USCA1 Opinion

January 3, 1994

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
___________________

No. 93-1266
COMBUSTION ENGINEERING, INC.
Plaintiff, Appellant,
v.
MILLER HYDRO GROUP, ET AL.,
Defendants, Appellees.
____________________
No. 93-1267
COMBUSTION ENGINEERING, INC.,
Plaintiff, Appellee,
v.
MILLER HYDRO GROUP, ET AL,
Defendants, Appellants.
____________________
ERRATA SHEET
The opinion of this Court
amended as follows:
On page 25, 1st
verdict was served,"
ordered,".

issued on December 30,

1993, is

full paragraph, line 5, "When a directed

should be "after a directed verdict was

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________
No. 93-1266
COMBUSTION ENGINEERING, INC.,
Plaintiff, Appellant,
v.
MILLER HYDRO GROUP, ET AL.,
Defendants, Appellees.
____________________
No. 93-1267
COMBUSTION ENGINEERING, INC.,
Plaintiff, Appellee,
v.
MILLER HYDRO GROUP, ET AL.,

Defendants, Appellants.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Gene Carter, U.S. District Judge]
___________________
____________________
Before
Boudin and Stahl, Circuit Judges,
______________
and Fuste,* District Judge.
______________
____________________

____________________
*Of the District of Puerto Rico, sitting by designation.

John H. Montgomery with whom Gordon F. Grimes, David A. Sol

___________________
________________
_____________
Diane S. Lukac, Faith K. Bruins and Bernstein, Shur, Sawyer & Nel
______________ ________________
______________________________
were on briefs for plaintiff.
George S. Isaacson with whom David W. Bertoni and Brann
____________________
__________________
_____
Isaacson were on briefs for defendant Miller Hydro Group.

________
Roy S. McCandless with whom Robert S. Frank, Mark K. Googins
__________________
_______________ _______________
Verrill & Dana were on brief for party-in-interest appellee Kansall
______________
Osake-Pankki.
____________________
December 30, 1993
_________________

BOUDIN,

Circuit Judge.
_____________

complex commercial
relating to the
Maine.

In

dispute,

the ensuing

succeeded

appeal.

with

appeal

arises out

overtones

of

construction of a hydroelectric

Combustion Engineering,
Group,

This

in

litigation,
Inc., nor

deception,
facility in

neither

the

the builder,

owner, Miller

recovering against

the

of a

other.

Hydro
Both

We affirm the district court.

I. BACKGROUND

In the early 1980's,

Miller Hydro set about

hydroelectric facility on the Androscoggin River

Falls, Maine, to generate electricity.

creating a
near Lisbon

It first negotiated a

contract with Central Maine Power Company by which the latter

agreed to

purchase a

facility.

Miller

set amount of

Hydro

also

power from

obtained

Finnish bank, Kansallis-Osake-Pankki, and

the

project

from the

Federal Energy

the planned

financing

from

a license to build

Regulatory Commission

("FERC").
In May 1986,

Miller Hydro entered into

central document

at

Engineering

the

for

"turnkey" basis.

issue
latter

in

this

a contract--the

case--with

to build

The turnkey contract,

the

Combustion

facility

on

by cross-reference,

provided for a facility including turbines with a capacity of

7800 cubic

feet of

water per second.1

Under

its contract

____________________
1The 7800 cfs figure, which is important to this case,
appears in technical specifications annexed to the turnkey
contract.
A shorter and more general "project description,"
-3-3-

with

Maine Central

Power,

provide power capacity of 14

contract

Miller

Hydro

was

expected

to

megawatts, and the Miller Hydro

with Combustion Engineering

also referred

to this

requirement by cross-reference.
Subject

to

these

and

other

specifications,

it

was

entirely up to Combustion Engineering to design and build the

new facility.

The turnkey contract contained

penalty provisions,
case.
$24

one of which

incentive and

lies at the heart

of this

The price set for construction was fixed at just under

million,

but

Engineering would
to the extent
77,500

the

contract

provided

earn a sliding-scale

that

bonus for efficiency

that the facility produced power

megawatt hours

per

year;

Combustion

in excess of

corresponding

penalty

provision reduced Combustion Engineering's fixed price to the

extent that the

facility was less efficient than a specified

minimum output of 73,500 megawatt hours per year.

The

turnkey contract provided that the bonus or penalty

would be determined by certain tests

by an independent
A

protocol

including a

tester at the completion

specified

how

the

requirement that

"total flow of 7800 cfs."

require

that would be performed

retest

by

the

It
a

test

of construction.

would

be

facility be

conducted,
tested at

also permitted Miller Hydro to

different

tester

if

it

were

____________________
also annexed, refers to
"approximately 8,000" cfs.

turbine

discharge

capacity

of

-4-4-

dissatisfied with
Combustion

the

initial test.

