Meehan v. Shaughnessy

• Decision Date: 28 March 1989
• Citation: 535 N.E.2d 1255,404 Mass. 419
• Parties: , 57 USLW 2642 James F. MEEHAN et al. 1 v. Maurice F. SHAUGHNESSY et al. 2 Cynthia J. Cohen et al., 3 third-party defendants.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 1255

535 N.E.2d 1255

404 Mass. 419, 57 USLW 2642

James F. MEEHAN et al. ¹ v. Maurice F. SHAUGHNESSY et al. ² Cynthia J Cohen et al., ³ third-party defendants.

Supreme Judicial Court of Massachusetts Suffolk.

Argued Oct. 6, 1988.

Decided March 28, 1989.

John J. Curtin, Jr. (Meghan H. Magruder & Rory FitzPatrick, Boston, with him), for Maurice F. Shaughnessy et al.

Edward J. Barshak (Regina E. Roman, Boston, with him), for James F. Meehan et al.

Before HENNESSEY, C.J., and WILKINS, LIACOS, LYNCH and O'CONNOR, JJ.

HENNESSEY, Chief Justice.

The plaintiffs, James F. Meehan (Meehan) and Leo V. Boyle (Boyle), were partners of the law firm, Parker, Coulter, Daley & White (Parker Coulter). After Meehan and Boyle terminated their relationship with Parker Coulter to start their own firm, they commenced this action both to recover amounts they claim the defendants, their former partners, owed them under the partnership agreement, and to obtain a declaration as to amounts they owed the defendants for work done at Parker Coulter on cases they removed to their new firm. The defendants (hereinafter collectively Parker Coulter) ⁴ counterclaimed that Meehan and Boyle violated their fiduciary duties, breached the partnership agreement, and tortiously interfered with their advantageous business and contractual relationships. As grounds for these claims, Parker Coulter asserted that Meehan and Boyle engaged in improper conduct in withdrawing cases and clients from the firm, and in inducing employees to join the new firm of Meehan, Boyle & Cohen, P.C. (MBC). Parker Coulter also filed a third-party action with similar claims against MBC and against Cynthia J. Cohen (Cohen), a former junior partner, and Steven H. Schafer (Schafer), a former associate, who, among others, left the firm to join MBC.

After a jury-waived trial, a Superior Court judge rejected all of Parker Coulter's claims for relief, and found that Meehan and Boyle were entitled to recover amounts owed to them under the partnership agreement. The judge also found, based on the partnership agreement and a quantum meruit theory, that Parker Coulter was entitled to recover from Meehan and Boyle for time billed and expenses incurred on the cases Meehan and Boyle removed to their own firm. Parker Coulter appealed from the judgment, and we granted direct appellate review.

Although we are in agreement with most of the judge's reasoning and conclusions which he reached after lengthy and painstaking proceedings, we nevertheless reverse the judgment entered below and remand for further findings and a hearing, consistent in all respects with this opinion. This result follows from our conclusion, infra, that the judge erred in deciding that Meehan and Boyle acted properly in acquiring consent to remove cases to MBC. ⁵

We summarize the facts as found by the judge. Aside from certain conclusions which the judge reached, and which we address in more detail below, the parties agree that these findings were warranted by the evidence. Parker, Coulter, Daley & White is a large partnership which specializes in litigation on behalf of both defendants and plaintiffs. Meehan joined the firm in 1959, and became a partner in 1963; his practice focuses primarily on complex tort litigation, such as product liability and aviation defense work. Boyle joined Parker Coulter in 1971, and became a partner in 1980; he has concentrated on plaintiffs' work. Both have developed outstanding reputations as trial lawyers in the Commonwealth. Meehan and Boyle each were active in the management of Parker Coulter. They each served, for example, on the partnership's executive committee and, as members of this committee, were responsible for considering and making policy recommendations to the general partnership. Boyle was also in charge of the "plaintiffs department" within the firm, which managed approximately 350 cases. At the time of their leaving, Meehan's interest in the partnership was 6% and Boyle's interest was 4.8%.

Meehan and Boyle had become dissatisfied at Parker Coulter. On June 27, 1984, after unsuccessfully opposing the adoption of a firm-wide pension plan, the two first discussed the possibility of leaving Parker Coulter. Another partner met with them to discuss leaving but told them their proposed firm would not be suitable for his type of practice. On July 1, Meehan and Boyle decided to leave Parker Coulter and form their own partnership.

