Opposition Brief — Fischer v. Bar Harbor Banking & Trust Co.

In The

Supreme Court of the United States

October Term, 1988

a.

4

DR. E.G. FISCHER,

Petitioner,

Vs.

BAR HARBOR BANKING & TRUST COMPANY,

Respondent.

&

RESPONDENT'S BRIEF IN OPPOSITION

&

Gorpon H. S. Scorr

Two Central Plaza

Augusta, Maine 04330

(207) 622-3747

Counsel for Respondent

Of Counsel:

EATON, PEABODY, BRADFORD & VEAGUE

P. O. Box 1210

Bangor, Maine 04401

(207) 947-0111

THomas M. Brown, Esa.

- eer neem ene

oe

COCKLE LAW BRIEF PRINTING CO,, (800)

OR CALL COLLECT (402) 342-2831

or

i

TABLE OF CONTENTS

Page

pe ee Sly es 6h Serer rr errr ererrrrrry ii

Si Armee: OO} Ete CAGE. 20... i 2 ccc cesceescceas 1

REASONS WHY THE WRIT SHOULD NOT BE

ei Peery ree e Tere eer er ee Terry Tree Tree 3

1. Because The District Court’s Decision Not To

Certify Was Plainly Correct, Neither Of The

Decisions Below Raises Any Question Concern-

ing The Proper Scope Of A Discretion To Cer-

ME svc cnn <nsendanituen twas wa dheuaceesaneennaas 3

2. Neither The Opinion Of The Court Of Appeals,

Nor That Of The District Court, Reveals Any

Real Disagreement With The Policy Of Lehman

PE EE, Se sok sc cd chadepensnesencaes’s 8

ae ee PP PTeTE TELE T TERT T TEE Tee Tree e Tee 11

ii

TABLE OF AUTHORITIES

_ CASES

Alabama Power Co. v. Laney, 428 So.2d 21, 22-23

FM | rere reer reer errr erre ry yr rie cre

Allington Towers Condominium North, Inc. v. Elling-

wood Towers North, Inc., 415 So.2d 118, 119 (Fla.

Ae SG | Se Piet Ar tara e

Berthiaume, Estate of v. Pratt, M.D., 365 A.2d 792,

| er rer errr ere ree rT Pore ery

Bi-Rite Enterprises, Inc. v. Bruce Miner Co. Inc., 757

ee fl te | eee or ee te

Bleich v. Ortiz, 493 A.2d 236, 238 (Conn. 1985) ...

Bogosian v. First Nat. Bank of Millburn, 133 N.J. Eq.

S04, SE A.D Bey TO VIO oc vs cn resccenisw cee

Cantwell v. University of Massachusetts, 551 F.2d

, et £e @ cs Pee eeeeeTeeeeTe TT Torre

Cardon v. McConnell, 120 N.C. 461, 27 S.E. 109

tj PEPE CPTOCT ERT CTT Tere re eee ee

PS o's av bess 6508 dccenepeas chews dennensasecdns

Dixon v. The Process Corporation, 416 A.2d 1295,

1300 (Mid. Ct. Spec. App. 1900) 2... ...ccccccess

Eli Lilly and Co. v. Home Ins. Co., 764 F.2d 876 (D.C.

GSR SOE ic kcvnsavccsa ceuneretaenasekenseuseess

Elkins v. Moreno, 435 U.S. 647 (1978) .............

Elms v. Crane, 118 Me. 261, 107 A. 852 (1919) ....

Forman v. Cheltenham National Bank, 502 A.2d 686,

GOS CPR. BOGE. TIGR) on ccc ceccacescvasesiace

iii

TABLE OF AUTHORITIES-Continued

Page

Hiram Ricker & Sons v. Students Intl. Meditation

Soc., 342 A.2d 262 (Me. 1975), app. dis., 423 U.S.