It appears

that

if

Engineering had built a highly efficient plant of

the size specified, Miller Hydro might have been liable for a
bonus payment as large as $850,000.
What

happened instead

built a far larger plant

is

that Combustion

Engineering

with turbines having a maximum flow

capacity of over 9000 cfs or more and a power capacity

to 19 megawatts.
size

was

done

Engineering

Miller Hydro claims that

deliberately

in order to

and

this increase in

secretly

by

manipulate the bonus

the construction contract.

of 18

Combustion

provisions of

Miller Hydro and Kansallis-Osake-

Pankki both say that they did not learn of the increase until
it was too late to modify the facility.
When the facility was tested at a total

flow of 9000 or

more cfs, the tester reported results that equated to a bonus

of over

$8

million.

In

Miller Hydro's

view,

Combustion

Engineering had invested $1 million or so of its own money in

increasing the facility's
increase
to the

size in order

in the incentive bonus.

test itself and

to reap a

ten-fold

Miller Hydro also objected

invoked its right

to a retest.

It

also refused to state its "final acceptance" of the facility,

or to make final construction
to

retest, Combustion

payments.

Instead of agreeing

Engineering promptly

against Miller Hydro in district court.

-5-5-

brought suit

In its complaint Combustion Engineering set forth claims

based

on

contract,

unjust

enrichment,

and

promissory

estoppel, and it sought to enforce a mechanic's lien

the facility.

As damages,

$8.16 million,
further

a final

against

it demanded an incentive bonus of

construction payment

of $45,364,

payment of $1,236,427 in amounts withheld from prior

payments, and a

claimed early completion bonus

Kansallis-Osake-Pankki

intervened,

arguing

of $893,894.

that Combustion

Engineering had by contract subordinated its rights under the

mechanic's

lien

statute

to

the

bank's

mortgage

on

the

facility.
Miller
Engineering
claims.
not

Hydro

counterclaimed

asserting

Miller

agreed to

contract,

as a

fraud,

Hydro tells us that Central

buy the

extra

generate and that Miller Hydro

costs

against

result

of

power that

racketeering

Maine Power has

the facility

will or may incur

the facility's

particular, it says that it

and

Combustion

enlarged

can

additional
size.

In

may face penalties from FERC for

building a facility larger than the license permits, and that

it may

have to

reconstruct fish-protection facilities

that

were keyed to the originally planned smaller turbines.

Because
claims,

the case

the district

presented
court

both

legal and

bifurcated the

trial.

equitable
In the

first phase, Combustion Engineering tried its contract claims

to the

jury and

Miller Hydro tried

its contract

and fraud

-6-6-

counterclaims to the same jury.

(Miller Hydro's racketeering

counterclaim

the

was

dismissed by

recounted

below.)

proposed

to

In

rule

the

court

second

himself

on

in circumstances

phase the
Combustion

trial

Engineering's

equitable claims (unjust enrichment and promissory

and

to

resolve

mechanic's

lien

any

outstanding

claim,

including

issues

judge

estoppel)

concerning

priority

as

the

between

Combustion Engineering and Kansallis-Osake-Pankki.

After Combustion Engineering presented its case in chief
to the jury, the district

court entered judgment as a matter

of law against Combustion Engineering on its contract claims.

The court

held that

Combustion

Engineering had

materially

breached its contract in testing the facility at a total flow

in excess of 7800 cfs

and in other departures from the

protocol.

found it

The court

Hydro's argument that

to

agree to

barred recovery.

unnecessary to reach

the refusal of Combustion

retest was

also a

breach of

test
Miller

Engineering
contract that

Miller
against

Hydro's

contract and

Combustion Engineering

together with a
the

own

jury

Engineering

had

counterclaims

were submitted

special verdict form.

returned

fraud

its

verdict,

breached

the

On

the jury

January 23, 1992,

finding

contract

to

that
by

Combustion

designing

the

facility for a maximum flow in excess of 7800 cfs, and not in

accordance

with

the

FERC

license.

It

found

the actual

-7-7-

maximum

flow to be

capacity to be
Engineering
Miller Hydro.

at least 9000

18 megawatts.

had

provided

cfs and the

It also

materially

found that Combustion

false information

Nevertheless, the jury awarded

Miller Hydro either for breach of contract or

(in

power output

to

no damages to
fraud, finding

response to special verdict questions) that Miller Hydro

had not

proved damages

from the breach

of contract

or the

misrepresentations.
On October 6,
denying

Combustion

1992, the

trial judge

Engineering

filed a

recovery on

its

decision
equitable

claims.

