Appendix — Bishay v. Citizens Bank of Massachusetts, 123 S. Ct. 2280 (2003) (No. 02-1479)
Supreme Court brief2003
Ask Donna
What actually matters in this document.
Text
erage aye f
fe Ds :
ie. ais RA
la
APPENDIX A — MEMORANDUM AND ORDER OF
THE APPEALS COURT OF THE COMMONWEALTH
OF MASSACHUSETTS DATED OCTOBER 22, 2002
COMMONWEALTH OF MASSACHUSETTS
APPEALS COURT
00-P-798
CITIZENS BANK OF MASSACHUSETTS
VS. |
BAHIG BISHAY' & others.’
MEMORANDUM AND ORDER
PURSUANT TO RULE 1:28
This appeal by the defendants (collectively Bishay),
is from the entry of a judgment ordered in 1999 bya Superior
Court judge in favor of Citizens Bank for $360,427.99 for
attorney’s fees and costs which were allowed as reasonable
collection costs relating to a loan made to Bishay in 1988
(A.4225,4229). Bishay also appeals from three prior summary
judgement orders of the same judge which dismissed his
1. Individually and as trustee of Old Post Road Realty Trust
and Commonwealth Realty Trust.
2. Bishay Motors & Leasing, Inc., formerly known as Bishay
Motors, Inc.; Massachusetts Auto. Group, doing business as Bishay
Isuzu; U.S. Auto Exchange Group Ltd.; and 1095 Commonwealth
Ave. Group (A.2).
2a
Appendix A
counterclaims against Citizens Bank related to its collection
of the loan (A.4230). The loan was repaid through a
proceeding in the United States Bankruptcy Court, concluded
pursuant to a confirmatory order issued in 1996 (A.288,4230).
In this appeal, Bishay principally presents the issue
whether, and to what extent, his rights were preserved in the
bankruptcy proceeding to pursue his counterclaims against
Citizens Bank in the Massachusetts courts (B.Br.3-4).
He argues that the Superior Court judge’s rulings, principally
based on res judicata grounds, did not reach the full extent
of those claims and thereby deprived him of his day in court.
We conclude the judge’s decisions were correct and affirm.
Citizens Bank commenced this action in June, 1995, by
filing a verified complaint in the Superior Court (A.19).
Bishay’s ‘answer contained a counterclaim in two counts,
the first alleging a breach.of good faith and fair dealing, and
the second an alleging unfair trade practices under GL. c.
93A (A.70,74). Bishay then filed two voluntary petitions in
bankruptcy, the first in J uly, 1995, for 1095 Commonwealth
Ave. Corp., and the second, individually, in September, 1995,
which subsequently were consolidated for administration
(A.218). The plan, confirmed by order of the Bankruptcy
Court in April, 1996, permitted Bishay to pursue his counter-
claim. After Citizens Bank moved in the Superior Court to
dismiss the counterclaim in June, 1996, Bishay moved to
3. The plan allowed Citizens Bank’s claim for payment of the
loan’balance and also allowed retention of a lien on Bishay’s assets
to permit recovery of attorney’s fees and costs in defending against
Bishay’s counterclaim (A.279-280).
3a
Appendix A
amend it, and the amendment was allowed by a motion judge
in November, 1996 (A.690), resulting in a counterclaim
of six counts (A.692-726). Four decisions by a different
Superior Court judge followed, resulting in the dismissal of
Bishay’s entire amended counterclaim and the award of
collection costs to Citizens Bank.
1. Application of res judicata. In the first of the Superior
Court orders challenged by Bishay in this appeal, the judge
considered the parties’ cross motions for summary judgment
on Bishay’s several counts in the amended counterclaim
(A.2205,2216). The judge correctly stated the controlling
principle as follows: “The application of res judicata to a
bankruptcy court order confirming a Chapter 11 reorgani-
zation plan generally bars later proceedings on all claims
and issues concerning the debtor-creditor relationship
that were actually raised during the confirmation process as
well as those that could have been raised... .” (A.2219).
See Monarch Life Ins. Co. v. Ropes & Gray, 65 F.3d 973,
978 & n.8 (1st Cir. 1995) (res judicata principles applicable
to confirmation orders of a bankruptcy court). “Under a generally
accepted exception to the res judicata doctrine, a party’s
claims are not precluded by a prior action if the court in that
action expressly reserves those claims for later adjudication.
Apparel Art Intern. v. Amertex Enterprises[, Ltd.], 48 F.3d
576, 586 (1st Cir. 1995). D & K Properties Crystal Lake v.
Mutual Life Ins. [Co.], 112 F.3d 257, 260 (7th Cir. 1997).”
(A.2220).
The judge reviewed the relevant language in the
reservation clause of the plan confirmed by the Bankruptcy
4a
Appendix A
Court,‘ correctly concluding from its wording and the record
in that court that the original two counts in Bishay’s
counterclaim had not been adjudicated in that court and had
been preserved so as to survive the confirmation order.
Moreover, he stated those two counts “constitute independent
claims which could be characterized as a set-off to Bishay’s
debt.” (A.2222).
In contrast, however, the judge concluded that the
additional four claims in the amended counterclaim’ were in
the nature of defenses to Bishay’s obligations under the note,
and that he essentially sought to relitigate the validity of
that note and the forbearance agreement.°® These additional
4. “The Debtors’ estates may retain, and by its duly authorized
representative(s) settle, release or prosecute, their alleged claims
against Citizens arising from the transactions between the Debtors
and Citizens and related matters (the ‘Alleged Claims’).” (A.280).
5. We adopt the judge’s summary description of the counts as
follows: (I) allegations of “numerous breaches of [Citizens Bank’s]
express and implied duties” under the note and a forbearance
agreement; (II) a claim that Citizens Bank is “estopped from treating
the Note as a demand obligation and collecting the full amount”;
(III) first count of prior counterclaim restated; (IV) a request for a
declaratory judgment that the “Note and Forebearance Agreement
are extortionate,” and all payments should be ordered disgorged;
(V) a claim of intentional infliction of emotional distress; and (VI)
second count of prior counterclaim restated. (A.2222-2224; 712-724).
6. There is no merit in Bishay’s argument that general or blanket
type language in the reservation clause preserved his claims in the
amended counterclaim. “A blanket reservation that seeks to reserve
all causes of action reserves nothing. To hold otherwise would
(Cont'd)
5a
Appendix A
(Cont'd)
eviscerate the finality of a bankruptcy plan containing such a
reservation, a result at odds with the very purpose of a confirmed
bankruptcy plan.” D & K Properties Crystal Lake v. Mutual Life Ins.
Co., 112 F.3d at 261.
Bishay’s assertion that classification of Citizens Bank’s claim
as “impaired,” means that approval of the claim was not final
(B.Br.18), is without merit. That assertion ignores the plain language
of section 6(a) of the reorganization plan which required full payment
of the loan balance on or before December 27, 1996 (A.279). Further,
no reasonable reading of 11 U.S.C. § 1124 (1984) supports that
assertion.
There also is no merit in Bishay’s assertion that he should receive
a more favorable interpretation of the reservation clause because it
was drafted by Citizens Bank. Compare Union Carbide Corp. v.
Newboles, 686 F.2d 593, 595 (7th Cir. 1982) (approval of a plan by
a creditor “cannot be deemed an act of assent having significance
beyond the confines of the bankruptcy proceedings, simply because
the gamesmanship imported from state contract law into the
bankruptcy proceedings would be intolerable”). Moreover, there is
no indication that Bishay did not have adequate opportunity to contest
the plan or seek its modification.
Similarly, there is no merit in Bishay’s request that we consider
statements made by counsel for Citizens Bank at the confirmation
hearing (B.Br.20-23). Compare Sure-Snap Corp. v. State Street Bank
& Trust Co., 948 F.2d 869, 873 (2d Cir. 1991) (even comments by a
judge in a colloquy with debtors were “not dispositive of. . . allegedly
reserved right,” and did not affect application of res judicata
principles). In the judge’s third decision he stated, “Bishay now asks
this Court yet again to adopt his interpretation of the reservation
[clause]. This the court declines to do.” (A.3392). We similarly
decline any invitation by Bishay to consider any reinterpretation by
reading any “intent” into the reservation clause (see B.R.Br.2-8).
6a
Appendix A
claims were not expressly identified in the reservation clause,
the bankruptcy schedules (A.3224-3267), or in the previously
filed counterclaim in Bishay’s answer to Citizens Bank’s
complaint.’ Because the Bankruptcy Court ordered the
payment of Citizens Bank’s claim, inherent in that order is
the court’s determination of the validity and enforceability
- of the note and forbearance agreement. The judge therefore
properly stated that “(flinal orders of the bankruptcy court
are res judicata as to all matters that were or could have been
litigated before the bankruptcy court,” see Federal Deposit
Ins. Corp. v. Shearson-American Exp., Inc., 996 F.2d
493, 497 (1st Cir. 1993), cert. denied, 5 10 U.S. 1111 (1994),
and correctly concluded that the confirmation order had res
7. The judge noted that the Bankruptcy Court allowed a joint
motion on September 4, 1996, authorizing Bishay to employ special
counsel to pursue the litigation then pending in the Superior Court,
No. 95-1312A (A.2222 n.10).
There is no merit in Bishay’s assertion that the counts in his
amended counterclaim were preserved because his proposed version
of that counterclaim was attached to a stipulation filed in the
Bankruptcy Court with respect to a fee dispute. That filing occurred
before the joint motion was allowed, and there is no indication that
the amended counterclaim was brought within the scope of that
motion.
