Court Opinion

ID: 2964929
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:33:06.571127+00
Date Added: 2024-06-11T11:43:03.841104
License: Public Domain

USCA1 Opinion

	

                            United States Court of Appeals
                            United States Court of Appeals
                                For the First Circuit
                                For the First Circuit
                                 ____________________

            No. 97-1216

                                SEARS, ROEBUCK & CO.,

                                 Plaintiff, Appellee,

                                          v.

                             GOLDSTONE & SUDALTER, P.C.,

                                Defendant, Appellant.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                    [Hon. Richard G. Stearns, U.S. District Judge]
                                              ___________________

                                 ____________________

                                        Before

                                Stahl, Circuit Judge,
                                       _____________

                            Bownes, Senior Circuit Judge,
                                    ____________________

                              and Lynch, Circuit Judge.
                                         _____________
                                 ____________________

                      David G. Hanrahan,  with whom Ross D.  Ginsberg and
                      _________________             _________________
            Gilman,  McLaughlin &  Hanrahan,  LLP,  were  on  brief,  for
            _____________________________________
            appellant.
                      Allan E. Taylor, with whom Elizabeth C. Sackett and
                      _______________            ____________________
            Taylor,  Duane,  Barton &  Gilman,  LLP, were  on  brief, for
            _______________________________________
            appellee.

                                 ____________________

                                   October 22, 1997
                                 ____________________

                      LYNCH, Circuit Judge.   This case raises  issues of
                      LYNCH, Circuit Judge.   
                             _____________

            Massachusetts law  concerning the obligations  that attorneys

            owe clients in their billing practices.  

                      Attorney  Daniel   Goldstone  formed   Goldstone  &

            Sudalter, P.C.  to purchase the  practice of  the late  Eldon

            Sudalter, a collection  attorney.  Goldstone &  Sudalter then

            billed Sears, Roebuck & Co.  in excess of one million dollars

            for  past work Goldstone said Attorney Sudalter had performed

            on Sears's cases.  Sears at first paid most of the bills, but

            eventually  sued  Goldstone  &  Sudalter  for an  accounting,

            asking for a  judicial determination of its  total liability,

            if any, for the  past work.   Goldstone & Sudalter, in  turn,

            counterclaimed for the unpaid balance.  

                      Following Goldstone's  admission  that  he  had  no

            personal knowledge concerning Sudalter's billing practices to

            support  his interpretation of  the records which  formed the

            basis for his bills,  Sears amended its complaint to  include

            common-law  claims for  breach  of  contract  and  breach  of

            fiduciary   duty,  and  a  statutory  claim  of  "unfair  and

            deceptive trade  practices" under  Mass. Gen.  Laws ch.  93A.

            Sears sought reimbursement  for bills it had  previously paid

            and an award of attorney's  fees.  The district court granted

            Sears's  motion for summary judgment, and awarded it $833,409

            --  the entire  amount of  Sears's payments  on  the disputed

            bills -- and $112,000 in attorney's fees.

                                         -2-
                                          2

                      Although  our  analysis  varies from  that  of  the

            district  court,  the summary  judgment  record  reveals that

            Goldstone & Sudalter has not met its burden of substantiating

            its bills under Massachusetts law  and that Sears has met its

            burden of showing unfair and deceptive practices.  We affirm.

                                    I. The Facts.
                                    _____________

                      We state the facts in  the light most favorable  to

            Goldstone &  Sudalter, the  party opposing  summary judgment.

            Swain v. Spinney, 117 F.3d 1, 2 (1st Cir. 1997). 
            _____    _______

                      In 1991, Daniel Goldstone, then a lawyer with three

            years  of experience,  began  negotiations with  Mrs.  Janice

            Sudalter  to purchase  the law practice  of her  late husband

            Eldon Sudalter.   Eldon Sudalter was a  solo practitioner and

            had been the primary collection attorney for Sears in eastern

            Massachusetts  for the previous fifteen years.  Mrs. Sudalter

            had worked in her husband's office  for most of that time and

            her  regular duties included  preparing the  monthly billings

            for Sears and other clients.

                      In mid-1991, Goldstone  and Mrs. Sudalter  signed a

            letter of intent,  and Goldstone formed Goldstone  & Sudalter

            to  purchase  the assets  of  the practice  and  continue the

            business.   In late  1991, the  relationship broke  down amid

            mutual recriminations, and  Goldstone sued  Mrs. Sudalter  in

            state court over the terms of their agreement.  

                                         -3-
                                          3

                      By early 1992,  Goldstone was in possession  of the

            files of  the Eldon Sudalter  practice and was  servicing its

            clients,  although   Goldstone  and  Mrs.  Sudalter  did  not

            finally settle the state court litigation until January 1993.

            The  settlement  provided  for  a  total  purchase  price  of

            $150,000  for all of the  assets, tangible and intangible, of

            the  Eldon Sudalter  practice.   Goldstone  had not  actually

            worked with Attorney Sudalter, and had not discussed with him

            the  firm's billing  practices.   Goldstone  had no  personal

            knowledge of whether particular cases in Sudalter's files had

            been  billed  or  were uncollectible,  or  had  been formally

            closed, whether or not billed or uncollectible.

