Court Opinion

ID: 4195829
Source: CourtListenerOpinion
Date Created: 2017-08-15 14:05:18.135484+00
Date Added: 2024-06-11T14:39:41.986040
License: Public Domain

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16-P-705                                               Appeals Court

    LORI HOLLAND      vs.   KANTROVITZ & KANTROVITZ LLP & others.1

                              No. 16-P-705.

         Suffolk.       January 10, 2017. - August 15, 2017.

           Present:    Grainger, Wolohojian, & Neyman, JJ.2

Practice, Civil, Summary judgment. Attorney at Law,
     Malpractice, Negligence. Negligence, Attorney at law.
     Limitations, Statute of. Bankruptcy, Discharge. Judicial
     Estoppel.

     Civil action commenced in the Superior Court Department on
April 29, 2013.

     The case was heard by Linda E. Giles, J., on a motion for
summary judgment.

     Luke Rosseel for the plaintiff.
     Daniel R. Sonneborn for the defendants.

     WOLOHOJIAN, J.     In September 2009, the plaintiff retained

the defendants as personal injury counsel to represent her with

     1
       The law offices of Martin Kantrovitz, and Martin
Kantrovitz.
     2
       Justice Grainger participated in the deliberation on this
case prior to his retirement.
                                                                     2

respect to serious injuries she sustained when she slipped and

fell on ice the year before.     Approximately one month later,

acting pro se, she filed for bankruptcy protection, and received

a bankruptcy discharge in early 2010.     Thereafter, in 2011, the

defendants allowed the statute of limitations on the personal

injury claim to expire without filing suit.     This legal

malpractice suit followed.     The question on appeal is whether

the plaintiff's malpractice claims were properly dismissed on

summary judgment on the ground that the bankruptcy action (or

the position the plaintiff took in it) foreclosed them.      We

reverse.

    Reserving additional facts to the analysis that follows, we

recite here only the core facts, and do so in the light most

favorable to the plaintiff, drawing all reasonable inferences in

her favor.   See, e.g., Sullivan v. Liberty Mut. Ins. Co., 444
Mass. 34, 38 (2005).   On January 15, 2008, the plaintiff, a

State employee, was seriously injured when she slipped and fell

on ice outside the building in which she worked.     The building

was owned and/or maintained by a private entity, Northland

Investment Corporation.     The ice had accumulated because of a

defective gutter and had not been salted.     The plaintiff's

injuries were sufficiently severe that she lost 410 scheduled

work days, and even as late as September 2012, she remained

unable to work full time.
                                                                   3

     During the workers' compensation proceedings relating to

her injuries, the plaintiff was approached by defendant Martin

Kantrovitz's associate, who told her that the defendants would

like to represent her.   She agreed and, by September 9, 2009,

had retained the defendants to represent her as personal injury

counsel.   The plaintiff alleges that thereafter the defendants

paid little, if any, attention to her case, did not meet with

her in person, repeatedly failed to respond to her telephone

calls, failed to investigate or pursue her claims, and failed to

inquire into her financial situation.3

     Approximately one month after she had retained the

defendants as personal injury counsel, the plaintiff, acting pro

     3
       The plaintiff's claims of inattention are buttressed by
various documents that were part of the summary judgment record.
For example, Kantrovitz's own internal memoranda indicate that,
on June 9, 2010, the plaintiff called and left a voicemail
stating, "I need you to settle this case because I[']m going to
be homeless. They are selling the house that I'm l[i]ving in
right now, and I'm gonna need some money so at least I can get
out of there. I don't know how much [yo]u [are] asking, I have
no idea about this case. So if you could please contact me
. . . ." Kantrovitz did not respond, and the plaintiff called
again on June 22, 2010, asking that the case be settled given
her housing dilemma. Again, Kantrovitz did not respond. On
July 20, 2010, the plaintiff called and again left a voicemail,
restating her pressing need for money and asking for information
about her case and that it be settled. Again, there appears to
have been no response or action by Kantrovitz. Not until
December 22, 2010, does the record reflect that Kantrovitz spoke
with the plaintiff. Although he noted at that time that "she is
under control," he remarked that "[w]e need to get the case in
suit ASAP," and noted the need to request medical records. The
statute of limitations expired approximately three weeks later,
on January 15, 2011.
                                                                   4

