USCA1 Opinion

October 4, 1993

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
___________________

No. 92-2342
JOHN P. MURRAY, ET AL.,
Plaintiffs, Appellants,
v.
ROSS-DOVE COMPANY, INC. AND
DOVETECH, INC.,
Defendants, Appellees.
__________________
ERRATA SHEET
The opinion of this
amended as follows:
On page 12, last
with "continued".

Court issued on September 27,

line of

footnote 5,

1993, is

replace "continual"

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________
No. 92-2342
JOHN P. MURRAY, ET AL.,
Plaintiffs, Appellants,
v.
ROSS-DOVE COMPANY, INC. AND
DOVETECH, INC.,
Defendants, Appellees.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Ernest C. Torres, U.S. District Judge]
___________________
____________________

Before
Torruella, Circuit Judge,
_____________
Feinberg,* Senior Circuit Judge,
____________________
and Boudin, Circuit Judge.
_____________
____________________

Robert M. Duffy with whom Michael P. DeFanti and Hinckley, Al

_______________
___________________
_____________
& Snyder were on brief for appellants.
________
Michael B. Waitzkin with whom Eric L. Lewis, Rima Siro
_____________________
_______________
__________
Nussbaum & Wald, Marc C. Hadden and Gidley, Sarli & Marusak were
________________ ______________
________________________
brief for appellees.
____________________
September 27, 1993
____________________
____________________________
*Of the Second Circuit, sitting by designation.

BOUDIN,
decision
commercial

Circuit Judge.
______________

of the district
dispute

at

This

is an

appeal

court withdrawing from

the

end of

the

from

the jury a

plaintiffs'

case.

Although
show

we think

fraud

abandoned,
view

just

that the

and we

plaintiffs' evidence

treat an

aiding

and abetting

the evidence of negligence and

adequate

to

failed to

foreclose

claim as

injury was in our

directed

verdict.

Accordingly, we affirm the

ruling as to the fraud

claim but

vacate the

the negligence claims

and remand

judgment as to

for further proceedings, strongly encouraging the parties

to

explore settlement of this case.

I. BACKGROUND
Plaintiffs

are three individuals, Franklin D. Crawford,

John P. Murray, Jr. and J. Michael Murray, known collectively

as "the Crawford Group," and an associated investment entity,
Bevmar

Acquisition Corp.

Defendants are Ross-Dove Company,

Inc., a commercial auction firm, and Dovetech,

Ross-Dove

(which

may well

dispute

arises

out of

certain

assets

of

corporation formerly

an

not be

suable entity).

appraisal done

Bevmar, Inc.

a division of

by

("Bevmar"),

Ross-Dove of
a

engaged in the manufacture

The

California
and sale of

electronic circuitry panels.

In

1989,

one

Crawford, organized
effort

to solicit

Robert

H.

Marik,

Bevmar Acquisition
investments in

-2-2-

an

acquaintance

Corp. as part

Bevmar.

In aid

of

of an
of that

effort,

an

investment

banker

Dovetech to appraise certain

appraisal was
other

conducted by

employees, and

appraisal valued

was

working with

Dovetech's

Bruce Schneider, with

help from

in

June 1989.

machinery, equipment,

sale.

$6 million depending

The appraisal

That

molds

dies at three different values, ranging from over

total to over

engaged

of Bevmar's assets.

completed

Bevmar's

Marik

and

$2 million

on the circumstances

said that the appraised value

of

of molds

and dies should not decline for at least three years.

In September

1989, Marik invited Crawford

Bevmar, through the Bevmar

the

Dovetech

Crawford.

appraisal
Crawford

interest

in

Dovetech

appraisal.

appraisal

was

Bevmar

still

Acquisition Corp., and Marik made

of

Bevmar's

contacted
and

to invest in

assets

Schneider

to determine

Schneider
valid.

the

assured
In

to

available

to

explain

his

status

of

Crawford

October

1989

the

that the
Crawford,

together with the two Murrays, paid $3 million for a stake in

Bevmar comprising a loan to Bevmar to be repaid at 20 percent
annual interest, a 40 percent equity interest in the company,
and a bonus depending on the fortunes of the company.
To secure

the loan,

security interest

Bevmar gave

in all of its

the Crawford

group a

machinery, equipment, molds

and dies.
in the

There were some discrepancies between items listed

Dovetech appraisal and

security

items listed in

filings, but the latter

the recorded

lists were delayed and the

-3-3-

discrepancies
rapidly

not

apparent

Crawford

immediately
was

invested a

chapter 7

that

noticed.

