Filed: Sep. 13, 2001
Latest Update: Feb. 21, 2020
Summary: 7, Although Keracher disputes that he ever made these precise, statements, for purposes of summary judgment, we take the record, in the light most favorable to the Kearney, the non-moving, party.purchased such properties at auctions organized by King Auction.at his auction.fiduciary duty claim.
United States Court of Appeals
For the First Circuit
No. 00-1837
No. 00-1910
MERRILL W. KEARNEY,
Plaintiff, Appellant,
v.
J.P. KING AUCTION COMPANY, INC.,
J. CRAIG KING,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. D. Brock Hornby, U.S. District Judge]
Before
Torruella, Circuit Judge,
Campbell, Senior Circuit Judge,
and Schwarzer,* Senior District Judge.
Thomas P. Hineman and Mark K. McDonough, with whom Kevin M.
Cuddy and Cuddy & Lanham were on brief for appellant.
John W. McCarthy, with whom Brent A. Singer and Rudman &
Winchell, LLC were on brief for appellees.
*Of the Northern District of California, sitting by
designation.
September 13, 2001
CAMPBELL, Senior Circuit Judge. This appeal from
adverse rulings in the district court concerns the sale of
eighty acres of undeveloped waterfront land in Lubec, Maine.
Owned by plaintiff-appellant Merrill Kearney, the land was sold
at auction on his behalf by defendant-appellee J.P. King Auction
Company (“King Auction”) on May 14, 1997.
The auction did not go well. Only two bidders were
present and one withdrew when the price per acre rose to $100.
The remaining bidder offered $8,000, a hugely undervalued price
by both parties’ estimates. (Kearney, himself, had only several
months earlier purchased the land for $90,000.) Forced by the
Maine Superior Court to convey the land for $8,000 to the bidder
at the auction, Kearney sued King Auction alleging breach of
contract, negligence, breach of fiduciary duty, negligent
misrepresentation, fraudulent misrepresentation, punitive
damages, negligent infliction of emotional distress, intentional
infliction of emotional distress, and unfair trade practices.1
The district court entered summary judgment in favor of King
1 Suit was brought in United States District Court in the
District of Maine under diversity jurisdiction as King Auction
is an Alabama corporation and Kearney a citizen of Maine.
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Auction on all counts but breach of fiduciary duty, negligent
infliction of emotional distress and unfair trade practices.
Plaintiff now appeals from that ruling, but only with respect to
his claims of fraudulent and negligent misrepresentation and
punitive damages. The breach of fiduciary duty claim was tried
to the jury, which found for King Auction.2 Plaintiff appeals
from that result, alleging error in the trial court’s exclusion
of certain evidence.
We consider, first, the district court’s dismissal of
claims upon summary judgment, and second, the correctness of the
district court’s ruling excluding evidence at trial. Discerning
no error, we affirm in all respects.3
I. Factual Background4
2Before trial, Kearney had voluntarily dismissed his claim
of unfair trade practices. At trial, the district court granted
King Auction’s motion for judgment as a matter of law on
Kearney’s claim for negligent infliction of emotional distress,
a determination from which no appeal has been taken.
3Defendants filed a cross-appeal conditioned on this court
reversing in some part the judgment of the district court. As
we affirm that judgment in all respects, defendants’ cross-
appeal is moot.
4The facts described below are taken from the record before
the district court at summary judgment, which contained
extensive deposition testimony and documentary evidence. In
Part III of this opinion, when we discuss the evidentiary ruling
at trial, we do so in the context of further evidence admitted
during trial, which, in order to keep separate from the analysis
of the evidence at summary judgment, we do not describe until
Part III.
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In February 1997, Kearney purchased eighty acres of
undeveloped waterfront land in Lubec, Maine, for $90,000. By
his own account, he had spent considerable time surveying the
land before negotiating from $300,000, the original asking
price, to the final sale price of $90,000. He thereupon
attempted to sell the land himself for a profit, placing
advertisements in various national and international newspapers
such as the Wall Street Journal and the Hong Kong Daily.
Shortly thereafter, Donald Long, a Canadian businessman and
acquaintance of Kearney’s, offered to buy the eighty acres for
$1.8 million. The two men entered into an informal written
agreement at the end of February 1997.5
Before formalization of the deal between Long and
Kearney, Michael Keracher from King Auction called Kearney with
an offer to evaluate the land. Keracher had seen Kearney’s
advertisement and thought King Auction could sell Kearney’s land
for him at a competitive price. During that first conversation,
Kearney told Keracher that he had an offer from Long for $1.8
million, which hadn’t been “completely finalized.” Kearney
testified that Keracher told him that “the property was just
5
The deal between Long and Kearney was that Long would pay
Kearney $200,000 Canadian as a down payment and would pay off
the balance overtime at seven percent interest. The date of the
agreement was February 28, 1997 and was to be finalized on March
8, 1997.
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worth a lot more money that what [Kearney] was getting out of
it . . . . He said, I will fly up right now . . . and look at
it and I can give you an evaluation of what I think . . . .
[I]t would be worth your while, because it isn’t going to cost
you anything for me to check it out . . . .” Kearney testified
that he was inclined to show Keracher the land, but not before
speaking with Long.