In any event, the amended counterclaim was first filed in the
Superior Court in August, 1996, some four months after the
confirmation order dated April 23, 1996 (A.294), and after the
expiration of the applicable bankruptcy appeal period. Bishay did
not appeal the confirmation order.
7a
Appendix A
judicata effect as to counts I, II, IV, and V of Bishay’s
amended counterclaim (A.2219,2224).®
2. The surviving claims in the amended counterclaim.
Bishay seeks to pursue his dismissed amended count III and
most of the count VI claims by raising events which occurred
after the general release in a September 16, 1994, forbearance
agreement he executed. He argues that these counts were
preserved by the reservation clause, and he asserts that the
judge improperly dismissed those claims, essentially ignoring
the effect of the release and res judicata (B.Br.27-48)."°
8. The judge subsequently denied Bishay’s two motions for
reconsideration of these rulings in his second and third decisions
(A.248 1-2482, 3391-3395).
9. In his first decision, the judge addressed Citizens Bank’s
contention that the general release served as a defense to count III
and so much of count VI concerning events occurring prior to the
release, and Bishay’s claim that the release was not binding because
he signed it under economic duress (A.2225). The judge’s conclusion
that Bishay’s failure timely to object to the forbearance agreement,
his subsequent conduct in accepting the benefits of Citizens Bank’s
forbearance, and his partial performance in making sporadic
payments, constituted ratification of the agreement. The judge further
concluded that because the general release was valid and binding,
Bishay is precluded from asserting any claim against Citizens Bank
arising from their relationship prior to September 16, 1994, and
allowed summary judgment for Citizens Bank on count III and
subsections a, b, c, d, e, g, h, and i of count VI (A.2229).
10. In the judge’s second decision, he declined to reconsider
his prior rulings on count III after Bishay filed a motion for
reconsideration and submitted a joint stipulation which contained
(Cont'd)
8a
Appendix A
Bishay asserts that in 1995, Citizens Bank’s refusal
to accept full payment of the loan constituted (1) a breach of
its obligations to him; (2) interfered with his business
obligations; and (3) violated c. 93A (B.Br.31)."' Even if we
were to consider those claims not barred by the release and
res judicata principles, they lack merit. In summary, (1) at
the time in issue, there is no indication that Bishay ever
tendered any payment or actually had a commitment for
financing from another lender, and in indicating its intent to
require a release, in the circumstances, Citizens Bank was
not in breach of any obligation to Bishay; (2) no claim of
interference could arise because Citizens Bank did not induce
anyone to act unfavorably toward Bishay or impede his
performance; and (3) the Bankruptcy Court’s determination
that the release of claims was proper thus precludes the c. 93A
claim to the extent that it was based on Citizens Bank’s
collection efforts. Also, Bishay’s argument (B.Br.36-44)
attempting to revive his claim for intentional infliction of
(Cont’d)
a proposed amended counterclaim. The judge rejected consideration
of Bishay’s claims alleging interference with contractual relations
after the September 16, 1994, release, and declined to alter his ruling
that only the two claims pending in the Superior Court at the time of
the bankruptcy confirmation order had been preserved (A.2477-2479,
2481-2482).
11. The related factual background is that after filing the
bankruptcies, in November, 1995, Bishay asked what terms Citizens
Bank would require to discharge all its security for the defaulted
loan if he could obtain financing to repay the loan. The response
was that a release of all theoretical claims would be required (A.642-
646). Bishay claims the collateral then securing the loan balance of
$2.4 million was, disproportionally, worth $18 million (B.Br.30).
9a
Appendix A
emotional distress and his unsupported characterization
of Citizens Bank’s conduct as unethical, oppressive, and
unscrupulous and violative of c. 93A, fail to raise genuine
issues of material fact.
With respect to Bishay’s c. 93A argument (B.Br.45-48)
based on Citizens Bank’s two-tiered billing arrangement with
its attorneys, for which it was sanctioned in the Bankruptcy
Court (A.1310-1350), Bishay asserts that a causal relationship
existed between that arrangement and Citizen Bank’s refusal
to accept payment of the loan in 1995, and contrary to the
judge’s conclusion, that he suffered damages. There is
nothing in this assertion warranting disturbing the judge’s
careful analysis, concluding Bishay has no reasonable
expectation of demonstrating that his alleged damages were
caused by Citizens Bank’s involvement in the two-tiered fee
arrangement (A.3396-3398)."
3. Award of attorney's fees. In his fourth decision,
and after a thorough analysis of the parties’ claims, the
judge determined that Citizens Bank had a right to recover
$360,427.99 in attorney’s fees and costs incurred as the
12. Acting on a motion of Citizens Bank for reconsideration,
the judge addressed the c. 93A issues raised in subsections f and k of
count VI in his third decision (A.3396). He concluded that Bishay
had not suffered any monetary loss in the course of the Bankruptcy
Court’s resolution of the two-tiered fee issue. He explained that
“the amount of fees owed by Bishay was reduced to reflect the amount
Citizens [Bank] itself would have paid its attorneys for the work.
Moreover, the attorney’s fees and expenses Bishay incurred in
challenging the dual billing arrangement were set off against the fees
he owed Citizens [Bank] under the loan agreement.” (A.3397).
10a
Appendix A
reasonable costs of collection of the loan from April 25, 1996,
through November 30, 1998 (A.4224). Bishay claims that
the note was paid “some time before a substantial part of
those legal fees were incurred,” and accordingly when the
note was paid, the fees incurred thereafter could not constitute
reasonable fees for “collection and enforcement” of the note
(B.Br.49). Arguing this point for the first time in this appeal
(see memorandum in opposition to summary judgment at
A.3702-3721), Bishay is not entitled to consideration of that
argument in this court. See Royal Indem. Co. v. Blakely, 372
Mass. 86, 87-88 (1977).
In any event, Bishay fails to show that the language of
the note (A.32), his guarantees (A.40,44,56), or the relevant
provisions of the Bankruptcy Court’s approval of a lien on
his assets (A.280), restricted his contractual obligations after
the note was paid. He also fails to show how the fees awarded
were not related to litigation arising out of the collection
process, or that there was any error in the judge’s thorough
analysis of the course of this litigation (A.4216-4224).”
The judge properly concluded that “Bishay vigorously
pursued his purported $100 million counterclaim against
[Citizens Bank] to no avail, despite his clear contractual
obligation to pay . . . collection costs in the event his claim
13. The judge noted that the fees requested represented nearly
two thousand hours of work, that Bishay asserted a counterclaim he
valued at $100 million, involving complex issues of bankruptcy law,
res judicata, contract, and c. 93A, and the filing of over one hundred
pleadings. He stated that “every point on every issue was vigorously
contested by both parties,” and that Citizens Bank ultimately
succeeded in obtaining judgment in its favor on Bishay’s entire
counterclaim (A.4220).
lla
Appendix A
was unsuccessful.” (A.4224). Although Citizens Bank’s claim
with respect to the unpaid loan balance was satisfied on
December 27, 1996,'* because Citizens Bank’s complaint and
Bishay’s counterclaim then were pending in the Superior
Court, it cannot be said that the parties had reached an end
to all “charges of the holder ... in connection with the
collection and enforcement of [the note].” (A.32). Bishay’s
counterclaim was grounded in allegations of improper
conduct by Citizens Bank in collecting the note, which Bishay
not only pressed after the note had been paid, but had he
been successful, he essentially would have overturned the
validity of Citizens Bank’s collection of the note. Citizens
Bank incurred additional fees and costs in withstanding
Bishay’s continwiag attack on the validity of its collection of
the note, and those fees and costs properly were an integra!
part of the collection process. Compare Penney v. First Natl.
Bank of Boston, 385 Mass. 715, 723 (1982) (attorney’s fee
and costs incurred by bank in defending against debtor’s
action brought after sale of debtor’s collateral “were an
integral part of the collection process”).'° See Leventhal v.
Krinsky, 325 Mass. 336, 342 (1950); Covich v. Chambers,
8 Mass. App. Ct. 740, 752 (1979).
14. The Bankruptcy Court order regarding discharge of debtors
states in relevant part: “In accordance with the terms of the Confirmed
Plan, all claims of creditors were satisfied in full on December 27,
1996 with the exception of certain legal fees and costs of Citizens
Bank. . . .” (A.3070-3071).
15. Bishay no longer challenges the judge’s conclusion that
Citizens Bank was entitled to $117,765.24 in fees as a prevailing
party in connection with its first motion for summary judgment,
an amount which was included in the total award (A.4223-4224).
i
i
{
12a
Appendix A
4. Costs incurred after judgment and in this appeal.
Citizens Bank requests attorney’s fees and costs it claims
were allowed in the Superior Court, and to March 17, 1999,
when the award was entered (C.B.Br.45-46). Because this
request concerns matters beyond our purview in another
court, we decline to consider the request. Citizens Bank may,
however, request its attorney’s fees and costs in connection
with this appeal by filing a petition with this court, together
with the necessary back-up materials, within fifteen days of
the issuance of the rescript in this case. Bishay shall have
ten days to respond to that submission, in accordance with
Yorke Mgmt. v. Castro, 406 Mass. 17, 20 (1989).
Judgments affirmed.
By the Court (Jacobs, Cypher,
& Kantrowitz, JJ.)
s/ Ashley Ahern
Clerk
Entered: October 22, 2002.