                      Like  many  collection  attorneys, the  late  Eldon

            Sudalter  operated on a contingency fee  basis.  Before 1987,

            Sears  paid Attorney Sudalter  one-third of his  recovery and

            reimbursed  him for  all  court  costs.   That  changed.   On

            September   8,  1987,  Attorney   Sudalter  executed  a  form

            "Attorney  Retention Agreement"  prepared  by Sears  for  its

            collection attorneys throughout the United States.

                      The  1987 Agreement  increased Attorney  Sudalter's

            fee to forty-five  percent, but he was now  to be responsible

            for all costs that were not reimbursed by debtors.  According

            to  Mrs. Sudalter,  under  the new  agreement, "[W]e  take 45

            percent of  what we  collect.   If we  can recover the  costs

            [from debtors], great.  If we can't recover the costs, that's

                                         -4-
                                          4

            just part of the agreement; that's why they're [Sears] paying

            us  the  45  percent."   Goldstone  offered  no  evidence  to

            contradict  Mrs.  Sudalter's  testimony  that the  forty-five

            percent contingency fee was intended to take into account all

            court costs.

                      According  to  the 1987  Agreement,  the collection

            attorney  was to  send all  monies  collected to  Sears on  a

            monthly basis,  accompanied by a report; Sears would then pay

            the attorney's contingency fee.  The 1987 Agreement provided:

            "Attorney will be accountable for all monies collected on any

            of the accounts and will submit at  least monthly a report to

            Sears listing the accounts on which collections were made and

            amount collected, together with a  check payable to Sears for

            all  monies  collected."  (emphasis   supplied).    The  1987
            ___

            Agreement also  states, "Attorney waives any  attorney's lien

            on Sears accounts and agrees  not to assert such lien against

            Sears."

                      Sears  did  not  send  individual  checks  to   the

            Sudalter  firm for the particular matters for which they paid

            Attorney Sudalter  his legal  fees or  costs over  the years.

            Likewise, Attorney  Sudalter did  not customarily  record his

            receipt of  the contingency fee  or costs from Sears  on each

            debtor's  file.       Rather,  Attorney  Sudalter   regularly

            deposited money from  debtors in a Sears client trust account

            and  remitted a  single check  each month  to Sears  from the

                                         -5-
                                          5

            account for  the total  amount of  that month's  collections.

            Sears then remitted  the contingency fee for  that amount and

            for any amounts that debtors  sent directly to Sears.  Before

            1987, Sears would  reimburse court costs in  a single monthly

            check if Sudalter could not collect them from debtors.  After

            1987, Sears was  not responsible for those costs, although it

            would still occasionally send Sudalter costs that debtors had

            sent to  Sears instead of  Sudalter, again in a  single check

            for that month.  

                      The  agreement set  forth  a separate  compensation

            arrangement  if Sears  terminated  the agreement  or withdrew

            customer accounts.   In that event, Sears  would pay Sudalter

            $60  per hour  for his  time and  reimburse his  court costs,

            although it would pay no such fees if Sudalter terminated the

            agreement or was in breach of the agreement.  According to an

            employee for a collection agency that Sears uses, withdrawing

            accounts is  seen as a  "drastic" step because of  these fees

            and  costs and  for that  reason  is rarely  employed in  the

            collection industry. 

                      In early 1992, Goldstone  called Karen D'Angelo,  a

            special  accounts  manager at  Sears,  to ask  why  Sears had

            stopped sending cases to the  Sudalter firm, now operating as

            Goldstone &  Sudalter.      D'Angelo was  a  low-level  Sears

            employee who had been in her present job in Massachusetts for

            two years  and  had first  spoken to  Attorney Sudalter  only

                                         -6-
                                          6

            shortly  before he died in 1991.  D'Angelo informed Goldstone

            that  Sears rated its  collection attorneys by  comparing the

            amounts  the attorneys collected  monthly as a  percentage of

            their  total portfolios.    According to  Goldstone, D'Angelo

            informed him that  the law practice had "never  closed a file

            in fifteen years," and urged the firm to close these accounts

            to make its percentage appear more competitive.

                      Goldstone began "closing" the old files,  informing

            Sears  that  he would  attempt  no more  collections  on such

            cases.    At  the  same  time,  he  implemented  the  billing

            practices  at issue  in  this lawsuit.    Goldstone began  by

            reviewing  thousands of old files contained in "dead storage"

            in the basement  of the late Eldon  Sudalter's former office,

            most  of which had  red stickers on them.   Some file folders

            contained  handwritten  notations  of  court  costs  paid  by

            Sudalter  and some  indicated whether  those  costs had  been

            reimbursed by  debtors or Sears.  Goldstone prepared a letter

            for signature by a Sears representative, "acknowledg[ing] the

            assignment  to Goldstone  & Sudalter,  P.C.  of the  contract

            executed by  Eldon B.  Sudalter, P.C." in  1987.   The letter

            also referred to that  contract, stating, "Specifically, with

            regard   to  the  'pre-1992  closed  cases,'  Sears  will  be

            responsible for  costs expended  and attorneys'  fees at  the

            rate of  $60.00  per  hour in  accordance  with  Exhibit  'B'

                                         -7-
                                          7

            annexed to  the  1987 contract."    Emma Scott,  an  in-house

            attorney for Sears, signed the letter.  