Long did not insist that the agreement between him and
Kearney was binding to the extent of precluding Kearney from
showing Keracher the land. Long did express his skepticism,
however, with regard to Keracher’s offer to sell the land for
more than the $1.8 million Long had offered. Kearney testified
that Long “wanted to know how anybody else could get so much
money out of it, and he wanted to meet with him [Keracher].” So
Keracher flew up to Maine from Alabama a few days later to visit
with Kearney and Long and to see the eighty acres in Lubec.
Keracher spent no more than one hour on the property,
which was covered with more than twenty inches of snow at the
time. Keracher testified that he did not speak with local real
estate agents or visit any other parcels of land nearby.
Kearney testified that Keracher “mentioned numbers, three to ten
million dollars for the property” and that “[Keracher] felt it
would bring a minimum of three million dollars.” Although
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Kearney fell short of testifying that he understood Keracher to
be guaranteeing an auction price of at least three million
dollars, Kearney did say that Keracher “just said many, many
times . . . I’m sure it would bring in three million dollars.”
When Kearney was asked “did you believe that you were being
guaranteed that he would get a price like that?”, Kearney
responded, “I believed that he was going to get three million
dollars or more out of it . . . . I felt that, sure enough,
they [King Auction] were going to get me over -- if they were
going to get me over 1.8 million that it would be my interest to
go with them.” Long testified to essentially the same
statement. Long explained that although Keracher “would not
guarantee it, . . . he said he would get a minimum of 3.5
[million dollars], and he thought up to ten million dollars.”
After viewing the property, Kearney drove Keracher
further north to Fredericton, in New Brunswick, Canada, to visit
Long who was waiting for them in a Sheraton Hotel. Kearney
described the meeting in the hotel room during which Long asked
Keracher how King Auction “could get so much money out of th[e]
property.” Both Kearney and Long describe Keracher’s
explanation as being that King Auction drew “heavy hitters,”
people both Keracher and Long described as “Hollywood people”
and “big movie stars . . . [who] like places like that that’s
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isolated.” The implication was that those “heavy hitters” would
bid up the price of the land. Long reiterated, however, that
even though “[Keracher] was quite sure that he could get [$3-$10
million] out of it . . . it was an auction, so – you know–.”
Asked if Long meant that he understood there to be no
guarantees, Long replied “Well, that was . . . my opinion.”
Keracher denied speaking to Kearney or to Long about
the dollar amount the land could bring at auction. He explained
that “[w]e never do that,” speaking to the King Auction policy
that forbids agents from evaluating the object to be auctioned.
“That is one thing that we are told by King [Auction], by our
company, you never mention value. You can’t.” Keracher did say
that he recalls telling both Long and Kearney that the land was
unique because of its size and its location on the ocean. He
said that he had “looked at materials, advertisements, other
advertisements for land for sale in Maine, and had only been
able to come across smaller parcels, five acres, three acres,
two acres, ten acres. And [Kearney’s land] was unique in that
respect, that it was a larger parcel. It was eighty acres of
what they said was ocean front property.” Keracher also
testified that he told Kearney that King Auction had been
successful in selling “premier properties” such as his --
premier properties being defined by King Auction as worth over
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a million dollars -- and that King Auction sells such properties
on a regular basis. Keracher gave Kearney a list of people who
had sold their property through King Auction in the past as
references, encouraging Kearney to call them.
At the end of the meeting between Long, Kearney and
Keracher, Long agreed to let Kearney out of their informal
contract. Kearney and Keracher then drove to the Bangor, Maine
airport to return Keracher to Alabama. During that drive,
Kearney and Keracher discussed the details of the auction, in
particular, what kind of auction it would be and who would pay
the up-front costs. Keracher estimated the cost of the auction
and advertising would run around $40,000. Kearney did not want
to pay it all, and the two men discussed the possibility of
splitting the cost. The two men also discussed the possibility
of the auction being an absolute auction, an auction with a
reserve, or an auction with a published reserve. Keracher
described an auction with reserve as less risky because the
seller “can either accept or reject the highest bid.” Likewise,
an auction with a published reserve announces in advance that
the seller is not going to sell the property for less than a
certain amount of dollars. The absolute auction as described by
Keracher to Kearney “attracts the most interest because people
read that its going to sell without reserve . . . and you can
-8-
expect to bring in more bidders, and because of more bidders
you’ll have more competition, and hopefully you’ll get . . . the
market value of the property.” The risks of the absolute
auction described by Keracher to Kearney were that the seller
“take[s] what it brings . . . no matter what [King Auction]
do[es], no matter how beautiful a brochure [King Auction]
print[s], no matter how many ads [King Auction] place[s], at
some point in time [the] property must stand on its own. It
will bring what it’s worth.”
By plaintiff’s own account, the drive to Bangor airport
did not resolve the details of the auction. Both Kearney and
Keracher testified that no final agreement had been reached.
Not until further telephone calls and discussions regarding the
above mentioned decisions, did Kearney and Keracher agree that
they would split the cost of the auction and that the auction
would proceed as an absolute auction rather than one with a
reserve. Kearney did say that Keracher expressed his preference
to proceed with an absolute auction, feeling that it would
attract more bidders. To the same end, Keracher testified that
Kearney “may have said . . . [that he was] not afraid of an
absolute auction.”6
6 Apparently, Kearney had described to Keracher two other
property auctions he had attended, one that was cancelled before
it started and another that did not result in a sale. It was at
-9-
After a month and a half of sending various copies of
the auction contract to each other, on April 17, 1997, Kearney
signed King Auction’s agreement, initialing every page. Kearney
said he did not read the contract “word for word, but I looked
through it.” Kearney explains that he did not read the contract
thoroughly because he had confidence in Keracher – “I had a
hundred percent trust in him . . . [he] was a professional, and
he was an expert in what he was doing.”