13a
APPENDIX B — MEMORANDUM OF DECISION
AND ORDER OF THE SUPERIOR COURT OF THE
COMMONWEALTH OF MASSACHUSETTS DATED
FEBRUARY 11, 1998 AND FILED FEBRUARY 17, 1998
COMMONWEALTH OF MASSACHUSETTS
NORFOLK, ss.
SUPERIOR COURT
CIVIL ACTION
NO. 95-1312A
CITIZENS BANK OF MASSACHUSETTS,
Plaintiff,
VS.
BAHIG BISHAY' & others’,
Defendants.
MEMORANDUM OF DECISION AND ORDER
ON PARTIES’ CROSS-MOTIONS FOR
RECONSIDERATION
1. Individually and as Trustee of Old Post Realty Trust.
2. Commonwealth Realty Trust, Bishay Motors & Leasing,
Inc. f/k/a Bishay Motors, Inc., Massachusetts Auto Group, Ltd.,
and 1095 Commonwealth Ave. Corp.
l4a
Appendix B
INTRODUCTION
The plaintiff, Citizens Bank of Massachusetts (Citizens),
brought this action in an attempt to recover more than $1.5
million owed by defendant Bahig Bishay and various trusts
and corporations controlled by him under a defaulted
promissory note. This debt has since been repaid as a result
of a Chapter 11 plan confirmed by the Bankruptcy Court
on April 23, 1996. However, numerous counterclaims by
Bishay against Citizens remain pending in this action. In a
Memorandum of Decision and Order dated November 24,
1997 and filed December 1, 1997, this Court granted Citi-
zens’ motion for summary judgment on the vast majority
of Bishay’s amended counterclaim and denied Bishay’s
cross-motion for partial summary judgment. This matter is
now before the court on the parties’ cross-motions for
reconsideration pursuant to Super. Ct. R. 9D. For the reasons
discussed below, Citizens’ motion for reconsideration is
ALLOWED. Further, the defendants’ cross-motion for
reconsideration is DENIED.
DISCUSSION
I. BISHAY’S MOTION FOR RECONSIDERATION
In its November 24, 1997 Memorandum of Decision and
Order, this Court granted Citizens summary judgment on
Counts I, II, IV and V of Bishay’s amended counterclaim on
the ground that the Bankruptcy Court’s April 23, 1996
Confirmation Order in the Chapter 11 bankruptcy proceed-
ings constituted res judicata as to those claims. This Court
further granted Citizens summary judgment on Count II and
15a
Appendix B
subparts a, b, c, d, e, g, h and i of Count VI of the amended
counterclaim on the ground that a valid and binding general
release in the parties’ September 16, 1994 Forbearance
Agreement precluded Bishay from asserting any claims
against Citizens arising from the parties’ relationship prior
to that date.
Bishay now asks this Court to reconsider those rulings,
urging this Court to reinstate Count III of the amended
counterclaim and to further hold that the broad reservation
in the Chapter 11 Reorganization Plan (the Plan) permits the
post-bankruptcy litigation of all other counts of the amended
counterclaim not affected by the September 16, 1994 release.
Bishay first argues that this Court erred in awarding summary
judgment on Count III of the amended counterclaim based
on the general release in the parties’ Forbearance Agreement
because the majority of Count III contains allegations of
misconduct alleged to have occurred after September 16,
1994.
Bishay overlooks the fact that in determining that Count
III was reserved for post-confirmation litigation by the
Bankruptcy Court, this Court also determined that any such
claim was limited to the allegations as they stood before the
Bankruptcy Court when the Plan was confirmed. At that time,
Bishay’s counterclaim against Citizens in the present Superior
Court action alleged in Count I that Citizens breached its
duty of good faith and fair dealing by interfering in the FDIC
matter and by refusing to subordinate its mortgage on the
1095 Commonwealth Ave. property. Liability for this conduct
is barred by the general release in the September 16, 1994
Forbearance Agreement. Bishay has now submitted a
16a
Appendix B
document which he contends was filed by the parties with
the Bankruptcy Court on August 26, 1996: a Joint Stipulation
of the Parties Relating to Requested Protective Order that
Discovery Not Be Had, to which is appended several exhibits,
including Bishay’s proposed amended counterclaim in this
Superior Court action. However, this Court notes that the
Chapter 11 plan was confirmed by the Bankruptcy Court some
four months earlier, on April 23, 1996; indeed, the joint
stipulation relied proffered by Bishay concerns the post-
confirmation attorneys fees proceedings.
Thus, to the extent that amended Count Ill alleges
interference with contractual relations that Bishay had with
parties other than the FDIC, after September 16, 1994, such
claims were not part of Bishay’s original complaint, were
not before the Bankruptcy Court at the time of confirmation,
and were not saved for post-bankruptcy litigation by the
reservation in the Confirmation Plan. Accordingly, Citizens
is entitled to judgment as a matter of law on Count III of the
amended complaint, which this Court declines to reinstate.
Bishay next contends that this Court erred in ruling that
the blanket reservation contained in the Plan was insufficient
to preserve the remaining four counts of the amended
counterclaim for post-confirmation adjudication. This Court
concluded that because the reservation failed to expressly
identify particular claims or types of actions intended to be
preserved, its language’ was too broad and vague to prevent
3. The reservation referred to preserve “the debtors’ alleged
claims against Citizens arising from the transactions between the
Debtors and Citizens and related matters (the “Alleged Claims”)”.
17a
Appendix B
the Confirmation Order from constituting res judicata as to
all claims other than the two specific claims pending in
Superior Court at the time of confirmation. Bishay contends
that this Court improperly relied on Illinois and New York
cases in concluding that a reservation of a debtor’s right
to pursue rights and remedies outside of the bankruptcy
proceeding must specifically identify or refer to the cause
of action intended to be reserved. Citing Apparel Art Inter-
national, Inc. v. Amertex Enterprises, 48 F.3d 576 (1st Cir.
1995), Bishay argues that Massachusetts law interprets
the “express” nature of a reservation more broadly than
other jurisdictions and does not require identification of the
particular claims reserved for later adjudication.
In Apparel Art International Inc., the plaintiff subcon-
tractor, who had been awarded $387,994 against the
defendant contractor during arbitration before the AAA,
filed an action in U.S. District Court (Suit #1) to enforce the
arbitration award pursuant to the Federal Arbitration Act.
48 F.3d at 579. After confirming the award and entering
judgment in plaintiff’s favor, the court permitted the plaintiff
to conduct post-judgment discovery in supplemental
proceedings so that it could execute its judgment. During
said discovery, the plaintiff learned of numerous asset
transfers by the defendant to a company which the plaintiff
believed had been created to defraud the defendant’s
creditors. Jd. While these proceedings were ongoing, the
plaintiff filed a separate suit in U.S. District Court (Suit #2)
alleging RICO, fraudulent conveyance and alter ego claims
against the defendant. Jd. at 580. The District Court dismissed
the fraudulent conveyance and related claims, stating:
18a
Appendix B
Essentially, the fraudulent transfer claim is merely
one aspect of plaintiff’s attempt at collection of
the judgment issued in (Suit #1]. Since plaintiff
has already begun that process in (Suit #1],
we cannot entertain these claims again here
without a real risk of allowing multiple judgments
to issue for the same harm ... The dismissal
is without prejudice to any legitimate execution
of judgment motions which the plaintiff may
seek to file [in the supplementary proceedings
in Case #1]. Jd. at 586.
In concluding that the plaintiff could assert claims for
fraudulent conveyance, depletion of corporate assets, and
alter ego in the supplementary proceedings, the First Circuit
held that Suit #2 did not bar such claims under the doctrine
of res judicata because the District Court in Suit #2 had
expressly reserved the plaintiff's right to litigate those claims
in a later action. Jd.
Bishay’s argument that Apparel Art International, inc.
demonstrates that the First Circuit requires a less specific
reservation than other jurisdictions in order to exempt a claim
from the application of res judicata is simply without merit.
The District Court’s reservation of “any legitimate execution
of judgment motions which the plaintiff may seek to file
[in the supplementary proceedings in Case #1]” specifically
identified the claims which were reserved: those relating to
the defendant’s attempt to avoid the arbitration judgment.
The First Circuit did not interpret the reservation broadly,
as Bishay seeks to do here, to preserve any claim the plain-
tiff might have against the defendant arising out of their
19a
Appendix B
contractual relationship. Rather, the claims the plaintiff
was allowed to bring in the supplemental proceeding
were the very ones pending before the District Court when
it made the reservation. Thus, the holding in Apparel Art
International, Inc. is consistent with those cases in other
jurisdictions rejecting blanket reservations in bankruptcy
confirmation plans and requiring that the claims to be
reserved for later adjudication be expressly identified.
Accordingly, this Court declines to alter its ruling that
the language in the Plan permitting Bishay and 1095
Commonwealth Ave. Corp. to assert “their alleged claims
against Citizens arising from the transactions between the
Debtors and Citizens and related matters” reserved only the
two claims pending in Superior Court at the time of the
reservation, and failed to specifically reserve the additional
claims later asserted in Bishay’s amended complaint. Bishay’s
motion for reconsideration is therefore DENIED.
II. CITIZENS’ MOTION FOR RECONSIDERATION
Citizens urges this Court to reconsider its denial of
summary judgment on subparts f, j, k, 1 and m of Count VI,
asserting that although such claims were not encompassed
in the parties’ general release, they are nonetheless barred
by principles of either res judicata or absolute privilege.