se, filed for bankruptcy protection in October 2009.    The

plaintiff did not inform the defendants of the bankruptcy

proceeding, nor did they inquire.4   At the same time, the

plaintiff did not disclose the personal injury claim in her

written filings with the bankruptcy court.   She states that she

did not do so because she did not understand that the bankruptcy

forms called for that information and, more specifically, that

she did not understand the requirement that she disclose

"[o]ther contingent and unliquidated claims of every nature"

pertained to the personal injury suit she had hired the

defendants to pursue.

     On November 10, 2009, in response to oral questioning by

the bankruptcy trustee at a meeting of creditors, the following

exchange took place:

     Trustee:   "Does anybody owe you any money?"

     Plaintiff:   "Yes."

     Trustee:   "Have you been injured in any way --"

     Plaintiff:   "Yes."

     Trustee: "-- that you feel you have the right to sue
     someone?"

     Plaintiff:   "Yes."

     Trustee:   "What's that?"

     4
       Supported by the opinion of an expert, the plaintiff
contends that the defendants had a duty to inquire into her
financial situation and advise her regarding seeking bankruptcy
protection.
                                                                      5

    Plaintiff: "In 2008, I had fallen in front of 600
    Washington Street. I filed workman's comp. I was denied.
    About a year later, they settled and gave me just sick time
    bank."

    Trustee: "Does anybody -- aside from that, does anybody
    owe you any money?"

    Plaintiff:   "No."

The parties dispute the import of this exchange.   On the one

hand, the plaintiff contends that it demonstrates that she

disclosed the details of her injury as well as the fact that she

believed she "has" (in the present tense) a right to sue

someone, thus adequately disclosing the personal injury claim to

the bankruptcy trustee.   On the other hand, the defendants

contend that the trustee's final question sought to determine

whether the plaintiff believed anyone "aside from that" owed her

money for her injuries and that, when she answered "no," she

effectively hid the personal injury claim from the trustee.     The

plaintiff avers that she did not attempt, or intend, to hide the

personal injury claim from the bankruptcy trustee, and that she

believed she had adequately disclosed it by providing the

details of her fall and stating that she believed she continued

to have the right to sue someone.   On February 12, 2010, the

plaintiff's debts were discharged in bankruptcy.

    Thereafter, the defendants allowed the statute of

limitations to expire on January 15, 2011 without filing suit, a
                                                                  6

fact they disclosed to the plaintiff by a letter signed by

Kantrovitz.   It stated as follows:

    "Dear Ms. Holland:

         I am terribly sorry to inform you that as I was making
    sure that I had all of your records in order to file a
    lawsuit, I realized that I let the Statute of Limitations
    go by. Suit should have been filed before January 15,
    2011. . . . I am returning relevant papers and suggesting
    that you go to another attorney and show him or her this
    letter and papers and have them do what is necessary. I
    have malpractice insurance and my company would handle the
    claim as if you went after the owners of the building where
    you were injured. You have three (3) years from notice of
    this information to file suit against me."

This legal malpractice suit followed.   While the amended

complaint alleges counts for negligence and breach of contract,

it does not specify any particular theory of legal malpractice;

its factual allegations are limited to the defendants' failure

to timely file suit.

    By the time of summary judgment, the plaintiff had advanced

three more detailed theories of alleged legal malpractice.

First, she contended that the defendants failed to engage in

meaningful communications prior to her filing the bankruptcy

petition and thus did not discover that the plaintiff was in

such financial distress that she was considering bankruptcy.

The defendants had a duty, she contends, to advise her how

bankruptcy would affect her personal injury suit and to advise

her whether forgoing filing for bankruptcy altogether, and

allowing the defendants to negotiate with her creditors, was in
                                                                   7

her best interests in light of the fact that the settlement

value of her personal injury claim substantially exceeded her

debt.    Second, she contended that the defendants failed to

engage in meaningful communications with her during the

bankruptcy and thus breached their duty to coordinate with the

bankruptcy trustee to preserve the plaintiff's right to be

compensated for her personal injury claim.    (We refer to these

first two theories collectively as the "communication

failures.")   Third, she contended that the defendants failed to

timely file the underlying personal injury suit, forever barring

recovery.

