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* Of the District of Maine, sitting by designation.
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James W. Murphy with whom Frederic L. Ellis was on brief
________________
__________________
Kansallis Finance Ltd.
Eric Lund with whom Susan R. Riedel was on brief for Daniel
_________
________________
Fern, et al.
____________________
November 2, 1994
____________________
("Kansallis")
lawyers, asserting
committed
brought
that they
Plaintiff
this diversity
Kansallis Finance
suit
against
four
for fraud
in judgment
for the
Richard Anderson,
various fact-findings,
Massachusetts
law on
clearly established
and
certify the
which there
precedent.
legal
as well as
two questions
of
is either
conflicting or
no
We uphold the
questions to
factual findings
the Massachusetts
Supreme
lawsuit
transaction
issues
consummating the
which
was
Donahue,
from
loan
and
lease
financing
on appeal.
letter from
stems
What
is important
is that,
defendants'
issued
Jones &
on
purported law
letterhead
Sabatt, P.A."
of
obtained an opinion
partner, Stephen
captioned
The
in advance
"Fern,
Jones,
Anderson,
letter contained
several
defendants
here)
criminally
convicted for
Kansallis
or any
to
defraud
Kansallis.
his part
of the
in the conspiracy,
was
later
in which
Jones
sought compensation
from defendants on
the theory
actual
partners or
liable
for the
partners
fraudulent
by estoppel,
opinion letter
Jones were
and
either
that they
Jones
caused to
were
be
went to trial.
and the
but, for
defendants were
partners at the
findings
opinion
that Jones
letter
on
issuance of the
partnership.
fact
on
of
the
district court
plaintiff's
claim
that
authority
court
the
partnership
to
hold, as
that the
ch. 93A.
matter of
consumer
the
findings of
Massachusetts
on its behalf.
a
issue the
and
with
it
apparent
Nonetheless, the
law, that
fraud, is
partnership,
had clothed
___
went on
authority to
made independent
under
have
did not
behalf
relevant time,2
"innocent"
for their
another partner's
even when
____________________
1
Jones did
arranged
district
ratified
appealed
2
The district court also found that, even if
not actual partners, they were partners by estoppel.
they were
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The
court
arose
subject to the
11.
its
First,
position.
it
liability
finds
Kansallis
error in
cannot attach to
Instead, based
also
the
asserts
court's
two
legal errors.
ruling that
"innocent" partners in
on the court's
vicarious
a 93A claim.
letter was
ordinary course
Second, it
partnership was
made only
upon an
it was error to charge the jury that, for the letter to have been
issued in the
course of
motivated
least
at
partnership.
in an
in
part
by
the
must have
intent
to
serve
been
the
motivation is required
requirement is present
here.
Discussion
__________
We
findings.
squarely
Because
we
evidence to support
affirm
these
findings,
we
are
no clearly
established precedent
on one of
faced
Finding
the questions,
and
-5-
conflicting
we certify both
to the SJC
Defendants argue that it was error for both the jury and the
judge to find that they were
that it was error for the
Jones's partners.
on
its
behalf.
determination
occurred
Finally,
that the
primarily
they
conduct
and
find
error
giving rise
substantially
in
to
the
judge's
the 93A
within
claim
Massachusetts.
the jury
Jones to
issue
the opinion
letter.
We find
no merit
in any
of these
contentions.
A.
Partnership
___________
or more
profit."
936
F.2d
persons
to carry
on as
636
(1st
1991).
to
exhaustive
parties
manifesting
if
Several
partnership
their
business for
considered
the
determine
Cir.
6.
co-owners a
intention
factors
exists.
are
non-
"(1) an agreement by
to
associate
in
and losses,
See
___
(providing additional
partnership).
rules for
While
partnership
that agreement
requires
an
not be
in
agreement
among the
writing.
inferred from
partners,
undoubtedly
of a
acts.
need
Loft, 936
____
F.2d at
636-37.
We
uphold
the fact-findings
below on
the existence
of a
at
"'the
636,
standard
conviction that
that
a mistake
requires
definite
and
firm
American Title
______________
Ins. Co. v. East West Financial, 16 F.3d 449, 453 (1st Cir. 1994)
________
___________________
(quoting United States v. United States Gypsum Co., 333 U.S. 364,
_____________
________________________
395 (1948)).
The evidence adduced at trial was sufficient
to support the
finding that defendants and Jones were indeed law partners at the
time
the
fraudulent
uncontroverted that
opinion
letter
was
as
an
is
and Stephen
Defendants
maintain
employee only.
dissolved in
It
issued.
1981
and,
They
also
while all
submit that
four
the partnership
defendants
and
Jones
continued
to
share
office
space,
secretarial
of clients, and
services,
letterhead,
so forth, they
did so as a
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only, laying much emphasis on the fact that their letterhead used
the denomination "P.A." after listing their names.
The jury and district court were entitled to
defense.
discredit this
Sabatt filed partnership tax returns for several years past 1981,
the
year
the partnership
108A,
already
referred to itself
office
space"
and that
Receipt of
partnership
dissolved,
allegedly
was
evidence of a
7(4).
described,
as a
a share of
In
the
in
the
it was for
profits in
answered
manner in
partnership.
firm's
name
of
each
See
___
of
internal
ledgers
at the
"shared
the
firm,
and
and
the
lawyer's directory
investments
their
themselves
Martindale-Hubbell,
__________________
as a
name of the
of the firm
partnership.3
held accounts,
-- specifically describing
Though they
offer explanations
____________________
3
The original lease was made in 1974, when Sabatt had
not yet joined the firm, in the name of "Fern, Anderson, Donahue
& Jones, a partnership consisting of Daniel J. Fern, Richard C.