Bevmar

further $500,000

petition was filed and

When its assets

was

What
in

did

deep

but in

become
trouble.

March 1990

Bevmar entered bankruptcy.

were liquidated, the amount

realized on the

machinery, equipment, molds and dies was about $453,000.

The plaintiffs then commenced
court

charging

Ross-Dove

negligent misrepresentation,

and

this suit in the district

Dovetech

with

fraud, and aiding

the torts of others.1

Actual damages in the

million

were

sought,

as

damages.

The

gist of

the complaint was

carelessly
assets

or dishonestly

it had appraised in

group had

relied

to

its

well

as

punitive

overestimated
June 1989 and
detriment on

negligence,
and abetting

amount of $4.5
or

exemplary

that Dovetech

had

the

the

value of

that the Crawford

that

appraisal

in

investing in Bevmar.
After

discovery,

September 1992.
of witnesses,
the

three

molds and

four-day

jury

trial

Plaintiffs offered testimony

either in

Crawford

employees,

person or by

group members,

an employee
dies after

of

from a number

deposition, including
Schneider,

the company

two

Bevmar

that purchased

Bevmar's bankruptcy, and

who had appraised Bevmar machinery

occurred in

the

an appraiser

and equipment and given a

____________________
1The last of these claims is not discussed in the
plaintiffs' brief on appeal, there is scant evidence to
support such a claim, and we treat it as abandoned.
-4-4-

general
March

opinion about
1989.

expert

the value

Surprisingly,

witness

to

testify

of its

molds and

plaintiffs did
as

to

dies in

not provide

an

inadequacy

or

the

incompetence of Dovetech's appraisal.2

At

the

close

of plaintiffs'

judgment as a matter
the

current name

case,

defendants sought

of law under Fed. R. Civ.

of the

traditional relief

P. 50(a)(1),
afforded

by a

directed

verdict.

On

October 1,

1992, the

delivered a detailed oral opinion concluding

had

district court
that plaintiffs

failed to show that the appraisal was inaccurate or that

defendants

were at

fault.

Alternatively, the

court found

failures of proof as to justifiable reliance on the appraisal

and as

to causation of injury.

as a close

Although we regard this case

call, on balance we think that

plaintiffs did at

the completion of their opening case have enough

evidence to

reach a jury on a negligence theory.

II. ANALYSIS
On

a Rule

50(a) motion,

appellate review

is plenary.

American Private Line Serv., Inc. v. Eastern Microwave, Inc.,

_________________________________
_______________________
980 F.2d 33, 35 (1st Cir. 1992).
from it are

considered in

The evidence and inferences

the light most

favorable to

the

____________________
2Plaintiffs belatedly attempted to add an expert witness
but this was disallowed because the witness was not timely
listed as required by pretrial orders.
Plaintiffs complain
but we see no error in this ruling. The district court did
allow plaintiff to make use of deposition testimony of Steve
Piletz, an expert appraiser who had appraised certain of the
assets in March 1989.
-5-5-

party opposing the

directed verdict,

Raymond Steel, Inc. v.

____________________

close

plaintiffs.

Puerto Rican American Ins. Co., 954

______________________________

F.2d 19, 22 (1st Cir. 1992).

the

here, the

of plaintiffs'

A directed verdict is proper at

case

only

when the

plaintiffs'

evidence, viewed in this light, would not permit a reasonable

jury

to find in favor

of the plaintiffs

on any permissible

claim or theory.
A reviewing
have

offered

court must thus ask

enough

evidence

plaintiffs' favor on each of the

____
at least one cause of action.
that Rhode

Island law defines

not clear--and we

accept this

law,

to

permit

findings

in

elements necessary to prove

Here, the parties have assumed

the causes of

action--why is

premise.

In re Newport
______________

Plaza Associates, L.P., 985 F.2d

_______________________
It

whether the plaintiffs

See
___

640, 644 (1st

Cir. 1993).

also appears to be common ground that, under Rhode Island

a

cause

misrepresentation

of

action
exists

inaccurate, the inaccuracy

on the appraisal was

for

if

the

negligence
Dovetech

or

negligent

appraisal

was

stemmed from negligence, reliance

justified, and the reliance proximately

-6-6-

resulted in injury.3
evidence.