The contract specifies the duties of King Auction, such
as to “prepare and distribute advertising and sales literature
in a manner reasonably calculated to advise persons who might be
interested in the PROPERTY and the sale thereof” and to “prepare
a full-color, descriptive sales brochure with photographs of the
property.” The contract also contains a disclaimer that the
seller, Kearney,
acknowledges and understands that neither
KING nor any of its agents, employees, or
representatives have guaranteed or promised
that the PROPERTY, in whole or in part,
shall produce a specific price or that a
certain minimum price will be bid at the
AUCTION. SELLER is not relying on KING for
advice on the following: legal; accounting;
taxes; or the laws, rules or regulations of
any government. This AGREEMENT contains the
entire understanding of the parties, and all
prior understandings and negotiations have
been merged herein. SELLER is not relying
the latter auction where he learned of the property at issue.
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upon any statements or representations made
by or on behalf of KING that are not
specifically set forth in this AGREEMENT.
In fulfillment of its duties, King Auction then
advertised the auction in nation-wide newspapers and magazines,
prepared full-color brochures, and mailed several thousand
brochures to people on their mailing list. Keracher’s
undisputed deposition testimony was that approximately 130
people responded to the advertisements requesting brochures and
fifty people responded after receiving those brochures. Of
those, between eight and twelve people paid twenty-five dollars
each to receive full property information packages. None,
however, showed up at the auction.
Only two people attended the auction to bid on the
property. At this point, Keracher alleges that he asked Kearney
if he wanted to continue with the auction and Kearney said yes.
Kearney contends to the contrary, testifying that it was he who
wanted to stop the auction but Keracher would not listen and
proceeded anyway. Kearney claims that at that point he felt
that King Auction failed to successfully advertise to attract
bidders. He said that he also felt that King Auction failed to
honor his wishes as his agent to stop the auction when only two
bidders showed up. When the auction started and one bidder
dropped out after the price per acre rose to $100, the
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auctioneer attempted to change the auction from absolute to
reserve. This attempt failed. The first bidder, successfully
bidding $8,000 for the property, sued Kearney in Maine Superior
Court winning a judgment that ordered Kearney to convey the
land.
This lawsuit by Kearney against King Auction followed.
All other claims being disposed of prior to trial, the jury
decided only Kearney’s claim against King Auction for breach of
fiduciary duty. It found no such breach, apparently believing
that King Auction, despite holding the auction when only two
bidders were present, nevertheless fulfilled its fiduciary duty
to Kearney. Judgment was entered for King Auction.
II. Motion for Summary Judgment
A. Misrepresentation Claims
Kearney’s misrepresentation claims were premised on
Keracher’s statements to him that (1) at auction Kearney’s
eighty acres in Lubec would sell for between $3 and $10 million,
and (2) the auction would attract “heavy hitters.” 7 The
7
Although Keracher disputes that he ever made these precise
statements, for purposes of summary judgment, we take the record
in the light most favorable to the Kearney, the non-moving
party. New York State Dairy Foods, Inc. v. Northeast Dairy
Compact Comm’n, 198 F.3d 1,3 (1st Cir. 1999). Kearney’s
testimony, along with Long’s, allow us to comfortably conclude
for summary judgment purposes that a fact finder could find that
these statements were made as both of these men say they were.
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defendants contend that these statements, assuming they were
made, are not actionable under Maine common law as they are not
statements of present fact but expressions about belief about
and hope for the future. Defendants further contend that the
record at summary judgment fails to create a jury question as to
Kearney’s justifiable reliance on these statements to support
either cause of action.8 Determining, as we do, that defendants
are correct with regard to their first contention – that, as a
matter of Maine law, neither statements are of present fact,
hence, not actionable under Maine law as misrepresentations – we
affirm the district court’s judgment.9
8 Claims for fraudulent and negligent misrepresentation,
although obviously distinct, both require that the defendant
have made a false representation of present fact and that the
plaintiff justifiably relied on the representation as true. As
claims for fraudulent and negligent misrepresentation share
these two elements, we do not distinguish the two for purposes
of this appeal. We note, too, that the plaintiff in his brief
collapsed his analysis of the two misrepresentation claims for
the same reason. For the elements of fraudulent
misrepresentation, see, e.g. Glynn v. Atlantic Seaboard Corp.,
728 A.2d 117, 119 (Me. 1999)(citing Letellier v. Small,
400 A.2d
371, 376 (Me. 1979)). For the elements of negligent
misrepresentation, see, e.g., Bowers v. Allied Inv. Corp.,
822
F. Supp. 835, 839 (D. Me. 1993) (citing Diversified Foods, Inc.
v. First Nat'l Bank of Boston,
605 A.2d 609, 615 (Me. 1992)).
9 Plaintiff contends that we are barred from deciding this
appeal on this ground because King failed to raise this argument
below. The record at the district court shows, however, that
this argument was before the trial court and that it was at
least one basis of its ruling granting King’s motion for summary
judgment.