     The defendants moved for summary judgment, arguing that (1)

the plaintiff's malpractice claim should be confined to the

failure to timely file suit because that was the only negligent

act alleged in the amended complaint, (2) no harm resulted from

that failure because the plaintiff gave up the right to pursue

the underlying personal injury action when she failed to

disclose it in the bankruptcy proceedings, and (3) the plaintiff

was judicially estopped from asserting her personal injury claim

by virtue of her failure to disclose it the bankruptcy.    Given

our disposition of the second issue, we need not consider the

first;5 we address the remaining two arguments in turn.

     5
       The defendants do not argue that they were entitled to
summary judgment on the merits of the communication failures;
                                                                        8

    Effect of bankruptcy on subsequent malpractice claim.         The

defendants argue that the plaintiff's malpractice claim is

barred by the earlier bankruptcy and her failure to disclose the

underlying personal injury suit.

    We begin by noting that the malpractice claim was never

part of the bankruptcy estate.     A legal malpractice claim is

part of a bankruptcy estate if either (a) under State law, it

has accrued as of the bankruptcy petition date, 11 U.S.C.

§ 541(a)(1) (2012); Butner v. United States, 440 U.S. 48 (1979),

or (b) regardless of whether it has accrued under State law, it

is "sufficiently rooted in the pre-bankruptcy past and so little

entangled with the bankrupts' ability to make an unencumbered

fresh start that it should be regarded as 'property'" of the

estate.   Segal v. Rochelle, 382 U.S. 375, 380 (1966).    See

generally In re de Hertogh, 412 B.R. 24, 28-29 (Bankr. D. Conn.

2009) (and cases collected therein).

    Under Massachusetts law, a legal malpractice claim accrues

"when a client 'knows or reasonably should know that he or she

their argument is instead that those theories of liability were
not raised in the amended complaint and therefore need not have
been considered by the motion judge. Contrast Chiao Yun Ku v.
Framingham, 53 Mass. App. Ct. 727, 731 (2002) ("At the summary
judgment stage, a court will look beyond the complaint to the
entire record"). Because we conclude that summary judgment
should not have entered on the theory of liability contained in
the amended complaint, it matters not that the additional
theories of liability were not considered by the motion judge.
                                                                     9

has sustained appreciable harm as a result of the lawyer's

conduct.'"   Lyons v. Nutt, 436 Mass. 244, 247 (2002), quoting

from Williams v. Ely, 423 Mass. 467, 473 (1996).    Under this

test, the plaintiff's legal malpractice claim based on the

failure to timely file suit had not accrued by the date the

bankruptcy petition was filed.    Indeed, it appears undisputed

that the plaintiff did not know that the defendants had allowed

the statute of limitations to lapse until she received the

February 9, 2011 letter -- more than a year after the bankruptcy

petition was filed.6   In addition, although the underlying

personal injury claim has prepetition roots, the malpractice

claim for failure to timely file it did not.    That claim did not

come into being until the limitations period expired.7

     6
       We note   also that there is nothing to indicate that the
plaintiff knew   or should have known, as of the bankruptcy filing
date, that she   had suffered appreciable harm from the alleged
communications   failures.
     7
       As to the communications failures, although they have
factual connection to the plaintiff's prebankruptcy past in that
she retained the defendants prior to the bankruptcy petition
date and at least some of the alleged communication failures
occurred before the bankruptcy, no harm occurred until the
filing of the petition in which the plaintiff (acting pro se and
without the defendants' advice) did not disclose the personal
injury claim. "Because the filing of the bankruptcy caused the
debtor harm . . . 'the claim cannot be deemed to have accrued
prepetition.'" In re Mateer, 559 B.R. 1, 7 (Bankr. D. Mass.
2016), quoting from In re Riccitelli, 320 B.R. 483, 492 (Bankr.
D. Mass. 2005).
                                                                  10

      Because the plaintiff's malpractice claim was never part of

the bankruptcy estate, the trustee never had standing to pursue

it.   In re Mateer, 559 B.R. 1, 5 (Bankr. D. Mass. 2016), quoting

from In re Ross, 548 B.R. 632, 639 (Bankr. E.D.N.Y. 2016) ("The

Chapter 7 trustee, standing in the debtor's shoes, can maintain

only those actions that the debtor could have brought prior to

or when she filed her bankruptcy petition").   The malpractice

claim at all times belonged to the plaintiff, who has standing.

