Sinsheimer v. Burke

79 N.E.3d 1112 (Table)

Robert S. SINSHEIMER

v.Timothy BURKE.

16–P–302

Appeals Court of Massachusetts.

Entered: February 28, 2017.

MEMORANDUM AND ORDER PURSUANT TO RULE 1:28

The defendant, Timothy Burke, appeals from a summary judgment entered in the Superior court in favor of the plaintiff, Robert Sinsheimer, on Sinsheimer's attorney's lien and related claims, and against Burke on Burke's malpractice and related counterclaims. The judge ordered that Sinsheimer's attorney's lien be enforced and awarded Sinsheimer $47,137.35 plus statutory interest. We affirm.

Background . Burke, an attorney, retained Sinsheimer in 1999 to litigate a partnership dispute between Burke and his former partner, Jeffrey Cohen (the Cohen Matter). Burke and Cohen were litigating the dissolution of their partnership and the distribution of its assets.² In 2002, the parties tried their claims to a jury in the Superior Court. The jury was provided special questions, and asked to resolve a straightforward factual issue: which of two versions of the agreement between these former partners did the jury find to have been the operative one?³ The jury found in Burke's favor on a general verdict.⁴

On July 27, 2005, a "Judgment and Order on Complaint for Accounting and Declaratory Judgment," entered ordering that Burke receive $246,659.24, that Cohen receive $54,383.37, and that Cohen complete an accounting of other partnership funds. The order included the following: "Interest shall be assessed by the clerk." Cohen asserted that Burke was not entitled to any interest, while Burke maintained that he was entitled to both prejudgment and postjudgment interest. In 2006, the parties filed a joint motion for final judgment, which did not include the word "interest," but incorporated the 2005 judgment and order. Thereafter, the court entered a final judgment, which did not include a provision for the payment of interest. Cohen appealed, arguing, inter alia, that the trial judge failed to make adequate findings and erred in calculating the amount of the award to each party.

In 2010, this Court affirmed the final judgment. See Burke v. Cohen , 77 Mass. App. Ct. 1110 (2010) (Burke I). Post appeal, Burke returned to the Superior Court and requested that the final judgment after rescript include an award of statutory interest.⁵ The judge declined to award interest. [R.A. 3/397]. Following some procedural issues not critical to our decision, the Superior Court issued a "Third Amended Final Judgment After Rescript," which provided that "Burke is not entitled to either prejudgment or postjudgment interest."⁶ Burke again appealed to this Court.

In 2013, this court determined that "[a]s a matter of law and as an exercise of equitable discretion," the trial court's denial of interest was appropriate. Burke v. Cohen , 84 Mass. App. Ct. 1112 (2013) (Burke II) at *3. We also reiterated our conclusion in Burke I that Burke had "waived claims in contract and tort (conversion, breach of fiduciary duty, breach of contract, and fraud or deceit) and [had] requested a verdict on his remaining counts for an accounting and a declaratory judgment of entitlement to the result of the accounting." Ibid .

Long before the lengthy appeals, Burke and Cohen had agreed that Sinsheimer would hold the disputed funds in escrow. After Burke II , Sinsheimer distributed Cohen's share in accordance with the Superior Court's judgment and distributed Burke's share, less $47,000. Sinsheimer claimed that Burke owed him approximately $47,000 in outstanding fees.⁷

In 2013, Sinsheimer brought the present action against Burke in the Superior Court alleging breach of contract and seeking the enforcement of an attorney's lien pursuant to G. L. c. 221, § 50. Burke counterclaimed for breach of contract (Count I), breach of the implied covenant of good faith and fair dealing (Count II), negligent misrepresentation (Count III), negligence (Count IV), malpractice (Count V), "Breach of Contract-Escrow Agent" (Count VI), "Breach of Fiduciary Duty–Escrow Agent" (Count VII), "Conversion–Escrow Agent" (Count VIII), and violation of G. L. c. 93A (Count IX). Sinsheimer moved for summary judgment on his claims. Burke moved for partial summary judgment on Counts VI, VII, and VIII of his counterclaim. The judge allowed Sinsheimer's motion for summary judgment and denied Burke's motion for partial summary judgment, concluding that: (1) Sinsheimer had a valid and enforceable attorney's lien; (2) Sinsheimer did not commit malpractice because the Burke II decision ruled as a matter of law and equity that Burke could not have recovered statutory interest on his judgment in the Cohen Matter; and (3) Burke's claims, even if they had merit, accrued no later than April, 2010, when Burke stopped paying Sinsheimer due to perceived errors and were thus barred by the statute of limitations. Burke now appeals.