                      Goldstone  states that he  regarded this  letter as

            "completely  consistent with  the earlier  Attorney Retention

            Agreement"  and that he did not  believe that Scott's signing

            of the  letter was intended  to alter the  terms of  the 1987

            Agreement   in   any   way.      According   to   Goldstone's

            interpretation  of the  agreement,  his  "closing" of  cases,

            which  he did after his conversation with D'Angelo, triggered

            Sears's  obligation to pay for court costs and work performed

            on  an hourly basis under the contract's provisions regarding

            cases "withdrawn"  by Sears.    There is  some evidence  that

            Sears's in-house attorneys, at  least initially, agreed  with

            Goldstone's interpretation.

                      From  February 1,  1992  until  February 23,  1996,

            Goldstone billed Sears for costs and attorney's  fees on each

            of  over 15,000 files.  He  derived his cost figures from the

            handwritten  notations  on the  outside of  the folders.   He

            assumed that  Sudalter had  not been reimbursed  by Sears  or
                   _

            debtors unless there was a handwritten note to that effect on

            the folder.   He derived  his figures for attorney's  fees by

            estimating the amount of time that Sudalter had spent on each

            file by examining the tasks  that the file reflected had been

            performed,  or by having  non-attorney employees perform such

                                         -8-
                                          8

            estimates  to his specifications.1   These bills  for "closed

            cases" totaled over $1.1 million dollars; Sears paid $833,409

            before bringing the present litigation. 

                      During this time,  Goldstone also submitted monthly

            the money  he had  collected for Sears  on active  files, and

            Sears paid the  forty-five percent contingency fee.   Despite

            the 1987  Agreement and without Sears's  knowledge, Goldstone

            also pocketed a portion of  the money he collected from Sears

            debtors as reimbursement  for court costs before  sending the

            balance to Sears each month.2

                                
            ____________________

            1.      In  each  case,  the amount  of  attorney  time  that
            Goldstone estimated was  minimal, almost always less  than an
            hour.

            2.  According to Goldstone, the  firm's practice of  skimming
            reimbursement for costs off the top of collections from Sears
            debtors was dictated by the law of champerty, which generally
            requires  that clients  remain liable  for  expenses even  in
            contingency fee arrangements.  According to Goldstone, a non-
            attorney Sears employee  agreed with his interpretation.   In
            fact, however, S.J.C.  Rule 3:05,  governing contingent  fees
            for  Massachusetts   attorneys,  provides,   "Contingent  fee
            arrangements concerning the collection of commercial accounts
            . .  . made in accordance with  usual practices in respect of
            such cases shall not be regarded as champertous and shall not
            be subject to," inter alia, the requirement that "the client,
                            __________
            in   any   event,  is   to   be  liable   for   expenses  and
            disbursements."   Regardless, the 1987 Agreement and DR 9-102
            absolutely  forbid  Goldstone's unilateral  reimbursement  of
            costs from  client funds  without the  client's knowledge  or
            consent, even if he were entitled to such reimbursement.
                      Under  the  Massachusetts   Rules  of  Professional
            Conduct,  effective  January  1, 1998,  which  repeal  former
            S.J.C.  Rule 3:05 and  the disciplinary rules,  attorneys may
            make  payment of costs and expenses contingent on success for
            all clients.  See Rule 1.8(e)(1).  Naturally, the requirement
                          ___
            to keep  client funds separate  remains in effect.   See Rule
                                                                 ___
            1.15.

                                         -9-
                                          9

                      In mid-1992, Sears employees  began to question Mr.

            Goldstone's  billings  when  they  noticed   that  his  bills

            exceeded the amount  he had collected  for Sears for  several

            months.  Goldstone explained that  many of the bills were not

            for ongoing  cases, but for  closed cases  from the  Sudalter

            firm.  He represented that Sears  had not previously paid for

            these cases.  At a  meeting in the summer of  1992, Goldstone

            showed a  box of files  to Karen D'Angelo, the  Sears special

            accounts  manager with whom he had spoken earlier, explaining

            that the  markings meant  that Sears had  not paid  for these

            cases.   D'Angelo confirmed that  the account numbers  on the

            files  represented genuine Sears collection accounts that had

            been placed  with the  Sudalter firm,  but did  not challenge

            Goldstone  on  the  meaning  of  the  file  folder  markings.

            Goldstone  did not say that  this was just his interpretation

            of the  file folder markings,  or that the markings  could be

            interpreted differently.

                      Later  that year,  higher-ranking Sears  executives

            inquired about the  increase in expenses for  attorney's fees

            that Goldstone's "closed cases" bills represented, asking the

            office  to "stop" Goldstone's bills.  Renee Matta, D'Angelo's

            supervisor, wrote  an e-mail explaining her  understanding of

            the situation. 

                      This is not  something that I can "stop."  Attorney
                      Goldstone  is charging for fees and costs that were
                      never billed to us over an extended  period of time
                      for services rendered  by Attorney Sudalter. .  . .

                                         -10-
                                          10

                      I merely  asked him  to get  the bloodletting  over
                      with  in 92  if  possible.   He  was  in today  and
                      brought in the  "last" of the culling  process.  It
                      should peak out  at $605,000 for the year!   All of
                      these  cases should have (at some time) been billed
                      to Sears --  but were not.  Mrs.  Sudalter has said
                      that she had intended to  bill Sears -- but didn't.
                      . . . I have reviewed many of the accounts and find
                      the  bookkeeping to  be in  order.   Mr.  Goldstone
                      merely  followed the intent of the contract when he
                      was  told that accounts  that have not  been "paid"
                      should not remain in his portfolio. . . . 

