Opinion
14-P-1285
06-18-2015
HMA ADMINISTRATORS, LLC, & others v. MINTZ, LEVIN, COHN, FERRIS, GLOVSKY and POPEO P.C., & others.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
The plaintiffs, alleging negligence and breach of fiduciary duty, brought suit against the defendant attorneys, seeking to recover for losses the plaintiffs sustained as a result of theft of corporate funds and usurpation of corporate opportunities by Jedidiah Brettschneider, the former president and chief executive officer of HMA Direct. A Superior Court judge allowed the defendants' motion to dismiss under Mass.R.Civ.P. 12(b)(6), 365 Mass. 754 (1974), concluding that the plaintiffs failed to state a plausible claim of proximate causation. We affirm.
"We review the allowance of a motion to dismiss de novo, accepting as true the factual allegations in the plaintiff[s'] complaint, as well as any favorable inferences reasonably drawn from them." Genovesi v. Nelson, 85 Mass. App. Ct. 43, 46 (2014) (citations omitted). "To survive a rule 12(b)(6) motion to dismiss, a complaint must make 'factual "allegations plausibly suggesting (not merely consistent with)" an entitlement to relief.'" Okoli v. Okoli, 81 Mass. App. Ct. 381, 388 (2012), quoting from Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008), quoting from Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007).
Brettschneider and the plaintiffs retained the defendants in June, 2009, to represent them in connection with a Massachusetts Division of Insurance (DOI) show cause order issued because Brettschneider falsely denied having a criminal record in certain licensing applications. In December, 2009, defendant Attorney Nancy Adams, on behalf of Brettschneider and other of plaintiffs' employees, received correspondence from the United States Department of Labor (DOL), notifying them that, as a result of his prior criminal conviction, Brettschneider was prohibited by § 411 of the Employee Retirement Income Security Act (ERISA) from serving in any capacity with respect to the plaintiffs' employee benefit plans business, and that the plaintiffs' knowing retention of him as an employee was a felony punishable by a fine or imprisonment. Attorney Adams forwarded these so-called "411 letters" to Brettschneider by electronic mail message. She did not forward the letters to other managing members of the plaintiffs because Brettschneider had assured her that he would. He did not.
For the purposes of this appeal we will assume, as did the motion judge, that the defendants owed the plaintiffs a duty that was breached by Attorney Adams's failure to properly advise the plaintiffs with respect to the ERISA matter. See DeVaux v. American Home Assur. Co., 387 Mass. 814, 817-818 (1983) ("An attorney-client relationship may be implied 'when [1] a person seeks advice or assistance from an attorney, [2] the advice or assistance sought pertains to matters within the attorney's professional competence, and [3] the attorney expressly or impliedly agrees to give or actually gives the desired advice or assistance'") (citation omitted).
The plaintiffs learned about the existence of the 411 letters in May, 2010. During the period between Attorney Adams's receipt of the letters and the plaintiffs' discovery of their existence, Brettschneider secretly incorporated a business to compete directly with the plaintiffs and stole nearly two million dollars from the plaintiffs and their subsidiaries.
The plaintiffs' theory of proximate causation is that if Attorney Adams had directly forwarded the 411 letters to them, they would have learned of the potential ERISA ramifications resulting from Brettschneider's violations and would have timely terminated his employment. It follows, the plaintiffs urge, that such a course of conduct would have prevented their losses. The plaintiffs' theory, however, is outside the foreseeable chain of causation. See Palsgraf v. Long Island R.R., 248 N.Y. 339, 344 (1928).
"Before liability for negligence can be imposed, there must first be a legal duty owed by the defendant to the plaintiff, and a breach of that duty proximately resulting in the injury." Davis v. Westwood Group, 420 Mass. 739, 742-743 (1995). The defendants may be held liable only for the reasonably foreseeable field of danger to which the plaintiffs were exposed as a result of the defendants' representation in connection with the DOI and DOL matters -- for example, the plaintiffs' potential prosecution with respect to the § 411 violations. See Colucci v. Rosen, Goldberg, Slavet, Levenson & Wekstein, P.C., 25 Mass. App. Ct. 107, 111 (1987) ("To prevail on a claim of negligence by an attorney, a client must demonstrate . . . that the attorney's negligence is the proximate cause of the loss"). Nothing in the complaint plausibly suggests that the plaintiffs' damages stemmed from the defendants' failure "to exercise reasonable care and skill in handling the matter for which [they were] retained." Ibid.
The same requirements, of duty and proximate cause, apply to claims for breach of fiduciary duty. See Estate of Moulton v. Puopolo, 467 Mass. 478, 492 (2014).
The motion judge stated, "That these events coincided with the defendant's [sic] legal representation of the HMA entities does not mean that defendants can be held legally responsible for them, absent any allegations that the defendants' conduct contributed in some way to causing those events to occur." We agree. We also find significant that, even prior to the plaintiffs' retention of the defendants' services, the DOI show cause order put the plaintiffs on notice of Brettschneider's criminal propensity. The defendants' alleged breach of duty did not cause or contribute to the damages the plaintiffs seek to recover.
Drawing all inferences from the complaint in the light most favorable to the plaintiffs, we conclude that the defendants' alleged inaction was not the proximate cause of harm suffered by the plaintiffs. The judge did not err in allowing the defendants' motion to dismiss.
Judgment affirmed.
By the Court (Cypher, Meade & Massing, JJ.),
The panelists are listed in order of seniority.
--------
Clerk Entered: June 18, 2015.