With respect to the fraud claim, the district court ruled
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Last year, in Vielleux v. Nat’l Broadcasting Co., 206
F.3d 92 (1st Cir. 2000), this court considered the evolving
Maine common law of misrepresentation when the basis of the
claim is a statement that might be construed as an opinion or
promise of future performance.
Traditionally, an action for deceit could be
brought under Maine law only if the
challenged misrepresentation was of past or
existing fact, not just of opinion or of
promises for future performance. See Wildes
that Kearney failed to proffer sufficient evidence from which a
reasonable jury could find that King Auction recklessly
disregarded the truth of the above statements. The district
court said that although King Auction was wrong, “being wrong
does not make its statements intentional misrepresentations. ...
Additionally, it is dubious whether Kearney could justifiably
rely on King’s representations. See generally Eaton v. Sontag,
387 A.2d 33, 37-9 (Me. 1978)(“dealer’s talk”).” Kearney v. J.P.
King Auction Co., Inc., No. 99-137-B,
2000 WL 761793, at *3 (D.
Me. 2000, March 2, 2000)(some citations omitted). With respect
to the negligence claim, the district court concluded that there
was no evidence from which a reasonable jury could find that
“the information supplied was false or that Kearney could
reasonably rely upon it.”
Id. Both of these rulings were in
response to substantially the same arguments raised on appeal by
King: that (1) the statements are nonactionable statements of
opinion and (2) Kearney could not justifiably rely on either
statement.
Moreover, an appellate court is not constrained to affirm
on the grounds relied upon below. See Mesnick v. General
Electric Co., 950 F.2d 816, 822 (1st Cir. 1991) (“Since
appellate review of a grant of summary judgment is plenary, the
court of appeals, like the district court, must view the entire
record in the light most hospitable to the party opposing
summary judgment, indulging all reasonable inferences in that
party's favor . . . . An appellate panel is not restricted to
the district court's reasoning but can affirm a summary judgment
on any independently sufficient ground.”)(citations and
quotation marks omitted).
-14-
v. Pens Unlimited Co., 389 A.2d 837, 840
(Me. 1978). Even “a preconceived intention
not to perform” was said to be incapable of
turning a breach of a promise . . . to do
something in the future into an action for
deceit. Shine v. Dodge, 130 Me. 440,
157 A.
318, 319 (Me. 1931).
In the Wildes case, however, the Maine
Supreme Judicial Court pointed to a sentence
in Shine, supra, as broadening the blanket
rule. Allowing a finding of deceit to be
based on a disingenuous promise of
employment, the Wildes court quoted Shine:
“The relationship of the parties or the
opportunity afforded for investigation and
the reliance . . . may transform into an
averment of fact that which under ordinary
circumstances would be merely an expression
of opinion.” 389 A.2d at 840 (quoting
Shine, 157 A. at 318).
Vielleux, 206 F.3d at 119-20. This court’s conclusion in
Vielleux was that “in appropriate circumstances, promises
concerning future performance may be sufficiently akin to
averments of fact as to be actionable under Maine
misrepresentation law.”
Id. As the two statements at issue are
both statements about the hoped-for outcome of the auction,
i.e., a future event at which Keracher arguably promised “heavy
hitters” would be present and that the land would sell for
between $3 and $10 million, the question is whether this case
presents the “appropriate circumstance[]” in which Keracher’s
“promises concerning [the outcome of the auction] may be
sufficiently akin to averments of fact as to be actionable under
Maine law,”
id. In other words, we must decide whether the
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interaction between Kearney and Keracher was such that Kearney
“justifiably understood [Keracher’s promises of future
performance] as being of fact and not mere opinion.” Wildes,
389 A.2d at 840.
The Maine cases in which statements of opinion “have
been justifiably understood as being of fact” have arisen under
circumstances in which the plaintiff is “at the mercy of the
defendant,” such as in employment situations where an employer,
with full knowledge of imminent corporate downsizing,
nevertheless promises a position to a new salesperson. Id. at
840-41. See also Boivin v. Jones & Vining, Inc.,
578 A.2d 187,
188-89 (Me. 1990) (upholding a jury verdict in favor of
plaintiff-employee for misrepresentation claim the basis of
which was defendant-employer’s promise of continued employment
made with knowledge that such continued employment was likely
unfeasible). We drew upon this reasoning in Veilleux as support
for upholding (in relevant part) a jury verdict in favor of
plaintiffs’ claim for a misrepresentation where the plaintiffs
were not employees suing their employer over promises of further
employment, but, when the statements were made, were in a
similarly vulnerable position.
In Veilleux, the defendants were truck drivers who were
being featured in a television news program and were promised by
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the defendant news station that, among other things, an
organization antagonistic to their profession (Parents Against
Tired Truckers (PATT)), would not be included in the program.
One factor influencing this court’s conclusion that the jury
could reasonably construe that promise as an averment of present
fact was that the news station’s statements concerned “aspects
of the program within [its] exclusive control [and] upon which
[plaintiff] reasonably could have relied.” Veilleux, 206 F.3d
at 120. We went on to explain that “[the plaintiff] was not in
a position to know about, investigate or influence defendant’s
inclusion of PATT in the program; he was ’at the mercy of the
defendant[s]’ with regard to their representations.” Id.
