Opinion
18-P-1025
08-30-2019
Eugene O'MALLEY v. ECKERT, SEAMANS, CHERIN & MELLOTT, LLC, & others.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
Eugene O'Malley appeals from a judgment dismissing his claims against the law firm of Eckert, Seamans, Cherin & Mellott, LLC (ESCM) and two of its attorneys, Stephen Burr and Lawrence Kulig, pursuant to Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 (1974). A judge of the Superior Court concluded that all of O'Malley's claims were untimely. We agree and accordingly affirm.
Background. The facts, drawn from O'Malley's complaint, the exhibits attached thereto, and the public record, are accepted as true. See Schaer v. Brandeis Univ., 432 Mass. 474, 477 (2000). In 2011, Adel A. Hamadi al Tamimi, a client of the defendants, needed funds to pursue an international arbitration claim. Burr, an attorney at ESCM, introduced him to O'Malley, a financial consultant with ties to the investment community. Thereafter, Tamimi entered into a consulting agreement with O'Malley, promising to pay O'Malley a four percent finder's fee if he identified a capital source for him. Although Tamimi retained the investor procured by O'Malley and received the capital funding, he refused to pay O'Malley's invoice for the full fee. Instead, Tamimi authorized Burr to make one partial payment to O'Malley from the capital funds in the amount of $50,000.
Acting on the defendants' unopposed request, the motion judge took judicial notice of the pleadings and the docket from earlier, related litigation. See Reliance Ins. Co. v. Boston, 71 Mass. App. Ct. 550, 555 (2008).
The finder's fee of $238,400 (four percent of $5,960,000 in capital) became due and payable on or about September 6, 2011, the date the capital funding was wired by the investor into the ESCM client funds account maintained for the benefit of Tamimi (ESCM client account). Burr drafted the consulting agreement.
A series of communications between Burr and O'Malley ensued featuring Burr telling his client one thing and O'Malley another. "[O]ver a course of months[,] the [defendants] proffered to Plaintiff a series of lies ... that they knew to be untrue as to why the fee should not be paid, all the while admitting in writing, internally, that they knew that the fee was due and there was no good faith basis not to pay it."
On September 8, 2011, Burr was "evasive" as to why the rest of the finder's fee could not be wired to O'Malley. By e-mail sent the same day, Burr informed O'Malley, "I will not get paid until you get paid and the money will not leave here unless this is dealt with .... [W]e have the money and it is not going anywhere." On September 15, 2011, Burr advised Tamimi that there was no "opening to negotiate" the compensation under the terms of the consulting agreement and "strong[ly] recommend[ed]" that Tamimi approve payment in full immediately. On September 28, 2011, Burr advised O'Malley that he should "proceed based on [his] own best judgment and, if [he] retain[s] counsel[,] on [his] counsel's advice". Burr also informed O'Malley that Tamimi believed that O'Malley had "question[ed] his integrity," and that of the fifteen obligations Tamimi had asked Burr to resolve, the payment obligation to O'Malley was the only one outstanding. In the same e-mail, Burr "assure[d]" O'Malley that Tamimi had some "good faith concerns" about O'Malley's right to full payment of his finder's fee.
Shortly thereafter, Burr transferred $220,000 of the capital funds held in the ESCM client account to ESCM's own account to satisfy Tamimi's bills for unrelated legal work. On October 14, 2011, Burr informed O'Malley by e-mail that he "agreed to nothing with [him], and can not [sic] tell [O'Malley] when [he] will be able to address this, but the money [wa]s still here and [he] still counsel[ed] patience." During conversations with O'Malley, the defendants also brought up other "bogus" excuses as to why the full finder's fee was not owed. During a meeting between O'Malley and Burr on November 3, 2011, Burr conceded that Tamimi had "no basis on which to withhold the balance of the [finder's] fee owed to O'Malley."
O'Malley retained counsel to vindicate his rights. On November 4, 2011, O'Malley sued Tamimi for nonpayment of the finder's fee and named ESCM as a trustee defendant (fee litigation). The parties resolved O'Malley's concurrent motion for "[a]ttachment on [t]rustee [p]rocess" by stipulation and order dated November 9, 2011, requiring ESCM to hold $188,400 of the capital funds (plus any interest) in trust pending the outcome of the action. The stipulation and order placed no other restrictions on the use of those funds. Unbeknownst to O'Malley at the time, "on the very day that Tamimi was served with the complaint, he instructed Burr and [ESCM] to transfer all funds out of his name so as to ‘avoid’ O'Malley's claim." Burr complied with the instruction.
As the defendants point out, O'Malley's complaint and motion for attachment stated that the capital funds held by ESCM were being released to pay arbitration costs and other expenses. Thus, O'Malley knew by that date (November 4, 2011) that funds were being used for purposes other than to pay the balance of his finder's fee.