CCC TREC CASO SCRUT ing dxesecnnsccessenes 7

Hodgkins v. Gallagher, 122 Me. 112, 119 A. 68 (1919) ..... 6

Keiser v. Kile, 166 Okl. 41 26 P.2d 194, 195 (1933) ..... 5

Kemart Corp. v. Printing Arts Research Lab, Inc., 146

F.Supp. 21, 23, aff’d. 269 F.2d 375, cert. den. 361

ee er 6

Lehman Brothers v. Schein, 416 U.S. 386 (1974)

Fe LO A CO ree tee ee eee eee eee 4, 8, 10, 11

Michaud v. Town of Livermore Falls, 381 A.2d 1110,

Wide esos ben scckacededcdessevesa 6

Nelson v. Maine Times, 373 A.2d 1221, 1223 (Me.

RUMEN GNE G40 i eG0s04scsccsdonrdocdcessens 6

Packard v. Central Maine Power Company, 477 A.2d

eae cca es bhssased saan 040s s0oeeees 6

Parker v. Kirkpatrick, 124 Me. 181, 126 A. 825 (1924) ..... 6

Roche v. Egan, 433 A.2d 757 (Me. 1981)............... 6

Rogers Carl Corp. v. Moran, 246 A.2d 750, 753 (N.J.

ES TOOT TELE eT eT eT ee Teer eee 5

Saunders v. Van Pelt, 497 A.2d 1121 (Me. 1985) ....... 6

Shakopee Mdewakanton Sioux Community v. City of

Prior Lake, Minn., 771 F.2d 1153 (8th Cir. 1985)

EE MER we ace casasebevvccessevacess 4

State of Florida ex rel. Shevin v. Exxon Corp., et al.,

526 F.2d 1266, rehearing den. 529 F.2d 523, (5th

Cie 1976), COt. Gen. 429 US. G29... 0. ee eccceees +

iv

TABLE OF AUTHORITIES-Continued

Page

Spencer v. Harmon Enterprises, Inc., 44 Cal.Rptr.

683, 689 (Cal. Dist. Ct. App. 1965)..............4.. 5

White v. Edgar, 320 A.2d 668 (Me. 1974)............-. 7

STATUTES

Maine Revised Statutes Annotated Title 11, Sec.

9-307(1) (Supp. 1988) (effective Jan. 1, 1978) ...:....7

OTHER

2 Field, McKusick & Wroth, MAINE CIVIL PRAC-

ye Oe OO renee errr ree TT rerreare 8

Restatement of Torts, 2d, Section 647, Comments

i rrr peer rene rrr me Pr rrr re Pe ero eee Eee 6

Wright, Miller & Cooper, FEDERAL PRACTICE

AND PROCEDURE: Jurisdiction 2d, Section

4248, at pages 172, 178 .........sseeeeeeeeeeees 9, 11

Wright, Miller & Cooper, FEDERAL PRACTICE

AND PROCEDURE: Jurisdiction 2d, Section

AFAG, OE DTTS 000s. ceccccseccsvecascescvesenscsees 10

No. 88-1084

,%

In The

Supreme Court of the United States

October Term, 1988

,%

vy

DR. E.G. FISCHER,

Petitioner,

vs.

BAR HARBOR BANKING & TRUST COMPANY,

Respondent.

a

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RESPONDENT'S BRIEF IN OPPOSITION

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vy

The Respondent Bar Harbor Banking & Trust Com-

pany respectfully submits that this Court should deny the

petition for writ of certiorari seeking review of the First

Circuit’s opinion in this case. That opinion is reported at

857 F.2d 4. The Petition was received by counsel for the

respondent on January 3, 1989.

a

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STATEMENT OF THE CASE

Petitioner and Respondent owned conflicting inter-

ests in a sailboat under construction. Petitioner’s interest

2

arose from a contract to purchase the boat upon comple-

tion, under which petitioner had made partial payments

of the purchase price, and from a subordinate security

interest granted to him by the builder. Respondent's

interest arose from a series of loans to the boat builder

secured by work in progress, including the boat that

petitioner had contracted to purchase. Respondent had

recorded its claim in the usual form of filings with the

Secretary of State of Maine pursuant to the Maine Com-

mercial Code on March 12 and June 15, 1984; petitioner

similarly filed on June 18, 1984.

