Court Opinion

ID: 4150066
Source: CourtListenerOpinion
Date Created: 2017-03-03 16:07:48.611947+00
Date Added: 2024-06-11T14:49:16.592525
License: Public Domain

NOTICE: All slip opinions and orders are subject to formal
revision and are superseded by the advance sheets and bound
volumes of the Official Reports. If you find a typographical
error or other formal error, please notify the Reporter of
Decisions, Supreme Judicial Court, John Adams Courthouse, 1
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; SJCReporter@sjc.state.ma.us

16-P-45                                                 Appeals Court

    BOURGEOISWHITE, LLP       vs.   STERLING LION, LLC, & another.1

                               No. 16-P-45.

          Worcester.       December 14, 2016. - March 3, 2017.

          Present:     Kafker, C.J., Grainger, & Sullivan, JJ.

Practice, Civil, Attorney's fees, Summary judgment, Waiver.
     Damages, Attorney's fees, Breach of contract. Contract,
     Attorney, Performance and breach, Waiver. Attorney at Law,
     Attorney-client relationship, Fiduciary duty. Waiver

     Civil action commenced in the Superior Court Department on
September 22, 2014.

     The case was heard by Shannon Frison, J., on a motion for
summary judgment.

     Camille F. Sarrouf for the defendants.
     Samuel J. Miller (Roy A. Bourgeois also present) for the
plaintiff.

    KAFKER, C.J.        This appeal arises from a fee dispute between

a law firm and its former clients.       The plaintiff law firm,

BourgeoisWhite, LLP, brought this action against the defendants,
    1
        David G. Massad.
                                                                       2

Sterling Lion, LLC, and its owner, David G. Massad, alleging

breach of contract and unjust enrichment following the

plaintiff's representation of the defendants in an employment

dispute.   The judge granted the plaintiff's motion for summary

judgment, determining that the plaintiff was owed the $83,681.84

amount sought in the complaint, including $29,944.45 in

"professional courtesy credits" that the plaintiff extended and

then rescinded, plus prejudgment interest.2   We conclude that the

undisputed facts establish that the $29,944.45 in credits was

written off by the plaintiff law firm and thus waived.       Summary

judgment therefore should have been granted in favor of the

defendants with respect to the credits.    We further conclude

that the defendants have failed to identify any factual disputes

as to the reasonableness of the remaining fees, because they

rely solely on unsupported and conclusory assertions about the

representation.    We therefore remand for the entry of summary

judgment in favor of the plaintiff in the amount of the fees

sought, less the credits.

     Background.    The following undisputed facts are set forth

in the summary judgment record.    Massad owns Sterling Lion, an

Internet-based company that helps homeowners sell their homes

without a broker.    Roy Bourgeois, one of the plaintiff's

     2
       With the addition of prejudgment interest, judgment
entered for the plaintiff in the amount of $99,897.79.
                                                                   3

partners, had known Massad for many years and previously

represented him in unrelated matters.

     In January, 2012, a former business associate, Dennis

Craig, sued Massad and Sterling Lion for alleged violations of

the Massachusetts Wage Act, G. L. c. 149, § 148.    Massad hired

Bourgeois to represent them in the matter.    Bourgeois sent

Massad an engagement letter listing the hourly rates for the

plaintiff law firm, which ranged from $125 to $330 per hour, and

specified that Massad would receive monthly bills.    Bourgeois

drafted an answer and asserted several counterclaims relating to

unpaid promissory notes by Craig.    Bourgeois noted that he did

not "pull any punches" in the pleadings because he believed

Craig was "caught red-handed" and had fabricated the theory that

he was an employee "solely as a basis to not pay his promissory

note[s]."

     The plaintiff's first bill, dated February 8, 2012,

contained a twenty percent "professional courtesy credit."     Over

the next year, Massad received and paid subsequent bills without

any discounts.3    In April, 2013, Massad received another

"professional courtesy credit" of $2,330.    Bourgeois stated in a

letter accompanying the bill, "I know you hate getting these

bills (and frankly I hate sending them to you), but I did issue

     3
         During this time, Massad paid approximately $30,000 in
fees.
                                                                     4

a fairly substantial discount simply because I think the case is

really unfair to you."

     Massad's next bill contained a similar discount of $3,486.

Bourgeois stated that the bill, which totaled $8,250, would

"hopefully" be "the last of the big bills" on the matter.       He

explained that he gave the "very substantial" credit "[s]imply

because [Massad] w[as] spending so much money on th[e] problem."

