Commonwealth v. Bryan (Lawyers Weekly No. 10-016-17)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us

SJC-12140

COMMONWEALTH  vs.  ATUNBI BRYAN.

Suffolk.     November 7, 2016. – January 20, 2017.

Present:  Gants, C.J., Botsford, Lenk, Hines, Gaziano, Lowy, & Budd, JJ.

Practice, Criminal, Mistrial.  Supreme Judicial Court, Superintendence of inferior courts.

Civil action commenced in the Supreme Judicial Court for the county of Suffolk on February 26, 2016.

The case was heard by Duffly, J.

Nicholas Brandt, Assistant District Attorney (Gregory D. Henning, Assistant District Attorney, also present) for the Commonwealth.

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Posted by Stephen Sandberg - January 20, 2017 at 10:33 pm

Categories: News   Tags: , , , ,

Commonwealth v. Edwards (Lawyers Weekly No. 10-015-17)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us

SJC-11989

COMMONWEALTH  vs.  JOSHUA EDWARDS.

Suffolk.     September 6, 2016. – January 20, 2017.

Present:  Gants, C.J., Botsford, Lenk, Hines, Gaziano, Lowy, & Budd, JJ.

Constitutional Law, Search and seizure, Investigatory stop, Reasonable suspicion.  Search and Seizure, Motor vehicle, Threshold police inquiry, Reasonable suspicion.  Threshold Police Inquiry.  Firearms.  Alcoholic Liquors, Possession of opened bottle.  Beverage Containers.

Indictments found and returned in the Superior Court Department on April 23, 2013.

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Posted by Stephen Sandberg - January 20, 2017 at 6:58 pm

Categories: News   Tags: , , , ,

Morgan v. Massachusetts Homeland Insurance Company (Lawyers Weekly No. 11-005-17)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us

16-P-216                                        Appeals Court

ANTHONY G. MORGAN  vs.  MASSACHUSETTS HOMELAND INSURANCE COMPANY.

No. 16-P-216.

Hampden.     November 9, 2016. – January 20, 2017.

Present:  Kafker, C.J., Kinder, & Lemire, JJ.

Consumer Protection Act, Class action, Insurance.  Practice, Civil, Class action, Consumer protection case.  Motor Vehicle, Insurance.  Insurance, Motor vehicle insurance, Settlement of claim, Regulation, Amount of recovery for loss.  Words, “Actual cash value,” “Retail book value.”

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Posted by Stephen Sandberg - January 20, 2017 at 3:24 pm

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Hanna v. Williams, et al. (Lawyers Weekly No. 12-181-16)

COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
CIVIL ACTION
No. 1684CV0722 BLS 1
Lead Case
STEPHEN HANNA, as personal representative of the ESTATE OF NATHALIE
ROTHBLATT
vs.
MATTHEW WILLIAMS, RBC CAPITAL MARKETS, LLC, BRADLEY COOK,
MICHAEL STARR and TAYLOR GANSON & PERRIN LLP
Consolidated With:
SUPERIOR COURT
CIVIL ACTION
No. 1684CV0724 BLS 1
ELLIOT BERKOWITZ, STEVEN BERKOWITZ and ESTHER BERKOWITZ
vs.
MATTHEW WILLIAMS, RBC CAPITAL MARKETS, LLC, BRADLEY COOK,
MICHAEL STARR and TAYLOR GANSON & PERRIN LLP
MEMORANDUM AND ORDER ON MOTIONS TO DISMISS
(Corrected Version)
Alleged misconduct by lawyers and a financial advisor to cause a 91-year old, infirm
woman to execute a new will six days before she died resulted in disputes over the distribution of
her $ 12 million estate. The disputes among the possible heirs were, ultimately, settled by a
compromise agreement. The probate court approved that agreement by a Decree and Order of
Compromise. Now three of the heirs, who were parties to the compromise agreement, sue the
lawyers and the financial advisor for intentionally and tortiously interfering with their expected
1
inheritance (Civil Action No. 2016 – 0724). The three heirs claim they would have received a
much larger inheritance than what they obtained through the compromise agreement but for the
conduct of defendants. Also, the personal representative of the estate sues the same defendants
to recover the legal fees paid by the estate on behalf of all the heirs, incurred as a result of the
litigation, allegedly caused by defendants’ conduct, over the distribution of the estate (Civil
Action No. 2016 – 0722).
Defendants move to dismiss all claims contending that (a) this court lacks subject matter
jurisdiction over plaintiffs’ claims as a result of the proceedings in the probate court, and (b) the
complaints fail to state a claim upon which relief may be granted.1
BACKGROUND
The following facts are taken from the complaints. For the purposes of these motions, the
factual allegations, and reasonable inferences therefrom, are taken as true. Curtis v. Herb
Chambers I-95, Inc., 458 Mass. 674, 676 (2011).
Events Surrounding Execution of Will and Trust
In 2013, Nathalie Rothblatt was a 91 year-old widow. On March 7, 2013, Rothblatt fell
and broke her hip. She was taken to Beverly Hospital. At that time she suffered various other
ailments such as chronic congestive heart failure, kidney failure and low blood pressure. She
suffered from severe pain from the broken hip, as well as dizziness and difficulty concentrating.
She was placed on medication including morphine and dopamine that affected her cognition.
During her hospitalization she suffered bouts of disorientation, delusions, and confusion. She did
1 The financial advisory defendants also move to compel arbitration. See Part C of this
memorandum.
2
not recover. On March 20, 2013, she died.
Rothblatt did not have children. She was predeceased by her husband, William Rothblatt,
and her brother Sidney Berkowitz. She was survived by her brother, Henry Berkowitz. In
addition, her family consisted of the children of Sidney Berkowitz, plaintiffs in this case, Elliot,
Steven, and Esther Berkowitz (the “Berkowitz Siblings”). She was also survived by her first
cousin, Ralph Edelstein, and his wife, Eileen Edelstein.
The following events occurred during Rothblatt’s two-week hospitalization prior to her
death. Ralph and Eileen Edelstein visited Rothblatt. They observed that her prognosis was poor.
Ralph Edelstein contacted defendant, Matthew Williams, a financial adviser employed by
defendant, RBC Capital Markets, LLC (“RBC”). RBC had acted as a financial adviser to
Rothblatt for several years, although Williams had only recently become the person responsible
for her account. At the time of her death, Rothblatt possessed assets worth approximately $ 12
million. Her account at RBC was worth approximately $ 9 million. Her account was Williams’
largest account for which he was responsible.
Williams visited Rothblatt at the hospital on March 12, 2013. He commenced a
discussion with her about her estate planning. Williams knew that Rothblatt did not want to
leave any portion of her estate to her surviving brother, Henry Berkowitz. At the hospital in
March 2013, Williams told Rothblatt that she needed to execute a new estate plan because if she
did not her estate would go to Henry Berkowitz. The complaint alleges that Williams’ statement
was false and was made recklessly or intentionally to induce Rothblatt to agree to a hastily
constructed estate plan, orchestrated by Williams.
According to Williams, Rothblatt told him that she wanted to execute a new will that
3
would include as legatees Ralph and Eileen Edelstein, and two of the three Berkowitz Siblings,
Steven and Elliot. According to Williams, Rothblatt also stated that she wanted to give a large
portion of her estate to him, Williams. Williams then selected a friend, defendant Bradley Cook,
an attorney at defendant Taylor Ganson & Perrin LLP (“Taylor Ganson”), to draft a new will and
trust. Rothblatt had no previous association with Cook or with the law firm.
Based on what Williams told Cook, a new will and trust were drafted. Cook was assisted
in the drafting of the new will and trust by defendant, Michael Starr. Without ever having met or
conversed with Rothblatt, Cook and Starr drafted the estate plan and then went to Rothblatt’s
hospital room, accompanied by Williams, on March 14, 2013. At that time, Rothblatt executed
the documents. The estate planning documents drafted by Cook and Starr included a devise to
Williams and his family of assets worth over $ 2 million. In addition, the documents provided
that Taylor Ganson act as trustee of a well-funded trust. The trust was drafted such that it would
have a very long life, which would generate significant fees for the trustee law firm.
The execution of the documents at the hospital occurred without the presence of anyone
from Rothblatt’s family, or any other independent person. No evaluation of Rothblatt’s
competence to execute the documents was performed, even though it was allegedly obvious that
she was impaired. Neither Cook nor Starr had any conversation with Rothblatt to ascertain her
intentions. Rothblatt signed the documents without reading them. Concerned that Rothblatt
would die before they could complete the estate plan, Williams, Cook and Starr took
extraordinarily steps to make sure the documents were executed that day, before Rothblatt was
scheduled for major surgery. The complaint alleges that Rothblatt lacked the capacity to create a
new estate plan and that fact was known or should have been known to defendants.
4
According to the complaint, Cook took the executed documents back to his office in
Boston. There, he pressured an employee of the law firm to notarize Rothblatt’s signature on the
documents, although the notary had not been present at the hospital and did not, in fact, witness
Rothblatt’s signature.
The Prior Will
In 1961, Ralph Edelstein’s law firm prepared a will for Rothblatt. Rothblatt executed the
will on December 29, 1961. The will left her household furniture and tangible personal property
to Ralph Edelstein. All the rest and residue of her estate was devised to her brother, Sidney
Berkowitz, and if he predeceased her (as he did) to his issue, per stirpes. Those issue are the
plaintiffs, the Berkowitz Siblings. Rothblatt’s other brother, Henry Berkowitz, was not named as
a legatee of her will. Ralph Edelstein was named as the executor of this 1961 will.
Litigation After Rothblatt’s Death
When the family members of Rothblatt learned, after her death, of the hastily arranged
new will and trust, they were shocked and upset. When they complained to RBC and Taylor
Ganson, both firms quickly determined that their employees and the firms must disclaim their
beneficial interests in the will and withdraw from representation. Williams formally waived his
rights under the will. The law firm resigned as trustee. The validity of the new will and trust,
however, remained clouded by defendants’ conduct. Disputes between and among family
members based upon the validity of the 1961 will and the allegedly tainted 2013 will ensued.
Each of the family members retained separate legal counsel.
A Petition for Probate of the 2013 will was filed in the Probate and Family Court in Essex
County. Plaintiff, Stephen Hanna, was appointed personal representative of the Estate of Nathalie
5
Rothblatt (the “Estate”). Extensive litigation took place regarding the validity of the 1961 and the
2013 wills. In 2014, the parties reached a settlement. Pursuant to the settlement, the Berkowitz
Siblings received 71 percent of the estate rather than the 100 percent they otherwise would have
received under the 1961 will. The Berkowitz Siblings also allege that they suffered significant
emotional distress from the experience of the dispute and litigation.
Pursuant to the settlement, Stephen Hanna obtained the approval of the probate court to
pay the legal fees and costs incurred by all the litigants in the probate court litigation out of the
Estate assets . The amount of legal fees paid by the Estate as a result of the litigation was
approximately $ 1,240,000.
The following are additional facts in the record provided by the Affidavit Of Debra
Squires-Lee. The Affidavit submits “true and accurate” copies of documents from the Probate
and Family Court in the matter of the Estate of Nathalie Rothblatt, Docket No. ES13P1055EA.
The probate court documents are submitted in support of defendants’ motions to dismiss on the
premise that (a) upon a motion to dismiss for lack of jurisdiction the court may consider
materials outside the complaint, Audoire v. Clients’ Security Board, 450 Mass. 388, 390 n. 4
(2008), and (b) this court may take judicial notice of public documents from another court.
Plaintiffs do not contest or object to the consideration of the documents from the probate court.
In the probate court, Edelstein petitioned for probate of the 2013 will. The Berkowitz
Siblings objected and challenged the 2013 will in favor of the 1961 will. Henry Berkowitz
objected to both wills. The objectors to the 2013 will alleged that the will was procured by
undue influence over Rothblatt and that Rothblatt did not understand or comprehend the
implications of what she was doing by signing the 2013 documents. After a significant amount
6
of litigation activity, the parties to the probate court proceeding entered into a settlement. A
Compromise Agreement, dated August 5, 2014, was submitted to the court.
The Compromise Agreement references the disputes regarding the 1961 will and the 2013
will, but does not state a conclusion as to which is the valid will. The Agreement provides for a
compromise whereby each of the contestants receives a percentage of the residue of Rothblatt’s
estate. Thus, Ralph and Eileen Edelstein received 19 percent, Steven Berkowitz received 24
percent, Elliot Berkowitz received 29 percent, Esther Berkowitz received 18 percent, and Henry
Berkowitz received 10 percent of the estate. The Compromise Agreement also attaches and
incorporates a “Compromise Last Will and Testament of Nathalie Rothblatt” to describe the
settlement agreement.
The parties submitted the Compromise Agreement and the Compromise Last Will and
Testament of Nathalie Rothblatt to the probate court for approval. On August 7, 2014, the court
entered a Decree and Order of Compromise. The Decree approved the Compromise Agreement.
No finding was made in the Compromise Agreement or in the Decree regarding the validity or
invalidity of the 1961 will or the 2013 will. Also, on August 7, 2014, the court entered a Decree
and Order of Petition for Formal Adjudication. In that Decree, the probate court formally
“admitted to Probate” the Compromise Last Will and Testament of Nathalie Rothblatt.
The Compromise Agreement also provides that the Estate shall pay the costs of litigation
and attorneys fees incurred by each party in connection with the subject matter of the
Compromise Agreement. The parties agreed to the amounts of costs and attorneys fees submitted
