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McLaughlin v. Rubenstein

Superior Court of Massachusetts, Suffolk

October 12, 2017

Daniel McLaughlin et al.
v.
Alan B. Rubenstein et al

          MEMORANDUM AND ORDER ON PLAINTIFFS' SPECIAL MOTION TO DISMISS PURSUANT TO THE ANTI-SLAPP STATUTE

          Edward P. Leibensperger, Justice

         In this legal malpractice action, plaintiffs, Daniel and Rachel McLaughlin (" McLaughlin" ), move to dismiss an abuse of process counterclaim asserted by the defendant law firm, Rackemann, Sawyer & Brewster, P.C. (" Rackemann" ). McLaughlin's motion is a " special motion to dismiss" based on the so-called anti-SLAPP statute, G.L.c. 231, § 59H. For the reasons stated below, the motion will be denied.

         BACKGROUND

         McLaughlin commenced this action for legal malpractice on December 13, 2016. On February 17, 2017, Rackemann filed its answer to the complaint and asserted a counterclaim in three counts: Count I, Breach of Contract, Count II, Quantum Meruit/Unjust Enrichment and Count III, Abuse of Process. McLaughlin's special motion to dismiss is directed towards Count III, only.

         The abuse of process counterclaim alleges, in essence, that McLaughlin executed a plan to collect a judicial award of legal fees based on Rackemann's work but then failed to pay the fees owed to Rackemann. McLaughlin allegedly used a putative claim of legal malpractice to avoid paying over the fee award to Rackemann.

         As alleged in the counterclaim, McLaughlin received an award of attorney fees in an underlying action under G.L.c. 176D against an insurer for unfair claim settlement practices. Rackemann represented McLaughlin in that action. The award of approximately $775,000, issued by the court in September 2014, was based primarily on the bills submitted by Rackemann for work done in the underlying insurance case. McLaughlin subsequently received payment of the award of fees from the insurer. Nevertheless, McLaughlin did not pay Rackemann for approximately S400,000 of its bills.

         In fact, McLaughlin had stopped paying bills from Rackemann in 2013. Nevertheless, McLaughlin continued to engage Rackemann to perform legal services, including the trial in 2014 of the c. 176D case against the defendant insurance company (in which the defendant insurance company was found to have violated c. 176D and G.L.c. 93A) and the subsequent " damages" trial later in 2014 (in which the fees charged by Rackemann was the major part of the asserted damages). McLaughlin authorized and approved evidence offered by Rackemann to the effect that the fees charged by Rackemann were reasonable and, therefore, recoverable from the insurance company. It can reasonably be inferred that the parties operated on an implied agreement between McLaughlin and Rackemann that Rackemann should wait to be paid its outstanding invoices until after a decision was rendered by the court as to whether the insurance company would be obligated to pay the attorney fees charged by Rackemann. Rackemann continued to represent McLaughlin without being paid though the appeal process. In August 2016, the Appeals Court affirmed the trial court's decisions, including the award of attorney fees to McLaughlin.

         Instead of paying the unpaid bills from the fees awarded, on February 18, 2016, McLaughlin asserted in a letter to Rackemann that McLaughlin was investigating a claim of malpractice. McLaughlin requested that Rackemann enter into a tolling agreement. Thereafter, according to the affidavit of Rackemann's outside counsel, McLaughlin " made a demand for a sum of money far in excess of the legal fees due and owing to Rackemann for its work on the bad faith case, and did not offer to pay any of Rackemann's unpaid legal fees." Rackemann attempted to open negotiations regarding a settlement by way of reducing the amount of unpaid legal fees it was seeking. In response, McLaughlin commenced this action. Based on these facts, Rackemann asserts in its counterclaim for abuse of process that " McLaughlins' claim against Rackemann was not filed with the sincere and good faith belief that it has merit, but was filed as a pretense not to pay the legal bills of Rackemann." Counterclaim, ¶ 101.