Anderson, Robert J. Donahue and Stephen C. Jones." When the firm
renewed its lease in 1983, it did not advise the landlord that
the partnership had "dissolved" or that Sabatt had been named a
partner. We also note that Jones and defendants Fern, Anderson
and Donahue were co-owners of certain accounts without defendant
Sabatt. Thus, the renewed lease, as well as those accounts for
which Sabatt was not listed as a co-owner, only bolster the
finding of partnership as between Jones and defendants Fern,
Anderson and Donahue.
Nonetheless, the totality of other
evidence is sufficient to support the finding by both the judge
-8-
for
these
circumstances
partnership, it was
that
consistent
not clear
with
error to come
the
absence
to the
of
conclusion
was issued.
B.
Authority
_________
Both parties
Despite
the
jury to find
apparent
on the
incongruity
of
different
no
that
so
Mass.
450, 457, 436 N.E.2d 155, 159 (1982) (quoting W.A. Seavey,
Agency
DeRosa,
______
authority
480, 484
(1st Cir.
1992).
Whether apparent
____________________
and jury that Sabatt was also a member of the partnership.
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v. Hallamore Motor Trans., Inc., 394 Mass. 56, 59 n.2, 473 N.E.2d
____________________________
1137, 1139
n.2 (1985).
clear error.
We
Fed. R. Civ.
thus affirm
been
F.3d at 453.
As indicated,
the district
of fact
Jones
did have
letter on behalf
its
apparent
authority to
issue
the opinion
Kansallis changed
There is
defendants manifested
reasonably
lead
partnership,
third
parties
to
the world
to
believe
signs that
they
and speak on
were
In
could
a
law
behalf of the
common
directories
office
and
signs
and
joint
Martindale-Hubbell.
__________________
listings
But
more
in
telephone
specifically,
behalf
of the
partnership: they
caused
their phone
to be
the
procedures for
of legal
stationery.
that
the
the issuance
By
firm, and
opinion
letters on
encouraged Kansallis to
not just
Jones,
stood behind
firm
believe
the opinion
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letter.
358 (1983).
There
387
is no clear
there is
no clear
The opinion
named partners,
error in the
letter was
individual who
Management
which
Jones
Co., a
used
employee's name
Indeed,
turned
out to
company of
to
facilitate
York
be
the
any of
the
is customarily
which Jones
nowhere appeared
Kansallis's New
not signed by
of the firm, as
jury's contrary
was a
fraud.
on the law
lawyer, who
of
Iyanough
principal and
The
Iyanough
firm's letterhead.
dealt directly
with
Jones
in
language
the
in
transaction,
the
letter
specifically asked
so that
concerning
ostensibly
the firm
whether the
--
the
made by the
and not
letter spoke on
crucial
the
purview to
assurances
decide
behalf of
before
that she
concluding
revise
representations
collective "we" --
Thus,
was an
should
that
to
individual "I."4
him
it
have obtained
did.
Under
further
these
____________________
4
It is only the conduct of the principal, and not the
conduct of the agent, that may create apparent authority.
Sheinkopf v. Stone, 927 F.2d 1259, 1269 (1st Cir. 1991). Thus,
_________
_____
the fact that Jones made this
change in language, which
undoubtedly heightened Kansallis's belief that the firm stood
behind the letter, does
not help Kansallis show apparent
authority.
-11-
circumstances, the
to
issue the
letter
on
the
firm's
behalf
not
clearly
erroneous.
C.
on the
facts
that
the
opinion
letter
was
11.
They
drafted
by
-- making
entire
cause of
action
basis for
to Jones's
others in Massachusetts.
occurred in
partnership existed in
by linking
filings --
Massachusetts and
the
fraudulent U.C.C.
11 provides
an
burden
of
proving
involvement
in
Massachusetts.
paragraph).
II.
lack
of
See
___
primary
ch.
and
93A,
substantial
11
(last
Legal Issues
____________
Kansallis's legal challenges are not so easily resolved.
argues
cause of action
It
concluded that, in a
liability5 are
who
were entirely
unaware and
uninvolved with
i.e., those
their partner's
We have
of the
93A claim.
in
questions
state law
diversity
to
We
has
certified questions
that
to the SJC.
7 F.3d
270,
court);
to
SJC
Cir.
1993)
appeals court
certify
Rule 1:03
are claim-determinative
it is
See Nieves v.
___ ______
274 (1st
precedent, federal
discretion
highest state
therefore think
state
law
(accepting
and on
which
order to
theory
that
find
defendants vicariously
Jones's
conduct
was
within
liable
the
based on
scope
of
the
the
part, with
the intent to
benefit the
partnership.
1163, 1166
articulated by
American Manufacturers
______________________
____________________
5
Ins. Co., 373 Mass. 594, 597, 368 N.E.2d 1385 (1977) (adopting as
________
its
own
the
appeals
vicariously liable
the fact that
purposes").
court
holding
the [agents]
In light
that
principals
of their agents
may
be
"regardless of
for their
own
since Wang
____
For these
the
reasons, we
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fact-findings by
For
the reasons
discussed
in our
opinion
in this
case,
we certify
the following
questions to
the Massachusetts
Under Massachusetts
law,
to find
that
a certain
act
is
doctrine
alia,
____
of vicarious
liability, must
a plaintiff
show, inter
_____
that the act was taken at least in part with the intent to
May
defendants be found
conduct by their
even
vicariously liable
partner that
unaware of and
for authorized
L. ch.
93A,
conduct?
The Clerk
under the
of this
Official Seal
of the Court is to
Court, the
forward,
Certification, our
opinion, and the briefs and appendix filed by the parties, to the
Massachusetts Supreme Judicial Court.
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