Howe v. Fiduciary Trust Co.

• Court: Massachusetts Superior Court
• Writing for the Court: Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): FABRICANT
• Citation: Howe v. Fiduciary Trust Co., 2001 MBAR 81, 972206 (Mass. Super. Apr 19, 2001)
• Decision Date: 19 April 2001
• Docket Number: 972206
• Parties: Chester Howe v. Fiduciary Trust Company et al.

2001-MBAR-081

Chester Howe v. Fiduciary Trust Company et al.

No. 972206

Superior Court of Massachusetts

April 19, 2001

Mass L. Rptr. Cite: 13 Mass. L. Rptr. 125

Venue Superior Court, Middlesex, SS

Judge (with first initial, no space for Sullivan, Dorsey, and Walsh): FABRICANT

INTRODUCTION

Chester Howe brings this action against the estates of his former law partners, Richard Ely and Arthur P. Schmidt, seeking indemnification for his payment in settlement of the judgment that was affirmed by the Supreme Judicial Court in Williams v. Ely, 423 Mass. 467 (1996) ("the underlying action"). The defendants have counterclaimed seeking indemnification from Howe for their contributions to the same settlement. Presently before the Court are cross-motions for summary judgment. For the reasons that will be explained, the plaintiff's motion will be allowed and the defendants' cross-motion will be denied.

BACKGROUND

The materials submitted in connection with the present cross-motions establish the following facts as undisputed.1 Chester Howe, Richard Ely, and Arthur P. Schmidt were among the partners of two law firms that merged in 1974 to form the firm of Gaston Snow & Ely Bartlett, later renamed Gaston & Snow ("Gaston"). All three, along with all others who were then partners, signed the firm's "Articles of Partnership," dated March 1, 1976 ("the 1976 agreement").2 Article 16 of that document provided, in pertinent part, as follows:

In case a Partner shall withdraw from the partnership except upon dissolution thereof by general consent, the remaining Partners continuing the partnership business, jointly and severally, covenant and agree with such Partner, his legal representatives and heirs, that, unless the partnership shall be insolvent on the date of his withdrawal as a Partner, they will indemnify and save him, his legal representatives and heirs, harmless from all liabilities, obligations, claims, and demands of every description against the partnership which exist at the date of his withdrawal or shall thereafter arise, except liabilities incurred by him and not disclosed by him as aforesaid and except liabilities arising out of his professional conduct.

The 1976 agreement contained certain other terms that also bear on the present dispute. Article 11 provided for presumptive continuation of the partnership business "in the event that a Partner withdraws." Article 17 provided for partnership meetings, specifying certain actions authorized to be taken at such meetings by majority vote, and others by two thirds vote. Among the actions specified in both categories were some, such as changes in the composition of the partnership, change in the firm name, and termination of the partnership, that would by their nature supercede provisions of the partnership agreement.3

In 1984, Gaston adopted its "Articles of Partnership, March 1, 1976, as amended through and as of March 1, 1984" ("the 1984 agreement"). Howe, Ely, and Schmidt all signed the 1984 agreement.4 Article 16 of the 1984 agreement contained an indemnification provision substantively identical to that in the 1976 agreement.5 The pertinent provisions of Articles 11 and 17 also remained substantively unchanged.

In each of 1985 and 1986, the partners voted to approve proposed amendments to the partnership agreement ("the 1985 agreement" and "the 1986 agreement").6 Signature pages were circulated, but the evidence offered includes no copy of either document signed by anyone. Howe has no present memory of whether he signed the 1985 agreement or not, but testified in the underlying action that he did not, and no evidence is offered that he did. Howe declined to sign the 1986 agreement, objecting to the changes made. In his deposition testimony in this case, Howe characterized his refusal as "a protest," indicating that "I thought the partnership was headed in the wrong direction." Howe nevertheless remained a partner in the firm; according to his deposition testimony, which is not contested by any contrary evidence, "my position in the firm did not change one iota, whether or not I signed it." Howe characterizes the 1986 agreement as "the final partnership agreement under which I functioned." Howe knows of no partner other than himself who did not sign the 1986 agreement. The defendants contend that Ely and Schmidt both signed the 1985 and 1986 agreements, and no evidence is offered to the contrary.

