
USCA1 Opinion

	




          January 3, 1994   UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ___________________          No. 93-1266                             COMBUSTION ENGINEERING, INC.                                Plaintiff, Appellant,                                          v.                             MILLER HYDRO GROUP, ET AL.,                                Defendants, Appellees.                                 ____________________          No. 93-1267                            COMBUSTION ENGINEERING, INC.,                                 Plaintiff, Appellee,                                          v.                              MILLER HYDRO GROUP, ET AL,                               Defendants, Appellants.                                 ____________________                                     ERRATA SHEET               The opinion  of this Court  issued on December 30,  1993, is          amended as follows:               On page  25, 1st  full paragraph, line  5, "When  a directed          verdict  was served,"  should  be "after  a directed  verdict was          ordered,".                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 93-1266                            COMBUSTION ENGINEERING, INC.,                                Plaintiff, Appellant,                                          v.                             MILLER HYDRO GROUP, ET AL.,                                Defendants, Appellees.                                 ____________________        No. 93-1267                            COMBUSTION ENGINEERING, INC.,                                 Plaintiff, Appellee,                                          v.                             MILLER HYDRO GROUP, ET AL.,                               Defendants, Appellants.                                 ____________________                    APPEALS FROM THE UNITED STATES DISTRICT COURT                              FOR THE DISTRICT OF MAINE                       [Hon. Gene Carter, U.S. District Judge]                                          ___________________                                 ____________________                                        Before                           Boudin and Stahl, Circuit Judges,                                             ______________                             and Fuste,* District Judge.                                         ______________                                 ____________________                                    ____________________        *Of the District of Puerto Rico, sitting by designation.            John H.  Montgomery with whom  Gordon F. Grimes,  David A.  Soley,            ___________________            ________________   _______________        Diane S. Lukac, Faith  K. Bruins and Bernstein, Shur,  Sawyer & Nelson        ______________  ________________     _________________________________        were on briefs for plaintiff.            George  S.  Isaacson  with whom  David  W.  Bertoni  and  Brann  &            ____________________             __________________       ________        Isaacson were on briefs for defendant Miller Hydro Group.        ________            Roy  S. McCandless with whom  Robert S. Frank, Mark K. Googins and            __________________            _______________  _______________        Verrill & Dana were on brief for party-in-interest appellee Kansallis-        ______________        Osake-Pankki.                                 ____________________                                  December 30, 1993                                  _________________                 BOUDIN,  Circuit Judge.   This  appeal  arises out  of a                          _____________            complex commercial  dispute,  with  overtones  of  deception,            relating to the  construction of a hydroelectric  facility in            Maine.    In  the ensuing  litigation,  neither  the builder,            Combustion Engineering,  Inc., nor  the  owner, Miller  Hydro            Group,  succeeded  in  recovering against  the  other.   Both            appeal.  We affirm the district court.                                    I. BACKGROUND                 In the early 1980's,  Miller Hydro set about  creating a            hydroelectric facility on the Androscoggin River  near Lisbon            Falls, Maine, to generate electricity.  It first negotiated a            contract with Central Maine Power Company by which the latter            agreed to  purchase a  set amount of  power from  the planned            facility.   Miller  Hydro  also  obtained  financing  from  a            Finnish bank, Kansallis-Osake-Pankki, and  a license to build            the  project  from the  Federal Energy  Regulatory Commission            ("FERC").                 In May 1986,  Miller Hydro entered into  a contract--the            central document  at  issue  in  this  case--with  Combustion            Engineering  for  the  latter  to build  the  facility  on  a            "turnkey" basis.   The turnkey contract,  by cross-reference,            provided for a facility including turbines with a capacity of            7800 cubic  feet of  water per second.1   Under  its contract                                            ____________________                 1The  7800 cfs figure, which  is important to this case,            appears  in technical specifications  annexed to  the turnkey            contract.   A shorter and more general "project description,"                                         -3-                                         -3-            with  Maine Central  Power,  Miller  Hydro  was  expected  to            provide power capacity of 14  megawatts, and the Miller Hydro            contract  with Combustion Engineering  also referred  to this            requirement by cross-reference.                   Subject  to  these  and  other  specifications,  it  was            entirely up to Combustion Engineering to design and build the            new facility.   The turnkey contract contained  incentive and            penalty provisions,  one of which  lies at the heart  of this            case.  The price set for construction was fixed at just under            $24  million,  but  the  contract  provided  that  Combustion            Engineering would  earn a sliding-scale  bonus for efficiency            to the extent  that the facility produced power  in excess of            77,500  megawatt hours  per  year;  a  corresponding  penalty            provision reduced Combustion Engineering's fixed price to the            extent that the  facility was less efficient than a specified            minimum output of 73,500 megawatt hours per year.                 