            Although the  e-mail states that Matta "reviewed  many of the

            accounts," the  record reveals that  such review was  only to

            determine whether  the account numbers accurately referred to

            Sears debtors.  As Matta explained, 

                      [O]n  some  invoices  it was  difficult  for  us to
                      determine  what we were  paying for.   The accounts
                      were  very, very  old  .  .  .  .    I  recall  [my
                      employees]   getting   some   clarification   [from
                      Goldstone] on  some account  numbers. . .  .   I do
                      recall them  getting some clarification  on account
                      names to  substantiate the  name that  we had  been
                      billed for.   
             
            Other than the  review to see if the  account numbers matched

            those of Sears's debtors,  Matta relied on Goldstone for  her

            information.  Apart from reviewing the account numbers, Sears

            employees did not independently review the law firm's records

            to  determine   whether  the  amounts  Goldstone  billed  for

            attorney  time  or  costs were  accurate;  they  trusted that

            Goldstone, as their attorney, had a basis for those figures.

                      Believing  that Goldstone had a basis for his bills

            and  that the contract required the payments, Sears employees

            did not question Goldstone again until the bills continued to

                                         -11-
                                          11

            arrive  throughout 1993 and  early 1994 without  any apparent

            end  in sight.  When Sears again  began to question the bills

            and  to  delay its  payments  to Goldstone,  he  took action.

            Goldstone  threatened to deduct his fees from money collected

            from Sears's debtors.   He also noted in a letter that he and

            the firm felt  "restrained from acting  in our client's  best

            interest because of" Sears's failure  to pay.  In 1994, Sears

            finally terminated its relationship with Goldstone & Sudalter

            and brought the present action for an accounting to determine

            whether   Goldstone's  bills  were   in  order.     Goldstone

            counterclaimed for the unpaid balance.

                      At  deposition,  Mrs. Sudalter  testified  that she

            performed bookkeeping duties  for her husband's firm  and was

            intimately  familiar   with  its  billing  practices.     She

            testified that Sears  did not owe anything on  the old files,

            i.e. files in dead storage of  whatever year, and that it was

            impossible to  determine from the outside of a folder whether

            Sears had paid  a fee for  the file.   Although he had  never

            discussed with Attorney  Sudalter the system  for determining

            whether  Sears had  paid  a  fee or  reimbursed  costs for  a

            particular case, Goldstone's position was that the costs were

            self-evident from  a review  of the  case jacket.   Likewise,

            Goldstone  contends, the fee  could be reliably  estimated by

            reviewing  the work performed  and determining, based  on his

            experience, how much time each task ordinarily required.

                                         -12-
                                          12

                      Mrs. Sudalter noted that, after 1987, Sears was not

            obligated to reimburse for costs, and that she did not record

            Sears's  payment of the forty-five percent contingency fee on

            the outside  of each file  folder because it would  have been

            time-consuming.   Mrs. Sudalter  also testified that  the red

            stickers that many of the file folders contained marked those

            cases as "closed," that the firm's "closed" cases were either

            fully  paid up  or uncollectible,  and that the  law practice

            never  intended  to  submit any  further  bills  to Sears  on

            "closed" cases.  A preliminary review of a mere fourteen case

            files demonstrated that Sears had already paid legal fees for

            work performed on  some substantial portion  of the cases,  a

            fact which Goldstone admitted at his deposition.

                      Following  these  depositions,  Sears  amended  its

            complaint,  alleging  a fraudulent  double-billing  scheme by

            Goldstone.   Sears asked  for damages of  $833,409 to recover

            all the  fees it had  paid for old  cases, and  also demanded

            attorney's fees under Mass. Gen.  Laws ch. 93A for "unfair or

            deceptive trade  practices."   On  cross-motions for  summary

            judgment,  the   district  court  ruled  for  Sears,  finding

            Goldstone in breach of his  contract and fiduciary duty as an

            attorney and in  violation of Mass. Gen.  Laws ch. 93A,    2.

            The  district court awarded the full  $833,409 in damages and

            $112,000 in attorney's fees.

                                         -13-
                                          13

                      Our review of the district court's grant of summary

            judgment is de novo.  Swain, 117 F.3d at 5.
                                  _____

                    II.  Goldstone's Obligations In Billing Sears
                    _____________________________________________

                      The   attorney-client   relationship   is   "highly

            fiduciary" in  Massachusetts.    Hendrickson  v.  Sears,  310
                                             ___________      _____

            N.E.2d  131, 135 (Mass. 1974);  Dunne v. Cunningham, 125 N.E.
                                            _____    __________

            560, 561 (Mass. 1920).  To state that elastic truism does not

            answer the question of the level  of duty which is imposed on

            a lawyer in billing clients.  The district court found that a

            particularly  high   level   of  duty   was  required   here,

            analogizing this case to situations  where the attorney has a

            separate   business   relationship   with   a  person   while

            simultaneously  representing  that  person as  counsel.   See
                                                                      ___

            Goldman  v. Kane, 329  N.E.2d 770 (Mass. App.  Ct. 1975).  To
            _______     ____

            the  extent  that  the  district  court's  opinion  might  be

            misunderstood   to  suggest   that  the   separate  "business

            transaction"  rules  in  Goldman  apply  to ordinary  billing
                                     _______

            arrangements  between a lawyer  and client when  the lawyer's

            sole relationship  with the  person who is  the client  is as

            counsel, we clarify that this is not the law.

