U.S. Trust Co. of New York v. Herriott

• Decision Date: 21 July 1980
• Citation: 10 Mass.App.Ct. 313,407 N.E.2d 381
• Parties: UNITED STATES TRUST COMPANY OF NEW YORK v. Richard L. HERRIOTT et al. 1
• Court: Appeals Court of Massachusetts

Page 381

407 N.E.2d 381

10 Mass.App.Ct. 313

UNITED STATES TRUST COMPANY OF NEW YORK v. Richard L. HERRIOTT et al. ¹

Appeals Court of Massachusetts, Norfolk.

Argued May 14, 1980.

Decided July 21, 1980.

Kirk Y. Griffin, Boston, for Richard L. & Aloise B. Herriott.

Larry C. Kenna, Charles P. Gamer, Mark L. Alderman, Choate, Hall & Stewart, Boston, for plaintiff.

Before HALE, C. J., and GOODMAN and GREANEY, JJ.

GREANEY, Justice.

By its amended action, United States Trust Company of New York (Trust Company) sought judgment against Richard L. Herriott (Herriott) and his wife, Aloise B. Herriott, on two promissory notes, ² aggregating $450,000, plus interest, attorney's fees and expenses of collection. The action also sought to set aside alleged fraudulent transfers of real and personal property made by one or the other of the Herriotts to various corporations or trusts under their control and to reach and apply the Herriotts' interests in certain of those corporations and trusts. After answering to the merits, the defendants set forth thirty-four counterclaims against the Trust Company which asserted that the plaintiff's action had intentionally or negligently interfered with the defendants' business relationships, that the suit constituted an abuse of process, and that the Trust Company's collection efforts violated G.L. c. 93A. Eighteen of the counterclaims were dismissed on the plaintiff's motion; the sixteen which survived are exclusively concerned with the Trust Company's action to reach and apply the interests of Herriott and his wife in the various business organizations under their control. The Trust Company filed a motion for summary judgment on the notes (Mass.R.Civ.P. 56(a), 365 Mass. 824 (1974)), supported by affidavits stating current indebtedness (with interest) and amounts due for attorney's fees and expenses. Neither Herriott (represented below by counsel other than their counsel on appeal) replied to the merits of the rule 56(a) motion. Instead, Richard Herriott moved for a continuance of the summary judgment proceedings on the ground that a response to the Trust Company's motion would violate his Fifth Amendment privilege against self-incrimination. That motion was denied and the plaintiff's motion for summary judgment allowed, with a certification by the judge that "there (is) no just reason for delay" in entering a judgment for the Trust Company. Mass.R.Civ.P. 54(b), 365 Mass. 821 (1974). After an evidentiary hearing on attorney's fees, a second judge ordered entry of a judgment for the plaintiff in the amount of $532,052.31. ³ The Herriotts' appeal from that judgment questions the propriety of the denial of the motion for a continuance; contends that they were improperly denied a jury trial on the assessment of damages; and challenges the sufficiency and correctness of the judicial certificate under rule 54(b). We affirm the judgment.

1. Herriott argues that the judge abused his discretion in refusing to continue the summary judgment proceedings based on the assertion that a response to the Trust Company's rule 56 motion would involve a violation of his privilege against self-incrimination. The motion requesting a continuance stated that Herriott was under investigation by a State grand jury in New York, that certain bank records, including records of the loans involved in this litigation, had been subpoenaed before that grand jury, that officers of the Trust Company "appear to have participated" in an investigation of Herriott's affairs by the Federal Bureau of Investigation, and that, based on the criminal investigation, Herriott had received a protective order prohibiting the Trust Company from taking his deposition until September 10, 1979. The motion was signed by his attorney; a supporting affidavit setting forth these facts or other facts that might establish the claim of privilege was not filed as required by Mass.R.Civ.P. 56(f), 365 Mass. 825 (1974).