The  turnkey contract provided that the bonus or penalty            would be determined by certain tests  that would be performed            by an independent  tester at the completion  of construction.            A  protocol  specified  how  the  test  would  be  conducted,            including a  requirement that  the  facility be  tested at  a            "total flow of 7800 cfs."  It  also permitted Miller Hydro to            require  a   retest  by  a   different  tester  if   it  were                                            ____________________            also  annexed,  refers  to  turbine  discharge   capacity  of            "approximately 8,000" cfs.                                         -4-                                         -4-            dissatisfied with  the  initial test.    It appears  that  if            Combustion  Engineering had built a highly efficient plant of            the size specified, Miller Hydro might have been liable for a            bonus payment as large as $850,000.                 What  happened instead  is  that Combustion  Engineering            built a far larger plant  with turbines having a maximum flow            capacity of over 9000 cfs or more and a power capacity  of 18            to 19 megawatts.   Miller Hydro claims that  this increase in            size  was  done  deliberately  and   secretly  by  Combustion            Engineering  in order to  manipulate the bonus  provisions of            the construction contract.  Miller Hydro and Kansallis-Osake-            Pankki both say that they did not learn of the increase until            it was too late to modify the facility.                 When the facility was tested at a total  flow of 9000 or            more cfs, the tester reported results that equated to a bonus            of over  $8  million.   In  Miller Hydro's  view,  Combustion            Engineering had invested $1 million or so of its own money in            increasing the facility's  size in order  to reap a  ten-fold            increase  in the incentive bonus.  Miller Hydro also objected            to the  test itself and  invoked its right  to a retest.   It            also refused to state its "final acceptance" of the facility,            or to make final construction  payments.  Instead of agreeing            to  a  retest, Combustion  Engineering promptly  brought suit            against Miller Hydro in district court.                                           -5-                                         -5-                 In its complaint Combustion Engineering set forth claims            based  on   contract,  unjust   enrichment,  and   promissory            estoppel, and it sought to enforce a mechanic's lien  against            the facility.  As damages,  it demanded an incentive bonus of            $8.16 million,  a final  construction payment  of $45,364,  a            further  payment of $1,236,427 in amounts withheld from prior            payments, and a  claimed early completion bonus  of $893,894.            Kansallis-Osake-Pankki  intervened,  arguing  that Combustion            Engineering had by contract subordinated its rights under the            mechanic's  lien  statute  to  the  bank's  mortgage  on  the            facility.                 Miller   Hydro    counterclaimed   against    Combustion            Engineering  asserting  contract,   fraud,  and  racketeering            claims.  Miller  Hydro tells us that Central  Maine Power has            not  agreed to  buy the  extra  power that  the facility  can            generate and that Miller Hydro  will or may incur  additional            costs  as a  result  of  the facility's  enlarged  size.   In            particular, it says that it  may face penalties from FERC for            building a facility larger than the license permits, and that            it may  have to  reconstruct fish-protection facilities  that            were keyed to the originally planned smaller turbines.                 Because  the case  presented  both  legal and  equitable            claims,  the district  court  bifurcated the  trial.   In the            first phase, Combustion Engineering tried its contract claims            to the  jury and  Miller Hydro tried  its contract  and fraud                                         -6-                                         -6-            counterclaims to the same jury.  (Miller Hydro's racketeering            counterclaim  was  dismissed by  the  court  in circumstances            recounted  below.)   In  the  second  phase the  trial  judge            proposed   to  rule   himself  on   Combustion  Engineering's            equitable claims (unjust enrichment and promissory  estoppel)            and  to  resolve  any   outstanding  issues  concerning   the            mechanic's   lien  claim,   including  priority   as  between            Combustion Engineering and Kansallis-Osake-Pankki.                 After Combustion Engineering presented its case in chief            to the jury, the district  court entered judgment as a matter            of law against Combustion Engineering on its contract claims.            The court  held that  Combustion  Engineering had  materially            breached its contract in testing the facility at a total flow            in excess of 7800 cfs  and in other departures from the  test            protocol.   The court  found it  unnecessary to reach  Miller            Hydro's argument that  the refusal of Combustion  Engineering            to  agree to  a  retest was  also a  breach of  contract that            barred recovery.                 Miller  Hydro's  own  contract and  fraud  counterclaims            against  Combustion Engineering  were submitted  to  the jury            together with a  special verdict form.  On  January 23, 1992,            the  jury  returned  its  verdict,  finding  that  Combustion            Engineering  had  breached  the  contract  by  designing  the            facility for a maximum flow in excess of 7800 cfs, and not in            accordance  with  the  FERC  license.   It  found  the actual                                         -7-                                         -7-            maximum  flow to be  at least 9000  cfs and the  power output            capacity to be  18 megawatts.  It also  found that Combustion            Engineering  had  provided  materially  false information  to            Miller Hydro.   Nevertheless, the jury awarded  no damages to            Miller Hydro either for breach of contract or  fraud, finding            (in  response to special verdict questions) that Miller Hydro            had not  proved damages  from the breach  of contract  or the            misrepresentations.                  