Opinion
No. 11–P–1564.
2013-03-21
Elkin McCALLUM v. SAFETY NATIONAL CASUALTY CORPORATION.
By the Court (MEADE, SIKORA & WOLOHOJIAN, JJ.).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
This case involves an application of statutory provisions governing frivolous claims, G.L.c. 231, §§ 6F, 6G. The plaintiff, Elkin McCallum, appealed to the single justice from a Superior Court judge's award of attorney's fees and costs to the defendant, Safety National Casualty Corporation (Safety National). On appeal from the order of the single justice affirming the award, McCallum claims that the single justice abused his discretion because he relied on insufficient factual findings made by the motion judge. Safety National argues that we should (1) affirm the single justice's order, and (2) award attorney's fees and costs for a frivolous appeal. We agree with Safety National for the following reasons.
Background. 1. Underlying claims. The Superior Court judge found, inter alia, the following facts to be undisputed and material as the basis for summary judgment in favor of Safety National. McCallum was the president and chief executive officer of the now-defunct Joan Fabrics Corporation (JFC), a company which produced textiles for use in automobiles and home furnishings. Safety National is an insurance company which, in addition to selling policies, acts as a surety for bonds posted with State governments. As a result of JFC's self-insured status under the workers' compensation laws of Massachusetts and North Carolina, it engaged with Safety National in multiple arrangements assuring its financial responsibility.
In particular, JFC (1) purchased excess insurance from Safety National to cover workers' compensation liability claims above $400,000; (2) received surety bonds from Safety National to be posted with Massachusetts and North Carolina; and (3) provided letters of credit to Safety National, specifically letter of credit no. 11923, as funds or security for the bonds. McCallum claimed that he had pledged his personal assets as cash collateral to Enterprise Bank, which had issued letter of credit no. 11923. Every contract between JFC and Safety National identified JFC as either the “employer,” the “principal,” the “applicant,” or the “owner.” None of the agreements mentioned McCallum.
JFC filed for bankruptcy protection in April, 2007, and Massachusetts and North Carolina demanded payments under the bonds. As a result, Safety National drew down on letter of credit no. 11923. Enterprise Bank then transmitted $3,000,000 to Safety National, which applied a portion of those funds to pay for workers' compensation claims. Safety National is holding the remaining funds while it awaits the resolution of pending claims. McCallum alleged that Safety National is holding more funds than necessary; he demanded, among other remedies, remittance of $3.4 million as compensation for excessive collaterization by Safety National.
2. Procedural history. McCallum filed a complaint in Superior Court and alleged the following counts: (1) breach of contract; (2) intentional misrepresentation; (3) conversion; (4) violation of G.L.c. 176D; and (5) violation of G.L.c. 93A, §§ 2, 11. After extensive discovery and three “emergency” motions filed by McCallum, Safety National filed a motion for summary judgment. The judge granted the summary judgment motion in its entirety.
With respect to McCallum's individual counts, the judge ruled that (1) the “plain terms” of the contracts indicate that McCallum is not a party to any of them; (2) the alleged misrepresentations came from Safety National's Web site and fell “squarely within the category of puffery, on which no reasonable person may rely”; (3) the contract through which McCallum alleged conversion was between Safety National and Enterprise Bank; (4) G.L.c. 176D “does not provide a direct right of action”; and (5) the G.L.c. 93A claim failed for the same reasons as the other claims. McCallum did not appeal from the summary judgment.
Next, Safety National filed a motion for counsel fees pursuant to G.L.c. 231, § 6F. The judge held a hearing and reviewed the materials submitted by both parties. She concluded that “all of the plaintiff's claims were wholly insubstantial and frivolous.” After further briefing and argument on Safety National's motion identifying fees, the judge entered a final judgment ordering McCallum to pay $208,809.55 in fees and costs. McCallum then filed timely notices of appeal from the judge's § 6F order and fee award, pursuant to G.L.c. 231, § 6G. The single justice affirmed summarily the motion judge's § 6F order.