The

breaches

of

court

held that

contract

did

not

under

Maine

law

automatically

material

preclude

an

equitable recovery but that the plaintiff's good faith effort

to

perform was

prerequisite; and

Combustion Engineering "did

its

obligations

under

the

not seek in

the

turnkey

court ruled

that

good faith to

meet

contract,"

given

the

deliberate breaches and misrepresentations found by the jury.

The jury findings, the court

said, were binding on the court

in deciding the equitable claims.

On

the same

Combustion

day, the

Engineering

retesting of the
to allow the

trial judge

requesting

the

facility, to appoint a

denied a
court

to

motion by
order

special master, and

filing of a supplemental complaint.

The court

ruled that this motion, filed on June 3, 1992, well after the
jury

verdict,

came

too

late.

Not

only

had

extensive

-8-8-

discovery
held and

been conducted but the jury trial had already been

the case

was nearing

completion.

Further delay,

said the court, would be unfair to both of the other parties.

Finally, by decision

entered on December 22,

1992, the

trial judge ruled on Combustion Engineering's mechanic's lien

claim.

It rejected the

of such

a lien

required a valid

Combustion Engineering
claim.

claim on the ground that enforcement

underlying claim

had been found

and that

to lack such

a valid

The court granted Kansallis-Osake-Pankki's request to

discharge

the mechanic's

lien.

It

also

granted

Miller

Hydro's requests, made in its counterclaims, for declarations

of breach

of contract

and

misrepresentation by

Combustion

Engineering.
On January 11, 1993, the court entered final judgment in
the case.

Combustion Engineering has appealed

verdict against it on its

its

equitable

motion

to

claims,

retest.

contract claims, and the denial of

its mechanics

Miller Hydro

lien

explicitly sought to

disturb the judgment on

contract

counterclaims

fraud

claim,

has appealed

dismissal of its racketeering counterclaim.

and

the directed

entered

and its

the earlier

Neither side has

Miller Hydro's
upon

the

jury

verdict.
II. DISCUSSION
Combustion Engineering

advances a

series of

different

arguments on appeal, variously involving the directed verdict

-9-9-

against it

on

its contract

equitable claims,
retest, and

claims,

the district

the dismissal

court's refusal

issues, reserving for the

its

to order

lien.

We

the ruling discharging the mechanic's

begin with these

of

end a discussion

of Miller Hydro's cross-appeal.

Combustion
briefed,
court's

point

Engineering's
on

appeal

first, and

is its

most

extensively

on

the district

attack

grant of a directed verdict--now renamed judgment as

a matter of law, Fed. R. Civ. P. 50(a)--dismissing Combustion

Engineering's
review

such

evidence

contract

claims

a dismissal

presented

against

de novo,
________

Miller

Hydro.

asking whether

reasonable jury

find

for the

Murray v.
______

Cir. 1993).

In considering this question, it is assumed that

of

credibility

are resolved,

F.3d 573,

the

plaintiff.

issues

Ross-Dove Co., 5
____________

could

on

We

and

inferences

evidence drawn, in favor of the non-moving party.

At the threshold one might

576 (1st

from

Id.
___

think that the attack on the

directed verdict is barred by the jury's subsequent findings.

These

findings, on

that Combustion
building

Miller Hydro's

counterclaims, establish

Engineering breached the turnkey contract by

plant

well

in

excess

of

the

contracted for

capacity.
has

Miller Hydro

forfeited its

failing

to

Engineering

claims that

right

"appeal"

to

from

replies that

Combustion Engineering

challenge
the

jury

appeals

those

findings

verdict;

are from

by

Combustion

judgments,

not

-10-10-

findings, and that it has appealed the judgment rejecting its

contract claims.
We
settle

think that

in this

the propriety

of

verdict might

case the

jury findings

the directed

insulate the directed

verdict.

do not

The

verdict if the

jury

jury in

deciding the counterclaims had independently reached the same

_____________
conclusion on the same issue.

But here the trial

judge, in

submitting the counterclaims to the jury, instructed the jury

that as

a matter of

law "the turnkey contract

construction of a hydroelectric facility

accommodate a maximum

required the

. . . . designed to

hydraulic flow of 7800

cubic feet per

second."2
A central

theme of Combustion Engineering's argument on

appeal is that the contract

figure.