With

this yardstick, we

turn to

the

____________________
3Because plaintiffs' claims of negligence and negligent
misrepresentation both allege negligent supply of false
information, we will consider them as the same claim. See
___
Ralston Dry-Wall Co., Inc. v. United States Gypsum Co., 740
___________________________
________________________
F. Supp. 926, 932 (D.R.I. 1990), aff'd, 926 F.2d 99 (1st Cir.
_____
1991). The Rhode Island Supreme Court has not yet directly
addressed a cause of action for negligent misrepresentation,
Ostalkiewicz v. Guardian Alarm, 520 A.2d 563, 569 (R.I.
____________
______________
1987), but federal courts applying Rhode Island law have held
that negligent misrepresentation is actionable.
E.g., Banco
____ _____
Totta e Acores v. Fleet Nat'l Bank, 768 F. Supp. 943, 946-47
______________
________________
(D.R.I. 1991); Ralston Dry-Wall Company, Inc., 740 F. Supp.
______________________________
at 932.
-7-7-

A.

Inaccuracy and Fault

____________________

The first two elements,

negligence in
to

inaccuracy in the appraisal and

its preparation, are closely

be considered

together.

In

related and need

the abstract,

an appraisal

could be inaccurate without fault,

or it could be carelessly

prepared but correct in its conclusion.

in

many, the issues overlap

the magnitude
negligence.

of

because if inaccuracy is shown,

the inaccuracy

How strong the

But in this case, as

may

be some

inference would be

evidence

of

depends, as

usual, on the facts.

Here, plaintiffs'

best case for error

in the appraisal

and for negligence, stripped to its essentials, can be easily

summarized.

First and

most

important,

plaintiffs

offered

evidence of a gross disparity between the appraisals of value

assigned by Dovetech
1989 and the

to the

value realized

about a year later.

Bevmar molds and

for the Bevmar

dies in

June

molds and

dies

In the Dovetech appraisal, the molds and

dies were evaluated as follows:

AUCTION: $16,000 x 96 = $1,536,000
ORDERLY: $21,000 x 96 = $2,016,000
IN PLACE: $42,000 x 96 = $4,032,000
According to

the appraisal, "auction" meant

disposition "as

is" at an

auction sale completed in a 30-40

day time frame;

"orderly"

meant orderly

months;

and

"in

place"

liquidation over
meant

enterprise.

-8-8-

as

part

a maximum
of

an

of six
ongoing

When the
July 1990,
was

96 molds and

dies were auctioned as

the winning bid was $40,000 for the whole lot and

made by Elcor Corporation,

dies to Bevmar in
collect the

1986.

molds and

which had sold

96 molds and

When its representative

dies, he

found some

to

arrived to
be in

condition and others to be incomplete, missing or

another
their

company.

Thus the

proof (subject

that

a lot in

molds and

claimed by

plaintiffs' starting

to reservations

dies appraised

at a

yet to

poor

point was

be discussed)

minimum price

million in 1989 had sold for less than 3 percent

of $1.5

of the this

figure a year later.

There

was far less of

a disparity as

and equipment; the minimum

around

$676,000 and

about $413,000.
between

the

the

to the machinery

estimate provided by Dovetech was

auctions of

these items

returned

The district court, after evaluating the gap

appraisal

and

the

realized

price

for

the

machinery and equipment found no proof of material inaccuracy

at

all.

of

the

But the molds and dies represented about two-thirds

total value

equipment,

molds

appraisal could

attributed

and

dies.

by itself

by
A

Dovetech to
serious

easily be

error

an adequate

machinery,
in

their

basis for

finding the appraisal to be materially in error.

The

disparity

in the

price

predicted

and the

price

realized

for the molds and

auction might

not

have

dies is hardly

been fair,

conclusive.

although

there

is

The
no

-9-9-

suggestion
changed

of that in this record.

so materially

based on the disparity;

that no

Or conditions might have

negligence could

be imputed

in this instance, Crawford testified

briefly that market conditions had if anything improved.

a very large

and unexplained disparity offers

case of error in the appraisal and

But

a prima facie

at least some evidence of

negligence.
Whether

the

huge disparity

here

would

be sufficient

evidence of negligence need not be decided, because there was

further

evidence

appraisal.

that

All of the Bevmar

Bevmar's California
where

they

products

cast

were

held

consulted by

by

light

on

the

molds and dies were located at

plant or at about

for Bevmar.

each of the nine

an unfavorable

Bevmar

Schneider

eight other locations

subcontractors
testified that

make

he visited

locations in making his appraisal

telephone with subcontractors and

to

and then

others as to

what they would pay if the molds and dies were sold.

won

But

Elcor's representative

the

bid

a year

later,

locations and found many

some cases

he

visited each

of the items in poor

even unusable.

that Schneider

testified that

And a Bevmar

had visited only three

after Elcor
of

the nine

condition, in

employee testified

of the subcontractors

when doing his appraisal, had not even examined all the molds
and dies

at these three stops,

items were missing.

and had been

told that some

There was testimony that the

molds and

-10-10-

dies were different and in different condition.

