Articles Posted in COMMERCIAL LITIGATION

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(This Boston Accident and Injury Lawyer Blogpost is the Last in a Three Part Analysis of a Recent U.S. Appeals Court Ruling involving defamation, public officials and the news media Click here to view Part One and Click Here to view Part Two)

PART THREE : THE COURT RULES ON THE DEFAMATORY BROADCAST

As stated previously, under Maine common law, a plaintiff alleging defamation must show a false and defamatory statement published without privilege to a third party resulting in harm to the plaintiff.

HAMSTEAK.jpgIn the lower court proceeding, the defendants had contended that the various statements made on the show and attributed to Levesque either were not defamatory or, because Levesque had stipulated that he was a public official, it could not be shown that they were made with actual malice. The district court held that the statements were protected on multiple grounds. It found the “hate crime” comments substantially true and mention of the “anti-ham response plan” protected as “rhetorical hyperbole”.

However, the lower court determined that the ham sandwich and the “ham is not a toy” comments were materially false, reasonably susceptible of a defamatory meaning, and highly offensive. Yet the court believed that Levesque had failed to demonstrate that the defendants had acted with constitutional malice when they made the defamatory comments.

The Court of Appeals agreed, finding that most, but not all of the statements attributed to the Plaintiff were largely true, although laced with “imaginative expression” or “rhetorical hyperbole”, which it concluded were protected speech.

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(This BlogPost written by Boston Personal Injury Attorney, the attorney, is the Second in a Three Part Analysis of a Recent U.S. Appeals Court Ruling involving defamation, public officials and the news media Click here to view Part One)

PART TWO – FOX & FRIENDS READS AND REACTS

On April 24, a line producer for “Fox & Friends” discovered the Plagman article. The Fox News Research Department read the Plagman article and conducted further research, and discovered additional information, including the original Lewiston Sun Journal story. The Plagman articles and other research materials were delivered to the show’s Doocy and Kilmeade. Doocy used Google News to conduct additional research, also found the Plagman article and Sun Journal stories, and decided to use the story as part of its show.

ham sandwich.jpgDuring the three-hour show, Doocy and Kilmeade repeatedly raised the April 11 incident, ridiculed Levesque, and blamed him for the handling of the incident. They reported as true several of the fabricated quotations that Plagman attributed to Levesque including the fact that the student had placed a ham sandwich on the table, the “ham is not a toy” statement and also attributed to Levesque a false statement comparing the incident to Mogadishu. Throughout the show, Doocy and Kilmeade repeated these falsified quotations.

After the April 11 incident, Levesque had received derogatory and threatening emails and phone calls from persons who learned about the incident and the student’s suspension. Of seventy-five emails submitted to the district court, sixty-nine were written after the “Fox & Friends” cablecast. As the result of these incidents, he elected to bring an action for defamation.

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(This Blogpost is the First in a Three Part Series by Boston Injury Lawyer, the attorney, who analyzes an interesting recent U.S. First Circuit Court of Appeals Ruling involving defamation, public officials and the news media. Click Here to view Part Two)

PART ONE – THE SCHOOL HATE CRIME INCIDENT MAKES LOCAL NEWS  

The U.S. District Court of Massachusetts has affirmed a lower Court’s summary judgment ruling that Fox News Network, LLC (“Fox”), and “Fox and Friends” television personalities, Steve Doocy and Brian Kilmeade, did not defame the Superintendent of the Lewiston, Maine public schools during a morning show, which ran in April, 2007.

FOX AND FRIENDS.jpgThe story involves an incident, which took place on April 11, 2007, when a student at the Lewiston Middle School placed a bag containing leftover ham on the cafeteria table where Somali Muslim students were sitting for lunch. The Somali students reported the incident, which resulted in an investigation and suspension of the offending students. The incident was classified as a “Hate Crime/Bias” in the school’s computer system, and a police report was filed characterizing the incident as “Crime: Harassment/Hate Bias.”