The 1985 agreement contained the indemnification provision of Article 16 in language identical to that in the previous version, and remained unchanged in the pertinent provisions of Articles 11 and 17 as well. The 1986 agreement included a number of significant new provisions, resulting in renumbering of pre-existing provisions, but the portions pertinent here remained without substantive change; the indemnification language previously in Article 16 appeared in Article 18, and the provisions noted supra, previously appearing in Articles 11 and 17, appeared as portions of Articles 13 and 19.7

Howe resigned from Gaston effective March 1, 1987, to become general counsel for the A.W. Chesterton Company. Ely resigned in September 1987, to join several other Gaston partners in establishing the Boston office of Dechert, Price & Rhoads. Effective January 1, 1988, the firm again amended its partnership agreement. Schmidt signed this amendment. Schmidt retired from Gaston, and from the practice of law, effective February 29, 1988. The firm's fortunes declined over the succeeding several years, and in September of 1991 Gaston ceased operations and filed for bankruptcy relief. Ely died in 1990, at age 83, and Schmidt died in 1996, at age 80.8

On February 4, 1988, while the firm was still operating, and before Schmidt's retirement, but after Howe and Ely had left, certain former clients of Gaston brought the underlying action in Norfolk Superior Court, Civil Action No. 88-360, alleging malpractice by certain attorneys of the firm in connection with tax advice given in the mid-1970s. Named as defendants in that action were a long list of individuals, including Howe, Ely, and Schmidt, who had not been involved in the alleged negligence, but who were nevertheless alleged to be liable by virtue of their status as partners in the firm at the time of the alleged malpractice. In August of 1994, the plaintiffs in the underlying action recovered judgment against some of the named defendants, including Howe and the estates of Ely and Schmidt, and that judgment became final after the defendants' unsuccessful appeal. See Williams v. Ely, 423 Mass. 467 (1996). Some of the parties to that action, including the three parties here, then entered into a settlement agreement under which these three and certain others each paid $250,000 in return for a general release. Howe now seeks indemnification for his payment pursuant to the indemnification provisions of the various successive partnership agreements; the defendants' counterclaims seek indemnification from Howe for their corresponding payments.

DISCUSSION

This Court grants summary judgment where no genuine issues of material fact exist and the summary judgment record entitles the moving party to judgment as a matter of law. Hakim v Massachusetts Insurers' Insolvency Fund, 424 Mass. 275, 281 (1997); Cassesso v. Commissioner of Correction, 390 Mass. 419, 422 (1983); Community Nat'l Bank v. Dawes, 369 Mass. 550, 553 (1976); Mass.R.Civ.P. 56(c). The moving party bears the burden of affirmatively demonstrating that there is no genuine dispute of material fact on every relevant issue. Pederson v. Time, Inc., 404 Mass. 14, 16-17 (1989). A party moving for summary judgment who does not bear the burden of proof at trial may demonstrate the absence of a triable issue either by submitting affirmative evidence negating an essential element of the nonmoving party's case or by showing that the nonmoving party has no reasonable expectation of proving an essential element of the claim at trial. Kourouvacilis v. General Motors Corp., 410 Mass. 706, 716 (1991). Once the moving party establishes the absence of a triable issue, the party opposing the motion must respond and allege specific facts establishing the existence of a genuine issue of material fact. Pederson, 404 Mass. at 17. "To avoid summary judgment, an opposing party may not rely upon his pleadings or bald conclusions but must set forth specific facts showing that there is a genuine issue for trial." United States Trust Co. of New York v. Herriott, 10 Mass.App.Ct. 313, 318 (1980); see also Trustees of Tufts College v. Parlane Sportswear Co., Inc., 4 Mass.App.Ct. 783, 784 (1976).

To recover on a claim for breach of contract, a plaintiff must show the existence of a contract, his own performance of his material obligations under the contract, the opponent's breach of a material obligation, and the resulting damages. See Singarella v. City of Boston, 342 Mass. 385, 387 (1961); Loranger Construction Corp. v. E.F. Hauserman Co., 1 Mass.App.Ct. 801 (1973); Gluckenberger v. Boston University, 974 F. Sup. 106, 150 (D.Mass. 1997). A valid contract requires terms identifying all material obligations of the parties. See City of Haverhill v. George Brox, Inc., 47 Mass.App.Ct. 717, 720 (1999). "It is axiomatic that to create an enforceable contract, there must be agreement between the parties on the material terms of that contract, and the parties must have a present intention to be bound by that agreement." Situation Management Systems, Inc. v. Malouf, Inc., 430 Mass. 875, 878 (2000).

I. Existence of a Contract.

The parties agree that Howe and the decedents were parties to a series of contracts, up to and including the 1984 partnership agreement, each containing the indemnification provision on which Howe relies....