During July, 1984, the boat builder informed peti-

tioner that it was ceasing operations because of financial

difficulties. On July 25, 1984, the boat builder gave peti-

tioner a bill of sale for the unfinished boat, subject to

respondent’s claim. Thereafter petitioner took possession,

had the boat finished elsewhere, and removed the boat to

Rhode Island in August, 1984. On May 24, 1985, peti-

tioner commenced a civil action against respondent in the

District Court for the District of Maine, averring claims

for slander of title and intentional infliction of emotional

distress. After some confusion at the office of the Maine

Secretary of State, the security interest of the Bank was

terminated of record in October, 1985. Termination was

again evidenced by a release delivered to plaintiff.

On September, 29, 1986, the United States Magistrate

recommended granting the Respondent’s motion for

summary judgment. In his objections to the Magistrate’s

recommended decision petitioner argued that the Maine

Supreme Court should be asked to define a cause of

action for slander of title, including the special damages

ieee

required and the defense of qualified privilege. On Sep-

tember 27, 1987, the District Judge determined that certi-

fication of the issues suggested by petitioner was

unnecessary and granted Respondent’s motion for sum-

mary judgment.

The District Judge, a Maine lawyer with over thirty

years of practice as a lawyer, bankruptcy referee and

judge, and district judge in that jurisdiction, held that,

although direct Maine authority was lacking, the Maine

courts would recognize the tort of slander of title and

would also recognize the well established privilege of a

rival claimant. The District Court found that respondent

was entitled to the privilege and that petitioner had not

shown any possibility of overcoming the privilege at a

trial. The District Court’s judgment was affirmed by a

panel of the Court of Appeals that included the Court’s

Maine appointee, another Maine lawyer of over thirty

years experience. Although questioning summary judg-

ment on familiar evidentiary grounds, the First Circuit's

Maine judge did not fault the District Court’s exposition

of the controlling principles of substantive law.

,%

-

REASONS WHY THE WRIT

SHOULD NOT BE GRANTED

1. Because The District Court’s Decision Not To

Certify Was Plainly Correct, Neither Of The

Decisions Below Raises Any Question Concern-

ing The Proper Scope Of A Discretion To

Certify.

The questions sought to be certified at the District

Court level involved aspects of the petitioner’s slander of

title claim. The petition focuses chiefly on the District

Court’s refusal to certify a question concerning the privi-

lege of a rival claimant, on which respondent was

awarded summary judgment. Although the petition does

not set out the question, presumably petitioner had in

mind determining whether the privilege would be recog-

nized in Maine and ascertaining the showing required to

overcome it. The District Court thus was asked to certify

questions as to the Maine Court’s acceptance of general

American common law principles recognized in every

jurisdiction that has considered them and rejected

nowhere.

The questions proposed for certification were not

novel questions of local doctrine, see Delehanty v. Hinckley,

845 F.2d 1069 (D.C. Cir. 1986), or matters as to which

there is considerable disagreement among American

jurisdictions, see Eli Lilly and Co. v. Home Ins. Co., 764 F.2d

876 (D.C. Cir. 1985), or intensely local questions impor-

tant to a wide spectrum of state government activities, see

Elkins v. Moreno, 435 U.S. 647 (1978), or a question involv-

ing a developing area of the law presented to a distant

court lacking regular contact with the lex loci, as was the

case in Lehman Brothers v. Schein, 416 U.S. 386 (1974).

Particularly to the experienced District Judge, certifica-

tion was not required because the course the state courts

would take was reasonably clear. Bi-Rite Enterprises, Inc.,

v. Bruce Miner Co., Inc., 757 F.2d 440 (1st. Cir. 1985); State

of Florida ex rel. Shevin v. Exxon Corp., 526 F.2d 1266,

— rehearing den. 529 F.2d 523 (5th Cir. 1976), cert. den. 429

U.S. 829. The Federal Court therefore had no reason to

shun its responsibility to decide all issues before it. Shak-

opee Mdewakanton Sioux Community v. City of Prior Lake,

Minn., 771 F.2d 1153 (8th Cir. 1985), cert. den. 475 U.S.