      There remains, however, the question whether the

malpractice claim had any value or, put another way, whether the

plaintiff would be able to show causation or harm, given her

failure to disclose the personal injury claim in the bankruptcy.

We turn to that question now.

      "A client in a malpractice action based on an allegation of

attorney negligence must show that, but for the attorney's

failure, the client probably would have been successful in the

prosecution of the litigation giving rise to the malpractice

claim."   Frullo v. Landenberger, 61 Mass. App. Ct. 814, 818

(2004), quoting from Colucci v. Rosen, Goldberg, Slavet,

Levenson & Wekstein, P.C., 25 Mass. App. Ct. 107, 113 (1987).

See Bongiorno v. Liberty Mut. Ins. Co., 417 Mass. 396, 401

(1994).   The defendants argue that the plaintiff, as a matter of

law, was foreclosed from pursuing the underlying personal injury

claim once she was discharged in bankruptcy without having
                                                                  11

disclosed the claim.8   It follows, they argue, that the plaintiff

will not be able to prove that their later failure to file suit

caused any harm.

     These two propositions do not logically follow one from the

other where, as here, the alleged value of the personal injury

claim exceeded the value of the claims discharged in bankruptcy.9

Although it is true that the personal injury claim (because it

existed at the time of the bankruptcy petition) was an asset of

the bankruptcy estate, it does not follow that the claim

(whether disclosed or not) was extinguished by the bankruptcy

discharge.   As we further explain below, the personal injury

claim continued to exist until the statute of limitations

lapsed, and its value was not diminished by the bankruptcy.

What the bankruptcy did change, however, was the identity of the

     8
       The plaintiff does not dispute that she had an obligation
to disclose the underlying personal injury claim in the
bankruptcy. She argues instead that (1) she operated in good
faith and did not intend to hide anything from the bankruptcy
trustee, as evidenced by her answers disclosing the existence of
her injuries and her belief that she had the right to sue
someone for them, (2) given her pro se status and her answers to
the trustee's questioning, she sufficiently disclosed the claim,
and (3) to the extent she failed to adequately disclose the
claim, that failure was the result of the defendants'
negligence. See Jernigan v. Giard, 398 Mass. 721, 723 (1986)
("[a]n attorney defending a malpractice action may not rely on
the consequences of his own negligence to bar recovery against
him").
     9
       The summary judgment record showed that plaintiff's expert
valued the personal injury suit far in excess of the
approximately $32,000 discharged in bankruptcy.
                                                                   12

parties with an interest in any recovery on the personal injury

claim.

    As soon as the plaintiff filed her bankruptcy petition, her

personal injury claim became an asset of the bankruptcy estate,

and the trustee was responsible for pursuing it for the benefit

of the estate and its creditors.    See 11 U.S.C. § 323(b) (2012)

(trustee has capacity to sue and be sued).   That interest did

not terminate on the bankruptcy discharge; indeed, had the

defendants filed suit on the plaintiff's behalf after the

bankruptcy discharge, but before the statute of limitations had

elapsed, the "usual remedy [would be] to substitute as the real

party in interest the trustee of the bankruptcy estate in the

place and stead of the former debtor."    Rousseau v. Diemer, 24
F. Supp. 2d 137, 143 (D. Mass. 1998), quoting from Kohlbrenner

vs. Victor Belata Belting Co., U.S. Dist. Ct., No. 94-CV-

0915E(H) (W.D.N.Y. June 3, 1998).   See Mass.R.Civ.P. 17(a), 461
Mass. 1401 (2011) ("[n]o action shall be dismissed on the ground

that it is not prosecuted in the name of the real party in

interest until a reasonable time has been allowed after

objection for ratification of commencement of the action by, or

joinder or substitution of, the real party in interest").    See

Vidal v. Doral Bank Corp., 363 F. Supp. 2d 19, 22 (D.P.R. 2005);

Barefield v. Hanover Ins. Co., 521 B.R. 805, 808-809 (Bankr.

