Opinion
16-P-979
03-22-2017
Jacqueline CALLAHAN v. Jonathan A. BEDARD.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The defendant, Jonathan A. Bedard, appeals from a Superior Court judgment, following a jury-waived trial, that awarded the plaintiff, Jacqueline Callahan, damages as a result of the defendant's fraud and breach of fiduciary duty. He argues (1) that the plaintiff's fraud claim was improperly pleaded; (2) that the plaintiff did not reasonably rely on his false statements, and even if she did, she did not suffer damages; and (3) that he did not breach his fiduciary duty owed to the plaintiff, and even if he did, the judge miscalculated the damages. We affirm the judgment, except insofar as we reduce the plaintiff's damages for the defendant's breach of fiduciary duty by $5,775 pursuant to the holding in M. F. Roach Co . v. Provincetown , 355 Mass. 731, 732-733 (1969).
The plaintiff's claims were brought as cross claims as the plaintiff and the defendant were originally named as codefendants in the broader litigation below. The other parties to the litigation, and the separate judgment on the claims involving them, are not before us in this appeal.
The defendant also argues that the plaintiff waived her claim for fraud when she accepted a deed as fifty percent owner of the trust that controlled the condominium unit. We have considered this claim and find nothing that warrants further discussion. See Commonwealth v. Domanski , 332 Mass. 66, 78 (1954). See also Tynan v. Attorney Gen ., 453 Mass. 1005, 1005 (2009).
The judge found that $5,775 represents the plaintiff's attorney's fees for prosecuting the cross claims against the defendant.
"A trial court's findings of fact will be upheld unless shown to be clearly erroneous." Rosen v. Rosen , 90 Mass. App. Ct. 677, 692 (2016) (quotation omitted). "A finding is ‘clearly erroneous' when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Ibid . (quotation omitted). The judge's conclusions of law are reviewed de novo. Aggregate Indus.—N.E. Region, Inc . v. Hugo Key & Sons, Inc ., 90 Mass. App. Ct. 146, 149 (2016).
1. Pleading . The defendant argues that the plaintiff's fraud claim was not pleaded with particularity as required by Mass.R.Civ.P. 9(b), 365 Mass. 751 (1974). We disagree.
The rule provides in relevant part: "In all averments of fraud, mistake, duress or undue influence, the circumstances constituting fraud, mistake, duress or undue influence shall be stated with particularity."
There were adequate allegations in the plaintiff's complaint of the circumstances constituting the fraud. See Masingill v. EMC Corp ., 449 Mass. 532, 540 (2007) (elements of claim). The complaint alleged that the defendant purchased a condominium unit for the plaintiff to prevent her from taking their daughter to the plaintiff's native South Africa and wrongfully informed the plaintiff that the owner of the other unit in the condominium, Louise Ford, was unlawfully refusing to contribute to required repairs to common areas of the condominium. According to the allegations in the complaint, the defendant convinced the plaintiff that it was necessary for her to transfer her interest in the condominium to the defendant's effective control, to appoint his mother as a trustee of the condominium trust, and to grant a power of attorney to the defendant so he could effectuate the necessary repairs to the condominium. The defendant further represented that the plaintiff's rights and interest in the condominium were protected by the documents she had signed. "The allegations indicate the statements made, the period in which they were made, their falsity and the defendant's knowledge of their falsity, as well as the plaintiff's detrimental reliance thereon." Schinkel v. Maxi-Holding, Inc ., 30 Mass. App. Ct. 41, 48 (1991), citing Friedman v. Jablonski , 371 Mass. 482, 488–489 (1976). The claim was properly pleaded.
2. Reliance and damages . The defendant argues that the plaintiff did not reasonably rely on his false statements because their relationship had a history of deceit and dishonesty. He further argues that if she did rely on his false statements, she did not prove damages. "To recover for fraudulent misrepresentation, a plaintiff ‘must allege and prove that the defendant made a false representation of a material fact with knowledge of its falsity for the purpose of inducing the plaintiff to act thereon, and that the plaintiff relied upon the representation as true and acted upon it to [her] damage.’ " Masingill , 449 Mass. at 540, quoting from Kilroy v. Barron , 326 Mass. 464, 465 (1950). The plaintiff's reliance on the misrepresentation must be justifiable. Restatement (Second) of Torts § 537 (1977). Here, the defendant prepared documents for the plaintiff to execute under the guise that he was protecting her interests and the interests of their daughter. The defendant worked as a real estate developer and held himself out to be a real estate expert. The defendant's assertion that he needed her to sign over her interest in the condominium so he could make repairs and upgrades to the property was not "preposterous or palpably false" given the circumstances, Zimmerman v. Kent , 31 Mass. App. Ct. 72, 81 (1991) (quotation omitted), and the plaintiff's reliance was justifiable because she could reasonably believe, and did believe, that he intended to act in furtherance of their daughter's best interests.
Generally, in cases of fraud, the injured party is entitled to the benefit of the bargain. Twin Fires Inv., LLC v. Morgan Stanley Dean Witter & Co ., 445 Mass. 411, 425 (2005). The plaintiff is entitled to damages because she did not receive the repairs to the condominium's common areas that the defendant promised to perform if she transferred her fee simple interest in the condominium to the defendant's mother. The judge did not err by determining $30,300, the value of the defendant's unperformed work, was the proper amount of damages the plaintiff was owed. See id . at 424.
The transfer was to a nominee trust of which the defendant's mother was the sole trustee and the defendant was the sole beneficiary.
3. Fiduciary duty and damages . The defendant concedes that he owed a fiduciary duty to the plaintiff, but argues that he did not breach his duty. In addition, he argues that if he did breach his fiduciary duty, the judge's calculation of damages was incorrect.
The defendant owed the plaintiff the duty of utmost good faith and absolute loyalty as her attorney in fact under the power of attorney she granted him. See Gagnon v. Coombs , 39 Mass. App. Ct. 144, 154 (1995). The defendant breached that duty through his dealings with Ford, which exposed the plaintiff to litigation as a trustee of the condominium. See id . at 155. The plaintiff incurred damages as a result of having to defend herself against Ford's lawsuit. The judge was correct in including as damages the plaintiff's attorney's fees and costs in defending against the third-party suit. See O'Brien v. New England Tel. & Tel. Co ., 422 Mass. 686, 696 (1996). However, the judge erred in including in the recovery the $5,775 that the plaintiff incurred in litigating her cross claim against the defendant. See M. F. Roach Co ., 355 Mass. at 732-733. Therefore, the judgment shall be modified to reduce the damages for the defendant's breach of fiduciary duty by $5,775. As so modified, the judgment is affirmed.
The claims against the plaintiff were eventually dropped at trial, but her attorney's fees in defending against Ford were substantial.
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So ordered .
Affirmed as modified.