(citing
Wildes, 389 A.2d at 840) (citations omitted). Equally
important, however, to this court’s conclusion in Veilleux that
the relevant statement was an actionable misrepresentation more
closely akin to an averment of present fact than of future
performance was that at the time the statement was made,
a jury could reasonably find . . . that the
defendants deliberately concealed from [one
plaintiff], at the time they told him that
PATT would not be included, the fact that
they had already filmed and recorded taped
comments highly critical of truckers from
PATT’s co-founders . . . in preparation for
use in the projected program . . . . The
program was therefore already a work in
progress when the misrepresentation was
made. A promise not to include PATT and the
concealment of prior PATT filming can be
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regarded under the rational of Wildes and
Boivin as pertaining to existing “facts”
rather than mere opinions or projections.
Accordingly, we do not think the fact that
defendants’ alleged representation to
exclude PATT also pertained to a time in the
future (i.e., when the completed program
would be aired) prevents it from being
actionable as a misrepresentation of fact
under recent Maine law.
Veilleux, 206 F.3d at 120-21.
None of the factors present in Veilleux -- a
defendant’s exclusive control over and deliberate concealment of
critical information -- which factors track those considered and
relied upon by Maine courts, are present in this case. With
regard to the first statement about the market value of land to
be garnered at auction, the relationship between Kearney and
King Auction was not vulnerable or one-sided such that Kearney
could not undertake his own investigation into the market value
of his property or the range of values of land sold by King at
auction. On the contrary, the evidence was undisputed that
Keracher encouraged Kearney to inquire into King Auction’s
references, those presumably being individuals on behalf of whom
King Auction sold premier properties and individuals who
purchased such properties at auctions organized by King Auction.
Moreover, Kearney had been to a couple of auctions himself and
had experience with evaluating, buying and selling land in
Maine. He, as much as King Auction, should have been able to
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investigate whether or not the $3 to $10 million figure was a
reasonable one for the price of waterfront land in Lubec, Maine.
Nor was there any evidence that Keracher was deliberately
concealing something from Kearney that would make Keracher’s
estimate of $3 to $10 million more like an averment of present
fact than of future aspirations. This statement is in stark
contrast to the one at issue in Veilleux where the promise not
to include the PATT footage was made after that footage had
already been filmed.
As for the second statement about “heavy hitters”,
there is little evidence in the record tending to establish that
Keracher was lying when he said that King Auction’s auctions
attract “heavy hitters.” Whereas plaintiff provided no evidence
that those “heavy hitters” did not exist or did not attend other
King Auction auctions, it is undisputed that King Auction
provided plaintiff a list of references of former clients and
attendees, the relative wealth of which plaintiff could have
investigated to assure himself of the truth of Keracher’s “heavy
hitters” statement. For ought that appears, King Auction’s
other auctions had attracted “heavy hitters” however
unsuccessful the later situation in Kearney’s case. To be sure,
the fact that Kearney’s own auction played to a total absence of
the so-called “heavy hitters” may be some evidence of the
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falsity of King Auction’s statement that its auctions drew
“heavy hitters.” Standing alone, however, it is not enough to
create a jury question on the issue of misrepresentation.
Moreover, it is important to note that in stating that
King Auction’s auctions attract “heavy hitters,” Keracher did
not guarantee Kearney that those “heavy hitters” would show up
at his auction. A reasonable interpretation of the statement,
especially in light of the auction contract both parties signed
(e.g., defining King Auction’s duty, in part, to “prepare and
distribute advertising and sales literature in a manner
reasonably calculated to advise persons who might be interested
in the PROPERTY and the sale thereof”), is that King Auction’s
client list and reputation was such that its auctions could
attract wealthy bidders who are prepared to pay a high price for
premier properties. It should have been obvious, however, from
the signed auction contract negotiated by both parties and the
nature of voluntary auctions themselves, that King Auction had
no real control over who chose to attend any of its auctions,
aside from doing its best to publicize the event and market the
property, duties which Kearney failed to show that King Auction
did not fulfill. On the contrary, the undisputed evidence
demonstrated that King Auction prepared and placed nation-wide
advertisements, printed and sent to individuals on its mailing
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list brochures describing the property, followed up with those
individuals requesting further information with full-color
brochures.10 Plaintiff’s only counter-evidence was his own
deposition testimony in which he states, without foundation,
that he felt that King Auction failed to successfully attract
bidders. This self-serving and conclusory statement of opinion
has no probative value as to the truth of Keracher’s statement
that King Auction’s auctions attract “heavy hitters”, the
question a jury was to have decided had the misrepresentation
claim survived.
In any event, both statements at issue here are akin
to those in this court’s decision in Schott Motorcycle Supply,
Inc. v. American Honda Motor Co., 976 F.2d 58 (1st Cir. 1992) –
statements found to be nonactionable misrepresentations under
Maine law. In Schott, plaintiff, a motorcycle dealership, was
allegedly promised by the defendant, American Honda Motor
Company, that Honda Motor Company would remain just as committed
to the motorcycle industry as it had in the past and that new
Honda products and programs would cause an increase in Honda
sales. Allegedly relying on these assurances, plaintiff split
into two businesses, one exclusively selling Honda motorcycles,
10
That King Auction would retain a percentage of the price
of the sale also suggested that it would have been against its
interest not to try to market the auction as best it could.