The single justice's order states, in its entirety, the following: “The plaintiff appeals pursuant to G.L.c. 231, § 6G from an order on attorneys' fees pursuant to c. 231, § 6F (SUCV2009–012469; December 21, 2010; Fabricant, J.) Upon review of the record, the order is hereby affirmed.”
Analysis. 1. General Laws c. 231, § 6F, award. Pursuant to G.L.c. 231, § 6F, a motion judge may award reasonable costs and attorney's fees incurred in litigation when “all or substantially all” of the opposing party's claims are “wholly insubstantial, frivolous and not advanced in good faith.” Fronk v. Fowler, 456 Mass. 317, 324–325 (2010). If a judge awards fees and costs, G.L.c. 231, § 6F, requires her to “include in such finding the specific facts and reasons on which the finding is based.” Id. at 325 n. 16, quoting from G.L.c. 231, § 6F. A claimant may then appeal a fees order to a single justice of this court pursuant to G.L.c. 231, § 6G. The single justice “shall review the finding and award, if any, appealed from as if [he] were initially deciding the matter, and may withdraw or amend any finding or reduce or rescind any award when in [his] judgment the facts so warrant.” G.L.c. 231, § 6G, as amended by St.1992, c. 133, § 561.
We treat the underlying factual findings adopted and accepted by the single justice as “final”; factual findings are not subject to further review. Danger Records, Inc. v. Berger, 444 Mass. 1, 12–13 (2005). We review the orders of the single justice only for errors of law and abuse of discretion. See id. at 13;Fronk v.. Fowler, supra at 328.
Here, McCallum contends that the single justice committed an error of law by affirmance of a § 6F order “that lacked the requisite specific and separate statement of subsidiary facts required by the statute.” We disagree with McCallum's characterization of the judge's § 6F order.
First, the trial judge began her § 6F order by stating that “[t]he background of this case, and the Court's analysis of the claims presented, appears in this Court's [Summary Judgment Order].” She then prefaced her list of factual findings with the words, “[a]s that memorandum makes clear.”
These statements incorporate her previous factual findings by reference, an entirely permissible practice of trial judges. Cf. Gilligan v. Registrars of Voters of Wilmington, 323 Mass. 346, 348 (1948) (trial judge did not incorporate by reference any exhibits so facts were not properly before reviewing court). See Adoption of Howard, 24 Mass.App.Ct. 911, 911 (1987) (affirming on basis of trial judge's findings, which incorporated by reference trial judge's earlier findings and rulings).
The judge listed the following findings in her § 6F decision:
“[McCallum] claimed breach of contract without ever identifying any contract that he contended the defendant had breached; misrepresentation without ever identifying either any representation of fact or any reliance; conversion without ever identifying any property that the defendant converted to its own use, or any property to which he had any rights; and statutory claims similarly devoid of any basis.”
Further, the judge gave her rationale for her finding of bad faith. In part, she noted that McCallum (1) had continued his pursuit of the claims after Safety National had pointed out the flaws in his theories; (2) had filed “purported emergency motions”; and (3) had sought sanctions without basis. She concluded that the “manner and circumstances in which the plaintiff pursued the claims strengthens” the inference of bad faith. See Fronk v. Fowler, supra at 335, quoting from Massachusetts Adventura Travel, Inc. v. Mason, 27 Mass.App.Ct. 293, 299 (1989) (“[a]bsence of good faith of a claimant in litigation may be inferred reasonably from circumstances”). Finally, she made the requisite § 6F finding that McCallum's claims “were wholly insubstantial, frivolous and not advanced in good faith.” We conclude that the judge's incorporated facts, followed by her synopsis of those facts and her rationale for finding bad faith, meets the § 6F requirement for a “separate and distinct finding” that includes “the specific facts and reasons on which the finding is based.”
