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Jenkins v. Bakst

Appeals Court of Massachusetts, Suffolk

July 23, 2019

KENNETH D. JENKINS
v.
DAVID BAKST & another.[1]

          Heard: February 8, 2019.

         Attorney at Law, Malpractice, Negligence. Evidence, Legal malpractice, Professional standards. Negligence, Attorney at law, Standard of care, Causation. Contract, Employment. Corporation, Valuation of stock. Proximate Cause. Practice, Civil, Summary judgment.

         Civil action commenced in the Superior Court Department on February 24, 2015. The case was heard by Helene Kazanjian, J., on a motion for summary judgment.

          Karen T. Guthrie for the plaintiff.

          Robert A. Curley, Jr. for the defendants.

          Present: Hanlon, Kinder, & Englander, JJ.

          ENGLANDER, J.

         This is an attorney malpractice action. The plaintiff, Kenneth D. Jenkins, claims that his attorney was negligent in negotiating the stock buy-back clause (clause or buy-back clause) in Jenkins's employment agreement with his new company, Apollo Security International, Inc. (Apollo).[2] Jenkins claims that the clause contained in the employment agreement did not comport with the instructions he gave to his attorney, and that as a result he was damaged when, upon his termination from Apollo, he received an inadequate payment from Apollo for his Apollo stock. A Superior Court judge granted summary judgment for the defendants, reasoning that Jenkins had failed to adduce facts from which a fact finder could find either a breach of the standard care, or causation. We affirm.

         Background.

         In 2003, Jenkins entered into negotiations with Apollo with a view toward joining the company as its president and chief operating officer. Apollo provided security services to businesses. As of 2003 Jenkins was working as a regional president for Pinkerton Security, and he had decades of experience in the security business.

         The principal of Apollo was Dennis Crowley. Crowley and Jenkins were friends, having worked together in the security industry years earlier. Crowley and Jenkins worked out the basics of Jenkins's compensation, which included a salary and a percentage of Apollo's stock. Because Apollo was privately owned, Jenkins and Crowley agreed that if Jenkins were terminated, Apollo would buy back Jenkins's stock from him.

         Jenkins retained David Bakst, of the law firm of Morrison Mahoney LLP (Morrison), to represent him in the negotiation and drafting of his employment agreement.[3] The point of contention in this case is the clause in the employment agreement that defined how Jenkins's stock would be valued upon buy-back; Jenkins's position is that he told Bakst he wanted to receive fair market value for the stock, and that Apollo's fair market value should be measured by a percentage of Apollo's annual revenues -- "anywhere from 25 to 35 percent or some numbers like that." The buy-back clause in the employment agreement, however, did not establish fair market value based on a percentage of annual revenues. Rather, it provided for valuation by an entirely different approach, an approach Bakst had suggested during the negotiations.[4]

         Jenkins left Apollo ten years later, in 2013. When he left, Apollo obtained appraisals under the employment agreement's valuation method that valued Jenkins's stock at approximately $200, 000. Jenkins, on the other hand, claimed that he should have received at least $1.6 million for his stock, and perhaps as much as $3.4 million.[5] Notably, Jenkins did not seek either to mediate or to arbitrate the buy-back amount (arbitration was provided for in the employment agreement). Apollo requested arbitration, but before any hearing, Jenkins agreed to settle his claims with Apollo for $1 million.

         Jenkins brought this suit against Bakst and Morrison in 2015. The gist of his claim is that he told Bakst that the employment agreement's fair market value formula should value Apollo at between twenty-five and thirty-five percent of annual revenues, and that Bakst failed to follow his instructions. After discovery, the defendants moved for summary judgment, which the motion judge granted in a thoughtful decision. She ruled that on the undisputed material facts a fact finder ...


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