On September 23, 2014, a jury returned a verdict in favor of O'Malley. Judgment subsequently entered awarding O'Malley significant actual and multiple damages totaling $580,200, attorney's fees of $790,943, and costs of $34,586. After this court affirmed the judgment, see O'Malley vs. Tamimi, 89 Mass. App. Ct. 1132 (2016), O'Malley settled with Tamimi.
This court found no abuse of discretion in the attorney's fee award based, among other things, on the "disruptive behavior" and "machinations" of Tamimi, and on the "flagrant[ ] disobey[ing]" of the trial judge's specific order by Tamimi's attorney. The defendants did not represent Tamimi in the fee litigation proceedings.
On October 30, 2017, O'Malley, proceeding pro se, filed this action against the defendants, seeking damages, including legal fees incurred, based on tort and G. L. c. 93A claims.
Discussion. O'Malley's tort claims were properly dismissed as time-barred. While O'Malley may not have discovered exactly where all the capital funds ended up until late 2014 (during posttrial discovery as to Tamimi's assets), by November, 2011, he knew that some of those funds were no longer in the ESCM client account as they were being used for other expenses in addition to arbitration costs. O'Malley's attorneys successfully moved to protect O'Malley's interest in the capital funds. By the stipulation and order, the balance of the finder's fee owed to O'Malley ($188,400) remained in the ESCM client account until he prevailed in the litigation. Moreover, O'Malley's complaint in the fee litigation, as well as his motion for attachment, demonstrated that he knew of Burr's "lie[ ]" about Tamimi's "good faith concerns" by November, 2011 as well. He was thus put on notice of his tort claims no later than November, 2011. The date of the judgment is irrelevant to the notice inquiry. Filed more than three years later, the tort claims were untimely. See G. L. c. 260, § 2A ; Passatempo v. McMenimen, 461 Mass. 279, 293-294 (2012).
O'Malley's c. 93A claim was based on the same underlying facts as his tort claims. The c. 93A claim, however, was subject to a longer, four-year statute of limitations. See G. L. c. 260, § 5A. On appeal, O'Malley failed to address the dismissal of the c. 93A claim. Absent appellate argument, we deem the claim waived. See Sullivan v. Liberty Mut. Ins. Co., 444 Mass. 34, 35 n.1 (2005). Were the c. 93A claim properly before us, we would conclude, as did the motion judge, that it also accrued in November, 2011. O'Malley waited too long to bring his claims.
O'Malley urges this court to apply equitable tolling principles to extend the limitations period. The doctrine of equitable tolling may be applied only in "exceedingly limited" circumstances and is to be "used sparingly." Halstrom v. Dube, 481 Mass. 480, 485 (2019). In the trial court, O'Malley argued that where he expected to recover in full against Tamimi, "it made little sense" to incur great expense to sue the defendants. On appeal, he argues that suing the defendants during the contentious fee litigation would have been "imprudent" and "premature," and if he had sued Burr during the fee litigation, that "complication" would have damaged his case against Tamimi. These grounds do not fall within the established categories for invoking the doctrine. Compare Halstrom, supra (plaintiff's judicial action against former employee in pursuit of attorney's fees did not toll running of statute of limitations on plaintiff's collection action against former client); Shafnacker v. Raymond James & Assocs., Inc., 425 Mass. 724, 727-729 (1997) (declining to toll statute of limitations during pendency of plaintiff's arbitration claim).
As the motion judge reasoned, O'Malley failed to allege any facts plausibly suggesting that the defendants had fiduciary obligations to him. There was no escrow agreement requiring Burr to disburse the funds on the fulfillment of a condition. See Grand Pac. Fin. Corp. v. Brauer, 57 Mass. App. Ct. 407, 415 n.6 (2003). Tamimi was Burr's client. Given the adversarial relationship between O'Malley and Tamimi in 2011, Burr did not owe a legal duty to O'Malley to disclose Tamimi's transfer instructions (or to ensure, contrary to Tamimi's wishes, that O'Malley was paid in full). See Bartle v. Berry, 80 Mass. App. Ct. 372, 378 (2011).
As noted by the motion judge, at oral argument on the rule 12 (b) (6) motion, O'Malley conceded that there was no escrow agreement governing the disposition of the capital funds and that the defendants were not O'Malley's attorneys.
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Where O'Malley had actual knowledge of the defendants' misrepresentations as well as his harm by November, 2011, the discovery rule may not be applied to his benefit. See Patsos v. First Albany Corp., 433 Mass. 323, 328-329 (2001). As the judge noted, the fact that O'Malley did not comprehend the full extent of his injury did not toll the running of the statutes. Upon the discovery of Burr's "lies" in November, 2011, a duty of inquiry arose, starting the running of the clock. See Passatempo, 461 Mass. at 294. On the facts alleged, a theory of fraudulent concealment was plainly inapplicable. See G. L. c. 260, § 12 ; Salvas v. Wal-Mart Stores, Inc., 452 Mass. 337, 375-376 (2008).
Judgment affirmed.