United States District Court, D. Massachusetts
WELLS FARGO BANK, N.A., AS TRUSTEE FOR OPTION ONE MORTGAGE LOAN TRUST 2007-FXD1 ASSET-BACKED CERTIFICATES, SERIES 2007-FXD1, Plaintiff,
STEPHEN A. ABLITT, LAWRENCE F. SCOFIELD, JOHN CONNOLLY, JR., KEVIN D. GEANEY and RACHELLE D. WILLARD, Defendants.
MEMORANDUM AND ORDER
ALLISON D. BURROUGHS, U.S. DISTRICT COURT JUDGE.
legal malpractice case arises from an allegedly defective
mortgage foreclosure. Plaintiff Wells Fargo Bank, N.A., as
Trustee for Option One Mortgage Loan Trust 2007-FXD1
Asset-Backed Certificates, Series 2007-FXD1
("Plaintiff" or "Wells Fargo"), alleges
that attorneys at Connolly, Geaney, Ablitt & Willard, P.C
("CGA&W") committed legal malpractice while
attempting to prosecute a foreclosure on its behalf. Wells
Fargo's Complaint names five defendants-Stephen A.
Ablitt, Lawrence F. Scofield, John Connolly, Jr., Keven D.
Geaney, and Rachelle D. Willard-all of whom, upon Wells
Fargo's information and belief, were previously
shareholders and/or officers of CGA&W.
pending are defendants' motions to dismiss the Complaint
for failure to state a claim on which relief can be granted
pursuant to Fed.R.Civ.P. 12(b)(6) and for failure to join
indispensable parties pursuant to Fed.R.Civ.P. 12(b)(7) and
19. [ECF Nos. 48, 50, 52]. For the reasons stated herein,
defendants' motions are granted in part. The motions are
denied with respect to Count I but granted with respect to
Count II. Wells Fargo may amend the Complaint within 14 days
to bring a breach of contract claim against CGA&W.
Fargo alleges the following facts in its Complaint.
is a Rhode Island professional corporation engaged in the
practice of law in the Commonwealth of Massachusetts. [ECF
No. 1 ("Compl.") ¶ 7]. Wells Fargo retained CGA&W,
which at the time was known as Ablitt Law Offices, in 2011,
to execute a foreclosure on property located in Millbury,
Massachusetts, to which Wells Fargo held a note and mortgage.
Id. ¶¶ 14, 21, 24, 28. CGA&W conducted a
foreclosure sale on the property in November 2011 and Wells
Fargo was the highest bidder. Id. ¶ 36.
Subsequent to the auction and recordation of the foreclosure
deed in Wells Fargo's favor, it was discovered that
proper notice of the auction had not been given to a
junior-lien holder with an interest in the property.
Id. ¶ 38. CGA&W attempted to secure a Waiver of
Notice from the junior lienholder but was unsuccessful in
doing so. Id. ¶ 40. Acting on one or more of
the defendants' advice, in February 2012, Wells Fargo
executed a deed to the mortgagor, for nominal consideration,
as a means to effectuate a rescission of the foreclosure sale
so that Wells Fargo could conduct a new foreclosure sale that
would extinguish all recorded interests junior to its
interest. Id. ¶ 42. Rather than effectuating
such a rescission, Wells Fargo's execution of a deed to
the mortgagor for nominal consideration caused a quitclaim
deed to be recorded with the Registry of Deeds, and
ultimately purported to divest Wells Fargo of its loan
collateral. Id. ¶¶ 43-44.
early as December 2012, defendants or associate attorneys
working under their direction made efforts, including through
an offer of compensation to be paid by CGA&W, to secure a
deed of the property from the homeowner to Wells Fargo.
Id. ¶ 48. Throughout 2013 and 2014, defendants
or associate attorneys acting under their direction continued
efforts to negotiate with the homeowner and/or his attorney
for a deed conveying the property back to Wells Fargo.
Id. ¶¶ 49, 58. During that time,
defendants failed to disclose to Wells Fargo or its loan
servicer the extent of the problem created by the errant
quitclaim deed, failed to disclose to Wells Fargo that the
quitclaim deed had not accomplished the intended rescission
of the November foreclosure nor positioned Wells Fargo to
conduct a new foreclosure sale of the property, and failed to
initiate any legal action against the homeowner. Id.
Fargo filed its Complaint on February 13, 2015, bringing
claims for legal malpractice (Count I) and breach of contract
(Count II) against the five defendants. [ECF No. 1].
Defendants answered the Complaint by May 2015. [ECF Nos.
12-16]. The parties appeared for a scheduling conference in
July 2015 and agreed to refer the case to mediation. [ECF No.
22]. In March 2016, after an unsuccessful mediation, the
Court held an additional scheduling conference and set a fact
discovery deadline of July 29, 2016. [ECF Nos. 33, 43].
Subsequent to that conference, in March and April 2016, each
of the defendants moved to dismiss the complaint for failure
to state a claim and failure to join an indispensable party.
[ECF Nos. 48, 50, 52]. Wells Fargo filed an omnibus
opposition to defendants' motions on April 20, 2016. [ECF
initial matter, defendants' motions to dismiss are
untimely. A motion asserting any of the seven enumerated
defenses in Rule 12(b) must be made "before pleading if
a responsive pleading is allowed." Fed.R.Civ.P. 12(b).