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and the other selling Harley Davidsons and golf carts. Within
three years, the business that was solely devoted to Honda
motorcycles went under, due in whole part, contended the
plaintiff, to the defendant’s false assurances of continued
product development and commitment. This court, citing Boivin
and Shine, supra, affirmed the district court’s dismissal of
plaintiff’s fraud claim that was based on the above statements
because the “alleged misrepresentations consisted only of
opinions as to future events . . . . These general statements
in the context of the franchisor-franchisee communications
constitute nothing more than ’puffing’ or ’trade talk,’ upon
which no reasonable person would rely.”
Schott, 976 F.2d at 65
(citations omitted).
Like the statements in Schott, the statements at issue
here are no more than averments of the defendants’ high
expectations for the auction King Auction was to oversee.
Indeed, the district court, in ruling for the defendants on this
issue, cited to Sontag v. Eaton, 387 A.2d 33 (Me. 1978), a case
that merely reaffirms what is black letter law in Maine: that
a statement made by a seller of land regarding its estimated
value is “dealer’s talk” and cannot be actionable fraud should
the market price of the land be in actuality much lower. See
id. at 37 (“[M]isrepresentations as to value and quality of land
-22-
made by the vendor, even though made with fraudulent intent, are
not actionable . . . . Such representations are ’dealer’s
talk.’”). Although King Auction was not the owner of the land
to be sold, King Auction was “selling” the benefits of its
services on the basis of the perceived quality of Kearney’s land
and its expertise in the auction process. As a businessman who
sells land at auction, Keracher’s statements regarding the
potential “heavy hitters” at auction and the land’s hoped-for
sale price of $3 to $10 million
should have been understood [by Kearney] to
be[] but the use of extravagant language of
the class known to every man of ordinary
experience as “dealer’s talk,” i.e., “that
picturesque and laudatory style affected by
nearly every trader in setting forth the
attractive qualities of the goods he offers
for sale,” and this even among friends. But
such is not actionable. The law recognizes
the fact that sellers may naturally
overstate the value and quality of the
articles of property which they have to
sell. Everybody knows this, and a buyer has
no right to rely on such statements.
Id. at 37-38 (citations omitted). See also
id. at 38 (stating
that “[s]ince an express statement by the Eatons that their
property was worth eighty thousand ($80,000) dollars, the
selling price, . . . would not be actionable fraud, but merely
an opinion of the sellers which the buyers must expect to be
likely inflated as puffing or dealer’s talk, their failure to
disclose the alleged fact, if true, that the actual investments
-23-
in the property did not reflect the true value of the property
would also not be actionable fraud”).
We conclude, therefore, that no action for
misrepresentation lies under Maine law under these
circumstances. Summary judgment for the defendants on counts
four (negligent misrepresentation) and five (fraudulent
misrepresentation) was properly granted.
B. Punitive Damages
As plaintiff had no viable misrepresentation claim,
supra, his claim for punitive damages for those alleged
misrepresentations also fails.11
III. Evidentiary Ruling at Trial
During trial on plaintiff’s remaining claim for breach
of fiduciary duty, plaintiff asked to introduce evidence of the
two statements that were the basis of his previously dismissed
misrepresentation claims. The trial court, questioning the
relevance of the statements to the claim the jury had to decide
11 In any case, the evidence before the district court at
the time of its summary judgment ruling fails to meet Maine’s
malice standard for punitive damages. “Maine law requires a
plaintiff to prove by clear and convincing evidence that the
defendant was motived by ’ill will’ toward the plaintiff, or
acted so ’outrageously’ that malice could be inferred.”
Veilleux, 206 F.3d at 135 (citing Tuttle v. Raymond,
494 A.2d
1353, 1361 (Me. 1985)). See also Boivin (reversing a jury
verdict for punitive damages despite upholding the jury finding
for fraud based on false assurances of future employment).
-24-
(breach of fiduciary duty), ordered arguments and proffers on
the relevance issue for the following morning before the jury
was to be brought in.
Plaintiff’s position was that the statements were
relevant to the breach of fiduciary duty claim because they were
made during the scope of the agency relationship and, as he
contended they were false or misleading, they bore on the issue
of whether Keracher breached his fiduciary duty to Kearney. 12
Defendants’ position was that the statements were not relevant
because they could not have been made during the agency
relationship as they were undisputably made on the first day
Kearney and Keracher met and therefore before any fiduciary duty
arose.13 When the court pressed the plaintiff to substantiate
his position that the agency relationship between Kearney and
12Presumably, plaintiff relies here on a fiduciary’s duty
of good faith and, in some instances, material disclosure. See,
e.g., Glynn v. Atlantic Seaboard Corp., 728 A.2d 117 (Me.
1999)(in case alleging, among other things, corporate fraud
among officers, stating that “[w]here a fiduciary relationship
exists between the parties, omission by silence may constitute
the supplying of false information”)(quotation marks omitted);
Estate of Whitlock,
615 A.2d 1173, 1178 (Me. 1992)(in a case
alleging fraud on the part of a trustee of an estate, stating
"[t]h[e] duty to make full disclosure and otherwise to exhibit
extreme good faith runs through the whole law of fiduciary and
confidential relations ...")(citing George G. Bogert, Trusts and
Trustees § 544, at 407-08 (2d ed. 1978)).