     Massad also received discounts on his September and

October, 2013, bills.    In a letter accompanying the October

bill, Bourgeois stated, "I gave you a twenty percent courtesy

credit discount simply because I am bothered by the amount of

money you are spending on this case, and I am trying to be fair

to both of us."    In another letter, Bourgeois noted, "Obviously,

we are not going to pay [Craig] a dime, but the likelihood that

we would ever recover the amount that he owes you is virtually

nil."

     When Massad received his January, 2014, bill, he was

"upset" with how much time an associate at the plaintiff law

firm had spent on the case and the lack of specificity as to

what the associate was doing.4   Bourgeois told Massad to "throw

away" that bill.    Massad testified that he did not dispute any

     4
       Massad testified, "I don't even know what anybody was
doing and why. . . . I get a bill that says review and review
and review and review and review, and there's nobody doing
anything because . . . nothing is happening."
                                                                    5

other bill up until this point, but may have expressed concern

with how expensive the case was getting at various points

throughout the representation.

     The employment dispute went to trial on March 10, 2014, and

resulted in a verdict unfavorable to Massad and Sterling Lion.

Massad's next bill, dated March 26, 2014 (March bill), contained

a credit in the amount of $7,944.45, which represented "all of

the lawyers' time (including [his] own)" on the January bill,

which Bourgeois had told him to "throw away."5   That work,

Bourgeois explained, was "now free of charge."   Massad was

charged only $884 for "actual out of pocket expenses" for

January.

     The March bill also contained a $22,000 "professional

courtesy credit" for work completed in February and March,

including the trial.6   In a letter accompanying the bill,

Bourgeois wrote, "Even though I wrote off all of the January

bill I still decided to give you a very substantial discount on

the February/March bill.   I did this because you are a friend in

a bad situation and I am not looking to make a profit from that.

On the other hand, I am not looking to lose money in the

situation either and I think that the . . . substantial courtesy

     5
       This is the first of the credits that the plaintiff would
later seek to rescind.
     6
       This is the remainder of the credit that the plaintiff
sought to rescind.
                                                                    6

credit coupled with the complete write off of the [January] bill

is more than fair. . . .   That . . . consumes more than all of

my profit on this matter."   With the credits, the March bill

totaled $48,316.

     Thereafter, although Massad continued to receive bills for

posttrial work, he stopped paying the bills in a timely manner.

Massad testified that he was dissatisfied with how the case was

handled at trial.7   Although Massad had not yet paid the March

bill, Bourgeois issued a fifty percent credit on the May bill,

stating that he tried to reach a result that was "fair" to

Massad.

     Massad made one $10,000 payment in May, 2014.   In July,

Bourgeois asked Massad to "make payment on the large outstanding

balance," and issued a twenty percent credit on the July bill.

Bourgeois emphasized that he had "done a very large amount of

work" for Massad and discounted all of his profit.   In a letter

accompanying the August bill, Bourgeois again requested payment

of the balance, which had amassed to over $50,000.   On August 7,

Bourgeois sent a follow-up letter, noting that he had "worked

hard for [Massad] on this difficult case and . . . treated [him]

     7
       Massad testified, "Instead of handling the case and going
after the problem, we went after [Craig] . . . and beat him to
death two days . . . on the stand. . . . Drove him to nothing.
Had nothing to do with the case. . . . I think he had the jury
crying for the poor guy." Massad did not, however, attempt to
find another lawyer for the posttrial work.
                                                                     7

as a friend."   Massad agreed to allow Bourgeois to stop

representing the defendants in a telephone call that day.

Massad made one $5,000 payment at the end of August, and

Bourgeois subsequently withdrew as counsel.

     In September, Bourgeois sent Massad a final bill that

reversed the $29,944.45 in credits from the March bill, and

requested payment in the amount of the outstanding balance:

$83,681.84.   Bourgeois explained:   "The reason for those credits

is no longer valid.   We give professional courtesy credits to

long-term clients who pay their bills, and you have neither paid

your bills nor responded to any of my letters . . . relat[ing]

to your unpaid bills."     The plaintiff filed a complaint seeking

$83,681.84.

     Following discovery, the judge granted summary judgment in

favor of the plaintiff in that amount.     The judge cited the

hourly rates in the engagement letter, and concluded that the

"gratuitous discounts" on the March bill "d[id] not affect the

validity of the contract."8

     Standard of review.    Summary judgment is appropriate "if

and only if there is no genuine issue as to any material fact."

