FOLEY v. TEVNAN (2021)

MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

Nearly two decades after the formation of the Gallivan Boulevard Nominee Trust (the Trust), the plaintiff brought suit in the Superior Court against her cobeneficiary, the defendant, alleging that he committed a breach of contract, breached the covenant of good faith and fair dealing, perpetrated misrepresentation and fraud,³ breached his fiduciary duty, engaged in unfair and deceptive acts or practices pursuant to G. L. c. 93A, and was unjustly enriched.⁴ Following a jury-waived trial, the judge ruled in favor of the defendant on all of the plaintiff's remaining counts, and the defendant's counterclaim seeking a declaration that the plaintiff had breached her fiduciary duty, wrongly received benefits from the Trust, and denied the defendant the benefits of the Trust.⁵ The plaintiff appeals from the judgment, disputing a number of the judge's findings of fact and challenging the initial transaction, which granted the defendant his beneficial interest in exchange for legal services, as contrary to public policy. We affirm.

We discern no merit in the plaintiff's contention that the business transaction between the plaintiff and the defendant should be void as a matter of public policy. While we have consistently held that transactions between an attorney and a client are subjected to careful scrutiny, see Pollock v. Marshall, 391 Mass. 543, 556-557 (1984), “the presumed influence of an attorney over the client in such transactions may be ‘neutralized by independent advice given to the client or by some other means.’ ” Rubin v. Murray, 79 Mass. App. Ct. 64, 69-70 (2011), quoting Pollock, supra. Here, the judge carefully considered evidence of the defendant's advice to the plaintiff, the plaintiff's understanding of the transaction, and the nature of the transaction. In addition to making a number of findings regarding the transaction and the plaintiff's knowledge and experience, the judge specifically found that the defendant advised the plaintiff to seek independent counsel before consummating the transaction, but that the plaintiff told the defendant that she did not need to consult with another attorney. Furthermore, the judge found that the plaintiff was an intelligent, competent, and savvy business person who fully understood that she was giving the defendant a twenty-five percent interest in the Trust. See Rubin, supra at 70 (“It was appropriate that the judge take into account the knowledge and sophistication of the individual ․ in assessing the adequacy of [the] disclosure”). Finally, the judge found that the Trust acquired the property at a cost of approximately $160,000 and that the defendant performed well over one hundred hours in legal work for the plaintiff's benefit (and that the beneficial interest in the Trust was designed to compensate the defendant for such work, in lieu of payment of legal fees in cash).

These findings were amply supported by the record. The defendant testified that he advised the plaintiff to seek independent legal counsel and the judge was entitled to credit this testimony. See New England Canteen Serv., Inc. v. Ashley, 372 Mass. 671, 675 (1977). Furthermore, the plaintiff was an experienced business person who had successfully run an insurance agency for nearly twenty years, had previous experience with trusts, and had reviewed and signed tax forms on behalf of the Trust -- even going so far as to correct one such form to indicate the defendant's twenty-five percent beneficial interest. Finally, the judge credited the defendant's testimony regarding the extensive legal work he performed on behalf of the plaintiff in purchasing the property and forming the Trust, and, given that the defendant performed well over one hundred hours in legal work on the matter, receiving a twenty-five percent beneficial interest in the Trust as compensation was reasonable.

Although the plaintiff asks us to set aside the transaction as a matter of public policy, this case is clearly within established law. See Pollock, 391 Mass. at 556-559. The defendant was entitled to receive compensation for the legal services he performed and there was no error in concluding that a twenty-five percent beneficial interest in the Trust was reasonable in light of the extensive services performed by the defendant, which amounted to nearly $40,000 in legal fees. Furthermore, there was no error in concluding that the defendant did not breach his fiduciary duty ⁶ because he properly advised the plaintiff to seek independent legal counsel, there was no fundamental unfairness in the transaction, and the transaction was equitable. See Rubin, 79 Mass. App. Ct. at 73.⁷

Judgment affirmed.

FOOTNOTES

3.   The judge allowed the defendant's motion for summary judgment as to the breach of contract, breach of the covenant of good faith and fair dealing, and misrepresentation and fraud claims and they are not the subject of this appeal.

4.   The plaintiff also brought equitable claims for a declaratory judgment pursuant to G. L. c. 231A and for the creation of a constructive trust, both to return the defendant's interest in the Trust to the plaintiff.

5.   The judge ordered the plaintiff to distribute the defendant's share of the net profits and assets of the Trust -- twenty-five percent -- but, because of the defendant's delay, only to the extent they had accrued since February 13, 2017.

6.   Additionally, we note that the judge did not abuse his discretion in finding that the plaintiff knew of the facts giving rise to her alleged injury on December 30, 1998, when the Trust was formed. See Stark v. Advanced Magnetics, Inc., 50 Mass. App. Ct. 226, 233-234 (2000). Accordingly, there was no error in concluding that, even if the defendant did breach his fiduciary duty owed to the plaintiff by taking an ownership interest in the Trust as compensation for legal services, such claims would be time-barred.

7.   In the exercise of our discretion, we decline to award attorney's fees to the defendant in this instance. See Fronk v. Fowler, 456 Mass. 317, 326-327 (2010).