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Finnegan v. VBenx Corp.

Superior Court of Massachusetts, Suffolk, Business Litigation Session

November 20, 2017

J. Brent FINNEGAN et al.
v.
VBENX CORPORATION et al. VBenx Corporation et al.
v.
J. Brent Finnegan et al.

          INTERIM ORDER ON DEFENDANTS’ MOTION FOR AN AWARD OF FEES AND COSTS UNDER G.L.C. 231, § 6F

          Mitchell H. Kaplan, Justice

         Still pending in this action is the G.L.c. 231, § 6F motion brought by the defendants VBenx Corporation, Richard Baker, Peter Marcia, Walter Smith and D. Michael Sherman (collectively, VBenx)[1] in which they seek an award of reasonable counsel fees and other costs incurred in defending the claims asserted against them by the plaintiffs J. Brent Finnegan, Kenneth F. Phillips, Karen W. Finnegan and Back Bay Ventures, LLC (collectively, Finnegan and the Finnegan claims). An abbreviated review of the prolix proceedings in this eight-year litigation (there are 291 docket entries) is necessary to place this motion in context.

         BACKGROUND

         Finnegan filed his claims on September 4, 2009; VBenx filed its counterclaims on October 28, 2009. After much pretrial sparring, the Finnegan claims were severed from VBenx’ counterclaims and proceeded to trial, without a jury, on April 25, 2011 (Lauriat, J. presiding). The case was tried over twenty-five days, concluding on June 5, 2011. 819 exhibits were entered in evidence (6.5 feet of paper according to Judge Lauriat’s Memorandum of Decision). On October 19, 2012, the Court issued extensive Findings of Fact and Rulings of Law finding in favor of VBenx with respect to all claims asserted against it. After further motions and hearings, on March 26, 2013, the Court entered a Separate and Final Judgment based upon its Findings and Rulings which dismissed all of the Finnegan claims. On May 3, 2013, Finnegan appealed; the Superior Court’s Judgment was affirmed by the Appeals Court on August 14, 2015. See Finnegan v. Baker, 88 Mass.App.Ct. 35 (2015).

         In the meantime, the parties commenced litigation of VBenx’ counterclaims. Of relevance to the motion now before the court, on May 6, 2013 the parties filed a Rule 9A package including both Finnegan’s motion to dismiss the counterclaims and VBenx’ cross motion for an award of fees and costs under § 6F based on the outcome of the jury-waived trial.[2] It is that cross motion which is still undecided. On October 23, 2013, the Court (Billings, J.) issued an order on these cross motions. The Court dismissed a few of the many counterclaims asserted against Finnegan, but allowed the majority of the claims to proceed. The Court referred the § 6F motion to Judge Lauriat " for such action as he deems appropriate." On December 20, 2013, Judge Lauriat unfortunately decided that he must recuse himself from any further involvement in this case and therefore declined to rule on the § 6F motion.

         The Court (Kaplan, J. presiding) was therefore left to address the § 6F motion; although he had not presided over the jury-waived trial that was the predicate for VBenx’s claim. § 6F provides, in relevant part, that:

Upon motion of any party in any civil action in which a finding, verdict, decision, award, order or judgment has been made by a judge or justice or by a jury, auditor, master or other finder of fact, the court may determine, after a hearing, as a separate and distinct finding, that all or substantially all of the claims, defenses, setoffs or counterclaims, whether of a factual, legal or mixed nature, made by any party who was represented by counsel during most or all of the proceeding, were wholly insubstantial, frivolous and not advanced in good faith. The court shall include in such finding the specific facts and reasons on which the finding is based.

         The Court concluded that it could not make a " finding of specific facts and reasons on which the finding is based, " as required by the statute, without effectively retrying the factual issues which Judge Lauriat decided following a twenty-five-day trial.[3] This is because the case was not one in which the legal theories underpinning Finnegan’s claims were without any basis, but rather the issued raised by the § 6F motion was whether the facts alleged in support of these theories had been " advanced in good faith."

         Following further discovery and other pretrial proceedings, Finnegan moved for summary judgment on all of the remaining counterclaims. On May 13, 2016, the Court (Kaplan, J.) ruled on this motion. It dismissed some of VBenx counterclaims but allowed several to proceed to trial- including Baker, Marcia, Smith, and Sherman’s claims against Finnegan and Phillips for malicious prosecution for having prosecuted the claims tried and dismissed by Judge Lauriat. As to the still unresolved § 6F motion the Court ruled that: " [this motion] shall be heard by the court simultaneously with the claims tried to the jury under this count." The counterclaims were scheduled for trial on December 6, 2016, Leibensperger, J. to preside. Unfortunately, Judge Leibensperger also concluded that he must recuse himself. The trial was therefore rescheduled to begin on May 17, 2017, Kaplan J. presiding.

         The trial began on the scheduled date and proceeded for nine days. Two claims were submitted to the jury for its verdict: breach of fiduciary duty and malicious prosecution. The jury found the defendants liable under both and awarded monetary damages. With respect to the claim of malicious prosecution the jury was instructed that, to find Finnegan liable, it must among other things, find that he had brought the claims previously tried to Judge Lauriat " without probable cause." The jury was provided with the following instruction on " probable cause:"

Turning first to the question of " probable cause, " the standard for probable cause is that the defendants reasonably believed that there was a sound chance that their claims would be held valid when the case was decided. This means that the plaintiffs must either prove (1) that Finnegan and Phillips did not believe that their claims would be held valid, or (2) that their belief was not reasonable under the circumstances. Finnegan’s and Phillip’s conduct in bringing the suit against the plaintiffs must be judged by their honest and reasonable belief at the time they filed their suit and not by what may turn out later to have been the actual state of things. In deciding whether they actually believed in the validity of their claims and whether, if they did, it was reasonable for them to hold that belief, you may consider the information known to them at the time they filed the complaint and whether it was reasonable for the defendants to rely on that information given its quality, quantity and the availability of additional, available information.

         The damages that the jury awarded on this count included all of the reasonable attorneys fees and costs incurred by the individual defendants in defending against the Finnegan claims. Thereafter, Finnegan filed a number of post-trial motions. A motion for remittitur was allowed and the remittitur accepted by VBenx. Motions for judgment notwithstanding the verdict and a new trial on liability were denied. The remittitur was not directed to the amount of attorneys fees and costs incurred in defending the Finnegan claims. Final Judgment entered on June 15, 2017. On July 5, 2017, Finnegan filed a Notice of Appeal from that judgment. The Appeal has been docketed in the Appeals Court, but no briefs have yet been filed.

         THE § 6F MOTION

         The Court concludes that it should delay ruling on the § 6F motion until the pending appeal of the Final Judgment on the counterclaims is ...


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