We

think it

verdict on the
the district

is not

instructing
reading of

would be odd

to uphold

in fact the district

to

say that

the jury--on

maximum

the directed

ground that the jury found the

judge (namely, that

ceiling) when
This

did not make 7800 cfs a

same thing as

the 7800 cfs figure

judge told it

the district
the contrary,

court
we

was a

to do so.

erred in

agree with

the contract--but rather to explain

so
its

why we think

____________________
2The court also told the jury that the court itself had
rejected Combustion Engineering's contract claims because the
court had found (in directing a verdict) a material breach of
contract by Combustion Engineering, namely, its failure to
show compliance "with the testing requirement of testing at a
total flow of 7800 cfs" as required by the protocol annexed
to the turnkey contract.
-11-11-

that the directed

not insulated by

verdict decision by the district

the jury verdict and should

court is

be reviewed on

the merits.
Turning
relation

to

to the
the

merits, the

directed verdict

first issue
is

whether

before us

in

the testing

protocol required that the final acceptance test be conducted

at a

maximum of

separate
cfs

7800

cfs.

Although

issue from whether

the maximum

reality here

size for

is that the

the turnkey contract

the facility,

would

be

and the

unlikely

to

is

we think

that the
One

cfs figure differently in the

contract
do

made 7800

two issues are interrelated.

might be able to read the 7800

test protocol

formally this

design specifications,

so in

this

case.

but

Combustion

Engineering treats the two issues together, and so do we.

The district
ruled as

court construed

a matter

target and ceiling

of the

facility.

appear

in

apparently

intrinsic
_________

that the

As noted

not in

above, the 7800

technical

the body

figure was

might not be

protocol--support the view

cfs figure does

although

contract itself.

conclusive if it

license

This

stood alone,

Two other pieces of

contract--the FERC

and testing

specifications

of the

not stand alone.

to the

7800 cfs

contract and

figure for both construction

annexed

cross-reference
but it does

of law

the turnkey

evidence

and the

test

that the 7800 cfs figure was both

target and ceiling for the project.

-12-12-

First,
contract

the FERC license was incorporated in the turnkey

by

construct the

cross reference,

the

contractor

facility in accordance with the

FERC license refers to the

total capacity

promising to
license.

project as having turbines with a

of 14 megawatts,

a figure

that the

contract treats as a counterpart to the 7800 cfs

already

The

noted, the turnkey

contract refers to

turnkey

figure.

As

14 megawatts

and the annexed technical specifications to 7800 cfs.3

Second, the test protocol annexed to the turnkey project
clearly provided for
One can imagine a
large capacity
(perhaps

the

reference
and in

testing at "a total flow

of 7800 cfs."

contract providing for a facility

while limiting the test to

expected

normal flow).

with a

some lower figure

Here,

however, the

to the same figure in the technical specifications

the test

protocol strongly suggests

common sense that the facility was

as a

matter of

to be built and tested at

that figure.
Combustion Engineering's brief argues that the 7800
figure

was actually intended

as a minimum,
_______

figure be read as akin to other figures in the

are

allegedly

performance minima.

____________________

cfs

urging that the

contract that

Combustion Engineering

3There was also evidence that the license application

initially reflected a flow of 6800 cfs and that approval of
FERC to increase this to 7800 was obtained in 1985. However,
there is some doubt that this evidence could be described as
intrinsic, at least in the form submitted, and we do not rely
upon it to sustain the directed verdict.
-13-13-

also suggests that in

rough

approximation.

contemplated

any event the

It

modifications

also

its objection.

argues

in whatever

Finally, it claims that Miller

and waived

7800 figure was only

that

the

figure

parties

was chosen.

Hydro learned of the increase

Some of

these arguments

are in

tension with others, and none is persuasive.

There

may be figures

performance minima.

in the turnkey

But certainly

contract that are

the normal reading

of a

performance or capacity figure in a license is that, like the

_______
speed limit sign on a highway,

it is intended as a

Here, the contract said that the facility

accordance with
14

maximum.

was to be built in

the license, and the license

provided for a

megawatt facility, a figure that the contract's technical

specifications equated
7800 cfs.

Thus, we

to a

facility having

think that

7800 cfs was

a capacity

of

a target

and

ceiling and not a minimum.

We agree with Combustion Engineering's claim
treating 7800 cfs as a
deviations;

ceiling, there may be room

for minor

but an increase to over 9000 cfs--there was some

testimony that
hardly

that, even

9600 cfs

minor

or more

change.

was the

real capacity--is

Correspondingly,

the

megawatt

capacity increased from 14 megawatts to 18 megawatts or more,

hardly

minor

Combustion

adjustment.

The

engineer

who

assisted

Engineering testified that a change from 7800 cfs

to 9000 cfs or more would be material.

-14-14-

There were
contract
proved

by
any

provisions for

the turnkey

agreement, but

Combustion Engineering

agreement

Miller

contractor to exceed the

by

The jury's verdict that

Hydro

7800 cfs figure.

of waiver or estoppel, that

contract

modification of

has not

permitting
As

for the claim

issue was submitted to the jury.

Combustion Engineering breached

by constructing a

the

facility in

excess of

the

7800 cfs

appears

implicitly to reject the waiver or estoppel defense.