                      To  the extent that  the district court  was ruling

            that the  more stringent  Goldman business  transaction rules
                                      _______

            apply  when an attorney purchases a practice and subsequently

            bills for services rendered earlier by that practice, we need

            not and do  not reach that issue.   We leave that  issue more

                                         -14-
                                          14

            appropriately to the  Massachusetts courts to decide  in some

            future  case.3   We  affirm  on the  basis  that the  summary

            judgment  record shows  no  dispute  of  material  fact  that

            Goldstone  violated the  usual  duties owed  by Massachusetts

            lawyers when billing  clients and that he did so  in a manner

            which was in breach of his contract and in violation of Mass.

            Gen. Laws ch. 93A.

                      In  Goldman, an attorney sued his client to enforce
                          _______

            a  loan agreement whose  terms greatly favored  the attorney.

            The  loan agreement was  an independent  business transaction

            between  the two.   In  this context,  the court  declined to

            enforce  the agreement: "When  an attorney bargains  with his

            client  in  a  business  transaction in  a  manner  which  is

            advantageous to  himself, and  if that  transaction is  later

            called  into question,  the court  will subject  it  to close

            scrutiny."    Id. at  773.    When  there are  such  business
                          ___

            transactions, the fiduciary relationship requires a series of

            heightened  duties   in  light  of   the  heightened   risks.

            Specifically, these heightened  duties require the  lawyer to

            meet the burden  of showing that (1) the  transaction "was in

            all respects fairly and equitably conducted" and that (2) the

                                
            ____________________

            3.  The  new  Massachusetts  Rules  of Professional  Conduct,
            effective January 1,  1998, do not expressly  address whether
            the  business transaction rules  should be applied  to such a
            situation.   See Rule 1.8 (governing attorney-client business
                         ___
            transactions);  Rule  1.17  (governing  the  sale  of  a  law
            practice).

                                         -15-
                                          15

            client had received "independent advice in the matter or else

            receive[d] from the attorney such  advice as the latter would

            have  been  expected to  give  had the  transaction  been one

            between his client and  a stranger."  Id.4   The Goldman rule
                                                  ___        _______

            has been  adopted by the Supreme  Judicial Court.  See  In re
                                                               ___  _____

            Stern,  682  N.E.2d   867,  871  (Mass.  1997)   (finding  an
            _____

            attorney's entering into a business transaction with a client

            without urging an independent legal opinion a violation of DR

            5-104 and  DR 1-102); Israel  v. Sommer, 197 N.E.  442 (Mass.
                                  ______     ______

            1935) (holding a trust agreement favoring an attorney invalid

            for failure to obtain disinterested advice); Hill v. Hall, 77
                                                         ____    ____

            N.E. 831 (Mass. 1906) (holding  a sale invalid for failure to

            obtain disinterested advice).  The new Massachusetts Rules of

            Professional Conduct  restate the  Goldman requirements  as a
                                               _______

            separate  rule, see Rule 1.8,5  and essentially the same rule
                            ___

                                
            ____________________

            4.  Under  Goldman,  a prudent  attorney  would refrain  from
                       _______
            attempting  personally  to  give  the required  disinterested
            advice.  The  attorney in Goldman had advised  his client not
                                      _______
            to enter  into the loan  agreement, yet the court  found that
            "in the  circumstances of  this case,  [the attorney's]  full
            disclosure and his advice were not sufficient to immunize him
            from liability."  Id.
                              ___

            5.  Rule 1.8(a) provides:
                      "A  lawyer   shall  not   enter  into  a   business
                      transaction  with a client  or knowingly acquire an
                      ownership, possessory, security, or other pecuniary
                      interest adverse to a client unless:
                           "(1) the transaction  and terms  on which  the
                           lawyer acquires  the  interest  are  fair  and
                           reasonable  to   the  client  and   are  fully
                           disclosed and  transmitted in  writing to  the
                           client in  a  manner which  can be  reasonably
                           understood by the client;

                                         -16-
                                          16

            has been proposed by the  ALI, see Restatement (Third) of the
                                           ___ __________________________

            Law  Governing Lawyers    207  (Proposed Final  Draft No.  1,
            ______________________

            March 29,  1996) (relying  on  Goldman and  similar cases  to
                                           _______

            require  independent legal  advice for  business transactions

            between lawyers and clients).6

                      Business  transactions  other than  fee  agreements

            between  lawyers  and  clients create  special  conflicts  of

            interest that  require the precaution of  independent advice.

            However, attorneys, like fiduciaries  generally, are entitled

            to  receive compensation for  their services, and  may pursue

            their  legitimate  interests  in  receiving  payment  in  the

            ordinary  fashion.   Thus,  seeking  to enforce  a  valid fee

            contract  is an  exception to  the  general requirement  that

                                
            ____________________

                           "(2) the   client   is  given   a   reasonable
                           opportunity to seek  the advice of independent
                           counsel in the transaction; and
                           "(3) the client consents in writing thereto."