by each party to Hanna and directed Hanna to pay those costs. The probate court approved the
Compromise Agreement.
7
Finally, the Compromise Agreement provides, in paragraph 11, that “Stephen J. Hanna,
after consultation with the Parties attorneys, will consider what actions, if any, are to be taken
with respect to any claims that the Estate of Nathalie Rothblatt may have against (i) Taylor
Ganson & Perrin, LLP, Bradley R. Cook, Michael J. Starr, and any other attorneys or employees;
and (ii) RBC Capital Markets, RBC Wealth Management, Matthew R. Williams, and any other
employees, including the option of filing a petition with the Probate Court for instructions as to
how to handle any potential claims.”
DISCUSSION
A. First Amended Complaint of the Berkowitz Siblings (Civil Action No. 2016 – 0724)
The First Amended Complaint asserts eight counts for relief against defendants.2 Count
VI, entitled “Tortious Interference With An Expectancy” is, upon analysis, the principal theory
asserted by plaintiffs for recovery. In that Count, the Berkowitz Siblings allege that defendants
intentionally, through duress, fraud and undue influence, interfered with their expected
inheritance from Rothblatt. Because this theory is most directly implicated by defendants’ motion
to dismiss for lack of jurisdiction, it will be discussed first. Thereafter, the motions to dismiss all
counts will be discussed.
1. Motion to Dismiss for Lack of Jurisdiction
Defendants do not contest that the superior court has general jurisdiction to hear tort
claims seeking money damages. G.L. c. 212, § 3. Instead, defendants argue that only the probate
2 Count I, Legal Malpractice; Count II, Professional Negligence (Williams); Count III, C.
93A (attorneys), Count IV, C. 93A (Williams and RBC); Count V, Civil Conspiracy; Count VI,
Tortious Interference With an Expectancy; Count VII, Respondeat Superior (law firm); Count
VIII, Respondeat Superior (RBC).
8
court has jurisdiction over a will contest and the claim by the Berkowitz Siblings is, in essence, a
will contest. In addition, defendants contend that to allow the Berkowitz Siblings to proceed in
superior court would constitute a collateral attack on the decrees of the probate court entered as a
result of the Compromise Agreement. Consequently, all of the claims of the Berkowitz Siblings
should be dismissed for lack of subject matter jurisdiction.
Defendants concede that there is no Massachusetts precedent directly on point as to
whether a tortious interference with inheritance claim may proceed when it involves litigation
about the testator’s intent and there has been an adjudicated will contest. They note, however,
that G. L. c. 215, § 3 provides that the probate court shall have “jurisdiction of probate of wills”
and in a case decided before the statute just mentioned, the Supreme Judicial Court held that the
probate court had “separate and exclusive jurisdiction” over wills. Peters v. Peters, 62 Mass. (8
Cush.) 529, 539 (1851).3 Because, according to defendants, the Berkowitz Siblings must prove
the validity of the 1961 will, and the invalidity of the 2013 will, in order to succeed on their
claim of tortious interference, there is no jurisdiction in the superior court to revisit what has
been resolved in the probate court.
To analyze defendants’ arguments, the elements of the tort of interference with an
expected inheritance must be examined. According to the Supreme Judicial Court in Labonte v.
Giordano, 426 Mass. 319, 320 – 321 (1997), “we have long recognized a cause of action for
tortious interference with the expectancy of receiving a gift in certain limited conditions. The
3 The statute, G. L. c. 215, § 3, does not use the word “exclusive” when describing the
probate court’s jurisdiction over wills, while it does use the word “exclusive” for other
jurisdictional descriptions, such as divorce. Whether the probate court’s jurisdiction over will
contests is “exclusive” is an issue I do not need to decide because, as described later in this
memorandum, the claim in this case is not a will contest.
9
defendant must intentionally interfere with the plaintiff’s expectancy in an unlawful way.” Id.
“Unlawful means include duress, fraud, or undue influence.” Id. at note 4. The tort is also
recognized in the Restatement (Second) of Torts, § 774B (1979)(“One who by fraud, duress or
other tortious means intentionally prevents another from receiving from a third person an
inheritance or gift that he would otherwise have received is subject to liability to the other for
loss of the inheritance or gift.”). Massachusetts appears to join with the majority of states in
recognizing the tort.
In Labonte, the Court was addressing an alleged interference by a wrongful act when the
donor was still alive that substantially diminished an inheritance expected at the donor’s death.
There was no dispute regarding the validity of a will. A much earlier case, cited as precedent in
Labonte, comes closer to the facts of this case. In Lewis v. Corbin, 195 Mass. 520, 527 (1907),
the interference was the fraudulent failure by the defendant to obtain the proper signatures to a
codicil to make the gift in the codicil effective. Thus, to succeed, Lewis had to prove that the
intent of the donor as shown by the codicil should be enforced. Lewis asserted his claim in a
separate tort proceeding after the will of the decedent, without the codicil, had been adjudicated
and admitted to probate. The Court wrote that Lewis’ claim was a “sufficient statement of an
actionable wrong” so long as Lewis could prove that the testator’s intent did not change before
she died.
Other Massachusetts cases support the recognition of the tort. In Monach v. Koslowski,
322 Mass. 466, 469 – 470 (1948), the alleged interference was fraudulently to prevent a testator
from making a new will when defendant knew the testator wanted to change a prior will. The
putative new will would have benefitted the plaintiff whereas the prior will, the will admitted to
10
probate, omitted the plaintiff. The Court held “[t]here are strong intimations in our decisions that
one who has been deprived of a devise, legacy or gift which a testator or donor would have given
to him but for the wrongful interference of another may maintain an action of tort against the
latter for the recovery of damages.”Id. at 470. As in Labonte, the validity of a will was not
directly at issue, but the Court recognized the tort where there was fraudulent interference with
respect to an alleged desire to create a new will. The plaintiff is Monach would have to prove the
testator’s intent was different from what was expressed in a will admitted to probate. See also,
Torrosian v. Garabedian, 2105 WL 8024624 (D. Mass. (Saylor, J.) 2015)(denying motion to
dismiss tortious interference with expectancy of inheritance claim notwithstanding a will
admitted to probate); Spinnato v. Goldman, 67 F. Supp. 3d 457, 466 (D. Mass. (Saris, J.)
2014)(denying motion to dismiss tortious interference with expectancy of inheritance claim
arising from conduct that put into question the validity of a will admitted to probate). In sum, the
Massachusetts cases make clear that (a) the tort of intentional interference with an expectancy is
recognized, (b) proof depends on showing that “but for” the interference the plaintiff would have
been a recipient, and (c) there may be recovery notwithstanding a prior will admitted to probate.
The basic premise of defendants’ jurisdictional argument is that the Berkowitz Siblings
must prove, in order to succeed, that the 2013 will is invalid and that the 1961 will is valid.
Moreover, to allow recovery by the Berkowitz Siblings, defendants contend, would be an attack
on the probate court decree. I disagree with both propositions.
First, the Berkowitz Siblings do not have to prove that the 2013 will is invalid. Instead,
they must prove that the procuring of the 2013 will, even assuming it is valid, was an intentional
tortious act by defendants. If it was, the Berkowitz Siblings have been injured. Monach, supra at
11
469 (“plaintiff need not go any farther than to show that the attempt of the testator to revoke that
will and to execute another will was frustrated by the wrongful interference by the defendants
with the expectancy of the plaintiff for their own personal gain”). Second, the burden of the
Berkowitz Siblings to succeed on the tortious interference claim is to show, whether by the 1961
will or otherwise, that there was a reasonable probability that they would have received legacies
greater than what they received by the Compromise Agreement absent the interference. As
described in Comment (d) to § 774B of the Restatement (Second) of Torts, “[i]f there is a
reasonable certainty established by proof of a high degree of probability that the testator would
have made a particular legacy or would not have changed it if he had not been persuaded by the
tortious conduct of the defendant and there is no evidence to the contrary, the proof may be
sufficient that the inheritance would otherwise have been received.” At the motion to dismiss
stage, the Berkowitz Siblings adequately allege the required reasonable likelihood of expectancy.
Moreover, the complaint of the Berkowitz Siblings is not a collateral attack on the
decrees of the probate court. The nature of the probate court proceeding, a will contest, is
different than a tort claim for tortious interference. “[I]n a will contest, the testator’s intent or
mental state is the key issue; in an intentional interference case, the wrongdoer’s unlawful intent
to prevent another from receiving an inheritance is the key issue. Because of the differences in
proof, the actions are not the same nor will the same evidence necessarily support both actions.”
Huffey v. Lea, 491 N.W. 2d 518, 521 (Sup Ct. Iowa 1992)(holding that claim preclusion based on
probate court judgment in will contest did not bar separate claim for intentional interference with
expectancy to inherit).
Some courts that have dealt with similar facts have expressed concern that allowing a
12
separate action to recover for wrongful interference with an inheritance may undermine the
“jurisdictional space carved out by our legislature when it enacted the Probate Code and created
remedies, such as a will contest, designed exclusively for probate.” Wilson v. Fritschy, 55 P. 2d
997, 1002 (Ct. Of App., New Mexico 2002). This conclusion is not consistent with the
Massachusetts cases cited above (which express no similar concern to bar a claim of intentional
interference outside of a will contest proceeding) and appears to rest on a finding that the
plaintiff in Wilson possessed an adequate remedy in the probate proceedings against the alleged
wrongdoers. The test, according to Wilson, for whether a separate action may proceed is whether
there was available an adequate remedy in probate. Id. at 1001. In Massachusetts, however, a
person injured by an intentional interference with an expectancy to inherit, committed by third
parties not involved in a will contest (such as the present case), would have no remedy if the
probate court decree in a will contest precluded recovery.4 The probate court is a court of general
equity jurisdiction, G.L. c. 215, §§ 3, 6. It does not have jurisdiction to decide a tort action for
money damages. Feener v. New England Tel. & Tel. Co., 20 Mass. App. Ct. 166, 169
(1985)(negligence action in superior court against third party may proceed notwithstanding final
judgment in probate court denying relief to plaintiff as a matter of estate administration). The
Berkowitz Siblings could not have asserted their claims, including a claim for potential multiple
damages under G. L. c. 93A and a claim for emotional distress, against defendants in this case in
the probate court proceeding.
4 In contrast, where the alleged wrongful interference could be fully litigated by the
parties to a will contest in probate court, the will contest determination will be “final and
conclusive upon all the parties.” Brignati v. Medenwald, 315 Mass. 636, 637 – 638 (1944). The
Court explicitly distinguished those facts from the facts of Lewis v. Cohen, cited supra, where
