Bassichis v. Flores

Decision Date01 July 2022
Docket NumberSJC-13175
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court
PartiesMICHAEL J. BASSICHIS & others[1] v. MICHAEL I. FLORES.

Heard: January 5, 2022.

Privileged Communication. Attorney at Law. Fraud. Practice, Civil Motion to dismiss, Conduct of counsel.

Civil action commenced in the Superior Court Department on July 10 2020.

A motion to dismiss was heard by Mark C. Gildea, J.

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

Peter S. Farber for the plaintiffs.

J William Chamberlain, Jr., for the defendant.

The following submitted briefs for amici curiae: Steven E. Kramer, pro se.

Richard M. Novitch & Kimberley J. Joyce, pro se.

Present: Budd, C.J., Gaziano, Lowy, Cypher, Kafker, Wendlandt, & Georges, JJ.

GEORGES, J.

This case concerns the scope of the litigation privilege, which precludes civil liability based on communications made by a party, witness, or attorney in connection with judicial proceedings or contemplated litigation. In particular, we are asked to determine whether the protection afforded by the litigation privilege applies where the statements at issue are fraudulent misrepresentations, and also whether the litigation privilege extends to actions taken during the course of litigation, or whether it is limited to written and oral statements.

The plaintiffs seek to hold the defendant attorney liable for his conduct while representing a client in divorce proceedings, and for purported fraudulent misrepresentations he made to the court during the divorce trial that formed the basis for the trial judge's disposition of the marital estate to the defendant's client, the wife, thereby preventing the husband's creditors from attaching any of the marital assets. We conclude that the litigation privilege applies in these circumstances, and therefore affirm the allowance of the defendant attorney's motion to dismiss the plaintiffs' complaint.

1. Background.

We recite the facts as set forth in the plaintiffs' complaint. See Galiastro v. Mortgage Elec. Registration Sys., Inc., 467 Mass. 160, 164 (2014).

The plaintiffs are creditors of William von Thaden,[2] who was married to Kimberly von Thaden until their divorce in 2017. The defendant, Michael I. Flores, represented Kimberly in the divorce proceedings. Prior to the filing of the complaint in the present action, the plaintiffs each had filed separate complaints against William and Kimberly, asserting a number of claims arising from contract disputes involving William's construction business. After William filed a petition for bankruptcy and was granted a discharge under 11 U.S.C. § 727, the plaintiffs jointly commenced this action against Flores, Kimberly's former attorney.

a. Prior proceedings involving debts owed by William and Von Thaden Builders.

During much of the marriage between William and Kimberly, William owned and operated a successful construction business, Von Thaden Builders, Inc. (Von Thaden Builders), that was the primary source of income for his family. By 2014, however, the business was no longer profitable. The complaint alleges that despite these financial difficulties, William "continued to withdraw large sums from his business account to maintain his family at the standard of living they had been accustomed to." He used the money he received from new customers to pay debts from previous jobs. By June of 2016, William was unable to continue conducting the business in this manner. He closed Von Thaden Builders and liquidated its few remaining assets, leaving multiple debts unpaid.

One such debt was owed to plaintiff Max Makowsky, who had lent William $50,000 in October of 2015, and had been repaid only $5,000 by the time that Von Thaden Builders closed. William had received a short-term loan of $50,000 from Makowsky once previously, and had repaid that loan in less than two months. In this instance, however, when Makowsky asked that the loan be repaid in May of 2016, William paid only $5,000 toward the outstanding balance. By June of 2016, the $45,000 balance still had not been paid; at that point, Makowsky demanded payment, and William told him that Von Thaden Builders was struggling. William closed the business shortly thereafter. In August of 2017, Makowsky commenced an action against William and Kimberly in the Superior Court.

William also owed money to plaintiff Lower Cape Plastering LLC (Lower Cape Plastering), which had completed work for Von Thaden Builders in June and July of 2016 but had not been paid the full amount invoiced. In August of 2016, Lower Cape Plastering commenced an action against William in the District Court, seeking repayment of $20,500 for work that had been performed. After a jury trial in June of 2017, judgment was entered in favor of Lower Cape Plastering in the amount of $31,281.26. In October of 2017, Lower Cape Plastering filed a complaint in the Superior Court to enforce the District Court judgment. See note 4, infra.