Against this

background, a jury could have regarded Schneider's assignment

of a uniform
$16,000

figure to each of the 96

apiece if

auctioned)

molds and dies (e.g.,

____

as highly

suspicious and

as

further evidence that Schneider had done a sloppy appraisal.

The deposition

testimony of

jury's

judgment

Schneider could

reinforced

that

the

negligent.

His expert credentials were fairly

also have

appraisal

was

thin but, far

worse, portions of his deposition transcript read to the jury

were

littered

pressed

with

on the

matters.

the entry

puzzling uniformity

There was no

and abetting

"no

not fault the

from the jury.

the evidence that plaintiffs

when he

of figures

real evidence of fraud

fraud, and we do

withdrawing this issue

response"

was

and related
or of aiding

trial court in

Yet at

least some of

associate with fraud could have

further undermined the jury's confidence in Schneider's skill

and care.4
We

think

that

the

evidence recited

would

permit

reasonable jury to conclude that Schneider's appraisal of the

molds and dies was erroneous

in the sense that it was

not a

____________________
4Schneider relied in
appraising the machinery and
equipment located on the East Coast on photographs sent to
him by a Dovetech employee based in Massachusetts.
He
apparently knew that Marik was seeking a high appraisal
figure.
And he was associated, although the evidence was
somewhat confused, with a possible proposal in September 1989
for Ross-Dove itself to offer $500,000 to Bevmar for all of
the items in question, the same month in which he assured
Crawford that the June 1989 appraisal was still valid.
-11-11-

responsible estimate of value

and, further, to conclude that

its preparation was negligent.

A jury might not so find, and

a strong defense case might make such findings less likely or

even impossible.
as it stood at

Still, limiting ourselves

to the evidence

the close of plaintiffs' case,

inferences

and

plaintiffs,

we

issue

of

credibility

think that

jury

in

that

and resolving
favor

found

of

the

error

and

negligence in the appraisal would not be irrational.

We turn
molds

now to the

district court's discussion

of the

and dies, a subject that the court fairly described as

difficult

and to which it gave careful attention.

gave three reasons for

disregarding the discrepancy

appraisal and realized value.

appraisal

was

based on

functioning molds
(in the

the market

value

of the

the molds and

district court's words) "apparently

the court,

between

The first was that Schneider's

and dies whereas

as scrap," some being

The court

dies were

sold at auction

operational and some not.

made a comparison between

items as

This, said

predicted and realized

price of the items a comparison of apples and oranges.

With

respect, we think it might be more accurate to say

that Schneider
they, or

appraised the

molds and

some of them, turned out to be

clear what knowledge Elcor

the auction.
for auction as

dies as

apples but

oranges.

It is not

had of the molds and

dies before

The molds and dies seem to have been advertised

operational, since pictures of the items they

-12-

-12-

could produce were offered.

Bevmar
what

Having sold 96 molds and dies to

in 1986, Elcor may have supposed that it already knew

it was

certainly

getting.

very low

At the

and may

same time,

be open

Elcor's bid

to the

was

inference that

Elcor knew that many of the items were scrap or little more.
No doubt, as the district court assumed, it
in Schneider's estimate
dies would be bought
above scrap
implicit

that the molds

for use, for $1.5 million

value.5

But

by

the

same token

and

is obviously
it

is

also

in the appraisal that they were capable of such use

and would normally be

market conditions or in
no evidence
or that

of $1.5 million

is implicit

so employed, absent a major

the items themselves.

that market conditions had changed

the items themselves had

Yet

change in
there is

by July 1990

unexpectedly deteriorated.