Reporter's Notes to Rule 56(c), Massachusetts Rules of Court,

     8
       The judge explained, "Those credits and discounts are not
part of the contract itself and cannot be demanded by the client
. . . . Even in the uncommon occurrence of the attorney
withdrawing such discounts and credits, the contract between the
parties for the respective hourly rates still stands."
                                                                      8

Rules of Civil Procedure, at 99 (Thomson Reuters 2016)

(quotation omitted).      We conclude that there is none in the

instant case.

     Discussion.     1.   Reversal of "professional courtesy

credits."    In order to decide this case, we must review a law

firm's obligations, both contractual and fiduciary, to its

clients regarding the fees.      As the Restatement (Third) of the

Law Governing Lawyers § 16 comment f, at 149 (2000), explains,

"[c]ontracts generally create or define the duties the lawyer

owes the client."     However, "[a]ttorneys . . . should never lose

awareness that, in matters of fees, attorneys are fiduciaries

who owe their clients greater duties than are owed under the

general law of contracts."      Malonis v. Harrington, 442 Mass.
692, 702 (2004) (quotation omitted).      See Spilker v. Hankin, 188
F.2d 35, 39 (D.C. Cir. 1951) ("Fee contracts between attorney

and client are a subject of special interest and concern to the

courts.     They are not to be enforced upon the same basis as

ordinary commercial contracts").

     The defendants claim that the plaintiff cannot reverse the

$30,000 in credits from the March bill because Bourgeois did not

indicate that the credits were conditional.9     We agree.     As

     9
       The defendants also claim that a genuine issue of material
fact exists as to the amount of fees owed to the plaintiff,
because the defendants hired Bourgeois personally, rather than
his law firm. This argument has no merit. The engagement
                                                                  9

explained in more detail below, Bourgeois unconditionally "wrote

off" those fees, and thus waived his right to them as a matter

of contract law.   His belated attempt to recoup the fees would

also not comport with the "highly fiduciary nature" of the

lawyer-client relationship.   Malonis, 442 Mass. at 700.   Summary

judgment therefore should have been granted for the defendants,

not the plaintiff, with respect to the credits.   See

Mass.R.Civ.P. 56(c), as amended, 436 Mass. 1404 (2002) ("Summary

judgment, when appropriate, may be rendered against the moving

party"); Reporter's Notes to Rule 56(c), supra ("Because by

definition the moving party is always asserting that the case

contains no factual issues, the court should have the power, no

matter who initiates the motion, to award judgment to the party

legally entitled to prevail on the undisputed facts"); Perseus

of N.E., MA, Inc. v. Commonwealth, 429 Mass. 163, 168 (1999)

(reversing summary judgment in favor of moving party and

remanding for entry of summary judgment in favor of nonmoving

party); Beatty v. NP Corp., 31 Mass. App. Ct. 606, 613 (1991)

(affirming grant of summary judgment in favor of client because

letter, dated January 19, 2012, lists the hourly rates for
various members of the firm, and encourages Massad to discuss
any concerns he has about the arrangement with Bourgeois.
Massad did not raise any concerns about someone other than
Bourgeois working on the case until February, 2014. At that
point, Massad had already received over two years' worth of
monthly bills, all of which listed many hours spent on the
matter by the same associate (and a paralegal).
                                                                       10

undisputed facts established that law firm was not entitled to

$721,888 "premium" fee when law firm moved for summary judgment;

"one of the principal purposes of the summary judgment rule is

to isolate and dispose of factually unsupported claims").        See

also Petrillo v. Zoning Bd. of Appeals of Cohasset, 65 Mass.

App. Ct. 453, 460-461 (2006) (affirming sua sponte grant of

summary judgment in favor of nonmoving party).

     Under the common law of contracts, waiver is the

"intentional relinquishment of a known right."      Dynamic Mach.

Works, Inc. v. Machine & Elec. Consultants, Inc., 444 Mass. 768,

771 (2005) (quotation omitted).   Waiver may be express or

"inferred from a party's conduct and the surrounding

circumstances."   Id. at 774 (quotation omitted).     Lawyers may

waive a client's duty to pay a fee, and are generally "well

positioned to appraise a waiver of a client's duties to them."

