Meyer v. Wagner

• Decision Date: 16 April 1999
• Citation: 709 N.E.2d 784,429 Mass. 410
• Parties: Judith MEYER v. Augustus F. WAGNER, Jr.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 784

709 N.E.2d 784

429 Mass. 410

Judith MEYER v. Augustus F. WAGNER, Jr.

Supreme Judicial Court of Massachusetts,

Barnstable.

Argued Jan. 4, 1999.

Decided April 16, 1999.

George C. Deptula, Boston, for the plaintiff.

James R. DeGiacomo, Boston (Judith K. Wyman with him) for the defendant.

Present: WILKINS, C.J., ABRAMS, LYNCH, GREANEY, FRIED, & MARSHALL, JJ.

GREANEY, J.

The principal issue raised in this appeal is whether a client who agreed to the settlement of a divorce action on the advice of her attorney later may properly assert a claim for malpractice against the attorney in the preparation and execution of the settlement agreement.

The plaintiff brought this action against the defendant in the Superior Court claiming that he had committed malpractice in the legal services rendered to her in connection with her divorce and claims for equitable division of property. She maintained that, due to the defendant's mishandling of the proceedings, particularly in preparing and executing a settlement agreement governing distribution of the marital assets, and in failing to institute necessary ancillary proceedings to secure the assets, she did not obtain appropriate levels of alimony, child support, and a fair distribution of the assets, including assets connected to numerous parcels of real estate and businesses owned by her former husband. The plaintiff also asserted a claim for violation of G.L. c. 93A, § 9. ¹ The defendant filed a counterclaim in which he sought to recover approximately $200,000 for the legal services rendered and expenses.

The judge considered a number of pretrial motions, including the defendant's motion to strike the claim of negligence in the preparation and execution of the settlement agreement. ² After a pretrial hearing, the judge allowed the defendant's motion, relying primarily on the fact that the Probate Court judge in the divorce proceeding had approved the settlement agreement.

After a trial on the plaintiff's claim that the defendant was negligent in failing timely to initiate adequate prejudgment and postjudgment measures properly to secure the assets covered by the agreement, and on the defendant's counterclaim, a jury returned verdicts on both claims in favor of the defendant, and assessed the plaintiff $70,000 in attorney's fees. ³ The judge entered a separate memorandum of decision on the plaintiff's G.L. c. 93A claim in which she concluded that there was no violation of the statute. The plaintiff appealed from the judgments entered, and we transferred the case to this court on our own motion.

We conclude that the judge should not have struck the plaintiff's negligence claim concerning the defendant's alleged malpractice in preparing and executing the settlement agreement. There must be a new trial on that claim. Because the evidence relating to that claim is inextricably intertwined with the plaintiff's claim that the defendant failed properly to secure the marital assets and with the defendant's counterclaim, a new trial on those claims is also necessary.

1. There was evidence of the following. In November, 1987, the plaintiff commenced a divorce proceeding against her husband, a real estate developer. ⁴ The first attorney hired by the plaintiff obtained temporary orders. The orders restrained the husband from transferring, except in the normal course of business, or dissipating, marital assets and his ownership interests in numerous trusts and corporations which held title to the properties he was developing.

In March, 1988, the plaintiff retained the defendant, and the law firm in which he was a partner, to represent her in the divorce. The husband was uncooperative throughout the divorce proceedings. At the outset, the plaintiff explained to the defendant that he needed to be aggressive because her husband was inclined to be obstructive. In addition to the defendant, two other attorneys with the firm worked on the plaintiff's case, and separate experts and an investigator were also retained to assist in preparation.