the probate court did not have the power to provide a complete remedy.
13
Finally, the probate court decrees adopted the resolution of a dispute agreed to among the
possible legatees. There was no finding in the Compromise Agreement or in the decrees issued
by the probate court that either the 1961 will or the 2013 will were valid or were not valid. The
admission to probate of the Compromise Last Will and Testament of Nathalie Rothblatt was
nothing more than an approval of a settlement because, as is obvious, the Compromise Will is
not executed by the testator nor can it even purport to be an actual expression of her testamentary
intent.5 The decrees approving the Compromise Agreement are simply not under attack. For all
of these reasons, the motion to dismiss for lack of jurisdiction will be denied.
2. Motion to Dismiss for Failure to State a Claim
(a) Count VI (Tortious Interference With An Expectancy)
In addition to their challenge to the jurisdiction of the court to adjudicate this claim,
defendants also advance two arguments for why the complaint fails to state a cognizable claim.
First, they note that the complaint fails to allege that any of the defendants knew about the
1961 will when they performed the acts that are the subject of the complaint. Putting aside
whether defendants’ knowledge of the 1961 will might reasonably be inferred from the
circumstances, the complaint survives even if defendants were unaware of the actual existence of
the 1961 will. That is because the tort requires only that defendants intentionally interfere with an
5 By motion, assented to, defendants submitted Exhibit G to the Affidavit of Debra
Squires-Lee, a copy of the Compromise Last Will and Testimony of Nathalie Rothblatt. The
document bears typewritten “signatures” of Rothblatt (“/s/ Nathalie Rothblatt”) and defendants,
Cook and Starr. The typewritten signatures of Cook and Starr attest “that the Testatrix
[Rothblatt] signs and executes this instrument as her Will and that she signs it willingly (or
willingly directs another to sign for her), and that each of us, in the presence and hearing of the
Testatrix, hereby signs this Will as a witness . . . .” Of course, none of this can be true because
the Compromise Will came into being after the death of Rothblatt.
14
expectancy, not that defendants know the details and scope of the expectancy. Defendants knew,
as a matter of law, that the execution of a new will acts to revoke all prior wills. Thus, there was
a reasonable likelihood that heirs would suffer a loss of expectancy. The complaint alleges facts
showing that defendants knew who the potential heirs of Rothblatt were, including the Berkowitz
Siblings. Further, the facts alleged in the complaint demonstrate that Williams, assisted by the
lawyers, intentionally interfered with the heirs’ expectancy by inserting a devise of $ 2 million to
himself. Those facts are enough to sustain the cause of action. That the magnitude of the harm to
the Berkowitz Siblings may allegedly be greater than what defendants actually contemplated is
not fatal to the claim. A defendant who wrongfully interferes with a contract or advantageous
relationship is liable for all losses to the plaintiff which flow, directly and proximately, from his
tortious conduct. H.D. Watts Co. v. American Bond and Mortgage Co., 267 Mass. 541, 552
(1929)(interference with contract). See Restatement (Second) of Torts, §774A (damages for
intentional interference may be loss of the expected benefit, consequential damages and
emotional distress).
Second, defendants contend that the Berkowitz Siblings’ decision to enter into a
compromise settlement of the will contest acts to defeat the causation element of their claim in
the present case that must be proved against defendants. In other words, defendants say that the
Berkowitz Siblings’ harm was caused by their decision to settle, not by defendants’ conduct. This
argument overlooks the fact that the Berkowitz Siblings allege that they decided to enter into the
Compromise Agreement precisely because of the uncertainty caused by defendants’ interference
and the effect of defendants’ alleged wrongful conduct. Where a defendant’s tortious conduct
causes the person affected by the conduct to settle a lawsuit for less than what the person
15
otherwise would have received, a valid claim is stated. Fishman v. Brooks, 396 Mass. 643, 646
(1986)(legal malpractice claim asserting that lawyer caused plaintiff to accept inadequate
settlement).
Accordingly, defendants motion to dismiss Count VI of the First Amended Complaint of
the Berkowitz Siblings will be denied.
(b) Counts I and II (Professional Negligence)
Defendants argue that Counts I and II alleging professional negligence must be dismissed
because neither the lawyers nor the financial advisor owed any duty of professional care to the
Berkowitz Siblings. This is a correct statement of the law.
The Berkowitz Siblings had no relationship with either the Taylor Ganson defendants
(“the lawyers”) or the RBC defendants (“the financial advisors”). The complaint does not allege
any contract, representation or even a communication between the lawyers or the financial
advisors and the Berkowitz Siblings. In short, there is no privity of contract between the
Berkowitz Siblings and the defendant professionals.
In general, a lawyer’s duty of care arises from an attorney-client relationship. Miller v.
Mooney, 431 Mass. 57, 60 – 61 (2000). Specifically, it is well settled that in preparing a will, an
attorney can have only one client to whom he owes a duty of undivided loyalty. There is no duty
of professional care running from the attorney to a potential heir. Id. at 63 -64. Logotheti v.
Gordon, 414 Mass. 308, 311 – 312 (1993). As a result, the Berkowitz Siblings’ claim of
negligence or legal malpractice against the Taylor Ganson defendants must be dismissed.
Similarly, a financial advisor’s duty of care arises from a contractual relationship. A
professional owes a duty of care to a party with whom he is not in privity of contract only in
16
circumstances where the professional knew that the non-client would rely on his representations
or services. Flattery v. Gregory, 397 Mass. 143, 147 (1986). Moreover, as with lawyers, a
financial advisor involved with assisting a testator with respect to her testamentary intentions is
inevitably put in a position of having a potential conflict of interest between his client and the
possible heirs. He cannot owe duties of care to both the client and the heirs. Spinner v. Nutt, 417
Mass. 549, 554 (1994)( “it is the potential for conflict that prevents the imposition of a duty on
the defendants to the trust beneficiaries”). The Berkowitz Siblings claim against Williams and
RBC for professional negligence must fail.
(c) Counts III and IV (Violation of G.L. c. 93A)
Defendants seek dismissal of the Berkowitz Siblings’ G.L. c. 93A claim on the ground
that the complaint fails to allege a commercial relationship between the lawyers and the financial
advisors, on the one hand, and the Berkowitz Siblings, on the other. The First Amended
Complaint does not explicitly state whether the claim is made under § 9 or § 11 of c. 93A, but
facts asserting compliance with the demand requirement of § 9 are alleged. Also, the Berkowitz
Siblings do not constitute a “business” that could bring a claim under § 11, so the analysis must
proceed on the basis that plaintiffs’ claim is under § 9.
Under § 9 (1) “[a]ny person, . . . who has been injured by another person’s use or
employment of any method, act or practice declared to be unlawful by section two” may recover.
Plaintiffs must allege facts to show that defendants acted in the conduct of trade or commerce in
order to state a cognizable claim. G.L. c. 93A, § 2 (declaring unlawful “unfair or deceptive acts
or practices in the conduct of any trade or commerce”)(emphasis added). “[T]o survive the
defendant’s motion to dismiss, the plaintiffs must show that the defendant had a commercial
17
relationship with the plaintiffs or that defendant’s actions interfered with ‘trade or commerce.’”
First Enterprises, Ltd. v. Cooper, 425 Mass. 344, 347 (1997).
Here, there was an indirect commercial relationship between plaintiffs and defendants.
There is no requirement that the Berkowitz Siblings be in privity of contract with defendants in
order to proceed on a claim of violation of c. 93A, § 9. Ciardi v. F. Hoffmann-LaRoche, Ltd.,
436 Mass. 53, 65 (2002)(plaintiff must allege a connection between herself and the defendants,
albeit an indirect one). An indirect connection includes the relationship between a plaintiff who
suffers an injury from wrongful conduct, regardless of whether the plaintiff purchased goods or
services involved in perpetrating the wrongful conduct. Maillet v. ATF-Davidson Co., Inc., 407
Mass. 185, 190 – 191(1990)(breach of warranty claim by injured person, not in privity, upheld).
“Trade” and “commerce” are defined in § 1 (b) of c. 93A to include the offering of any
service in the Commonwealth. There is no question that the complaint adequately alleges that the
lawyers and the financial advisors offered their services to Rothblatt in a commercial transaction.
Further, when defendants offered their services to Rothblatt it was foreseeable that heirs of
Rothblatt, including the Berkowitz Siblings, would suffer injury if the services were shown to be
a tortious interference with the expectancy of an inheritance. In order to state a claim under c.
93A, all that is necessary is that plaintiffs allege (1) an unfair or deceptive act or practice
committed in a business context; (2) a loss or injury; and (3) a causal connection between the
deceptive act or practice and that loss or injury. Cohen v. Brokers’ Service Marketing Group II,
LLC, 87 Mass. App. Ct. 1121 (2015); 2015 WL 2364313 ( upholding c.93A claim by investor
injured by broker with whom investor had no contact or communication). The Berkowitz
Siblings’ complaint satisfies that requirement.
18
The lawyer defendants rely on two decisions of the Supreme Judicial Court dismissing c.
93A claims against lawyers responsible for drafting an estate plan for a decedent. Miller v.
Mooney, 431 Mass. 57, 65 (2000); Logotheti v. Gordon, 414 Mass. 308, 312. In both cases, the
Court first held that the lawyer defendants could not be held liable to disappointed heirs of the
decedents for legal malpractice or negligence. There were no claims of intentional wrongdoing in
either case and there was no claim of civil conspiracy with a non-lawyer to commit an intentional
tort. With respect to potential c.93A liability, the Court in Logotheti merely mentioned that “the
same policy reasons” (i.e., a lawyer should not have potentially conflicting duties of care to the
decedent and to the heirs) requiring dismissal of the negligence claim should apply to the c. 93A
claim. Id. In Miller, the Court held that a lawyer who had represented the testator for more than
thirty years should not be held liable to her heirs for negligence. With respect to c. 93A, the
Court noted that plaintiffs must show that the lawyer was acting in a business context, and he
was not when he negligently failed to learn that his associate had drafted a new will. Miller, 431
Mass. at 65. The Court did not articulate a general principle regarding c. 93A liability but,
instead, ruled on the facts specific to those cases.
I find that both Miller and Logotheti are distinguishable from the present case. Here, the
lawyers became involved at the request of a financial advisor. They had no previous relationship
with Rothblatt. The combination of the financial advisor and the lawyers was allegedly a
commercial venture to earn fees and more. The complaint alleges that the combination was a
conspiracy to intentionally interfere with the expectancy of Rothblatt’s heirs by diverting assets
to Williams and by creating a trust so the lawyers could earn substantial fees. This was not a
private matter between a lawyer and his long-standing client. It was an alleged use of defendants’
19
commercial positions to advance a scheme to injure third persons. Defendants were acting in
trade or commerce.
(d) Count V (Civil Conspiracy)
