ANDREW DONARUMO, individually & d/b/a Drew Donarumo Plumbing & Heating, Donarumo Plumbing & Heating, & Drewâs Plumbing & Heating Inc. Plaintiffs
JEFFERY J. PHILLIPS, Esq. & DANIEL TREGER, Esq. Defendants
MEMORANDUM OF DECISION AND ORDER ON DEFENDANTSâ
MOTION FOR SUMMARY JUDGMENT PURSUANT TO MASS. R. CIV. P.
B. Gordon Justice
Andrew Donarumo (" Mr. Donarumo"), individually and
d/b/a Drew Donarumo Plumbing & Heating, Donarumo Plumbing &
Heating and Drewâs Plumbing & Heating Inc. (collectively, the
" Plaintiffs"), bring this legal malpractice action
against their former counsel, Jeffrey J. Phillips, Esq.
(" Attorney Phillips") and Daniel Treger, Esq.
(" Attorney Treger"). Plaintiffs allege that the
Defendants were negligent and violated Mass. G.L. c. 93A
during their representation of them in a civil action arising
out of the sale of Plaintiffsâ plumbing business. Presented
for decision is the Defendantsâ Motion for Summary Judgment
Pursuant to Mass. R. Civ. P. 56. Following a hearing and for
the reasons which follow, the Defendantsâ motion shall be
following facts are drawn from the summary judgment record
and the statement of undisputed material facts filed jointly
by the parties under Superior Court Rule 9A(b)(5). The Court
views this record in the light most favorable to the
Plaintiffs, the non-moving party.
The Furlong Litigation
January 10, 2008, Michael G. Furlong, Esq., JoAnn Furlong and
Drewâs Plumbing & Heating II, Inc. (the "
Furlongs") brought an action against the Plaintiffs in
Superior Court, alleging that the Plaintiffs had engaged in
unlawful and bad faith conduct in connection with the sale of
their plumbing business to the Furlongs (the "
Furlong litigation"). More specifically, the
Furlongs alleged that the Plaintiffs violated contractual and
common law tort duties owed to them when, immediately
following the sale, the Plaintiffs opened up a new plumbing
business that began competing against the company sold to the
Furlongs. The Furlongs asserted several causes of action
against the Plaintiffs (including violations of Chapter 93A)
which, if proven, would have allowed the Furlongs to recover
multiple damages and attorneysâ fees.
13, 2008, the Plaintiffs retained Attorneys Phillips and
Treger (collectively, the " Defendants") to defend
them in the Furlong litigation. To that end, Mr.
Donarumo and Deirdre Donarumo (" Ms. Donarumo"),
his spouse and the Trustee of the Donarumo Realty Trust,
executed a Legal Services Agreement with the Defendants. The
Defendants thereafter represented the Plaintiffs in the
Furlong litigation during the caseâs discovery
phase, through the trial, and up until September 19, 2013, at
which time the Plaintiffs directed the Defendants to cease
their post-trial work on Plaintiffsâ behalf.
The Defendantsâ Legal Advice
the course of the Furlong litigation, the Defendants
consistently conveyed their view to the Plaintiffs that they
had a very strong defense to the Furlongsâ claims and that
Plaintiffs were likely to prevail at trial. Indeed, Attorney
Phillips regularly characterized the Furlongsâ claims as
frivolous; and, even as trial approached, Phillips maintained
in an internal memorandum that " [t]his is a case about
a lawyer [Furlong] who made a terrible business choice,
" who " refused to accept the results of his
mistake, " and who now " blame[s] everyone but
himself for the business failure." The Defendants
additionally assured the Plaintiffs that, even if the
Furlongs prevailed at trial, the financial liability risk was
just $188, 000 - the amount Mr. Donarumo earned while working
in areas purportedly prohibited by the non-compete provisions
of the purchase and sale agreement. With respect to the
Furlongsâ Chapter 93A claim, Attorney Phillips advised Mr.
Donarumo that he did not see a " smoking gun" that
would make such a claim a matter of concern, and further
informed Mr. Donarumo that Chapter 93A claims were typically
thrown out by the judge.