13 This position was in addition to defendants’ assertion
that the statements, assuming they were made, were not false or
misleading.
-25-
King Auction began on the very first day Kearney met Keracher,
plaintiff explained “that [a] fiduciary relationship is not a
lightning bolt. It’s more analogous to a web that’s being
woven. And the web began when these gentlemen met and continued
and was reenforced and developed until it matured on May 14 [the
date of the auction]. That is our position.”
The court continued to be perplexed by plaintiff’s
position regarding the statements’ relevancy, and asked the
plaintiff directly: “when is the first manifestation of
agreement between King [Auction] and Kearney that there will be
an auction and a relationship?” To this, plaintiff’s counsel
responded: “I would represent to you that in . . . the car as
Mr. Kearney drives back from Fredericton to Bangor to drop Mr.
Keracher off at the airport, he will indicate to you that at
that time he had decided that it was — the property was going to
be auctioned and he and Mr. Keracher discussed the methodology
of the auction . . . . That’s why the conversations progressed
that far, because there had been an agreement in the course of
that car ride . . . .” Having heard this apparent concession
from plaintiff’s counsel that the earliest the agency
relationship began was on the way from Canada to the Maine
airport, the court then asked counsel when the statements were
made, to which he responded “A very precise question, and I have
-26-
to give you a precise answer. We’re at the other end of the car
ride. They’re before you get to Bangor. They are part of what
leads up to coming down to Bangor.”
Having received this apparent concession that the
statements at issue were made before an agency relationship
between Kearney and King Auction had formed, the district court
ruled the statements irrelevant and inadmissible, stating that
“the fiduciary obligation flows from the agency relationship.
That is not established until there is an agreement, whether it
be written or oral. I understand what [plaintiff’s counsel] is
proposing. But these are matters that go to the inducement, the
entering into the [agency] agreement. They have already been
ruled upon in the summary judgment context. The questions
before the jury will be breach of the fiduciary obligations that
flow from the auction agency relationship.” In essence, the
court concluded that without an agency relationship to create a
fiduciary duty at the time the statements were made, the
statements were not relevant to any breach of that duty.
Because we can find no error, let alone reversible error, in
this reasoning, we affirm the district court’s exclusionary
ruling.
Implicit in the district court’s exclusionary ruling
was the court’s acceptance of the factual predicate that the
-27-
agency relationship between the parties had not commenced until
after the statements were made.14 This factual predicate is not
only supported by plaintiff’s counsel’s concession at trial, it
is independently supported elsewhere in the record. Viewed as
a factual finding, it was not clearly erroneous.15 Kearney’s and
Long’s deposition testimony indicated that the statements
regarding the estimated value of land and King Auction’s “heavy
hitters” were made just after Keracher had viewed the property
and once again during the meeting with Mr. Long. This coincides
with plaintiff’s concession at trial that the statements were
made before Keracher returned to Bangor to fly home, before, as
plaintiff also concedes, any fiduciary relationship was
manifested between the parties. It was, therefore, manifestly
reasonable for the district court to find that the statements
14The parties devoted considerable time in the district
court arguing about when precisely the fiduciary duty between
Kearney and King Auction arose. King Auction argued that the
fiduciary relationship began only with the signing of the agency
contract. Plaintiff argued that the fiduciary relationship
began much earlier, sometime in the car ride back to Bangor.
The district court did not resolve the dispute, and neither do
we, because even if the relationship began during the ride back
to Bangor, the statements sought to be admitted into evidence
were made before that relationship arose.
15We review preliminary findings of fact that form the
basis of evidentiary rulings for clear error. Baker v. Dalkon
Sheild Claimants Trust, 156 F.3d 248, 252 (1st Cir. 1998)
-28-
were made prior to the beginning of the parties’ fiduciary
relationship.
This being so, the only remaining question is whether
these statements were nonetheless relevant to the breach of
fiduciary duty claim even though made before the fiduciary
relationship began. In ruling they were not relevant, the
district court said: “[T]hese are matters that go to the
inducement . . . [and] [t]hey have already been ruled upon in
the summary judgment context.” In effect, the district court
concluded that plaintiff was impermissibly seeking to revive his
misrepresentation claims, claims that the district court
previously (and, as we have already concluded, correctly)
dismissed. Plaintiff made no argument in the district court to
refute the court’s conclusion along these lines, e.g., that
these statements were relevant, if at all, only to the dismissed
misrepresentation claims and not to the fiduciary duty claim.
We discern no abuse of discretion in this ruling. Iacobucci v.
Boulter, 193 F.3d 14, 20 (1st Cir. 1999) (standard of review).16
16 In any case, an erroneous evidentiary ruling requires
vacation of a jury verdict (the remedy sought here) only if the
ruling excludes evidence and “the exclusion results in actual
prejudice because it had a substantial and injurious effect or
influence in determining the jury's verdict.” United States v.
Shay, 57 F.3d 126, 134 (1st Cir. 1995) (internal quotation marks
omitted). Neither party has argued, one way or the other, that
the ruling had such a “substantial or injurious effect” on the
jury verdict. We eschew any such argument on their behalf.