This is quite understandable since there is no clear evidence

that Miller Hydro knew of the change in capacity until it was
too

late to alter course, and substantial evidence indicates

that Combustion Engineering sought to conceal its deviation.

Combustion Engineering argues that at the very least the
contract

was ambiguous,

have been admitted and

jurisdictions

follow

integrated contract

follow

the

document.
(1990).

the issue submitted to a

so-called

evidence

But

Maine resolves

is excluded;

modern approach,

"interpret"
See
___

binary

should

jury.
rule

Some

that an

is either clear or ambiguous and, in the

case, extrinsic

to

extrinsic evidence

the traditional

former

evidence

so that

even

the problem,

allowing

seemingly

A. Farnsworth, Contracts
_________

we need not decide

other states

7.12,

extrinsic
unambiguous
at 521-23

in this case precisely

because Combustion

how

Engineering

has not properly pointed to any extrinsic evidence that could

alter the result.

-15-15-

We

say

Engineering's
summaries of
comprise

"properly"
brief

pointed

does

documents,

have an

summaries, not

entire

events or

relevant extrinsic
a single

because

Combustion

page

of capsule

testimony purporting

evidence.

In

reference appears

this
to a

page

to
of

transcript

page or an exhibit number or to an appendix or addendum page.

There is some

similar material in the fact

statement of the

brief, with record or appendix references, and we have sought

to match up the summaries
statement.

Having

that this

with relevant portions of the fact

done so as best we can, our conclusion is

"evidence," even

if considered,

does not

create

ambiguities warranting jury resolution.

To take
as an
both

Combustion Engineering's first

example, the brief

capsule summary

says that an engineer

working for

Combustion Engineering and Miller Hydro told the latter

that "the Turbine

limit Combustion
equipment."
affirms

Specifications were minimums that

Engineering's right

The engineer's actual

the contractor's right

electrical equipment and says

expected

of

criteria . .

the

equipment

. ."

Nothing
to

to select

that "the overall

was

appropriate

letter, however,

to design the

outlined

in

did not

merely

generator and
performance
the

minimum

in the quotation associates

minimum criteria

general

reference

figure.

The balance of the evidence summarized by Combustion

Engineering is even less persuasive.

with

the

the

7800 cfs

-16-16-

Later in its brief, Combustion Engineering makes a quite

different

argument.

violation

of the

debar

It

It argues that

efficiency bonus or
not be
other

found to
amounts,

even assuming

occurred,

from

all recovery

under

a
not
the

as the

invokes

final

the

testing should

precedent" to
payment

retained temporarily

also

this should

penalty, and that proper

such

that

testing was directed to fixing the

be a "condition

contract or sums
company

that

test protocol

Combustion Engineering

contract.

The

says

recovery of

due

under the

from prior

payments.

notion

that

"substantial

performance" is sufficient to allowit to sue on the contract.

It may be
breach

of

Combustion
greater

a close question

testing

protocol--among

Engineering tested

than

7800

whether standing alone

the facility

cfs--should

balance of the contract price

other

preclude

at

the

breaches,
a flow

recovery

of

far
the

as well as the possible bonus.

If this were

the posture of the case, we would be obliged to

engage

close

relation

in a

to the

reading

rest of

of the

test

the contract.

protocol and
One

its

can certainly

conceive of a case in which the contractor failed to fulfil a

requirement needed to earn a
ordinary

circumstances, be

bonus payment but would not, in

deemed

to

lose

the

right

to

collect the basic price for work done.

Here, however, Combustion Engineering

violated not only

the test protocol but the contract specifications by building

-17-17-

an oversized

facility, and

deliberate.

The jury verdict alone confirms the substantial

breach,

and

Combustion

deliberate

was substantial

character

Engineering's misrepresentations

concealment.
did not

its

the breach

Even if the violation

preclude all

the substantial and

precludes

contractual

patent
and efforts

under the

at

contract,

deliberate breach did

claim

from

of the testing protocol

further recovery

assuredly

is

and

based

on

so and

substantial

performance.
This premise of a substantial and deliberate breach also
disposes

of Combustion

Engineering's

equitable claims

for

unjust enrichment and promissory estoppel.

district court

that, even

under

Maine law

Maine

law appears

equitably based
good faith is

if such

where contractual
to make

recoveries.4

claims may
claims

good faith
Here

We agree with the

be permitted

have been

a condition

lost,
of such

Combustion Engineering's

disproved by the jury verdicts.