Here, defendants filed their motions to dismiss nearly a year
after answering the Complaint. Nonetheless, because the
defenses of failure to state a claim and failure to join may
be raised in a motion for judgment on the pleadings,
Fed.R.Civ.P. 12(h)(2), and a motion for judgment on the
pleading may be made "[a]fter the pleadings are
closed-but early enough not to delay trial, "
Fed.R.Civ.P. 12(c), the Court will treat defendants'
motions as motions for judgment on the pleadings. "A
motion for judgment on the pleadings [under Rule 12(c)] is
treated much like a Rule 12(b)(6) motion to dismiss, with the
court viewing the facts contained in the pleadings in the
light most favorable to the nonmovant and draw[ing] all
reasonable inferences therefrom." In re Loestrin 24
Fe Antitrust Litig., 814 F.3d 538, 549 (1st Cir. 2016)
(internal quotations and citation omitted).
crux of defendants' pending motions is that because Wells
Fargo retained CGA&W, and not the individual defendants, the
law firm should be the named defendant. Defendants further
argue that since they were not actively involved in the Wells
Fargo representation, they cannot be held personally liable
for the conduct of other attorneys at the firm. This argument
is foreclosed by SJC Rule 3:06(3)(b). SJC Rule 3.06(3)(b)
imposes vicarious liability on all of the owners of a
professional corporation "at the time of any negligent
or wrongful act, error, or omission of any owner or employee
of said entity which occurred in the performance of legal
services." See Yeomans v. Stackpole, No.
MICV201101702F, 2013 WL 1729213, at *3 (Mass. Super. Apr. 13,
2013) ("[V]icarious liability exists when any partner in
a partnership commits a ‘negligent or wrongful act,
error or omission . . . in the performance of legal services
by said entity.'") (citing S.J.C. Rule 3:06(3)(b)).
Under this rule, all of the owners of a professional
corporation are jointly and severally liable, up to a cap
that depends on the size of the firm and the firm's
insurance, for any legal malpractice committed by any other
owner or employee of the corporation. See Fitzsimmons v.
Soutter, No. 921036H, 1994 WL 879599, at *4 (Mass.
Super. June 9, 1994) ("As a shareholder in Soutter &
Kertzman, P.C. from 1981 to 1985, Kertzman's liability
for the negligent or wrongful conduct of Soutter is governed
by Supreme Judicial Court Rule 3:06(3)(b). . . . The Rule
goes on to place dollar limits on a shareholder's
liability for the acts of others in the corporation.").
alleged in the Complaint, all five defendants were owners
and/or shareholders of CGA&W at some time between 2011 and
2014. Compl. ¶¶ 7-11. Because the allegedly
negligent services were provided from 2011 through 2014, all
of the defendants can be held liable, even if they had no
involvement in the Wells Fargo matter. The extent of their
liability, if any, will depend on whether they were directly
involved in the matter and what misconduct, if any, took place
while they were actually owners and/or shareholders of CGA&W.
claim that because Wells Fargo retained CGA&W, and not the
individual defendants, CGA&W is a necessary party that must
be joined under Fed.R.Civ.P. 19. They don't provide any
legal support for this argument, and ignore SJC Rule 3:06(3)
entirely. "Under a motion pursuant to Rule 12(b)(7), the
moving party carries the burden of showing why an absent
party should be joined." Raytheon Co. v. Cont'l
Cas. Co., 123 F.Supp.2d 22, 32 (D. Mass. 2000).
Defendants have not met this burden. Though CGA&W may also be
liable to Wells Fargo, defendants have not explained why
CGA&W is a required party for purposes of this suit, given
that the individual defendants, as owners and/or shareholders
of CGA&W, can provide complete relief to Wells Fargo. See
Pujol v. Shearson Am. Exp., Inc., 877 F.2d 132, 137 (1st
Cir. 1989) ("[A] person potentially liable as a joint
tortfeasor is not a necessary or indispensable
party, but merely a permissive party subject to joinder under
Rule 20"); Sullivan v. Starwood Hotels &
Resorts Worldwide, Inc., 949 F.Supp.2d 324, 330-31 (D.
Mass. 2013) ("Typically, joint tortfeasors . . . are not
necessary parties under Fed.R.Civ.P. 19(a)(1)."). Even
if the defendants intend to eventually seek indemnity from
CGA&W, that does not require CGA&W to be added as a defendant
in this action. See Charest v. Fed. Nat. Mortgage
Ass'n, 9 F.Supp. 3d 114, 131 (D. Mass. 2014)
("Because Rule 19(a)(1) is concerned only with those who
are already parties, the fact that an existing party's
dispute with the absent party is left unresolved does not
make the absent party a required party.").
the foregoing, the Court agrees with the defendants that
Count II of the Complaint should be dismissed. Count I, for
legal malpractice, fits squarely within SJC Rule 3:06(3) and
can proceed against all of the defendants. Count II, for
breach of contract, however, fails to state a claim, because
the only contract that existed was between Wells Fargo and
CGA&W. To maintain a claim for breach of contract under
Massachusetts law, a party must demonstrate that a contract
actually existed between the parties. Selski, Inc. v.
Bassett, No. 03-0381A, 2004 WL 2424300, at *2-3 (Mass.
Super. Oct. 18, 2004). "As a general matter, contracts
do not bind nonparties." City of Revere v.
Boston/Logan Airport Assocs., LLC, 416 F.Supp.2d 200,
208 (D. Mass. 2005). Furthermore, "an agent is not
ordinarily liable for his principal's breach of
contract." McCarthy v. Azure, 22 F.3d 351, 360
(1st Cir. 1994); see also Union Mut. Life Ins. Co. v.
Chrysler Corp., 793 F.2d 1, 11-12 (1st Cir. 1986)