To succeed on their claim for civil conspiracy, the Berkowitz Siblings will have to prove
that defendants acted together either (1) to exercise some power of coercion that they would not
have had if they had acted independently, or (2) pursuant to “a common plan to commit a
tortious act.” Kurker v. Hill, 44 Mass. App. Ct. 184, 188-189 (1998). The first prong is
inapplicable because the power of coercion must be directed at the party bringing the claim; here,
the Berkowitz Siblings. There is no such allegation in the complaint. The second prong of civil
conspiracy is, however, satisfied by the factual allegations that Williams and the lawyers
intentionally interfered with plaintiffs’ expectancy of inheritance. The facts alleged give rise to a
reasonable inference, all that is necessary at the motion to dismiss stage, that defendants engaged
in a purportedly tortious “common plan.” All “the plaintiffs must show [is] an underlying
tortious act in which two or more persons acted in concert and in furtherance of a common
design or agreement.” Bartle v. Berry, 80 Mass. App. Ct. 372, 383-384, rev. denied, 460 Mass.
1116 (2011). Defendants motion to dismiss this count will be denied.
(e) Counts VII and VIII (Respondeat Superior)
Because the claims of the Berkowitz Siblings for tortious interference, civil conspiracy
and c. 93A survive the motions to dismiss, so too the claims against the employers. Defendants
do not argue that the individual defendants were acting outside of the scope of their employment.
The counts alleging respondeat superior liability will not be dismissed.
20
B. Second Amended Complaint of Stephen Hanna as Personal Representative of the
Estate of Nathalie Rothblatt (Civil Action No. 2016 – 0722)
Defendants move to dismiss the Second Amended Complaint (“SAC”) of Stephen Hanna,
the personal representative of the Estate of Nathalie Rothblatt, for essentially one reason:
Defendants contend that the only damages sought by the Estate are not recoverable. A further
explication of the facts from the SAC and the documents submitted from the files of the probate
court proceeding aids in resolution of the motion.
Stephen Hanna was appointed personal representative of the Estate to try and “sort
everything out” when it became clear that there was going to be a complicated contest over the
administration of Rothblatt’s Estate. SAC ¶ 61. According to the Order appointing Hanna, his
appointment was necessary “to preserve the estate or to secure its proper administration.”
Litigation among the potential heirs of Rothblatt ensued regarding the validity of both the 1961
and 2013 wills. The SAC alleges facts plausibly to suggest that the alleged wrongful conduct of
defendants with regard to the 2013 will was a contributing cause to at least some of the litigation
activity. In addition, the SAC alleges that it was reasonably foreseeable to defendants that there
would be litigation over a will that was executed on Rothblatt’s deathbed in the circumstances of
her failing health and with testamentary provisions that gave substantial benefits to Williams and
the attorneys. SAC ¶ 64. Legal costs and fees, totaling approximately $ 1,240,000, “were lawfully
and reasonably assumed” by the Estate “as part of the settlement of the Estate Litigation.” SAC ¶
65. The facts alleged show that the Estate had an interest in resolving the disputes in order to
reach closure.
The Compromise Agreement that memorialized the settlement of the litigation provides
21
that the “Estate shall also pay the costs of litigation and attorneys’ fees incurred by each party . . .
or reimburse each party for such costs and fees already paid, but each of these payments and
reimbursements shall be specifically allocated against and reduce the share of the Estate to be
received by each party in accordance with [the agreed upon percentages for each person’s share
of the Estate].” The probate court approved the Compromise Agreement and therefore approved
the expenditure by the Estate.
Defendants’ first argument is that the Estate did not really pay the fees or, as argued by
RBC, the agreement for the Estate to pay the fees was a “ruse” and a “feint.” The argument flies
in the face of the maxim that, on a motion to dismiss, the facts alleged, and all reasonable
inferences from the facts, must be accepted as true. The Estate did pay the fees. Such payment
was authorized by the probate court. At this stage of the litigation, nothing more need be said.
Defendants’ second argument is that the SAC fails sufficiently to allege causation. This
argument is made in two parts. The first part is that there is no “but for” causation alleged; i.e.,
that defendants’ wrongful conduct was a cause of the Estate litigation. A glance at the SAC,
however, reveals that “but for” causation is explicitly alleged. That there may have been other
contributing causes for the litigation is not a ground for dismissal of the Estate’s complaint. The
second part of the causation argument is that the payment of the fees by the Estate was caused by
the Estate’s voluntary decision to assume the fees and not by defendants’ conduct. Again, this
may or may not be so, but it will depend on the facts as they develop. There may be facts
surrounding why the Estate assumed payment of the fees, including its interest in obtaining the
compromise result and expediting the closing of the Estate. Or there may be facts surrounding
whether the Estate holds, implicitly or explicitly, an assignment to recover the fees incurred by
22
the heirs. Resolution of this issue of proximate cause is inappropriate on a motion to dismiss.
Two additional substantive arguments are made by defendants in support of their motions
to dismiss. Both are without merit. The RBC defendants, but not the lawyer defendants, advance
an argument that the Estate’s substantive claims of professional negligence, civil conspiracy, and
violation of c.93A do not survive the death of Rothblatt. This is not correct. Actions that arise
from a contractual relationship, such as the claims here based upon Rothblatt’s engagement of
RBC and Taylor Ganson as professionals, survive. McStowe v. Bornstein, 377 Mass. 804, 808
(1979). The lawyer defendants, but not the RBC defendants, contend that the allegations of the
Estate complaint do not rise to the level of a c. 93A violation. Accepting the allegations of the
SAC as true, I find that a plausible c. 93A claim is stated. In addition, a fair evaluation of c.93A
liability should await a full record upon summary judgment or trial.
In sum, defendants’ arguments for dismissal of the action brought by the Estate to recover
legal fees and costs incurred by the Estate to obtain a resolution of disputes allegedly caused by
defendants’ conduct are without merit. The motions to dismiss will be denied.
C. Motion to Compel Arbitration
RBC and Williams move to compel arbitration of the claims asserted against them by the
Berkowitz Siblings and by the Estate. In support of their motion they submit the Affidavit of
Gregory Gibbs, a senior paralegal at RBC Wealth Management, attesting to certain documents
that Gibbs says represent an agreement between Rothblatt and RBC. In a document dated
November 30, 2003, Rothblatt apparently signed a Client Account Information Form that
affirmed the following:
“ I acknowledge that I have received the Client Agreement and agree to
23
abide by its terms as currently in effect or as they may be amended from time to
time.”
“I UNDERSTAND THIS ACCOUNT IS BEING GOVERNED BY
THE PRE-DISPUTE arbitration clause appearing on page 6 of the Client
Agreement at Section 19.”
Emphasis in the original.
Gibbs then attaches an unsigned document entitled Client Account Agreement and states
in his affidavit that it “is a true and accurate copy of the Client Agreement between Nathalie
Rothblatt and RBC Dain Rauscher n/k/a RBC WM” for the period through November 2003. (In
an earlier paragraph of his affidavit, Gibbs states that RBC WM is a division of defendant, RBC
Capital Markets, LLC). Gibbs also attaches an unsigned copy of a Client Account Agreement
dated February 2013, and swears in his affidavit that it is “the Client Account Agreement
between Nathalie Rothblatt and RBC WM in effect for clients of RBC WM on the date of
Nathalie Rothblatt’s death in March 2013.
Both of the unsigned client agreements contain a clause saying, in slightly different
language, that the agreement shall be binding upon Rothblatts heirs, executors, administrators,
personal representatives, successors and assigns. Both of the unsigned client agreements contain
an arbitration provision. Both of the unsigned agreements say they are governed by Minnesota
law.
RBC and Williams contend that the claim of the Berkowitz Siblings must be sent to
arbitration because they are “heirs” and the putative client agreements say that the contract is
binding on Rothblatt’s heirs. RBC and Williams cite no authority, however, for how it could
24
possibly be that a contract between Rothblatt and RBC binds non-parties. While the Estate,
standing in Rothblatt’s shoes, may or may not be bound by the putative agreements, it is
fundamental contract law that a contract only binds the parties thereto. Thus, the motion of RBC
and Williams to send the Berkowitz Siblings’ claims to arbitration will be denied.
In the opposition of the Estate to the motion to compel arbitration, it is pointed out that
arbitration was never mentioned by RBC “until very recently.” Counsel for the Estate says that a
c.93A demand letter went to RBC on November 16, 2015. The demand letter was responded to
by RBC in December 2015, without mention of the arbitration clause and without demand to
arbitrate. Rather than demand arbitration promptly, RBC and Williams elected to (i) wait until
after this action was commenced in August 2016, (ii) attempt to obtain dismissal of the action by
separate motions to dismiss for lack of jurisdiction and for failure to state a claim, and (iii) only
if such motions failed, compel arbitration. The opposition also expresses some skepticism about
whether the affidavit of Gibbs and the attached documents actually represent valid contracts
between Rothblatt and the defendants in this case, RBC and Williams. Apparently, no discovery
has taken place with respect to this subject. The opposition also contests whether the language of
the putative agreements to arbitrate covers a claim like the one asserted here by the Estate.
Accordingly, I decline, at this time, to rule on the motion to compel arbitration of the
Estate’s claim. The motion will be denied, without prejudice, to re-filing the motion within
ninety (90) days of this Memorandum and Order. The parties should have an opportunity to take
discovery on the issue of the existence of a valid, binding arbitration agreement. The parties
should also address the application of Minnesota law to their disputes as to the validity and scope
of the arbitration provision. In addition, the parties should address in any future motion to compel
25
arbitration whether there has been a waiver of arbitration by the conduct of RBC and Williams.
CONCLUSION
For the reasons stated above (i) the joint motion of all defendants to dismiss both actions
for lack of jurisdiction is DENIED; (ii) the motions of all defendants to dismiss the Lead Case,
the action by Stephen Hanna as personal representative of the Estate, for failure to state a claim
are DENIED; the motions of all defendants to dismiss the Consolidated Case, the action by the
Berkowitz Siblings, for failure to state a claim are ALLOWED, in part, and DENIED, in part.
Counts I and II of the Berkowitz Siblings’ complaint are DISMISSED. Otherwise, the motions
to dismiss are DENIED. The motion of RBC and Williams to compel arbitration of the claims of
the Berkowitz Siblings is DENIED. The motion of RBC and Williams to compel arbitration of
the claims of the Estate is DENIED WITHOUT PREJUDICE to re-filing as described in this
memorandum.
By the Court,
_______________________
Edward P. Leibensperger
Justice of the Superior Court
January 6, 2017
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Posted by Stephen Sandberg - January 19, 2017 at 9:31 pm