In sum, a jury could condemn Schneider for appraising the

_____________________________________________________________
molds and dies as useful when in fact they were largely
_____________________________________________________________
scrap.
_____
Second, the

district court

observed that the

buyer of

the molds and dies

molds and dies.

only 20 to 40

of the

The court found these to be "a far cry" from

the 96 that were

the

at the auction got

court said

appraised by Dovetech, the more

that the more

valuable ones

so because

were excluded.

____________________
5Piletz, who appraised Bevmar's machinery and equipment
in
March 1989,
offered an
informed guess
based on
reproduction value--not an appraisal--that the molds and dies
"might" sell for about $158,000 if sold as scrap and $634,000
if sold for continued use.
-13-13-

The

court

evidently

believed

appraisal and

price might

that Dovetech

was appraising

that

the

discrepancy

have been explained

a more extensive

by the

in
fact

and valuable

collection of molds and dies than the subset that was finally
bought by Elcor.
The evidence,
Elcor bid

on

knowledge

that

however, permitted the jury

the list
some

of
were

96 molds
missing

and
or

to find that

dies without
owned

by

any

others.6

Further, Crawford's testimony that Elcor had found only 20 to

40 dies is coupled with the statement that many were obsolete

and "[h]ad not been running for

have

thought

that, whatever

years."
the

number

The jury could well

owned by

Bevmar,

Schneider had no business appraising such items at an average

value apiece of $16,000 (auction) to $42,000 (in place).
______
Third,

the

discrepancy
scrap

evidence that

plaintiffs

were

held

that

because

the

between market value and

required

to

offer

expert

Schneider had erred in adopting a market value

approach; absent

correct.

court

reflected a difference

value,

jury would

district

be

such expert
left to

guidance, said the

"speculate"

on which

court, the

approach

was

Rhode Island law, even assuming that it controls on

this issue, does

not automatically require expert

testimony

____________________
6The 96 molds and dies were advertised as a lot, and the
Elcor
testimony is
open to
the inference
that its
representative was surprised when the post-auction survey
revealed fewer than had been promised.
-14-14-

to show negligence.

Murphy v.
______

United Steelworkers, 507 D.2d

___________________

1342, 1345-46
were

(R.I. 1986).

required

competing

between

techniques of

But

we agree that,

competing

concepts

appraisal an

if a choice
of

value

expert might

or

well be

required.7
Here, however, the evidence permitted the jury to assume
that Schneider's concept
conclude that he
values to many
the jury
of

of market value

had negligently

assigned excessive

of the molds and dies.

was capable of appraising

was proper but

to

market

And we conclude that

the plaintiffs' evidence

disparity and fault on its own, although expert testimony

would surely have been prudent and helpful.

recherche about the reasoning
the

huge discrepancy

suspiciously uniform

between

There is nothing

behind the inferences based on

appraisal

and proceeds,

estimates, and Schneider's

the

failure (if

the jury so found) to visit each of the sites and inspect the
molds.
B.
B.
This brings us to
cause

Reliance and Causation

Reliance and Causation
______________________
the second element of

the negligence

of action for which the district court found a failure

____________________
7Piletz' deposition suggests that he did believe that a
different method of appraising molds and dies than the
telephone survey used by Schneider was called for.
It is
very doubtful that Piletz' alternative approach was explained
adequately to permit the jury to reject Schneider's method.
But plaintiffs' far better case was that Schneider had used a
permissible method but botched the job by failing to do any
adequate inspection or make adequate inquiry.

-15-15-

of proof, namely, justifiable reliance.

is

required.

The

discrepancies,
Dovetech

of

several

appraised

missing molds
others have

evidence

A bit of background

suggested

that

there

were

different

kinds,

between

what

Bevmar

actually

owned.

The

and what

and dies and uncertainties

already been mentioned.

about ownership of

It

also appears

that

some of the machinery and equipment in the appraisal may have

belonged

to a Rhode Island

the appraisal.

The

justifiable reliance
not entitled

to

state entity but

district

court

because, it said,

rely on

the

was counted in

found

appraisal to

were
that

extent that

the

To the

items

owned

naturally

by Bevmar,

of

establish

items appraised.

not

lack

the plaintiffs

Bevmar owned the

were

the

security

interest in Bevmar's inventory of equipment, machinery, molds

and

dies

had

reduced

concluded, "the evidence

there

was

no

value.

Therefore,

the

court

establishes as a matter of law that

justifiable

reliance

on

the

appraisal

to

establish the expected security interest in these assets."

Plaintiffs

concede that

the

ownership

of

the

items

appraised

was not within the scope of the representations in

the appraisal.