Subpart j of Bishay’s amended counterclaim alleges that
Citizens violated Chapter 93A by causing a false independent
appraisal of the 1095 Commonwealth Avenue property.
Subpart f alleges that Citizens violated Chapter 93A by
attempting to collect reimbursement for legal fees under the
dual billing agreement with its counsel, Brown, Rudnick,
Freed & Gesmer. Subpart k further alleges that Citizens
20a
Appendix B
violated Chapter 93A by entering into the dual billing
agreement, and by submitting false time entries and a false
fee petition to the Bankruptcy Court. Citizens contends that
these three claims are barred by the res judicata effect of the
Bankruptcy Court’s January 21, 1997 decision awarding
attorney’s fees pursuant to 11 U.S.C. § 506(b).
In that decision, the Bankruptcy Court addressed the
impropriety of the appraisal at issue as follows:
Debtors cite “impropriety in the preparation and
use of the appraisals, as demonstrated by the
testimony elicited at the evidentiary hearing held
on April 18, 1996.” The Court has reviewed the
testimony from that hearing. The testimony on
appraisal issues was lengthy and touched on a
number of distinct appraisal-related issues; and it
pertained to only one of the ten appraisals for
which compensation is now being sought. The
Debtors do not identify or cite the specific
testimony on which they rely. They offer no
argument as to why the alleged improprieties
| warrant denial of the appraisal fees. Nor do they
| even identify the improprieties they have in mind.
| In short, the Debtors have not articulated this
| objection in sufficient detail to permit either
| Citizens or the Court to understand, respond to,
and adjudicate the substance of their objection.
The compensation sought for these appraisals is
reasonable and will be allowed in the amount
requested.
2la
Appendix B
Given the extensive hearing held by the Bankruptcy Court
on the issue of the allegedly improper appraisal, that court’s
determination that Bishay had failed to clearly articulate a
basis on which the court could find said appraisal to be
wrongful, and the court’s award of the appraisal fee to
Citizens, this Court concludes that Bishay is barred from now
relitigating the propriety of the appraisal fee in the form of
an action under Chapter 93A. Accordingly, Citizens is correct
that the doctrine of res judicata entitles it to judgment as a
matter of law on subpart j on Count VI.
With respect to subparts f and k, the Bankruptcy Court
noted in its decision that in opposing Citizens’ application
for fees, “the Debtors argue that the dual billing system
violates all notions of good faith and fair dealing and
constitutes an unfair and deceptive practice in violation of
Massachusetts G. L. c. 93A.” The Court ultimately concluded
that the dual billing agreement, properly construed, was not
illegal or void as against public policy; that with the exception
of one of its attorneys, Citizens did not intentionally misrepresent
or conceal the dual fee agreement; and that the appropriate
sanction for Citizens’ misconduct was to award Bishay his
attorneys’ fees in pursuing the issue. The Bankruptcy Court
did not, however, address whether Citizens’ conduct with
respect to the fee agreement constituted a violation of Chapter
93A so as to affirmatively entitle Bishay to damages under
that statute. Rather, the court merely rejected the argument
that Citizens’ conduct was so egregious as to warrant a total
denial of attorneys’ fees under the promissory notes. More-
over, this Court cannot conclude that the Chapter 93A issue
was logically or practically necessary to the Bankruptcy
Court’s fee decision, as the court could have decided that
22a
Appendix B
regardless of whether Citizens’ conduct constituted a Chapter
93A violation under state law, a balancing of the equities
required that citizens be allowed to recover some of its fees.
Thus, this Court declines to hold that the issue of Citizens’
Chapter 93A liability was implicitly determined by the
Bankruptcy Court’s January 21, 1997 Order so as to bar
litigation of said claim in the present action based on res
judicata.‘
Nonetheless, Citizens’ contends that its conduct with
respect to the dual billing agreement was privileged.
Massachusetts has long recognized that statements or other
communications made by parties, counsel or witnesses in
the institution or conduct of litigation are absolutely
privileged, even when made maliciously or in bad faith,
provided such statements relate to the judicial proceeding.
Theran v. Rokoff, 413 Mass. 590, 591 (1992); Sullivan v.
Birmingham, 11 Mass. App. Ct. 359, 361 (1981); Doe v.
Nutter, McClennan & Fish, 41 Mass. App. Ct. 137, 140,
rev. den., 423 Mass. 1111 (1996). Moreover, the privilege
attached to such statements provides a complete defense not
only to a defamation suit but to all theories of civil liability
based thereon. Sullivan v. Birmingham, supra at 368;
Doe v. Nutter, McClennan & Fish, supra at 140. Subpart f
of Bishay’s amended counterclaim alleges that Citizens
violated Chapter 93A by attempting to collect reimbursement
for legal fees under the dual billing agreement with its
4. It should be noted that because Bishay’s claim with respect
to the dual fee agreement is based on post-confirmation conduct and
did not exist at the time of the confirmation proceedings, the scope
of the reservation in the confirmation plan is not at issue here.
23a
Appendix B
counsel, Brown, Rudnick, Freed & Gesmer. Subpart k further
alleges that Citizens violated Chapter 93A by entering into
the dual billing agreement, submitting false time entries to
the Bankruptcy Court and submitting a false fee petition to
the Bankruptcy Court. Insofar as Subpart k is based on the
written and oral statements made by Citizens in the Bank-
ruptcy Court fee proceeding, such statements cannot form
the basis of civil liability. However, the bulk of Subparts f
and k are based on Citizens’ conduct in entering into a dual
billing agreement with its attorney and then attempting
to collect from debtors such as Bishay a higher billing rate
than the bank itself would have to pay for the same work.
These claims do not involve statements or communications
made in the course of litigation and are thus not privileged.
Massachusetts does not recognize the broad immunity for
all actions taken by participants in the litigation process urged
by Citizens.
The question then becomes whether Citizens’ conduct
with respect to the dual billing agreement can form the
substantive basis of a Chapter 93A claim. While it is clear
that abuse of process may violate Chapter 93A, Bishay cannot
demonstrate such a claim in the present case. Datacomm
Interface, Inc. v. Computerworld, Inc., 396 Mass. 760,
777-779 (1986). Abuse of process presupposes the use of
legal action for an ulterior purpose: to achieve some end other
than the apparent end of the litigation process which has
been initiated. Jd. at 775-776: Silvia v. Building Inspector
of West Bridgewater, 35 Mass. App. Ct. 451, 453, rev. den.,
416 Mass. 1104 (1993). Irrespective of the propriety or
impropriety of the dual billing agreement, Citizens ad no
purpose in petitioning the Bankruptcy Court for fees other
' 24a
Appendix B
than the asserted desire to collect attorney’s fees under
that agreement. Nonetheless, even where the institution of
litigation does not constitute an abuse of process it may,
in certain circumstances, constitute an unfair or deceptive
practice for purposes of Chapter 93A. See Schubach v.
Household Finance Corp., 375 Mass. 133, 137 (1978)
(holding that a company’s conduct in filing collection suits
in distant venues to increase the chances of obtaining default
judgments could be unfair for purposes of Chapter 93A
although it was permitted by the venue provisions of GL.
c. 233, § 2 and was not an abuse of process). Bishay has a
colorable claim that the mere entering into of the dual billing
agreement and attempt to enforce it against creditors could
be deemed an unfair and deceptive act. See Guenard v. Burke,
387 Mass. 802, 809 (1982) (holding that an attorney’s use of
a contingent fee agreement in a divorce case was an unfair
and deceptive practice where although the agreement was
ultimately not enforced against the plaintiff, the attorney
relied on the agreement to retain one third of plaintiff’s
recovery).
Finally, although the court in awarding actual damages
under Chapter 93A must take into account that Bishay has
already been compensated for those attorney’s fees incurred
in resisting the dual billing agreement in the Bankruptcy
Court, if the court finds a knowing and wilful violation of
Chapter 93A, it is arguable, but this Court does not now rule,
that fees from that proceeding could be the basis of multiple
damages. See Datacomm Interface, Inc. v. Computerworld,
Inc., supra at 780 (1986) (holding that where attorney’s fees
constitute a party’s actual damages, as in an abuse of process
claim, they may be multiplied under c. 93A). See also Cohen
25a
Appendix B
v, Liberty Mutual Insurance Co., 41 Mass. App. Ct. 748, 753
(1996) (discussing the 1989 amendment to c. 93A, § 9(3)
which provides that the amount of actual damages to be
multiplied is the amount of the judgment on all claims arising
out of the same and underlying transaction or occurrence,
regardless of the existence of insurance coverage available
in payment of the claim). Moreover, in the absence of other
actual damages, Bishay would be entitled to recover statutory
damages of twenty-five dollars. See Brow v. Stanton, 12 Mass.
App. Ct. 992, 993 (1981); Knott v. Laythe, 42 Mass. App.
Ct. 908, 910 (1997). Accordingly, this Court concludes that
Citizens is not entitled to summary judgment on subparts f
and k of Count VI of Bishay’s amended counterclaim.
Finally, Subpart 1 of Count VI alleges that Citizens
violated Chapter 93A by repeatedly petitioning the Court for
authority to sell Bishay’s antique car collection, while Subpart
m alleges that Citizens violated Chapter 93A by filing the
present law suit, by alleging under oath that Bishay owed
$2,568,000, and by failing to disclose that part of the debt
had been repaid. Citizens’ conduct in alleging in its complaint
that Bishay owed a particular amouni under the promissory
notes involves statements made in the institution of litigation
which are absolutely privileged and cannot form the basis
for liability under Chapter 93A. However, to the extent
that Subpart m alleges that the filing of the complaint itself
and petitioning of the Court to liquidate Bishay’s collateral
violate c. 93A, the litigation privilege would not bar an action
on theories of malicious prosecution or avuse of process.