After the single justice reviewed McCallum's appeal, he affirmed the order and therefore did not “withdraw or amend” the judge's findings. G.L.c. 231, § 6G. Although a single justice's order preferably would contain (a) the rationale for the affirmance of a § 6F fee award, and (b) an express adoption of a judge's findings of fact, Massachusetts case law does not make that effort a duty. See Fronk v. Fowler, 456 Mass. at 328 n. 22 (“The single justice was not required affirmatively to adopt and accept the judge's § 6F findings. What matters is that the [judge's] findings ... have not been ‘withdraw[n] or amend[ed]’ ”), quoting from G.L.c. 231, § 6G; Pirie v. First Congregational Church, 43 Mass.App.Ct. 908, 909 (1997) (treating single justice's decision as “incorporating the findings of fact” when single justice “affirm[ed]” § 6F order without modification or elaboration).
The single justice's order states that he reviewed the record, so we treat his order as incorporating the motion judge's findings of fact. See Pirie v. First Congregational Church, supra. Those findings are “final” and are not subject to challenge. Danger Records, Inc. v. Berger, supra. We therefore review the single justice's order for errors of law or abuse of discretion. We find neither, since he affirmed the well-supported conclusions of the motion judge. See id. at 13.
2. Frivolous appeal. General Law c. 211A, § 15, and Mass.R.A .P. 25, as appearing in 376 Mass. 949 (1979), authorize this court to award fees and double costs to an appellee in a civil case for a frivolous appeal. An appeal is frivolous “when there can be no reasonable expectation of a reversal.” Avery v. Steele, 414 Mass. 450, 455 (1993) (citation omitted). The determination of an appeal as frivolous rests in our sound discretion. Ibid.
Here, McCallum bases his appeal on the premise that the motion judge failed to incorporate by reference the factual findings from her summary judgment order. Although McCallum acknowledges that the motion judge “referenced facts,” his brief omits the judge's incorporation-by-reference language, which preceded her factual recitation. Moreover, despite his failure to appeal the summary judgment, he (1) devotes significant attention to the ostensible bases of his underlying claims, and (2) emphasizes the purported absence of the judge's factual findings despite her incorporation of them into her § 6F order.
McCallum's reply brief compounds the problem with the following equivocation: “McCallum does not argue in this appeal that the Superior Court's summary judgment findings were without basis. Rather, McCallum argues any § 6F subsidiary facts contained in the [§ 6F order] were without basis....”
The following aspects of McCallum's appeal cause us further concern: (1) he mischaracterizes the record by using an ellipsis to change the meaning of a detrimental fact;
(2) he claims inaccurately that Safety National argued that “remand for ‘proper findings' is not an available remedy for the errors below” despite Safety National's express acknowledgment that a possible “remedy would be a remand for proper findings”; and (3) he recites as the basis for his misrepresentation claim a statement made by Safety National which is different from the statement specified in his Superior Court complaint.
Safety National's brief identified the improper ellipsis, which the following underlined section represents:
“It is Safety National's intent to pay any remaining cash collateral back to Enterprise Bank, which presumably would then return the funds to JFC, the applicant for the Letter of Credit. It was these facts that precipated the statement [in Mr. Martin's affidavit] that the funds would be returned to JFC. To the extent that there are agreements by and among JFC, Enterprise Bank, and Mr. McCallum that may require Enterprise Bank to return such funds to Mr. McCallum, as opposed to JFC, Safety National has no objection to such a disposition.”
In sum, these defects aggravate the weakness of the merits of the appeal. See Avery v. Steele, supra at 456. Further, his contention that the motion judge failed to make the required § 6F factual findings had no reasonable chance of success. We therefore conclude that his appeal was wholly frivolous. Avery v. Steele, supra.
Conclusion. the order of the single justice is affirmed. Safety National has requested costs and counsel fees pursuant to Mass.R.A.P. 25. Since we have found McCallum's appeal to be frivolous, Safety National may file an application for such fees and costs, together with supporting materials, within fourteen days of the date of this order. See Fabre v. Walton, 441 Mass. 9, 10–11 (2004). McCallum shall have fourteen days for response.
So ordered.