At most,

the appraisal purported to appraise

property at Bevmar's facilities or, in the case of some molds

and

dies,

property

subcontractors.
no case if

Bevmar

claimed to

Thus it is true

their cause

have

lent

to

its

that plaintiffs would have

of action depended

on showing

that

-16-16-

they

reasonably

Bevmar's title.

relied

upon

It seems

the

appraisal

to us that

to

establish

plaintiffs' cause

of

action, specifically the showing of reliance and injury, does

not depend on such a showing.
The problem is confused
have been somewhat fuzzy
often attractive for a
and evidence of loss
hope

that the jury

case

plaintiffs had

because plaintiffs in this case

in their theory of damages.

It is

plaintiff with evidence of wrongdoing

to throw the evidence

will make a causal

available

there are hints of both in

to the jury

connection.

two different

and

In this

theories, and

its pleadings and arguments.

One

theory is
not

that, but

have invested

for the misappraisal,

at all

and would

plaintiffs would

still have

their $3.5

million; the other is that their security interest would have

been worth more if the appraisal had been accurate.
Plaintiffs offered
theory,

their

namely, that they

own testimony

would not

on

have made

the

first

the initial

investment if they had known that the assets in question were

worth

far

standpoint,
question

less

than

the

appraisal

said.8

From

this

it does not matter whether some of the assets in

belonged

to

Rhode

Island

or

to

Bevmar

____________________
8The testimony on this issue is not crystal clear but it
was adequate for the jury to draw such a conclusion.
And
given the importance the Crawford group attached to the
appraisal, evidenced by other facts (e.g., the inquiry to
____
Schneider
and
a
separate
inquiry
into
Ross-Dove's
reputation), the conclusion is eminently plausible.
-17-17-

subcontractors.

If

plaintiffs' testimony is accepted,

then

the mistaken appraisal "caused" the loss in the familiar "but

for" sense:

but for

the mistake,

the loss would

not have

occurred.
cause.)

(We defer for the moment questions of

The

validity of the security

intervening

agreement simply does

not matter.
Its

validity

very

much

does

matter

on

the

second

possible theory of injury, namely, that the misrepresentation

caused

loss insofar

security
event

as

interest,

it

overstated

the

reducing plaintiffs'

of bankruptcy.

value would indeed be

On

this

value

protection

theory, any

claims would be

Perhaps any damage

___

recovery on this

for there

record;9 but

is nothing

Whether one

or lack of causal connection,

plaintiffs' damage

point

in the

harmless as to those assets that were

_____________________________

speaks of unjustified reliance

this

the

misestimate of

misappraised but were not owned by Bevmar.

_____________________________________________

speculative on

of

proportionately reduced.
second theory might
we

need not

decide

obviously wrong with

be
the

the first

theory as a basis for getting to the jury.

Defendants on
why

Crawford's

appeal offer

reliance

justifiable reliance.

on

the

a different argument
appraisal

They argue that the

could

as to
not

be

appraisal by its

____________________
9Arguably, it would be plaintiffs' responsibility to
show which assets were owned by Bevmar and the extent to
which, as to those assets, the appraisal figure exceeded the
price received at auction. It is unclear whether the record
permits such an allocation.
-18-18-

terms required the

distributed

consent of

Dovetech before

it could

be

to third parties other than Marik and Bevmar and

that, at least implicitly, this caveat made reliance on it by

third party investors unreasonable.
would

undercut both

injury.

of

This view, if accepted,

plaintiffs'

It was not adopted

possible

theories

of

by the district court as a basis

for the directed verdict.

There was evidence at trial that Dovetech
appraisal would
plaintiffs.
that

he

be distributed to financing

Crawford also testified that

(Crawford) and

others were

knew that its

sources such as

he told Schneider

going

to rely

on the

appraisal in making their investment and Schneider reaffirmed

its

validity.

Piletz testified

their work will be relied

might

find that,

defendants urge,

that appraisers

on by third parties.

even if

the appraisal

Dovetech had

treated the Crawford group as

know that

Thus

caveat is

waived its protection

among those for whose

a jury
read as
or had
benefit

the appraisal had been done.

Finally we turn to the district
reason

for its directed

court's third and last

verdict, which can

be described as

accepting an "intervening cause" defense.