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Bridgeman, et al. v. District Attorney for the Suffolk District, et al. (Lawyers Weekly No. 10-014-17)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us

SJC-12157

KEVIN BRIDGEMAN & others[1]  vs.  DISTRICT ATTORNEY FOR THE SUFFOLK DISTRICT & others.[2]

Suffolk.     November 16, 2016. – January 18, 2017.

Present:  Gants, C.J., Botsford, Lenk, Hines, Gaziano, Lowy, & Budd, JJ.

Controlled Substances.  Constitutional Law, Conduct of government agents.  Due Process of Law, Disclosure of evidence, Presumption.  Supreme Judicial Court, Superintendence of inferior courts.  Practice, Criminal, Postconviction relief, Conduct of government agents, Disclosure of evidence, Plea, New trial.  Evidence, Certificate of drug analysis, Disclosure of evidence.

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Posted by Stephen Sandberg - January 18, 2017 at 4:53 pm

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ABCD Holdings, LLC v. Hannon, et al. (Lawyers Weekly No. 12-172-16)

1
COMMONWEALTH OF MASSACHUSETTS
SUFFOLK, ss. SUPERIOR COURT
SUCV2015-1367-BLS2
ABCD HOLDINGS, LLC,
Plaintiff
vs.
PATRICK HANNON, SOFIA GAGUA, PATRICK (“P.J.”) HANNON,
RHR, LLC, SIMILAR SOILS, INC. and AGRITECH, INC.,
Defendants
And
J.DERENZO CO., SOFIA GAGUA, RHR, LLC, PATRICK (“P.J.”) HANNON,
SIMILAR SOILS, INC., IMMANUEL CORP., AGRITECH INC., and L-5 INC.,
Reach and Apply Defendants
MEMORANDUM OF DECISION AND ORDER
ON MOTIONS TO DISMISS
This is an action seeking to collect on a personal guaranty and to recover for other allegedly wrongful conduct following the execution of that document. The guaranty was executed by defendant Patrick Hannon on a loan for $ 219,759. The lender, Bright Horizons Finance, LLC, subsequently assigned its rights under the promissory note and under the guaranty to the plaintiff ABCD Holdings, Inc. Plaintiff has sued not only Hannon but various other individuals and entities on a variety of legal theories. Now before the Court are motions to dismiss by: 1) Hannon, as to some (but not all) counts against him; 2) defendants P.J. Hannon and RHR, LLC; and 3) defendant Agritech, Inc. This Court concludes that Hannon’s Motion must be Denied but that the other two Motions must be Allowed.
2
BACKGROUND
This action was instituted on June 6, 2016. Plaintiff tried and failed to obtain a preliminary injunction against Hannon. See Memorandum of Decision dated June 24, 1016 (Salinger, J.) The case was once again before the Court in connection with various motions to dismiss, which were allowed in part and as to other counts reserved, since plaintiff’s counsel indicated that he would amend the complaint. The Amended Complaint was filed on October 7, 2016. The allegations as set forth in the Amended Complaint, together with attachments thereto, are as follows.
The loan which is at the heart of this case was made on July 21, 2011. It was made by Bright Horizons, an entity owned by Boston attorney George McLaughlin. The loan was made to two companies, Ware Real Estate (Ware) and ABC&D Recycling (Recycling). Ware owns real property in Ware, Massachusetts improved with a waste transfer station; at the time, it was wholly owned by defendant Hannon. Recycling was in the business of recycling debris from construction sites and operated the waste transfer station in Ware. Hannon was its president and sole officer. Hannon was also a long time client of McLaughlin.
The loan to Ware and Recycling was payable in full on demand, pursuant to terms set forth in a promissory note (the “W&R Note”) with payments of interest to be made on a monthly basis. The W&R Note is attached to the Amended Complaint as Exhibit A. In addition to requiring payment on demand, the W&R Note gave Bright Horizon the right to receive half of the profits of the two businesses; it also conferred warrants which gave Bright Horizon the right to purchase a majority share of the two companies at an agreed upon purchase price which could be paid by forgiving $ 100,000 of the debt owed as a result of the loan. The W&R Note was signed by Hannon as manager of Ware and as president of Recycling.
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Hannon also executed a “Limited Guaranty,” attached to the Amended Complaint as Exhibit B. The Limited Guaranty provided that, in the “Event of Default” (a defined term under the Note), Hannon was prohibited from accepting or receiving any payment or reimbursement from Ware or Recycling, and if he did receive such payment, was required to hold it in trust. The Amended Complaint alleges that Hannon breached this provision by accepting and receiving payments from the two companies totaling at least $ 580,000 while he was in control of them; he also received $ 40,000 from the sale of certain property owned by one of the companies, raising the total to $ 620,000. The Guaranty further provided:
“Anything to the contrary in this Guaranty notwithstanding, the liability of Guarantor under this Guaranty is limited to the repayment of (i) no more than $ 109,879 of the Guaranteed Obligations (the Liability Limit”) plus (ii) 100% of any and all collection costs or expenses incurred by Lender against Guarantor, including reasonable attorneys’ fees and expenses….”
(Emphasis added).
To date, Ware and Recycling have failed to pay amounts owed under the W&R Note apart from a few interest payments. Similarly, Hannon has made no payments pursuant to the Limited Guaranty. The Amended Complaint alleges that plaintiff has incurred $ 247,000 in collection costs so far. All told, it is alleged that Hannon owes $ 976,879 pursuant to the Limited Guaranty (the sum of the $ 109,879 amount that Hannon guaranteed, collection costs of $ 247,000, and $ 620,000 of “additional interest”).
The lawsuit also concerns a second loan which was made directly to Hannon in the amount of $ 125,000 (the Hannon Note). Hannon made some payments on that obligation. However, on May 3, 2012, Hannon and his wife filed a petition for bankruptcy pursuant to Chapter 11. As a consequence of that petition, Bright Horizon was required to disgorge $ 45,000 of those payments as a preference. Plaintiff seeks to recover that amount in this action.
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On July 21, 2012, Bright Horizon assigned all of its rights under both the W&R Note and the Hannon Note as well as under the Limited Guaranty to plaintiff ABCD Holding, an entity which (like Bright Horizon) was wholly owned by McLaughlin. On July 17, 2012, ABCD Holdings exercised the warrants it obtained under the W&R Note to purchase a majority interest in Ware and in Recycling. Hannon refused to honor them and litigation ensued as to whether ABCD Holdings had lawfully acquired a majority interest in Recycling. ABCD Holding, LLC v. ABC&D Recycling, Inc., Civ. No. 2012-00171 (Hampshire County Superior Court). A Superior Court judge (Carey, J.) concluded that it did, specifically finding that the loan agreement that conferred the warrants was a “fair and reasonable business contract.” See Findings of Fact, Rulings of Law and Order, attached to Amended Complaint as Exhibit N. Neither Ware nor Recycling is a named party in the instant action.
On June 20, 2014, the Bankruptcy Court entered judgment denying Hannon’s request to discharge his debts, freeing creditors (like the plaintiff) to pursue their claims against him. According to the Amended Complaint, Hannon had already embarked on a course of conduct to make his assets unavailable for creditors. Specifically, Hannon funneled money to a girlfriend with whom he cohabited, defendant Sofia Gagua, while the bankruptcy was pending. In 2015, she purchased a house in Uxbridge for $ 458,000 in cash – money that the Amended Complaint alleges she obtained from Hannon.
In the meantime, the Amended Complaint alleges that Hannon continued to engage in the same business of receiving soils and other materials for recycling or deposit at landfills. Specifically, it states that he is operating two landfills in Uxbridge known as “Rolling Hills” and “Green Acres.” Neither landfill is actually owned by Hannon, however: the Rolling Hills landfill is owned by reach-and-apply defendants Immanuel and L-5, and the Green Acres landfill is
5
owned by reach and apply defendants Elias Richardson and Richardson-North Corporation. The Amended Complaint alleges that these entities have contracted with Hannon so that the money that they receive is actually funneled to Hannon directly or to entities that Hannon controls. Those entities include defendant Agritech (of which Hannon is president and sole officer), defendant RHR which is “nominally managed” by Hannon’s son, P.J. Hannon, and Similar Soils, Inc. Patrick J. Hannon is identified in Secretary of State filings as the president and director of Similar Soils. Reach and apply defendants J. Derenzo Company and J. Derenzo Construction Company, Inc. (Derenzo) have paid money to one or both of the Uxbridge landfills – payments which are then routed through the above named entities controlled by Hannon.
The Amended Complaint asserts the following counts against Hannon only: enforcement of Limited Guaranty (Count I); breach of contract (Count II); enforcement of Hannon Note (Count III); money lent (Count IV); unjust enrichment (Count V) and violation of Chapter 93A (Count VI). The motion by Hannon seeks to put a cap on liability as to Counts I and II (relating to the W&R Note) and seeks to dismiss Counts V and VI for failure to state a claim upon which relief may be granted. Count VII, labeled “alter ego/piercing the corporate veil,” is asserted against RHR, Similar Soils and Agritech and alleges that all three entities are “sham corporations” controlled by Hannon for the fraudulent purpose of hiding his assets. Count VIII for “fraudulent transfer” alleges that Hannon has, “on information and belief,” transferred all or some of his contract rights to income earned in connection with the two Uxbridge landfills; that count is asserted against RHR, Agritech, Gagua, and P.J. Hannon. Count IX, asserted against “all defendants,” seeks to reach and apply the house purchased by Gagua. It also seeks to reach and apply “contract benefits” and “business opportunities” belonging to RHR, Similar Soils,
6
