The Accountant/Attorney Liability Reporter: December 2005

Inside this Issue

The Court of Appeals Finds Accountant Trustees Liable Under G.L. c. 93A

The Massachusetts Appeals Court recently found a trustee liable for unfair and deceptive practices under G.L. c. 93A. In Quinton v. Gavin, Docket No.: 04-1-999, Mass. App. Ct. (October 19, 2005), the defendant, a CPA, advertised and sold his services as an independent trustee to members of the public. He then systematically misused the funds entrusted to him. The CPA argued he could not be found liable under G.L. c. 93A because, as matter of law, the statute does not apply to claims brought against a trustee by trust beneficiaries. The Appeals Court disagreed finding that, based on the facts presented to the court the defendant could not rely on his status as a trustee to shield him from liability.

Court Upholds Consulting Firm’s Decision to Terminate at Will Employee

By Brian C. Newberry, Esq.

Recently, the Massachusetts Superior Court granted summary judgment in favor of a consulting firm which had terminated an employee, concluding that the public policy exception to the at-will employment doctrine did not apply in a situation where an employee believed GAAP principles compelled a certain course of action but his employer and the client disagreed. In Dolph v. CPA Firm, Suffolk Superior Court, No. 03-5074, July 1, 2005, the CPA firm (“Employer”) hired the plaintiff Dolph (“Employee”) as a senior accountant. After only six months employment, the Employer terminated Employee. He filed claims for wrongful termination, breach of the implied covenant of good faith and fair dealing and intentional interference with contractual relations with the firm, the last claim lodged against two of the Employer’s principals.

Partnership Agreement Invalid Where It Requires Departing Law Partners From Sharing Fees Earned After Departure

By Douglas M. Marrano, Esq.

A recent decision by the Massachusetts Supreme Judicial Court (“SJC”) held unenforceable a provision in a law firm partnership agreement requiring partners who leave the firm to pay a percentage of fees generated after their departure from services performed for certain current and former firm clients. Eisensten v. Conlin, 444 Mass. 258, 827 N.E.2d 686 (2005).

Insurer Allowed to File a Legal Malpractice Claim Against Insured’s Defense Counsel Under a Theory of Subrogation

In St. Paul Fire and Marine Insurance Company v. Birch, Stewart, Kolasch & Birch, LLP, Leonard R. Svensson, Bernard L. Sweeney, the U.S. District Court for the District of Massachusetts addressed whether an insurer had a right to file a legal malpractice claim against the insured’s defense counsel under a theory of subrogation. 2005 U.S. Dist. LEXIS 15383. Recognizing it as a matter of first impression, the Court predicted that the Massachusetts Supreme Judicial Court would expand existing case law for the assignment of legal malpractice claims, and concluded that an insurer may assert a legal malpractice claim as the insured’s subrogee provided that the subrogation would not invoke public policy concerns.

Court Finds Attorneys Not Liable For Conflict of Interest

The United States District Court, District of Massachusetts, addressed whether a complaint, which charged legal malpractice, could be amended to include a claim for conflict of interest. The Court considered whether a conflict of interest existed that led to cognizable damages and ruled the plaintiff could not amend his complaint. No conflict of interest existed because the representations at issue were factually and legally distinct.

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