The verdicts

____________________
4The most recent Maine decision to which we are cited,
says that an equitable recovery may be allowed when the
builder provided materials or
services "in an
honest
endeavor" to perform the contract.
Loyal Erectors v.
_______________
Hamilton & Son, Inc., 312 A.2d 748, 755-56 (Me. 1973);
______________________
Accord, Levine v. Reynolds, 54 A.2d 514, 517 (Me. 1947).
______
______
________
Even if Maine law is more fluid, allowing the judge some
flexibility in weighing the equities, see A. Horton & P.
McGehee, Maine Civil Remedies, 11-17 (2d ed. 1992), we are
____________________
certain from its statements here that the district court
would exercise that discretion to disallow recovery, and we
would have no difficulty sustaining that decision.
-18-18-

were binding on the court, see Dairy Queen, Inc. v. Wood, 369
___ ________________
____

U.S. 469 (1962), and are amply supported by the evidence.

This

outcome

becomes

even

more

compelling when

one

appreciates that the deliberate and substantial breach placed

Miller Hydro at risk of significant harm.
where building "more"
owner; but

than one promised is a

Indeed,

it may be

ultimately suffer because

license

benefit to the

that is hardly assured in the case of a federally

licensed dam.
will

There may be cases

that Miller

Hydro itself

of violation of

its federal

terms or because the fish protection facilities will

have to be

rebuilt.

obtaining extra

Nor is

it clear that it

power that

it says it

has gained by

can neither

sell to

CentralMaine Power nor economically wheel to other customers.

Miller Hydro

alludes

to

these

providing much supporting detail.

how much substance

the long-term benefits

to

Combustion
for

produce

whether short term

in part, or even outweighed,

of a larger
power.

facility with a

What

we

do

know

by

greater
is

that

Engineering was not entitled to create such risks

Miller

Hydro by

deliberately--from
behaving

without

We have no way of knowing

there is to them, nor

disadvantages may be offset

capacity

possibilities

the

secretly
terms

deviating--substantially and
of the

in this fashion now forfeits

contract.

the balance due under

the contract does not seem in the least unfair.

-19-19-

That one

Combustion Engineering has

require little

discussion.

should have granted

in accordance
only

after

first argues that

with the protocol.

verdict

and the

for

retest,

jury verdict

refusal

to

grant

of the facility

had

made not

turned down

but

after

in this

case.

this

request for equitable

the court

This demand was

Combustion Engineering

own request

impudent,

It

its motion for a retest

Hydro's

court's

two remaining arguments that

highly

the

Miller
directed

The district

belated,

relief was well

if

not

within its

discretion.
The other argument is Combustion Engineering's attack on
the
Maine

district court's
mechanic's

oversimplification

refusal to grant
lien

to say that

additional remedy and not

under Maine

law, as

statute.

it relief
It

may

be

the statute creates

a new right; but it

in many

under the
an

only an

is clear that

jurisdictions, the

mechanic's

lien depends

on the claimant having a valid underlying claim

for monetary

recovery based on

the construction

performed.

Bangor Roofing & Sheet Metal Co. v. Robbins Plumbing Co., 116
________________________________
____________________
A.2d 664, 666 (Me. 1955).

Combustion Engineering has no such

valid underlying claim

in this case,

so the district

court

properly discharged the mechanic's lien.

There remains
noted,

the

Miller Hydro's

jury

found

counterclaims) that

(in

own appeal.
deciding

As

Miller

Combustion Engineering had

already
Hydro's

breached its

-20-20-

contract
did

and engaged in misrepresentation but that the proof

not support

falsehoods.

its judgment

Rather,

dismissing

of

damages from

the breach

or

Miller Hydro does not challenge these verdicts,

which limited
relief.

a finding

on these

claims to

it argues that the district

its

remaining

racketeering

declaratory

court erred by

counterclaim

and

declining to submit that claim to the jury.

The
counts

remaining
under

counterclaim

comprised

three

related

Racketeer

Influenced

and

Corrupt

the

Organizations Act,

18 U.S.C.
RICO

counts,

1961, et seq. ("RICO").

_______
asserted

in

In

substance,

these

pleadings

amendment,

charged Combustion Engineering and various of its

employees with a fraudulent scheme to obtain inflated bonuses

from

one or more power-plant construction projects.

Various

uses

of

of

the

mails

fraudulent scheme
Miller

Hydro

or

telephone

were alleged.

sought

system
For

damages,

in

aid

the RICO

injunctive

the

violations,
relief,

and

attorney's fees.
After the RICO counts were added, Combustion Engineering
on April 16, 1991, moved to dismiss the counts under

Fed. R.

Civ. P. 12(b)(6) for failure to state a claim; it asserted as

grounds for

dismissal various somewhat technical

the RICO counterclaims

(e.g., that
____

a separate

had not been sufficiently alleged).

district court granted the motion

defects in
"enterprise"

On October 4, 1991, the

to dismiss but on a ground

-21-21-

only

barely suggested by

that an

earlier, October

a footnote in
19, 1990,

magistrate judge had found a

the motion, namely,

discovery order

by the

failure of Miller Hydro to make

out a prima facie case of fraud by Combustion Engineering.

