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Taylor v. Moskow

Superior Court of Massachusetts, Suffolk, Business Litigation Session

June 10, 2016

Jane E. Taylor, Trustee and Beneficiary of the Jane E. Taylor GST Exempt Trust and the Jane E. Taylor Non-Exempt Trust Derivatively on Behalf of Coolidge Properties, LLC et al.
v.
James M. Moskow et al No. 134357

          June 12, 2016, Filed

          MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS' MOTION TO DISMISS

          Mitchell H. Kaplan, Justice

         As pointed out in an earlier decision, this case represents the plaintiff, Jane E. Taylor's, fourth attempt to sue her brother, defendant James M. Moskow, and two businesses in which he has an interest because of payments they received from the derivative plaintiffs, Coolidge Properties, LLC (Coolidge) and Stearnwood Properties, LLC (Stearnwood) (sometimes collectively referred to as the LLCs). Each of those entities previously owned apartment buildings that were acquired many decades ago by Taylor's and Moscow's grandfather. Each of Taylor and Moscow hold membership interests in Coolidge through trusts created as part of grandfather's estate plan and in Stearnwood directly. Coolidge and Stearnwood have sold all their apartment buildings. Taylor lives in Florida; Moscow was the manager of both Coolidge and Stearnwood.

         In this action (as in the three prior actions all of which were litigated in Federal Court and have been dismissed), Taylor complains about payments made by Coolidge and Stearnwood to defendants JMB Group, LLC (JMB) and Black Oak Realty, LLC (Black Oak) for property management services and leasing services, respectively. The case is before the court on the defendants' second motion to dismiss. This court previously allowed the defendants' first motion to dismiss, but with leave to replead the counts asserting claims for Breach of Fiduciary Duty and Unjust Enrichment, if allegations sufficient to state claims under those theories of recovery could be alleged in good faith. Taylor thereafter filed an amended complaint, repleading those two counts, and the defendants again moved for dismissal, both on the grounds that Taylor still had not met the prerequisites to bring derivative claims and because, even as amended, the allegations failed to state claims on which relief may be granted. That motion is now before the court.

         At oral argument on the motion to dismiss, it became apparent to the court that Taylor's derivative claims asserted in the amended complaint were all likely filed after the expiration of the three-year statute of limitations for such claims. See G.L.c. 260, § 2A. Taylor's claims are all premised on payments made by the LLCs to JMB and Black Oak during the period January 2009 through November 2011. This action was first filed on September 29, 2015. The court invited the parties to submit affidavits addressing the issue of when the LLCs' putative claims for breach of fiduciary duty and unjust enrichment accrued. See Mass.R.Civ.P. 12(b) (if on a motion to dismiss under Rule 12(b)(6) " matters outside the pleadings are presented to . . . the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56"). Having reviewed those submissions, the court concludes that the defendant's motion, now treated as a motion for summary judgment based upon the expiry of the three-year period of limitations, must be ALLOWED.[1] The few facts necessary to reach this conclusion are set out in the following discussion.

         DISCUSSION

          " [L]imitations periods in Massachusetts run from the time a plaintiff discovers, or reasonably should have discovered, the underlying harm . . . for which relief is sought." Crocker v. Townsend Oil Co., 464 Mass. 1, 8, 979 N.E.2d 1077 (2012). " Under the second prong of the discovery rule, '[r]easonable notice that . . . a particular act of another person may have been a cause of harm to a plaintiff creates a duty of inquiry and starts the running of the statute of limitations.'" Passatempo v. McMenimen, 461 Mass. 279, 294, 960 N.E.2d 275 (2012), quoting Koe v. Mercer, 450 Mass. 97, 102, 876 N.E.2d 831 (2007).

         In this case, it is undisputed that on December 15, 2011, Moscow sent Howard Magram, his sister Taylor's accountant, a letter on JMB letterhead which stated in the first line: " As per your request I am enclosing accounting ledgers for all trust for which Jane Taylor is a beneficiary." He signed the letter " James Moskow, Manager, JMB Group LLC." Moscow followed that up with an email to Magram on January 12, 2012, which he also signed, electronically: " James Moskow, JMB Group LLC." The text of the email was as follows:

Attached you will find the general ledgers for Coolidge Properties LLC and Stearnwood Properties LLC for the years 2009, 2010, and 2011, as well as I/E statements showing the breakout of the JMB Management expenses. Unless you have a compelling reason, I ask that you have the common decency to wait until after my sister's [Barabara's] funeral to request additional information.

         That correspondence was followed by emails between Moskow's lawyer and Taylor's lawyer, Harvey Alford, concerning the LLC's records. Among much other colloquy, Moskow's lawyer writes to Alford: " Due to the recent acrimony and apparent distrust of Mr. Moskow's ability to manager [sic] the Sewall and Stearnwood properties, JMB Group has decided to terminate its management agreement and no longer serve as property manager." Alford responds, in part: " Replacing the management company will not end the issues . . . My client demands a breakdown of JMB, check by check." He also expressly states that he is going to investigate: " whether the monies paid to said individual was commensurate with appropriate payment for reasonably required services and not overpayment to Mr. Moskow's family members." Alford also threatens court action. Moscow's lawyer responds, in part: Instead of doing this piecemeal Mr. Moskow will make available, at the office of the LLCs, the LLCs' records for review by your client or her accountant. Please advise of convenient dates.

         There is no doubt that Taylor was on notice that JMB managed the LLCs, that Moskow had an interest in JMB, and of the claims that she seeks to assert derivatively on behalf of the LLCs, at least as early as January 2012, if not much earlier than that. The three-year statute of limitations had therefore expired when she filed this action in September 2015.[2]

         ORDER

         For the foregoing reasons, having treated the defendants' motion to dismiss as a motion for summary judgment and given the plaintiffs an adequate opportunity to respond, the court hereby ALLOWS that ...


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