On October 6,  1992, the  trial judge  filed a  decision            denying  Combustion  Engineering  recovery on  its  equitable            claims.    The  court  held that  under  Maine  law  material            breaches  of  contract  did  not  automatically  preclude  an            equitable recovery but that the plaintiff's good faith effort            to  perform was  a  prerequisite; and  the  court ruled  that            Combustion Engineering "did  not seek in  good faith to  meet            its  obligations  under  the  turnkey  contract,"  given  the            deliberate breaches and misrepresentations found by the jury.            The jury findings, the court  said, were binding on the court            in deciding the equitable claims.                   On  the same  day, the  trial judge  denied a  motion by            Combustion  Engineering  requesting  the  court  to  order  a            retesting of the  facility, to appoint a  special master, and            to allow the  filing of a supplemental complaint.   The court            ruled that this motion, filed on June 3, 1992, well after the            jury  verdict,  came  too  late.    Not  only  had  extensive                                         -8-                                         -8-            discovery  been conducted but the jury trial had already been            held and  the case  was nearing  completion.   Further delay,            said the court, would be unfair to both of the other parties.                 Finally, by decision  entered on December 22,  1992, the            trial judge ruled on Combustion Engineering's mechanic's lien            claim.  It rejected the  claim on the ground that enforcement            of such  a lien  required a valid  underlying claim  and that            Combustion Engineering  had been found  to lack such  a valid            claim.  The court granted Kansallis-Osake-Pankki's request to            discharge  the mechanic's  lien.    It  also  granted  Miller            Hydro's requests, made in its counterclaims, for declarations            of breach  of contract  and  misrepresentation by  Combustion            Engineering.                   On January 11, 1993, the court entered final judgment in            the case.   Combustion Engineering has appealed  the directed            verdict against it on its  contract claims, and the denial of            its  equitable  claims,  its mechanics  lien  claim,  and its            motion  to  retest.   Miller Hydro  has appealed  the earlier            dismissal of its racketeering counterclaim.  Neither side has            explicitly sought to  disturb the judgment on  Miller Hydro's            contract  and  fraud  counterclaims  entered  upon  the  jury            verdict.                                    II. DISCUSSION                 Combustion Engineering  advances a  series of  different            arguments on appeal, variously involving the directed verdict                                         -9-                                         -9-            against it  on  its contract  claims,  the dismissal  of  its            equitable claims,  the district  court's refusal  to order  a            retest, and  the ruling discharging the mechanic's  lien.  We            begin with these  issues, reserving for the  end a discussion            of Miller Hydro's cross-appeal.                 Combustion  Engineering's  first, and  most  extensively            briefed,  point  on  appeal  is its  attack  on  the district            court's  grant of a directed verdict--now renamed judgment as            a matter of law, Fed. R. Civ. P. 50(a)--dismissing Combustion            Engineering's  contract  claims  against  Miller  Hydro.   We            review  such  a dismissal  de  novo,  asking whether  on  the                                       ________            evidence  presented  a  reasonable jury  could  find  for the            plaintiff.   Murray v.  Ross-Dove Co., 5  F.3d 573,  576 (1st                         ______     ____________            Cir. 1993).  In considering this question, it is assumed that            issues  of  credibility  are resolved,  and  inferences  from            evidence drawn, in favor of the non-moving party.  Id.                                                               ___                 At the threshold one might  think that the attack on the            directed verdict is barred by the jury's subsequent findings.            These  findings, on  Miller Hydro's  counterclaims, establish            that Combustion  Engineering breached the turnkey contract by            building  a  plant  well  in  excess  of  the  contracted for            capacity.   Miller Hydro  claims that  Combustion Engineering            has  forfeited its  right  to  challenge  those  findings  by            failing  to  "appeal"  from  the  jury   verdict;  Combustion            Engineering  replies that  appeals  are from  judgments,  not                                         -10-                                         -10-            findings, and that it has appealed the judgment rejecting its            contract claims.                 We  think that  in this  case the  jury findings  do not            settle  the propriety  of  the directed  verdict.   The  jury            verdict might  insulate the directed  verdict if the  jury in            deciding the counterclaims had independently reached the same                                           _____________            conclusion on the same issue.   But here the trial  judge, in            submitting the counterclaims to the jury, instructed the jury            that as  a matter of  law "the turnkey contract  required the            construction of a hydroelectric facility  . . . . designed to            accommodate a maximum  hydraulic flow of 7800  cubic feet per            second."2                  A central  theme of Combustion Engineering's argument on            appeal is that the contract  did not make 7800 cfs a  maximum            figure.   We  think it  would be odd  to uphold  the directed            verdict on the  ground that the jury found the  same thing as            the district  judge (namely, that  the 7800 cfs figure  was a            ceiling) when  in fact the district  judge told it  to do so.            