USCA1 Opinion
March 14, 1995
[NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 94-1577
DELA, INC.,
Plaintiff, Appellant,
v.
CNA INSURANCE COMPANY,
Defendant, Appellee.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Edward F. Harrington, U.S. District Judge]
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Before
Cyr, Boudin and Stahl,
Circuit Judges.
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Stuart M. Holber, Russell S. Channen and Phillips, Gerstein &
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Holber on brief for appellant.
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Thomas M. Elcock, James T. Hargrove, Debra A. Joyce and Morrison,
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Mahoney & Miller on brief for appellee.
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Per Curiam. Plaintiff Dela, Inc., a Massachusetts
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company engaged in the business of laminating fabrics,
suffered nearly $80,000 in damages when its building was
flooded on March 17, 1990. When its insurance carrier,
defendant CNA Insurance Co., disclaimed coverage for such
losses, plaintiff brought the instant declaratory judgment
action. That suit was filed on April 17, 1992, twenty-nine
days after the expiration of the applicable limitations
period on March 19, 1992. The district court proceeded to
award summary judgment for defendant on the ground that the
action was time-barred. The sole issue now on appeal is
whether defendant should be equitably estopped from relying
on the limitations defense.
Under Massachusetts law, which we apply in this
diversity action, the doctrine of equitable estoppel is well
established. Inasmuch as the doctrine is designed to prevent
results "contrary to good conscience and fair dealing,"
McLearn v. Hill, 276 Mass. 519, 524 (1931), there are "no
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rigid criteria" governing its application, Libman v.
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Zuckerman, 33 Mass. App. Ct. 341, 346 (1992). Broadly
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stated, estoppel seeks to prevent a person "from denying the
consequences of his conduct where that conduct has been such
as to induce another to change his position in good faith or
such that a reasonable man would rely upon the
representations made." Bergeron v. Mansour, 152 F.2d 27, 30
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(1st Cir. 1945) (applying Massachusetts law). In the statute
of limitations context, the doctrine requires proof "that the
defendants made representations they knew or should have
known would induce the plaintiffs to put off bringing a suit
and that the plaintiffs did in fact delay in reliance on the
representations." White v. Peabody Constr. Co., 386 Mass.
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121, 134 (1982); accord, e.g., Whitcomb v. Pension Dev. Co.,
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808 F.2d 167, 172 (1st Cir. 1986) (applying Massachusetts
law). It is unnecessary that defendant intentionally mislead
or deceive the plaintiff, see, e.g., MacKeen v. Kasinskas,
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333 Mass. 695, 698 (1956), or even that defendant intend by
its conduct to induce delay, see, e.g., LaBonte v. NY, NH &
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Hart. R.R., 341 Mass. 127, 131 (1960) ("one is responsible
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for the word or act which he knows, or ought to know, will be
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acted upon by another") (emphasis added); accord, e.g.,
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Clauson v. Smith, 823 F.2d 660, 663 n.3 (1st Cir. 1987). It
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is necessary, however, that "[t]he reliance of the party
seeking the benefit of estoppel [be] ... reasonable."
O'Blenes v. Zoning Board of Appeals, 397 Mass. 555, 558
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(1986).
In seeking to invoke this doctrine here, plaintiff
points to communications between the parties' attorneys,
particularly to a telephone conversation that occurred on
January 27, 1992. In an affidavit submitted below,
plaintiff's trial counsel (John James) described that
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conversation with defendant's counsel (Frank Toto) as
follows. The attorneys there discussed the need for a
declaratory judgment action in the event the matter was not
settled. James said he had been authorized to bring suit but
would await defendant's response to a pending settlement
demand. When asked if defendant intended to file suit to
resolve the coverage issue, Toto "unequivocally" stated that
"if the matter did not settle CNA would be bringing an action
for declaratory judgment." James replied that he would
accept service of process on behalf of his client and that he
"would not file the action in anticipation of [defendant's]
filing suit." (Attached to the affidavit was a letter
written by Toto to James three days later, which mentioned
that "[i]n our last conversation, ... you agreed to accept
service of any declaratory judgment action CNA might file
over the coverage issue.") In his affidavit, James went on
to explain that he had believed, based on this conversation
and his amicable relationship with Toto, that defendant would
be filing suit; that he had relied on this agreement in not
bringing suit himself; and that he immediately filed the
action when it became apparent that defendant was not going
to do so.
On appeal, defendant contends that James' reliance on
Toto's promise was unreasonable in light of the
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"clarification" that appeared in the latter's follow-up
letter.1 In its view, the reference there to "any
declaratory judgment action that CNA might file" (emphasis
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added) was sufficient to call into question defendant's
intentions in this regard. A more plausible interpretation,
we think, is that Toto's choice of language simply reflected
the possibility that the case would be settled in the
interim. We find nothing in his letter that would seriously
undercut an "unequivocal" promise voiced three days earlier.
We nonetheless agree that plaintiff's reliance on that
representation was unreasonable as a matter of law. From all
that appears, Toto conveyed this pledge in a single telephone
conversation, at a time when nearly two months remained
before the limitations period expired. The follow-up letter
contained no explicit confirmation thereof, and the matter
was never addressed again. Most important, plaintiff took no
steps thereafter to ascertain whether defendant had in fact
fulfilled its promise. This last factor proves largely
dispositive.
The instant case is unusual in that the representation
at issue--a promise to file suit--concerned an action that
was to be performed before the statute of limitations
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expired, not afterwards. Plaintiff was thus in a position to
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1. Defendant offered no response below to James' affidavit--
perhaps because its summary judgment motion was granted eight
days after that affidavit was filed.
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confirm, prior to the March 19, 1992 deadline, that defendant
had followed through on its pledge. Yet no such steps were
taken. As that date approached, with no notice of any filing
having been received, plaintiff failed even to place a
telephone call to ascertain the status of events. No matter
how "unequivocal" Toto's statement had been, and no matter
how cordial the attorneys' relationship was, we think that
such a lack of diligence precluded invocation of equitable
estoppel as a matter of law. See, e.g., O'Blenes, 397 Mass.
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at 558-59 (holding that it was unreasonable for attorney to
rely on statement by zoning board clerk as to when appeal
period expired; attorney "had an obligation to determine" the
relevant facts); cf. Irwin v. Dep't of Veterans Affairs, 498
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U.S. 89, 96 (1990) ("We have generally been much less
forgiving in receiving late filings where the claimant failed
to exercise due diligence in preserving his legal rights.")
(quoted in McKinney v. Waterman S.S. Corp., 925 F.2d 1, 6 n.6
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(1st Cir. 1991)).
The judgment is affirmed. See Loc. R. 27.1.
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