The Plaintiff, Leon Levesque, was the superintendent of the Lewiston School System. He was informed of the suspension and endorsed the decision. The following week, a reporter for the Lewiston Sun Journal, interviewed Levesque for an article she intended to write about the incident, which was published on April 19, 2007. The article included quotations from Levesque, describing the offending student’s conduct as “a hate incident”.
 

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This Blogpost by Boston Personal Injury and Accident Laywer, the attorney, anaylzes a battle between insurers over costs of construction accident.

Following a construction site accident where an insurer of a subcontractor refused to defend the general contractor, who then successfully filed a declaratory action to force the subcontractor’s insurer to share in the defense and settlement costs of the action, the Massachusetts Supreme Judicial Court has refused to permit the general’s insurer to recover the attorney’s fees incurred in successfully bringing its declaratory judgment action.
 
zurich.jpgIn January of 2001 a worker fell and suffered injuries while employed on a project in Uxbridge, Massachusetts. A year later he brought a negligence action against the general contractor and another subcontractor on the project. The general contractor was insured under a general liability insurance policy with Zurich American Insurance Company (Zurich). The subcontractor also had a policy issued by Worcester Insurance Company (Worcester), and was required by contract to list the general as an additional insured.

Upon filing of the complaint, the general called upon the subcontractor and Worcester to defend. They refused and Zurich defended. Zurich also brought a declaratory judgment action in the general’s name, seeking indemnification from the subcontractor and Worcester for their refusal to defend. Ultimately, the negligence case settled, with the general contributing $75,000 to the settlement.

The general contractor prevailed in the declaratory judgment action and Worcester was ordered to pay one half of both the settlement amount and the costs of defending the negligence action. However, the general contractor also sought an award of the attorney’s fees incurred to file and prevail in the declaratory judgment action, even though it was evident that it was Zurich who had paid the fees. The Superior Court judge denied the request and the general contractor appealed.

The SJC affirmed and discussed at length its reasoning. Massachusetts generally follows the customary approach to the award of attorney’s fees in civil litigation, known as the “American Rule”. In the absence of some statute or other rule, successful litigants must nonetheless pay their own attorney’s fees and expenses.

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textron.jpgInternal documents prepared by a corporation, which analyze the potential success of IRS challenges to its tax returns, is protected work product and not discoverable by the IRS as part of a subsequent investigative subpoena, according to the U.S. First Circuit Court of Appeals.

In this case, Textron, Inc. and its various subsidiaries had prepared internal tax accrual workpapers, which listed positions the company was taking on its 2001 IRS returns, and which might require the company to set aside a reserve. These positions were then analyzed by Textron attorneys who estimated a percentage likelihood that the position would not prevail if challenged by the IRS. Textron had also produced these workpapers to its independent auditor, Ernst & Young.

The IRS had issued an administrative summons to obtain the documents, which Textron refused to produce, claiming various legal defenses. The IRS sued to enforce the subpoena. After an evidentiary hearing, the district court for the District of Rhode Island ruled that the documents were protected as work-product, and also found that Textron’s disclosure to Ernst & Young did not constitute a waiver (although it did rule that the disclosure constituted a waiver of any attorney-client privilege claimed).

The IRS appealed. The First Circuit agreed with the District Court, finding that the documents were produced “because of” potential litigation. While not all dealings with the IRS during an audit could be construed as comercial litigation, “the resolution of disputes through adversary administrative processes, including proceedings before the IRS Appeals Board” fell under the definition of litigation.

The IRS had argued that preparation of tax returns was not meant to be an adversary process, but a self-reporting exercise, which relied on the good faith of taxpayers, and that it was entitled to verify such self-assessment by reviewing any relevant information.

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stumps.jpgThe Massachusetts Appeals Court has determined that a bank, acting as a fiduciary under a family trust, was liable for ignoring the provisions in a lease, which gave the lessee of a Cape Cod property used as a tree stump dump a right of first refusal with respect to purchase of the property.