Agritech, Immanuel Corp. and L-5. The motions by defendants RHR, Agritech and P.J. Hannon pertain to Counts VII, VIII, and IX.
DISCUSSION
A. Hannon’s Motion to Dismiss
Hannon concedes that the Amended Complaint states a claim for relief as to those counts arising from the W&R Note and the Hannon Note (Counts I, II and III). As to Count I and II concerning the W&R Note, however, he argues that the Limited Guaranty by its terms limits his liability to $ 109,879.50 together with collection costs and asks that recovery be capped by that amount. As to Count V for unjust enrichment, Hannon contends that it is superfluous, given the availability of a contract remedy. As to the Chapter 93A claim, Hannon argues that it does not apply to disputes among parties involved in the same business venture and does not lie in any event where the conduct alleged is a “mere breach of contract.” This Court concludes that, at this early stage in the case, the motion must be denied.
Hannon’s argument as to the cap on his liability has some superficial appeal. Certainly, the language of the Limited Guaranty could not be clearer. It states that “[a]nything to the contrary in this Guaranty notwithstanding,” Hannon’s liability under that that contract is limited to “repayment of (i) no more than $ 109,879 of the Guaranteed Obligations (the Liability Limit”) plus (ii) 100% of any and all collection costs or expenses incurred by Lender against Guarantor, including reasonable attorneys’ fees and expenses.” Although Hannon also promised not to accept payments from either Ware or Recycling and, if he did, to hold those amounts in trust, the above quoted language limits plaintiff’s recovery for that breach to the amount expressly set forth in the Limited Guaranty.
7
If plaintiff had alleged only a breach of the Limited Guaranty, then this would be the end of the story. The Amended Complaint alleges more than a breach of that contractual obligation, however, asserting that, at the time that Ware and Recycling were in default on the W&R Note, Hannon essentially drained them of all of their assets. In doing so, he essentially rendered worthless the stock warrants that the companies had given to Bright Horizon so that, when ABCD Holdings exercised those warrants, both Ware and Recycling were empty shells saddled only with debt. This is enough in this Court’s view to state a claim that Hannon has engaged in unfair and deceptive practices in violation of G.L.c. 93A §2.
As the Supreme Judicial Court has recognized, the reach of Chapter 93A is quite broad and may even apply to conduct which is otherwise legal. Kattar v. Demoulas, 422 Mass. 1, 14 (2000) (upholding lower court’s denial of a motion to dismiss a 93A claim as to conduct involving the exercise of a right to foreclose). Because the statute does not attempt to define what constitutes an unfair or deceptive act or practice, the definition necessarily depends on the circumstances of each case. Commonwealth v. DeCotis, 366 Mass. 234, 242 (1974); see also Anthony’s Pier Four Inc., v. HBC Assocs. 411 Mass. 451, 473, 476 (1991) (use of discretionary contract right to force financial concessions violated c. 93A). Where the case involves a contract with a limitation of liability provision, that cap will not necessarily bar a broader recovery under chapter 93A: if the chapter 93A claim depends entirely on the breach of contract claim, it will, but if the conduct at issue is more tortious in nature, it will not. Standard Register Co., v. Bolton-Emerson Inc., 38 Mass.App.Ct. 545, 550 (1995) Thus, for example, a limitation of liability provision in a software agreement was not effective to preclude recovery under Chapter 93A where the conduct alleged was intentional misrepresentation, a tort- based theory. V. Mark Software Inc., v. EMC Corp., 37 Mass.App.Ct. 610, 619-621 (1994). In the instant case,
8
Hannon is accused of draining the assets of Ware and Recycling, which not only made it impossible not only for them to pay off the loan but also rendered the stock warrants that plaintiff had received as part of that loan transaction essentially valueless. This is conduct that sounds more in tort.
As to the defendant’s argument that 93A does not apply, this Court concludes that (at least based on the allegations of the Amended Complaint) this is not a dispute between two parties to the same venture: it arises from an arm’s length transaction negotiated between Bright Horizons on one hand and the two companies controlled by Hannon, Ware and Recycling. Although ABCD Holdings (as assignee of Bright Horizon’s rights) ultimately did become a majority shareholder in Ware and Recycling, that was only after the alleged wrongdoing had occurred. 1
B. Agritech’s Motion to Dismiss
Agritech, which was not a party to the two notes at issue in this case, is included as both a defendant and as a reach and apply defendant. The Counts asserted against it are Counts VII, VIII and IX of the Amended Complaint. This Court concludes that the Amended Complaint fails to state a claim upon which relief may be granted.
In naming Agritech as a defendant in Counts VII, plaintiff asserts that Agritech and Hannon are essentially one and the same. As Agritech points out, this is a novel use of the corporate veil piercing doctrine, which is ordinarily used to pierce the corporate form and hold individuals liable for the corporate debt. Here, the reverse is true: plaintiff is seeking to hold
1 Although the unjust enrichment claim may indeed prove to be duplicative or otherwise have no legal basis apart from the claims that survive, this Court declines at this point to dismiss it from the case. It is conceivable, for example, that facts may be developed that will call into question the enforceability of the Limited Guaranty, which was apparently negotiated between McLaughlin and Hannon when Hannon was his client. If plaintiff is deprived an adequate remedy at law, then this equitable remedy of unjust enrichment may be in order.
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Agritech liable for the debt of an individual officer to another corporate entity. Moreover, there is no allegation that Agritech itself has done anything to injury the plaintiff. In any event, the Amended Complaint does not set forth facts which would allow this Court to disregard the corporate form. See My Bread Baking Co. v. Cumberland Farms, Inc. 353 Mass. 614, 620 (1968) (listing relevant factors). To survive dismissal, a complaint must plead more than “labels and conclusions” but allege facts with “enough heft to show that the pleader is entitled to relief.” Iannachino v. Ford Motor Co., 451 Mass. 623, 636 (2008), quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). The Amended Complaint certainly contains conclusions: for example, it alleges that, on “information and belief,” Agritech is the “alter ego” of Hannon. It also goes on at some length to describe Hannon’s history of misconduct in other transactions. But as to specific facts supporting Count VII, it alleges only that Hannon is Agritech’s president, sole officer and director and derives revenue from it. This is not enough to survive a motion under Rule 12(b)(6).
Count VIII alleges that Hannon fraudulently transferred certain assets to Agritech in violation of the Uniform Fraudulent Transfer Act (UFTA). See G.L.c. 109A §§5-6. That requires a showing that Hannon as the debtor has made some “transfer” to Agritech after the debt to the plaintiff arose. Under the UFTA, a transfer is defined to mean the “disposing of or parting with an asset or an interest in an asset, and includes payment of money, release, and lease, creation of a lien or other encumbrance.” G.L.c 109A §2. The Amended Complaint, however, does not explain what Hannon transferred to Agritech. Plaintiff appears to argue that Hannon enjoyed certain business opportunities in connection with the Uxbridge landfills and that he set up Agritech to realize these opportunities. But that is not conduct that falls within the purview of the UFTA.
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Count IX is asserted against Agritech as a reach and apply defendant. According to the Amended Complaint, Agritech has received certain payments in connection with the operation of the two Uxbridge landfills beginning in December 2014, In naming Agritech as a reach and apply defendant, plaintiffs is apparently attempting to claim an entitlement to these payments. A valid action for reach and apply, however, required that the property being “reached” is a debt owed by the reach and apply defendant (here Agritech) to the principal defendant (here Hannon). Mass.Elec. Co. v. Athol One, Inc. 391 Mass. 685, 687 (1984). That necessarily requires a showing that the reach and apply defendant has some specific obligation, incurred through consideration, that is owed to the debtor. The Amended Complaint does not identify the debt that Agritech owes to Hannon.
C. Motion to Dismiss by P.J. Hannon and RHR, LLC
Like Agritech, neither P.J. Hannon nor RHR are parties to the Notes that give rise to this case, but each is named both as a defendant and a reach and apply defendant in the same counts that are lodged against Agritech. Just as those counts are deficient as to Agritech, they also fail to state a claim against P.J. Hannon and RHR, for the same reasons. That is, plaintiff has failed to allege specific facts to pierce the corporate veil or to otherwise hold RHR and P.J. Hannon responsible for Hannon’s misdeeds (Count VII). It does not identify what property Hannon has fraudulently transferred to either RHR or P.J. Hannon so as to support a claim under the UFTA (Count VIII). Finally, there is nothing in the Amended Complaint to suggest that either RHR or P.J. Hannon owe a debt to Hannon that can be reached by plaintiff and applied to satisfy Hannon’s debt (Count IX).
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CONCLUSION AND ORDER
For all the foregoing reasons, the Motion to Dismiss by Patrick Hannon is DENIED. The Motions to Dismiss by Agritech, Patrick J. Hannon and RHR, LLC are ALLOWED and it is hereby ORDERED that Counts VII, VIII and IX be DISMISSED as to defendants P.J. Hannon, RHR, LLC and Agritech, Inc. only.
________________________________
Janet L. Sanders
Justice of the Superior Court
Dated: December 7, 2016

