Nova Assignments Inc v. Another

• Decision Date: 16 June 2010
• Docket Number: No. 08-P-1451.,08-P-1451.
• Citation: 77 Mass.App.Ct. 34,928 N.E.2d 364
• Parties: NOVA ASSIGNMENTS, INC.v.Stephen T. KUNIAN & another.
• Court: Appeals Court of Massachusetts

77 Mass.App.Ct. 34

928 N.E.2d 364

NOVA ASSIGNMENTS, INC.v.Stephen T. KUNIAN & another.¹

No. 08-P-1451.

Appeals Court of Massachusetts Suffolk.

Argued May 11, 2009.

Decided June 16, 2010.

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Nicholas J. Nesgos, Boston, for the plaintiff.

Peter F. Carr, II, Boston, for the defendants.

Present: GRAINGER, BROWN, & RUBIN, JJ.

RUBIN, J.

In this case we review a Superior Court judge's order granting summary judgment in favor of the defendants, attorney Stephen T. Kunian and his law firm Eckert Seamans Cherin & Mellott, LLC (Eckert). The plaintiff, Nova Assignments, Inc. (Nova), is the assignee of the law firm Posternak Blankstein & Lund, LLP (PBL).² Our standard of review of the judge's order granting summary judgment is the familiar one. We review the grant of summary judgment de novo, viewing the evidence contained in the summary judgment record in the light most favorable to the nonmoving party, in this case Nova. Gray v. Giroux, 49 Mass.App.Ct. 436, 438, 730 N.E.2d 338 (2000).

I.

The following facts are taken from the summary judgment record. PBL represented KCI Management Corporation (KCI) in litigation to secure KCI's rights to develop certain real estate in the Hyde Park area of Boston. KCI began to dispute the reasonableness of PBL's fees, at which point PBL threatened to withdraw from its representation of KCI and to attach the Hyde Park real estate for payment of its fees. Kunian then commenced representation of KCI in this legal fee dispute.

On December 28, 2000, Kunian sent a letter to PBL memorializing an agreement between PBL and KCI. At that time, Kunian was an attorney at Lyne Woodworth & Evarts, LLP (Lyne Woodworth). The letter states that PBL agreed to pursue “vigorously and conscientiously” an appeal then pending in this court concerning the real estate in Hyde Park. KCI agreed that it would “not transfer the real estate [in Hyde Park] without putting an agreed upon amount in escrow pending resolution of the legal fee[ ]” dispute. The letter states that PBL and KCI's principal, Alexis P. Kisteneff, would attempt to resolve the legal fee dispute and that if they could not come to an agreement, they would “enter into some agreed upon form of mediation.” The letter also states, “Based on this undertaking by [KCI], [PBL] will take no legal action against [KCI] for the collection of the legal fees it alleges are owed until completion of the appeal process.” According to the deposition testimony of PBL partner David Saltiel, Kunian also represented in a telephone conversation with Saltiel several days before the December 28, 2000, letter, that he would “arrange for the escrow of the funds” and that he himself would hold them in escrow: “He [Kunian] recognized, if we [i.e., PBL] were going to go forward we had to have some security. So he offered to escrow-to arrange for the escrow of the funds and to hold them in escrow.... He also indicated particularly that he would be holding the escrow because I remember saying, ‘I trust you, Steve.’ We had had a long relationship and I trusted him that if he said he would hold in escrow, I would be very comfortable that I didn't have to worry about the funds disappearing....” In March, 2001, Kunian left Lyne Woodworth and joined Eckert, where he continued to represent KCI.

In July, 2002, shortly after PBL obtained a decision from this court allowing KCI to develop the Hyde Park real estate,³ KCI entered into a purchase and sale agreement for the sale of that real estate. This agreement contains an express provision, drafted by Kunian, which states, “Buyer pledges complete confidentiality in making this offer and in the consummation of this purchase. Buyer agrees to not contact any of Seller's contractors including ... Attorneys, Posternak, Blankstein & Lund....” In December, 2002, KCI sold the Hyde Park real estate for $1,750,000. Kunian acted as the closing attorney. From the proceeds, he paid both his former and present law firms for their legal services. He did not, however, escrow any funds for PBL, but instead wired the net proceeds to KCI outside of Massachusetts.

According to Saltiel's affidavit, the substance of which he testified to in his deposition, when Saltiel learned about the sale of the property, he “called Kunian regarding his prior assurance about the escrow and the now critical issue of the payment of PBL's fees. Kunian's response was that he ‘forgot’ about the escrow arrangement at the time of the closing transaction. Kunian further stated that ‘it would not have made a difference anyway’; he said that had he remembered[,] he would have resigned as counsel to KCI, because [Kisteneff] would never have put the money in escrow for PBL.” Kunian himself testified in his deposition that he “completely forgot about the letter.” He further testified that if he had remembered “that I had signed a letter,” he would have “advised my client, and probably, depending on my client's instructions, withdrawn as counsel.”