Having decided to establish a new firm, Meehan and Boyle then focused on whom they would invite to join them. The two spoke with Cohen, a junior partner and the de facto head of Parker Coulter's appellate department, about joining the new firm as a partner. They arranged to meet with her on July 5, and told her to keep their conversations confidential. The day before the July 5 meeting, Boyle prepared two lists of what he considered to be his cases. The lists contained approximately eighty to 100 cases, and for each case indicated the status, fee arrangement, estimated settlement value, and potential fee to MBC. Boyle gave these lists to Cohen for her to examine in preparation for the July 5 meeting.

At the July 5 meeting, Meehan and Boyle outlined to Cohen their plans for the new firm, including their intent to offer positions to Schafer, Peter Black (Black), and Warren Fitzgerald (Fitzgerald), who were associates at Parker Coulter. Boyle stated that he hoped the clients he had been representing would go with him to the new firm; Meehan said he would take the aviation work he had at Parker Coulter with him. Both stated that they felt others at Parker Coulter were getting paid as much as or more than they were, but were not working as hard. Cohen decided to consider the offer from Meehan and Boyle, and agreed to keep the plans confidential until formal notice of the separation was given to the partnership. Although the partnership agreement required a notice period of three months, the three decided to give only thirty days' notice. They chose to give shorter notice to avoid what they believed would be an uncomfortable situation at the firm, and possible retaliatory measures by the partnership. Meehan and Boyle had agreed that they would leave Parker Coulter on December 31, 1984, the end of Parker Coulter's fiscal year.

During the first week of August, Cohen accepted the offer to join the new firm as a partner. Her primary reason for leaving Parker Coulter to join MBC was that she enjoyed working with Meehan and Boyle.

In July, 1984, Boyle offered a position at MBC to Schafer, who worked closely with Boyle in the plaintiffs department. Boyle told Schafer to organize his cases, and "to keep an eye towards cases to be resolved in 1985 and to handle these cases for resolution in 1985 rather than 1984." He also told Schafer to make a list of cases he could take with him to MBC, and to keep all their conversations confidential.

Late in the summer of 1984, Meehan asked Black and Fitzgerald to become associates at MBC. Fitzgerald had worked with Meehan in the past on general defense work, and Black worked with Meehan, particularly in the aviation area. Meehan was instrumental in attracting Black, who had previously been employed by U.S. Aviation Underwriters (USAU), to Parker Coulter. Although Black had already considered leaving Parker Coulter, he was concerned about whether USAU would follow him to a small firm like MBC, and wanted to discuss his leaving Parker Coulter with the vice president of USAU. In October, 1984, Black and Meehan met with the USAU vice president in New York. They later received assurances from him that he would be interested in sending USAU business to the proposed new firm. Black then accepted the offer to join MBC. Fitzgerald also accepted. Schafer, Black, and Fitzgerald were the only associates Meehan, Boyle, and Cohen approached concerning the new firm.

During July and the following months, Meehan, Boyle, and Cohen made arrangements for their new practice apart from seeking associates. They began to look for office space and retained an architect. In early fall, a lease was executed on behalf of MBC in the name of MBC Realty Trust. They also retained an attorney to advise them on the formation of the new firm.

Boyle was assigned the task of arranging financing. He prepared a personal financial statement and obtained a bank loan in September, 1984. During that fall, two other loans were made on MBC's credit. Cohen, at the request of an accountant, had been trying to develop projections of MBC's expected revenue in order to obtain long-term financing. The accountant requested a list of cases with indications as to MBC's expected fees for this purpose. In November, Boyle updated and revised the list of cases he expected to take to MBC which he had compiled in July. The November list contained approximately 135 cases. The increase in Boyle's caseload from July to November resulted in part from the departure of a Parker Coulter attorney in early September, 1984. Boyle was in charge of reassigning the cases this attorney worked on. Although another attorney requested transfer of some of these cases, Boyle assigned none to that attorney, and assigned most of the cases to himself and Schafer. Meehan, Cohen, and Black also prepared lists of cases which they anticipated they would remove, and included the potential fee each case would generate for MBC.

Toward the end of November, Boyle prepared form letters to send to clients and referring attorneys as soon as Parker Coulter was notified of the separation. He also drafted a form for the clients to return to him at his home address authorizing him to remove cases to MBC. An outside agency typed these materials on Parker Coulter's letterhead. Schafer prepared similar letters and authorization forms.

While they were planning their departure, from July to approximately December, Meehan, Boyle, Cohen, Schafer, Black, and Fitzgerald all continued to work full...