The Plaintiff in this case operated a stump dump on property in Chatham owned by the Defendant, Fleet Bank, as Trustee of a family trust. It had a series of leases with the owner, which contained renewal options as well as a right of first refusal in the event of a bona fide offer of purchase from an outside party. The plaintiff brought suit after the subject property was transferred to the beneficiaries and then sold to a third-party purchaser. At the time of sale, the plaintiff’s leases on the property had not been renewed, but verbal extensions had been granted while negotiations were ongoing.

The plaintiff alleged in its complaints that both Fleet and the beneficiaries breached the implied covenant of good faith and fair dealing with regard to lease renewal option and the right of first refusal contained in the leases; and that both constituted unfair and deceptive acts or practices, in violation of G.L. c. 93A.
The Plaintiffs had been involved in extended negotiations for a lease renewal under the option granted in the expiring leases, and also made an offer to purchase the property, which was held up due to issues surrounding the title. During the negotiations, the oldest beneficiary under the trust died, which caused the trust assets to be distributed to the remaining beneficiaries.

During this extended period, the owners received another offer to purchase from a third party, and ultimately, title was transferred to the beneficiaries and then to the new offeror. The Plaintiffs were aware of the offer, and through counsel, sought to learn the terms so that they could exercise their right of first refusal. Their requests were ignored by Fleet and the beneficiaries.

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submarineThe U.S. First Circut Court of Appeals has upheld an arbitration award against the general contractor and in favor of a subcontractor who left a jobsite prior to completion of its work on a project at the Portsmouth Naval Shipyard in Kittery, Maine. The case was Eastern Seaboard Construction Co, Inc. v. Gray Construction, Inc.

The subcontractor, Eastern Seaboard Construction, Inc. (“Eastern”), was performing site work and encountered changed conditions, which increased the cost of the work and delayed completion of the project. The subcontractor sought extra payment for the changed conditions, which the general contractor, Gray Construction, Inc. (“Gray”), refused to pay after the U.S. government denied its request for extra payment for Eastern’s work.

There was an arbitration provision in the subcontract between Eastern and Gray, and therefore the parties conducted hearings before a single arbitrator of the American Arbitration Association (“AAA”). The arbitrator heard evidence and gave an award to Eastern, which was reduced by the cost incurred by Gray to complete Eastern’s work.

Eastern then made a request to the arbitrator, pursuant to AAA rules, to amend the award to reflect a credit to Eastern for the unpaid balance of its contract, which was only around $10,000 less than the credit Gray had received for its completion costs. Both parties appealed to the U.S. District Court, where a magistrate judge vacated the amended award, which had given Eastern its credit for the balance remaining on its contract. The U.S. District Court affirmed the magistrate’s decision and Eastern appealed to the 1st Circuit.

The 1st Circuit reviewed the decision de novo and recited the well established principal that arbitration awards are rarely disturbed by reviewing courts, but that there are instances when justice so requires. Here, the issue raised by Eastern was whether the arbitrator had the authority to alter its decision after the award became final.

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COMMONWEALTH vs. FREMONT INVESTMENT & LOAN CO.

SJC-10258, December 9, 2008.

The Massachusetts Supreme Judicial Court has upheld a preliminary injunction requested by the Massachusetts Attorney General and issued by a Superior Court judge preventing a subprime lender, Fremont Investment & Loan Co., from proceeding to foreclose on property subject to its mortgages, without first negotiating with the owners, and then if deemed necessary, obtaining specific court approval to proceed to foreclose.

Fremont is an industrial bank chartered by the State of California. Between 2004, and 2007, Fremont had originated almost 15,000 loans to Massachusetts residents secured by mortgages on owner-occupied homes, over fifty to sixty per cent of which were subprime.

When the Attorney General brought suit in 2007, a significant number of Fremont’s loans were in default. The Attorney General analyzed ninety-eight of those loans and found that all were ARM loans with a substantial increase in payments required after the first two or three years, and that ninety per cent of the ninety-eight had a one hundred per cent loan-to-value ratio.