See Sullivan v. Birmingham, supra at 367 n.8. Nonetheless,
based on the summary judgment record, Bishay has no
reasonable expectation of demonstrating at trial 2 Chapter
26a
Appendix B
93A violation under these theories. As noted abeve, abuse
of process presupposes the use of legal action for an ulterior
or improper purpose. Silvia v. Building Inspector of West
Bridgewater, supra at 453. Similarly, malicious prosecution
involves perverse use of the litigation process in the sense
that the defendant lacked probable cause to institute the
criminal or civil action at issue. Id. at 453-454. Given the
size of the debt owed by Bishay, his pattern of default on the
parties’ various forbearance agreements, and his general lack
of cooperation in resolving the debt, Citizens’ filing of the
present action was justified and for the proper purpose of
collecting the money owed. Accordingly, this Court concludes
that Bishay has no viable ground for the Chapter 93A claims
alleged in Subparts 1 and m of Count VI, entitling Citizens
to judgment as a matter of law.
27a
Appendix B
ORDER
For the foregoing reasons, it is hereby ORDERED that
Citizens’ motion for reconsideration be ALLOWED. Upon
reconsideration, it is OR DERED that Citizens’ motion for
summary judgment be ALLOWED as to Subsections j, | and
m of Count VI of the amended counterclaim, but DENJED
as to Subsections f and k of that Count. It is further
ORDERED that the defendants’ motion for reconsideration
be DENIED.
s/ Gordon L. Doerfer
Gordon L. Doerfer
Justice of the Superior Curt
DATED: February 11, 1998
28a
APPENDIX C — MEMORANDUM OF DECISION
AND ORDER OF THE SUPERIOR COURT OF THE
COMMONWEALTH OF MASSACHUSETTS DATED
OCTOBER 16, 1998 AND FILED OCTOBER 21, 1998
COMMONWEALTH OF MASSACHUSETTS
NORFOLK, ss.
SUPERIOR COURT
CIVIL ACTION
NO. 95-1312A
CITIZENS BANK OF MASSACHUSETTS,
Plaintiff,
VS.
BAHIG BISHAY' & others?,
Defendants.
MEMORANDUM OF DECISION AND ORDER ON
PARTIES’ RENEWED CROSS-MOTIONS FOR
RECONSIDERATION
1. Individually and as Trustee of Old Post Realty Trust.
2. Commonwealth Realty Trust, Bishay Motors & Leasing,
Inc. f/k/a Bishay Motors, Inc., Massachusetts Auto Group, Ltd.,
and 1095 Commonwealth Ave. Corp.
29a
Appendix C
INTRODUCTION
This action originated with a complaint by plaintiff,
Citizens Bank of Massachusetts (Citizens), seeking to recover
more than $1.5 million owed by defendant Bahig Bishay and
various trusts and corporations controlled by him under a
defaulted promissory note. That debt was repaid as a result
of a Chapter 11 plan confirmed by the Bankruptcy Court on
April 23, 1996. However, numerous counterclaims by Bishay
against Citizens remained pending in this case. In a Memo-
randum of Decision and Order dated November 24, 1997,
this Court granted Citizens’ summary judgment on Counts I,
II, IV and V of Bishay’s amended counterclaim on the ground
that the Confirmation Order entered in the Chapter 11
bankruptcy proceedings constituted res judicata as to those
claims. The Court further granted Citizens summary
judgment on Count III and subsections a, b, c, d, e, g, h
and i of Count VI of the amended counterclaim on the
ground that a valid and binding general release in the parties’
September 16, 1994 Forbearance Agreement precluded
Bishay from asserting any claims against Citizens arising
from the parties’ relationship prior to that date. Finally, this
Court denied Bishay’s cross-motion for summary judgment.
Thereafter, both parties moved this Court for
reconsideration of that summary judgment decision. In a
Memorandum of Decision and Order dated February 11,
1996, this Court granted Citizens’ motion for summary
judgment as to Subsections j, 1 and m of Count VI of the
amended counterclaim, on the ground that such claims were
based on written and oral statements made to the Bankruptcy
Court which were privileged and could not form the basis of
30a
Appendix C
civil liability.? However, this Court denied the motion as to
Subsections f and k of Count VI on the ground that Citizens’
entering into the improper dual billing agreement with its
attorney and then attempting to collect from debtors such as
Bishay a higher billing rate than the bank itself would have
to pay could constitute unfair and deceptive practices under
Chapter 93A.
With respect to Bishay’s cross-motion for reconsideration
this Court denied Bishay’s request to reinstate Count III of
the amended counterclaim. In addition, this Court denied
Bishay’s request that the court reverse its interpretation of
the reservation in the Chapter 11 Reorganization Plan and
hold that the reservation permits the post-bankruptcy
litigation of all other counts of the amended counterclaim
not affected by the September 16, 1994 release.
This matter is again before this Court because in August
of 1998, the parties filed renewed cross-motions for
reconsideration pursuant to Super. Ct. R. 9D. For the reasons
discussed below, Citizens’ renewed motion for reconsi-
deration is ALLOWED. Further, the defendants’ renewed
cross-motion for reconsideration is DENIED.
3. This Court further found that to the extent that the filing of
the complaint, the petitions to liquidate Bishay’s collateral, and the
attorney’s fees were not privileged, they nonetheless did not support
a Chapter 93A claim based on abuse of process because Bishay
had presented no evidence of an improper or ulterior motive for
such acts.
3la
Appendix C
DISCUSSION
I. BISHAY’S RENEWED MOTION FOR RECONSI-
DERATION
Bishay asks this Court to rescind its previous order that
the reservation clause in the Chapter 11 plan was insufficient
to preserve his counterclaims for post-bankruptcy litigation,
and to reinstate Counts I, II, III, IV, V and subsection j of
Count VI of the amended counterclaim. Bishay further asks
this Court to find that he can state a claim for abuse of process
and accordingly, reinstate subsections j, 1 and m of Count
VI. In connection with these matters, Bishay urges this Court
to examine the contents of a sealed envelope, containing
supplemental answers to interrogatories dated September 30,
1997, which was filed in connection with Bishay’s original
summary judgment motion but which was apparently placed
directly in the impound safe without ever being reviewed by
this Court. In the interests of justice, this Court has examined
the contents of the envelope to determine whether any
information contained therein warrants reconsideration of the
November 24, 1997 and February 11, 1996 Memoranda of
Decision and Order.
This Court carefully considered the proper scope of the
reservation in the Chapter 11 plan not only in the initial
summary judgment decision but also, in even greater detail,
on Bishay’s first motion for reconsideration. That issue
having been decided adversely to him on two prior occasions,
Bishay now asks this Court yet again to adopt his inter-
pretation of the reservation. This the court declines to do.
Where there has been no material change in circumstances,
32a
Appendix C
a court is not bound to reconsider a case, issue, or question
of law once decided. Peterson v. Hopson, 306 Mass. 597,
599 (1940); King v. Globe Newspaper Co., 400 Mass. 705,
707, cert. den., 485 U.S. 940 (1987). Although the court has
the power prior to final judgment to reconsider an inter-
locutory ruling, such power should be exercised only where
there are compelling reasons to do so, and a judge should
hesitate to undo his own work. Peterson v. Hopson, supra
at 603; King v. Globe Newspaper Co., supra at 707-708.
There is simply no valid reason for this Court to revisit the
legal question of the proper scope of the reservation and
indeed, considerations of judicial economy militate against
such action. Compare Hurley v. Berkshire Design Group,
Civil No. 92-3275B (Mass. Super. Ct. April 26, 1994)
(Toomey, J.); Flores v. Metropolitan Dist. Com’n, Civil
No. 92-4265 (Mass. Super. Ct. March 9, 1995) (McDaniel,
J.); (allowing motions for reconsideration based on new case
law not existing at the time of the prior summary judgment
motions).
In addition, Bishay contends, for the first time, that the
confirmation of the Chapter 11 plan does not constitute res
judicata as to his counterclaims against Citizens because said
claims were “non-core” to the bankruptcy proceeding and
thus could not have been adjudicated in that forum. Bishay
never even intimated this argument in either the original
motion for summary or the first motion for reconsideration.
Following a decision of this Court, a party has no right to a
rehearing, and a question of law not seasonably raised cannot
be revived by the simple expedient of bringing it forward
and demanding a second ruling. Peterson v. Hopson, supra
at 599-600. See also Diversified Mortgage Investors v. Viking
33a
Appendix C
General Corp., 16 Mass. App. Ct. 142, 151 (1983). This
Court will not now entertain Bishay’s “non-core” argument,
given his failure to raise the issue in connection with either
the original summary judgment or the cross-motions for
reconsideration.‘ Accordingly, this Court declines to consider
the merits of Bishay’s claims in his renewed motion for
reconsideration or to reinstate Counts I, II, Ill, IV, V and
subsection j of count VI of the amended counterclaim.