1011.

ore

Without really tackling the underlying substantive

issue, the petitioner tries to suggest some infirmity in the

District Court’s conclusion that Maine law recognizes the

privilege of a rival claimant as an affirmative defense to a

claim of slander of title. He characterizes the Magistrate’s

proposed findings and recommendations as adopting

minority views, accuses Professor Prosser of inventing

“the doctrine” for the Restatement of Torts, and asserts

that only one case in this century has recognized “such a

doctrine”. The invention is in Petitioner’s argument. The

privilege of a rival claimant is far from the orphan peti-

tioner t ies to make out.

In addition to the Restatement of Torts, the Restate-

ment of Torts, 2d, and the Arkansas case cited at page 9

of the petition, Courts in the States of New Jersey, Bogo-

sian v. First Nat. Bank of Millburn, 133 N.J. Eq. 404, 32

A.2d 585, 586 (1943); Rogers Carl Corp. v. Moran, 246 A.2d

750, 753 (N.J. Super. 1968); Connecticut, Bleich v. Ortiz,

493 A.2d 236, 238 (Conn. 1985); Pennsylvania, Forman v.

Cheltenham National Bank, 502 A.2d 686, 688 (Pa. Super.

1985); Alabama, Alabama Power Co. v. Laney, 428 So.2d 21,

22-23 (Ala. 1983); Florida, Allington Towers Condominium

North, Inc. v. Ellingwood Towers North, Inc., 415 So.2d 118,

119 (Fla. Dist. Ct. App. 1982); Maryland, Dixon v. The

Process Corporation, 416 A.2d 1295, 1300 (Md. Ct. Spec.

App. 1980); California, Spencer v. Harmon Enterprises, Inc.,

44 Cal.Rptr. 683, 689 (Cal. Dist. Ct. App. 1965); North

Carolina, Cardon v. McConnell, 120 N.C. 461, 27 S.E. 109

(1897); and Oklahoma, Keiser v. Kile, 166 Okl. 41, 26 P.2d

194, 195 (1933), have not only recognized but approved

the privilege. See also Kemart Corp. v. Printing Arts

Research Lab, Inc., 146 F. Supp. 21, 23, aff’d. 269 F.2d 375,

cert. den. 361 U.S. 893 (S. D. Cal. 1956).

The privilege on its face seems almost a self-evident

necessity if disputes over conflicting interests in property

are to be resolved in the courts rather than at the bairi-

cades, since the underlying tort may arise from the filing

of a required notice of claim in a public office. In count-

less everyday transactions nowadays one either records a

mortgage or a financing statement - risking litigation like

this if petitioner is correct - or abandons a security inter-

est to other creditors or to a trustee in bankruptcy. Actu-

ally, the privilege of a rival claimant is only an extension

of a markedly similar privilege recognized in personal

defamation actions; that is the privilege to protect an

important interest of the defendant-publisher. Restate-

ment of Torts, 2d, Sec. 647, comments a, b.

The Maine court has recognized comparable privi-

leges sufficiently often to leave any reasonable observer

confident of the outcome if the privilege of a rival claim-

ant were presented to it. See Saunders v. Van Pelt, 497 A.2d

1121 (Me. 1985); Packard v. Central Maine Power Company,

477 A.2d 264 (Me. 1984); Roche v. Egan, 433 A.2d. 757 (Me.

1981); Parker v. Kirkpatrick, 124 Me. 181, 126 A. 825 (1924);

Hodgkins v. Gallagher, 122 Me. 112, 119 A. 68 (1919); Elms

v. Crane, 118 Me. 261, 107 A. 852 (1919). Moreover, the

Maine Court does not share Petitioner’s scorn for the

Restatement of Torts. It has regularly cited and relied on

the Restatement as an authority. See Michaud v. Town of

Livermore Falls, 381 A.2d 1110, 1113-4 (Me. 1978); Nelson v.

Maine Times, 373 A. 2d 1221, 1223 (Me. 1977); Estate of

Berthiaume v. Pratt, M.D., 365 A.2d 792, 795 (Me. 1976).

Needless to say, all of this lore was in the possession, and

it may fairly be assumed in the contemplation, of the

District Judge, even if he did not detail all the reasons

why a Maine lawyer would conclude that Maine law

recognizes the privilege of a rival claimant.’