This  is not  to  say that  the district  court  erred in  so            instructing  the jury--on  the contrary,  we  agree with  its            reading of  the contract--but rather to explain  why we think                                            ____________________                 2The court also told the  jury that the court itself had            rejected Combustion Engineering's contract claims because the            court had found (in directing a verdict) a material breach of            contract by Combustion  Engineering, namely,  its failure  to            show compliance "with the testing requirement of testing at a            total flow of  7800 cfs" as required by  the protocol annexed            to the turnkey contract.                                         -11-                                         -11-            that the directed  verdict decision by the district  court is            not insulated by  the jury verdict and should  be reviewed on            the merits.                 Turning  to the  merits, the  first issue  before us  in            relation  to  the  directed verdict  is  whether  the testing            protocol required that the final acceptance test be conducted            at a  maximum of  7800  cfs.   Although  formally this  is  a            separate  issue from whether  the turnkey contract  made 7800            cfs  the maximum  size for  the facility,  we think  that the            reality here  is that the  two issues are interrelated.   One            might be able to read the 7800  cfs figure differently in the            test protocol  and the  contract  design specifications,  but            would  be  unlikely  to  do  so in  this  case.    Combustion            Engineering treats the two issues together, and so do we.                 The district  court construed  the turnkey  contract and            ruled as  a matter  of law  that the  7800 cfs  figure was  a            target and ceiling  figure for both construction  and testing            of the  facility.  As noted  above, the 7800  cfs figure does            appear   in   annexed   technical   specifications   although            apparently  not in  the body  of the  contract itself.   This            cross-reference  might not be  conclusive if it  stood alone,            but it does  not stand alone.   Two other pieces of  evidence            intrinsic  to the  contract--the FERC  license  and the  test            _________            protocol--support the view  that the 7800 cfs figure was both            target and ceiling for the project.                                         -12-                                         -12-                 First,  the FERC license was incorporated in the turnkey            contract  by  cross reference,  the  contractor  promising to            construct the  facility in accordance with the  license.  The            FERC license refers to the  project as having turbines with a            total capacity  of 14 megawatts,  a figure  that the  turnkey            contract treats as a counterpart to the 7800 cfs  figure.  As            already  noted, the turnkey  contract refers to  14 megawatts            and the annexed technical specifications to 7800 cfs.3                 Second, the test protocol annexed to the turnkey project            clearly provided for  testing at "a total flow  of 7800 cfs."            One can imagine a  contract providing for a facility   with a            large capacity  while limiting the test to  some lower figure            (perhaps  the  expected  normal flow).    Here,  however, the            reference  to the same figure in the technical specifications            and in  the test  protocol strongly suggests  as a  matter of            common sense that the facility was  to be built and tested at            that figure.                 Combustion Engineering's brief argues that the 7800  cfs            figure  was actually intended  as a minimum,  urging that the                                                _______            figure be read as akin to other figures in the  contract that            are  allegedly  performance minima.    Combustion Engineering                                            ____________________                 3There was  also evidence  that the  license application            initially reflected a  flow of 6800 cfs and  that approval of            FERC to increase this to 7800 was obtained in 1985.  However,            there is some doubt that  this evidence could be described as            intrinsic, at least in the form submitted, and we do not rely            upon it to sustain the directed verdict.                                         -13-                                         -13-            also suggests that in  any event the  7800 figure was only  a            rough  approximation.    It  also  argues  that  the  parties            contemplated  modifications  in whatever  figure  was chosen.            Finally, it claims that Miller  Hydro learned of the increase            and waived  its objection.   Some of  these arguments  are in            tension with others, and none is persuasive.                 There  may be figures  in the turnkey  contract that are            performance minima.   But certainly  the normal reading  of a            performance or capacity figure in a license is that, like the                                                _______            speed limit sign on a highway,  it is intended as a  maximum.            Here, the contract said that the facility  was to be built in            accordance with  the license, and the license  provided for a            14  megawatt facility, a figure that the contract's technical            specifications equated  to a  facility having  a capacity  of            7800 cfs.   Thus, we  think that  7800 cfs was  a target  and            ceiling and not a minimum.                 We agree with Combustion Engineering's claim  that, even            treating 7800 cfs as a  ceiling, there may be room  for minor            deviations;  but an increase to over 9000 cfs--there was some            testimony that  9600 cfs  or more  was the  real capacity--is            hardly  a  minor  change.     Correspondingly,  the  megawatt            capacity increased from 14 megawatts to 18 megawatts or more,            hardly  a  minor  adjustment.    The  engineer  who  assisted            Combustion  Engineering testified that a change from 7800 cfs            to 9000 cfs or more would be material.                                         -14-                                         -14-                 There were  provisions for  modification of  the turnkey            contract  by  agreement, but  Combustion Engineering  has not            proved   any  agreement  by   Miller  Hydro   permitting  the            contractor to exceed the  7800 cfs figure.  As  for the claim            of waiver or estoppel, that  issue was submitted to the jury.            