The district court

found

that the lists of assets appraised by Dovetech did not

match

the list

of assets

agreement filing;
plaintiffs

included in

plaintiffs' security

that attorneys acting in

some measure for

disbursed plaintiffs' money at the closing before

-19-19-

certain of plaintiffs'
the

conditions were

bankruptcy trustee

plaintiffs'

security

proceedings

(a

had challenged
interest

challenge

in

that

satisfied; and
the validity

the
has

pending
now

that
of the

bankruptcy

apparently

been

dropped).
The

first and

injury are

last

of these

irrelevant so

far as

"intervening causes"

of

the plaintiffs proceed

on

their first theory of recovery: as already shown, that theory

does

not depend on the validity of the security agreement at

all.
alleged

The

cause" is

the attorneys'

failure to insist at the closing that other promised

third-party
certain

remaining "intervening

investments in

liens

against

its

Bevmar

be

property

committed
be

and

satisfied.

that
The

district court's conclusion may

if

the client

instructions

initial $3 million would

likely, the conditions if

rest on the assumption that,

had been

followed, either

never have been paid over

the

or, less

satisfied would have prevented the

failure of Bevmar.
There

was some

disregard

of

evidence

instructions,

of

the

attorneys'

but

very

little

significance or consequences of such disregard.

law

is

not

defense,

especially

nor

especially

friendly to
precise;

an
and

supposed
about

Rhode Island

intervening
a

jury

the

cause

instructed

-20-20-

according

to the

latitude.10
think

that the

mistake at the

state's case

Measured

against

law might

such language,

evidence presented
closing compelled
_________

intervening cause was responsible

have considerable

as to
a jury to

we

do

not

counsel's alleged
decide that

for the plaintiffs'

an

loss.

Whether in

presenting their

defense defendants

could offer

more powerful evidence on this point is another matter.

III.
To sum up, we
was
jury.

CONCLUSION

agree with the district court

that there

insufficient evidence of fraud to submit that claim to a

But in our view the jury did have sufficient evidence,

judged at the close of the plaintiffs' case, to find material

error

in the

appraisal and

While plaintiffs

may face

reliance,

causation,

and

explained

above that

negligence in

its preparation.

hurdles on issues
damages,

we

directed verdict

think

of justifiable
for

reasons

on those

grounds

cannot be justified at this stage.

____________________
10Thus, "an
intervening act will not
insulate a
defendant from liability if his negligence was a concurring
proximate cause which had not been rendered remote by reason
of the secondary cause which intervened."
Roberts v.
_______
Kettelle, 356 A.2d 207, 215 (R.I. 1976). The first negligent
________
act will be rendered remote if "a second actor has become
aware of the existence of a potential danger caused by the
negligence of a first actor and the second actor acts
negligently with regard to the dangerous condition, thereby
bringing about an accident with injurious consequences to
others."
Walsh v. Israel Couture Post, No. 2274 V.F.W., 542
_____
____________________________________
A.2d 1094, 1096-97 (R.I. 1988). Further, "an intervening act
of negligence will not insulate an original tortfeasor if it
appears that such intervening act is a natural and probable
consequence of the initial tortfeasor's act." Id. at 1097.
___
-21-21-

On

remand

this

case

should be

possible.

The discrepancy

the amount

ultimately realized

with

the doubts

for molds and

ought to make the defense quite

better

job

of
and

auction

appraised

by

Schneider.

value and

dies, coupled

appraisal's thoroughness,

uneasy about fault.

the

price

intervening cause defense is

humanly

On

be able in its own case

explaining

appraisal

if

between the appraisal

raised about the

other hand, the defense may

settled,

discrepancy

of

How a

the
jury

96

to do a

between

molds

and

will dispose

anyone's guess.

the

the
dies

of the

And even

if a

jury makes an award, the award can be appealed.

The

parties

respective

now

strengths

Money spent on

have
and

pretty

weaknesses

further litigation

fair
of

gauge

their

is a loss

of

the

positions.

to both

sides

regardless of the outcome, since most litigation expenses are

not

recoverable.

case for a
think

Full reconstruction

jury is likely

counsel would

clients

not be

if they failed to

to be

of the events in this

especially expensive.

serving the interests

make an earnest

We

of their

effort to settle

this case.
The judgment

of the district court

is affirmed insofar
________

as it

granted judgment as a

fraud

and aiding and abetting and is vacated with respect to

_______

the

negligence claims.

proceedings.

matter of law on

The case

No costs.

-22-22-

is remanded
________

the claims of

for further