Filed: Nov. 17, 2020
Latest Update: Dec. 05, 2020
United States Court of Appeals
For the First Circuit
No. 20-1329
RICHARD HISERT, Manager, on Behalf of H2H Associates, LLC,
Plaintiff, Appellee,
v.
HERBERT HASCHEN,
Defendant, Appellant,
and
BLUE WATERS DREDGING LLC; DAVID URBANI; DOROTHY B. WILLIAMS;
JOSEPH EDGAR,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. F. Dennis Saylor, IV, Chief U.S. District Judge]
Before
Lynch, Thompson, and Kayatta,
Circuit Judges.
Thomas T. Merrigan, with whom Sweeney Merrigan Law, LLP was
on brief, for appellant.
James F. Grosso, with whom O'Reilly, Grosso, Gross & Jones,
P.C. was on brief, for appellee.
November 17, 2020
LYNCH, Circuit Judge. Richard Hisert, the managing
member of H2H Associates, LLC ("H2H"), successfully brought suit
against Herbert Haschen for fraud. A jury found Haschen had
committed fraud in connection with a contract for dredging work to
be performed in Cohasset, Massachusetts. The jury awarded Hisert
$148,626 in damages.1 The finding of fraud was based on
Massachusetts law. This appeal for Haschen followed.
The Army Corps of Engineers had awarded H2H, a limited
liability company ("LLC") organized under New York law, a contract
in 2015 to dredge the Cohasset Harbor. H2H subcontracted with
Blue Waters Dredging LLC ("BWD"), an LLC organized under Maryland
law of which Haschen was a member, to perform the dredging work.
The alleged fraud occurred in December 2015 when Haschen signed a
partial lien waiver on behalf of BWD stating that all of BWD's
obligations with respect to the dredging project had been paid in
full. Haschen later acknowledged during discovery that he was
aware of open vendor accounts and suppliers and vendors demanding
payment owed to them at the time he signed the partial lien waiver.
H2H subsequently relied on the statement in that document to
continue making payments to BWD.
1 A default judgment was also entered against defendant
Dorothy Williams in the amount of $342,309.38 and applicable costs
and attorneys' fees were awarded against both Haschen and Williams.
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The district court instructed the jury as to the elements
of Massachusetts law with respect to fraud. Those instructions
were consistent with the district court's ruling in denying the
parties' cross-motions for summary judgment.2 Hisert v. Blue
Waters Dredging LLC, Civil Action No. 16-11960-FDS, 2018 WL
6025653, at *6-9 (D. Mass. Nov. 16, 2018). Haschen wanted Maryland
law to apply, while Hisert asserted that he could prevail under
either Massachusetts or Maryland law. Neither party advocated for
New York law to apply.
Id. at *8.
The district court determined that there are two
relevant differences between Massachusetts and Maryland law with
respect to fraud. Id. at *6. The first difference is that Maryland
law requires proof of deliberate intent to deceive
, id. (citing
case law from Maryland), while Massachusetts law does not
, id.
(citing case law from this Circuit). The second difference is
that Maryland law requires proof of fraud by clear and convincing
evidence
, id. at *7 (citing case law from Maryland), while
Massachusetts law requires proof only by a preponderance of the
evidence
, id. (citing case law from this Circuit).
Finding that Massachusetts follows the functional
approach to choice-of-law analysis, the district court held that
2 The district court allowed defendant David Urbani's
motion for summary judgment as to all counts. Hisert v. Blue
Waters Dredging LLC, Civil Action No. 16-11960-FDS, 2018 WL
6025653, at *10 (D. Mass. Nov. 16, 2018).
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Massachusetts law applied since Massachusetts had the most
significant relationship to the occurrence and parties. Id. at
*7-8 (explaining that "[t]he functional approach is 'explicitly
guided by the Restatement (Second) of Conflict of Laws (1971)'"
(quoting Levin v. Dalva Brothers, Inc.,
459 F.3d 68, 74 (1st Cir.
2006))). In particular, the district court determined that "the
location of the intended harm" and that "Massachusetts was the
focus of the overall transaction" weighed heavily in favor of
applying Massachusetts law over Maryland law.
Id. at *8.
Haschen's brief on appeal purports to raise several
issues: (1) whether the district court erred in denying his motion
to dismiss the amended complaint for failure to state a claim for
fraud; (2) whether it erred in determining at summary judgment
that Massachusetts law applied to the fraud claim; (3) whether it
erred in denying his motion for summary judgment on the fraud
claim; and (4) whether it erred in rejecting his argument at
summary judgment that the fraud claim against him was barred by
the arbitration clause in the agreement between H2H and BWD.