The jury's verdict that  Combustion Engineering breached  the            contract  by constructing a  facility in  excess of  7800 cfs            appears  implicitly to reject the waiver or estoppel defense.            This is quite understandable since there is no clear evidence            that Miller Hydro knew of the change in capacity until it was            too  late to alter course, and substantial evidence indicates            that Combustion Engineering sought to conceal its deviation.                  Combustion Engineering argues that at the very least the            contract  was ambiguous,  so that  extrinsic evidence  should            have been admitted and  the issue submitted to a  jury.  Some            jurisdictions  follow  the traditional  binary  rule  that an            integrated contract  is either clear or ambiguous and, in the            former  case, extrinsic  evidence  is excluded;  other states            follow  the  so-called  modern approach,  allowing  extrinsic            evidence  to   "interpret"  even   a  seemingly   unambiguous            document.   See  A. Farnsworth, Contracts    7.12,  at 521-23                        ___                 _________            (1990).  But  we need not decide  in this case precisely  how            Maine resolves  the problem,  because Combustion  Engineering            has not properly pointed to any extrinsic evidence that could            alter the result.                                         -15-                                         -15-                 We   say    "properly"   pointed    because   Combustion            Engineering's  brief  does  have an  entire  page  of capsule            summaries of  documents,  events or  testimony purporting  to            comprise  relevant extrinsic  evidence.    In  this  page  of            summaries, not  a single  reference appears  to a  transcript            page or an exhibit number or to an appendix or addendum page.            There is some  similar material in the fact  statement of the            brief, with record or appendix references, and we have sought            to match up the summaries  with relevant portions of the fact            statement.  Having  done so as best we can, our conclusion is            that this  "evidence," even  if considered,  does not  create            ambiguities warranting jury resolution.                 To take  Combustion Engineering's first  capsule summary            as an  example, the brief  says that an engineer  working for            both  Combustion Engineering and Miller Hydro told the latter            that "the Turbine  Specifications were minimums that  did not            limit Combustion  Engineering's right  to select  appropriate            equipment."   The engineer's actual  letter, however,  merely            affirms  the contractor's right  to design the  generator and            electrical equipment and says  that "the overall  performance            expected  of  the  equipment  was  outlined  in  the  minimum            criteria . .  . ."  Nothing  in the quotation associates  the            general  reference  to  minimum criteria  with  the  7800 cfs            figure.  The balance of the evidence summarized by Combustion            Engineering is even less persuasive.                                         -16-                                         -16-                 Later in its brief, Combustion Engineering makes a quite            different  argument.   It  says  that  even assuming  that  a            violation  of the  test protocol  occurred,  this should  not            debar  Combustion Engineering  from  all recovery  under  the            contract.  It argues that  testing was directed to fixing the            efficiency bonus or  penalty, and that proper  testing should            not be  found to  be a "condition  precedent" to  recovery of            other  amounts,  such  as the  final  payment  due  under the            contract or sums  retained temporarily  from prior  payments.            The  company  also  invokes  the  notion   that  "substantial            performance" is sufficient to allowit to sue on the contract.                 It may be  a close question  whether standing alone  the            breach   of  a   testing   protocol--among  other   breaches,            Combustion  Engineering tested  the facility  at  a flow  far            greater  than  7800  cfs--should  preclude  recovery  of  the            balance of the contract price  as well as the possible bonus.            If this were  the posture of the case, we would be obliged to            engage  in a  close  reading  of the  test  protocol and  its            relation  to the  rest of  the contract.   One  can certainly            conceive of a case in which the contractor failed to fulfil a            requirement needed to earn a  bonus payment but would not, in            ordinary  circumstances, be  deemed  to  lose  the  right  to            collect the basic price for work done.                 Here, however, Combustion Engineering  violated not only            the test protocol but the contract specifications by building                                         -17-                                         -17-            an oversized  facility, and  the breach  was substantial  and            deliberate.   The jury verdict alone confirms the substantial            breach,   and  its  deliberate   character  is   patent  from            Combustion  Engineering's misrepresentations  and efforts  at            concealment.   Even if the violation  of the testing protocol            did not  preclude all  further recovery  under the  contract,            assuredly  the substantial and  deliberate breach did  so and            precludes  a   contractual   claim   based   on   substantial            performance.                   This premise of a substantial and deliberate breach also            disposes  of Combustion  Engineering's  equitable claims  for            unjust enrichment and promissory estoppel.  We agree with the            district court  that, even  if such  claims may  be permitted            under  Maine law  where contractual  claims  have been  lost,            Maine  law appears  to make  good faith  a condition  of such            equitably based  recoveries.4  Here  Combustion Engineering's            good faith is  disproved by the jury verdicts.   The verdicts                                            ____________________                 4The  most recent Maine decision  to which we are cited,            says  that an  equitable  recovery may  be  allowed when  the            builder  provided  materials  or   services  "in  an   honest            endeavor"  to  perform  the  contract.    