Finally, Bishay asks this Court to reconsider its
determination that he failed to demonstrate some ulterior
motive for Citizens’ legal efforts to collect on the defaulted
loan, which would raise a genuine issue of fact with respect
to an abuse of process claim. Bishay asserts that information
revealed in the June 1998 deposition of Citizens Financial
Group Chairman Larry Fish’ supplies an ulterior motive,
such that subsections j, 1 and m of Count VI should be
reinstated. Further, according to Bishay, “important discovery
concerning the profit that Citizens-could make from fore-
closure on the Bishay loans was only produced by Citizens
on August 27, 1998.” Bishay does not explain why he was
unable to muster this information in support of either the
original motion for summary judgment or his motion for
4. This Court notes that following its decision on the parties’
cross-motions for reconsideration, Bishay filed with the Bankruptcy
Court a “Motion to Clarify and Amend the Reservation Clause in the
April 23, 1996 Confirmed Plan of Reorganization, Nunc Pro Tunc,
And Declare That the Alleged Claims of the Debtor Are Non-Core.”
The Bankruptcy Court denied this motion, and Bishay’s appeal to
the Bankruptcy Appellate Panel of the First Circuit is now pending.
5. Until 1997, Fish was also a Director of Citizens Bank.
na enn sees
34a
Appendix C
reconsideration. The docket does not reflect that Bishay ever
moved pursuant to Mass. R. Civ. P. 56(f) for additional time
to conduct discovery necessary to oppose Citizens’ motion
for summary judgment. This Court does not consider the
belated presentation of Fish’s testimony to be a material
change in circumstances warranting a reconsideration of the
claims at issue.® Accordingly, Bishay’s renewed motion for
reconsideration is DENIED in all respects.’
6. Moreover, an examination of the merits reveals that Fish’s
testimony is inadequate to establish the ulterior motive required to
prevail on an abuse of process claim. Fish states in his deposition
that hundreds of Citizens Bank employees were on an incentified
pay plan tied to the performance of the bank. Although Fish agreed
that employees in the special assets group would qualify for
participation in the pay plan, he stated that he lacked any knowledge
as to whether particular members of the assets group actually received
incentive pay. Finally, he admitted that for members of the special
asset group on the incentified pay plan, the quality of the assets held
by the bank, including loans collected, would affect the incentive
pay received. Bishay’s theory is that Citizens’ actions with respect
to his loan were driven by employees’ ulterior motive of obtaining
“secret incentive bonuses,” because the more fees and expenses the
Bank recovered in connection with Bishay’s loan, the bigger the
bonuses for employees. Insofar as all loan collection proceedings
seek to recover money, the desire to increase the bank’s wealth cannot
constitute an ulterior motive. Further, Bishay has failed to produce
any evidence that the individuals involved in handling his loan in
fact received any incentive pay connected therewith.
7. Needless to say, this Court also denies Bishay’s requests,
contained in his opposition to Citizens’ renewed motion for
reconsideration, to allow him leave to amend his counterclaim to
include a separate count for abuse of process, and to grant further
discovery pursuant to Mass. R. Civ. P. 56(f).
35a
Appendix C
II. CITIZENS’ MOTION FOR RECONSIDERATION
Citizens now urges this Court to reconsider its denial
of summary judgment on Bishay’s remaining claims,
subsections f and k of Count VI, on the ground that Bishay
has no reasonable expectation of proving actual damages
under Chapter 93A. While Citizens did not argue the absence
of Chapter 93A damages in either its original summary
judgment motion or motion for consideration, this is not a
case of a party seeking a further hearing on an argument
unseasonably raised as a mere afterthought. Rather, in sparing
subsections f and k of Count VI from summary judgment,
this Court, without input from either party, raised the issue
of damages, noting that while any award of actual damages
under Chapter 93A would have to account for the fact that
Bishay had already been compensated for the attorney’s fees
incurred in resisting the dual billing agreement in the
Bankruptcy Court, Bishay might conceivably be able to
establish damages beyond those attorney’s fees.
Accordingly, because this Court sua sponte raised the
issue of Bishay’s ability to prove Chapter 93A damages, it is
valid for citizens in response to now seek to present evidence
on this issue. Further, given that the only cause of action
remaining in this case is a Chapter 93A claim based on two
narrow grounds, it is in the interests of judicial economy to
consider the possible resolution of the claim on summary
judgment. In doing so, this Court notes that both Citizens
and Bishay have extensively briefed the issue of Chapter 93A
damages in connection with the present motion.
36a
Appendix C
To prevail on a claim under Chapter 93A, section 11,
a plaintiff must have suffered a “loss of money or property.”
G.L. c. 93A, § 11 (1989). In this context, “money” means
money, not time, and “property” means the kind of property
that is purchased or leased, not such intangibles as a right to
sense of security or peace of mind. Halper v. Demeter,
34 Mass. App. Ct. 299, 304 (1993). Where the plaintiff
fails to satisfy his burden of proving that he suffered some
loss of money or property within the meaning of G.L. c. 93A,
§ 11, summary judgment is appropriate. See Lumbermens
Mutual Casualty Co. v. Offices Unlimited, Inc., 419 Mass.
462, 468-469 (1995) (stating that where no judgment entered
against the plaintiff, who therefore never paid out any loss,
plaintiff failed to establish damages from insurer’s disclaimer
of coverage).
In the present case, Bishay challenged the dual billing
arrangement in the Bankruptcy Court prior to that court’s
awarding Citizens any attorneys fees. After an extensive
evidentiary hearing, the amount of fees owed by Bishay was
reduced to reflect the amount Citizens itself would have paid
its attorneys for the work. Moreover, the attorney’s fees and
expenses Bishay incurred in challenging the dual billing
arrangement were set off against the fees he owed Citizens
under the loan agreement. Thus, Bishay never expended
any money out of his pocket as a result of the existence and
attempted enforcement of Citizens’ dual billing arrangement.
Compare Guenard v. Burke, 387 Mass. 802, 809-810 (1982)
(concluding that where attorney unfairly withheld funds from
a client under an illegal fee agreement, c. 93A damages were
the difference between the withheld funds and the reasonable
37a
Appendix C
fee owed the attorney); Doucette v. Kwait, 392 Mass. 915,
916-917 (1984) (concluding that where attorney wrongfully
charged a separate fee for services that should have been
included under the contingent fee already paid by the client,
c. 93A damages were the amount of that fee and interest
thereon).
Nonetheless, in his answers to interrogatories, Bishay
claims $100,000,000 in damages from Citizens’ unfair and
deceptive practices, which he proceeds to itemize. In addition,
he has introduced the affidavit of Howard Gordon, an expert
specializing in business valuation and business damages
calculations, stating that Bishay’s various businesses
sustained losses in excess of 90 million dollars due to
Citizens’ wrongful actions. Bishay seeks to recover these
damages in connection with his remaining Chapter 93A
claims on the theory that because Citizens wanted to collect
excessive fees under the improper dual billing arrangement,
it refused repayment of Bishay’s loan in November of 1995
and refused to release the collateral for the loan, preventing
Bishay from undertaking various business opportunities,
forcing him into bankruptcy, and resulting in $10,000 in costs
in the bankruptcy proceedings and lost business profits of
$34,000,000.
It is well established that in the absence of a causal
relationship between the alleged unfair acts and the claimed
loss, there can be no recovery under G.L. c. 93A, § 11.
Massachusetts Farm Bureau Federation, Inc. v. Blue
Cross of Massachusetts, Inc., 403 Mass. 722, 730 (1989).
On the record before this Court, Bishay has no reasonable
38a
Appendix C
expectation of demonstrating that the millions of dollars of
damages he alleges were caused by Citizens’ entry into and
attempted enforcement of the dual billing arrangement at
issue. Accordingly, this Court concludes that Citizens is
entitled to summary judgment on Subparts f and k of Count
VI of Bishay’s amended counterclaim.
39a
Appendix C
ORDER
For the foregoing reasons, it is hereby ORDERED that
Citizen Bank’s renewed motion for reconsideration be
ALLOWED. Upon reconsideration, it is ORDERED that
Citizen Bank’s motion for summary judgment on the
remainder of Count VI of the amended counterclaim be
ALLOWED.
It is further ORDERED that the defendants’ renewed
motion for reconsideration be DENIED.
s/ Gordon L. Doerfer
Gordon L. Doerfer
Justice of the Superior Curt
DATED: October 16, 1998
1
|
i
j
|
|
J
}
|
|
40a
APPENDIX D — MEMORANDUM OF DECISION
AND ORDER OF THE SUPERIOR COURT OF THE
COMMONWEALTH OF MASSACHUSETTS
DATED MARCH 17, 1999 AND FILED MARCH 18, 1999
COMMONWEALTH OF MASSACHUSETTS
NORFOLK, ss.
SUPERIOR COURT
CIVIL ACTION
NO. 95-1312A
CITIZENS BANK OF MASSACHUSETTS,
Plaintiff,
VS.
BAHIG BISHAY'! & others’,
Defendants.
MEMORANDUM OF DECISION AND ORDER ON
PLAINTIFF’S MOTION FOR AWARD OF COLLECTION
COSTS AND DEFENDANTS’ CROSS-MOTION FOR ENTRY
OF SEPARATE JUDGMENT
1. Individually and as Trustee of Old Post Realty Trust.
2. Commonwealth Realty Trust, Bishay Motors & Leasing,
Inc. f/k/a Bishay Motors, Inc., Massachusetts Auto Group, Ltd.,
and 1095 Commonwealth Ave. Corp.
4la
Appendix D
INTRODUCTION
This action originated with a complaint by plaintiff,
Citizens Bank of Massachusetts (Citizens) , seeking to
recover more than $1.5 million owed by defendant Bahig
Bishay and various trusts and corporations controlled by him
under a defaulted promissory note. That debt was repaid as a
result of a Chapter 11 plan confirmed by the Bankruptcy
Court on April 23, 1996. However, numerous counterclaims
by Bishay against Citizens remained pending in this case.