-29-
Plaintiff raises for the first time on appeal a legal
theory as to why the statements could be relevant to the
fiduciary duty claim. He contends that even if the statements
were not actionable misrepresentations when made, once a
fiduciary duty was established and King Auction had reason to
know that Kearney was laboring under the misconception that his
land would fetch $3 to $10 million at auction, King Auction had
a duty as Kearney’s agent to correct Kearney’s mislaid high-
hopes. Plaintiff bases this argument on the proposition that,
as his fiduciary, King Auction (via Keracher) is obligated to
fully disclose “all facts within [its] knowledge which bear
materially upon [Kearney’s] interests.” Goldberg Realty Group
v. Weinstein, 669 A.2d 187, 190 (Me. 1996) (citing Jensen v.
Snow,
131 A. 415, 418 (1933)). This rule commonly arises in
Maine law with regard to the sale of land by a seller’s agent.
The rule is premised on the fact that a real
estate agent is not hired simply to locate a
buyer, but to so do as the seller’s
fiduciary. . . . There is no requirement
that the principal prove fraud or malice on
the part of the agent or that the principal
show actual harm caused by breach of the
agent’s duty. In a case alleging
nondisclosure, . . . the only questions are
whether the information was material and
whether it was withheld by the fiduciary.
The rule encourages fiduciaries to avoid
temptation altogether by forcing full and
frank disclosures.
-30-
Id. (quotation marks omitted).17
Plaintiff can secure no benefit from this Maine common
law rule. Because the appellant never raised this theory of
relevance in the district court, he is precluded from presenting
it for the first time on appeal. See McCoy v. Massachusetts
Institute of Technology, 950 F.2d 13, 22 (1st Cir. 1991). See
also Paterson-Leitch Co. v. Massachusetts Mun. Wholesale Elec.
Co.,
840 F.2d 985, 990 (1st Cir. 1988) (stating that a party has
a duty “to spell out its arguments squarely and
distinctly . . . [rather than being] allowed to defeat ths
system by seeding the record with mysterious
references . . . hoping to set the stage for an ambush should
the ensuing ruling fail to suit”). This sound rule of waiver
protects district courts from having to second-guess and read
between the lines of the briefing presented to it by opposing
parties. As we have said, “[o]verburdened trial judges cannot
17 Although we affirm the jury verdict for King Auction, we
note that under Maine law the only apparent remedy for breach of
fiduciary duty in this context would appear to be the return of
the broker’s commission, here some small percentage of the
$8,000 for which the land sold. See Goldberg Realty Group, 669
A.2d at 190 (reaffirming previous holding “that the broker
forfeits any right to a commission if he breaches [fiduciary]
duty” of material disclosure).
-31-
be expected to be mind readers.” Id.18 Plaintiff’s waiver ends
the matter.19
18Plaintiff confuses this waiver principle with the rule
allowing the court of appeals to affirm a district court’s
granting of summary judgment on a different basis than that
relied on below. The former prevents an appellant from
overturning the district court on the basis of an argument never
presented to the district court, furthering considerations of
judicial economy and basic fairness; the latter furthers the
same goals and reaffirms the long-standing Supreme Court
precedent that “[w]here the decision below is correct[,] it must
be affirmed by the appellate court though the lower tribunal
gave a wrong reason for its action.” Riley Co. v. Commissioner,
311 U.S. 55, 59 (1940)(citing Helvering v. Gowran,
302 U.S. 238,
245 (1937)(“In the review of judicial proceedings the rule is
settled that, if the decision below is correct, it must be
affirmed, although the lower court relied upon a wrong ground or
gave a wrong reason.”)). See also
Mesnick, 950 F.2d at 822 (“An
appellate panel is not restricted to the district court’s
reasoning but can affirm a summary judgment on any independently
sufficient ground.”); Chongris v. Board of Appeals,
811 F.2d 36,
37 n. 1 (1st Cir. 1987)(citing “ample precedent [in this
circuit] for this sort of fluctuation”).
19We note, however, without deciding the issue, that even
if there was no waiver here, it is by no means certain that
plaintiff would prevail were we to reach the merits of his
relevancy argument. For one thing, it is not clear that the
Maine common law rule on which plaintiff relies applies equally
in the present context as it does in the seller-real estate
agent context. For another thing, the statements’ relevance
depends upon a strained interpretation of Keracher’s deposition
testimony in which he says “I told Mr. Kearney, and would tell
him again, especially as we got nearer to the auction, if he
wanted to sell this property to anyone for $1.8 million, I would
say do it, because ... our company would be paid a commission.”
Far from suggesting (as plaintiff urges it does) that Keracher
had failed to accurately apprise Kearney of material information
regarding the potential sale price of his land, this statement
tends to suggest that Keracher, in performing his fiduciary
duty, strove to counsel Kearney in such as way as to comport
with Kearney’s wishes and interests. Finally, as we stated,
supra note 16, even assuming the district court erred in
-32-
Finding no error in the district court’s exclusionary
ruling, the verdict is therefore affirmed. Defendants’
conditional cross-appeal is dismissed as moot.
excluding the statements as irrelevant, plaintiff is faced with
the further hurdle of showing that excluding the evidence
resulted in “actual prejudice because it had a substantial and
injurious effect or influence in determining the jury’s
verdict.” Shay, 57 F.3d at 134 (internal quotation marks
omitted). Plaintiff has failed to argue for, let alone make, a
showing of actual prejudice.
-33-
