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Orkin v. Woolf

Superior Court of Massachusetts, Worcester

January 29, 2019

Arthur ORKIN et al. As Trustees of the Orkin Family Trust DTD 12-9-96
v.
Louis Allen WOOLF et al.

          DECISION AND ORDER ON DEFENDANT’S MOTION TO DISMISS

          William F. Sullivan, Justice of the Superior Court

          INTRODUCTION

          The plaintiffs are husband and wife who hired defendant Woolf to advise them in regards their retirement investments on behalf of the Orkin trust. Woolf was a registered representative of Investors Capital Corporation. A portion of their investment dealt with certain property in Texas which resulted in distributions to the plaintiffs. These investments were done in 2010. In 2015 distributions ceased from the Irving Street property in Texas. The plaintiffs received a distribution suspension notice in 2015.

         On November 3, 2017 the plaintiffs filed a statement of claim with FINRA. The defendant moved to dismiss this claim and the claim was in fact dismissed. After this dismissal, the plaintiffs filed suit in Worcester Superior Court. The defendants have filed a motion to dismiss under Mass.R.Civ.P. 12(b)(6) arguing that the plaintiff’s claims are barred by the applicable statutes of limitations.

          DISCUSSION

          The defendants argue that the statute of limitations on all counts of the complaint, both in contract and in tort, expired.

          The plaintiffs oppose the motion, arguing that because of the defendant’s fraudulent behavior and other factors, the statutes of limitations were tolled until the plaintiffs discovered the negligence, fraud and breach of contract. The plaintiffs maintain that they did not become aware of the claims until 2015.

         In considering a motion to dismiss, the Court accepts all well-pleaded factual allegations of the complaint as true, but disregards characterizations and conclusions. See Sisson v. Lhowe, 460 Mass. 705, 706 (2011); Welch v. Sudbury Youth Soccer Ass’n, 453 Mass. 352, 354 (2009); Eyal v. Helen Broadcasting Corp., 411 Mass. 426, 429 (1991); Productora e Importadora de Papel, S.A. de C.V. v. Fleming, 376 Mass. 826, 833-35 (1978); Multi Tech v. Mitchell Mgmt. Sys., 25 Mass.App.Ct. 333, 335 (1988).

         To survive a motion to dismiss under Mass.R.Civ.P. 12(b)(6) a complaint must set forth the basis of the plaintiff’s entitlement to relief with "more than labels and conclusions." Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008), quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). While factual allegations need not be detailed, they "must be enough to raise a right to relief above the speculative level ... [based] on the assumption that all the allegations in the complaint are true (even if doubtful in fact) ..." Id., quoting Bell Atl. Corp., 550 U.S. at 555-56. At the pleading stage, Mass.R.Civ.P. 12(b)(6) requires that the complaint set forth "factual ‘allegations plausibly suggesting (not merely consistent with)’ an entitlement to relief ..." Iannacchino, supra, quoting Bell Atl. Corp., 550 U.S. at 557.

         For tort actions, the three-year limitations period "commences after the cause of action accrues." The statute does not define the term "accrues." However, the general rule for tort actions is that an action accrues when the plaintiff is injured. Joseph A. Fortin Constr., Inc. v. Massachusetts Hous. Fin. Agency, 392 Mass. 440, 442, 466 N.E.2d 514 (1984). Cannon v. Sears, Roebuck & Co. 374 Mass. 739, 741, 374 N.E.2d 582 (1978). The Supreme Judicial Court has developed a discovery rule to determine when the statute of limitations begins to run in circumstances where the plaintiff did not know or could not reasonably have known that he or she may have been harmed by the conduct of another. Bowen v. Eli Lilly & Co., 408 Mass. 204, 205, 557 N.E.2d 739 (1990).

          Under this discovery rule, the statute of limitations starts when the plaintiff discovers, or reasonably should have discovered, "that [he] has been harmed or may have been harmed by the defendant’s conduct." Therefore, the three-year statute of limitations period does not start to run "until a plaintiff has first, an awareness of [his] injuries and, second, an awareness that the defendant caused [his] injuries." Doe v. Creighton, 439 Mass. 281, 283, 786 N.E.2d 1211 (2003).

         The general rule regarding contract claims is that a cause of action for breach of contract accrues at the time of the breach. Campanella & Cardi Constr. Co. v. Commonwealth, 351 Mass. 184, 185, 217 N.E.2d 925 (1966). "However, there are situations in which a cause of action in ... contract ... which is based on an inherently unknowable wrong may not accrue until the person injured knows or in the exercise of reasonable diligence should know the facts giving rise to the cause of action." Frank Cooke, Inc. v. Hurwitz, 10 Mass.App.Ct. 99, 106, 406 N.E.2d 678 (1980).

         Once a plaintiff relies upon the discovery rule to argue that his claim was delayed due to an inability to recognize the cause of his injuries, he bears the burden of "proving both an actual lack of causal knowledge and the objective reasonableness of that lack of knowledge." Id. Generally, an issue concerning what the plaintiff knew or should have known is a factual question that is appropriate for the trier of fact. Riley v. Presnell, 409 Mass. 239, 240, 565 N.E.2d 780 (1991).

          In the present case, there are significant issues of fact that must be resolved by a jury. The complaint describes the plaintiffs as unsophisticated investors who placed their trust in the defendants. The complaint also outlines the types of investments that were made on the plaintiffs’ behalf. The description of these investments make it reasonable that it would be difficult for investors like the plaintiffs to determine or discover any ...


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