Loyal  Erectors  v.                                                      _______________            Hamilton  &  Son,  Inc., 312  A.2d  748,  755-56  (Me. 1973);            ______________________            Accord,  Levine v.  Reynolds, 54  A.2d 514,  517 (Me.  1947).            ______   ______     ________            Even  if Maine  law is  more fluid,  allowing the  judge some            flexibility  in weighing  the  equities, see  A. Horton  & P.            McGehee,  Maine Civil Remedies,  11-17 (2d ed.  1992), we are                      ____________________            certain  from its  statements here  that  the district  court            would exercise that  discretion to disallow recovery,  and we            would have no difficulty sustaining that decision.                                         -18-                                         -18-            were binding on the court, see Dairy Queen, Inc. v. Wood, 369                                       ___ ________________     ____            U.S. 469 (1962), and are amply supported by the evidence.                 This  outcome  becomes  even  more  compelling when  one            appreciates that the deliberate and substantial breach placed            Miller Hydro at risk of significant harm.  There may be cases            where building "more"  than one promised is a  benefit to the            owner; but  that is hardly assured in the case of a federally            licensed dam.   Indeed,  it may be  that Miller  Hydro itself            will  ultimately suffer because  of violation of  its federal            license  terms or because the fish protection facilities will            have to be  rebuilt.  Nor is  it clear that it  has gained by            obtaining extra  power that  it says it  can neither  sell to            CentralMaine Power nor economically wheel to other customers.                 Miller Hydro  alludes  to  these  possibilities  without            providing much supporting detail.   We have no way of knowing            how much substance  there is to them, nor  whether short term            disadvantages may be offset  in part, or even outweighed,  by            the long-term benefits  of a larger  facility with a  greater            capacity  to  produce  power.    What  we  do  know  is  that            Combustion  Engineering was not entitled to create such risks            for  Miller  Hydro by  secretly  deviating--substantially and            deliberately--from  the  terms  of the  contract.    That one            behaving  in this fashion now forfeits  the balance due under            the contract does not seem in the least unfair.                                         -19-                                         -19-                 Combustion Engineering has  two remaining arguments that            require little  discussion.  It  first argues that  the court            should have granted  its motion for a retest  of the facility            in accordance  with the protocol.   This demand was  made not            only  after  Combustion Engineering  had  turned down  Miller            Hydro's  own request  for  retest,  but  after  the  directed            verdict  and the  jury verdict  in this  case.   The district            court's   refusal  to  grant  this  highly  belated,  if  not            impudent,  request for equitable  relief was well  within its            discretion.                   The other argument is Combustion Engineering's attack on            the  district court's  refusal to grant  it relief  under the            Maine    mechanic's   lien   statute.      It   may   be   an            oversimplification  to say that  the statute creates  only an            additional remedy and not  a new right; but it  is clear that            under Maine  law, as  in many  jurisdictions, the  mechanic's            lien depends  on the claimant having a valid underlying claim            for monetary  recovery based on  the construction  performed.            Bangor Roofing & Sheet Metal Co. v. Robbins Plumbing Co., 116            ________________________________    ____________________            A.2d 664, 666 (Me. 1955).  Combustion Engineering has no such            valid underlying claim  in this case,  so the district  court            properly discharged the mechanic's lien.                 There remains  Miller Hydro's  own appeal.   As  already            noted,  the   jury   found  (in   deciding   Miller   Hydro's            counterclaims) that  Combustion Engineering had  breached its                                         -20-                                         -20-            contract  and engaged in misrepresentation but that the proof            did  not support  a finding  of  damages from  the breach  or            falsehoods.   Miller Hydro does not challenge these verdicts,            which limited  its judgment  on these  claims to  declaratory            relief.  Rather,  it argues that the district  court erred by            dismissing  its   remaining  racketeering   counterclaim  and            declining to submit that claim to the jury.                 The  remaining  counterclaim   comprised  three  related            counts   under   the   Racketeer   Influenced   and   Corrupt            Organizations Act,  18 U.S.C.    1961, et seq. ("RICO").   In                                                   _______            substance,  these  RICO  counts,  asserted  in  a   pleadings            amendment,  charged Combustion Engineering and various of its            employees with a fraudulent scheme to obtain inflated bonuses            from  one or more power-plant construction projects.  Various            uses  of  the  mails  or  telephone  system  in  aid  of  the            fraudulent scheme  were alleged.   For  the RICO  violations,            Miller   Hydro  sought   damages,   injunctive  relief,   and            attorney's fees.                 After the RICO counts were added, Combustion Engineering            on April 16, 1991, moved to dismiss the counts under  Fed. R.            Civ. P. 12(b)(6) for failure to state a claim; it asserted as            grounds for  dismissal various somewhat technical  defects in            the RICO counterclaims  (e.g., that  a separate  "enterprise"                                     ____            had not been sufficiently alleged).   On October 4, 1991, the            district court granted the motion  to dismiss but on a ground                                         -21-                                         -21-            only  barely suggested by  a footnote in  the motion, namely,            that an  earlier, October  19, 1990,  discovery order  by the            magistrate judge had found a  failure of Miller Hydro to make            out a prima facie case of fraud by Combustion Engineering.                    _____ _____                 The   magistrate  judge's  order  had  been  entered  in            resolving discovery disputes  including Miller Hydro's  claim            that  Combustion Engineering had  lost the protection  of the            attorney client privilege as to certain materials because its            attorney   was   participating   in   a  fraudulent   scheme.            Interpreting  Maine law governing  the privilege, see  Me. R.                                                              ___            Evid.  502(d)(1),  the  magistrate  judge  found  that Miller            Hydro's evidence thus far made out the necessary prima  facie                                                             _____  _____            case  on  "the first  three  elements  of fraud  [knowing  or            reckless  misrepresentation of a  material fact] but  not the            final two [purpose and effect of inducing reliance]."  Absent            sufficient proof of each element  needed to prove fraud,  the            magistrate judge found no  loss of the privilege and  refused            to order protection of the documents in issue.                 On  appeal,  Miller  Hydro  complains  sharply  that  in            resolving the Rule 12(b)(6) motion  the district judge had no            right  to  rely  on materials  beyond  the  pleadings without            giving Miller Hydro notice and  an opportunity to counter the            extra-pleading material.  Although Rule 12(b)(6) does require            "a  reasonable opportunity" to  counter material  outside the            pleadings, the magistrate  judge's finding of no  prima facie                                                              _____ _____                                         -22-                                         -22-            case  was cited in Combustion Engineering's motion to dismiss            and  arguably Miller Hydro  had the necessary  opportunity to            counter it.  This court  has looked through form to substance            in applying  the rule's  requirement.  See  Moody v.  Town of                                                   ___  _____     _______            Weymouth, 805 F.2d 30, 31 (1st Cir. 1986).            ________                 What  is  more  troublesome is  Miller  Hydro's further,            substantive  argument  that  the magistrate  judge's  finding            cannot support the district court's order dismissing the RICO            claims.  All  that the finding showed, says  Miller Hydro, is            that  in October 1990, while discovery was still underway, it            lacked enough evidence to show that all elements of fraud had            been made  out to the  extent needed to vitiate  the attorney            client privilege.5  Even assuming  that the standards are the            same for  proving fraud  in relation  to the  attorney-client            privilege  issue and in relation to a RICO claim, it does not            follow  that evidence  was equally  lacking  in October  1991            after further discovery had been conducted.                 The district court did  not discuss any of  the evidence            in its  brief order of  dismissal in October 1991.   Further,            the court  actually allowed  the Maine  fraud claims  made by            Miller  Hydro to  go the  jury.   Yet common alleged  acts of            fraud  underlay  both the  Maine  fraud  and the  RICO  fraud                                            ____________________                 5The standard of  proof is rather elusive since  a prima                                                                    _____            facie  case does not require  definitive proof; yet the fraud            _____            claim itself has  to be proved under  Maine law by  clear and            convincing evidence.                                           -23-                                         -23-            counts.   Indeed,  Miller Hydro  argues  that RICO  fraud  is            easier to prove than fraud under Maine law because the latter            requires that each element be proved by clear and  convincing            evidence.  The district court's seeming concession that there            was enough evidence  of fraud under Maine law  adds to doubts            whether we could  sustain the court's  dismissal of the  RICO            counts based on the magistrate judge's finding.                 We need  not resolve  the matter,  however, because  the            jury's  verdict  taken  together   with  other  circumstances            persuades  us that  Miller Hydro  was  not prejudiced  by the            dismissal of the RICO claims.  The jury found that no damages            had been proved by Miller Hydro on the two counterclaims that            did reach the jury  even though the jury found both breach of            contract  by Combustion  Engineering  and  acts amounting  to            fraud.   The  central damage  claims  argued to  the jury  by            Miller  Hydro--e.g., delay  costs, prospective  rebuilding of                           ____            the fishways--are  common to the  Maine fraud and  RICO fraud            claims,  and the  jury finding  of no  damages on  the former            suggests the same outcome would have resulted on the latter.                 Miller Hydro  argues, although without much detail, that            its damage  claims based on breach of  contract were somewhat            narrower than  those covered  by fraud.   Its theory  is that            contract  damages must  be within  the  contemplation of  the            parties but  fraud damages  need not be,  and we  will assume            that  this  is  so.    But  Miller  Hydro  does  not  suggest                                         -24-                                         -24-            (attorney's fees  aside) that  its actual  damages for  fraud            were narrower under Maine law  than under RICO and, given the            common acts  of  alleged fraud,  it is  hard to  see why  the            damage claims under  RICO would be broader.   Instead, Miller            Hydro simply asserts that the fraud damage claims under Maine            law  required clear and convincing evidence while those under            RICO required merely a preponderance of the evidence.                   