During the discovery phase of the litigation, the defendant's law firm sent out requests for admissions and interrogatories, and scheduled depositions of the husband and his business associates. The husband failed repeatedly to comply with various requests for production of documents. The defendant and his associates at the law firm testified that they were involved in tracing the husband's assets, some of which were in the husband's name, and easily ascertainable, and others of which required extensive discovery to determine his interests. The depositions were intended to identify the husband's interests in the various corporate entities under which he did business, as well as to discover the properties held by those entities. The depositions established that ascertainment of ownership was onerous, making it difficult to trace the sources of the husband's finances. The defendant further testified that, when the plaintiff acquired information concerning the husband's property holdings and business ventures, she would inform either the defendant or one of his associates, who would then attempt to substantiate the information. ⁵

Due to the husband's failure to cooperate, the defendant ostensibly developed a strategy by which he would file for contempt when the husband violated a court order. It was believed that the sanction of jail would have a chilling effect on the husband and would result in his compliance with the order. In May, 1989, the husband was found in contempt for failing to pay for the children's education and for not paying the mortgage on the family home, and he was sentenced to serve thirty days in jail. The husband then paid all outstanding obligations.

On the eighth day of trial, the plaintiff, on the advice of the defendant, agreed to a settlement. On July 27, 1989, the Probate Court judge ordered the entry of a judgment of divorce which incorporated the settlement agreement. The defendant described the agreement's provisions to the Probate Court judge, and the parties acknowledged to the judge that they accepted the agreement. The judge stated that the agreement was "fair," and that the parties had "the best of professional advice that anybody can get."

The settlement agreement required, among other provisions, that the husband pay the plaintiff $250,000 in cash within one hundred days; and $100,000 in July, 1990, which, if not paid, would increase to $150,000 in July, 1991. The husband was obligated to sell the marital home at 5 Cranberry Lane, Sandwich, and a neighboring two and one-half acre parcel at Blueberry Lane. The husband held title to both properties, valued at $2 million and $800,000 respectively. ⁶ He was to pay the plaintiff $600,000 on the earlier of the sale of the Blueberry Lane parcel or December 31, 1989. Although the agreement also required the husband to provide mortgages to the plaintiff on both properties, the mortgages were never executed. ⁷ The plaintiff testified that she was urged by the defendant to enter into the settlement agreement even though she had expressed concerns about security and her husband's control over the assets.

In September, 1989, the husband placed an advertisement for the Cranberry and Blueberry Lane properties in The Boston Globe, under the heading "Forced Divorce Sale." The sale prices were listed as $1.5 million and $750,000 respectively. The advertisement stated that "no reasonable offer will be refused," and that the properties were "priced for quick sale." The plaintiff testified that, after bringing the advertisement to the defendant's attention, she reiterated her concerns about security, but he never disclosed to her that mortgages on the properties had not been perfected.

Ten days after the husband failed to pay the initial $250,000, the defendant filed a complaint for contempt. The husband then executed a purchase and sale agreement for the marital home, with a purchase price of $1.125 million. The buyer paid a deposit of $250,000, the return of which was secured by a $250,000 mortgage on the Cranberry and Blueberry Lane properties granted to the buyer by the husband. The husband thereafter satisfied the payment owed to the plaintiff.

When the husband failed to pay the $600,000 to the plaintiff when due, the defendant again filed a complaint for contempt and requested attachment on the Cranberry Lane and Blueberry Lane properties. A hearing was scheduled on the contempt, and the attachment was granted.

At the closing on the marital home, the plaintiff released her attachment on the marital home, but not on the Blueberry Lane parcel. To secure payment of the $600,000, she received two mortgages on commercial properties owned by the husband in Sandwich, which were subject to other outstanding mortgages. Of the $75,000 net proceeds from the sale of the marital home, ⁸ the plaintiff obtained approximately $8,000 for her legal fees, and approximately $15,000 was placed in escrow, which she ultimately received. ⁹

Before the contempt hearing in April, 1990, the husband sought to release the attachment on the Blueberry Lane property so that he could sell it. He represented to the Probate Court judge that the purchase price for the property was $450,000. The defendant successfully argued to the court that the true sales price was $700,000, but the husband had structured the sale to appear otherwise. The husband was found in contempt and sentenced to thirty days in jail. A single justice of the Appeals Court stayed the judgment.

In November and December, 1990, attachments were sought and granted on all of the husband's business properties. At the same time, the prospective buyers of the Blueberry Lane parcel decided not to proceed with the purchase. The plaintiff testified that she expressed to the defendant her concerns that the husband would allow the parcel to be foreclosed on, but the defendant failed to take any action. The bank holding the...