Restatement (Third) of the Law Governing Lawyers, supra at

§ 19(2) & comment d, at 166.10

     In the present case, Bourgeois, by his own words, expressly

"wrote off" and waived approximately $30,000 in fees.      See

Dynamic Mach. Works, Inc., 444 Mass. at 771.     See also In re

Vernon-Williams, 343 B.R. 766, 809 (E.D. Va. 2006) (referring to

discounted fees as "waive[d]"), reversed in part on other

     10
       The defendants raised waiver as an affirmative defense in
their answer.
                                                                  11

grounds, Boleman Law Firm, P.C. v. United States, 355 B.R. 548

(E.D. Va. 2006).   The write-offs were described by Bourgeois in

the bills as "professional courtesy credits."   These credits

encompassed work completed by one associate that had generated

questions and criticism by Massad.   Bourgeois could not have

been more explicit about the waiver for that work, telling

Massad that he should "throw away" that bill, as the work was

now "free of charge."   See Brokers' Choice of America, Inc. vs.

NBC Universal, Inc., U.S. Dist. Ct., No. 09-cv-717 (D. Colo.

Aug. 15, 2011) (attorney's "written off fees essentially

decreased the attorneys' rate and should not be charged");

Ellenoff Grossman & Schole, LLP vs. Rosenberg, U.S. Dist. Ct.,

No. 13-cv-7022 (S.D.N.Y. Apr. 16, 2015) (law firm could not

retract ten percent "courtesy discount" on bill after

"unilaterally and voluntarily reducing its bill").

      Although Bourgeois belatedly attempts to characterize the

credits as conditional on Massad's staying current on his bills,

there is nothing in the language of the billing letter to

support this contention.   Nor is there anything in Bourgeois's

affidavit suggesting that he ever communicated such a condition

to Massad prior to his September, 2014, letter revoking the

credits.11   See Hendrickson v. Sears, 365 Mass. 83, 90 (1974)

     11
       Bourgeois's affidavit, dated August 18, 2015, states only
that the credits "were contingent upon [Massad] staying current
                                                                  12

("The attorney owes his client a duty of full and fair

disclosure of facts material to the client's interests");

Beatty, 31 Mass. App. Ct. at 612 ("[T]he meaning of a written

document, if placed in doubt, is construed against the party

that wrote it . . . and the principle surely counts double when

the drafter is a lawyer writing on his or her own account to a

client").

    There is also nothing in the parties' conduct or

surrounding circumstances to suggest that the credits were

conditional on Massad paying his bills in a timely manner.     The

write-offs were given in the context of a difficult ongoing

representation where both sides were "bothered" by the amount of

legal fees.    Massad had also previously received numerous

similar credits over the course of two years, and Bourgeois

never described those credits as conditional or attempted to

revoke them.   Even after the credits at issue had been given and

Massad had fallen considerably behind in his bills, Bourgeois

gave two additional "professional courtesy credits" in the

amounts of fifty and twenty percent.    Thus, as Massad fell

behind in his bills, Bourgeois did not warn him that the credits

could be reversed, but instead gave additional credits and

on his bills and making all payments," not that he communicated
such a condition to Massad prior to his September, 2014,
revocation. Moreover, nothing in Bourgeois's billing letters or
affidavit alludes to any oral conversations with Massad about
the credits being conditional.
                                                                   13

simply requested payment of the balance.    Massad would therefore

have no reason to believe that the $29,944.45 in credits was

conditional, and there is no genuine issue of material fact on

this point.    See Restatement (Third) of the Law Governing

Lawyers, supra at § 18(2) (contract between lawyer and client

construed "as a reasonable person in the circumstances of the

client would have construed it").12

     Ethical principles governing the lawyer-client relationship

confirm this conclusion.    As previously explained, lawyers owe

fiduciary duties to their clients that exceed their contractual

obligations.   Beatty, 31 Mass. App. Ct. at 612.   Unlike the

traditional contractual relationship, the lawyer-client

relationship exists for the benefit of the client, Restatement

(Third) of the Law Governing Lawyers, supra at § 16 comment c,

     12
       The judge apparently interpreted the credits as
modifications to the contract, thus requiring consideration
under traditional contract law. See Tri-City Concrete Co. v. A.
L. A. Constr. Co., 343 Mass. 425, 427 (1962); Alperin, Summary
of Basic Law § 16.7 (4th ed. 2009) ("[A]ny modification of a
contract [must] be supported by a new and valid consideration
because a party who promises to perform what he already is
legally bound to do suffers no legal detriment. This is the
'pre-existing duty rule'"). Because "a waiver may be
effectuated by one party," and "a modification is the result of
bilateral action of both parties," the credited bills and
accompanying letters, not responded to by Massad, are more
properly characterized as waivers. Dynamic Mach. Works, Inc.,
444 Mass. at 771-772 (quotation omitted). In any event,
however, consideration likely existed for the reduction in fees,
because Massad was "upset" with how much time an associate was
spending on the case and how expensive the fees were getting on
a case he considered unfounded.
                                                                  14

and requires "[u]nflinching fidelity to [the client's] genuine

interests."   Berman v. Coakley, 243 Mass. 348, 354 (1923).