         McLaughlin, on the other hand, avers that Rackemann committed malpractice allegedly by failing to relay a settlement offer from the insurer/defendant in the c. 176D case to McLaughlin and by adopting and executing legal strategies that ran up legal bills to excessive amounts. McLaughlin points to the decision of the judge awarding fees in the c. 176D case, where it was held that approximately $200,000 of legal fees billed to McLaughlin by Rackemann were not recoverable as reasonable attorneys fees from the insurer. Consequently, McLaughlin contends that it has a valid malpractice claim supported, as to the claim of excessive fees, by a decision of a Superior Court judge. McLaughlin argues that the abuse of process claim is merely a tactic to chill McLaughlin's right to pursue the legal malpractice claim and, if allowed to stand, would encourage an abuse of process claim in every legal malpractice claim where there exists a dispute over unpaid bills.

         ANALYSIS

          The anti-SLAPP statute, G.L.c. 231, § 59H, " was enacted by the Legislature to provide a quick remedy for those citizens targeted by frivolous lawsuits based on their government petitioning activities." Kobrin v. Gastfriend, 443 Mass. 327, 331, 821 N.E.2d 60 (2005). The Supreme Judicial Court noted that the anti-SLAPP statute " had its genesis as a legislative attempt to protect private citizens when exercising their constitutional right to speak out against development projects or other matters of concern to them and their communities and to seek government relief." Kobrin, supra at 337. " SLAPP suits [are] generally meritless suits brought by large private interests to deter common citizens from exercising their political or legal rights or to punish them from doing so." Duracraft v. Holmes Prods. Corp., 427 Mass. 156, 161, 691 N.E.2d 935 (1998). The Court also has found that the language of the statute is broader than that prototype. See Baker v. Parsons, 434 Mass. 543, 549, 750 N.E.2d 953 (2001) (the legislative history indicates that the anti-SLAPP statute was intended to go beyond the " typical" case).

         That said, however, the Supreme Judicial Court has imposed a significant, narrowing construction of the statute in order to avoid constitutional problems. Recently, the Court " augment[ed]" the framework" for analyzing a motion to dismiss brought under the statute. Blanchard v. Steward Carney Hospital, Inc., 477 Mass. 141, 143, 75 N.E.3d 21 (2017). The augmented framework adds an additional test to apply when evaluating an anti-SLAPP motion so as " to distinguish between meritless claims targeting legitimate petitioning activity and meritorious claims with no such goal." Id. at 157.

          The now three-pronged framework for analyzing an anti-SLAPP statute is as follows. First, the moving party must make a threshold showing through the pleadings and affidavits that claims against it are " based on" the petitioning activities alone and have no substantial basis other than or in addition to the petitioning activities. Duracraft, 427 Mass. at 167-68. If such a showing is made by the moving party, the burden shifts to the non-moving party to show " (1) the moving party's exercise of its right to petition was devoid of any reasonable factual support or any arguable basis in law, and (2) the moving party's acts caused actual injury to the responding party." G.L.c. 231, § 59H. Blanchard adds a third prong to the framework. The non-moving party may defeat an anti-SLAPP motion by establishing " that its suit was not 'brought primarily to chill' the special movant's legitimate exercise of its right to petition." Blanchard, 477 Mass. at 159, quoting Duracraft, supra at 161. The non-moving party must persuade the court that its " primary motivating goal in bringing its claim, viewed in its entirety, was 'not to interfere with and burden [the moving party's] . . . petition rights, but to seek damages for the personal harm to [it] from [the moving party's] alleged . . . [legally transgressive] acts." Blanchard, supra at 160, quoting Sandholm v. Kuecker, 2012 IL 111443 ¶ 57, 356 Ill.Dec. 733, 962 N.E.2d 418 (2012).

         McLaughlin's special motion to dismiss under the anti-SLAPP statute is directed only to Rackemann's counterclaim for abuse of process. The abuse of process counterclaim is necessarily based on McLaughlin's protected petitioning activity; i.e., the commencement of this malpractice action. " [A]n actionable abuse of process claim will always be, at least in part, based on a special movant's petitioning activities . . . As we noted in Fabre [ Fabre v. Walton, 436 Mass. 517, 781 N.E.2d 780 (2002)], however, this does not mean that an abuse of process claim will always be solely based on a special movant's petitioning activities." 477 Harrison Ave., LLC v. Jace Boston LLC, 477 Mass. 162, 169, 74 N.E.3d 1237 (2017) (emphasis in original). Thus, the first issue presented is ...


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