Plaintiffs Michael J. Bassichis and Sylvia E. Freed had hired Von Thaden Builders in February of 2016 to demolish the existing residence and to build a new single-family home on their property in Wellfleet. After Von Thaden Builders closed, work on the project ceased, and Bassichis was forced to act as the general contractor to complete the job. Bassichis and Freed commenced an action in the Superior Court in April of 2017 against William and Von Thaden Builders, seeking $55,386.35 in damages, which was the amount that Bassichis had been required to expend, above the agreed contract price, in order to finish the project.

b. Divorce proceedings.

Kimberly did not become aware of her husband's financial difficulties until the business closed in June of 2016. At that time, Kimberly obtained a promise from her husband to cooperate in what the complaint labels a "collusive divorce," through which she would receive all of the marital property. She then hired the defendant, Flores, to represent her in the divorce. According to the plaintiffs, the agreement among William, Kimberly, and Flores was that all of the marital assets, which included three parcels in Orleans (two buildable lots and one single-family home), three condominium units in Orleans, several motor vehicles, and an eighteen-foot Boston Whaler, "would be transferred to [Kimberly] by way of a judgment of divorce, and once the divorce decree became final, [William] would declare bankruptcy." In this way, the assets that were transferred to Kimberly would be shielded from William's creditors.

In October of 2016, Flores filed a complaint for divorce, on behalf of Kimberly, in the Probate and Family Court. In accordance with William's and Kimberly's plan, Flores requested a trial on the complaint be scheduled for June of 2017. Prior to trial, Flores submitted proposed findings of fact, supporting documentation, and a proposed judgment that awarded all marital assets to Kimberly. At trial, Flores represented Kimberly, while William appeared pro se. Flores informed the judge in his opening statement that William was in agreement with all of the proposed findings of fact and the proposed judgment. Flores explained that he had submitted the case as an "adversarial matter" because it was William's intent to file for bankruptcy after the divorce became final. The complaint quoted Flores's opening statement explaining that the couple had decided not to settle the case by agreement, because, due to the planned bankruptcy filing,

"settling this case by agreement would be perilous for both parties . . . because the trustee has the ability to claw back, as it were, and void [S]tate court agreements, judgments that are based on agreements, so we are seeking a ruling from you, a judgment from you, that allocates to my client under . . . [G. L. c. 208, § 34], her share of marital assets, as well as an award of alimony, to essentially insure that any future bankruptcy proceeding --the bankruptcy court gives due deference to the fact that a [S]tate court has divided the assets and awarded alimony, which is a little different than a negotiated agreement."

Flores later argued that William had "dissipated" approximately $896,000 of marital property by withdrawing that sum from retirement and college savings accounts, such that Kimberly was entitled to all of the remaining assets. According to the plaintiffs, Flores "purposefully withheld" information from the judge that could have been used to challenge the claim of dissipation, including records showing that the vast majority of the money that William withdrew from the marital accounts was used to pay legitimate business expenses, mortgages on the properties owned by the couple, real estate taxes, car loans, and other family expenses. William introduced no evidence at trial and told the judge that he was in agreement with all of Flores's representations. Presented with only the evidence submitted by Flores, in July of 2017, the judge entered a judgment transferring all marital assets to Kimberly.

Following the entry of judgment, William and Kimberly sold the three Orleans properties and paid the net proceeds of $638,552.48 directly to Flores. William then conveyed his fifty per cent interest in the Orleans condominium units to Kimberly for one dollar. After the judgment nisi became final, William filed a petition for bankruptcy in the United States Bankruptcy Court for the District of Massachusetts, naming the plaintiffs as creditors in that proceeding. The bankruptcy case was closed in May of 2019, without any distribution to William's creditors.

The plaintiff creditors' separate actions against William and Kimberly in the Superior Court have been consolidated for trial.[3] The amended complaint in the...

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