Denials of motions to dismiss under Rule 12(b)(6) or motions for
summary judgment under Rule 56 are generally not appealable when
issued, see Ortiz v. Jordan, 562 U.S. 180, 188 (2011); In re
Empresas Noroeste, Inc.,
806 F.2d 315, 317 (1st Cir. 1986), and
when an appeal of a subsequent judgment does go forward, we
generally pay no heed to whether the earlier denials were proper,
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see Ortiz, 562 U.S. at 183-84 (holding that a party may not "appeal
an order denying summary judgment after a full trial on the merits"
because "[o]nce the case proceeds to trial, the full record
developed in court supersedes the record existing at the time of
the summary-judgment motion"); Sexual Minorities Uganda v. Lively,
899 F.3d 24, 35-36 (1st Cir. 2018) (holding that "[w]hen an order
denying a Rule 12(b)(6) motion has no effect on the ultimate
disposition of the case, that order is unreviewable").3
When this Court at oral argument pointed out these issues
to counsel for the appellant, he pointed to a footnote in his
opening brief and argued that footnote somehow preserved his
challenge to the jury instruction given regarding Massachusetts
law as to fraud.4 While these arguments were not properly presented
3 Although Haschen appears to have made an oral Rule 50(a)
motion for judgment as a matter of law at the close of trial, he
did not file a Rule 50(b) renewed motion for judgment as a matter
of law following the jury's verdict. See Fed. R. Civ. P. 50(a)-
(b). He therefore did not preserve these legal issues for
appellate review. See Ortiz, 562 U.S. at 183-85; Ji v. Bose Corp.,
626 F.3d 116, 127 (1st Cir. 2010) (holding that moving
unsuccessfully for summary judgment does not obviate the need to
move under Rule 50 in order to preserve an argument that a party
is entitled to judgment as a matter of law); Udemba v. Nicoli,
237
F.3d 8, 13 (1st Cir. 2001) (holding that "to preserve for appeal
the district court's rejection of a motion for judgment as a matter
of law made at the close of the evidence, the movant must
seasonably renew that motion post-verdict").
4 The footnote referred to by appellant's counsel states:
"Haschen raised the choice of law issue in his summary judgment
motion . . . ; by Motion in Limine . . . ; and by objection at
sidebar following the Court's instructions to the jury." All that
appellant's counsel said at sidebar on the choice-of-law issue
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on appeal, see Ortiz, 562 U.S. at 183-85; Ji v. Bose Corp.,
626
F.3d 116, 127 (1st Cir. 2010), they lack merit in any event.
The district court was plainly correct that
Massachusetts law applied. Massachusetts generally follows the
functional approach to choice-of-law analysis. Levin, 459 F.3d at
74; UBS Fin. Servs., Inc. v. Aliberti,
133 N.E.3d 277, 288 n.12
(Mass. 2019); Cosme v. Whitin Mach. Works, Inc.,
632 N.E.2d 832,
834 (Mass. 1994); Bushkin Assocs., Inc. v. Raytheon Co.,
473 N.E.2d
662, 668-70 (Mass. 1985) (assessing, among other factors, the
comparative interests of the states involved and which has the
most significant relationship to the occurrence and parties).
While Haschen now argues on appeal that Massachusetts courts would
not necessarily apply such an approach in a tort case, he did not
preserve that argument by making it below. See In re Rauh,
119
F.3d 46, 51 (1st Cir. 1997) ("A party may not raise new arguments
for the first time on appeal."). The district court did not err
in finding that under the functional approach, Massachusetts had
a more significant relationship to the occurrence and parties than
Maryland. Although Haschen was in Maryland when he made the
fraudulent statement, the subject of the transaction was in
following the jury instructions was that "I want to once again
note my objections to the Court's ruling on Massachusetts vs.
Maryland law." He did not propose any further instructions on the
applicable law with respect to fraud. However, Hisert has not
raised in his opposition brief these impediments to Haschen's
claims on appeal.
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Massachusetts and at least some of the injury took place there.
Hisert, 2018 WL 6025653, at *8. The dredging project was being
performed in Massachusetts, H2H continued to make payments for
that project in reliance on Haschen's false statement, and at least
some of the unpaid vendors and suppliers were located in
Massachusetts.
Id. Massachusetts also has strong interests in
not having businesses operating within the Commonwealth defrauded
and in ensuring that public projects being performed within the
Commonwealth are completed in an appropriate and timely manner.
Those interests further support application of Massachusetts law.
And although Haschen does not appear to challenge the
sufficiency of the evidence, there was clearly enough for a
reasonable jury to determine that Haschen was liable for defrauding
Hisert and H2H, particularly given the lower burden for proving
fraud under Massachusetts law.
Finally, it is also clear that the arbitration clause in
the contract between H2H and BWD does not bar this lawsuit against
Haschen. Assuming arguendo that the arbitration clause in the
contract does apply to Haschen, he never moved to compel
arbitration or to stay this case in favor of arbitration. Even on
appeal, he does not argue for any of the forms of relief allowed
for under the Federal Arbitration Act. See 9 U.S.C. ยงยง 3-4. He
thus waived any right to arbitrate this fraud claim. See In re
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Citigroup, Inc., 376 F.3d 23, 26 (1st Cir. 2004) ("A party may
waive arbitration expressly or implicitly.").
Affirmed. Costs are awarded to Hisert.
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