_____ _____
The

magistrate

judge's

resolving discovery disputes

that

order

had

been

entered

including Miller Hydro's

Combustion Engineering had

lost the protection

in

claim
of the

attorney client privilege as to certain materials because its

attorney

was

Interpreting
Evid.

participating

in

Maine law governing

502(d)(1),

the

fraudulent

scheme.

the privilege, see

___

magistrate

judge

found

Me. R.

that Miller

Hydro's evidence thus far made out the necessary prima

_____
case

on

reckless

"the first

three

elements

misrepresentation of a

of fraud

[knowing

material fact] but

final two [purpose and effect of inducing reliance]."

sufficient proof of each element
magistrate judge found no

facie
_____

not the
Absent

needed to prove fraud,

loss of the privilege and

or

the

refused

to order protection of the documents in issue.

On

appeal,

Miller

Hydro

complains

resolving the Rule 12(b)(6) motion

right

to

rely

on materials

extra-pleading material.
"a

in

the

pleadings without

an opportunity to counter the

Although Rule 12(b)(6) does require

reasonable opportunity" to

pleadings, the magistrate

that

the district judge had no

beyond

giving Miller Hydro notice and

sharply

counter material

outside the

judge's finding of no

prima facie
_____ _____

-22-22-

case
and

was cited in Combustion Engineering's motion to dismiss

arguably Miller Hydro

had the necessary

opportunity to

counter it.

This court

has looked through form to substance

in applying

the rule's

requirement.

See
___

Moody v.
_____

Town of
_______

Weymouth, 805 F.2d 30, 31 (1st Cir. 1986).

________
What

is

substantive

more

troublesome is

argument

that

Miller

the magistrate

Hydro's further,
judge's

finding

cannot support the district court's order dismissing the RICO

claims.
that

All

that the finding showed, says

Miller Hydro, is

in October 1990, while discovery was still underway, it

lacked enough evidence to show that all elements of fraud had

been made

out to the

client privilege.5
same for

follow

Even assuming

proving fraud

privilege

extent needed to vitiate

the attorney

that the standards are the

in relation

to the

attorney-client

issue and in relation to a RICO claim, it does not

that evidence

was equally

lacking

in October

1991

after further discovery had been conducted.

The district court did
in its

brief order of

the court

not discuss any of

the evidence

dismissal in October 1991.

actually allowed

the Maine

fraud claims

Further,
made by

Miller
fraud

Hydro to
underlay

go the

jury.

both the

Yet common alleged

Maine

fraud

and the

acts of

RICO

fraud

____________________
5The standard of

proof is rather elusive since

a prima
_____
definitive proof; yet the fraud

facie case does not require

_____
claim itself has to be proved under
convincing evidence.

Maine law by

clear and

-23-23-

counts.

Indeed,

Miller Hydro

argues

that RICO

fraud

is

easier to prove than fraud under Maine law because the latter
requires that each element be proved by clear and
evidence.

convincing

The district court's seeming concession that there

was enough evidence

whether we could

of fraud under Maine law

sustain the court's

adds to doubts

dismissal of the

RICO

counts based on the magistrate judge's finding.

We need
jury's

not resolve

verdict

persuades

taken

us that

the matter,

together

Miller Hydro

dismissal of the RICO claims.

with
was

however, because
other

the

circumstances

not prejudiced

by the

The jury found that no damages

had been proved by Miller Hydro on the two counterclaims that

did reach the jury
contract
fraud.

by Combustion
The

Miller

even though the jury found both breach of

Engineering

central damage

Hydro--e.g., delay
____

the fishways--are
claims,

and the

and

claims

acts amounting

argued to

costs, prospective

common to the
jury finding

the jury

by

rebuilding of

Maine fraud and

of no

to

damages on

RICO fraud
the former

suggests the same outcome would have resulted on the latter.

Miller Hydro
its damage

claims based on breach of

narrower than
contract

those covered

damages must

parties but
that

argues, although without much detail, that

this

is

so.

by fraud.

be within

fraud damages
But

contract were somewhat

the

Its theory

contemplation of

need not be,

Miller

is that

and we

Hydro

does

the

will assume
not

suggest

-24-24-

(attorney's fees

aside) that

were narrower under Maine law

common acts

of

alleged fraud,

its actual

damages for

fraud

than under RICO and, given the

it is

hard to

see why

the

damage claims under

RICO would be broader.

Instead, Miller

Hydro simply asserts that the fraud damage claims under Maine
law

required clear and convincing evidence while those under

RICO required merely a preponderance of the evidence.

