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Taylor v. Moskow

Superior Court of Massachusetts, Suffolk, Business Litigation Session

March 10, 2017

Jane E. Taylor, Trustee and Beneficiary of the Jane E. Taylor GST Exempt Trust and Jane E. Taylor Non-Exempt Trust Derivatively on Behalf of Coolidge Properties, LLC et al.
v.
James M. Moskow et al No. 136594

          Filed March 16, 2017

          MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS' MOTION FOR ATTORNEYS FEES, COSTS, AND EXPENSES

          Mitchell H. Kaplan, Justice of the Superior Court.

         This case is before the court on the defendants' motion for attorneys fees, costs, and expenses under G.L.c. 231, § 6F and G.L.c. 156C, § 57. It follows the court's order dismissing the case, under Mass.R.Civ.P. 56, because it was clear, on the undisputed facts, that the case was filed well after the expiration of the three-year statute of limitations governing claims for breach of fiduciary duty. The untimeliness of this action is explained in two prior decisions: (1) the summary judgment decision entered on June 10, 2016, and (2) an earlier decision, entered on February 5, 2016, in which the court dismissed the plaintiff's complaint with leave to replead, if the plaintiff could address the shortcomings in her complaint after adequate investigation and in good faith.

         As described in greater detail in the two prior decisions, this litigation is, in essence, a dispute between Jane Taylor and her brother James Moskow. The parties' grandfather acquired two apartment buildings in Brookline which were owned, during the period relevant to this case, by two limited liability companies: Coolidge Properties, LLC and Stearnwood Properties, LLC (the LLCs). Taylor and Moskow came to own interests in these LLCs, over time, both directly and through trusts. Moskow, for some period, was the manager of the LLCs. As expressly permitted by their operating agreements, the LLCs contracted with companies that Moskow owned to provide property management and leasing services. Taylor has, apparently for many years, believed that Moskow's companies were paid too much for services that they provided to the LLCs; although, the complaints and amended complaints filed in this case never actually allege the basis for Taylor's belief that payments to Moskow's companies were not at market rates.

         As noted in the prior decisions, this case represents the fourth time that Taylor has sued Moskow over these payments. The prior three cases were filed in Federal Court. All were dismissed because Taylor was suing individually for claims that could only be asserted derivatively on behalf of the LLCs. When the Federal Court litigation was unsuccessful, she filed this case on July 6, 2015; in it she purports to assert her claims derivatively on behalf of the LLCs.

         The defendants moved to dismiss on a variety of grounds. Oral argument on that motion was convened on February 3, 2016. At that argument, the court reviewed with Taylor's counsel many of the apparent shortcomings in her derivative complaint; among them was the fact that the payments from the LLCs to her brother's companies, which are the subject of her complaint, were made between January 2009 and November 2011. Moreover, emails and correspondence between Taylor's accountant and Moskow, and then Taylor's attorney and Moskow's attorney, in December 2011 and January 2012, appeared to make clear that Taylor's concern with the amount of the payments was already very much at issue at that time. These emails and correspondence demonstrate that Moskow sent bookkeeping ledgers for the LLCs to the accountant in 2011, and Taylor's attorney (who was then the partner of Taylor's present counsel of record) was already then aggressively alleging that the LLCs had overpaid for services and demanding more documents. The court expressed its doubt that Taylor's action was timely filed. It, nonetheless, allowed Taylor to replead, but only if she could, in good faith, allege facts that would support a finding that the cause of action accrued after July 6, 2012.[1]

         Thereafter, Taylor, through her counsel, filed two more amended complaints and an affidavit purportedly addressing the timeliness issue; however none of them contained any factual allegations that, when viewed in the light most favorable to Taylor, could support a finding that her cause of action accrued after January 2012, if not months earlier. There were also two more hearings at which Taylor's attorney, in effect, acknowledge that it appeared that the case was untimely, but asked for more time to review documents and speak with his client. The court granted these requests, but repeatedly expressed its concerns regarding Taylor's good faith in pursuing claims which clearly appeared to be time barred and the time and expense to which Moskow was being put. It warned that filing documents that lacked any factual foundation could lead to sanctions.

         Finally, the court dismissed Taylor's claims. Because the court referenced emails and correspondence to and from Taylor's lawyer and accountant in December 2011 and January 2012, in its decision, the court treated the motion to dismiss as a motion for summary judgment. It issued its memorandum of decision and order on June 10, 2016.

         Although not necessary for the resolution of this motion, the court notes that in August 2016, represented by new counsel, Taylor moved for leave to file an appeal of the court's judgment of dismissal more than thirty days after judgment entered. That motion was denied. Taylor then sought relief in the Appeals Court under Mass.R.App.P. 14(b), and that was denied, as was a motion for reconsideration of the denial. Taylor has apparently appealed the denial of her Rule 14(b) motion.

         DISCUSSION

         This case is a paradigm example of the type of litigation that G.L.c. 231, § 6F was intended to address. The court finds that Taylor's efforts to continue this action in the face of correspondence and emails between her accountant and lawyer and Moskow (and his attorney), the authenticity of which cannot be challenged, which (a) addressed exactly the same issues as those raised in this litigation, and (b) were exchanged three and one-half years before this case was filed, " were wholly insubstantial, frivolous and not advanced in good faith." See Hahn v. Planning Board of Stoughton, 403 Mass. 332, 337, 529 N.E.2d 1334 (1988). (Examples of an absence of good faith are claims that were " interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.")

         Moskow notes that, including the Federal Court litigation and counting amended complaints, Taylor has filed eight complaints against Moskow, none of which has survived a motion to dismiss. He asks to recover all of his attorneys fees and expenses incurred in connection with this litigation. The court finds that request overbroad.

         The Federal Court litigation was never dismissed on its merits, but rather because Taylor was asserting claims in her own name that could only be asserted by the LLCs. It is true that Taylor's initial Superior Court complaint seemed to assert that it was a breach of fiduciary duty for Moskow to cause the LLCs to contract with companies affiliated with him, although related party contracts of this kind were expressly permitted by their operating agreements. Nonetheless, inferentially, the complaint also alleged that the fees paid were excessive. Although, it may well be That Taylor had no reasoned basis for believing that, the court clearly cannot make such a finding on the record before it. It dismissed Taylor's complaint because it was manifestly untimely. The court does not find that filing a complaint six months after the expiry of the period of limitations constitutes a basis to award fees under § 6F.

         However, at the February 5, 2016 hearing on the motion to dismiss, the court directed Taylor's counsel to the fact that the LLC's payments to the Moskow companies had ended more than three and a half years before this complaint was filed. It appeared that the amount of the payments were already the subject of heated exchanges with Taylor's accountants and lawyers in December 2011, and counsel's former partner appeared already to have the LLC's financial records at that time. In its written decision allowing the motion to dismiss, the first grounds for dismissal (among several others) set out in the decision was the statute of limitations. While granting leave to replead, the court cautioned counsel that Taylor should only file an amended complaint after careful investigation, and if facts supporting a delay in the accrual date of ...


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