There is no question that the Fifth Amendment privilege against self-incrimination "applies alike to civil and criminal proceedings, wherever the answer might tend to subject to criminal responsibility him who gives it." McCarthy v. Arndstein, 266 U.S. 34, 40, 45 S.Ct. 16, 17, 69 L.Ed. 158 (1924). The scope of the application of the privilege is the same as in a criminal setting; that is, it "not only extends to (matters) that would in themselves support a conviction under a . . . criminal statute but likewise embraces (matters) which would furnish a link in the chain of evidence needed to prosecute the claimant for a . . . crime." Hoffman v. United States, 341 U.S. 479, 486, 71 S.Ct. 814, 818, 95 L.Ed. 1118 (1951). But the assertion of the privilege by a party in a civil case does not require the court to issue a blanket injunction staying the future course of the litigation. Nor is there a constitutional requirement that the civil proceeding must yield to the criminal one. See De Vita v. Sills, 422 F.2d 1172, 1181 (3d Cir.1970). See also Note, Resolving Tensions Between Constitutional Rights: Use Immunity in Concurrent or Related Proceedings, 76 Colum.L.Rev. 674, 701 (1976). Instead, the rights of the parties to the civil action are to be considered as equal. However, it would constitute a clear abuse of discretion for the judge to turn a deaf ear to a serious claim of privilege. See generally Lefkowitz v. Cunningham, 431 U.S. 801, 805-806, 97 S.Ct. 2132, 2135-2136, 53 L.Ed.2d 1 (1977). The judge's task is to balance any prejudice to the other civil litigants which might result from granting a stay, against the potential harm to the party claiming the privilege if he is compelled to choose between defending the civil action and protecting himself from criminal prosecution. See Arthurs v. Stern, 560 F.2d 477, 478-480 (1st Cir.1977), cert. denied, 434 U.S. 1034, 98 S.Ct. 768, 54 L.Ed.2d 782 (1978). See also Flint v. Mullen, 499 F.2d 100 (1st Cir.), cert. denied, 419 U.S. 1026, 95 S.Ct. 505, 42 L.Ed.2d 301 (1974). As was well stated by the United States Court of Appeals for the District of Columbia Circuit:

"There may be cases where the requirement that a criminal defendant participate in a civil action, at peril of being denied some portion of his worldly goods, violates concepts of elementary fairness in view of the defendant's position in an inter-related criminal prosecution. On the other hand, the fact that a man is indicted cannot give him a blank check to block all civil litigation on the same or related underlying subject matter. Justice is meted out in both civil and criminal litigation. The overall interest of the courts that justice be done may very well require that the compensation and remedy due a civil plaintiff should not be delayed (and possibly denied). The court, in its sound discretion, must assess and balance the nature and substantiality of the injustices claimed on either side."

Gordon v. Federal Deposit Ins. Corp., 427 F.2d 578, 580 (D.C.Cir.1970). The judge's actions should be supported by a statement of reasons or by a record which demonstrates the basis for his conclusion with sufficient clarity to provide meaningful appellate review.

When the privilege is asserted in a summary judgment proceeding, the policy behind rule 56 asserts itself and must be recognized. That policy seeks "to make possible the prompt disposition of controversies on their merits without a trial, if in essence there is no real dispute as to the salient facts or if only a question of law is involved." Community Natl. Bank v. Dawes, 369 Mass. 550, 553, 340 N.E.2d 877, 879 (1976), quoting from 3 Barron & Holtzoff, Federal Practice and Procedure (Rules ed.) § 1231, at 96 (Wright rev.ed.1958). The rule itself expressly limits the judge's discretion to refuse summary judgment by providing that "(t)he judgment sought shall be rendered forthwith if the (materials) on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter or law." Mass.R.Civ.P. 56(c), 365 Mass. 824 (1974). 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." Mass.R.Civ.P. 56(e), 365 Mass. 825 (1974). Turner v. McCune, 4 Mass.App. 864, 865, 357 N.E.2d 942 (1976). If he is unable to do so, he is expected to file an affidavit pursuant to section (f), explaining "that he cannot for reasons stated present by affidavit facts essential to justify his opposition." Mass.R.Civ.P. 56(f), 365 Mass. at 825. In these circumstances "the court may refuse the application for judgment or may order a continuance or may make such other order as is just." Ibid. A party claiming his Fifth Amendment privilege ordinarily should file an affidavit invoking section (f) rather than relying upon a motion for continuance signed by his attorney, if he wishes to avoid the entry of judgment which is mandated when he does not respond as required by section (e). See also Inglett & Co. v. Everglades Fertilizer Co., 255 F.2d 342, 349-350 (5th Cir.1958) ("if it takes an oath to establish or affirm that which is a fact . . . we doubt that it is conducive to the orderly administration of justice for counsel to become the voice on summary judgment"). But see Brody v. United States, 243 F.2d 378, 387 n.5 (1st Cir.), cert. denied, 354 U.S. 923, 77 S.Ct. 1384, 1 L.Ed.2d 1438 (1957). Thus, at the stage of the case designed to ferret out and dispose of unsubstantiated claims, there is a need for sufficient specificity in the assertion of the privilege to permit a judge weighing a request for constitutional shelter to fashion a remedy which protects the rights of all parties and accommodates the policies underlying the privilege and the rule.

Assuming that his counsel could raise Herriott's privilege in this case as his duly constituted agent (Brody, supra ; contrast ...