In 2003, Nova, as assignee of PBL, filed its complaint in the instant action against KCI, Kisteneff, Kunian, and Eckert seeking, among other things, legal fees totaling in excess of $193,000. The Superior Court judge subsequently granted the motion of Kunian and Eckert for summary judgment. KCI's and Kisteneff's motions for summary judgment were denied, and the claims against them were subsequently dismissed by agreement of the parties. Nova filed a motion for reconsideration of the judge's order granting Kunian's and Eckert's motion for summary judgment, which was denied. Nova timely filed this appeal.

II.

A.

Nova first claims that, if the facts affirmed above are proven, Kunian is personally liable to it for a breach of a duty of care owed to PBL. Nova's theory is that Kunian knowingly or negligently made false personal representations, distinct from representations that Kunian may have made on behalf of his client, and that PBL foreseeably relied to its detriment on those personal representations.

In certain circumstances, a lawyer may owe a duty of care to a nonclient for the knowing or negligent provision of false information. See Kirkland Constr. Co. v. James, 39 Mass.App.Ct. 559, 561-564, 658 N.E.2d 699 (1995) ( Kirkland ). See also Restatement (Second) of Torts § 552 (1977). The defendants argue that no such duty may be imposed in this case, citing Lamare v. Basbanes, 418 Mass. 274, 276, 636 N.E.2d 218 (1994) ( Basbanes ), for the proposition that “the court will not impose a duty of reasonable care on an attorney if such an independent duty would potentially conflict with the duty the attorney owes to his or her client.” But the rule announced in Basbanes is inapposite here. As we explained in Kirkland, supra at 562, 658 N.E.2d 699, the limitation in Basbanes relates to claims that the law should imply a duty of care toward an adversary, essentially an attorney-client duty, in an attorney's provision of services to his own client. See, e.g. Basbanes, supra at 276, 636 N.E.2d 218; Robertson v. Gaston Snow & Ely Bartlett, 404 Mass. 515, 524, 536 N.E.2d 344, cert. denied, 493 U.S. 894, 110 S.Ct. 242, 107 L.Ed.2d 192 (1989); Spinner v. Nutt, 417 Mass. 549, 552, 631 N.E.2d 542 (1994). See also Page v. Frazier, 388 Mass. 55, 63, 445 N.E.2d 148 (1983). Nova does not raise such a claim, but rather a claim of detrimental reliance on a false representation as described in Kirkland. Bar membership provides no cloak of immunity for an attorney's false representations. Rather it imposes a high duty of ethical conduct in the practice of our shared profession.

Reading the summary judgment materials in the light most favorable to Nova, there is evidence that Kunian made personal representations to PBL in the negotiations leading up to the December 28, 2000, letter, both that he would arrange for the escrow of the funds and that he himself would hold them in escrow. Kunian's alleged representations contain promises by Kunian about actions he will take, and necessarily represent that as a matter of fact, Kunian had both the power and the intention to ensure that the escrow account would be created and that he would act as the escrow agent.⁴

While of course we do not decide liability, there is sufficient evidence in the summary judgment record to support a finding that these representations were knowingly or negligently false. Drawing every reasonable inference in favor of Nova, the summary judgment evidence could support a conclusion that less than eighteen months after making these representations, Kunian drafted a purchase and sale agreement that was part of a scheme to defraud PBL by failing to inform it of the sale of the property and by then wiring the funds out of State rather than placing them in escrow. There is no evidence that Kunian acted in any way surprised by the instruction to include in the purchase and sale agreement the provision specifically requiring the buyer not to inform PBL about the sale, nor did he take any action an attorney acting in good faith might have taken, for example, seeking to withdraw as counsel. The jury would not be obliged to find credible Kunian's own testimony that he forgot about KCI's obligations to PBL. They might reasonably infer that Kunian knew at the time he made his representations that he would not place the money in escrow and serve as an escrow agent, or that he should have known at that time that he would not be able to do so.

Whether PBL in fact relied on Kunian's representations, and whether any such reliance was reasonable, are questions that are properly for the jury and that will depend for their resolution on the jury's evaluation of all the facts and circumstances. Read in the light most favorable to Nova, however, the evidence could support a finding that PBL's reliance on Kunian's representation was reasonable. The defendants' motion for summary judgment on this claim should have been denied.

B.

Nova next focuses upon Kunian's preparation of the purchase and...