The SJC agreed with the lower court judge who concluded that there was a likelihood of success on the merits of the claim because the lender had originated home mortgage loans with four specific characteristics, which made it almost certain that the borrower would not be able to make the necessary loan payments, leading to default and then foreclosure, which the court deemed was an unfair act or practice within the meaning of G.L. c. 93A, § 2.

The four features were as follows:(1) the loans were ARM loans with an introductory rate period of three years or less; (2) they featured an introductory rate for the initial period that was at least three per cent below the fully indexed rate; (3) they were made to borrowers for whom the debt-to-income ratio would have exceeded fifty per cent if the lender had measured the borrower’s debt by the monthly payments at the fully indexed rate rather than the introductory rate; and (4) the loan-to-value ratio was one hundred per cent, or the loan featured a substantial prepayment penalty or a prepayment penalty that extended beyond the introductory rate period.

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The attorney is a Boston civil trial attorney licensed to practice in Massachusetts and New York. He has been litigating in state and federal courts in Massachusetts, New York, New Hampshire, Rhode Island and Vermont for nearly thirty years. He graduated from Yale University in 1976 and from University of Virginia Law School in 1980. He began his legal career in Paris, France and is fluent in French. In 1981 he returned to the U.S. and opened his own law practice in Cambridge, Massachusetts. He spent several years in the late 1980’s with a boutique Boston litigation firm, where he handled all the firm’s personal injury work. In 1987, he left the firm to reopen his own practice and has maintained his own law practice ever since.

While the attorney has trial experience in many practice areas (including criminal, divorce and probate), his primary focus has been civil trial practice, with an emphasis on plaintiffs’ personal injury and products liability claims. Other practice areas include insurance bad faith, legal malpractice, construction law and general commercial litigation, representing both plaintiffs and defendants.

the attorney brings a unique approach to business litigation. Unlike most firms, which bill hourly fees for services and demand large up front retainers, he is often prepared to represent claimants on a contingent fee basis, receiving payment only upon a successful recovery by trial or settlement.

While not every claim is appropriate for contingent fees, the attorney is prepared to review and evaluate potential claims at no initial cost to the client, and when appropriate, will enter into fee agreements contingent at least in part on the success of the case. This permits litigants to prosecute or defend claims knowing from the outset what it will cost to proceed with a claim.

The key to success in litigation, and in particular contingent or fixed fee cases, is objective and realistic early evaluation of the merits of a claim. This requires cooperation from the client in providing all the facts and producing all the relevant documents from the outset. There should be no surprises after the commencement of an action.

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GIUFFRIDA vs. HIGH COUNTRY INVESTOR, INC.
No. 07-P-751. November 24, 2008.

The Massachusetts Appeals Court has ruled that a family who had “shopping and dining privileges for life”, as part of the the sale of their Saugus, Massachusetts steak restaurant, could maintain an action for unfair business practices in violation of G.L. c. 93A when a subsequent buyer terminated those rights. This was so, even though the Court also upheld the dismissal of breach of contract and other related claims against the buyer, finding that the termination was justified because the buyer had exercised an option to purchase the real property where the restaurant was located.

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The Plaintiffs were the wife and two daughters of Frank Giuffrida, founder of the Hilltop Steak House restaurant, who died in December, 2003 at the age of 86. Giuffrida had negotiated the privileges as part of the sale of the restaurant in the late 1980s. The defendant, High Country Investor, Inc., acquired Hilltop in 1994 by means of an asset purchase from the original buyer. In September, 2004, High Country ceased to provide the privileges, claiming that the plaintiffs’ rights had terminated. The plaintiffs then filed suit.

The initial sale had not included the land and building where Hilltop operated. Rather, there was a lease, which included provisions also contained in the purchase and sale agreement, in which the new tenant agreed to provide Giuffrida and and his immediate family dining and shopping privileges at Hilltop during their lives. The Lease also contained an option for the tenant to buy the premises after Giuffrida’s death. In 1994, the initial buyer sold certain assets, including Hilltop, to High Country, which also received an assignment of the Lease, and assumed the tenant’s obligations therein. Following Giuffrida’s death, High Country gave written notice of its intent to exercise the option to purchase the property.

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