It is by
fraud damages
convincing

no means clear that the jury was told that the

under Maine law had to

evidence.6

But

even

be proved by clear and

if

the

jury

had

been

explicitly told clear and convincing evidence was required in

computing

damages,

prejudice in this

case.

is shown to be very
of

we

would

still

find

Perhaps where the

no

showing

of

issue of damages

close--turning, for instance, on a clash

expert opinions--the

asserted

difference

in burden

of

proof between a common law fraud and a civil RICO claim could
be decisive.

See Wilcox
___ ______

v. First Interstate Bank of Oregon,

_______________________________

815 F.2d 522, 531 (9th Cir. 1987).

But the burden of showing

____________________
6The district court's generally lucid instructions did
tell the jury that the elements of fraud under Maine law had
to be established by clear and convincing evidence. But when
the court came to instructing on the computation of damages,
where it discussed contract and fraud damages together, it
did not say that any of these determinations had to be made
_____
by clear and convincing evidence. Indeed, the jury could
easily have inferred the contrary because the court went on
to say that an award of exemplary damages did require a
finding of malice by clear and convincing evidence.
-25-25-

prejudice is upon the party claiming error, and we think that

here that burden has not been met.
Miller Hydro's main efforts at trial appear to have been
devoted

to establishing

contract and

Combustion Engineering's

fraud, findings

very important

breach of

in shoring

up

Miller Hydro's own defense to Combustion Engineering's claims

against

it.

When a

directed verdict

directed verdict was

no

case

in

chief

counterclaims.

was served,

ordered, Miller Hydro chose

of

its

Instead,

evidence that Combustion

own

in

Miller

support

Hydro

after a

to present

of

relied

its

own

upon

the

Engineering had offered in

its own

case in chief before the directed verdict was granted.

not

surprising

showing as to
facility,

that,

absent

an

affirmative

how Miller Hydro would suffer

the jury

awarded

decision to stop while ahead

no

damages.

It is

independent

from the larger

Miller

Hydro's

was probably good tactics,

but

it does not suggest that an adjustment in the burden of proof

would have altered the result.
More important, there is nothing in Miller Hydro's reply
brief--which

offers the burden

of proof distinction

as the

basis for presuming prejudice--that discusses the evidence of

damages in

any detail

or provides

that a different standard of

this

case.

nature of

In the
the jury

any basis

for believing

proof could alter the result in

present

circumstances,

instructions and

including the

the seemingly

limited

-26-26-

weight

placed

theoretical

on

damages

at

trial,

we

think

that

the

possibility of a different result is not enough.

And absent a showing that would suggest a real possibility of

a

different result,

it

is time

for

this already

lengthy

litigation to come to an end.

Having considered consequential

damages, it remains

address two other possible differences in remedy.

RICO statute allows attorney's
his business
1964(c).

First, the

fees to a person "injured

or property" by a RICO

violation.

to

in

18 U.S.C.

It is far from clear, however, that such attorney's

fees would be

available where, as here, the

jury finds that

no actual injury

has been proved.

Again,

given the absence

of

by Miller

that a

jury could

some showing

damages

Hydro

limited solely to attorney's fees,

award

we think that no

showing of prejudice has been made.

Second, Miller
have

been

entitled

Hydro argues

that under

to injunctive

continuing importance to

it.

relief

RICO it
that

Specifically, it

remains of
asserts that

Combustion Engineering, having

had its belated motion

retest denied

court, is now trying

by the district

would

for a
(how is

not explained) to pursue its demand for a retest though other

means.

This

conduct,

says

Miller

Hydro,

constitutes

continuing RICO fraud that the district court would have been
asked to

enjoin if the

RICO claims had not

been dismissed.

-27-27-

See
___

18 U.S.C.

1964(a) (injunctive remedy

available under

RICO).
We think this
remand

thin a

and further litigation

the district
contract

is too

court's dismissal

reed on which

under RICO.
of Combustion

and equitable claims and

to hang

Taken together,
Engineering's

the court's denial of the

belated

motion

for

a retest

Combustion Engineering has no

establish

definitively

further claim for a retest

any other remedy under

the turnkey contract.

Engineering

pursue

were

independent

to

law suit, we

that

any

such

or

If Combustion

claim

think that sanctions

through

an

for baseless

litigation might well be available.

III. CONCLUSION
This

case

outset by, for

could

plausibly have

been

settled

at the

example, payment of any remaining amounts due

under the contract but without any bonus payment.

Now, after

wearisome and no doubt expensive litigation over an imperfect

contract
it

and imperfect conduct, neither side has gained what

sought at

the outset.

This may

itself be

form of

justice, but it could have been achieved at a lower price.

Affirmed.
________

No costs.

-28-28-