Atlas tack corporation v. Salvatore F. Dimasi

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Brief case

Atlas tack corporation v. Salvatore F. Dimasi

On May, 1991 Superior Court

Plaintiff sought to recover damages against the defendants, both lawyers, on the ground that they are vicariously liable for alleged malpractice of another, Ralph Donabed, with whom they shared office space. Both defendants filed motions to dismiss supported by affidavits in which they averred that they were not partners of Donabed. The plaintiff filed an opposition to defendants motions to dismiss supported by an affidavit.

The plaintiff also filed a motion for continuance to conduct discovery. But the court was denied by court on the ground that the plaintiff had failed to conduct the discovery during several months while the action was pending before the court. Plaintiff deemed that court deters his opportunity to conduct a discovery before the court action on the motion for summary judgement.

Issue of representation

Plaintiff alleged that Donabed presented as a partner of two lawyers, because his name figured on the invoices and another sorter of legal documents.

The lawyers denied this representation and supported their argument by a Brown v. Gerstein case, that the use of a person name in a business even with the person’s knowledge is too slender thread to warrant favourable finding in the consent element. Thus, the judge concluded that defendants’ consent to use their name on the business letterhead did not amount to their holding themselves as partners of Donabed or consenting to do so.

Distinction with previous case Brown correspondence bearing the legend.

In our case there was apart this mention of professional association. In addition, there was no indication on the bills that the payment should be made to Donabed.

The bars declared that the term professional association might imply a partnership agreement.

The judge consider that this term or likewise others may suggest for a public like a partnership, because public couldn’t distinguish before aforesaid terms. Accordingly, a partnership by estoppels existed.

Procedure rule. A party is not entitled to present an argument on appeal on an issue not presented in the court below. (defendants release of discharging Donabed;).

But court admitted that in exceptional circumstances, defendants would not have had the opportunity to present the issue.

Defendants supported their release by a ruling Elias v. Unisys, where the principal is discharged from liability based solely on the principle of respondent superior when the plaintiff executes a general release of the agent.

Court didn’t agree by this support and declared that a covenant not to sue or release will not discharge a vicariously liable party if the covenant contains an express reservation of rights against that party.

The court deemed that the basis for the rule allowing a reservation against a party derivatively or vicariously liable appears to be the law should encourage settlements, the terms of which should be controlled by the intent of parties. Karcher v. Burbank, restatement of torts.

In summary, the court does not deem the action barred by a release.

Defendant’s motions to dismiss the appeals are denied, the judgement entered for the defendants are reversed and the case is remanded to the superior court for further proceedings.

Lexsee 637 N.E. 2d 230

Atlas Tack Corporation v. Salvatore F.Dimasi & another. N1

N1 Stephen P. Karll.

N 93-P-370

Appeals Court of Massachusetts

37 Mass. App. Ct. 66; 637 N.E. 2d 230; 1994 Mass. App. Lexis 671

March 23, 1994, Argued

July 25, 1994, Decided

Prior history:

Suffolk. Civil action commenced in the Superior court Department on May 10, 1991. The case was heard by Thomas E. Connolly, J., on motions for summary judgement.

Disposition:

Accordingly, the defendant’s motions to dismiss the appeals are denied, the judgements entered for the defendants are reversed and the case is remanded to the Superior Court for further proceedings.

Head notes:

A plaintiff seeking to recover damages against two lawyers on the ground that they were vicariously liable for the alleged malpractice of a third attorney established that there was a disputed issue of material fact whether a partnership by estoppel existed in the circumstances; summary judgement should not have been granted in the favour of the defendants.

A plaintiff who executed a general release of the responsible tort feasor did not thereby discharge other parties who would be derivatively or vicariously liable, where the release contained an express reservation of rights against those parties was not barred by the release.

Syllabus:

Attorney at Law, malpractice; Canons of ethics; partnership; what constitutes; estoppel; release.

Counsel:

Michael J. O’Neill for the plaintiff.

John T. Lamond for Stephen P. Karll.

John F. Kehoe, Karen S. Breda & John D. Bruce, for Salvatore F. Dimasi, submitted a brief.

Judges:

Present: Armstrong, Jacobs & Porada, JJ.

Opinion by:

Porada

Opinion:

Porada J.: the plaintiff sought to recover damages against the defendants, both lawyers, on the ground that they were vicariously liable for the alleged malpractice of another attorney, Ralph Donabed, with whom they shared the office space. Both defendants filed motions to dismiss supported by affidavits in which they averred that they were not partners of Donabed and had never held themselves out to be partners. The plaintiff filed an opposition to the defendants’ motions to dismiss supported by an affidavit. N2 treating the motions to dismiss as motions for summary judgement, the judge allowed the defendant’ motions. 

N2 the plaintiff also filed a motion for a continuance to allow the plaintiff time to conduct discovery before the court ruled on the defendants’ motions to dismiss. This motion was denied by the motion judge on the grounds that the plaintiff had failed to conduct any discovery in the proceeding several months while the action was pending before the court and had failed to file an affidavit in compliance with Mass. R. Civ. P. 56(f), 365 Mass. 825 (1974). The plaintiff claims this was error. There was none. First Natl. Bank of Boston v. Slade, 379 Mass. 243, 244-245, 399 N.E. 2d 1047 (1979) (failure to file an affidavit pursuant to Mass. R. Civ. P. 56  (f) precludes argument that party should have been given an opportunity to conduct discovery before the court action on motion for summary judgement).