As a result of three separate Memoranda of Decision and
Order, dated November 24, 1997; February 11, 1998; and
October 16, 1998 respectively, this Court granted Citizens
summary judgment on all of Bishay’s counterclaims.
This matter is now before the court on Citizens’ motion
for approval of an award of attorneys fees and costs, pursuant
to the original loan documents, incurred in defending against
Bishay’s counterclaim. Bishay has filed a cross-motion
seeking entry of separate and final judgment on his counter-
claim pursuant to Mass. R. Civ. P. 54 (b) and a stay of
Citizens’ motion for an award of fees and costs. For the
reasons discussed below, the defendants’ motion for entry of
separate judgment is DENIED. In addition, Citizens’ motion
for an award of costs is ALLOWED.
42a
Appendix D
DISCUSSION
I. SEPARATE AND FINAL JUDGMENT ON BISHAY’S
COUNTERCLAIM
This Court will first address Bishay’s motion for entry
of separate and final judgment on his counterclaim and a
stay of all action on Citizens’ motion for costs pending
his appeal of the summary judgment in Citizens’ favor.
Massachusetts Rule of Civil Procedure 54(b) provides in
relevant part:
When more than one claim for relief is presented
in an action . . . the court may direct the entry ofa
final judgment as to one or more but fewer than
all of the claims or parties only upon an express
determination that there is no just reason for delay
and upon an express direction for the entry of
judgment. In the absence of such determination
and direction, any order or other form of decision,
however designated, which adjudicates fewer than
all the claims or the rights and liabilities of fewer
than all the parties shall not terminate the action
as to any of the claims or parties, and the order or
other form of decision is subject to revision at
any time before the entry of judgment adjudicating
all the claims and the rights and liabilities of all
the parties. Mass. R. Civ. P. 5a(b).
The grant of a certificate directing entry of final judgment
on fewer than all the claims in an action presents a matter
for the sound discretion of the trial judge. Acme Engineering
43a
Appendix D
& Manufacturing Corp. v. Airadyne Co., Inc., 9 Mass. App.
Ct. 762, 764 (1980); United States Trust Co. of New York v.
Herriott, 10 Mass. App. Ct. 313, 321 (1980). However,
judicial discretion under Rule 54 (b) should not be exercised
routinely or as a courtesy or accommodation to counsel.
Acme Engineering & Manufacturing Corp. v. Airadyne Co.,
Inc., supra at 765; United States Trust Co. of New York v.
Heriott, supra at 322; High-tech Sales, Inc. v. Olektron Corp.,
31 Mass. App. Ct. 912, 913 (1991). Rather, in determining
that there is no just reason for delay, the court should consider
the possible hardship or injustice to the parties from delay
of the partial appeal, the interests of sound judicial admin-
istration, and whether appellate resolution of the separated
matter will simplify, shorten or expedite trial of any of the
remaining claims. Dattoli v. Hale Hospital, 400 Mass. 175,
177 (1987); Paris v. Snappy Car Rental Inc., 18 Mass. App.
Ct. 968, 968-969 (1984).
Accordingly, a certificate of separate and final judgment
should be entered only where, after balancing the competing
factors, the trial judge can say with assurance based on the
facts in the record that finality of judgment should be ordered
to advance the interests of sound judicial administration and
to prevent the danger of hardship or injustice posed by delay.
U.S. Trust Co. of New York v. Herriott, supra at 322.
The preferred practice is to withhold judgment until all claims
have been disposed of. Acme Engineering & Manufacturing
Corp. v. Airadyne Co., Inc., supra at 764.
In the present case, Citizens’ original complaint has been
mooted by its recovery in the Chapter 11 proceedings and
Citizens has received summary judgment on Bishay’s
44a
Appendix D
counterclaim in its entirety. Accordingly, the only aspect of
this case which remains is the assessment, pursuant to the
loan documents, of collection costs which Citizens is entitled
to recover in light of the failure of Bishay’s counterclaim.
This is not a case where, objectively evaluated, there is little
likelihood of recovery on a remaining claim which was
asserted as a mere afterthought, so as to support the entry of
separate and final judgment. Compare Acme Engineering
& Manufacturing Corp. v. Airadyne Co., Inc., supra at 765
(concluding that entry of separate judgment was proper where
remaining claims were marginal, poorly supported by the
evidence, and the likelihood of success was speculative).
Rather, Citizen’s claim for assessment of collection costs is
an integral aspect of the litigation of Bishay’s counterclaim.
This Court therefore concludes that a delay in the entry of
judgment poses no danger of hardship or injustice. Finally,
the interests of sound judicial administration militate against
separate and final judgment in this case, for if Bishay loses
an appeal on the merits of his counterclaim, he will inevitably
file a second appeal with respect to any award of collection
costs. See Tiffany v. Sturbridge Camping Clubs, Inc.,
32 Mass. App. Ct. 173, 178 (1992) (stating that entry of
separate judgment neither achieves economy nor avoids
hardship where essential facts underlie all of the claims in
the case, which involve the same two parties). The usual
requirement that all claims be adjudicated prior to entry of
judgment exists to avoid piecemeal appeals. Shawmut
Community Bank, N.A. v. Zagami, 419 Mass. 220, 225 (1994).
Thus, this Court declines in its discretion to certify the entry
of separate and final judgment on Bishay’s counterclaim in
this case.
45a
Appendix D
II. CITIZENS’ MOTION FOR APPROVAL OF AWARD OF
COLLECTION COSTS
Citizens now seeks an award of attorneys fees and
costs in the amount of $360,614.63 incurred through
November 30, 1998 in defending against Bishay’s
unsuccessful counterclaim. The original promissory note
dated June 8, 1988 provided:
The maker agrees to pay all charges of the holder
hereof in connection with the collection and
enforcement of this Note, including reasonable
attorneys’ fees.
Similarly, Bishay’s guaranty of the note provided:
Guarantor agrees to pay a reasonable attorney’s
fee and all other costs and expenses which
may be incurred by Lender in the enforcement
of Borrower’s obligation or [sic] this Guaranty
or both.
The September 16, 1994 Forbearance Agreement signed by
_Bishay also provided that he would pay the legal fees and
expenses incurred by Citizens in connection with the Note.
In confirming Bishay’s Chapter 11 Plan, the Bankruptcy
Court (Keener, J.) concluded:
Citizens is entitled under its loan documents,
specifically Plaintiff’s Exhibit 6, to retain its
liens on all assets until all of its claims are fully
46a
Appendix D
satisfied. Citizens’ claims include not only
principal, interest, costs and attorneys’ fees
accrued to date but future contingent costs
in connection with the debtor’s state court
counterclaims against Citizens Bank.
The Confirmed Plan thus provides that:
until Citizens actually receives (in form and
substance reasonably acceptable to it) a release
from (and evidence of dismissal with prejudice
of) all Alleged Claims, Citizens shall retain
its lien on all Estate Assets not disposed of in
accordance with this Plan as security for Citizens’
contractual right to reimbursement from the
Debtors for Citizens’ costs and anticipated costs
of defending the Alleged Claims.
On January 22, 1998, Citizens and Bishay agreed to replace
the $500,000 lien on Bishay’s assets with an irrevocable
Letter of Credit issued by Ocean Bank of Miami, Florida.
A. NECESSITY OF A HEARING
As a threshold matter, Bishay seeks an evidentiary
hearing on the matter of Citizens’ collection costs. With
respect to an award of fees or costs, “a losing party who seeks
to challenge factual issues raised by the affidavits and
vouchers of the prevailing party must have an opportunity
to be heard.” Waldman v. American Honda Motor Co.,
413 Mass. 320, 328 (1992). See also Boynton v. Tarbell,
272 Mass. 142, 146 (1930) (probate court award of attorney’s
47a
Appendix D
fees against estate); In re Matter of a Grand Jury Subpoena,
411 Mass. 489, 501 (1992) (court’s discretionary award of
expense reimbursement to recipient of subpoena duces
tecum); J.P. Construction Co., Inc. v. Stateside Builders,
Inc., 45 Mass. App. Ct. 920, 920 (1998) (award of attorney’s
fees under GL. c. 149, § 29).
Under Massachusetts law, where one party contracts to
pay the other’s attorney’s fees, the standard for recovery is
fair and reasonable compensation for the services rendered.
Margolies v. Hopkins, 401 Mass. 88, 93 (1987); MIF Realty,
L.P. v. Fineberg, 989 F. Supp. 400, 402 (D. Mass. 1998).
The court should consider time expended, customary hourly
charges, the attorney’s reputation, the demand for his
services, the stakes involved in the case, the results secured,
and the customary charges for similar services by others.
Cummings v. National Shawmut Bank of Boston, 284 Mass.
563, 565 (1934); Margolies v. Hopkins, supra at 93.
The documents in the present case explicitly require the fees
recovered by Citizens to be reasonable.