Attorneys are therefore "held to a high standard of fair dealing

when entering transactions with their clients,"13 Pollock v.

Marshall, 391 Mass. 543, 555 (1984), and must demonstrate that

such transactions are fair and equitable to their clients.14    See

Hill v. Hall, 191 Mass. 253, 262 (1906) ("It is a well settled

rule . . . that the attorney who bargains with his client in a

matter of advantage to himself must show . . . that it was in

all respects fairly and equitably conducted"); Pollock, 391
Mass. at 559 (issue in fee dispute was "how fairly and equitably

the [challenged] transaction was conducted").

     As such, reversal of the professional courtesy credits in

this case would not comport with the "highly fiduciary" nature

of the lawyer-client relationship.   Malonis, 442 Mass. at 692.

This type of belated attempt by a fiduciary to claw back fees

that were previously "written off" would not be fair and

     13
       This is especially so once the representation has already
begun, because the attorney has gained the client's trust and
confidence. See Saggese v. Kelley, 445 Mass. 434, 443 (2005)
(discussing inherent burden of changing lawyers during
representation); Restatement (Third) of the Law Governing
Lawyers, supra at § 18 comment e (same).
     14
       See also Restatement (Third) of the Law Governing
Lawyers, supra at § 18(a) (client may avoid change to contract
with lawyer if change is made beyond reasonable time after
representation has begun unless lawyer shows that change was
"fair and reasonable to the client").
                                                                     15

equitable to the client -- the party for whom the relationship

exists.15    See Goldman v. Kane, 3 Mass. App. Ct. 336, 342 (1975)

(attorney who made advantageous loan to client "breached his

fiduciary duty," because "fundamental unfairness" of loan was

"self-evident"); Beatty, 31 Mass. App. Ct. at 612-613 ($721,888

"premium" billing inconsistent with agreement to bill on hourly

basis and violated fiduciary duty owed to client).      We therefore

conclude that the defendants, not the plaintiff, should have

been granted summary judgment with respect to the $29,944.45 in

credits.

     2.     Reasonableness of fees.   Summary judgment was, however,

properly granted for the plaintiff on the issue of the

reasonableness of the remaining fees.      The defendants have

failed to raise a genuine issue of material fact with respect to

the reasonableness of those fees.     The defendants argue that

they were billed for duplicative and "legally unsound" motions,

and that the trial was over staffed.      Our review of the record

indicates that the allegedly duplicative motions predate the

     15
       We note that the rules of professional responsibility set
strict requirements for communications between a lawyer and
client regarding fees. See Mass.R.Prof.C. 1.4(b), as appearing
in 471 Mass. 1319 (2015) (lawyers must explain matters to their
clients "to the extent reasonably necessary to permit the client
to make informed decisions regarding the representation");
Mass.R.Prof.C. 1.5(b)(1), as appearing in 463 Mass. 1302 (2012)
("Any change[] in the basis or rate of the fee . . . shall . . .
be communicated in writing to the client" [emphasis added]).
See also Malonis, 442 Mass. at 700 (referencing attorney's "duty
to communicate to a client the basis of a fee").
                                                                  16

contested bills by nearly a year.   The defendants do not

identify which motions are "legally unsound," and we are

provided no explanation for why the trial was over staffed,

given the complexity of the case and the amount in controversy.

More is required for appellate argument.    See Mass.R.A.P.

16(a)(4), as amended, 367 Mass. 921 (1975).

     The judgment is reversed, and a new judgment is to enter in

favor of the plaintiff consistent with this opinion,

representing the fees sought, less the credits that were

"written off," plus statutory interest.16

                                    So ordered.

     16
       We also discern no abuse of discretion in the judge's
decision not to delay the issuance of her decision on summary
judgment to allow the defendants to take the deposition of
Bourgeois. The discovery deadline had passed, and the
defendants had already been defaulted once for their failure to
timely respond to the complaint.