Atlas Tack Corp. v. DiMasi

• Decision Date: 25 July 1994
• Docket Number: No. 93-P-370,93-P-370
• Citation: 637 N.E.2d 230,37 Mass.App.Ct. 66
• Court: Appeals Court of Massachusetts
• Parties: ATLAS TACK CORPORATION v. Salvatore F. DiMASI & another. 1

Page 230

637 N.E.2d 230

37 Mass.App.Ct. 66

ATLAS TACK CORPORATION v. Salvatore F. DiMASI & another. ¹

No. 93-P-370.

Appeals Court of Massachusetts Suffolk.

Argued March 23, 1994.

Decided July 25, 1994.

Michael J. O'Neill, for plaintiff.

John T. Lamond, for Stephen P. Karll.

John F. Kehoe, Karen S. Breda & John D. Bruce, for Salvatore F. DiMasi, submitted a brief.

Before ARMSTRONG, JACOBS and PORADA, JJ.

PORADA, Justice.

The plaintiff sought to recover damages against the defendants, both lawyers, on the ground that they were vicariously liable for the alleged malpractice of another attorney, Ralph Donabed, with whom they shared office space. Both defendants filed motions to dismiss supported by affidavits in which they averred that they were not partners of Donabed and had never held themselves out to be partners. The plaintiff filed an opposition to the defendants' motions to dismiss supported by an affidavit. ² Treating the motions to dismiss as motions for summary judgment, the judge allowed the defendants' motions.

After the motions were allowed, the plaintiff settled his claim for malpractice with Donabed and executed a release of Donabed from any and all claims "growing out of his legal representation of [the plaintiff] including but not limited to all claims against [him]" arising out of this action. The release specifically excluded the plaintiff's claims against the defendants in this action. ³

This appeal by the plaintiff then ensued. The plaintiff claims that summary judgments should not have been granted to the defendants because there is a disputed issue of material fact as to whether the defendants were partners by estoppel of Donabed. Ordinarily, whether a partnership by estoppel exists is a question of fact. Mersick v. Bilafsky, 205 Mass. 488, 492, 91 N.E. 889 (1910). In this case, however, based on the verified materials presented, the motion judge determined that the plaintiff's proof was insufficient as matter of law to establish a partnership by estoppel. We examine that proof.

In the affidavits presented to the judge by the defendants, the defendants averred that while they shared office space with Donabed, paid for a receptionist for the office together, and had office stationery entitled "Law Offices of DiMasi, Donabed & Karll, A Professional Association," they did not hold themselves out to be partners, never represented to the plaintiff or anyone else that they were partners and did not consent to any such representation. They also averred that they kept separate files, had their own staff, had their own personal stationery, and paid for their own expenses. In response, the plaintiff's president averred that the corporation needed an attorney to handle a dispute relating to the cost of clean up of a hazardous waste site it owned and was referred to this law office; that it was the corporation's business practice to hire law firms with multiple personnel and financial resources; that he assumed that he was hiring the law firm of DiMasi, Donabed & Karll when he spoke to Donabed; that all the correspondence and invoices received by the plaintiff from Donabed bore the letterhead of "Law Offices of DiMasi, Donabed & Karll, A Professional Association," and listed a roll of attorneys in the left hand margin; and that the checks issued by the plaintiff in payment for legal services were made payable to DiMasi, Donabed & Karll.

In order to establish a partnership by estoppel, the plaintiff bore the burden of proving "(1) that the would-be partner has held himself out as a partner; (2) that such holding out was done by the defendant directly or with his consent; (3) that the plaintiff had knowledge of such holding out; and (4) that the plaintiff relied on the ostensible partnership to his prejudice." Brown v. Gerstein, 17 Mass.App.Ct. 558, 571, 460 N.E.2d 1043 (1984). See also G.L. c. 108A, § 16. At issue here are the first two elements: whether Donabed held himself out as a partner of the defendants and whether the holding out was done with the defendants' consent. Relying upon Brown v. Gerstein, in which we held "that the use of a person's name in a business, even with that person's knowledge, is too slender a thread to warrant a favorable finding on the consent element." id. at 572 460N.E.2d1043, the judge apparently concluded that the defendants' consent to use of their name on the business letterhead did not amount to their holding themselves out as partners of Donabed or consenting to do so.

We conclude that this case is distinguishable from Brown v. Gerstein. In that case, Brown sought to hold Weiner, who practiced law with Gerstein, derivatively liable for Gerstein's alleged malpractice as his partner by estoppel. The only proof presented on the question of partnership by estoppel was evidence that Brown had received correspondence bearing the legend of Gerstein & Weiner, that Weiner knew that Gerstein was using Gerstein & Weiner stationery, and that a retainer check was made payable to Gerstein. Here, unlike the Brown case, the defendants not only knew that Donabed was using stationery with the legend "DiMasi, Donabed & Karll" but they also knew and consented to his use of stationery that bore the legend after their names, "a professional association" and listed in the margin a roll of attorneys including themselves, Donabed, and two attorneys not named in the letterhead title of DiMasi, Donabed & Karll. In addition, the bills forwarded to the plaintiffs from Donabed came on stationery with this letterhead instead of Donabed's personal stationery. There is no indication on the bills that payment should be made to Donabed or that the bill was submitted by Donabed instead of the law office of DiMasi, Donabed & Karll. While the committee on professional ethics of the Massachusetts Bar Association has declined to rule whether the use of the term "professional association" to describe lawyers who are not partners, but share office space, is deceptive, it has stated that the term is ambiguous and may well imply a partnership arrangement. Massachusetts Bar Assn. Comm. on Professional Ethics, Op. 85-2 (1985). While this opinion has no binding effect on the liability of the defendants to the plaintiffs, see Fishman v. Brooks, 396 Mass. 643, 649, 487 N.E.2d 1377 (1986), it buttresses our view that the use of the term "professional association" may well suggest a partnership to the public which is unlikely to distinguish among partnerships, professional corporations, and professional associations. At the very least, the use of the term in the circumstances of this case presents a question of fact as to whether a partnership by estoppel exists. See Johnson v. Shaines & McEachern, P.A., 835 F.Supp. 685, 690 (D.N.H.1993) (material issue of fact as to whether partnership relationship existed between New Hampshire and Massachusetts law firms described as G & M Law Group precluded summary judgment for Massachusetts law firm). Accordingly, we hold summary judgment should not have been granted.

We comment briefly on one other issue raised in this appeal which was not raised in the trial court because of the procedural posture of this case. As noted above, after summary judgments were entered for the defendants in this action, the plaintiff settled his claim against Donabed and issued a release discharging him from all liability growing out of his legal representation but excepted from the provisions of that release its claims against the defendants in this action. ⁴ The defendants now argue that this appeal should be dismissed because the plaintiff is barred as matter of law by the terms of that release from pursuing this action against the defendants. Ordinarily, a party is not entitled to present an argument on appeal on an issue not presented in the court below. Cruz v. Commissioner of Pub. Welfare, 395 Mass. 107, 111-112, 478 N.E.2d 1262 (1985). There are, however, exceptional circumstances which will prompt a reviewing court to examine the issue. Albert v. Municipal Court of Boston, 388 Mass. ...