if  you don't                      think  he's  sincere  you  should  recuse                      yourself.                                         -30-                                          30                           THE  COURT:   No,  I'm saying  if he                      thinks a  jury verdict should be given to                      him if he's not  willing to accept and go                      with another trial, I frankly don't think                      another jury would  go anywhere near that                      figure.   If they  give anything  at all.                      I'm  not  even convinced  he,  they would                      ever do that.                      This pre-trial  hearing was called by  the judge in            an  attempt to  settle  the case.    We  see nothing  in  the            comments of  the judge that  would create a  reasonable doubt            concerning  the  judge's  impartiality   in  the  mind  of  a            reasonable person.                           The Alleged Secret Communication                           The Alleged Secret Communication                           ________________________________                              by the Judge with the Jury                              by the Judge with the Jury                              __________________________                      M&J  has alleged  that  the  trial  judge,  without            advising counsel, responded in the negative to a question  by            the jury asking whether  it could award damages of  more than            $240,000.00  to  M&J.    This  alleged  secret  communication            between  the judge and jury  first surfaced in a conversation            between Gary  W.  Lavallee, foreman  of the  jury, and  Frank            Lombard,  president of  M&J, at  a local restaurant  three or            four weeks after  verdict and judgment  in the second  trial.            The jury     foreman subsequently  executed a sworn affidavit            which stated:                            AFFIDAVIT OF GARY W. LAVALLEE                            _____________________________                         I  am Gary W.  Lavallee.   My business                      address   is   82   Main   Street,   West                      Springfield, Massachusetts.                                         -31-                                          31                         I was  the foreman of the  jury in the                      case of  CIGNA vs. MacDonald  and Johnson                      Insurance Agency, Inc. in November 1994.                         Based   on    our   recent   conversa-                           tion regarding your jury award,                           we the jury sent  two questions                           out    to     Judge    Freedman                           requesting   guidance.      One                           question specifically asked  if                           we could award damages over and                           above  the   $240,000  you  had                           illustrated on the  blackboard,                           to  justify  for   a  loss   of                           renewal income.  His  reply was                           that we couldn't.                         During  our  deliberation,  the  whole                      jury   was   in  complete   agreement  to                      awarding additional damages based on loss                      of renewal income.                   Signed under the pains and penalties of perjury this                  1st   day of March 1995.                _______                                                 \s\ Gary W. Lavallee                                              _______________________________                                                 Gary W. Lavallee                      The  other  question asked  by  the  jury poses  no            problem.  It stated in writing:                      (1)  Are  we  allowed  to  tack  on   (or                      provide)  interest  to amount  of damages                      that MacDonald is asking for?                           If so, can we charge 8%?                      After consulting with counsel  the judge replied in            writing:                      Interest cannot be  added to any  verdict                      by the jury.                                          Judge Freedman.                                         -32-                                          32                      The  allegation by  the  jury foreman  of a  secret            communication  was  never  squarely  resolved  on the  merits            because  the district court ruled  in a motion  to strike the            affidavit  that it  had  been  obtained  in violation  of  an            explicit rule prohibiting interviews by counsel, litigants or            agents except  under the  supervision of the  district court.            See United States v.  Kepreos, 759 F.2d 961, 967  (1st Cir.),            ___ _________________________            cert.  denied,  474 U.S.  901 (1985).    We concluded  that a            _____  ______            complete  record was  necessary for  a fair  determination of            this  issue  and that  the  district  court should  determine            whether there was any private communication as alleged by the            jury   and,  if   so,  the   circumstances   surrounding  the            communication.                      We,   therefore,   issued   an    order   retaining            jurisdiction and                       remanding to the  district court for  the                      limited  purpose  of determining  whether                      the    alleged   private    communication                      occurred    and,    if   so,    in   what                      circumstances.  A new district judge will                      be  assigned  by the  chief judge  of the                      district court for the limited purpose of                      conducting this proceeding.                      Judge Douglas Woodlock was assigned by Chief  Judge            Tauro of the U.S. District Court of  Massachusetts to conduct            the proceeding.  On May 2, Judge Woodlock took testimony from            the  jury  foreman,  Lavallee, two  district  court  security            officers,  a deputy  U.S. Marshal,  and the  courtroom deputy            clerk to Judge Freedman during the trial.                                         -33-                                          33                      On May 6 testimony was taken from six other jurors.            One of  the jurors had left the state and no attempt was made            to obtain her  testimony.   Testimony was also  taken on  the            same  day from  Frank  Lombard,  president  of M&J,  and  the            courtroom deputy clerk for the proceeding.  At the conclusion            of  this evidentiary  hearing;  Judge  Woodlock informed  the            parties  of   his  intention   to  give  Judge   Freedman  an            opportunity to  state his recollection of  the allegations in            the  Lavallee  affidavit.   Counsel  was  advised that  after            reviewing  Judge  Freedman's  statement  they  would  have an            opportunity to interrogate him.                      In the meantime, counsel had advised Judge Woodlock            that Judge Freedman's  law clerk  at the time  of the  trial,            Kenneth B. Walton, might have relevant evidence to offer.  On            May 21, Mr. Walton's  evidence was taken.  At  the conclusion            of this hearing the parties informed Judge Woodlock that they            sought  no  other testimony  and that  they  did not  wish to            interrogate Judge Freedman.                      Judge Woodlock made the following ultimate finding:                         Based upon my review of  the materials                      of record  in this case  and the evidence                      adduced   at  the   evidentiary  hearings                      pursuant  to my  assignment, I find  as a                      matter   of  fact  that  after  the  jury                      retired  to  begin  its deliberations  in                      this  case  on  November  17,  1994,  and                      before  it  returned  with  its  verdict,                      Judge    Freedman     had    no    secret                      communication with the  jury outside  the                      presence   of   counsel.       The   only                      communication Judge Freedman had with the                                         -34-                                          34                      deliberating jury involved the receipt of                      a  jury   question  concerning  interest,                      which   he   shared  with   counsel,  and                      responded  to in writing, pursuant to his                      standard    practice    regarding    such                      inquiries.                       We  have  reviewed  carefully  the record  of  the            evidentiary hearings held by  Judge Woodlock and the detailed            subsidiary findings  he made.   We unhesitatingly  affirm his            ultimate finding and his underlying subsidiary findings.4                                          III.                                         III.                                      CONCLUSION                                      CONCLUSION                                      __________                      The judgments of the  district court in both trials            are affirmed.                affirmed                ________                      No costs to either party.                      No costs to either party.                      _________________________                                            ____________________            4.  In view of Judge Woodlock's findings, we need not address            the question of whether  the initial contacts between Lombard            and Lavallee,  and the subsequent securing  of the affidavit,            violated   the  mandate   of  Kepreos,   759  F.2d   at  967.                                          _______            Accordingly, we express no opinion on that question.                                         -35-                                          35