Although either not recognized or ignored by the

petitioner’s counsel, the District Judge also had in mind

Maine’s self-imposed limitations on answering certified

questions. The decision must in at least one alternative be

determinative of the litigation. White v. Edgar, 320 A. 2d

668 (Me. 1974); Hiram Ricker & Sons v. Students Intl.

Meditation Soc., 342 A.2d 262 (Me. 1975), app. dis., 423

1 The petitioner now asserts that the district judge refused

to certify an additional question, whether petitioner was a

“buyer in the ordinary course” as that phrase is used in the

Maine Commercial Code, ME. REV. STAT. ANN. tit. 11, Sec.

9-307(1) (Supp. 1988) (effective Jan. 1, 1978). Neither the

request nor the refusal is reflected anywhere in the District

Court’s careful recital of the case, and the Court of Appeals

indicates that the demand for certification of the “buyer in the

ordinary course” issue was made for the first time on appeal.

(App. to petition, p. 21) Whenever he raised the issue, it is

clear that petitioner is in no position to complain that the

question was not certified. Had the Maine Court held that

petitioner could not be a buyer in the ordinary course, that

would have ended his claim. Even if the Maine Supreme

Judicial Court had held that petitioner was such a buyer and

had superior rights in the boat as such, its decision would not

have determined whether the Bank had the state of mind

requisite for loss of its privilege as a rival claimant. Quite the

contrary, petitioner’s present insistence that, as the petition

puts it, “there is no Maine authority” (Petition, p 9, fn, emphasis

in original) on the question demonstrates that the Bank must

have lacked the knowledge or reckless disregard of its error in

asserting a lien that at a minimum would defeat the privilege.

Consequently, certification of that question would have been of

no benefit to petitioner.

U.S. 1042; 2 Field, McKusick & Wroth, MAINE CIVIL

PRACTICE, 249, 2d ed. 1970. The requirement was care-

fully discussed in his decision and in the circumstances of

this case was an additional factor influencing and sup-

porting the exercise of the trial court’s discretion to

refuse certification. The District Judge explained that, in

view of the prevailing unanimity on the issues on which

liability turned, the dispositive questions in the case were

questions of whether the respondent had met the thresh-

old showing required to justify summary judgment and

whether the petitioner had produced any indication of

rebuttal evidence. Pet. App. at 12-13. In view of these

circumstances, it would be hard to find a case resting

more comfortably “with the sound discretion of the fed-

eral court”, Lehman Brothers v. Schein, 416 U.S. 386, 391

(1974), and it would be hard to find a less appropriate

“opportunity to pronounce on what factors are not to be

taken into account in the certification decision.” Pet. at

14.

2. Neither The Opinion Of The Court Of Appeals,

Nor That Of The District Court, Reveals Any

Real Disagreement With The Policy Of Lehman

Brothers v. Schein.

Petitioner attempts to elevate the trivial certification

request he urged on the Court of Appeals to a matter

worthy of the exercise of this Court’s supervisory powers

by seizing and distorting beyond recognition a small

piece of the lower court’s opinion. After finding abun-

dant reason to reject the request for certification that

formed petitioner’s main contention on appeal, the Court

of Appeals noted that petitioner’s request for certification

was “particularly inappropriate” because the federal

court was his choice of a forum. Invoking this brief

statement and a similar comment in Cantwell v. University

of Massachusetts, 551 F.2d 879, 880 (1st Cir. 1977), where it

was likewise not necessary to the decision,” petitioner

declares that the First Circuit has made certification

unavailable in a diversity case when requested by the

plaintiff, and that this “policy significantly restricts the

availability of certification in diversity cases.” Pet. at 6.

Petitioner goes on to accuse the Court of Appeals of

rejecting “cooperative judicial federalism”, creating a

“substantial and unauthorized limitation on diversity

jurisdiction”, and pouncing on a bit of metaphor, of

requiring a request for certification immediately after

filing the complaint. Summarizing his request for relief,

petitioner suggests that this Court declare “the fact that

certification is requested by a plaintiff in a diversity

action ought not in and of itself be grounds for denial”

and that certification will not “turn on when a party may

have requested certification”. Pet. at 14. ,

The argument is pure bootstrap. Several of the cir-

cuits and commentators as well have noted that the plain-

tiff in a diversity case ought not to be asking for

certification of questions that he/she chose to present to a

federal court. According to Wright, Miller & Cooper,

2 In Cantwell, as in this case, the decision not to certify was

too clear for argument. The plaintiffs in Cantwell sought per-

mission to ask the Massachusetts Supreme Court to change its

repeatedly expressed refusal to abolish judicially the doctrine

of sovereign immunity, after the federal courts declined to just

assume that the Massachusetts Court wouid reverse itself if

given a chance.