            6.  As proposed by the ALI, Restatement   207 provides:
                                        ___________
                      "A  lawyer may  not participate  in  a business  or
                      financial  transaction  with  a  client,  except  a
                      standard commercial transaction in which the lawyer
                      does not render legal services, unless 
                           "(1) the client has adequate information about
                           the terms  of the  transaction  and the  risks
                           presented by the lawyer's involvement in it;
                           "(2)  the  terms   and  circumstances  of  the
                           transaction  are  fair and  reasonable  to the
                           client; and
                           "(3) the client consents to the lawyer's  role
                           in the transaction  under the limitations  and
                           conditions  provided  in      202  [concerning
                           client consent to conflicts of interest] after
                           being  encouraged,  and   given  a  reasonable
                           opportunity, to seek  independent legal advice
                           concerning the transaction."

                                         -17-
                                          17

            fiduciaries  subordinate their  interests to  those of  their

            clients.   See generally  Restatement (Second)  of Agency    
                       _____________  _______________________________

            441, 463  (1957) (providing  that a principal  has a  duty to

            compensate his or her agent and that an agent may take action

            in the  case  of  breach);  Restatement (Third)  of  the  Law
                                        _________________________________

            Governing Lawyers     29, 29A (P.F.D. No. 1,  March 29, 1996)
            _________________

            (providing that a client has an obligation  to compensate his

            or  her lawyer  and that  a lawyer  may enforce  a valid  fee

            contract).

                      Massachusetts law does not regard the  ordinary fee

            contract  as  a  "business  transaction  between  lawyer  and

            client" subject to the special requirements of Goldman.   See
                                                           _______    ___

            Coupounas  v. Madden, 514 N.E.2d 1316 (Mass. 1987) (affirming
            _________     ______

            a client's  duty to pay  a lawyer-accountant and  refusing to

            hold  invalid notes that client  signed for failure to obtain

            independent legal advice);  see also  Restatement (Third)  of
                                        ________  _______________________

            the  Law Governing Lawyers   207  cmt. a (P.F.D. No. 1, March
            __________________________

            29, 1996)  ("The requirements [for  business transactions] do

            not apply to ordinary client-lawyer fee agreements . . . .").

            It would make little sense  to require an attorney, embarking

            on representation  of a client and entering  into an ordinary

            fee agreement, to advise the  client to hire another attorney

            to  give  "independent  legal  advice"  concerning  that  fee

            agreement.

                                         -18-
                                          18

                      Nevertheless, this  case still  turns on  the rules

            for the regulation of attorney's fees which Massachusetts has

            established  to protect clients and to preserve the integrity

            of  the bar.   Massachusetts  has established  that a  lawyer

            always bears the burden of proof in any proceeding to resolve

            a  billing dispute, whether the lawyer appears as a plaintiff

            seeking  to recover a fee  or as a defendant  in a suit for a

            refund.  First  National Bank of Boston v.  Brink, 361 N.E.2d
                     ______________________________     _____

            406, 410 (Mass. 1977) (suit for an accounting and refund of a

            large fee  for tax advice);  Smith v. Binder, 477  N.E.2d 606
                                         _____    ______

            (Mass. App. Ct. 1985) (suit for an accounting and refund of a

            portion  of large retainer fee); see also Restatement (Third)
                                             ________ ___________________

            of the Law Governing Lawyers   56(2) (P.F.D. No. 1, March 29,
            ____________________________

            1996) (following the Brink rule).  As the  Restatement notes,
                                 _____                 ___________

            "A lawyer . . . will usually have better access than a client

            to evidence about the  lawyer's own services . . . ."  Id. at
                                                                   ___

              56  cmt. c.   That concern is particularly  salient in this

            case, where  the items  of evidence  that Goldstone  presents

            consist  of cryptic handwritten notations on several thousand

            old file folders.

                      To  satisfy an  attorney's  burden  of proof  under

            Massachusetts law,  he or she  must provide more  than purely

            speculative evidence to support a  claim that a client owes a

            particular charge  in order  to defeat  a properly  supported

            motion for  summary judgment.   See Beatty  v. NP  Corp., 581
                                            ___ ______     _________

                                         -19-
                                          19

            N.E.2d  1311, 1314-16 (Mass. App. Ct. 1991) (finding evidence

            of an agreement by  a client to pay  a performance bonus  too

            "isolated" to  support  attorney's claim);  accord  Davis  v.
                                                        ______  _____

            Glenville  Haldi, P.C.,  253 S.E.2d  207, 208  (Ga. Ct.  App.
            ______________________

            1979) (rejecting  attorney's claim  where  he introduced  "no

            evidence indicating the  amount of time spent on  the case or

            the amount of work he performed," but only the attorney's own

            opinion that a prospective contingency fee would be $25,000).

            Scanty  or speculative evidence concerning the value of legal

            services  is insufficient to  create a genuine  issue for the

            trier of  fact.  See  Beatty, 581 N.E.2d at  1315-16 (summary
                             ___  ______

            judgment  appropriate);  accord  Davis,  253  S.E.2d  at  208
                                     ______  _____

            (directed  verdict appropriate).  Placing the burden of proof

            on the  attorney is  sensible in light  of the  difficulty of

            monitoring the attorney's services.