It is by  no means clear that the jury was told that the            fraud damages  under Maine law had to  be proved by clear and            convincing  evidence.6    But  even  if  the  jury  had  been            explicitly told clear and convincing evidence was required in            computing   damages,  we  would  still  find  no  showing  of            prejudice in this  case.  Perhaps where the  issue of damages            is shown to be very  close--turning, for instance, on a clash            of  expert opinions--the  asserted  difference  in burden  of            proof between a common law fraud and a civil RICO claim could            be decisive.  See Wilcox  v. First Interstate Bank of Oregon,                          ___ ______     _______________________________            815 F.2d 522, 531 (9th Cir. 1987).  But the burden of showing                                            ____________________                 6The district  court's generally lucid  instructions did            tell the jury that the elements of fraud under Maine law  had            to be established by clear and convincing evidence.  But when            the court came to instructing  on the computation of damages,            where  it discussed contract  and fraud damages  together, it            did not say that any  of these determinations had to be  made                                     _____            by clear  and convincing  evidence.  Indeed,  the jury  could            easily  have inferred the contrary  because the court went on            to  say that  an award  of  exemplary damages  did require  a            finding of malice by clear and convincing evidence.                                         -25-                                         -25-            prejudice is upon the party claiming error, and we think that            here that burden has not been met.                 Miller Hydro's main efforts at trial appear to have been            devoted  to establishing  Combustion Engineering's  breach of            contract and  fraud, findings  very important  in shoring  up            Miller Hydro's own defense to Combustion Engineering's claims            against  it.   When a  directed verdict  was served,  after a            directed verdict was  ordered, Miller Hydro chose  to present            no  case  in  chief  of  its  own  in  support  of   its  own            counterclaims.    Instead,  Miller  Hydro  relied   upon  the            evidence that Combustion  Engineering had offered in  its own            case in chief before the directed verdict was granted.  It is            not  surprising  that,   absent  an  affirmative  independent            showing as to  how Miller Hydro would suffer  from the larger            facility,  the jury  awarded  no  damages.    Miller  Hydro's            decision to stop while ahead  was probably good tactics,  but            it does not suggest that an adjustment in the burden of proof            would have altered the result.                 More important, there is nothing in Miller Hydro's reply            brief--which  offers the burden  of proof distinction  as the            basis for presuming prejudice--that discusses the evidence of            damages in  any detail  or provides  any basis  for believing            that a different standard of  proof could alter the result in            this  case.    In the  present  circumstances,  including the            nature of  the jury  instructions and  the seemingly  limited                                         -26-                                         -26-            weight  placed  on  damages  at  trial,  we  think  that  the            theoretical  possibility of a different result is not enough.            And absent a showing that would suggest a real possibility of            a  different result,  it  is time  for  this already  lengthy            litigation to come to an end.                 Having considered consequential  damages, it remains  to            address two other possible differences in remedy.  First, the            RICO statute allows attorney's  fees to a person "injured  in            his business  or property" by a RICO  violation.  18 U.S.C.              1964(c).  It is far from clear, however, that such attorney's            fees would be  available where, as here, the  jury finds that            no actual injury  has been proved.  Again,  given the absence            of  some showing  by Miller  Hydro  that a  jury could  award            damages  limited solely to attorney's fees,  we think that no            showing of prejudice has been made.                 Second, Miller  Hydro argues  that under  RICO it  would            have  been  entitled  to injunctive  relief  that  remains of            continuing importance to  it.  Specifically, it  asserts that            Combustion Engineering, having  had its belated motion  for a            retest denied  by the district  court, is now trying  (how is            not explained) to pursue its demand for a retest though other            means.     This  conduct,  says  Miller   Hydro,  constitutes            continuing RICO fraud that the district court would have been            asked to  enjoin if the  RICO claims had not  been dismissed.                                         -27-                                         -27-            See  18 U.S.C.    1964(a) (injunctive remedy  available under            ___            RICO).                 We think this  is too  thin a  reed on which  to hang  a            remand  and further litigation  under RICO.   Taken together,            the district  court's dismissal  of Combustion  Engineering's            contract  and equitable claims and  the court's denial of the            belated  motion  for  a retest  establish  definitively  that            Combustion Engineering has no  further claim for a retest  or            any other remedy under  the turnkey contract.   If Combustion            Engineering   were  to  pursue  any  such  claim  through  an            independent  law suit, we  think that sanctions  for baseless            litigation might well be available.                                   III. CONCLUSION                 This  case  could  plausibly have  been  settled  at the            outset by, for  example, payment of any remaining amounts due            under the contract but without any bonus payment.  Now, after            wearisome and no doubt expensive litigation over an imperfect            contract  and imperfect conduct, neither side has gained what            it  sought at  the outset.    This may  itself be  a  form of            justice, but it could have been achieved at a lower price.                 Affirmed.  No costs.                 ________                                         -28-                                         -28-