E.D. Mich. 2014).   Thus, it was the running of the statute of
                                                                     13

limitations, not the bankruptcy discharge, that extinguished the

personal injury claim, stripping it of any potential value.

Accordingly, the malpractice claim should not have been

dismissed on the ground that the defendants' negligence in

allowing the statute of limitations to run without filing suit,

as a matter of law, could have caused no harm.

     All that said, because the value of the malpractice claim

(which was never an asset of the bankruptcy) is tied to the

value of the underlying personal injury suit (which was), the

trustee may have an interest in any recovery on the malpractice

claim -- at least to the extent of the value of the claims

discharged in bankruptcy.    On remand, the judge and the parties

should accordingly ensure that the trustee is notified of the

existence of a potential interest in any recovery.10

     Judicial estoppel.     Finally, the defendants argue that the

plaintiff's failure to disclose the personal injury suit

judicially estops her now from pursuing the malpractice claim.

We disagree.   The summary judgment record, viewed as it must be

in the light most favorable to the plaintiff, raised two

material issues of fact that precluded summary judgment.     First,

     10
       We do not prescribe the mechanics by which the trustee's
potential interest in any recovery should be protected. But
because it is advisable that the trustee should be notified, the
plaintiff is ordered to provide a copy of this opinion to the
trustee and to the bankruptcy court within fourteen days of the
date of its issuance.
                                                                   14

the exchange between the trustee and the plaintiff is

sufficiently open to interpretation that the question whether

the plaintiff thought she had disclosed the existence of the

personal injury claim should have been allowed to go the trier

of fact.   Second, the plaintiff's good faith in the bankruptcy

proceedings was also sufficiently raised by the summary judgment

record to be put to the trier of fact.

    "[T]wo fundamental elements are widely recognized as

comprising the core of a claim of judicial estoppel.    First, the

position being asserted in the litigation must be directly

inconsistent, meaning mutually exclusive of, the position

asserted in a prior proceeding. . . .    Second, the party must

have succeeded in convincing the court to accept its prior

position."   Otis v. Arbella Mut. Ins. Co., 443 Mass. 634, 640-

641 (2005) (quotations omitted).   "Notwithstanding that general

articulation of the doctrine, there may arise certain instances

where the party's prior position was asserted in good faith, and

where the circumstances provide a legitimate reason -- other

than sheer tactical gain -- for the subsequent change in that

party's position."   Id. at 642.   The doctrine is equitable in

nature and, even when decided in the context of summary

judgment, is reviewed for abuse of discretion.    Id. at 640.

That said, like any other matter determined on summary judgment,

the material facts must be undisputed.   Mass.R.Civ.P. 56, 365
                                                                  15
Mass. 826 (1974).   "Where a party's state of mind or motive is

in issue, summary judgment is disfavored."   Maimaron v.

Commonwealth, 449 Mass. 167, 177 (2007), quoting from Pinshaw v.

Metropolitan Dist. Commn., 402 Mass. 687, 695 (1988).

    Here, the judge erred when she concluded that the

plaintiff's good faith was not material and that she therefore

need not consider it.   Moreover, for purposes of summary

judgment, the judge was required to accept the plaintiff's

assertions, made by way of affidavit, that she did not intend to

hide the personal injury claim from the bankruptcy trustee, that

she thought she had disclosed it when she told the trustee she

had fallen, the location of the fall, and that she believed she

"had" (at the time of disclosure) a right to sue someone for her

injuries.   In addition, we note that the plaintiff's answer "no"

to the trustee's next question -- "aside from that, does anybody

owe you any money?" (emphasis added) -- does not contradict or

limit her previous disclosure because it sought information in

addition to, not substitution of, her earlier response.

    For these reasons, we reverse the judgment allowing the

defendants' motion for summary judgment and dismissing the

plaintiff's amended complaint and remand for further proceedings

consistent with this opinion.

                                    So ordered.