                      While Sears is  the moving party, it  has supported

            its  summary  judgment  motion  by  pointing   to  undisputed

            material facts in the record.  Now, the burden of proof rests

            with Goldstone to  present clear evidence that the  bills are

            owed by Sears.  "Once the moving party has properly supported

            her  motion for  summary judgment, the  burden shifts  to the

            nonmoving party, with  respect to each issue on  which he has

            the  burden of  proof, to  demonstrate that  a trier  of fact

            could reasonably find  in his favor."  DeNovellis v. Shalala,
                                                   __________    _______

            1997  WL 527912, at  *5 (1st Cir. Sept.  2, 1997).  Goldstone

                                         -20-
                                          20

            has failed to demonstrate that a trier of fact could find  in

            his favor.   The  evidence he  presented to  substantiate the

            bills he submitted for over 15,000 files consists entirely of

            his own interpretation of the handwritten markings  contained

            on the  outside of  the files  and his  own estimates  of the

            amount  of time that Sudalter  spent on cases stretching over

            fifteen years.  He lacks personal knowledge that Sudalter had

            not already  billed Sears on these accounts or had determined

            that they were not to be billed.

                      On  the summary judgment  record, Mrs.  Sudalter is

            the  only competent witness to her late husband's bookkeeping

            practices;  Goldstone has no personal knowledge regarding the

            firm's records  and never even  met Attorney Sudalter.7   See
                                                                      ___

            F.R.C.P. 56(e) ("Supporting and  opposing affidavits shall be

            made on personal knowledge . . . and shall show affirmatively

            that the  affiant  is competent  to  testify to  the  matters

            stated therein.").   Mrs. Sudalter  has testified that  it is

            impossible to  determine from  the old  file folders  whether

                                
            ____________________

            7.  Goldstone  also calls our  attention to the  affidavit of
            Frederick Casson, which  was stricken by the  district court.
            Goldstone failed  to disclose  Casson's identity pursuant  to
            F.R.C.P. 26(a) at the outset of the litigation.  The district
            court  ordered   the   affidavit   stricken,   the   sanction
            established  by  F.R.C.P.  37(c)(1).    The  district court's
            decision was well  within its discretion.   See Rivera-Flores
                                                        ___ _____________
            v.  Bristol-Myers Squibb Caribbean, 112 F.3d  9, 14 (1st Cir.
                ______________________________
            1997) ("Our review of the  district court's discovery-related
            decisions  is for abuse of  discretion, and we will intervene
            in  such  matters  only  upon a  clear  showing  of  manifest
            injustice.").

                                         -21-
                                          21

            Sears owed any money for  attorney's fees and costs, that the

            Sudalter firm never intended to submit further bills to Sears

            for files in "dead storage" and that the  red stickers on old

            files  indicate that  the  matters were  considered "closed."

            Goldstone's only  response is to  say that  Mrs. Sudalter  is

            biased against him.  But that does not satisfy  his burden to

            "set  forth specific facts  showing that  there is  a genuine

            issue" for trial.  Anderson  v. Liberty Lobby, Inc., 477 U.S.
                               ________     ___________________

            242, 248 (1986); DeNovellis, 1997 WL 527912, at *5.   A party
                             __________

            cannot create an  issue for the trier of fact "'by relying on

            the  hope that  the jury  will not  trust the  credibility of

            witnesses. . . .  There must be some affirmative evidence . .

            .  .'"   Dragon  v.  Rhode  Island  Dep't of  Mental  Health,
                     ______      ________________________________________

            Retardation and  Hospitals, 936 F.2d  32, 35 (1st  Cir. 1991)
            __________________________

            (quoting Wright  and Miller, Federal Practice  and Procedure:
                                         ________________________________

            Civil  2d    2527  (1st ed.  1971) (misquoted  as    2528  in
            _________

            Dragon)). 
            ______

                      Goldstone  nonetheless  urges  us   to  vacate  the

            summary judgment  for Sears and  remand the case in  order to

            require   Sears  to  establish  its  injury  by  showing  the

            impropriety of his bills for each  of over 15,000 files.   As

            the district  judge noted,  "[i]t would  be perverse  for the

            court  to hold  Sears  . . . to  a  standard the  [defendant]

            himself  could never  achieve."   This  case illustrates  the

            reasons  for the  Commonwealth's rule  that  a lawyer  always

                                         -22-
                                          22

            bears the burden to prove  that he is owed compensation under

            a valid fee agreement.  The burden of proof was not on Sears;

            it was on Goldstone.  He   has had his opportunity to satisfy

            his  burden.   While Sears's  record  keeping practices  were

            sloppy at best and Sears does  not evoke much sympathy, it is

            the  lawyer's burden  to justify  amounts  billed.8   Because

            Goldstone  has failed to produce evidence that Sears actually

            owed Sudalter  any of  the $833,409  that represents  Sears's

            payment  on the  closed files,  the  district court's  damage

            award was proper.9

                                
            ____________________

            8.  Goldstone argues  that a ruling  for Sears means  that no
            attorney  can  recover  for  his  work  in   the  absence  of
            contemporaneous time records.   The issue  is not whether  an
            attorney may  charge fees in the absence of contemporary time
            records.  It  is whether a lawyer  without personal knowledge
            that  a bill  is  owed  has  produced  sufficient  admissible
            evidence to survive  summary judgment that the  obligation in
            fact exists.   We  also note that  in the  purchase of  a law
            practice, the  lack of  adequate billing  records to  support
            accounts  receivable  can,  of course,  be  reflected  in the
            purchase price.

