PERSISTENCE PAYS OFF — MEEB GETS JUDGMENT REDUCED FOLLOWING ADVERSE MASSACHUSETTS SUPREME JUDICIAL COURT RULING

Published on: May 5, 2015

Sometimes persistence pays off. In this case, MEEB handled an appeal on behalf of a Defendant that was found to have breached a real estate contract entitling the buyer to liquidated damages in the amount of $375,000. Initially, MEEB succeeded in reversing and vacating the Judgment at the Appeals Court. However, the Massachusetts Supreme Judicial Court in 2014 reinstated the Judgment, which then carried interest dating back to 2004 (when the case was filed) which pushed the Judgment close to seven figures. In its Decision the Supreme Judicial Court honed in on the behavior of seller’s then counsel (not a MEEB attorney) at a closing, as constituting the basis for the breach of contract. Following, the Supreme Court’s Decision, MEEB attorneys Edmund A. Allcock and Haley Byron filed a Motion with the Superior Court on a technical issue relative to the timing of the interest. During the process and while the Motion was pending, Attorneys Allcock and Byron discovered that their former client’s counsel had been separately sued by the Plaintiff (for the exact same conduct that resulted in the Judgment) and that the former attorney’s insurer had settled out of Court with the Plaintiff for $595,000. MEEB filed a Motion with the Superior Court to have the $595,000 Court of court settlement credited against the Judgment. The theory for the credit was grounded in equity and a little known legal principle known as the “one satisfaction rule”. The theory being that if the Plaintiff recovered from the attorney and the defendant for the same conduct they would receive more than the amount of the Court Ordered Judgment. Litigation is supposed to be used to compensate a loss not as a profit mechanism.

In response to the contention that payment of the judgment would amount to an unjust double recovery in light of the outside settlement, the plaintiff argued that the $2.8 million in lost profits it claimed it suffered as a result of the lawyer’s conduct should be the measurement of loss and not the $375,000 in liquidated damages called for in the contract. Judge Thomas F. McGuire Jr. disagreed, finding that the buyer and the sellers explicitly agreed that, in case of a breach of contract by the sellers, the buyer’s loss would be calculated under the liquidated damages provision in their contract. In granting the sellers’ motion to apply a credit in satisfaction of the judgment, Judge McGuire said it would be inequitable to allow the buyer to ignore the agreement it freely made or to deny the sellers the benefit of the provision for which they bargained. Furthermore, the Plaintiff buyers had shunned their opportunity for specific performance to purchase the land, which would have allowed them the opportunity to realize a profit from the transaction. The Plaintiff/buyers wanted the best of both worlds.

The Decision was featured in the April 8, 2015 Edition of Massachusetts Lawyers Weekly and can be accessed by authorized users on their website archive page.

The Decision highlights some significant legal and practical principles for lawyers and litigants alike. The case reinforces the notion that litigation is supposed to compensate a party for a loss, not be used as a profit mechanism. More importantly, counsel and litigants should never give up in a case, even when they lose at the Supreme Judicial Court, sometimes significant collateral issues remain that can be subsequently addressed at the Superior Court. It also highlights the fact that knowledge of outside and related lawsuits and settlements can be important and applicable. Finally, sometimes persistence just pays off.

For a copy of the Decision click here.