Plaintiffs and the Furlongs engaged in intermittent
settlement discussions as the litigation proceeded. Relying
on Attorney Phillipsâ advice, the Plaintiffs offered the
Furlongs $25, 000 to settle the case during the first year of
litigation, and raised their offer to $100, 000 two to three
years into the case. At the same time, the Furlongs reduced
their initial settlement demand of $1 million (the sale price
of the plumbing business) to $925, 000, a settlement amount
Attorney Phillips characterized to the Plaintiffs as "
absurd." Shortly prior to trial, the Furlongs reduced
their demand to $700, 000; but the highest settlement offer
the Plaintiffs ever extended to the Furlongs during the five
years they were represented by the Defendants was $188, 000.
Attorney Phillips also notified the Furlongsâ counsel prior
to trial that the Plaintiffs would reject a hypothetical
mediator-suggested settlement of $600, 000.
to reach resolution, the parties completed discovery and the
Plaintiffs eventually moved for summary judgment. The Court
(Fabricant, J.) denied the Plaintiffsâ motion on December 6,
2010, ruling that the Furlongs had advanced several viable
claims against the Plaintiffs. These included causes of
action for breach of contract, breach of the implied covenant
of good faith and fair dealing, fraud in the inducement, and
violation of Chapter 93A. Attorney Phillips forwarded the
Courtâs summary judgment decision to the Plaintiffs, with a
covering instruction to read it carefully and contact him to
matter proceeded to a bench trial in April and May of 2012.
Attorney Treger served as the Plaintiffsâ lead trial counsel,
assisted by another lawyer in his firm. Attorney Phillips
attended trial, but did not play an active role in the
proceedings. Instead, Attorney Phillips counseled Plaintiffs
after each day of trial, and provided a running analysis of
each witnessâs testimony. Throughout the trial, Attorney
Phillips continued to report to his clients that all was
going well and, at one point, assured Mr. Donarumo that he
" had nothing to worry about."
24, 2013, the Court (Roach, J.) issued its Memorandum and
Order of Findings and Rulings, finding in favor of the
Furlongs. Most critically, the Court did not credit Mr.
Donarumoâs testimony, concluding that he " was prepared
to say whatever he needed to say to induce the Furlongs to
make the purchase, including statements which he knew or
should have known were not true." The Court specifically
found that Mr. Donarumo had made misrepresentations related
to his post-sale plans and regarding a non-plumberâs ability
to run the business. The Court cited "
overwhelming" evidence that Mr. Donarumo had breached
the partiesâ sales contract by actively competing with the
Furlongs in the private plumbing business, and observed that
the methods by which Mr. Donarumo had compromised the good
will of the plumbing business he had sold to the Furlongs
were " legion on the trial record." The Court thus
ruled in favor of the Furlongs on their breach of contract,
implied covenant of good faith and fair dealing, and fraud in
the inducement claims. The Court additionally found that the
Plaintiffsâ conduct violated Chapter 93A and, as such,
Plaintiffs were adjudged liable to the Furlongs for double
damages and attorneysâ fees. The Court did not calculate
Plaintiffsâ precise economic liability at that time, but
instead declared that further proceedings would be held to
few months following the Courtâs decision, the Defendants
continued to represent Plaintiffs on post-trial work.
Plaintiffs also retained Attorney Anil Madan (" Attorney
Madan") to work on a post-trial motion for them. On June
27, 2013, Attorney Phillips advised the Plaintiffs that the
Furlongs had advanced an unsolicited settlement demand of $3
million. Attorney Phillips referred to this offer as "
interesting, " and stated that it was " based on an
almost best case scenario." The Plaintiffs
expressed an interest in extending a counteroffer.
September 19, 2013, the Plaintiffs, through Attorney Madan,
advised Attorney Phillips that they would potentially be
filing a malpractice action against him. Attorney Madan also
conveyed to Phillips that there was " no expectation
that you will do any more work on the [Furlong
litigation]." Shortly thereafter, the Plaintiffs,
represented by Attorney Madan, settled the Furlong
litigation for $1.6 million.
The Defendantsâ Billing for Legal Services
outset of his firmâs engagement in June of 2008, Attorney
Phillips estimated to the Plaintiffs that the total legal
fees and expenses through a trial in the Furlong
litigation would range from $200, 000 to $300, 000. By
December of 2009, however, and still ...