10

FEDERAL PRACTICE AND PROCEDURE: JURISDIC-

TION 2d, Sec. 4248, at page 176,

“Ordinarily a court will order certification on its own

motion. It is in the best position to determine

whether it feels confident in its reading of the state

law. There is nothing to bar a party from suggesting

the desirability of certification but the court should

be slow to honor a request for certification from a

party who chose to invoke federal jurisdiction.”

Of course that is all the Court of Appeals was saying, and

it is far from a policy, or even an indication, that the

, source of a request for certification is “in and of

itself .. . grounds for denial.” Petitioner would turn this

mild criticism into a virtue, since he modestly admits

choosing federal court with full knowledge of the state

of Maine law on slander of title, with malice aforethought

as it were. And he maintains that diversity jurisdiction,

not only shields him from local prejudice, but becomes

his sword by giving him a right to demand a federal

hearing on the facts and both a federal and a state hear-

ing on the law.

Neither the Court’s opinion in Lehman Brothers v.

Schein, 416 U.S. 386 (1974), nor Chief Justice Rehnquist’s

concurring remarks, supports any such restraint on the

discretion of the district courts. On the contrary, as

explained in Wright, Miller & Cooper, FEDERAL PRAC-

TICE AND PROCEDURE: JURISDICTION 2d Sec. 4246, at

p- 115:

“His [Rehnquist, C.J.] opinion lends emphasis to the

statement by the Court that the use of certification is

in the sound discretion of the federal court, and that

if a federal court believes it can resolve an issue of

state law with available research materials already at

11

hand, its determination should not be disturbed sim-

ply because a certification procedure existed but was

not used.”

Nor did the lower court’s remark about a second bite

at the cherry suggest more than a factor to be taken into

account in deciding whether to grant a late request for

certification. Rather than laying down a rule that requests

must accompany the complaint, which petitioner notes

would suggest a disingenuous choice of forum, the

remark must be taken as a comment on the petitioner’s

request for certification of the “buyer in the normal

course” issue, which was presented for the first time to

the Court of Appeals. For reasons noted by the District

Court and earlier in this Brief, the request was immaterial

as well as untimely.

Neither the opinions below, nor those of any other

circuit, suggest a disagreement with the policy of Lehman

Brothers v. Schein, 416 U.S. 386 (1974), that is worth plen-

ary consideration by this Court. “Where certification is

available, it is not a device to be used indiscriminately.”

Wright, Miller & Cooper, FEDERAL PRACTICE AND

PROCEDURE: JURISDICTION 2d, Sec. 4248, at p. 172.

This was an appropriate exercise of discretion that

avoided burdening the Maine Court with an utterly

pointless certification, nothing more.

i.

_

CONCLUSION

This case did not below and does not here present

any issue worthy of serious consideration by this or any

other Court. It does not even raise, let alone offer an

12

appropriate vehicle for deciding, a worthwhile issue as to

the scope of the discretion of federal courts to certify or

decline to certify questions of state law. On the contrary,

petitioner would only be entitled to prevail if this Court

were to decide that the district courts and the courts of

appeal have no discretion whatever, but must certify any

question tendered to them by a litigant, regardless how

clear the answer may be. We submit that Petitioner’s

invitation to further prolong this wasteful exercise in

litigation tactics should be declined.

Respectfully Submitted,

Gorpon H. S. Scott

Two Central Plaza

Augusta, Maine 04330

(207) 622-3747

Counsel for Respondent

Of Counsel:

EATON, PEABODY, BRADFORD & VEAGUE

P. O. Box 1210

Bangor, Maine 04401

(207) 947-0111

THomas M. Brown, Esq.