            9.  Goldstone's attorney contended in oral argument that some
            of the $833,409 in bills that Sears paid  were not for closed
            files, but for new  work that Goldstone performed.   However,
            the  district  court   had  ordered  Goldstone  to   make  an
            accounting of invoices  he submitted for fees and  costs that
            he  claimed  were owing  to  his deceased  partner,  Eldon B.
            Sudalter, and according to the district court, "[t]he parties
            agree[d] that the  relevant sum charged to and  paid by Sears
            [was]  $833,409.  Goldstone   &  Sudalter's  own   accountant
            provided that figure as  "an accounting of all charges  . . .
            for  'closed accounts' . . . ."  Goldstone's attorney did not
            dispute  that  figure  at the  damages  hearing,  but instead
            contended that  Sears had  not shown that  all the  files had
            previously  been billed.  Given Goldstone's burden, that fact
            is  not material  to the  damages issue.   Goldstone  has not
            sustained his  argument that  part of  the $833,409  judgment
            covers bills for work that he himself  performed, rather than

                                         -23-
                                          23

                                   III. Chapter 93A
                                        ___________

                      The district court found that  the undisputed facts

            established   that   Goldstone's  conduct   was   "unfair  or

            deceptive," in  violation of Chapter  93A.  This  Chapter 93A

            finding,  and the finding that Sears  suffered harm from that

            violation, entitled  Sears to  an award  of attorney's  fees.

            Mass. Gen. Laws ch. 93A,   11; NASCO v. Public Storage, Inc.,
                                           _____    ____________________

            1997 WL 610055, at *1 (1st Cir. Oct. 8, 1997).

                      Chapter  93A  applies  to  attorneys, and  unlawful

            billing or other  unethical conduct can constitute  a Chapter

            93A violation.   See  Guenard v. Burke,  443 N.E.2d  892, 896
                             ___  _______    _____

            (Mass. 1982) (reliance on an illegal contingent fee agreement

            to collect  a fee violates  Chapter 93A); Brown  v. Gerstein,
                                                      _____     ________

            460  N.E.2d 1043,  1051-52 (Mass.  App.  Ct. 1984)  (lawyer's

            unethical  deceit toward his clients concerning the status of

            litigation  violated  Chapter  93A).   To  establish  that no

            genuine  issue of  material fact  existed on the  Chapter 93A

            claim, Sears is  required to show  that the undisputed  facts

            reveal that Goldstone's  conduct "falls 'within at  least the

            penumbra of  some common-law, statutory, or other established

            concept of unfairness' or  is 'immoral, unethical, oppressive

            or unscrupulous.'"  Cambridge Plating  Co. v. NAPCO, Inc., 85
                                ______________________    ___________

            F.3d 752,  769 (1st Cir.  1996) (quoting PMP Assoc.,  Inc. v.
                                                     _________________

            Globe Newspaper Co., 321 N.E.2d 915, 917 (Mass. 1975)).  
            ___________________

                                
            ____________________

            bills for Sudalter's work.

                                         -24-
                                          24

                      Goldstone's  breach  of  his obligations  in  these

            circumstances  is  sufficient  to  establish  a  Chapter  93A

            violation. Cambridge  Plating, 85  F.3d at  769; Doucette  v.
                       __________________                    ________

            Kwiat,   467  N.E.2d  1374  (Mass.  1984)  (finding  that  an
            _____

            attorney's collection of  a fee to which he  was not entitled

            under his fee agreement  violated Chapter 93A).  Furthermore,

            Goldstone  admitted to  conduct  which constitutes  unethical

            behavior  in   skimming  his  costs  off  the  top  of  Sears

            collections  without  Sears's  knowledge  or consent  and  in

            violation of his  contract.  See DR 9-102.  Violations of the
                                         ___

            rules  governing the legal  profession are evidence  of legal

            malpractice,   and   are  also   relevant   in  Chapter   93A

            determinations.   See Fanaras Enterprises, Inc. v. Doane, 666
                              ___ _________________________    _____

            N.E.2d 1003,  1006 (Mass. 1996);  Brown, 460 N.E.2d  at 1050,
                                              _____

            1052 n.22.

                      The  district  court's  finding  of a  Chapter  93A

            violation does  not  depend on  whether  Goldstone  knowingly

            devised a scheme to defraud Sears or was merely opportunistic

            and reckless in  making the assumptions he did  regarding the

            files.   Whether  or not  Goldstone's  conduct was  knowingly

            fraudulent,  the record clearly  shows that his  conduct fell

            "within  at least the penumbra of some common-law, statutory,

            or  other  established  concept  of unfairness."    Cambridge
                                                                _________

            Plating,  85 F.3d  at 769  (citation  and internal  quotation
            _______

            marks  omitted).   Sears did  not seek  the double  or treble

                                         -25-
                                          25

            damages  that are available for knowing violations of Chapter

            93A, see  Mass. Gen.  Laws ch.  93A,    11, so  the issue  of
                 ___

            Goldstone's knowledge  is not  a "genuine  issue of  material

            fact"  that  would  defeat summary  judgment.    The district

            court's award of  attorney's fees of $112,000  was warranted.

            Goldstone  does not  dispute the  amount  of attorney's  fees

            awarded.

                      The  district court's  grant  of summary  judgment,

            damages and attorney's fees is affirmed.
                                           ________

                                         -26-
                                          26