United States District Court, D. Massachusetts
MERRILL, LYNCH, PIERCE, FENNER & SMITH, INC., Interpleader Plaintiff,
KATHERINE FLANDERS-BORDEN, WILLIAM J. SHERRY, DAVID E. FLANDERS, KARYN S. BEEDY, and BRETT L. PETERSON, Interpleader Defendants, WILLIAM J. SHERRY, DAVID E. FLANDERS, KARYN S. BEEDY, and BRETT L. PETERSON, Crossclaim Plaintiffs,
KATHERINE FLANDERS-BORDEN, Crossclaim Defendant.
OPINION AND ORDER
A. O'Toole, Jr. United States District Judge
crossclaim plaintiffs filed a motion for summary judgment
(dkt. no. 43), and the crossclaim defendant, Katherine
Borden, has not filed an opposition. The crossclaim plaintiffs
have moved for summary judgment on Count I, prayer (ii) of
the Interpleader Complaint and Count I of the Crossclaim
(alleging breach of the implied contractual covenant of good
faith and fair dealing).
the motion is unopposed, the Court must still review the
record in order to determine if the crossclaim plaintiffs are
entitled to summary judgment under Federal Rule of Civil
Procedure 56 as they claim. See NEPSK, Inc. v. Town of
Houlton, 283 F.3d 1, 7 (1st Cir. 2002).
crossclaim plaintiffs claim that Borden breached the implied
covenant of good faith and fair dealing by intentionally
delaying the resolution of this case in order to deprive the
other beneficiaries of assets owed to them under the
“Transfer on Death” (TOD) instrument executed by
Roy Flanders. The purpose of the implied covenant is to
“guarantee that the parties remain faithful to the
intended and agreed expectations of the parties in their
performance” of their contract. Latson v. Plaza
Home Mortg., Inc., 708 F.3d 324, 326 (1st Cir. 2013)
(quoting Uno Rests., Inc. v. Bos. Kenmore Realty
Corp., 805 N.E.2d 957, 964 (Mass. 2004)).
crossclaim plaintiffs note, “TODs are contracts between
the owner of the property (typically securities) and a
securities or brokerage firm.” (Interpleader
Defs.'/Cross-cl. Pls.' Mem. in Supp. of Their Mot.
for Summ. J. 6 (dkt. no. 44).) Here, Roy Flanders and Merrill
Lynch, Pierce, Fenner & Smith (“MLPFS”)
executed the TOD, and the crossclaim plaintiffs and Borden
are the intended third-party beneficiaries of that contract.
A third-party beneficiary receives the fruits of a contract
without providing independent consideration, meaning that the
beneficiary incurs no obligations in exchange for the
benefits of the contract. This point is further emphasized by
the fact that a person may be unaware of the existence of a
contract of which she is a third-party beneficiary until it
is time to receive the benefit.
reviewing the record, the Court cannot grant the crossclaim
plaintiffs summary judgment on this count because their
theory of recovery, breach by Borden of the implied covenant,
is fatally flawed. The crossclaim plaintiffs have not
provided any support for their apparent argument that they,
as third-party beneficiaries, can sue Borden, a fellow
third-party beneficiary, for a breach of an implied covenant.
In order for the covenant to be implied, there must be an
existing contractual relationship between the parties. None
has been shown to exist here. Simple invocation of the
covenant cannot create it where there is no existing contract
between the parties. The crossclaim plaintiffs have not
offered any evidence of the existence of a contractual
relationship between them and Borden.
crossclaim plaintiffs' request for specific performance
is similarly flawed. Specific performance of a contract is
warranted against a party who has committed a breach or is
threatening to breach. Restatement (Second) of Contracts
§ 357 (1981). This remedy is intended to give the suing
party the benefit of the contract by compelling the other
contracting party to perform the terms the latter has agreed
upon. The crossclaim plaintiffs are not entitled to specific
performance because Borden has no contractual obligation to
the crossclaim plaintiffs.
crossclaim plaintiffs also assert that Borden owes both MLPFS
and the crossclaim plaintiffs attorney's fees and costs.
I have already determined that MLPFS is entitled to an award
of attorney's fees and costs in the sum of $26, 548.55.
(Elec. Order, Mar. 29, 2019 (dkt. no. 64).) The crossclaim
plaintiffs argue that Borden should pay the entire amount
because it was her refusal to consent to the distribution
that forced MLPFS to file this lawsuit. The crossclaim
plaintiffs' request is denied because Borden, acting pro
se, apparently thought, and apparently still thinks, she had
a legitimate reason for contesting the validity and
enforceability of the TOD. As far as the Court is concerned,
Borden's problematic behavior is related to her conduct
after the interpleader complaint was filed. As a
result, MLPFS' reasonable attorney's fees and costs
will be paid out of the brokerage account prior to
disbursement of the account's assets.
the crossclaim plaintiffs argue that Borden should pay
their attorney's fees and costs under 28 U.S.C.
§ 1927. The proper mechanism for such relief is to file
a separate motion detailing how Borden has
“unreasonably and vexatiously” multiplied the
proceedings in the case and what fees and costs the
crossclaim plaintiffs incurred as a result of that
unreasonable and vexatious conduct.
foregoing reasons, the crossclaim plaintiffs' motion for
partial summary judgment (dkt. no. 43) is DENIED.
 Borden attempted to file an amended
answer and counterclaims (dkt. no. 57), but that document was
stricken because it was both untimely and procedurally
defective. (Elec. Order, Jan. 14, 2019 (dkt. no. 61)). The
Court also denied Ms. Borden's motion for an extension of
time to ...