A review of the record reveals that Bishay’s brief has
failed to sufficiently challenge Citizens’ affidavits and
vouchers to raise a factual issue which would necessitate a
hearing. In demanding a hearing, Bishay does not contend
that the number of hours spent on the litigation or the rate
charged are unreasonable, issues that might require testimony
beyond the parties’ written submissions. Rather, his only
specific objections to the fees are that he should not have to
pay the $117,765.24 incurred in connection with Citizens’
first summary judgment motion, which largely failed, or fees
incurred in resisting Bishay’s June 12, 1997 motion to
48a
Appendix D
compel, which was granted. In addition, he contends that
the Stoll affidavit claims entitlement to fees Citizens was
not obligated to pay by contract. These legitimate concerns
can be adequately and fairly addressed based on a careful
review of the extensive documentary record before this Court.
B. FEE AWARD
Having carefully reviewed Citizens’ application,
affidavits and itemizations of fees and costs, and having
given serious consideration to Bishay’s arguments in
opposition thereto, this Court makes the following award of
collection fees and costs.
1. General Findings
Brown, Rudnick, Freed & Gesmer, P.C. (Brown,
Rudnick) has represented Citizens in the present litigation
since April of 1996. Attorney James W. Stoll (Stoll),
who has been the principal attorney for citizens in this case,
has 14 years experience in practice and has represented
numerous banks as well as the FDIC in lender liability
matters. Stoll was assisted primarily by Attorney Elise Busny,
who has five years experience in practice, and by paralegal
Susan Oldham.
Pursuant to the fee agreement between Citizens and
Brown, Rudnick, Citizens was billed for services at a blended
rate of $205 per attorney per hour. This Court finds the
blended rate to be fair and reasonable. Indeed, said rate is
lower than Brown, Rudnick’s standard rates, which are
commensurate with those charged at other firms of a similar
49a
Appendix D
size and reputation. For example, Stoll’s regular hourly
rate varied from $275 to $325 during the period relevant
to this litigation. In addition, pursuant to the fee agreement,
Citizens was billed for paralegal services at the standard rate
of $130 per hour. This Court also finds this rate to be fair
and reasonable.
Two affidavits by Stoll set forth itemized invoices billed
to Citizens by Brown, Rudnick for the period from April 25,
1996 through November 30, 1998. These invoices represent
$329,207.55 in fees for close to 2,000 hours of work, as well
as $31,407.08 in expenses. While this amount is large,
it should be emphasized that at issue in the present litigation
was a counterclaim which Bishay consistently asserted was
worth $100 million. Since May of 1996, in excess of one
hundred pleadings have been filed in this matter, none of
which has been brief. Indeed, every point on every issue was
vigorously contested by both parties. Bishay’s counterclaim
involved complex issues of bankruptcy law and res judicata
as well as more basic contract and Chapter 93A matters.
Through a series of decisions by this Court, Citizens
ultimately succeeded in obtaining judgment as a matter of
~ law on Bishay’s entire counterclaim.
2. Bishay’s Obiections
This Court will now address each of Bishay’s objections
to Citizens’ receipt of collection costs. Bishay first raises
the familiar refrain that Citizens’ misrepresentations with
respect to its dual billing agreement with Brown, Rudnick
bars it from recovering any collection costs under the loan
documents. This argument has already been twice rejected,
50a
Appendix D
first by the Bankruptcy Court in the fall of 1996, and then by
this Court in its November 27, 1997 Memorandum and
Decision of Order on Bishay’s cross-motion for summary
judgment. Notwithstanding Bishay’s persistence in pressing
such aclaim, this Court declines to find Citizens’ entitlement
to collection costs to be affected by the existence of the dual
billing agreement and its conduct before the Bankruptcy
Court with respect thereto. Bishay also makes a cursory
argument that Citizens should be barred from recovery
because it has made repeated misrepresentations to this Court
throughout the course of the present litigation. Bishay’s
allegations in this respect are wholly unsubstantiated and
serve only to highlight his unwillingness to honor his
contractual obligation to reimburse Citizens for its fees and
costs in defending against his unsuccessful counterclaim.
Bishay further contends that Citizens is not entitled to
fees because it has failed to demonstrate that it actually paid
the requested legal fees and expenses to Brown, Rudnick.
This argument lacks merit, given that Stoll’s affidavit
specifically states that the itemized fees and costs sought
have either already been paid by Citizens or are currently
owed by Citizens to Brown, Rudnick.
Bishay next complains that Citizens seeks to collect fees
and expenses which it was not obligated by contract to pay
Brown, Rudnick. In accordance with Citizens’ May 1995
outside Counsel Policies and Procedures Manual, Citizens
generally does not pay for inter-office conferences; excessive
review of files, memoranda and pleadings; or multiple lawyer
attendance at meetings or depositions unless approved in
advance. Further, Citizens does not pay for routine in-house
S5la
Appendix D
photocopying, telephone, telecopying and facsimile
charges; secretarial overtime; or meals, unless necessitated
by overnight travel. With respect to computerized research,
Citizens will pay only for use charges. Brown, Rudnick was
pre-approved to perform computerized research as necessary
in connection with the present case.
Bishay asserts that “Approximately $100,000 was billed
for review of pleadings, papers and files which Citizens
expressly refuses to pay.” Citizens’ itemizations do indeed
reveal a multitude of hours spent by Brown, Rudnick
reviewing its own pleadings, memoranda and files. None-
theless, after carefully examining the time records, this Court
did not discern excessive hours spent reviewing documents.
Further, Citizens’ itemized invoices reveal numerous
hours spent conferencing between attorneys on the case.
However, Citizens’ protocol states with respect to inter-
office conferencing that “only the time of the highest-paid
participant will be paid for, then only when the conference
advances the matter.” It appears that Brown, Rudnick adhered
to this policy in its invoices, because on any particular date,
only one attorney, not both, billed for conferencing activity.
Again, a review of the records does not reveal any obviously
excessive hours spent in inter-office conferences, and in a
complex case such as this one, involving more than one trial
counsel, some conferencing is to be expected.
With respect to expenses, although the invoices set forth
a total of $7,851.68 for “copies,” it is only routine in-house
photocopying for which Citizens will not pay. The only items
52a
Appendix D
which do not appear to comport with Citizens’ protocol are
$57.64 in meals which is not accompanied by itemized
overnight travel, and $129 in “misc. expenses” which is not
sufficiently itemized given that the protocol states that
Citizens will not pay for non-specific billing entries.
Accordingly, this Court will reduce the expenses collected
by Citizens by that amount.
Finally, Bishay contends that he should not have to pay
approximately $117,765.24 incurred in connection with
Citizens’ first summary judgment motion, which largely
failed, or those fees incurred by Citizens in resisting his
June 12, 1997 moticn to compel, which was granted.
In general, a litigant must qualify as a prevailing party in
order to receive an award of attorncy’s fees. Bonofiglio v.
Commercial Union Ins. Co., 412 Mass. 612, 613 (1992).
However, this Court has found no authority for the proposi-
tion that a prevailing party’s success should be gaged by each
individual procedural step and/or motion rather than by the
overall result achieved in the case. Accordingly, Citizens’s
fees need not be reduced by those hours spent unsuccessfully
resisting Bishay’s June 12, 1997 motion to compel.
Moreover, Citizens did prevail to a large extent on its
first summary judgment motion, obtaining judgment in its
favor on five out of six counts of the counterclaim and
successfully opposing Bishay’s cross-motion for partial
summary judgment. More importantly, Citizens’ failure to
receive summary judgment on one count of Bishay’s
counterclaim does not render the work done in preparation
for the motion unnecessary or unreasonable. This Court
53a
Appendix D
concludes that the portion of the summary judgment motion
on which Citizens did not succeed cannot be severed from
the successful portions so as to permit a rational diminution
of fees. See Rini v. United Van Lines, Inc., 903 F. Supp. 234,
238 (D. Mass. 1995), rev’d on other grounds, 104 F.3d 502
(lst Cir. 1997).
As the Appeals Court has noted, “it is altogether
appropriate that the person who, in doubtful circumstances,
unleashes the dogs of war should bear the heavier burden of
legal costs.” Strand v. Hubbard, 31 Mass. App. Ct. 914, 915
(1991). In the present case, Bishay vigorously pursued his
purported $100 million counterclaim against the bank to no
avail, despite his clear contractual obligation to pay Citizens’
collection costs in the event his claim was unsuccessful.
Accordingly, after careful review of Citizens’ application,
affidavits and itemizations of fees and costs, and having given
serious consideration to Bishay’s arguments in opposition
thereto, this Court determines that Citizens Bank of
Massachusetts has the right to recover $329,207.55 in
reasonable attorneys fees and $31,220.44 in expenses/
costs incurred from April 25, 1996 through November 30,
1998 in connection with the claims of Bishay and 1095
Commonwealth Avenue Corp. against Citizens arising from
transactions between Bishay, Commonwealth Avenue Corp.
and Citizens.
|
|
54a
Appendix D
ORDER
For the foregoing reasons, it is hereby ORDERED that
the defendants’ motion for entry of separate and final
judgment pursuant to Mass. R. Civ. P. 5a(b) be DENIED.
It is further ORDERED that judgmunt shall enter for plaintiff
Citizens Bank of Massachusetts for reasonable collection
costs in the amount of three hundred sixty thousand, four
hundred and twenty-seven dollars and ninety-nine cents
($360,427.99) jointly and severally against defendants Bahig
Bishay, individually and as Trustee of the Old Post Realty
Trust; Commonwealth Realty Trust; Hishay Motors &
Leasing, Inc. f/k/a Bishay Motors, Inc.; Massachusetts Auto
Group, Ltd.; and 1095 Commonwealth Ave. Corp.
s/ Gordon L. Doerfer
Gordon L. Doerfer
Justice of the Superior Court
DATED: March 17, 1999
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.