After the motions were allowed, the plaintiff settled his claim for malpractice with Donabed and executed a release of Donabed form any and all claims “growing out of his legal representation of (the plaintiff) including but not limited to all claims against (him)” arising out of this action. The release specifically excluded the plaintiff’s claims against the defendants in the action n3.

N3. the pertinent provisions of the release read as follows: “for good and valuable consideration” of ninety-five thousand dollars ($ 95,000), Atlas Tack Corporation of Boston, Massachusetts, does hereby release and discharge and by these presents does… forever discharge Ralph A. Donabed … from any and all actions, cause of action, suits, accounts, debts, claims, demands and liabilities of every name and nature, both in law and in equity, including but not limited to all damages … or any claim whatsoever on account of or in any way growing out of his legal representation of Atlas Tack Corporation including but not limited to all claims against Ralph A. Donabed, stated in a certain action entitled Atlas Tack Corporation v. Ralph A. Donabed, Law Offices of Dimasi, Donabed and Karll, Salvatore F. DiMasi and Stephen P. Karll, Suffolk Superior Court, Civil action number 91-3159, and specifically does not release and discharge any and all claims that Atlas Tack Corporation has against the Law Offices of Dimasi, Donabed and Karll, Salvatore F. Dimasi and Stephen P.Karll, stated in a certain action entitled Atlas Tack Corporation v. Ralph A. Donabed, Law Offices of Dimasi, Donabed and Karll, Salvatore F. Dimasi and Stephen P. Karll, Suffolk Superior Court, Civil Action Number 91-3159.”

This appeal by the plaintiff then ensued. The plaintiff claims that summary judgements should not have been granted to the defendants because there is a disputed issue of material fact as to whether the defendants were partners by estoppel of Donabed. Ordinarily, whether a partnership by estoppel exists is a question of fact. Mersick v. Bilafsky, 205 Mass. 488, 492, 91 N.E. 889 (1910). In this case, however, based on the verified materials presented, the motion judge determined that the plaintiff’s proof was insufficient as matter of law to establish a partnership by estoppel. We examine that proof.

In the affidavits presented to the judge by the defendants, the defendants averred that while they shared office space with Donabed, paid for a receptionist for the office together and had office stationary entitled “Law offices of DiMasi, Donabed, & Karll, A Professional association”, they did not hold themselves out to be partners, never represented to the plaintiff or anyone else that they were partners and did not consent to any such representation. They also averred that they kept separate files, had their own staff, had their own personal stationary, and paid for their own expenses. In response, the plaintiff’s president averred that the corporation needed an attorney to handle a dispute relating to the cost of clean up of a hazardous waste site it owned and was referred to the law office; that it was the corporation’s business practice to hire law firms with multiple personnel and financial resources; that he assumed that he was hiring the law firm of Dimasi, Donabed & Karll, when he spoke to Donabed; that all the correspondence and invoices received by the plaintiff form Donabed bore the letterhead of “Law Offices of Dimasi, Donabed & Karll, A Professional Association”; and listed a roll of attorneys in the left hand margin; that the checks issued by the plaintiff in payment for legal services were made payable to Dimasi, Donabed, & Karll.

In order to establish a partnership by estoppel, the plaintiff bore the burden of proving “(1) that the would-be partner has held himself out as a partner; (2) that such holding out was done by the defendant directly or with his consent; (3) that the plaintiff had knowledge of such holding out; and (4) that the plaintiff relied on the ostensible partnership to his prejudice”. Brown v. Gerstein 17 Mass. App. Ct. 558, 571, 460 N.E. 2d 1043 (1984); see also G.L. c.108A, §16. At issue here are the first two elements: whether Donabed held himself out as a partner of the defendants’ consent. Relying upon Brown v. Gerstein, in which we held “that the use a person’s name in a business, even with that person’s knowledge, is too slender a thread to warrant a favourable finding on the consent element”. Id.at 572, the judge apparently concluded that the defendants’ consent to use of their name on the business letterhead did not amount to their holding themselves out as partners of Donabed or consenting to do so.

We conclude that this case is distinguishable from Brown v. Gerstein; in that case Brown sought to hold Weiner, who practiced law with Gerstein, derivatively liable for Gerstein’s alleged malpractice as his partner by estoppel. The only proof presented on the question of partnership by estoppel was evidence that Brown had received correspondence bearing the legend of Gerstein & Weiner, that Weiner knew that Gerstein was using Gerstein & Weiner stationary and that a retainer check was made payable to Gerstein; here, unlike the Brown case, the defendants not only knew that Donabed was using stationary with the legend “Dimasi, Donabed & Karll” but they also knew and consented that bore the legend after their names “a professional association” and listed in the margin a roll of attorneys including themselves, Donabed, and two attorneys not named in the letterhead title of Dimasi, Donabed, & Karll. In addition the bills forwarded to the plaintiffs from Donabed came on stationary with the letterhead instead of Donabed’s personal stationary. There is no indication on the bills that payment should be made to Donabed or that the bill was submitted by Donabed instead of the law office of Dimasi… While the committee on professional ethics of the Massachusetts Bar Association has declined to rule whether the use of the term “professional association” to describe lawyers who are not partners, but share office space, is deceptive, it has stated that the term is ambiguous and may well imply a partnership arrangement.

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