Discussion . Summary judgment is appropriate only where no material facts are in genuine dispute. Santana v. Commonwealth , 90 Mass. App. Ct. 372, 374–75 (2016). We review rulings on cross motions for summary judgment de novo, in the light most favorable to Burke as the party against whom the judge allowed summary judgment. See ibid .

1. Sinsheimer's attorney's Lien . Burke neither challenges the validity of his fee agreement with Sinsheimer, nor the legitimacy of Sinsheimer's attorney's lien. See G. L. c. 221, § 50, as appearing in St. 1945, c. 397, § 1 ("[T]he attorney who appears for a client in such proceeding shall have a lien for his reasonable fees and expenses upon his client's cause of action, counterclaim or claim, upon the judgment, decree or other order in his client's favor entered or made in such proceeding, and upon the proceeds derived therefrom."). See also Zabin v. Picciotto , 73 Mass. App. Ct. 141, 162 (2008) ("[A]n attorney's lien attaches to the full amount of a settlement or judgment, until determination of the amount due to the attorney.").

Instead, Burke first argues that Sinsheimer erroneously encumbered the disputed fees, and that Sinsheimer breached his duty as escrow agent. The claim is unpersuasive. The Massachusetts Rules of Professional Conduct explicitly sanction the withholding of disputed funds in these and similar circumstances. Where "[t]rust funds belonging in part to a client or third person and in part currently or potentially to the lawyer" are held in a trust account, "[a] lawyer who knows that the right of the lawyer or law firm to receive such portion is disputed shall not withdraw the funds until the dispute is resolved." Mass.R.Prof.C. 1.15(b)(2)(ii), 471 Mass. 1381 (2015). Trust funds include "property held in any fiduciary capacity in connection with a representation, whether as trustee, agent, escrow agent, guardian, executor, or otherwise." Mass.R.Prof.C. 1.15(a)(1), 471 Mass. 1380 (2015). "In general, the phrase ‘in connection with a representation’ includes all situations where a lawyer holds property as a fiduciary, including as an escrow agent." Mass.R.Prof.C. 1.15, comment 2, 471 Mass. 1391 (2015). The comments to the rule further clarify that lawyers "often receive funds from third parties from which the lawyer's fee will be paid" and make clear that if "there is risk that the client may divert the funds without paying the fee," then "the lawyer is not required to remit the portion from which the fee is to be paid." Mass.R.Prof.C. 1.15, comment 3, 471 Mass. 1392 (2015). See also Cohen v. Lindsey , 38 Mass. App. Ct. 1, 2 (1995) (funds deposited in escrow account pending final judgment in eviction proceeding properly subject to attorney's lien).

Burke next claims that Sinsheimer materially breached the fee agreement because he was not authorized to waive any contract or interest claims. Burke claims that this breach excused his further performance under the contract. Although couched, in part, as a "breach of contract" claim, Burke ultimately argues that Sinsheimer breached his duty to Burke, which proximately caused his alleged damages. Viewing the summary judgment record in its entirety, Burke's claims are essentially for negligence and legal malpractice. See Herbert A. Sullivan, Inc . v. Utica Mutual Ins. Co ., 439 Mass. 387, 396 (2003) (negligence in performing a duty owed under a contract, "as distinguished from mere failure to perform it," is construed as a tort). For the reasons explained in part 2, infra , Sinsheimer's performance was not the proximate cause of any damage, because Burke was not entitled to recover any interest from the dissolution of the partnership with Cohen. Thus, Burke was not excused from performing under the fee agreement.

2. Sinsheimer's liability for legal malpractice . Burke's counterclaims hinge on his contention that Sinsheimer committed legal malpractice by failing to successfully procure interest on Burke's underlying judgment in the Cohen Matter. To sustain a claim for legal malpractice, Burke must prove that Sinsheimer failed to exercise reasonable care and skill in rendering him legal advice, and that Sinsheimer's negligence was the proximate cause of his reasonably foreseeable damages or loss. See Fishman v. Brooks , 396 Mass. 643, 646–647 (1986) ; Meyer v. Wagner , 429 Mass. 410, 424 (1999).

In the Cohen Matter, Burke was not entitled to interest...