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Posted by Stephen Sandberg - January 17, 2017 at 3:51 pm

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Commonwealth v. Caruso (Lawyers Weekly No. 10-013-17)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us.

SJC-09656

COMMONWEALTH  vs.  STEVEN CARUSO.

Middlesex.     September 9, 2016. – January 13, 2017.

Present:  Gants, C.J., Botsford, Gaziano, Lowy, & Budd, JJ.

Homicide.  Constitutional Law, Confrontation of witnesses, Assistance of counsel.  Evidence, Expert opinion, Information stored on computer, Of agency, Prior consistent statement, Testimony at prior proceeding, Videotape, Impeachment of credibility.  Agency, What constitutes.  Witness, Expert, Impeachment.  Practice, Criminal, Capital case, Confrontation of witnesses, Assistance of counsel.

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Posted by Stephen Sandberg - January 13, 2017 at 3:17 pm

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Commonwealth v. Gernrich (Lawyers Weekly No. 10-011-17)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us

SJC-12078

COMMONWEALTH  vs.  BRIAN E. GERNRICH.

Worcester.     September 8, 2016. – January 12, 2017.

Present:  Gants, C.J., Botsford, Lenk, Hines, Gaziano, Lowy, & Budd, JJ.

Practice, Criminal, False report.  Police Officer.  SheriffStatute, Construction.

Complaint received and sworn to in the Clinton Division of the District Court Department on June 4, 2014.

The case was heard by Christopher P. LoConto, J.

The Supreme Judicial Court granted an application for direct appellate review.

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Posted by Stephen Sandberg - January 12, 2017 at 9:21 pm

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Genentech v. Commissioner of Revenue (Lawyers Weekly No. 10-012-17)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us

SJC-12083

GENENTECH, INC.  vs.  COMMISSIONER OF REVENUE.

Suffolk.     October 7, 2016. – January 12, 2017.

Present:  Gants, C.J., Botsford, Lenk, Hines, Gaziano, Lowy, & Budd, JJ.

Taxation, Corporate excise, Manufacturing corporation.  Constitutional Law, Taxation, Commerce clause, Interstate commerce.

Appeal from a decision of the Appellate Tax Board.

The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.

Catherine A. Battin, of Illinois (Richard C. Call also present) for the taxpayer.

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Posted by Stephen Sandberg - January 12, 2017 at 5:48 pm

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Commonwealth v. Calvaire (Lawyers Weekly No. 10-010-17)

NOTICE:  All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports.  If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us

SJC-12084

COMMONWEALTH  vs.  DONALD CALVAIRE.

Suffolk.     October 6, 2016. – January 11, 2017.

Present:  Gants, C.J., Botsford, Lenk, Hines, Gaziano, Lowy, & Budd, JJ.

Incompetent Person, Criminal charges.  Practice, Criminal, Sentence, Dismissal, Competency to stand trial.  Constitutional Law, Equal protection of laws.  Due Process of Law, Substantive rights.

Civil action commenced in the Supreme Judicial Court for the county of Suffolk on January 29, 2016.

The case was reported by Cordy, J.

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Posted by Stephen Sandberg - January 11, 2017 at 8:19 pm

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